TMI Blog1998 (5) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to respondent No. 1-company. It appears that before filing Company Petition No. 36 of 1997, the appellant had filed Company Petition No. 65 of 1996, under section 248 read with section 250 of the Companies Act. However, that petition was dismissed by the Company Law Board by its order, dated January 16, 1997 [since reported as Bakhtawar Construction Co. ( P. ) Ltd, v. Blossom Breweries Ltd. [1997] 88 Comp Cas 859 ; [1997] 2 Comp LJ 39 (CLB)]. In a writ petition filed before the Delhi High Court, that order of the Company Law Board was set aside and the Delhi High Court remanded the matter back for hearing before the Company Law Board. During the pendency of those proceedings, Company Petition No. 36 of 1997 was filed by the appellant under section 248 read with section 250 of the Companies Act, and, therefore, in view of the filing of the subsequent petition, the earlier petition filed under section 247 read with section 250 of the Companies Act which was Company Petition No. 65 of 1996 was withdrawn. According to the appellant, an investigation under section 248 in relation to respondent No. 1-company was necessary because there were gross irregularities in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel appearing for respondent No. 1 on the other hand submitted that a perusal of the provisions of section 247 shows that under that section, the Company Law Board has power to issue a direction to the Central Government to appoint an inspector for investigating the affairs of a company. In the submission of learned counsel, however, under section 248, the said investigation is to be held without appointment of an inspector. In the submission of learned counsel, even for making an order under section 248, the Company Law Board has to be satisfied that an investigation is necessary. In the submission of learned counsel, therefore, the field in which sections 247 and 248 operate is the same and as the appellant has given up the remedy under section 247, its application under section 248 was not tenable. Learned counsel further submitted that the remedy provided by section 248 is a remedy for a purpose, viz. , that the information that is collected, as a result of investigation under section 248 is to be used by the Company Law Board for making an order in any proceedings that may be pending before it. In the submission of learned counsel, the provisions of section 248 can be use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment that there is good reason so to do, it may appoint one or more inspectors to investigate and report on the membership of any company and other matters relating to the company, for the purpose of determining the true persons ( a )who are or have been financially interested in the success or failure, whether real or apparent, of the company ; or." Perusal of the provisions of section 247(1)( a ) makes it clear that power is vested under that provision to the Company Law Board to issue directions to the Central Government for appointment of an inspector for investigation into the affairs of the company and that investigation is to be ordered as regards the membership of the company or other matters relating to the company for the purpose of determining the true persons who are or have been financially interested in the success or failure whether real or apparent of the company or who are or have been able to control or materially influence the policy of the company whereas under section 248, the investigation can be ordered by the Central Government or by the Company Law Board to investigate ownership of any shares or debentures of a company. Thus, from a reading of these tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut anybody taking any proceedings before the Central Government invoking that power. It is further to be seen here that section 248 is the provision which provides a remedy and, therefore, the provisions are to be so read as to advance the remedy and not to deny it. In my opinion, the question that is considered by the Company Law Board, viz. , that the Company Law Board would not be in a position to use the information that is collected for any purpose, did not arise for consideration at that stage. In any case, in my opinion, there are various purposes for which the information can be used by the Company Law Board itself. A perusal of the various provisions of the Companies Act shows that the Company Law Board has been vested wide powers in controlling the affairs of the company incorporated under the Companies Act. One may read section 237(1)( b ) of the Act. Under that power, the Company Law Board can recommend to the Central Government for an order of investigation into the affairs of the company if as a result of investigation under section 248, it is revealed that the business of the company is being conducted with an intention to defraud its creditors, etc. In any case, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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