TMI Blog1995 (1) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the joint family of Hirday Narain Goel, who was the grand-father of the petitioners. Various properties owned by the said joint family, including property No. 165, Civil Lines, Station Road, Bareilly, was transferred to the said Company. Sri Y.P.Goel, the son of Hirday Narain Goel, was the managing director of the aforesaid company. During the lifetime of Y.P. Goel, it was decided to bring into existence another wholly owned subsidiary company and consequently, Hirday Narain Yogendra Prakash Properties Private Limited was incorporated as a wholly-owned subsidiary of Prakash Timbers Private Limited. This company had a nominal capital of ₹ 2,00,000/- and a paid up capital of ₹ 30,000/- consisting of 30 shares of ₹ 1,000.- each. Y.P. Goel is said to have died on 28th April, 1986, leaving behind three daughters, i.e. the petitioners and respondent No. 5 before the Company Law Board. It was alleged that on 19th March, 1990, the respondent No, 5 became ambitious and wanted to take away the rights of the petitioners since they were living out of Bareilly where the said company and its properties were situated. The respondent No. 5 wanted to deprive the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 68/92 was filed under Section 397/ 398 of the Companies Act, 1956, by Smt. Sushma Shingla and Smt. Sandhya Sharan against Prakash Timbers Private Limited and 5 others. During the hearing held on 26-5-1994 both the parties submitted that they would like to settle the dispute in terms of the compromise scheme dated 7-2-94 which was filed with the Bench. Both parties desired separation of the subsidiary company M/s. Hriday Narain Yogendra Prakash Properties Private Limited (hereinafter referred to as HNP) from the parent company, namely, Prakash Timbers Private Limited (hereinafter referred to as PTP). As per the terms of compromise, one of the properties of PTP situated at 165, Civil Lines, Bareilly shall be divided into three blocks, A, B and C. Blocks B and C are desired to constitute as an asset of HNP and Block A to remain in PTP. In order to settle and dispose of the petition we direct, in terms of the compromise, that :-- i) The paid up capital of PTP be reduced by ₹ 1,54,000 (being the book value of 87 shares held by Smt. Sushma Shingla and 67 shares held by Smt. Sandhya Sharan). The share certificates of 154 shares held by the petitioners in PTP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the appellants, and Sri Tarun Agarwal, the learned counsel for the respondents. 7. On behalf of the respondents, a preliminary objection was raised that the order passed by the Company Law Board being a consent order, as contained in the written compromise scheme filed on behalf of the parties, no appeal lies against it. Reliance was placed on Bryam Pestonji Gariwala v. Union Bank of India, AIR1991SC2234 . That case dealt with the question as to whether a counsel had the authority to compromise on behalf of the client. It does not lay down that, in no circumstances, an appeal against an order passed on consent can lie. In the case before me, the appellants challenge the jurisdiction of the Company Law Board in making an order by which the properties stand transferred as soon as the order was passed and the appellants' contention is that such an order could not be passed in exercise of powers under Section 397/398 of the Companies Act. Therefore, the jurisdiction of the authority concerned being under challenge, the appeal, in my view, is maintainable. 8. The contention of the appellants is that in order to bring into effect the compromise, it was necessary tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up; the Company Law Board may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. 398. (1) Any member of a company who complains- (a) that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company; or (b) that a material change (not being a change brought about by, or in the interests of, any creditors including debenture holders, or any class of shareholders, of the company) has taken place in the management or control of the company, whether by an alteration in its Board of directors, of its managing agent or secretaries and treasurers or manager, or in the constitution or control of the firm or body corporate acting as its managing agent or secretaries and treasurers or in the ownership of the Company's shares, or it has no share capital, in its membership or in any other manner whatsoever, and that by reason of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 398, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (g) any other matter for which in the opinion of the Company Law Board it is just and equitable that provision should be made. As is evident, under Section 397 of the Companies Act, the Company Law Board has the authority to make such orders, as it thinks fit with a view to bring to an end the matters complained of. Under Section 398 also, a similar power is given and Section 402, without prejudice to the generality of the powers under Sections 397 and 398 of the Companies Act, specifies the areas in which the power of the Company Law Board can be exercised. It also contains the residuary powers in clause (g) in respect of any other matter for which in the opinion of the Company Law Board, it is just and equitable that provision should be made. Formerly, these powers were exercisable by a High Court, but with effect from 31st May, 1991, these powers have been vested in the Company Law Board. The High Court still has certain powers under Section 394 of the Companies Act for facilitating reconstruction and amalgamation of companies. The said section re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any transferor company under clause (iv) shall be made by the Court unless the Official Liquidator has, on scrutiny of the books and papers of the company, made a report to the Court that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. (2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of, the transferee company; and in the case of any property, if the order so directs, free from any charge which is, by virtue of the compromise or arrangement, to cease to have effect. (3) Within thirty days after the making of an order under this section, every company in relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration. If default is made in complying with this sub-section, the company, and every officer of the company, who is in default, shall be punishable with fine which may extend to fifty rupees. (4) In this section- (a) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2 ceased to have any interest in the so-called parent company and acquired a larger interest in the so-called subsidiary company, which, in its turn, surrendered the amounts due to it by the parent company and became owner of a portion of the aforesaid property. Neither the terms of the compromise provided that any deed of conveyance was necessary to bring into effect the aforesaid provisions nor does the law seem to require the execution of any instrument or deed of conveyance. There is no provision under the Registration Act or the Stamp Act providing that an order made by the Company Law Board under any of the powers is required to be stamped or registered. 12. In some cases arising under the old provisions of Section 153-A of the Companies Act, it was held that as a result of an order of the Court under Section 153-A, the title of the transferee company to the property and assets transferred is derived from and by the force of the order itself (See Sahayanidhi (Virudhu-nagar) Limited v. A. R. S. Subrahmanya Nadar, 1950 20 Comp Case 214 : AIR 1951 Mad 209 , United India Life Assurance Company v. Commissioner of Income Tax [1963]49ITR965(Mad) . The provision which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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