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2010 (9) TMI 227 - HC - Companies LawWhether the Company Law Board passed an order in favour of a third party and against a minority shareholder approaching the board under section 397/398 of the Companies Act, 1956 ? Whether the Company Law Board passed an interim order against the petitioner under section 397/398 of the Companies Act, 1956, without looking at the prima facie case and the evidence adduced ? Whether the Company Law Board justified an order affecting the rights of the petitioner under section 397/398 of the Companies Act, 1956, on the sole ground that the company has other properties too ? Whether the Company Law Board passed an interim order which amounts to giving a determination on the main company petition itself in a proceeding under section 397/398 of the Companies Act, 1956 ? Whether the Company Law Board confined its role to look at the alleged interests of the company alone when apparently larger public interest is involved by allowing the application through the impugned order ? Held that:- When the appellant has questioned the sale of company assets to respondents Nos. 6 and 7 herein, viz., "to declare that the impugned sale of the land belonging to the company which is an extent of 6.63 acres made under the deed indentures dated December 9, 2005 and December 20, 2003 and sale deed dated July 21, 2007, to respondents Nos. 5 and 6 are illegal, non est and void in law", the first respondent cannot be allowed to proceed with the joint development agreement. In the event of setting aside the sale in favour of respondents Nos. 6 and 7, the joint development agreement entered with the first respondent will be non est. It is not for the first respondent to state that the appellant and the other respondents could work out their remedies out of 36 per cent. of the shares of the company over the constructed area. As stated earlier, even assuming that the appellant can work out his remedy out of 36 per cent. shares of the company over the constructed area, in the event of setting aside the sale deed executed in favour of respondents Nos. 6 and 7, the prospective purchasers of the apartments from the respondents will be made to suffer. The first respondent is not going to proceed with the construction without collecting money from the prospective purchasers of the apartments. Thus, the public money will be involved in the project. Even assuming that the appellant has no right over the assets of the company being the shareholder, he can very well question the sale made by the directors of the company if he is able to establish that the sale is detrimental to the company and its shareholders. Hence, the contention of learned counsel appearing for respondents Nos. 2 to 7 that the appellant being a shareholder, has no right over the affairs of the company and he cannot question the joint development agreement entered into with the first respondent and cannot prevent the first respondent from proceeding with the construction as per the joint development agreement cannot be accepted.
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