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2015 (9) TMI 1587 - HC - Companies LawUnreasoned order of the Company Law Board - Siphoning off funds in favour of an entity controlled by those in control of the company - direction as to production of records or the substantive injunction - Held that:- The grievance of the petitioners before the CLB was that the company was fraudulently siphoning off funds in favour of an entity controlled by those in control of the company and to the prejudice of its genuine creditors, particularly the petitioners before the CLB in whose favour of the assets of the company remained charged. Such factual position was necessary to be pleaded and demonstrated for the purpose of obtaining an order of investigation. But it would be evident from, in particular, Section 247 of the Act that the ultimate purpose of the exercise is to obtain an order of investigation. It cannot be said that an adjudication of the company’s alleged liability to the petitioners before the CLB or the company’ s alleged liability to another creditor could have been undertaken by the CLB in course of the proceedings before it. If such is the case, the CLB did not have any authority to pass the order impugned, particularly to restrain the company from making any payment to a creditor. The constitutional scheme of things requires Courts or quasi judicial authorities to operate within the bounds of their authority. Merely because there is a complaint or some wrong-doing is alleged, is not enough for a Court or a quasi judicial authority to be excited to correct the percei ved wrong, however evil such wrong may be. It is incumbent on a Court or a quasi judicial authority to first discover the extent of its authority before embarking on an exercise of remedying the wrong complained of. If the system of Courts and quasi judicial authorit ies are to maintain order in society, they have to guard against their own indisciplin e to tread beyond the limits of their jurisdiction. The nature of the proceedings before the CLB did not permit it to issue the direction as to production of records or the substantive injunction. Neither was in aid of the ultimate reliefs that could be sought under Sections 237, 247 and 250 of the Act. The order impugned cannot stand both because it does not give reasons in support thereof and since it appe ars, ex facie, to be in excess of the authority available to the CLB in the context of the petition before it. Thus setting aside the order impugned dated August 10, 2015 and by requesting the CLB to take up the matter afresh at the ad interim stage upon notice to the parties and pass such order as may be warranted and within the bounds of the CLB’s authority
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