Waiver and estoppel objections need evidence before decision; procedural directions on subsidiary allegations were upheld.

Objections based on waiver, estoppel, acquiescence or an alleged collateral motive cannot be decided as preliminary issues in a petition under sections 397 and 398 of the Companies Act, 1956 when their determination depends on disputed facts and evidence. Such contentions must be left for decision on the merits. The Company Law Board's directions to require a reply on subsidiary-related allegations and to recognise liberty to pursue a separate statutory petition were within its procedural powers and showed no jurisdictional error. The challenged directions were therefore valid, and the appeal failed.

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Issues: (i) Whether objections based on waiver, estoppel or acquiescence, and the allegation of collateral motive, could be decided as preliminary issues in a petition under sections 397 and 398 of the Companies Act, 1956. (ii) Whether the directions issued by the Company Law Board to file a reply on matters relating to subsidiaries and to recognise the liberty to move a separate petition under the Act were legally sustainable.

Issue (i): Whether objections based on waiver, estoppel or acquiescence, and the allegation of collateral motive, could be decided as preliminary issues in a petition under sections 397 and 398 of the Companies Act, 1956.

Analysis: The objections turned on disputed factual matters, including the circumstances in which letters were written and resolutions were voted upon, and could not be resolved merely from the pleadings or documents produced. Such questions were not pure questions of law and required evidence before the final fact-finding authority. The availability of the plea of waiver, estoppel or acquiescence, and the contention that the petition was filed for an oblique purpose, therefore depended upon proof at the merits stage and not at the threshold.

Conclusion: The objections were not fit to be decided as preliminary issues and were rightly left for determination on merits.

Issue (ii): Whether the directions issued by the Company Law Board to file a reply on matters relating to subsidiaries and to recognise the liberty to move a separate petition under the Act were legally sustainable.

Analysis: The Company Law Board had wide powers under its enabling provisions to regulate procedure and pass appropriate orders in proceedings under sections 397 and 398 of the Companies Act, 1956. In view of the rejection of the challenge to the subsidiary-related directions, the direction to file a reply on allegations concerning dealings with subsidiaries could not be said to be without jurisdiction. The recognition of the statutory liberty to pursue relief under section 214(2) read with section 235 also involved no legal error.

Conclusion: The directions were valid and did not call for interference.

Final Conclusion: The appeal failed because the disputed objections required evidence and the impugned procedural directions were within the Company Law Board's powers.

Ratio Decidendi: A maintainability objection resting on waiver, estoppel, acquiescence or alleged collateral motive cannot be finally decided as a preliminary issue where its determination depends on disputed facts and evidence.

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