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TMI Blog2016 (3) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... dher, J. For the Appellants : Mr Arun Kathpalia, Mr Sourabh Gupta Mr Puneet Yadav, Advs. versus For the Respondents : Mr Jayant T., Mr N. N. Sareen, Advs. for R- 1 3. Mr B.K.V. Subrahmanyam, Adv. for R-2. Mr Jayant Bhushan, Sr. Adv. with Ms Aankhi Ghosh Mr Kartik Prasad, Advs ORDER Rajiv Shakdher, J CO.A(SB) 4/2014 CA 207/2014 CO.A(SB) 69/2014 CA 3025/2014 3062/2015 1. The captioned appeals raise a common question of law, which is, whether appellants can be given inspection of the statutory records of the concerned companies in which they hold shares, without any fetter. In CO.A.(SB) 4/2014, the appellants impugn the order dated 13.01.2014, passed by the Company Law Board (in short the CLB), while in CO.A.(SB) 69/2014, the challenge is laid by the appellant to order dated 18.09.2014, once again, passed by the CLB. 2. Therefore, let me first articulate the facts, briefly, in each of the appeals. 2.1 Before, I proceed further, I must indicate that the three appellants in CO.A. (SB) 4/2014 and the appellant in CO.A.(SB) 69/2014, will be collectively referred to hereafter as appellants . CO.A.(SB) 4/2014 3. The appellants herein ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given to respondents to file their reply by order dated 3.9.2013. The said time is finally extended up to the next date of hearing. List on 28.10.2013 at 2.30 PM... 3.5 As is evident, the matter was to come up, in the normal course, on 28.10.2013. In the interregnum, though, respondents vide a letter dated 05.10.2013, informed the appellants, albeit, for the very first time that unless an undertaking was furnished that the information derived during the course of inspection shall be only used for prosecuting CP 106(ND)/2013 and, before no other forum, inspection, would not be given. 3.6 The appellants, being aggrieved, by this communication, on 09.10.2013, brought this aspect to the notice of the CLB via an additional affidavit. 3.7 After completion of pleadings in the application i.e. CA 51/C-I/2013, it was taken up for hearing on 13.01.2014, when, the impugned order, as noted above, was passed. Being aggrieved, the appellants filed the instant appeal. CO.A.(SB) 69/2014 4. Similarly, in the aforementioned appeal, the appellant filed a petition under Section 397, 398 and 402 of the 1956 Act, alleging oppression and mismanagement by the respondents. This petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the appeals, were addressed by Mr Arun Kathpalia, Advocate. On the other hand, on behalf of the respondents in CO.A.(SB) 69/2014 arguments were advanced by Mr Jayant Bhushan. However, the learned counsel, appearing for the respondents in CO.A(SB) 4/2014, adopted the submissions made by Mr Jayant Bhushan. 6. Briefly, the arguments of Mr Kathpalia were as follows: (i) That the appellants have an unfettered right to seek inspection of the records of the concerned companies. (ii) The CLB has no power to stipulate conditions for seeking inspection of the statutory records. (iii) The appellants could not have been impeded in the exercise of their legal rights based on information received during the course of inspection. (iv) The issues pertaining to oppression and illegal activity can only come to fore, once, inspection is granted. (v) The aspect with regard to conditions being put forth was not articulated by the respondents in the hearing held before the CLB on 24.09.2013 and 01.10.2013 qua CA No. 51/C-I/2013. The conditions were put forth by the respondents, for the first time, in their communication dated 05.10.2013. (vi) The CLB has no jurisdiction and/or pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LB. In other words, it was argued that the order dated 14.06.2012 passed by the CLB, in the aforementioned company petition, was no different to the orders impugned in the present appeals. 7.2 It was thus, the submission of the learned senior counsel that the right of the appellants to seek inspection of the statutory record of the concerned companies was not unfettered, especially, where there was a serious apprehension of injury and/or damage being caused to the concerned companies. In support of this submission, learned counsel sought to place reliance on a judgement of a Single Judge of this court in the matter of: D. Ross Porter vs Pioneer Seed Co. Ltd. (1989) ILR I Del. 150. 7.3 Learned counsel also placed reliance on the extract from the report of the Company Law Committee, 1952 contained in Chapter-XII, para 183, bearing the heading Inspection and Investigation , to buttress his submissions. 7.4 What was sought to be conveyed by the learned senior counsel, based on the extract of the aforementioned report, was that, the right to inspection could not be abused and, therefore, ought not to become a tool of harassment or oppression in the hands of those, who have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B, could pass appropriate directions to protect their interests. 9.1 To my mind, quite clearly, this stage can only arise, once information is derived and its intended use is known. The CLB while passing the impugned order has left no scope for having the information placed before it, and thereafter, issuing appropriate directions with regard to the use of information. The CLB, on the other hand, has simply injuncted the appellants from using the information derived save and except in regard to matters pending before it. The argument advanced on behalf of the appellants by Mr Kathpalia, that the CLB has no such jurisdiction to pass such a direction, which in effect restrains them from pursuing their legal rights, before a forum which is not subordinate to CLB, has not even been touched upon in the impugned order. 10. Therefore, in my view, the impugned orders will have to be set aside with the following directions: (i) The appellants will have the right to inspect the statutory records of FKIPL and KIPL. The information so derived will be placed before the CLB. The CLB will, thereafter, ascertain as to the manner and the forum before which the appellants wish to use the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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