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
If the Company is a sick company,
is in the process of revival and rehabilitation or if some liquidation
proceedings are pending, then, the delay in the process is tolerated in most of
the cases as I have seen. But, where there are disputes in the Company or between
the groups when the Company is doing well and holds valuable properties, then,
obviously, there will be lot of urgency in getting the required relief from the
adjudicatory authority or forum. The disputes between the groups in the Company
can result in filing the winding-up petition before the Company Court on the
ground that there exist “just and equitable ground” to wind-up the Company or
it will result in filing of a petition before the Company Law Board under
section 397/398 of the Companies Act, 1956, seeking preventive measures
alleging oppression and mismanagement by the majority in the Company.
In many cases, the minority group
or the group of shareholders who approaches the Company Law Board under section
397/398 of the Companies Act, 1956, may not be able to visit the premises of
the Company even and may not be able to know as to how the day-to-day affairs
of the Company are being conducted. The situation will be different in listed
Public Companies in view of the shareholding pattern as per the SEBI (DIP)
regulations and also the requirements of listing agreement with the concerned
stock exchanges. Despite the disputes between or among groups in the Company, a
listed public company proceeds to function as if there exist no disputes
between or among the groups in the Company.
The disputes between the groups
in a Private Limited Company will be of serious in nature in many cases. The
Company might not have recorded all its properties in the Books or might not
have shown the true values of the properties of the Company in its books and it
happens practically. That is why, even when the financial position of a Company
is not good on paper, the group which approaches the Company Law Board will
press for some relief or orders as if they are approaching the Board to put an
end to the oppression and mis-management in the Company rather preferring to
wind-up the Company. Under the circumstances narrated above, the group can
press for winding-up of the Company on the ground that there exist “just and
reasonable ground” and even on the ground that the Company is financially sick.
But, it will not happen practically. As we see, practically, rather the
shareholders or the group of shareholders in the Company, an outsider gets a
Company wound-up and the liquidation proceeds.
In view of the reasons stated
above, a group or the shareholders who approaches the Board under section
397/398 of the Companies Act, 1956, seek urgent orders and they expose urgency
in the matter at each and every hearing. In fact, as everybody knows, only for
the speedy disposal of matters and to support the corporate word, a separate
adjudicatory forum like Company Law Board is constituted now and it is proposed
to constitute a National Company Law Tribunal and Appellate Tribunal as everybody
knows. Despite the constitution of Company Law Board, a company dispute and
especially the disposal of disputes under section 397/398 of the Companies Act,
1956 gets delayed. It can be attributed to the attitude of the shareholders or
the people involved in the case, the complications in deciding a company
dispute and also work load before the Company Law Board.
For example, if the Company Law
Board decides to hear the opposite party in an application or the petition
before passing orders, then, notice is to be served on the opposite party and
ensuring the service of notice will be the responsibility of the applicant or
the petitioner who approaches the Board seeking relief. The address available
for service of notice may not be correct in some cases and it leads to delay.
When the first notice and the second notice as the case may be, can not be
served on the opposite party, then, there is an alternative way of serving the
notice by giving a public notice in New Papers at the locality. This procedure
certainly consumes time and it is inevitable and based on logical footing.
While deciding matters under section 397/398 of the Companies Act, 1956, the
Company Law Board is conferred with enormous powers subject to express
limitations as stated under section 402 and as settled judicially and as such
Company Law Board can pass orders ex-parte or even without the presence of
opposite party if the situation demands. But, once the Company Law Board has
decided to listen the opposite party on a particular issue, then, the applicant
or the Petitioner is supposed comply with the procedure as contained in Company
Law Board Regulations and settled practice.
Despite the procedural relaxations
before the Company Law Board to a great extent, there are certain procedures
based on logical footing which can not be ignored.
Thus, it may appear to the
corporates or the petitioners who approach the Company Law Board seeking urgent
relief in matters like oppression and mismanagement that delay caused in
passing the orders as prayed for due to procedural requirements, but, there is
no option in many cases.
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
