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2013 (11) TMI 1295 - HC - Companies LawValidity of order passed - Notice under Section 400 of the Act was not served by the CLB on the Appellant - Whether the Order passed by the CLB, Mumbai Bench, dated 28th March, 2013 is nonest, ex facie not valid and the entire proceedings in Company Petition No. 62 of 2009, stand vitiated since the notice of the Application/Petition made by the Original Petitioner to the CLB under Sections 397 and 398 of the Act was not served on the Central Government by the CLB itself under the provisions of Section 400 of the Act - Held that:- Advocates for the Respondent No.2 (Original petitioner) had served a copy of the Petition on the Regional Director, Western Region on 18th June, 2009 and has also put the Regional Director, Western Region to notice of the fact that the hearing of the said Petition would take place before the CLB on 22nd June, 2009, and the Regional Director was requested to remain present at the said hearing. In fact, the Petition was served on the Central Government through the Regional Director, Western Region, after the Petition was numbered on the next day of its filing and therefore the question of such service being treated as a preacceptance /admission or prehearing notice does not arise. Object of Section 400 of the Act as well as Regulation 14 (3) is to give notice to the Central Government about the Petition having been filed under Sections 397 and 398 of the Act before the CLB, to enable the Central Government to make its representations if any before the CLB, which the CLB would take into consideration before passing its final order on the Petition. However, the Central Government through the Regional Director, Western Region did not choose to appear before the CLB on 22nd June, 2009 or on any other date of hearing which took place on about 30 occasions over a span of four years. Even if it is held that the service of the Petition on the Central Government under CLB Regulations, 1991 does not amount to strict compliance of Section 400 of the Act, there is a substantial compliance of Section 400 of the Act in this case by reason of the notice given by the Advocates for the Petitioner to the Central Government. The provisions of Section 400 of the Act are not mandatory in so far as the identity of the person or body giving the notice. What is mandatory is that notice of every application under Sections 397/398 of the Act has to be given to the Central Government. The form of the notice, the manner of its service and the identity of the server are not of mandatory nature but are directory. Shareholders holding almost 100% of the shareholding in the Respondent No. 3 Company have already represented themselves before the CLB. All of them are also represented in the present Appeal and as recorded hereinabove all of them including the Auditors SHARP & TANNAN have submitted before this Court that without prejudice to the contentions raised by them in their respective Appeals they do not support the contention of the Appellant in the present Appeal viz. that the impugned order of the CLB be quashed and set aside because the notice required to be served on the Central Government under Section 400 of the Act was not served by the CLB itself, though the Petition was served on the Central Government by the Original Petitioner and in fact the Central Government was also informed of the hearing of the Petition. In fact, in the instant case the Appellant has in the Memo of Appeal or in its written submissions not even mentioned what representation it was desirous of making before the CLB before the final orders were passed and how the impugned order passed is against public interest and/or the minority shareholders - Therefore, question of quashing and setting aside the Order dated 28th March, 2013 passed by the CLB does not arise - Decided against appellant. Jurisdiction of CLB - Removal of auditors appointed in view of the provisions contained in Section 224(7) - Whether CLB has power or jurisdiction to remove an auditor duly appointed by the Respondent No. 3 in view of the provisions contained in Section 224 (7) of the Act - Held that:- An examination of the Sections clearly brings out two aspects, first, the very wide nature of the power conferred on the court, and, secondly, the object that is sought to be achieved by the exercise of such power with the result that the only limitation that could be impliedly read on the exercise of the power would be that nexus must exist between the order that may be passed there under and the object sought to be achieved by these Sections and beyond this limitation which arises by necessary implication it is difficult to read any other restriction or limitation on the exercise of the court's power. Court's powers under Section 398 read with Section 402 should not be read as subject to the other provisions of the Act dealing with normal corporate management or that the court's orders and directions issued thereunder must not be in consonance with the other provisions of the Act - Therefore, objection of the Appellant based on Section 224 (7) of the Act is completely misconceived and without substance - Decided against appellant.
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