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TMI Blog2010 (2) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... the preliminary ground of withdrawal of Title Suit No. 24 of 1993, without leave to file a fresh suit. 3. The appellants who claim to be l/3rd shareholders of the respondent-company, Titan Engineering Co. (P.) Ltd., which is hereinafter referred to as the company, filed Company Petition No. 395 of 1993 before the CLB on 30th April, 1993 under sections 397, 398, 399, 402 and 403 of the Act against the respondents, alleging acts of oppression and mismanagement of the affairs of the company. 4. While the said application being CP No. 395 of 1993 was pending, the appellants filed the connected applications being CA No. 160 of 1993, CA No. 134 of 1996, and CA No. 237 of 1997, wherein further allegations were made. 5. By the order impugned, the CLB dismissed the CP No. 395 of 1993 as not maintainable holding that Title Suit No. 24 of 1993, filed on 8th February, 1993 and withdrawn on 30th April, 1993, was a comprehensive suit covering most of the allegations that had been made in CP No. 395 of 1993. 6. The relevant part of the order under appeal is extracted herein below for convenience : 'We have gone through the plaint in TS No. 24 of 1993. This is a comprehensive suit covering mos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that Title Suit No. 24 of 1993 filed by the appellants earlier, had been allowed to be withdrawn without leave to initiate a fresh suit on the same cause of action. 9. The appellant No. 1, appearing in person, submitted that the order of the CLB was patently unsustainable. The appellant No. 1 pointed out, and rightly, that the subject-matter of Title Suit No. 24 of 1993 and the subject-matter of the pending applications before the CLB were not entirely the same. 10. The appellant No. 1 argued that the cause of action in Title Suit No. 24 of 1993 was the lack of quorum for holding the Board meeting on 15th January, 1993. This was the only issue in the title suit. However, in the Company Petition No. 35 of 1993 filed on 30th April, 1993, the appellant No. 1 complained of various acts of oppression. 11. The appellant No. 1 argued that in the application before the CLB the appellants had made distinct allegations of submission of forged and false sales tax declaration forms. The CLB, thus, erred in holding that Title Suit No. 24 of 1993 was a comprehensive suit which covered most of the allegations on the basis of which Company Petition No. 35 of 1993 had been filed. 12. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and affairs of the company. These reliefs were neither sought nor could be granted in Title Suit No. 24 of 1993. 18. The bar of order 11, rule 2 of the CPC read with order 23, rule 1, of the CPC would be attracted in case of a subsequent suit, only if the court in which the earlier suit had been filed, had jurisdiction to grant reliefs claimed in the subsequent suit. 19. The CLB has not considered the issue of whether the reliefs claimed by the petitioner in the company petition before the CLB, could at all have been granted in Title Suit No. 24 of 1993, which was withdrawn on 30th April, 1993, without leave to institute a fresh suit in respect of the same cause of action. 20. Lengthy arguments have been advanced by the appellant No. 1 on the-merits of company petition being CP No. 35 of 1993. The appellant No. 1 also argued that the workers of the company had no right to intervene, or participate in the management of the company and as such were strangers to the company petition being CP No. 35 of 1993. 21. It is not necessary for this court to go into the merits of the company petition and the connected applications before the CLB. What is in issue in this appeal is the legalit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat an appeal under section 10F of the Act could only be entertained when there was a substantial question of law involved. The factual allegations made by the respondents against the appellant No. 1 are not material for adjudication of the issue involved in this appeal. 28. The question of whether the bar of order 23, rule 1, of the CPC is attracted in case of a company petition filed in the CLB, inter alia, under sections 397, 398, 399, 402 and 403 of the Act, after an earlier suit in a civil court had been withdrawn without liberty to file a fresh suit in respect of the same cause of action, is a substantial question of law. The question is answered in the negative for the reasons given in this judgment. 29. Mr. Banerjee submitted that the appellant No. 1 had been taking recourse to initiation of multiple proceedings against the respondents and on failing to obtain an interim order from the CLB, the appellant No. 1 filed Title Suit No. 70 of 1994. The filing of Title Suit No. 70 of 1994 and/or the reasons therefor are not material to the issue involved in this appeal. The company applications were not dismissed on the ground of initiation of Title Suit No. 70 of 1994. 30. Mr. Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmissible to pick out a word or a sentence from the judgment of the Supreme Court divorced from the context or the question under consideration and treat the same to be complete law decided by the Supreme Court. It is difficult to conceive how this judgment can be of any assistance to the respondents. 37. In Apeejay P. Ltd. v. Raghavachari Narasingham reported in [1989] 2 CLJ 220, cited by Mr. Banerjee, this Court stayed all proceedings in Suit No. 747 of 1988 till final disposal of Criminal Complaint Case No. 1233 of 1988 on the ground that participation in trial of suit before disposal of the criminal case tantamounted to compelling the Defendant to disclose his defence and entailed violation of Article 20(3) of the Constitution. The aforesaid judgment is also of no relevance to the issues involved in this appeal. 38. There is no finding of the CLB, that proceeding with the company petition would prejudice the defence of the respondents in the criminal proceeding. The company applications have not been dismissed on that ground. 39. An application under section 397/398 of the Act is not a suit, as rightly argued by the appellant. Moreover, proceedings under sections 397 and 398 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Supreme Court discussed the acts which constitute acts of oppression and mismanagement. The proposition of law laid down in the aforesaid judgment is well-settled. 45. In Shanti Prasad Jain v. Kalinga Tubes Ltd. reported in: [1965] 35 Comp Cas 351 : AIR 1965 SC 1535, the Supreme Court held that lack of confidence between majority shareholders and minority shareholders would not come within Section 397 unless it could be demonstrated that the lack of confidence sprang from a desire to oppress the minority. 46. There can be no dispute over the proposition of law laid down in Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad reported in: [2005] 123 Comp Cas 566 : AIR 2005 SC 809. Whether the company petition is maintainable in law, and whether the acts alleged therein amount to oppression or mismanagement, are issues for the Company Law Board to adjudicate. 47. In Bengal Luxmi Cotton Mills Ltd., In re reported in: [1965] 35 Comp Cas 187 : [1965] 69 CWN 137, this Court held that the court ought not to exercise the extraordinary and summary jurisdiction under sections 397 and 398 when an alternative remedy available had already been persued. The court further held that an order unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 397/398 of the Act was not a suit. 53. The CLB should have appreciated that the civil court did not decline leave to the appellants to initiate company proceedings, and more so, when the CLB itself took note of and quoted the following submission of the appellants in their pleadings in the civil court : It is, therefore, and for ends of justice necessary that your petitioners be granted leave to withdraw the instant suit and filed proceedings before the CLB involving marginally the subject-matter of the suit. 54. The civil court consciously did not decline leave to file a company petition under section 397/398 of the Act, which the civil court could not have done, but declined leave to file a fresh suit in respect of the same cause of action, which the civil court had power to do. There was, thus, no reason to hold that there would be any breach of legal propriety in considering the company petition on merits. 55. In any case, as observed above, the subject-matter of the company petition was not directly or substantially in issue in Title Suit No. 24 of 1993. The reliefs claimed in the company applications, inter alia, under sections 397 and 398, were entirely differen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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