2011 (5) TMI 844 - HC - Companies Law

Court dismisses company appeal challenging CLB order on maintainability of composite company petition under Companies Act.

Valentino International (P) Ltd. Versus Dugar Securities Ltd., New Delhi

The court dismissed the company appeal challenging the CLB's order on the maintainability of a composite company petition under sections 397 and 398 of ... Maintainability of petition to CLB – Held that:- merely because the objection has been raised by appellant, that in no manner will non-suit the company petitioner from the mechanism to examine the dispute raised as provided under the law. in the absence of there being any decision or order deciding the right of the parties either way and by which one could be said to be aggrieved and at the same time, arising any question of law, which may at all require determination, this Court has to refrain from entertaining the appeal. Appeal dismissed. Issues:Company appeal under section 10F of the Companies Act against CLB's order, maintainability of composite company petition under sections 397 and 398, disputed questions of fact, locus standi of company petitioner, examination of civil rights in rectification of Register, necessity of holding 10% or more shares to maintain company petition, interpretation of judgments in Ammonia Supplies Corpn. (P.) Ltd. v. Modern Plastic Containers (P.) Ltd. and Standard Chartered Bank v. Andhra Bank Financial Services Ltd., CLB's authority to examine disputed questions of fact, appeal under section 10F, determination of person aggrieved, examination of maintainability of company petition, jurisdiction of civil court in inter se disputes, necessity of reply to company petition, and final hearing before CLB.Analysis:The judgment involves a company appeal under section 10F of the Companies Act challenging the CLB's order regarding the maintainability of a composite company petition under sections 397 and 398. The appellant raised preliminary objections, questioning the maintainability of the petition due to disputed questions of fact and lack of locus standi. The CLB rejected the objections, stating that they could be examined after the reply to the petition was filed. The CLB observed that the matter required a detailed examination and should not be decided at the preliminary stage.The appellant contended that the petition was not maintainable as serious disputed questions of fact were involved, citing judgments in relevant cases. However, the respondent argued that the objections could only be considered after the reply was filed and examined by the CLB. The respondent emphasized that the company petition was maintainable under sections 397 and 398 and that the appeal under section 10F lacked merit.The court analyzed the contentions and the CLB's order, noting that the objections raised did not preclude the examination of the dispute as provided by law. The court found that the order rejecting the preliminary objection was not a final decision or order, and therefore, the appellant could not be considered aggrieved. The court refrained from entertaining the appeal due to the absence of a decision on the rights of the parties and the pending final hearing before the CLB.In conclusion, the court dismissed the appeal as devoid of merit, emphasizing that any finding on the merits at that stage could adversely affect the parties' rights. The judgment highlighted the importance of the pending proceedings before the CLB and the need for a comprehensive examination of the dispute raised in the company petition under sections 397 and 398 of the Companies Act.