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TMI Blog2007 (11) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... on-banking financial company incorporated under the Companies Act, 1956 (hereafter referred to as 'the Act') and is engaged, inter alia, in the business of leasing, portfolio investment in equity shares, issue management, portfolio management, and financing of projects, equipments, consultancy services, etc. The respondents are also companies registered under the Act and are involved in the hospitality industry. The petitioner is a shareholder in the second respondent-company. Alleging oppression and mismanagement the petitioner filed petitions under sections 397 and 398 of the Act before the Company Law Board (hereafter "the CLB") in 1998, which was dismissed. Meanwhile, in 1999, the Central Government ordered inspection of the accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigate into the affairs of the company and follow up actions are being taken. It alleges that the petition under section 397/398 read with section 408 of the Act filed by the petitioner was dismissed by the Company Law Board and that order was carried in appeal to this Court. The first respondent contends that it was not impleaded in the petition filed before the Company Law Board and that it had moved an application as an intervener in those proceedings. Further, the first respondent also filed an application under section 237(b) seeking investigation of the matter before the Company Law Board on the basis of the report filed under section 209A and the said petition is pending. It alleges that on receipt of the relevant orders, the appoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Company Law Board, in a petition under sections 397 and 398 of the Act, decided the matter in their favour and gave the petitioner an option to quit the second respondent company by selling its shares to the promoters but petitioner preferred an appeal against that order. The matter has now been referred back to Company Law Board. 7. It is alleged that when the petitioner-company became sure that it would be unable to obtain a favourable decision from the Company Law Board, it launched a massive criminal campaign against the promoters for answering respondent and got registered an FIR No. 90 of 2000 against the promoters for answering respondent on exactly the same grounds as that of the petition before the Company Law Board. In c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of its discretion for extraneous factors and oblique motives. 9. Learned counsel relied upon the decision of the Supreme Court, reported as Comptroller & Auditor General of India, Gian Prakash v. K.S. Jagannathan [1986] 2 SCC 679, to say that the High Court, exercising jurisdiction under article 226 has the power to issue a direction where the Government or a public authority fails to exercise or has wrongly exercised the discretion conferred upon it by a statute, a rule or a policy decision of the Government or has exercised such discretion mala fide or on irrelevant considerations or by ignoring the relevant considerations and materials or in such a manner as to frustrate the object of conferring such discretion. The Courts can give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been disputed that an application under section 237 for investigation was already pending before the Company Law Board. This was not averred or disclosed by the petitioners; they have, instead alleged that the Central Government acted in an unreasonable manner. Aside from the allegation about preparation of a draft petition under section 401 and the alleged deliberate abandonment of the option to file it, the allegations have not been substantiated by any other circumstances. 12. Sections 237 and 242 give wide discretion to the Government to pursue the necessary remedies and, in fact, it has reasonably exercised this discretion by moving an application before the Company Law Board for investigation. The petitioner could definitely have res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. R. in Queen on the Prosecution of Richard Westbook v. The Vestry of St. Pancras [1890] 24 QBD 371 : 'If people who have to exercise a public duty by exercising their discretion take into account matters which the Courts consider not to be proper for the guidance of their discretion, then in the eye of the law they have not exercised their discretion.' This view has been followed in Sadler v. Sheffield Corporation [1924] 1 Ch. D 483." (p. 494) 15. In view of the multifarious litigation pending between the petitioner and the contesting respondents, and the fact that the Central Government has already moved the Company Law Board for action, though not under section 401, I find no merit in the contention that its decision not to do so is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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