IN RE: CASTRON MINING LIMITED Vs. STATE

JUDGEMENT

(1.) THIS appeal under Section 10F of the Companies Act, 1956 has been filed from order dated 17th April, 2009 passed by the Company Law Board. The case of the appellant is that C.P. 50 of 2007 was filed under Sections 397 and 398 of the 1956 Act before the Company Law Board, New Delhi (CLB) on grounds of oppression. An ex parte interim order was passed on 8.5.2007. C.A. 251 of 2009 was filed for vacating of the said interim order and for dismissal of C.P. 50 of 2007. As no interim stay was granted three appeals under Section 10F of the Companies Act, 1956 were filed from order dated 13th July, 2007 and by order dated 16.10.2007 the Company Law Board was directed to first decide the question of maintainability and then proceed to decide the matter on merit. The reason for seeking dismissal of the proceedings before the CLB was that a suit had been filed in Alipore Court being T.S. 37 of 2005 on an identical subject matter and vacating of the order dated 8.5.2007 was also sought as the order was ex parte and contrary to the order passed in the suit and without any reason. The maintainability issue was decided in favour of the appellant and the CLB proceedings stayed till disposal of the civil suit, by order dated 17th April, 2009 and on the basis of the findings on the maintainability issue the CLB could not have proceeded to continue the order dated 8.5.2007 in view of Order 14(2)(2) of the Code of Civil Procedure, as it was not empowered to grant the final relief till disposal of the suit, therefore the continuance of the order dated 8.5.2007 is erroneous. In the revisional proceedings before the Division Bench one of the issues which arose for consideration was who is to represent the company and by the order of the Division Bench the said issue is to be decided before framing of issues and after filing of written statement. The CLB by its order dated 17.4.2009 has stayed the proceedings before it but has continued the interim order dated 8.5.2007 in the suit before the Alipore Court which it is not empowered to do. The application under Order 1 Rule 8 of the Code of Civil Procedure was dismissed on 18.5.2007. There has also been suppression of the proceedings before the Supreme Court and as suppression unravels all, the order dated 17.4.2009 be set aside. For the said proposition reliance is placed on : 2004 (1) CHN 448, : 1994 (1) SCC 1, : 2007 (8) SCC 449,, 2005 (4) SCC 405, 2005 (6) SCC 149, : 2005 (7) SCC 605 and : 2008 (8) SCC 511.

(2.) BY virtue of Rules 6 and 9 of the Company Court Rules the CPC is made applicable to proceedings filed under Sections 397 and 398 of the Companies Act, 1956. To avail of equitable remedy a party must come to Court with clean hands as held in : AIR 1981 SC 1298.

(3.) IN opposing the said appeal counsel for Anup Agarwalla submits that from order dated 17.4.2009 two appeals have been filed one by Mahendra Kumar Agarwalla Group and the other by the Anup Agarwalla Group. The appellant herein is aggrieved by the continuance of the order dated 8.5.2007 while the Anup Agarwalla group is aggrieved by the stay of CLB proceedings. Therefore what needs examination is whether the discretion exercised by the CLB in staying the CLB proceedings is proper. The appellant has contended that by staying the CLB proceedings the interim order ought not to have been continued. Additional grounds vis a vis suppression of SLP and pendency of SLP have been canvassed which is not in the vacating application. In the SLP filed there has been no substitution in place of P.K. Agarwalla who died therefore the SLP filed by him was dismissed and the interim application is pending as an appeal. Vacating of interim order dated 8.5.2007 is not a question of law therefore it is not to be decided. In Order 39 Rule 4 the word used is 'shall' and therefore vacating is discretionary. The Company was controlled by the Agarwalla family and under the scheme of arrangement the Company was to go to P.K. Agarwalla. The scheme which was sanctioned was signed by the MKA Group. In the Title Suit filed before the Alipore Court an application was filed under Order 7 Rule 11 which was initially allowed and in appeal the order set aside. Three Special Leave Petitions were filed, the SLP filed by P.K. Agarwalla and his heirs was dismissed. Two SLPs are pending as civil appeals. In 2005 the suit was filed in the Alipore Court but no writ of summons has been served on all the defendants and the suit is not proceeding. The application filed under Order 1 Rule 8 of the Code of Civil Procedure was dismissed. The respondents are not interested in pursuing the suit. Therefore in these facts the proceedings before the CLB ought not to have been stayed. The vacating application was disposed of by order dated 17th April, 2009 and the ground for vacating is suppression.