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TMI Blog2007 (9) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... ct by the Company Law Board - Mayank Kocher v. Transport of Handling Equipments Mfg. Co. (P.) Ltd. [2008] 143 Comp. Cas. 601 1 (CLB). 2. The appellant sought an investigation into the affairs and conduct of the business of a company which he claims was born out of funds of a partnership business carried on by the deceased patriarch of the two groups of parties fighting these and other proceedings. The appellant claimed that as an heir of a partner who held fifty per cent share in the firm, he was entitled to be apprised of the conduct of the company's affairs and participate therein. He cited fraud being practised on him by the other group in the manner in which the company's affairs were being conducted. The appellant urges that the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chemicals Ltd.'s case (supra) : "An action, not based on circumstances suggesting an inference of the enumerated kind will not be valid. In other words, the enumeration of the inferences which may be drawn from the circumstances, postulates the absence of a general discretion to go on a fishing expedition to find evidence. No doubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If the action is questioned on the ground that no circumstances leading to an inference of the kind contemplated by the section exists, the action might be exposed to interference unless the existence of the circumstances is made out. As my brother Shelat J., ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of his substantive rights: "I am of the view, merely because specific provisions are made granting a right of inspection of books of account of subsidiaries to the shareholder of a holding company and conferring a right to approach the Company Law Board to get an order of investigation into the affairs of the subsidiary companies, and empowering the inspectors to investigate into the affairs of the subsidiary companies, they do not mean that the Company Law Board has no such power to grant relief under sections 397, 398 and 402 of the Companies Act. It is well to remember here that before the constitution of the Company Law Board by the Companies (Amendment) Act, 1988, the powers under sections 397 and 398 of the Companies Act were exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion of the authority suggest what has been set out in sub-clause (i), (ii) or (iii ). If it is shown that the circumstances do not exist or that they are such that it is impossible for any one to form an opinion therefrom suggestive of the aforesaid things, the opinion is challengeable on the ground of non-application of mind or perversity or on the ground that it was formed on collateral grounds and was beyond the scope of the statute." (p. 689) 7. The appellant's reliance on the Madras judgment is inapposite. The Madras High Court considered the point and held that the powers under section 237 and under sections 397 and 398 of the Act were distinct, from a completely different perspective. In construing whether the expression "a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be a logical consequence of such investigation if ordered in the course of section 111 or sections 397 and 398 proceedings in that upon investigation and the result thereof, the petitioner's right to relief could be assessed. 9. It is beyond question that an investigation under section 237 can be directed upon subjective satisfaction of the existence or circumstances enumerated in section 237. If, however, it is shown or the Company Law Board is otherwise satisfied that such circumstances do not exist or that the facts and allegations are such that it is impossible to form an opinion as to the existence of such circumstances, an investigation is not called for. 10. The appellant's plea for investigation was founded on the assertion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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