TMI Blog2014 (6) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... istence of circumstances described in the three sub-clauses of clause (b). - decided against appellants. - CO. APPL (SB) No.11/2014 WITH CO. APPL. Nos.475-476/2013 & CO. APPL. No.482/2014 - - - Dated:- 28-4-2014 - MR. R.V.EASWAR, J. Deepak Khosla for the Appellant JUDGMENT 1. This is an appeal filed by Mr. Deepak Khosla under Section 10F of the Companies Act, 1956 impugning the orders passed by the Company Law Board (CLB) on 18.12.2013 and 31.12.2013. 2. The question of law sought to be urged in this appeal is whether the CLB was right in law in holding that the appellant (petitioner before the CLB) had no locus standi under Section 237(b) of the said Act. 3. The appellant had filed Company Petition No.130(ND)/2013 before the CLB invoking the suo motu jurisdiction of the CLB under Section 237(b) of the Act to investigate into the affairs of M/s. Connaught Plaza Restaurant Pvt. Ltd. and M/s. McDonald India Pvt. Ltd. In the petition, it was alleged that these two companies had committed a number of illegal acts and violations of law in the conduct of the business, including breaches of RBI and SEBI regulations, violation of accounting practices, breach of Forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Law Board made before the commencement of the Companies (Second Amendment) Act, 2002 may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. 7. As provided in the Section, any decision or order of the CLB is appealable, provided a question of law arises from such decision or order. Thus I am of the view that the impugned orders, even if they are considered to be administrative orders, are subject to the appeal jurisdiction of this court. In any case the formation of an opinion by the CLB that there are circumstances suggesting the existence of various situations as described in the three sub-clauses of clause (b) of Section 237 is a judicial act or a judicial decision to be taken after considering the material placed before the CLB. This involves judicial consideration and application of mind to the facts brought befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce by any person who may not be a member or creditor of the company or in any way connected to the company. Under Section 235(2) the application for investigation can be moved by not less than 200 members or by members holding not less than 1/10th of the total voting power. Section 237(b) does not place any such restriction. There may be several persons other than members of the company who may be in the know of the violations and irregularities or fraudulent practices perpetrated by a company. Those persons, driven by public spirit or public interest, may bring the relevant facts and the material with all the supporting evidence to the notice of the CLB to assist the CLB to suo motu form an opinion as to the existence of circumstances described in the three sub-clauses of clause (b). In the present case, the appellant contends that he has brought to the notice of the CLB several facts and material relating to the affairs of the two companies. The CLB ought to have itself formed any opinion and was not right in its view expressed in paragraph 8 of the order passed on 30.12.2013 that the alleged violations and irregularities will have to be taken up by the appellant before the appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove a Court when no legal injury has been caused to him. Thereafter, at paragraph16, the learned judge held as follows: 16. I have already pointed out that, on general principles, it would not be correct to read the section as authorising any man in the street to seek orders for investigation into the affairs of a company, merely because it is a public company and its affairs are, in his opinion, being conducted to the detriment of public interest. The interest which the person may have as a member of the public in the purity of the administration of public companies is too remote and intangible for the infraction of which he may move a court. That apart I do not think that Section 237 is capable of such a wide interpretation even when read in the context of the Scheme and the various other provisions of the Companies Act. There are several provisions of the Companies Act which contemplate restrictions and provisions to safeguard the interests of the public. A contravention of the provisions of the Act would also be an offence which can read to a criminal prosecution. Nevertheless whenever there is a violation of the statute, a right to seek redress from the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t litigation in respect of what does not concern them. The section should be so interpreted as to enable relief to be obtained only by some person whose rights have been affected by the manner in which the affairs of the company have been conducted or accounts maintained and has, therefore, a grievance in the eyes of law for which he seeks relief from the court. There is ample scope for the invocation of Section 237 by persons whose rights are infringed or affected and whose interests need to be protected or safeguarded by an investigation A creditor who is unable to move the Central Government under Section 235; member or members though aggrieved, are unwilling to move the Central Government or unable to fulfil the requirements of Section 236 and hence unable to move the Central Government members who approach the Central Government under Sections 235 237(b) and are not aggrieved by the rejection of their applications; a company which wants an investigation but is unable to have a special resolution passed. These are all some illustrations of persons who would be able to move the court u/s 237(a). It is, therefore, not as if the scope of the remedy enacted by this provision woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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