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TMI Blog2009 (3) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... approach the Company Law Board again if the status of entitlement as directors and shareholders of the company are estab- lished before the Civil Court. - C.A.P.P. NO. 32 OF 2007 (O&M) C.M.A. NOS. 184 OF 2007 AND 161 OF 2008 - - - Dated:- 19-3-2009 - K. KANNAN, J. A.K. Chopra, Amit Sethi and Ms. Roopa Pathania for the Petitioner. Amit Rawal and S.P. Sharma for the Respondent. ORDER K. Kannan, J. Dismissal by CLB on non-maintainability : 1. The appeal has been filed under section 10F of the Companies Act against the order of the Company Law Board passed in C.P. No. 76 of 2005 and connected applications dismissing the petition filed by the appellants herein complaining of oppression and mismanagement. The petition was dismissed on a preliminary objection taken by the respondents that the petition was not maintainable. Acts of oppression and mismanagement, nature of : 2. The particular acts complained of as constituting oppression and mismanagement were the return of allotment of shares on 10-5-2000 in relation to the 1st respondent company in Form No. 2 dated 30-5-2000 with the RoC which had been changed by the 2nd respondent in a fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Company Law Board s order dated 22-3-2005. There was yet another reason for the withdrawal on account of the fact that the proceedings were sought to be stayed on the ground of investigation being carried out pursuant to a complaint filed before the police in FIR No. 54, dated 10-4-2004. The 2nd respondent had approached the High Court of Punjab and Haryana for anticipatory bail in the matter. The High Court, while passing the order on 2-8-2005 granted the anticipatory bail but observed that the disputed documents like the letter of resignation dated 31-5-2001 and a family settlement set up by the respondents dated 16-9-2002 under the terms of which the petitioners were alleged to have forsaken their interests in the affairs of the company, shall be kept in abeyance for a period of six months and that the parties could approach the Civil Court for appropriate remedies. Nature of civil suits : ( i ) Civil Suit No. 662 of 2004 5. After the order of the High Court on 2-8-2005, Civil Suit No. 662 of 2004 had been filed against respondent Nos. 2 to 4 contending themselves to be shareholders of the company. The relief of injunction was sought for against respondent Nos. 2 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they had already filed a company petition complaining of oppression and mismanagement and that had also lodged the criminal complaint and it was still pending investigation. The cause of action for the suit was reconstitution of the board as attempted by the respondent on the basis of forged meetings and letter of resignation and the apprehended conduct of the respondents in attempting to create encumbrances over the properties. It could be noticed that although no declaration had been sought by the plaintiffs that the letter of resignation or the board resolutions were not valid, the claim for injunction itself had been made on such assumptions by treating the plaintiffs as director and shareholders of the company respectively. It could also be noticed that the claim for injunction itself would not have been possible without a finding as regards the status of the plaintiffs as continuing the directors and shareholders of the company. ( iii ) The second suit by father : 7. Yet another suit filed by the first plaintiff was a suit seeking for decree of declaration to the effect that a memorandum of family settlement alleged to have been executed by the plaintiff with ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enous attempts for disposing of the multiplex cinema premises, the 3rd petitioner had independently filed a suit before the Civil Judge (Junior Division), Ludhiana and the case is still pending. The plaint makes a reference to the fact that in the anticipatory bail filed by the 2nd respondent before the High Court, there had been a reference to the liberty given to the parties to approach the Civil Court for appropriate reliefs. The justification pleaded by the 2nd defendant had been that by virtue of the family settlement none of the plaintiffs had any right in the multiplex cinema theatre. ( vii ) Suit by father was to neutralize the strength of defence on the basis of family arrangement : 11. The declaration had been sought to take away the sting out of the 2nd respondent s armoury that the documents itself was not genuine and that the 2nd defendant could not rely on the same to explain away his conduct. The cause of action alleged the suit was the defence taken by the 2nd respondent in the company petition that had been filed earlier complaining of oppression and mismanagement. Again, it could be noted that the 1st petitioner had not sought for any declaration that he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppropriate adjudication before Civil Court. It could never have been intended that such observation for keeping the disputed documents in abeyance to revive all the rights asserted by parties to make way for yet another petition before the Company Law Board but that was how exactly it was conceived by the petitioners and they moved the Company Law Board with a petition for complaining of oppression and mismanagement. Congruence of issues to be resolved before Company. Law Board and civil courts : 14. The preliminary objections had been filed by the respondents on the ground that the order of the High Court itself provided for keeping in abeyance the disputed documents for a period of six months and the six months period having expired, there was no cause of action for the petitioners to continue the petitions. The Company Law Board examined the petition by making reference to filing of the fresh petition in C.P. No. 76 of 2005 as having been filed relying on the observations of the High Court keeping the documents in abeyance for six months. The Company Law Board adopted a strange reasoning that expiry of six months period and the dismissal of the SLP had the effect of tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner to continue as a director or to treat petitioner Nos. 2 and 3 as shareholders as finally established to examine the contentions whether there had been any oppression and mismanagement. Since the family arrangement itself refers to several items of properties and the respective allotment of the various items of properties to different parties, it would be only appropriate that the parties seek before the Civil Court before which cases are pending for interim direction relating to the management of the multiplex. The congruity of issues for consideration before the Civil Court and the Company Law Board are so compelling that the petitioners could not have sought for any relief before the Company Law Board without adjudication of the findings of fact before the Civil Court. 16. Learned counsel for the respondent cites several decisions in support of his contention that the dismissal of the petition was justified. I am merely detailing them for the sake of comprehensive treatment of the case by reference to several contentions raised by the respective counsel. He refers to a decision in 1. Caparo India Ltd. (U.K.) [Co. A. (SB) No. 24 of 2004], 2. Machino Plast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the company. The alleged wrongful allotment and adjustment of shares that constitute the core issue of oppression and mismanagement again are the issues that would fall for consideration only in the civil suit before which the relief of injunction is sought. The relief of injunction itself has a basis only for examining the claims of the petitioners that they could not be divested over the control of the company. While the parties would not normally be barred from approaching the Company Law Board from securing the reliefs complaining of oppression and mismanagement by the institution of a civil suit, such a bar would definitely operate in a case where finding in a Civil Court will have a direct bearing for consideration of the issues before the Company Law Board and such civil suits are already pending. It is not as if the Company Law Board cannot itself decide issues of forgery, fraud etc. but it is a case where civil suits have already been filed and it would be inappropriate to let the Company Law Board adjudicate on the same, although packaged to make it appear as though it is an open and shut case of oppression and mismanagement. Conclusion 18. The appeal is, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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