Corporate Laws

Companies Act, 1956

— Ss. 10-F, 10-E, 483, 397 & 398 — Appeal under S. 10-F filed before High Court against order of CLB in matter under Ss. 397 and 398 — Further appeal or Letters Patent Appeal against order passed in — Maintainability of — Held, not maintainable as under the 1956 Act no further appeal has been provided against such order of High Court — Changes brought about in the said Act vide amendment thereof w.e.f. 31-5-1991, taken note of in this regard — Further held, Letters Patent power of High Court in matter where Single Judge hears an appeal from original order (as in the present case) has been taken away by amendment of S. 100-A CPC w.e.f. 1-7-2002, (2006) 7 SCC 613-A

High Courts

Letters Patent appeal

— Maintainability of — Power of Letters Patent in matter where Single Judge hears an appeal from original order, held, has been taken away by amendment of S. 100-A CPC by Act 22 of 2002 w.e.f. 1-7-2002, (2006) 7 SCC 613-B

Corporate Laws

Companies Act, 1956

— Ss. 397 & 398 — Power of Company Law Board (CLB) under — Nature of — Held, CLB exercises quasi-judicial power as original authority — It may not be a court but it has all the trapping of a court, (2006) 7 SCC 613-C

Practice and Procedure

Appeal

— Vested right of — Clarified that such right can be taken away by a subsequent enactment, either expressly or by necessary intendment, (2006) 7 SCC 613-D

Corporate Laws

Companies Act, 1956

— Ss. 397 & 398 — Oppression and mismanagement — Relief in case of — Order for winding up, held, is not required to be passed in every such case — Said order is an option with Tribunal as Tribunal can pass winding-up order if it is just and equitable or can pass such order as it thinks fit — Acts which would amount to oppression to the members or mismanagement or material alteration in the control of the company or prejudice to the interest of the company would depend upon the facts of each case — K and B (NRI doctors) floating a hospital company along with S, younger brother of K — K, the main promoter, holding 46.378% shares — He also contributing substantial amounts for importing hospital equipments on condition that shares of the Company would be allotted to him for the value of the said equipments — Despite RBI approval, Company refusing to allot said shares to K and filing case after case at the instance of S to challenge that approval so that K may be reduced to minority and the management and control of the Company may come to S — Company also passing a resolution to raise funds and issue shares on the basis of which S making further attempt to reduce K to minority by purchasing majority of shareholding — Allegation as to fabrication of said resolution — No proper notices of meetings served on K and B — Meetings held in their absence — K ousted from Managing Directorship and thereafter removed B from Directorship of Company — Most of the shares allotted to subsidiary companies of S — Held, the said acts of the Company and S clearly constituted oppression of member under S. 397 and amounted to bringing about material change in the management of the Company under S. 398 — However, order for winding up of Company declined to be passed as it would not be in the interest of the Company or the parties — Removal of K and B from Directorship, outstripping of K from Managing Directorship, allotment of shares to companies of S and others and all resolutions adversely affecting K and B, set aside — Fresh meeting to be convened with K as Managing Director to decide matters in accordance with law, (2006) 7 SCC 613-E

Corporate Laws

Companies Act, 1956

— Ss. 286, 53, 171 & 289 — Notice of meetings to Directors — Board meetings convened without proper service of notice on appellant Directors — Notices sent to NRI appellants at very short interval of time and that too at their local addresses in India knowing fully well that they were living in USA — Held, said meetings could not be said to be valid — Decisions taken therein set aside, (2006) 7 SCC 613-F

Corporate Laws

Companies Act, 1956

— Ss. 397 & 398 — Comparison made between, (2006) 7 SCC 613-G

Corporate Laws

Company Law

— Directors/Board of Directors — Position and duty of Directors — Held, they are in a position of trust — They must confirm to the probity and their conduct should be above suspicion, (2006) 7 SCC 613-H

Interpretation of Statutes

External aids

— Letters — Letter of Law Minister, held, could not be read to interpret the relevant provisions where intendment of legislature was very clear from the words used therein — Said intendment had to be given its natural meaning and could not be subject to any statement made by the Law Minister in any communication, (2006) 7 SCC 613-I