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TMI Blog2012 (7) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... lding, there was nothing to stop them from rectifying the situation. (viii) In any case, it is an admitted position that the Petitioners in C.P. No. 94 have already entered into agreement to sell their shareholding to other members, though they may still be continuing to hold the membership in the Register of Members and may be eligible to file a petition under Sections 397/398 of the Act in terms of Section 399 of the Act, such irregular filings, if irregular and illegal can be easily remedied by the majority shareholders holding 75% shares..... 2. At the outset, Mr. Abhinav Vashisht, learned senior counsel for appellant submitted that he did not wish to challenge the impugned order to the extent it dismissed the appellant company's petition, but he pressed the present appeal only on the ground that in the absence of finding of oppression and mis-management, the CLB could not have proceeded to direct the appellant to purchase/buy the shareholding of respondents No.1 to 6. In this connection, he relied upon a judgment of the Supreme Court in Incable Net (Andhra) Limited and Others vs. AP Aksh Broadband Limited and Others (2010) 6 SCC 719 wherein it has been observed as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, set aside or modified except after due notice to the party concerned and provided further that no such agreement shall be modified except after obtaining the consent of the party concerned; (f) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under section 397 or 398, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (g) any other matter for which in the opinion of the [Tribunal] it is just and equitable that provision should be made. 4. Supreme Court in Needle Industries ( India) Ltd. Ors. Vs. Needle Industries Newey (India) Holdings Ltd. Ors. AIR 1981 SC 1298 has held as under:- 172. Even though the company petition fails and the appeals succeed on the finding that the Holding Company has failed to make out a case of oppression, the court is not powerless to do substantial justice between the parties and place them, as nearly as it may, in the same position in which they would have been if the meeting of 2nd May were held in accordance with law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholders and two Directors and bitterness having crept in their personal relationship, the same, in our opinion, will have a direct impact in the matter of conduct of the affairs of the Company. 17. When there are two Directors, non-cooperation by one of them would result in a stalemate and in that view of the matter the Company Law Board and the High Court have rightly exercised their jurisdiction. xxx xxx xxx 22. The provisions of the Act vis- -vis the jurisdiction of the Company Law Board must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard-and-fast rule can be laid down. There cannot be any doubt whatsoever that the acts of omission and commission on the part of a member of a company should be qua the management of the company, but it is difficult to accept the proposition that the just and equitable test, which should be held to be applicable in a case for winding up of a company, is totally outside the purview of Section 397 of the Act. The function of a Company Law Board in such matters is first to see as to how the interest of the company vis- -vis its shareholders can be safeguarded. The Company Law Board mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als Limited and Others (2011) 10 SCC 466 held as under:- 150. No doubt, in Needle Industries case, this Court had observed that the behavior and conduct complained of must be held to be harsh and wrongful and in arriving at such a finding, the Court ought not to confine itself to a narrow legalistic view and allow technical pleas to defeat the beneficial provisions of the section, and that in certain situations the Court is not powerless to do substantial justice between the parties, the facts of this case do not merit such a course of action to be taken. Such an argument is not available to the Chatterjee Group, since the alleged breach of the agreements referred to hereinabove, was really in the nature of a breach between two members of the Company and not the Company itself. It is not on account of any act on the part of the Company that the shares transferred to CP(I)PL were not registered in the name of the Chatterjee Group. There was, therefore, no occasion for the CLB to make any order either under Section 397 or Section 402 of the aforesaid Act. If, as was observed in Radharamanan case, the CLB had given a finding that the acts of oppression had not been established, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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