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TMI Blog2013 (3) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... st for an answer to the pristine legal issue, it may only be noticed that the petitioner before the CLB claimed to be a creditor of the appellant company and alleged that the business of the appellant company was being conducted to defraud the creditors of the company and such conduct warranted an investigation to discover "the true and actual persons behind the ... company" since "its control and its policies" were not known and "corporate cross-holdings" were in place to conceal the identities of those who were able to control or materially influence the policy of the company. The opinion of the CLB was rendered on an application in the nature of demurer filed by the company. The respondent's petition before the CLB referred, in its cause- title, to both Section 247 and Section 237(b) of the Act and summarised the purport of the application in the following words: "Petition under Sec 247 alongwith Sec 237(b) of the Companies Act for investigation of ownership of the Respondent Company as well as appointment of inspectors to investigate the affairs of the company." The reliefs claimed by the respondent in its petition before the CLB were: "(a) to appoint inspecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clares by an order that the affairs of the company ought to be investigated as regards the membership of the 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 (b) who are or have been able to control or materially to influence the policy of the company. (2) ... ..." The appellant shows that Sections 235 to 251 of the Act have been clustered in a separate segment entitled "Investigation." The appellant advocates that the scope of the provisions in such segment should be contextually interpreted. The appellant submits that the powers conferred under these sections bunched together in the statute at the end of the general provisions relating to the management and administration of companies should be seen as a whole and no part thereof, or a sub-section or clause from any section, be seen in isolation. The appellant says that the nature of the petition carried by the respondent to the CLB and the purport thereof have to be seen not in the light of the provisions invoked at its head but by the spirit of the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported at (1969) 1 SCC (Rohtas Industries Ltd v. S.D. Agarwal) has next been cited. Paragraph 3 of the concurring opinion is relied on for the observation therein that "Section 237(b) confers an administrative and not a judicial power ..." It may do well to remember that prior to the 1988 Amendment to the Act (with effect from May 31, 1991), Section 237(b) of the Act commanded the Central Government to appoint inspectors to investigate into the affairs of a company in certain cases; and, gave a discretion to the Central Government to cause such investigation in other cases and no appeal lay from the Central Government's direction for investigation. A judgment reported at (1979) 4 SCC 729 (Mool Chand Gupta v. Jagannath Gupta) has been placed by the appellant on the scope of the powers under Sections 235 and 237 of the Act as they stood prior to the said Amendment. A Division Bench judgment of the Madras High Court reported at AIR 1962 Mad 163 (NPSN Ramiah Nadar v. NKRK Amirtharaj) has been relied on by the appellant to demonstrate that an order under Section 237 of the Act was not appellable, but that matter pertained to an order of court under Section 237(a) of the Act. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious view of the CLB should have persuaded the CLB to not depart from it in the impugned judgment without finding it to be contrary to any dictum of a superior forum. It does not, however, appear that Rasoi Limited was cited before the CLB in course of the matter from which the present appeal arises and, in any event, in the CLB's reliance in the impugned judgment on a Bombay High Court judgment referred to later herein it is implicit that the view perceived to be taken in Rasoi Limited was found to run contrary to the opinion expressed by the Bombay High Court. In Rasoi Limited, the petitioner before the CLB had earlier filed a petition under Section 111A of the Act seeking the rectification of the register of members of a listed company on the ground that some of the respondent members had acted in concert in acquiring shares in the relevant company in violation of the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The subsequent plea was not carried only on the strength of Section 247(1A) of the Act, but Section 250 thereof was also invoked. The CLB held, at paragraph 15 of the report, that an investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, or fulfil the purpose of the statute: while, in statutes dealing with technical matters, words which are capable of both bearing an ordinary meaning and being terms of art in the technical matter of the legislation will presumptively bear their primary meaning as such terms of art (or, if they must necessarily be modified, some secondary meaning as terms of art)." In Cross' Statutory Interpretation (2nd Ed, 1987), which the respondent has cited, the author has quoted from several well-known judgments in the context of assessing the common legal phrase "intention of the legislature." From the celebrated judgment in company jurisprudence of Saloman v. Saloman and Co. Ltd [(1897) AC 22], where the phrase was noticed to be common but slippery "which, popularly understood, may signify anything from intention embodied in positive enactment to speculative opinion as to what the legislature probably would have meant, although there has been an omission to enact it" to Black- Clawson International Ltd v. Papierwerke Waldhof-Aschaffenburg AG [(1975) AC 591], which said that the expression was not quite accurate since it implied the attempt by judges only to seek the meaning of the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely for the purpose of invoking that provision. The respondent has referred to a Full Bench judgment reported at AIR 1959 AP 413 (B. Veeraswamy v. State of Andhra Pradesh) for the interpretation of the word "any" in the context of whether a State Government could authorise a regional transport officer to exercise the powers and discharge the functions of the state transport authority under certain provisions of the Motor Vehicles Act, 1939. The Full Bench held that the word "any" excluded limitation or qualification. In that case the word "any" figured in the expression "any officer subordinate" and the judges disagreed with the interpretation of a Madras Full Bench that the word "subordinate" in the relevant provision should be understood in the sense of statutory subordination since, according to them, the word "any" connoted wide generality. The respondent has carried a more recent judgment reported at (2002) 4 SCC 297 (Grasim Industries Ltd v. Collector of Customs) for the opinion therein, at paragraph 10 of the report, that no word or expression used in a statute can be seen to be redundant or superfluous. It is of some significance that in the following sentences in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the narrowness of the words used in the prayer at the tail which ought only to be looked at to ascertain whether the provision had at all been summoned. The respondent submits that the prayers in the petition were capable of being tweaked at a subsequent stage to make them conform to Section 237(b) of the Act, if it were found that in their original form they did not; or, in the alternative, the prayers should be read more charitably to assess whether the essence of invoking such provision was contained therein. The respondent relies on another Constitution Bench judgment reported at (2003) 3 SCC 272 (Sardar Amarjit Singh Kalra v. Pramod Gupta) in its reiteration that procedure has always been viewed as the handmaid of justice and not meant to hamper the cause of justice or sanctify miscarriage of justice. Though the respondent has not specifically referred to the precedents on the related provisions of the statute referred to in the impugned judgment, the appellant has sought to distinguish them. The CLB judgment reported at 86 Comp. Cas 291 (Alaknanda Manufacturing and Finance Pvt. Ltd v. Bahubali Services Ltd) has been referred to in the impugned judgment only for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spectors to investigate into and report on the membership of the concerned company and other matters relating to such company, were introduced by the insertion of subsection (1A) in Section 247 of the Act by the Companies (Amendment) Act, 1988 which also inserted the words "or to the Company Law Board in any proceedings before it," in sub-section (1) of the existing Section 248 of the Act. It may be out of place in the present context to assess the correctness of the Bombay view, both because Section 248(1) of the Act is not relevant in this case and it would be a futile exercise to posthumously interpret an omitted provision. But so much must be seen: the amendment introduced in 1988 used different expressions in the insertions introduced to two consecutive sections of the Act. That, by itself may have had a story to tell. It is now necessary to see the several sections bunched under the heading "Investigation" appearing in the first chapter entitled "General Provisions" in Part VI of the Act that covers management and administration of companies. Section 235 confers discretionary powers on the Central Government to cause the affairs of a company to be investigated into by an ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation under Section 247 of the Act on either a reference made to the CLB by the Central Government or on a complaint made by any person in such regard. Section 250A of the Act clarifies that an investigation may be initiated or continued notwithstanding proceedings relating to the concerned company pending under Section 397 or 398 of the Act and despite a special resolution for the voluntary winding-up of such company. Section 251 of the Act exempts legal advisors and bankers of companies from being obliged to make disclosures, save the excepted matters, in course of an investigation. That completes the full complement of the bouquet of sections under the heading "Investigation." The expression "in the course of any proceedings before it" would, loosely, imply "during any proceedings". If Section 247(1A) is read as giving the CLB unfettered authority in all circumstances to declare by an order that the affairs of a company ought to be investigated as regards the matters specified in such provision, it would result in the expression "in course of any proceedings before it" being rendered otiose. That would be impermissible by any rule of construction. The expression "in course of" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rger exercise contemplated by Section 247(1A) of the Act is not brought to its logical conclusion merely upon a direction for the conduct of an investigation thereunder being issued, a petition seeking only an investigation under Section 247(1A) of the Act would not be maintainable. If, however, there are other proceedings pending before the CLB, an application under Section 247(1A) of the Act would be permissible by such person as the CLB may consider desirable in the context of the pending proceedings; for, the report of the investigation may be dealt with, to the extent relevant, in the pending proceedings. The authority under Section 247(1A) of the Act can, doubtless, be exercised suo motu by the CLB. But the caveat that the expression "in the course of any proceedings before it" introduces in the provision, mandates that the suo motu authority be exercised only during the pendency of any proceedings before the CLB. If the appropriate interpretation of Section 247(1A) of the Act is that the authority to direct an investigation thereunder may be exercised by the CLB suo motu or at the instance of any other person, in the absence of any express provision making a distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are generally specified. For instance, Section 433 of the Act may be invoked by such classes of persons as recognised in Section 439 thereof; Sections 397 and 398 of the Act may be cited by such persons mandated to apply thereunder by Section 399 of the Act; Sections 111 and 111A of the Act may be taken recourse to by the persons specified therein; and, the related provision permitting investigation of the affairs of a company under Section 235 of the Act may be summoned before the CLB by the classes of persons enumerated in such section. In this context, the seemingly concurrent jurisdiction of the CLB, alongside that of the Central Government, under Section 237 of the Act has to be seen in the light of the discretion reserved unto the Central Government notwithstanding the opinion of the CLB of the circumstances detailed in clause (b) thereof. Since Section 247(1A) of the Act was not meant to be directly invoked - or such provision being taken recourse to only for the purpose of an investigation being directed thereunder - it does specify who may apply thereunder or who may be heard in course thereof. In the absence of the guidelines in the provision itself as to when an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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