Section 402 relief limited by prior consent order; independent applications failed and third-party contracts remained valid.

Section 402 relief was held to operate only within the seisin retained by an order made under sections 397 and 398, so it could not be invoked by independent later applications where the earlier consent order had not preserved jurisdiction over the new grievances. On the facts, an administrator could not be appointed through these proceedings because the requested control lay outside the scope of the prior order. Contracts granting playing time to third parties were also treated as valid, since the exhibitors had no notice of internal disputes and there was no proof of fraud, misrepresentation, mistake or coercion.

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Issues: (i) whether an administrator could be appointed for the company under section 402 of the Companies Act; (ii) whether the applications were maintainable under section 402 after disposal of the earlier petition by consent order; (iii) whether the contracts dated March 20, 1987 and February 12, 1987 granting playing time to VIP Enterprises and REK Exhibitors were illegal or void.

Issue (i): whether an administrator could be appointed for the company under section 402 of the Companies Act

Analysis: The consent order of March 29, 1984 had left the company to be managed by its board, while only a limited mechanism for resolving specified disputes was retained through reference to named decision-makers. The court held that, on the facts, the rival groups were unable to manage the company without detriment to its interests and that the dispute showed a breakdown in effective management. However, the power under section 402 had to operate within the framework of the order made under sections 397 and 398, and not as an independent fresh proceeding.

Conclusion: In principle, an administrator could be appointed only where the earlier order preserved such control, but on the facts of these applications that relief was not available.

Issue (ii): whether the applications were maintainable under section 402 after disposal of the earlier petition by consent order

Analysis: Section 402 was construed as enabling regulation of the company's affairs in future only through an order made under sections 397 or 398, where the court had retained seisin over the subject matter. The earlier consent order had not retained seisin over the later grievances concerning appointment of an administrator or cancellation of third-party agreements. The limited future control retained by the court related only to specified disputes referred for determination, and not to the reliefs now sought. Therefore, independent applications under section 402 for those reliefs were outside jurisdiction.

Conclusion: The applications were not maintainable.

Issue (iii): whether the contracts dated March 20, 1987 and February 12, 1987 granting playing time to VIP Enterprises and REK Exhibitors were illegal or void

Analysis: The exhibitors had no notice of the internal disputes or of the earlier proceedings, and were entitled to rely on the authority apparently conferred by the company on respondent No. 16. There was no pleading or proof that the agreements were vitiated by fraud, misrepresentation, mistake or coercion. In the absence of notice and in the presence of apparent corporate authority, the agreements could not be treated as void merely because of disputes within the company.

Conclusion: The contracts were neither illegal nor void.

Final Conclusion: The court declined to grant the substantive reliefs sought in the judges' summonses and held that the later applications could not be used to reopen matters beyond the scope of the earlier consent order, while also protecting the validity of transactions entered into by uninformed third parties.

Ratio Decidendi: An order under section 402 can regulate the future conduct of a company's affairs only when made within, and to the extent of, the seisin retained by an order under sections 397 or 398; relief against later events cannot be sought by independent proceedings where that seisin was not preserved.

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