TMI Blog2001 (8) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... akhs to the company. The receipt of the sum of Rs. 25 lakhs was never disputed. Admittedly, only a sum of Rs. 1 lakh had been repaid. 2. In order to avoid the affairs of the company being investigated and to avoid the likelihood of the allegation that monies had been diverted from the company to other companies under the control of those who were running this company being proved, and to prevent any fraudulent activities that might have been carried on by those in charge being brought out as a result of such investigation, the appellants through their counsel made an offer to purchase the shares which the company had allotted to the applicants before the CLB, at par. For considering that offer, the matter was thereafter adjourned by the CLB to enable the applicants to consider that offer. On 22-1-1999, the applicant through its counsel stated that his client was ready to sell the shares at par value to the respondents in the application before the CLB, viz., the appellants herein or their nominees. 3. On that day the CLB proceeded to make an order as under : In this petition, filed under section 235, the chartered accountant for the company made a statement on 7-12-1998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the CLB would have otherwise made on the prayer for the investigation into the affairs of the company. By persuading the CLB to make the order, the company avoided the appointment of any inspectors to investigate into its affairs. 7. Having secured that benefit and having made a solemn promise before the CLB which was reduced to writing by the CLB and the correctness of that record not having been disputed at any point of time by any of the parties, the appellant long after that order came to be made chose to pretend as if no order had been made and it was under no obligation to purchase the shares which it had undertaken to purchase. It must be re-emphasized here that that order was at no point of time questioned in any legal proceedings by the appellants. 8. The respondent having waited for the appellants to pay a sum of Rs. 25 lakhs and have the shares transferred to its name in vain it applied to the CLB under regulation 47. The CLB directed the parties to file an application before it under section 634A which was done. After hearing the parties on that application the CLB made the order on 12-5-2000 T.N.K. Govindaraju Chettiar Co. Ltd. v. Kuki Leather (P.) Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anced for the appellants would clearly result in justice being defeated and fraud allowed to be perpetrated by parties and their counsel on the adjudicatory forum. It would also cause grave doubts about the credibility of the statements made by the lawyers before the adjudicatory forum, which statements are normally relied upon by such forums as statements which are meant to be acted upon, and when acted upon to result in orders which would bind the counsel and the parties represented by such counsel. 12. The arguments advanced by the counsel for the appellants, though they may superficially appear to be attractive, the arguments, if accepted, would undermine the cause of justice and put the stamp of approval of the court to conduct which can only be described as fraudulent. 13. It is in that background that the arguments advanced for the appellants are required to be examined. 14. The submission that the order of 22-1-1999 is not an order at all is not a submission that can be accepted. The order made by the CLB on that date was in a proceeding properly brought before it. The cause title sets out that there was a proceeding under section 235 pending before it to which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and that the parties had undertaken to perform the obligations which they were required to perform as recorded in that order. The fact that the agreement was not signed by the parties in this background does not in any manner vitiate that order as embodying a compromise properly arrived at between the parties and which was capable of being made into a decree which was executable. 16. The submission that the CLB had no jurisdiction at all to make the kind of order that was made on that date is also a submission which is required to be rejected. The counsel rightly does not dispute that the CLB can direct the purchase of shares in proceedings under sections 397 and 398. While the proceeding that was initiated was one under section 235, that fact by itself is not to be regarded as placing an embargo on orders other than that warranted under section 235 being made, if parties to the proceedings agree to such an order and such agreement is not against public policy, is not illegal and is not violative of any of the provisions of the Act or any other law and it is not an agreement which itself is beyond the competence of the CLB to record under the provisions of the Act. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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