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2016 (1) TMI 466 - MADRAS HIGH COURT

2016 (1) TMI 466 - MADRAS HIGH COURT - TMI - Oppression and mismanagement - petitioners contend that the entire paper ballot is bad in law - question of law v/s question of facts - Held that:- On the face of the order of the CLB, it can be seen that considering the poll on the day, the 7th respondent was declared to have lost. It was also observed that he did not raise any objections during the voting. So the CLB has held that no prima facie case was made out. It has considered the questions of .....

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oes not agree with the contentions of the Learned Senior Counsel for the petitioners that the CLB has not considered the questions raised before it.

In so far as the personal grievance of the 7th respondent is concerned, there are specific findings in para 6 of the order of the CLB at pages 6 and 7 of the order. The communication of the 7th respondent has been referred to in page 7 of the order of the CLB indicating that the grievance is not just the elections. Again considering all t .....

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permitted to vote. Therefore, again mindful of the prejudice, that may be caused before the CLB, this court held in para 23 that the same would have to be decided by the CLB during the final hearing.

The CLB has exercised its discretion against the appellants after giving reasons. Even if prima facie case, regarding a question of law is made out, the interim relief can be denied. All the tests required for grant of interim relief must be satisfied. This court has already given its fi .....

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tated were already negated by this Court in its earlier order. An attempt is only now made to re-appreciate the same contentions. The applications to review cannot be used as a substitute to file an appeal. - Review Application Nos.94 and 95 of 2015 in Company Appeal Nos.13 and 14 of 2014 - Dated:- 18-12-2015 - MR. R. MAHADEVAN, J For the Petitioner : Mr. R. Murari, SC for Ms. Preethi Mohan & Mr. P. Chidambaram, SC for Mr. Anirudh Krishnan For the Respondent : Mr. R.Venkatavaradhan, Mr.P.S.R .....

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s sought for by the Petitioners therein, who are the petitioners in RP No 95 of 2015 and the 7th respondent therein, who is the petitioner in R.P No 94 of 2015. The Company Petition was filed after the 7th respondent was defeated in the election for the post of Director. Alleging irregularity in the election process and oppression, the petition was filed seeking many reliefs. Interim reliefs in the nature of injunction to enable the 7th respondent to continue as a Director and also for certain d .....

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cial Leave Petitions before the Supreme Court. Ultimately, they withdrew the SLPs with a liberty to rejuvenate the sleeping review petitions. While disposing of the SLPs, the Honourable Supreme Court has directed this Court to consider the review petitions at the earliest preferably within two weeks. The Review Petitions were listed on several dates at the convenience of the parties and heard at length. 3. The Learned Senior Counsel Mr.P.Chidambaram, appearing for the petitioner in R.P.No 95 o .....

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ies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules to contend that once the Company decides to have election by e-voting, the voting by other means are barred and the same is a pure question of law. The Learned Senior Counsel also drew the attention of this court to the notice issued to the shareholders and pointed out that the scrutinizer was also duty bound to block the votes registered in the e-voting in the presence of two independent witnesses and submit a repo .....

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ms of voting, the interim reliefs sought for ought to have been granted and the failure of the CLB to consider the questions of law and grant interim injunction is itself a question of law and under those circumstances, the interim reliefs sought for must be granted by this Court. The Learned Senior Counsel, in reply to the contention of the respondents that the review application is not maintainable, placed reliance upon Rule 2 (4) and (5) and Rule 6 of the Company Court Rules, Section 141 and .....

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ed upon the judgements reported in AIR 1961 SC 1633 (Commissioner of Income Tax, Bombay Vs. scindia Steam Navigation Co. Limited), AIR 1957 SC 49 (Sree Meenakshi Mills Limited Vs. Commissioner of Income Tax, Madras), AIR 1969 SC 460 (Oriental Investment Co. P Limited Vs. Commissioner of Income Tax, Bombay), AIR 1964 SC 1379 (Naunihal Kishan and others Vs. R.s.Ch.Partap Singh and another), 2014 7 BOMB CR 464 (Godrej Industries Limited), 2010 15 SCC 118 (Gian Singh Vs. State of Punjab and another) .....

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eir own cause and the petitioner has been defeated by adopting oppressive means and hence, the CLB ought to have granted the interim relief. Non consideration of this aspect is an error apparent on the face of the record and hence, the order ought to be reviewed. 5. The Learned Senior Counsel Mr.P.S Raman, representing Mr.T.K.Baskar, counsel for the 2nd and 3rd Respondents countenanced the contentions of the Learned Senior Counsel for the petitioners, contending that the review as against the or .....

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tances have refused to interfere with the interim orders of the CLB.The Learned Senior Counsel also contended that once this court has held that the questions raised are not questions of law, it is not an error apparent on the face of record and in consonance with the Clause 37 of the Letters Patent Act, the High Court has framed the rules under the Original Side and only a clerical or an arithmetical error can be rectified. However, even such rules cannot be applied while exercising jurisdictio .....

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ayanan Laxminarayan Hedge and others Vs. Millikarjun Bhavanappa Tirumale), 1997 3 CTC 134 (A.C.Muthiah Vs. Madras Refineries Limited), 2000 3 Callt 434 (Manohar Rajaram Chhabaria Vs. Union of India), 2008 144 Company Cases 619 (Palanisamy and another Vs. Milka Nutrients P Limited), 2012 108 CLA 25 Kar (D.Victor Samuel Vs. Pretechplast (P) Limited), 2015 128 CLA 353 SC (Purnima Manthena and others Vs. Renuka Datla and others) and 2010 9 SCC 437 (Kalabharati Advertising Vs. Hemant Vimalnath Narich .....

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dication to a future point cannot constitute a question of law to be appealed therefrom. Since the CLB has held that the issue needs to be adjudicated at the final hearing after the counter of the parties are filed, there is no necessity to interfere. The Learned Senior Counsel also contended that the rights of the shareholders to vote cannot be ousted on technicalities and therefore, the orders of this Court does not require any reconsideration and sought for dismissal of the review petitions. .....

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es open and protecting the rights of the parties. The counsel also contended that in para 8.4 of the prayer in the petition before the CLB, the petitioners therein has pleaded to include the paper ballot by other members by excluding only the votes of second and third respondent therein. Therefore, the petitioners cannot now contend that the entire paper ballot is bad in law. The counsel also contended that the notification dated 27.03.2015 is only clarificatory in nature and therefore, paper ba .....

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dered by this Court. Question No 7:- Whether the procedure adopted by the Respondents 2 and 3 in the meeting held on 26.09.2014 in relation to the method of voting violated the provisions of Section 107 of the Companies Act, 2013 read with Section 109. Question No 8:- Whether the procedure adopted by the Respondents 2 and 3 in the meeting held on 26.09.2014 in relation to the method of voting violated Rule 20 of the Companies (Management and Administration) Rules, 2014? Question No 9:- Whether t .....

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isions are as under. Sections 106:- Restriction on voting rights:- (1) Notwithstanding anything contained in this Act, the articles of a Company may provide that no member shall exercise any voting right in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid, or in regard to which the Company has exercised any right of lien. (2) A Company shall not, except on the grounds specified in sub-section (1), prohibit any member from e .....

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ed out electronically, be decided on a show of hands. (2) A declaration by the Chairman of the meeting of the passing of a resolution or otherwise by show of hands under sub-section (1) and an entry to that effect in the books containing the minutes of the meeting of the Company shall be conclusive evidence of the fact of passing of such resolution or otherwise. Section 108: Voting through electronic means:- The Central Government may prescribe the class or classes of companies and manner in whi .....

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the total voting power or holding shares on which an aggregate sum of not less than five lakh rupees or such higher amount as may be prescribed has been paid-up; and (b) in the case of any other Company, by any member or members present inperson or by proxy, where allowed, and having not less than one-tenth of the total voting power. (2) The demand for a poll may be withdrawn at any time by the persons who made thedemand. (3) A poll demanded for adjournment of the meeting or appointment of Chai .....

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to him in the manner as may be prescribed. (6) Subject to the provisions of this section, the Chairman of the meeting shall havepower to regulate the manner in which the poll shall be taken. (7) The result of the poll shall be deemed to be the decision of the meeting on theresolution on which the poll was taken. 1) Notwithstanding anything contained in this Act, a Company (a) shall, in respect of such items of business as the Central Government may, by notification, declare to be transacted only .....

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meeting convened in that behalf. 11. Rule 20 of the Companies (Management and Administration) Rules as it stood before amendment reads as under:- 20. Voting through electronic means:- (1) Every listed Company or a Company having not less than one thousand shareholders, shall provide to its members facility to exercise their right to vote at general meetings by electronic means. Provided that the Company may provide the facility referred to in this sub rule on or before the 1st day of January 20 .....

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tire voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralized server with adequate cyber security ; (ii) the expression - secured system - means computer hardware, software, and procedure that (a) are reasonably secure from unauthorized access and misuse; (b) provide a reasonable level of reliability and correct operation; (c) are reasonably suited to performing the intended functions; and (d) adhere to generally accepted security procedu .....

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s, auditors of the Company, or Directors either - (a) by registered post or speed post ; or (b) through electronic means like registered e-mail id; (c) through courier service; (ii) the notice shall also be placed on the website of the Company, if any and of the agency forthwith after it is sent to the members; (iii) the notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the Company is providing facility for voting by electronic m .....

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paper in the principal vernacular language of the district in which the registered office of the Company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, about having sent the notice of the meeting and specifying therein, inter alia, the following matters, namely:- (a) statement that the business may be transacted by electronic voting; (b) the date of completion of sending of not .....

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and not more than three days: Provided that in all such cases, such voting period shall be completed three days prior to the date of the general meeting; (vii) during the e-voting period, shareholders of the Company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically: Provided that once the vote on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently. (viii) at the end of the voting per .....

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n employment of the Company and who is well-versed with the e-voting system; (x) the scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority; (xi) the scrutinizer shall, within a period of not exceeding three working days from the date of conclusion of e-voting period, unblock the votes in the presence of at least two witnesses not in the employment of the Company and make a scrutinizers report of the votes cast in favour or against, .....

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chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the register and other related papers to the Company. (xiv) the results declared along with the scrutinizers report shall be placed on the website of the Company and on the website of the agency within two days of passing of the resolution at the relevant general meeting of members; (xv) subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant g .....

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t in its order even though it be one of law. On the answer to be given to it there has been a difference of opinion among the High Courts and that turns on the meaning to be given to the words, "any question of law arising out of" the order of the Tribunal. There is no pronouncement of this court which concludes this question, though there are decisions which afford guidance in the determination thereof. These decision will now be considered. 39. The result of the above discussion may .....

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w is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it. 14. In AIR 1957 SC 49 (Sree Meenakshi Mills Limited Vs. Commissioner of Income Tax, Madras), the Honourable Supreme Court has held as under:- 10. In between the domains occupied respectively by questions of fact and of law, there is a large area in which both these questions run into each other, forming so to say, enclaves .....

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a vacant site that the defendant is the owner of the adjacent. residential house and that he has been drying grains and cloth and throwing rubbish on the plot. The further question that has to be determined is whether the above facts are sufficient to constitute adverse possession in law. Is the user continuous or fugitive? Is it as of right or permissive in character? Thus, for deciding whether the defendant has acquired title by adverse possession the court has firstly to find on an appreciat .....

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an inference from facts is a question of law. In this respect, mixed questions of law and fact differ from pure questions of fact in which the final determination equally with the finding or ascertainment of basic facts does not involve the application of any principle of law. The proposition that an inference from facts is one of law will be correct in its application to mixed questions of law and fact but not to pure questions of fact. The following observations of Lord Atkinson' in Herber .....

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, pure questions of law or on mixed questions of law and fact .... It is wholly illegitimate, in my view, in cases such as the present, by finding in the words of the statute to endeavor to secure for 'a finding on a pure question of law, or on a mixed question of law and fact, that unassailability which properly belongs only to a finding on a question of pure fact". These observations were made in a case under the Workmen's Compensation Act, 1904. But the same principles have been .....

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st error and misconception should embarrass and fog the administration of law. The position that emerges on the authorities may thus be summed up: (1)When the point -for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66(1). (2)When the point for determination is a mixed question of law and fact; while the finding of the Tribunal on the facts found is final its decision as .....

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as been held as follows:- 6. There is no doubt that the jurisdiction conferred on the High Court by s. 66(1) of the Act is limited to entertain references involving questions of law. If, for instance, the point raised on reference relates to the construction of a document of title or interpretation of relevant provisions of a statute, it is a pure question of law. In dealing with it, the High Court may have due regard for the view taken by the Tribunal, but its decision would not be lettered by .....

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is not ration,ally possible. It is within these narrow limits that the conclusions of fact by the Appellate Tribunal can be challenged under s. 66(1). Such conclusions can never be challenged on the ground that they are based on misappreciation of evidence. There is, however, a third class of cases in which the assessee or the department may seek to challenge the correctness of the conclusion reached by the Tribunal on the ground that it is a conclusion on a question of mixed' law and fact. .....

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In dealing with findings on such questions of mixed law and fact the High Court must no doubt accept the findings of the Tribunal on the primary questions of fact; but it is open to the High Court to examine whether the Tribunal had applied the relevant legal principles correctly or not in reaching, its final conclusion; and in that sense, the scope of enquiry and the extent of the jurisdiction of the High Court in dealing with such points is the same as in dealing with pure points of law. (See .....

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of the Tribunal can, therefore, be challenged on theground that the relevant legal principles have been mis-applied by the Tribunal in reaching its decision on the point; and such a challenge is open under s. 66(1) because it is a challenge on a ground of law. It is because the question involved in this case was not a question of pure fact but was a mixed question of fact and law that this Court allowed the appeal on the last occasion and set aside the judgement of the Bombay High Court dated Ju .....

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re accordingly of the opinion that the questions actually framed by this Court on the last occasion are not appropriate and (1) 35 I.T.R. 594 54 do not reflect the real controversy between the parties. It is therefore, expedient in the interest of justice that the questions should be modified as suggested by the assessee Company in its .petition under s. 66(1) of the Act to the High Court and the Appellate Tribunal should be asked to make a fresh statement of the case. 16. In AIR 1964 SC 1372 (M .....

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order itself might be erroneous. Similarly, even if the statement was wrong, it would not follow that it was an "error apparent on the face of the record", for there is a distinction which is real, though it might not always be capable of exposition, between a mere erroneous decision and a decision which could be characterised as vitiated by "error apparent". A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected. but lies only fo .....

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ed in the decision of the High Court in T.R.Cs. 75 to 77 of 1956. The entire controversy turned on the proper interpretation of r. 18(1) of the turnover & Assessment Rules and the other pieces of legislation which are referred to by the High Court in its order of February 1956 nor could it be doubted or disputed that these were substantial questions of law. In the circumstances therefore, the submission of the appellant that the order of September 1959 was vitiated by "error apparent .....

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cate that electronic voting must stop three days before the meeting. The chairman of the meeting is to be given a tally of the electronic votes cast and the decision on any item of business is supposed to have been passed or not passed only on the basis of these electronic votes. Ex facie this is an untenable mechanism. If, as I have said, electronic voting is not limited to voting from a remote location but must also include electronic voting at the meeting in addition to postal ballots receive .....

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under:- 7. We are of the opinion that the above three decisions require to be reconsidered as, in our opinion, something which cannot be done directly cannot be done indirectly. In our, prima facie, opinion, non compoundable offences cannot be permitted to be compounded by the court, whether directly or indirectly. Hence, the above three decisions do not appear to us to be correctly decided. 19. Per contra, the Learned Senior Counsel for the respondent has relied upon the following judgements 20 .....

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an error apparent on the face of the record. As the above discussion of the rival contentions show the alleged error in the present case is far from self evident and if it can be established, it has to be established by lengthy and complicated arguments. We do not think such an error can be cured by a writ of certiorari according to the rule governing the powers of the superior court to issue such a writ. In our opinion the High Court was wrong in thinking that the alleged error in the judgement .....

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t in order to correct it or improve it, because some material which it ought to have considered has escaped consideration or failed to be placed before it for any other reason or because it suffers from a patent error which cannot be sustained by any process of reasoning. The Court cannot under cover of review arrogate to itself the power to decide the case over again because it feels then that the assessment of evidence, etc., done formerly was faulty or even incorrect. An erroneous view of evi .....

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ny Law Board is final and is therefore not appealable. The jurisdiction of the High Court in appeal is expressly confined to the determination of question of law. The mere fact that the High Court would have come to a different conclusion on the facts also does not make the matter appealable. 10. No question of law, much less, substantial questions of law is involved in this appeal. No substantial question of law is involved to entertain the CMA. 23. In 2012 108 CLA 25 Kar (D.Victor Samuel Vs. P .....

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m the Board of Directors of 1st Respondent Company under Section 284(3) of the Companies Act. It is well settled that this court in appeal, would be slow to interfere with the discretion exercised by the Company Law Board while granting or rejecting the interim application for directions, unless some exceptional ground is made out for interference. Having regard to the above said facts, we are of the opinion that no exceptional ground is made out and the Company Law Board has observed that conve .....

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ime, indeed are well settled. A question of law, as is comprehended in Section 10F of the Act, would arise indubitably, if a decision which is the foundation thereof, suffers from perversity, following a patent error on a fundamental principle of law or disregard to relevant materials or cognizance of irrelevant or non-germane determinants. A decision however, on the issues raised, is a sine qua non for a question of law to exist. A decision logically per-supposes an adjudication on the facets o .....

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rwise may be co- ordinate with that of the lower forum, ought to confine its judicial audit within the layout of the adjudgment undertaken by the forum of lower tier. This is imperative, more particularly in the exercise of the appellate jurisdiction qua a decision on discretion rendered at an introductory stage of any proceeding, otherwise awaiting final adjudication on merits following a full contest. It is settled that no adjudication at the preliminary stage of a proceeding in a court of law .....

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admittedly the contentions raised now were also raised earlier before this Court and also before the CLB. This court after considering the contentions, is of the view that the questions have already been answered in paragraphs 18,19,20 and 23 of the order dated 27.04.2015 which is extracted as under:- 18. Upon consideration of the grounds and the impugned order, this court is of the view that the questions that have been raised before this court are not purely questions of law, but are only mix .....

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unction for which the Petitioners must satisfy the mandatory tests of prima facie case, balance of convenience and irreparable loss. This court feels that the 7th respondent cannot be permitted to continue as a Director after he has failed in his endeavour to be re-appointed by virtue of an interim order. Any subsequent act(s) of mismanagement would give rise to a fresh cause of action to the petitioners. Hence, the loss if any cannot be held to be irreparable. The Company Law Board has consider .....

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ions on the powers of the Appellate Court to substitute its own discretion in an appeal preferred against a discretionary order. The second pertains to the infirmities in the ratiocinations as to the quality of Antox's alleged user of the Trade-Mark on which the passing-off action is founded. We shall deal with these two separately. 9. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the Appellate Court will not interfere wit .....

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e reached by the court below if the one reached by the court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the Trial Court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may .....

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cation of well settled principles in an individual case. 20. The grant of interim relief is only discretionary. Hence, sitting in appeal, this court is not inclined to interfere with the impugned order of the Company Law Board. The appellants have alleged various acts of oppression and mismanagement. Necessarily, the Company Law Board Board will have to go into the same at the time of final hearing. 23. In the facts of the case, whether the proceedings held on Annual General meeting on 26.09.201 .....

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Appeals are dismissed. Consequently, the connected MPs are closed. No costs. 26. It can be seen that specific findings were given by this Court in the order dated 27.04.2015. This court has recorded that there is no perversity in the findings of the CLB. The nature of relief and scope of the Company petition have been discussed. The main issue is regarding the validity of the elections. The reason for holding the elections is that the term of the 7th respondent had expired. In para 18, this cou .....

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when e-voting is contemplated, voting by poll is prevented. This argument requires an adjudication of the main petition before the CLB as it requires an adjudication as to whether e-voting bars other types of voting. Again, was it the intention of the Board of Directors to exclude the poll by ballot and prescribe only e-voting is a question of fact. The provisions as it stood before the notification does not clearly specify, as to whether, the electronic voting bars the other types of voting at .....

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ion of law, the same cannot be decided without rendering factual findings. Therefore, in the circumstances narrated above, it is only a mixed question of fact and law. It is the main relief and it cannot be isolated from the questions of facts as indicated above and decided at the introductory stage. 28. The judgements relied upon by the Learned Senior Counsel for the Appellants, clearly lay down the propositions regarding the question of law and the question of fact. What emerges is that when a .....

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court has already rendered its findings. Error if any has to be established by long drawn process, then the error is not an error apparent on record. In order to interfere with the orders of the CLB, the order must be perverse or a patent error in fundamental principles of law must exist and non-consideration of relevant or consideration of irrelevant materials must arise. As rightly contended by the Learned Senior Counsel for the respondents, deferment to a future date cannot be carved as a que .....

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counters. Considering the above, this court had held in para 18 that there is no perversity in the findings of the CLB. The nature of relief sought is similar to an election petition, where interim injunction against the elected member would not be granted as it would amount to making a mockery of the democratic process. Of course, if there is procedural violation, the same would be decided only at the final stage. On the face of the order of the CLB, it can be seen that considering the poll on .....

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ce of convenience and irreparable loss. It is sufficient if specific findings on the tests are given. Upon perusal of the order it is clear that the CLB has given findings in page 6, 7 and 8 of its order. Therefore, this court does not agree with the contentions of the Learned Senior Counsel for the petitioners that the CLB has not considered the questions raised before it. 30. In so far as the personal grievance of the 7th respondent is concerned, there are specific findings in para 6 of the or .....

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ncerned, any decision on the same can be arrived at only if the other questions are decided. On the face of it, the 7th respondent has been permitted to participate in the elections and his family members have been permitted to vote. Therefore, again mindful of the prejudice, that may be caused before the CLB, this court held in para 23 that the same would have to be decided by the CLB during the final hearing. 32. The CLB has exercised its discretion against the appellants after giving reasons. .....

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sion and will of the parties regarding the election process. Hence, there is no error in the findings of this court. 33. The Hon ble Supreme Court in the Judgment reported in 2013 (8) SCC 320, [KamleshVerma Vs. Mayawati and others], after examining various Judgments passed earlier has held as follows : "12. This Court has repeatedly held in various Judgments that the jurisdiction and scope of review is not that of an appeal and it can be entertained only there is an error apparent on the fa .....

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with the view of the Judgment cannot be the ground for invoking the same. As long as the point is already dealt with and answered, the parties are not entitled to challenge the impugned Judgment in the guise that an alternative view is possible under the review jurisdiction. Summary of the principles: 20. Thus, in view of the above, the following grounds of review are maintainable, as stipulated by the statute: 20.1 When the review will be maintainable:- (i). Discovery of new and important matte .....

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grounds at least analogous to those specified in the rule". The same principles have been reiterated in Union of India Vs. Sandur Manganese & Iron Ores Ltd., ors., JT (2013) 8 SC 275. 20.2. When the review will not be maintainable:- (i) A repetition of old and overruled argument is not enough to reopen concluded adjudications. (ii). Minor mistakes of inconsequential import. (iii). Review proceedings cannot be equated with the original hearing of the case. (iv). Review is not maintainabl .....

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