2000 (9) TMI 993 - HC - Companies Law

Division Bench to Hear Initial Appeals, Company Judge for Disposal: Alignment with Companies Act

The court determined that the appeal against the Company Law Board's order would be initially heard by the Division Bench for preliminary admission. ... Company Law Board Issues Involved:1. Maintainability of the appeal before the Division Bench or the learned company judge.2. Interpretation of statutory provisions and High Court Rules regarding the appellate forum for orders passed by the Company Law Board.3. Necessity for amending existing High Court Rules and Orders to align with amendments to the Companies Act.Issue-wise Detailed Analysis:1. Maintainability of the Appeal:The primary issue was whether the appeal against the order of the Company Law Board should lie before the Division Bench or the learned company judge. The court noted that the appellant's counsel conceded doubts about the maintainability of the appeal before the Division Bench and could not cite any supporting judgments. The court referred to a connected appeal where a similar doubt was raised but not resolved. The court reserved its order after hearing the counsel at length.2. Interpretation of Statutory Provisions and High Court Rules:The court examined the relevant statutory provisions and High Court Rules to determine the correct appellate forum. It referenced sections 397, 398, 399, 10E, and 10F of the Companies Act, 1956, and noted the amendments introduced by the notification dated May 31, 1991. Prior to these amendments, petitions under sections 397 and 398 were filed before the learned company judge, and appeals lay to the Division Bench. Post-amendment, such petitions were to be filed before the Company Law Board, and appeals against its orders were to be filed under section 10F to the High Court on questions of law.The court analyzed Part B of Chapter 3 of Volume 5 of the Rules and Orders of Punjab and Haryana High Court, which generally mandated that cases be heard by a single judge, except for specific exceptions. Clause 1 of these rules included an explanation that company appeals, among others, should be initially heard by a Bench of two judges for preliminary admission purposes.The court referred to various judgments, including the Bombay High Court's decision in Minoo H. Mody v. Hemant D. Vakil and the Supreme Court's observations in Stridewell Leathers (P.) Ltd. v. Bhankerpur Simbhaoli Beverages (P.) Ltd., which clarified that the appellate forum remained unchanged despite the amendments. Additionally, the court cited a Division Bench decision in Stephen Chemical Ltd. v. Innosearch Ltd., highlighting the distinction between the rules of different High Courts and affirming that company appeals should be listed for motion hearing before a Division Bench.3. Necessity for Amending Existing High Court Rules and Orders:The court emphasized the need to amend the relevant High Court Rules and Orders to provide a clear appellate forum for orders of the Company Law Board. It noted that such amendments would save the Division Bench's time and expedite the disposal of appeals by allowing them to be heard by the company judge. The court directed the Registry to place the matter before the Chief Justice for consideration of these suggestions.Conclusion:The court concluded that, as per the current rules, the appeal would lie before the Division Bench for preliminary hearing and admission. However, it suggested that post-admission, the appeal could be disposed of by the company judge. The court directed the appeal to be listed before the appropriate Bench for preliminary hearing, subject to the Chief Justice's orders. The court also highlighted the necessity for amending the High Court Rules and Orders to align with the amended provisions of the Companies Act, ensuring an appropriate appellate forum for Company Law Board orders.