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TMI Blog2019 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. Aggrieved thereof the Appellants have preferred the instant appeal primarily on the ground that the Appellant No. 1, being a Producer Company is governed by provisions of Part IX-A of the Companies Act, 1956 (hereinafter referred to as the 'Act') only and it being a Body Corporate registered under the Act and not a Company, provisions of Section 241 and 242 of Companies Act, 2013 relating to oppression and mismanagement do not apply to the Appellant Company. 2. The issue raised in this appeal is of vital importance as Part IX-A of the Act governing Producer Companies incorporated under the Act as Corporate Bodies has been saved from repeal by the provisions of Section 465 of Companies Act, 2013 by specifically providing that the Producer Companies shall continue to be governed by the provisions of Part IX-A of the Act as if such Act had not been repealed until a special act is enacted for Producer Companies. Before proceeding to deal with the issue it would be appropriate to refer to the factual matrix of the matter in dispute being subject matter of the Company Petition to appreciate whether such dispute is or is not a management dispute within the ambit of grievance re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroduced by Act I of 2003 w.e.f. 6th February, 2003. 'Producer Company' means a body corporate having objects or activities specified in Section 581B and registered as 'Producer Company' under the Act. A cursory look at the provisions embodied in Part IX- A of the Act reveals that Part IX-A was designed to exclusively deal with the 'Producer Companies' having its object as production, harvesting, procurement and all incidental activities including handling and selling of the primary produce of the members as also the import of goods and services for their benefit besides the objects specified in Section 581B. Section 581C deals with formation and registration of 'Producer Company'. Provisions in this Chapter deal with the Memorandum of Producer Company, Articles of Association, enabling of Interstate Cooperative Societies to become Producer Companies, management of Producer Companies, share capital, membership rights, finance, accounts, loans, investments, penalties, amalgamation, merger, division to form new Producer Companies as also resolution of disputes. Wading through these provisions renders it manifestly clear that Chapter IX-A is a complete code as regards 'Producer Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any' and therefore should comply with the provisions of Companies Act, 2013 governing the 'Private Companies', apart from the provisions of Part IX-A of the Act, is fundamentally flawed and cannot be accepted. Same holds good as regards the contention put forth by Respondents in regard to formation and registration of a 'Producer Company', which is specifically dealt with under Part IX-A of the Act leaving no scope for Companies Act, 2013 to regulate the affairs of 'Producer Companies' which have specifically been not included within the ambit of Companies Act, 2013. The proviso clearly provides that the provisions of Part IX A of the Companies Act, 1956 shall be applicable mutatis mutandis to a Producer Company in a manner as if the Companies Act, 1956 has not been repealed until a special Act is enacted for Producer Companies. Respondents made an unsuccessful attempt to persuade us to accept their plea that the general provisions of the Companies Act, 2013 would apply to the 'Producer Companies' as well. This plea ostensibly rests upon the expression 'mutatis mutandis' used in Secti on 465 of the Companies Act, 2013. They relied upon the following observations of the Hon'ble Ape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to management of the company. Some act of omission or commission attributable to the management which jeopardises the legitimate interests of the company or its members/ shareholders necessarily involves breach of statutory obligations or violation of Articles of Association which relate to the management, business or affairs of the company. Every act or omission entailing consequences of oppression or mismanagement is directly and proximately connected with the business and affairs of the company. In other words it can be safely stated that there cannot be a case of operation and mismanagement without being connected with the affairs of the Company. Everything done by or in the name of the Company, whether in adherence to or in breach of the statutory or contractual obligations would necessarily be connected with the management and business of the company. Viewed thus, allegations of oppression and mismanagement in the Company Petition seeking certain reliefs as noticed elsewhere fall within the ambit of a dispute relating to management or business of the company. Such dispute being a management dispute is squarely covered by the dispute contemplated under Section 581ZO of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be adopted to render the provision serve the purpose for which it was enacted. It is not disputed that a 'Producer Company' being treated as a class apart for the benefit of producer community, special mechanism for redressal of grievances and resolution of disputes has been devised. Once it is held that mismanagement of the Company bears direct and proximate nexus with management of the Company and an activity involving mismanagement may be prejudicial to the interests of the Company or a member thereof, it would be absurd to hold that dispute contemplated under the aforesaid provision would exclude disputes regarding and relating to management out of the scope and ambit of a 'Dispute' under this section notwithstanding the fact that such dispute does not fall within the 'inclusive' provision embodied in the Explanation. Holding to the contrary would be doing violence to the statute and the object of legislation. There is yet another aspect which cannot be overlooked. Sub-section 2 specifically provides that if any question arises whether the dispute relates to formation, management or business of the Producer Company, the question shall be referred to the Arbitrator, whose decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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