TMI Blog1993 (12) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... the normal course of business. The company, in which petitioner No. 1 was a director, was also restrained from holding any board meetings till the date of the next hearing, without giving at least three days notice, to the first petitioner either by registered A. D. post or through courier service under receipt along with a copy of the agenda for the board meeting. The petitioners and respondents were also permitted to approach the Bench at any time with proper application and copies served on the other parties in the event of any need for intervention. In addition to that, it was also further directed in paragraph 2 of the order as follows : "All the applicants will serve copies of their applications on others before July 23, 1993, and these parties will file their replies before September 7, 1993, and counter-replies, if any, will be filed by October 7, 1993. As far as the main petition is concerned, the petition has already been served on all the parties, as per the affidavit of service filed by the petitioners. The respondents will file their replies on the main petition by September 7, 1993, and the petitioners will file their rejoinders, if any, by October 7, 1993. The cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10F of the Act would lie only on a question of law. The question as to whether the maintainability of the petition should be tried and decided as a preliminary issue or not is not a pure question of law, as the determination of the said question involves and calls for determination of several facts also. Therefore, the issue not being a pure issue of law, the appeal could not have been entertained under section 10F of the Act. Section 10F of the Act reads as follows : "10F. Appeals against the orders of the Company Law Board. Any person aggrieved by any decision or order of the Company Law Board may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order : Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days." Thus, an appeal under section 10F of the Act can be entertained only if the appeal involved a question of law. The maintainability of the petition by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the widow and daughter of the pre-deceased son of Ramnath Goenka. As such their one-third share would come to 3,093.33 shares and 1,666.67 of the preference shares with voting rights under section 87 of the Companies Act. As such, they have the right to file the petition under sections 397 and 398 of the Act. At this stage, it may be mentioned that there is also a suit, namely, C. S. No. 1246 of 1992, filed on the original side of this court for a declaration that the shares held by the late Shri Ramnath Goenka were, in fact, the shares of the plaintiff. There is also another suit filed by the first-appellant being C. S. No. 1123 of 1992, on the original side of this court for various reliefs pertaining to the shares held by the late Shri Ramnath Goenka. Therefore, it is contended by learned counsel that the issue relating to the maintainability cannot be held to be a pure question of law, as it depends upon the determination of the aforesaid several facts. As such, it could not have been decided as a preliminary issue. Hence, the Company Law Board was justified in deciding that the said issue will also be decided along with the other issues. From the respective case of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes Act. It was held that neither the jurisdiction of the High Court under article 226 of the Constitution nor the jurisdiction of the Supreme Court under article 136 may be allowed to be exploited by those who can well afford to wait, to the detriment of those who can ill-afford to wait, by dragging the latter from court to court for adjudication of peripheral issues, avoiding decision on issues more vital to them. Tribunals and courts, which are requested to decide preliminary questions must, therefore, ask themselves whether such threshold part-adjudication is really necessary and whether it will not lead to other woeful consequences. After all, tribunals like Industrial Tribunals are constituted to decide expeditiously special kinds of disputes and their jurisdiction to so decide is not to be stifled by all manner of preliminary objections and journeyings up and down. It is also further observed that the nature of the jurisdiction under article 226 is supervisory and not appellate while that under article 136 is primarily supervisory, but the court may exercise all necessary appellate powers to do substantial justice. Thus, in the aforesaid decision also, it has been pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pleadings run into several hundreds of pages and several issues arise, it would not be just and proper to subject the parties to the trial of the entire case for the purpose of deciding the issue of maintainability. If in such cases, the maintainability issue is decided as a preliminary issue, it would be convenient for both the parties because in the event it is held that the petition is not maintainable, several other issues involved in the case need not be tried and the evidence need not be adduced. In a case like this, there will be a large volume of evidence which will have to be adduced and several issues are to be raised. Therefore, we are of the view that the proposition laid down in Saurashtra Cement and Chemicals Industries Ltd. v. Esma Industries Pvt. Ltd. [1990] 69 Comp Cas 372 (SC), cannot at all be applied. As far as the decision of the Supreme Court is concerned, we have pointed out that the said decision does not-state in categoric terms that it is not permissible to try an issue relating to the maintainability as a preliminary issue. Hence, we are of the view that the direction issued by the learned single judge that the issue as to the maintainability should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions filed by them. We find it very difficult to agree with the contention of learned counsel for the respondents. It is not a case in which it can be held that the Company Law Board has no jurisdiction to entertain the petition under sections 397 and 398 of the Act. No doubt the persons who have invoked the jurisdiction, whether they are entitled to the relief under section 397 or 398 of the Act or are entitled to maintain such a petition, are the questions which are required to be decided by the Company Law Board, but this does not take away the jurisdiction, nor does it affect the jurisdiction of the Company Law Board to pass such interim orders or to entertain such interim applications as are necessary in the interests of the subject-matter of the proceedings and also of the parties. We may point out at this stage itself the object with which interim orders are passed. In Kihoto Hollohan v. Zachillhu [1992] Supp. 2 SCC 651, it has been held thus (at page 717) : "The purpose of interlocutory orders is to preserve in status quo the rights of the parties, so that the proceedings do not become infructuous by any unilateral overt acts by one side or the other during its pende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company Law Board from entertaining and considering the interim applications requires to be interfered with. We also make it clear that we should not be understood as having laid down that the Company Law Board should entertain an interim application and pass an interim order. It is open to it to consider any such application that is filed whether the relief sought for requires to be granted in the facts and circumstances of the case as it is a matter for decision by the Board. We should not be taken to have interfered with the discretion which the Company Law Board enjoys in the matter of passing the interim orders. Several decisions were cited at the Bar, namely, Ved Prakash v. Iron Traders, AIR 1960 Punj 427; [1961] 31 Comp Cas 122 , Raza Textiles Limited v. ITO, AIR 1973 SC 1362 ; [1973] 87 ITR 539 ; Cotton Corporation of India Limited v. United Industrial Bank, AIR 1983 SC 1272 ; [1984] 55 Comp Cas 423 and World Wide Agencies Private Limited v. Margaret T. Desor [1990] 67 Comp Cas 607 ; [1990] 1 SCC 536. We have not referred to those decisions as they relate to the merits of the case, with which we are not concerned at this stage. Accordingly, the poin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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