TMI Blog2007 (1) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of sections 397 and 398 of the Companies Act, 1956 are present for passing an order pursuant to section 402 of the Act. Further, it was also alleged that not only the minority shareholders are being oppressed but the company s affairs are being carried on in a manner which is prejudicial to the interests of the company and also against public interest. Company petition was numbered as C.P. No. 60 of 1994 by the Company Law Board which came up for hearing on 18-9-1996 and the Company Law Board advised the parties to amicably settle the matter by selling the appellant s shares to the respondents for an agreed price. Matter was got adjourned to 15-10-1996 and then posted to 28-5-1997. On that day parties have submitted before the Company Law Board that they are attempting for amicable settlement. Matter was then taken up on 3-2-1998. On that day counsel appearing for the majority shareholders stated that his clients are agreeable to purchase the shares of the minority shareholders at a valuation made by a Chartered Accountant appointed by the Company Law Board. Consequently the Company Law Board passed the following order : "The counsel for the respondents states that his clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y they have valued the shares of the company as on 31-3-1994 at Rs. 45,763 per equity share. It was stated that the appellants who hold 250 shares are entitled to Rs. 1,14,40,750 as the sale price for their shares as per order of the Company Law Board dated 5-2-1998. Valuation report was accepted by the appellants minority shareholders. Majority shareholders however, requested for time to file objection to the valuation report and the case was adjourned. Later the Company Law Board passed an order on 3-5-2000 directing hearing of the main company petition since majority shareholders were not accepting the valuation report. Company Law Board passed the following order : "Since the counsel for the Respondents submits that his clients are not willing to accept the valuation the petition along with application will be heard on merits on 16-6-2000 at 10.30 a.m. In the meantime, the respondents may react to the proposal of the petitioners that he is willing to sell 250 shares held by him for a consolidated amount of Rs. 30 lakhs." Minority shareholders/appellants are aggrieved by the said order and have approached this Court. 3. Sri Joseph Kodianthra, counsel appearing for appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders dated 3-2-1998, 5-2-1998 and 11-3-1998 are not orders which fall under section 402( b ) of the Companies Act and therefore, are not enforceable under section 634A of the Companies Act. Counsel submitted, the principle laid down in Manish Mohan Sharma s case ( supra ) is not applicable to the facts of this case. 5. The powers conferred on the High Court under section 402 of the Companies Act have been conferred on the Company Law Board by the Companies (Amendment) Act, 1988. While acting under section 398, read with section 402 of the Companies Act, 1956, the Court/CLB has ample jurisdiction and very wide powers to pass such orders and give such directions as it thinks fit to achieve the object and there would be no limitation or restriction on such power. Section 402 of the Companies Act, 1956, read with rule 9 of the Companies (Court) Rules, 1959 the Court as well as CLB have powers to give such directions as are necessary to meet the ends of justice, and to make suitable provisions to bring about an amicable settlement to the disputes between the parties. The Calcutta High Court in Pramod Kumar Mittal v. Andhra Steel Corporation Ltd. [1982] 2 Comp. L.J. 629 held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in clause ( d ), provided that no such agreement shall be terminated, set aside or modified except after due notice to the party concerned and provided further than no such agreement shall be modified except after obtaining the consent of the party concerned; ( f )the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under section 397 or 398, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; ( g )any other matter for which in the opinion of the Tribunal it is just and equitable that provisions should be made". Section 634A of the Companies Act deals with enforcement of orders of Company Law Board. The said provisions is extracted below for easy reference : "634A. Enforcement of orders of Company Law Board. Any order made by the Company Law Board may be enforced by that Board in the same manner as if it were a decree made by a Court in a suit pending therein, and it shall be lawful for that Board to send, in the case of its inability to execute such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court s power while acting under sections 397, 398 and 402 of the Companies Act. Court held on a reading of section 402( a ) and section 402( g ), there can be no doubt that the intention of the Legislature was to confer wide and ample powers upon the Court for the regulation of the conduct of the company s affairs. 6. We may also refer to the recent decision of the Apex Court in Manish Mohan Sharma s case ( supra ). That was a case where the Company Law Board has recorded a memorandum of family arrangement and transfer document executed by the parties. The Court held that the same would form integral part of the order, and can be executed by the Company Law Board on an application under section 634A. Reversing the order of the Company Law Board as well as the High Court, the Apex Court held as follows : "Both the Company Law Board and the High Court in fact interpreted Clause 4.1.1.11 and came to definite, albeit different, conclusions as to what the clause meant. It may be that conclusion was not what was being contended for by the appellants. It may also be that the interpretation put on the clause by the Board or the High Court was not in the contemplation of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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