ANUP AGARWALLA Vs. CASTRON MINING LIMITED

JUDGEMENT

(1.) This appeal has been filed by Anup Agarwalla and his group from the order dated 17th April, 2009 passed by the Company Law Board (CLB). Sections 397 and 398 proceedings were filed by the appellant before the CLB on grounds of oppression. An interim order was passed on 8.5.2007 restraining the respondents from using the name of the Company or acting on its behalf. On an application for vacating the interim order the proceedings before the CLB has been stayed till disposal of the Title Suit filed in Alipore Court. The interim order dated 8.5.2007 although extended it is stay of the CLB proceedings by which the appellants are aggrieved. As mere filing of the suit cannot be a ground for stay of the proceedings under Sections 397 and 398 of the Companies Act, therefore the CLB ought not to have stayed its proceedings, especially as there is no prospect of the suit filed being decided as till date no writ of summons has been served. Section 397 read with Section 402 of the Companies Act expands the jurisdiction of the CLB and therefore reliefs though not prayed can also be granted to the Company by CLB. The proceedings before the CLB is not in abuse of process of law. The stay granted is under Section 10 of the CPC which does not empower the Tribunal to stay its proceedings as Section 10 is not to apply to Tribunals.

(2.) Therefore the first question that arises for consideration is the competence of the CLB to stay its proceedings. It has been held in the order dated 17th April, 2009 that the proceedings before the CLB is maintainable though the same has been stayed till the disposal of the Title Suit filed before the Alipore Court. By virtue of Section 10 of the CPC trial of a suit can be stayed but as the requisites of Section 10 has not been satisfied therefore the proceedings before the CLB could not have been stayed and the reason for staying the proceedings is based on an incorrect conclusion. The identity must be complete as also the subject matter and the parties. In the Title Suit, there are 150 defendants, therefore for lack of identity of subject matter or parties as held in Adhish Chandra v. Hindusthan Gas, 1985 AIR(Cal) 154 there has been illegal exercise of powers as the CLB has indefinitely stayed the proceedings filed before it. A question of law has arisen and therefore this appeal under Section 10F of the 1956 Act is maintainable. When the conditions of Section 10 is not fulfilled, there can be no stay as Section 151 is not to apply as held in Manohar Lal v. Rai Bahadur Rao, 1962 AIR(SC) 527 and CLB could not have stayed its proceedings.

(3.) Reliance has also been placed on National Institute of Mental v. C Parameshwara, 2005 AIR(SC) 242 and 102 Co. Cases 292. In the 1956 Act there is no provision as Section 10 of the Code. The discretion has been exercised on the basis of the Division Bench Order of 2005 and the decision of Lopchu Tea and such exercise not being proper renders the order dated 17th April, 2009 perverse. Parallel Boards were held to be prejudicial to the interest of the Company and judicial prudence would warrant continuance of CLB proceedings as Sections 397 and 398 of the Companies Act are a complete Code. Regulation 44 of the 1991 Regulation in the absence of Section 10 ought to be read with Section 151 strictly. While exercising inherent powers Section 10 cannot be applied to CLB proceedings as Section 10 is to apply only to suits and not to Tribunal. In the order of the Division Bench in 2005, the proceedings under Section 397 has been accepted and it has not been held that the suit bars 397 proceedings. The filing of a suit cannot bar statutory rights and the only remedy available to the appellant is to file proceedings under Sections 397 and 398. With 150 defendants and no writ of summons filed the prospect of the Title Suit before Alipore Court being heard is bleak. As the CLB has no inherent jurisdiction to stay its own proceedings and analogous principles is to apply and in view of the question of law raised the order be set aside to the extent it stays the CLB proceedings. Regulation 44 is applicable to proceedings before CLB and therefore CLB could not have stayed its own proceedings by exercising power and in doing so the CLB has acted perversely. In fact in the Title Suit filed there is no order restraining the CLB proceedings, therefore the order dated 17th April, 2009, staying the CLB proceedings till disposal of the Title Suit, be set aside.