Ozg Sarfaesi / DRT Lawyer
Ahmedabad | Pune |
Kolkata | Bangalore | Delhi | Mumbai
VoIP Text / Phone
# 09811415837-61-72-84-92-94
Website: http://sarfaesi.ozg.in
Email: debt@liaisoning.com
In any litigation, the Court or
the authority adjudicating the matter can pass interim orders and the matter
will get finally disposed of. Once the matter is dispose of finally, there ends
the litigation and the final order can be executed. If there is a provision for
review having limited scope, the court can review its order. This is the procedure
in any case; be it a suit for recovery of money, be it a petition seeking
divorce, be it a petition for compensation under Motor Vehicle Law and be it a
Writ Petition. But, the Company Law Board entertaining a petition alleging
oppression and mismanagement under section 397/398 of the Companies Act, 1956
can entertain applications under section 402 even after passing the final
order. Because, the responsibility of the Company Law Board does not end with
giving a finding on the allegations after looking into evidence and after
hearing the submissions from both sides. The responsibility of the Company Law
Board under section 397/398 of the Companies Act, 1956 is to put an end to the
matters complained of and to regulate the future affairs of the Company. The
Company Court has a responsibility while entertaining a petition seeking
winding-up and the Court considers various issues and may want to listen to
various other interested parties too while passing an order. The Company Court
may try to rescue the Company rather winding-up the Company by technically
applying the principles governing the winding-up of the Company. On the same
principle, a great responsibility is cast upon the Company Law Board under
section 397/398 of the Companies Act, 1956 and every endeavor is normally made
to put end to the matters complained of and to regulate the affairs rather
suggesting to wind-up the Company. That is why, the proceedings before the
Board under section 397/398 of the Companies Act and the procedure followed is
interesting and complicated. Many aspects under section 397/398 of the
Companies Act, 1956 are interesting and also complicated.
If the Company Law Board is able
to convince the warring parties or groups towards amicable settlement in a
Petition under section 397/398 of the Companies Act, 1956 or if any group quits
from the Company by selling their shares, there can not be any further problem
in the Company and the Company will remain a going concern without any internal
disturbance. But, when the warring shareholding groups decides to stay in the
Company and when the Petitioners want remedial and regulatory orders and when
the Company Law Board decides to pass orders to regulate the affairs of the
Company, then, it is likely that the litigation continues even after final
disposal of the Company Petition under section 397/398 of the Companies Act,
1956. There may be problems as to how the final order is to be understood and
there may be problems in implementing the orders of the Board and as such,
there can be a need for the aggrieved shareholding group or the majority group
to approach the Company Law Board under section 402 of the Companies Act, 1956
even when the main petition under section 397/398 is finally disposed of.
There are two aspects in this regard
in my opinion. The Board itself can clearly aver its further jurisdiction in
the course of implementation of its final order and the Board may itself can
keep the matter pending though final orders were passed. There is also a chance
where the Board intends to pass detailed final order in a petition under
section 397/398 of the Companies Act, 1956 without expressing anything on its
further jurisdiction in the matter. In my opinion, in both the cases, the
Company Law Board can entertain applications under section 402 of the Companies
Act, 1956 in view of the object of section 397/398 of the Companies Act, 1956
and the complications involved in many corporate disputes among shareholding
groups.
Dealing with entertaining
applications under section 402 of the Companies Act, 1956 even when the main
petition under section 397/398 of the Companies Act, 1956 is disposed of, the
Hon’ble Bombay High Court, in Mohinidevi Choraria & another Vs. Apsara
Cinema Pvt. Ltd & others, 1988 (4) BCR 597, 1988 MAH.L.J 1004, was pleased
to observe as follows:
“The future conduct of Company's
affairs can be regulated by the order made under Section 397 or 398 of the Act
and not by an independent proceeding. This does not, however, mean that such an
order under section 402 cannot be made subsequent to the termination of the
petition under Section 397 or 398 of the Act. An order regulating the conduct
of the Company's affairs in future may be made under section 402 after the
disposal of the petition under Section 397 or 398 of the Act, provided, the
circumstances of the case show that by its order under sections 397 or 398, the
Court had retained seisin over the matter. Whether the Court has retained
seisin depends upon the facts and circumstances of each case. The cases of Richardson
and Cruddas Ltd., Life Insurance Corporation of India v. Haridas Mundhra and
others, A.I.R. 1959 Cal. 695, (Lord Krishna Sugar Mills Ltd., v. Smt. Abnash
Kaur), (1974)44 Company Cases 210 and (Bhagwati Prasad Bajoria and others v.
British India Corporation Ltd., Kanpur and others), A.I.R. 1964 All. 75,
illustrate cases where seisin may be inferred. In other words, the order under
Section 397 and or 398 by its very nature must leave the doors open for future
application under section 402 of the Act.”
The jurisdiction of Company Law
Board to entertain applications under section 402 of the Companies Act, 1956
even when the main petition under section 397/398 of the Companies Act, 1956
disposed of depends on the facts and circumstances of the case and especially
the final order passed by the Board.
Ozg Sarfaesi / DRT Lawyer
Ahmedabad | Pune |
Kolkata | Bangalore | Delhi | Mumbai
VoIP Text / Phone
# 09811415837-61-72-84-92-94
Website: http://sarfaesi.ozg.in
Email: debt@liaisoning.com
