TaxTMI 
TaxTMI 
2009 (11) TMI 498
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....1995, a Memorandum of Understanding (MoU) was entered into between the Appellants and Respondent Nos. 6 to 16, who are shareholders of the Fifth Respondent. Under the MoU, the Appellants agreed to purchase 1200 equity shares of the Fifth Respondent held by Respondent Nos. 6 to 16, representing 60 per cent of the equity share capital of the Company for a consideration of Rs. 48 crores. Each share was valued of Rs. 4 lacs. Under the MoU, the Appellants paid an amount of Rs. 5.13 crores to Respondent Nos. 6 to 16 towards the first instalment of the purchase price. According to the Appellants, the original share certificates along with the share transfer forms were handed over to them and 525 shares were transferred in the name of the Appellants. 5. Respondent Nos. 1 to 4 instituted a Company Petition under sections 397 and 398 of the Companies Act, 1956 to which the Fifth Respondent and Respondent Nos. 6 to 16, have been impleaded as parties. The Appellants filed an Application on 8-3-2007, for being impleaded as Respondents to the Petition. The Application for impleadment records that the Appellants are majority shareholders of the Company and that in pursuance of the MoU entered ....
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....affairs of the Company will be conducted in a manner prejudicial to the public interest or in a manner prejudicial to the interest of the Company. These provisions elucidate the basis and foundation of a Petition filed by a member of a Company complaining of mismanagement or oppression as the case may be. Wide powers are conferred upon the Company Law Board to deal with the situation. The Company Law Board is entitled to make such orders as it thinks fit in order to bring to an end the matters complained of under section 397(1) or under sub-section (2) of section 398, to prevent the matter complained of or apprehended. 9. Section 402 of the Act, provides as follows :- "Power of Tribunal on application under section 397 or 398.-Without prejudice to the generality of the power of the Tribunal under section 397 or 398, any order under either section may provide for- (a )the regulation of the conduct of the company's affairs in future; (b )the purchase of the shares or interest of any members of the company by other members thereof or by the company; (c )in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; ....
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....nder section 397 or 398.-If the managing director or any other director or the manager, of a company, or any other person, who has not been impleaded as a respondent to any application under section 397 or 398 applies to be added as a respondent thereto, the Tribunal shall, if it is satisfied that there is sufficient cause for doing so, direct that he may be added as a respondent accordingly." 13. Section 405 of the Act, deals with the power of the Company Law Board to implead additional Respondents to an application under section 397 or 398. Under section 405, if the Managing Director or any Director or a Manager of a company or any other person, has not been impleaded and such person applies to be added as a Respondent, the Company Law Board is empowered to pass an order added him as Respondent, if sufficient cause for doing so is established to the satisfaction of the Board. The Company Law Board in the present case inferred that the power to add or implead a party as a Respondent to an Application under section 397 or 398 is to add only those parties who are referred to in clauses (d) and (e) of section 402. The Board applied the interpretative tool of ejusdem generis. The p....
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.... a class or category; (iii) The class or category is not exhausted by the enumeration; (iv) General terms follow upon the enumeration; and (v) there is no indication of a different legislative intent. [G.P.Singh on the Principles of Statute Interpretation, 9th Edition page 420.] This principle can have no application in construing words "any other person" in section 405 which operates in a field untrammeled by section 402. 14. The Company Law Board has in the present case diluted its finding that the expression "any other person" under section 405 must be construed with reference to section 402(e) by holding that occasions may arise to implead other persons on the facts of each case. The Board noted that shareholders who are not parties may apply on the apprehension that, any relief granted would affect their interest or employees or creditors may also apply on the same ground. The Board held that notwithstanding the 'strict' provisions of section 405, it may have to use it discretion in deciding on the basis of the facts of each case, where the application for impleadment has shown sufficient cause to be impleaded as a Respondent. The residual discretion which the Board assumes....
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.... the Annual General Meeting, is a restraint on the alienation of the immovable properties of the company. Prayer (e) of the Petition reads as follows :- "(e )The Respondent be directed to maintain the status quo qua the shareholding pattern of the Respondent Company as it stood on 1-4-1990 as also the composition of the Board as it stood on 1-4-1990." 17. According to the Appellants the relief that has been sought in prayer (e) for the maintenance of the status quo qua the shareholding Pattern of the Company, as it stood on 1-4-1990 and the composition of the Board as on that date would directly impinge upon the rights which the Appellants claim for the specific performance of the MoU dated 18-4-2005. According to the Appellants, Respondent Nos. 6 to 16 hold 1220 shares, whereas Respondent Nos. 1 to 4 hold 650 shares. Out of the 1220 shares held by Respondent Nos. 6 to 16, the MoU requires the transfer of 1200 shares to the Appellants. In pursuance of the MoU, the Appellants claim to have paid an amount of Rs. 5.13 crores. According to the Appellants, the grant of reliefs in terms of prayer (e) of the Petition for the maintenance of the status quo qua the shareholding pattern....