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1998 (6) TMI 583

tawar B. Chenoy, Director, Anis Dayal, Adv. Zinia Layer, Director and Amogh, Chartered Accountant For Respondents: U.P. Mathur, Adv. ORDER 1. The applicant herein, namely, Bakhtawar Construction Company Limited, had filed a petition under Section 248/250 of the Companies Act, 1956, in Blossom Breweries Limited., In re. We dismissed this petition as not maintainable, vide our order dated November 12, 1997 (see [1998] 95 Comp Cas 28). The applicant then filed an appeal against this order in the High Court of Bombay and the said High Court, while setting aside our order, has remitted the same back to us for considering the petition on the merits. In the said order, the High Court has also directed that we should consider the application for interim relief filed by the applicant (see [1998] 95 Comp Cas 28). 2. The applicant had filed an application C. A. No. 133 of 1997, dated April 24, 1997, seeking interim reliefs as sought for in the petition. The interim reliefs sought for in the petition are more or less on the same lines as provided under Section 250(2). However, when the matter was heard as per the directions of the High Court, the applicant sought for restraining the company fr .....

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dings and without hearing them, no orders can be passed against the shares held by them, Accordingly, he submitted that there is no scope either in law or on facts to grant the prayer sought for by the applicant. 4. Dr. Singhvi, senior advocate, appearing for the applicant submitted that the applicant has come before the Company Law Board in pursuance of the directions of the Bombay High Court which has, in the last para, of the order, directed the Company Law Board to consider the interim prayer. According to him, even though there is no specific provision either in Section 248 or Section 250(1) for grant of interim relief pending an order of investigation, in the absence of any specific fetter or prohibition to grant interim relief, it should be presumed that a judicial body will have the powers to grant interim relief to meet the ends of justice. He further submitted that one has to go by the purpose and objective of the provisions of a statute and as long as the interim relief sought is within the objective, then even in the absence of a specific provision, a judicial body is empowered to grant interim relief. According to him the interpretation of the provisions of the statute .....

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ted by both the counsel. The only issue to be considered is, whether we have any inherent powers or whether we should assume that the said power is vested in us implicitly in the absence of any specific prohibition in this regard. Regarding inherent power, Dr. Singhvi relied on regulation 44 of the Company Law Board Regulations. A reading of this regulation would make it clear that the inherent powers saved by this regulation relate to matters covered in the regulations which cover the procedural matters. What we are asked to exercise now is not related to procedural matters but a substantive power having the effect of affecting the rights of various other parties who are not before us. A reading of the various provisions of the Companies Act relating to the powers on the Company Law Board would indicate that, wherever the Legislature had intended to confer powers of the Company Law Board to grant interim relief during the pendency of any proceedings, the same has been specifically conferred on the Company Law Board. Reference may be made to Section 111(6) and Section 403 which covers proceedings under Section 397/398. As we have pointed out earlier the interim reliefs sought for i .....

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ares in connection with an investigation without such restriction. This is explicitly clear from para. 14 of the order in Gammon India Ltd., In re [1990] 3 Comp LJ 89 , wherein the Company Law Board itself has stated that it was exercising the powers as per the provisions of Section 250 as it existed before the 1988 amendment came into force. However, with the changes brought about by the amendment in 1988 to this section, an order of investigation is precedent to imposing restrictions on the shares. Accordingly, we are of the view that the decision to impose restrictions on the shares during the pendency of the proceedings in Gammon India Ltd., In re [1990] 3 Comp LJ 89, cannot be taken as a precedent. 6. However, Dr. Singhvi restricted his prayer only for restraining transfer of shares covered under the promoters' quota. While seeking this prayer, he seeks to invoke our inherent powers which according to him are incidental and ancillary to our substantive power as held in cases cited by him. The case referred to in ITO v. Mohamad Kunhi (M. K.) [1969] MANU/SC/0087/1968MANU/SC/0087/1968 : 71 ITR 815 ; [1969] 2 SCR 65, relates to the power of the Income-tax Appellate Tribunal in .....

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already mentioned earlier, are more or less in line with the provisions of Section 250(2). 8. Now the question that arises is whether, in the facts and circumstances of this case, this limited prayer of the applicant could be considered. This petition was filed on April 21, 1997, and we had fixed the dates of final hearing on December 15, 1997, and subsequent dates subject to this petition being maintainable. But for our dismissing the petition as not maintainable, this petition would have been disposed of in one way or the other and the lock-in period expiring on May 25, 1998, would have been of no relevance. Since this limited prayer has come out of circumstances beyond the control of any one, we are of the view that we should be pragmatic and practical in taking a view on this limited prayer notwithstanding the legal position stated earlier. Therefore, we feel that, granting the prayer of the petitioners, as modified by us hereinafter, especially when we have kept the petition in the next few months, is not likely to cause any hardship to the respondents, and as such, we hereby order that, the company shall not register the transfer of any shares comprised in the promoters' .....

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