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2004 (2) TMI 367

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..... ecord. 2. Shorn of the unnecessary details, the facts which gave rise to the litigation can be summarised as below: Basically this is a dispute between father-in-law and son-in-law. Father-in-law has died and his legal representatives have been brought on record. The petitioners 1 to 8 filed an application before the Company Law Board under sections 397 and 398 of the Companies Act seeking certain reliefs. According to them, they were holding 10.65% in total issued share capital of M/s. Ramadas Motor Transport Ltd. - 1st respondent. The main allegation, according to the order of the Company Law Board, was with respect to oppression and mismanagement in the affairs of the company which related to closure of parcel offices, sale of lorries and vehicles, fabrication of minutes books and documents, removal of petitioner No. 9 as Director of the Company, increase in share capital by way of right issue, diversion of funds to companies managed by former employees, fabrication of Board minutes and diversion of funds for personal gains by the respondents. On the basis of these allegations, the petitioners sought various reliefs. They prayed for supersession of the Board by declaring t .....

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..... putes not only in respect of two companies, but also in respect of four other group of companies in which the petitioners had some interest. The suggestion made by the Board was that the shares held by the petitioners in all these companies should be purchased by the respondents at a value to be determined by an independent chartered accountant. This suggestion was reiterated by the Board in a hearing held on 29-9-1997. However no progress was made as the respondents were not ready for compromise. An application for appointment of an administrator was heard on 28-11-1997 and an order was passed on 18-12-1997 rejecting the application. After the list of witnesses was filed, the Board decided to record the evidence at Chennai on 9-6-1998. At the request of the counsel for the petitioners summons to the witnesses were handed to him for service, but on the date fixed at Chennai no witness was produced and accordingly recording of evidence was closed. In a hearing held on 8-9-1998 the counsel for the petitioners informed that one of the petitioners has expired and as such legal heirs had to be substituted in his place. On this ground the hearing was adjourned till December, 1998 and fin .....

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..... e Board on the merits of the case, I am in full agreement with the end result in the case." He also imposed costs of Rs. 25,000 on the respondents in CA No. 5 of 1999. Now the judgment of the learned single Judge and the order of the Company Law Board have been assailed by Mr. Parasaran, learned senior counsel appearing for the respondents mainly on three grounds. In the first instance, he contended that the learned single Judge has gone into the questions of fact which was beyond the scope of the appeal, secondly he contended that if the oppression was not proved, section 402 of the Companies Act would not apply and thirdly he contended that there was no evidence on record to decide the issues between the parties. We will come to the third question first as to whether there was sufficient evidence on record for dealing with the appeal by the learned single Judge. We have already referred to the order passed by the Board. There was a statement made by the 9th petitioner, he was cross-examined, but his cross-examination remained inconclusive. There was no other oral evidence produced. A prayer had been made before the Board that the petitioners be allowed to produce evidence throu .....

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..... admissible or inadmissible evidence. In para 37 which was titled, "Whether the procedure followed by the Board can be sustained in law", the learned single Judge finds fault with the Board for not summoning the records. The learned single Judge says that C.A. No. 69 of 1994 was filed by the petitioners for summoning the records, but the Board did not pass an order. A similar prayer had been made in CA. No. 65 of 1996. These applications were not pressed at any stage and the learned single Judge noted : ". . . But the counsel might have felt that he will be in a position to convince the board without summoning the originals, he did not press for summoning the originals at that stage. That does not mean that the Board can act arbitrarily at its whims and fancies." (p. 389) The findings of the learned single Judge in this paragraph give rise to unrebuttable conclusions, (1) that the documents which were on record were not original documents and were not produced by anybody and (2) that the petitioners had not taken any steps to get their applications decided as admittedly they were not decided by the Board and no order has been passed on those applications. Rather than finding fa .....

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..... ents they being only the xerox copies, they are not admissible in evidence...." (p. 395) 9. Some of the documents were filed by the respondents before the board which were xerox copies. Considering the arguments of the parties and a judgment of this Court reported in Badrunnisa Begum v. Mohamooda Begum [2001] 3 ALD 11 the learned single Judge at the end of para 59 recorded : "Even assuming that the counsel did not object to the procedure, the respondents having filed xerox copies are bound to prove the authenticity of the documents filed by him in a manner known to law. If such a course is not adopted by the respondents, the Board is expected to eschew the documents filed by the respondents. But the Board acting on such inadmissible evidence dismissed the application." (p. 398) Then in para 67 the learned single Judge held : "In the case on hand, the Board under the guise of following its own procedure in adjudicating the dispute, passed the order under challenge without following any of the well known rules of procedure and the order is the result of non-application of mind to the issues in controversy with reference to the original records. Had the Board seen the or .....

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..... in his evidence on the acts complained by the petitioners and in fact the learned counsel appearing for respondents could not and did not elicit anything contrary to what the 9th petitioner has spoken in his chief examination and he stuck to his version except some minor discrepancies which did not matter much. Even the respondents counsel did not cross-examine the witness with reference to the documents. He being sufficiently a senior counsel, at least he would have cross-examined the witness with reference to documents filed by him or examined his witnesses in the manner in which the counsel for the petitioners examined his witness. That was also not done. Having pleaded before the board that recording oral evidence is a must he cannot now turn round and contend at this belated stage that as the petitioner failed to mark the documents, non-examination of witnesses by the respondents is not fatal to the case." (p. 407) 11. We have, in detail, referred to the conclusions and findings of the learned single Judge which leave no room to doubt that there was no evidence on the basis of which the Board could come to a conclusion that there was oppression. The learned counsel for t .....

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..... gment, which is reproduced below : "In the normal course, the matter has to go back to the Board for fresh disposal in accordance with law. If I adopt such a course, a dispute pending for over a decade will be in the Courts for another decade or two as there is every possibility of carrying the matter in appeal till all the forums that are involved in the adjudicatory process are exhausted by one or the other party." (p. 414) 13. We share the anxiety of the learned single Judge that the remand would give a new lease of life to the case for another decade or two, but, at the same time, we are conscious of the fact that for cutting the delays we cannot decide the matters on he basis of no evidence. Then the learned single Judge referred to many judgments and recorded that he was satisfied that even with the scanty evidence that was available on record, whether admissible or inadmissible, the matter could be adjudicated by him. With respects, we are not agreement with his view. It is settled law that the appellate Court can decide the matter provided there is sufficient evidence on record. Once the Court comes to the conclusion that there is no evidence on record, the decision w .....

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..... learly one arising out of its order. (2)When a question of law is raised before the Tribunal, but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is therefore one arising out of its order. (3)When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order. (4)When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that if may arise on the findings given by it." (p. 1645) 16. So the law is settled that the questions which can be raised in an appeal can be only four. Firstly when a question was raised before the Tribunal and dealt with by it, such question would be a question arising out of its order. Secondly when a question of law was raised before the Tribunal, but the Tribunal had failed to deal with it, that would also be a question arising out of its order and thirdly when a question was not raised before the Tribunal, but the Tribunal dealt with it, that would also be a question arising out of its order. In addition to it, the Supreme Court held that when a questi .....

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..... re not sure they were copies of the originals and an argument was made before the learned single Judge that a member of the Board was acquainted with the accounts and experts had approved the explanation given by the respondent-company. The learned single Judge dismissed the argument. In para 176 he stated : "Mr. Raghavan tries to impress upon the Court that the Board comprises of a member well acquainted with the accounts and other experts have approved the explanation given by the respondent-company. I can only observe that as this country is having such type of Accounts Officers the black money that is being generated in the industrial circles of this country is 3 to 4 fold than the real currency, which is expected to be in circulation as per the version of Reserve Bank of India. If the members of the Board properly analysed this issue in a manner known to law and not carried away by extraneous reasons, the result of the company petition would have been otherwise." (p. 457) In para 184 the learned single Judge noted : ". . . At least there is a prima facie evidence to show that there is large scale embezzlement of funds of the company and there is large scale evasion of .....

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