9911796707
TMI Blog2005 (7) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a petition under section 397/398 of the Companies Act (for short the 'Act') alleging oppression and mismanagement on the part of the respondents. That petition was filed in this Court as at that time jurisdiction to deal with such petitions was with the High Courts. With effect from 31st May 1991, the Act was amended conferring jurisdiction to entertain such petitions on the CLB. However, petitions already filed and pending with the High Courts were to be continued and disposed of by the High Courts. Therefore, this Court retained the jurisdiction over the petition filed by the petitioner in the year 1999, which was pending as on 31st May 1990. While this petition was still pending, the appellant moved application therein for withdrawal of that petition. Granting this liberty, petition was dismissed as withdrawn. 4. Thereafter, the appellant filed CP 5/97 before the CLB on 16th October 1996. The respondents challenged the maintainability of this petition by raising various preliminary objections, which can be summarised as under: i) the appellant had no locus standi to file the objection as he had agreed to sell the shares and, therefore, he was no more a member of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of process of law. 18. As far as limitation is concerned, no doubt provisions of Limitation Act are not applicable to proceedings before the CLB, yet if there is abnormal delay in bringing a matter before CLB, in this case over 6 years, we do take into consideration the limitation. May be the stand of the petitioner is that he was not keeping quite and that had agitated the matter well in time before the High Court. But having withdrawn a long pending matter from the High Court where in all probability, the matter could have ended in the near future, the petitioner cannot have the excuse that he had been vigilant in protecting his interest as a shareholder. We are coming to this conclusion only on comparing the various allegations in the earlier petition and this petition and finding that except for some marginal changes in language or figures, the allegations in the petition are practically the same as in the earlier petition and the present petition is nothing but repetition of the earlier petition. Further, on the arguments of Shri Chowdhary that the effects of the alleged acts of oppression and mismanagement committed earlier still continues, we are of the view that havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to forum shopping inasmuch as the appellant moved the CLB with due permission of the High Court. He also argued that the acts on oppression and mismanagement are always factual and cannot undergo a change on account of change in the forum. However, whatever new allegations were available, they were also incorporated in the fresh petition such as not giving the notice for the meeting of the Board of Directors and shareholders during the intervening period. Hence, the ground of forum shopping was completely erroneous for the dismissal of the petition. 7. He further submitted that the CLB did not appreciate the case in proper perspective while discussing the petition on the ground of delay and latches. While admitting that there was no limitation, the CLB failed to appreciate that the acts of oppression and mismanagement were continuing in the nature and were continuing up to the date of filing of the petition before the CLB. Further delay has been caused, if any, due to the mala fide and dishonest conduct of the respondent in delaying the proceeding before the Hon'ble Referee appointed by the Court and withdrawing on dishonest ground that the respondent had no confidence in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the company after the agreement was entered into thus exhibiting the lack of interest in the affairs of the company and therefore, even if their names continue in the Register of Members, they cannot be treated as members of the company. We are unable to accept this proposition. It is an admitted position that no consideration has been paid for the sale of shares and that the share certificates are still in possession of these petitioners. The position would have been different if only the registration is pending while all other pre acts like payment and receipt of consideration and handing over the necessary documents including the share certificate had taken place. In such a situation, we may have to examine about the locus standi of the petition even if his name continues in the Register of Members. In the present case, except an agreement itself, no further action in pursuant to the same has been taken. Under these circumstances, we have no hesitation to hold that the petitioner satisfies the condition of being a member of the company and since he owns more than 10% shares in the company, he has locus standi to present this petition. (ii) The CLB held that it had the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ale. While dismissing the application, this Court also observed that it is also held that in the absence of specific rules governing practice and procedure for hearing of this appeal, the same shall be guided by suitable and appropriate practice and procedure prescribed for hearing appeals in the High Court which shall be devised at the time of hearing of the appeal . The respondents herein filed appeal against the aforesaid order before the Division Bench which was also dismissed. At the time of hearing I was told that Special Leave Petition had been filed. Although leave was granted but there was no stay of the proceedings. Therefore, this appeal was heard. 11. It may also be mentioned that this appeal had earlier come up for hearing on 10th March 2003 when nobody appeared on behalf of the respondents. After hearing the counsel for the appellant order was passed remitting back the matter to the CLB. This order was however recalled on 6th August 2003 on application filed by the respondents giving reason for non-appearance on 10th March 2003. On 24th November 2004 again when the matter was called out for hearing nobody appeared for the respondents and order dated 10th March 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on before the CLB which was maintainable in view of the provisions of Section 68 of the Amendment Act is correct. Once his position is accepted, I am afraid that the findings of the CLB that the appellants indulged in forum shopping would not be a proper finding. The appellant, while seeking permission to withdraw the petition filed in this Court, had specifically expressed his intention to approach the CLB and on this ground the appellant wanted to withdraw the petition filed in the High Court. The petition was dismissed as withdrawn giving specific liberty to the appellants to move the CLB. The respondents had no objection also for withdrawal of the petition. If, in these circumstances, petition is filed before the CLB, same could not be dubbed as forum shopping . No doubt, on filing such a petition the respondents were within their rights to contest the same by raising any plea that was available to them under law. Therefore, they could have taken up the plea of limitation, non-maintainability of the petition on the ground that such a petition is not maintainable on the same cause of action after its withdrawal etc. However, by no stretch of imagination it could be dismissed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the High Court), the CLB clearly erred in straightaway dismissing the petition on the supposition that delay was inordinate. 15. When we discuss the question of delay and latches what is to be examined is as to whether the person approaching the Court was sleeping over his right and was negligent in pursuing the remedy the real test to determine delay is that the lapse of time is not attributable to any latches or negligence on the part of the petitioner. The test is not the physical running of time. Where the circumstances justifying the conduct exist, petition cannot be dismissed on the sole ground of latches. In the present case the CLB glossed over this important factor while considering this question. It was a case where the appellants had filed a petition in this Court in the year 1990 complaining of the acts of oppression and mismanagement. This petition was pending till 1996 when it was allowed to be withdrawn vide order dated 10th September 1996 with specific permission to the appellants to file the petition before the CLB. One has also to bear in mind the contentions of the appellants herein that in the said petition this Court had appointed a Referee on the joint ..... X X X X Extracts X X X X X X X X Extracts X X X X
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