TaxTMI 
TaxTMI 
2015 (3) TMI 550
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....no.1 has sought the relief that she holds 50% share of PTPL and is the Managing Director and Chairperson of PTPL. She further challenges her removal as a Director of PTPL and apart from other reliefs, has sought a declaration that the allotment of shares by Mr. Matang Sinh (respondent No.2 in Company Appeal filed by PTPL) is null and void. 4. By interim order dated 25.05.2009, the CLB directed status quo with regard to the fixed assets of the respondent companies as well as of all the share holdings. PTPL filed an application for modification of the status quo order. The application was dismissed by the CLB by its order dated 29.05.2011. 5. Appeal was filed by PTPL before this court against the order of CLB dismissing the application for modification of status quo order. By an order dated 19.10.2011, the appeal was disposed of in the following terms:- "After some arguments, Mr. C,A. Sundaram, learned senior counsel on instructions of Ms. Ranjana Roy Gamin, learned counsel, states that for the moment, appellant would be satisfied if appellant No.8 and/or his associates are allowed to bring :in money as....
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.... (iii) CA No. 87 praying for initiating contempt proceedings against some of the respondent for violating order dated 25.05.2009 ; and (iv) CA No. 88 seeking impleadment of WIPL and certain other parties. 10. The impugned order dated 09.05.2014 is an order of interim nature passed in CA No. 88 (application for impleadment) as the application has not yet been disposed of. 11. The appellants are aggrieved by the impugned order in as much as by the impugned order the CLB has returned a finding that the agreement dated 30.01.2013 aims at a complete takeover of PTPL by WIPL and a finding that the agreement is fraudulent, mischievous, in breach of and a complete abuse of the order passed by the CLB on 25.05.2009 and the liberty granted by this court by order dated 19.10.2011 and that the agreement is a nullity. 12. The appellants are further aggrieved by the finding of the CLB that the true persons who are or have been financially interested in the success or failure of WIPL are different from the persons who appear to be members of WIPL and the true persons who are or have been able to control or ma....
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....ons being issued by the impugned order. 18. Learned Senior Counsel for WIPL further contended that the CLB without even hearing the parties, has held that the Agreement dated 30.01.2013 is a nullity. It is submitted that in case the agreement was void then under Section 65 of the Contract Act, the parties that have received advantage under the agreement that is void are bound to restore it or compensate for it. It is submitted that in case the agreement is held to be nullity then PTPL and respondent no.1 must first restore to WIPL the amount of Rs. 150 Crores obtained by PTPL from WIPL under the said agreement. 19. Learned Counsels for the appellant submitted that there was no application filed by respondent no.1 seeking for investigation into the affairs of WIPL or seeking a direction that no Board Meeting or EOGM of WIPL be held or seeking appointment of a nominee director on the Board of PTPL. It is contended that the order was really an order on Company Applications No. 85, 86 and 87 of 2013, which even as per the order, are still to be heard. It is contended that the impugned order issues directions that were not even the subject matter or arise out of any of the application....
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....t WIPL had brought in money only in terms of the order passed by this court and in case the respondent no.1 has any objections then WIPL is agreeable to taking the money back. 25. It is submitted that respondent no.1 cannot, after having availed of the benefit of the money brought in by WIPL, challenge the transaction. It is contended that in case respondent No.1 has any objection to the transaction, then respondent no.1 should first restore the benefit and restitute the money to WIPL. 26. It is contended that respondent no.1 kept quite all along when the money was being brought in and was being utilized by PTPL to pay off the private sector banks and the secured creditors and was being utilized for discharge of the personal guarantees given including those given by the respondent no.1. 27. It is further contended that the application for impleadment of WIPL filed by the respondent no.1 is mala fide as the respondent no.1, after the infusion of Rs. 150 Crores by WIPL, has got all the assets of PTPL freed and debts paid off and thereafter the said application is being used as a modus operandi to force WIPL into giving up or writing off the said Rs. 150 Crores. 28. Learned Senior....
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....her submitted that when the powers under Section 247(1A) could not be exercised qua WIPL even if it had been a party to the proceedings, then powers could certainly not be exercised as an interim direction in an application seeking impleadment of WIPL. 35. Learned Senior Counsel for WIPL submitted that the respondent no.1 had filed the petition under Section 397 of the Act for oppression and mismanagement and such a petition would not lie against a company that is a stranger to the transaction or to the issue of oppression and mismanagement. It is submitted that when the petition was filed before the CLB or when the alleged cause of action accrued to the respondent no.1, WIPL was in no manner connected with PTPL. WIPL had come into the picture much later and had infused Rs. 150 Crores in terms of order dated 19.10.2011 and as such, no direction can be issue qua WIPL. 36. It is further contended that WIPL is neither a necessary nor a proper party to the petition filed by the respondent No.1 alleging oppression and mismanagement by PTPL and the other respondents therein. 37. Learned Senior Counsel further contended that no asset of PTPL was either charged or mortgaged with WIPL, t....
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....respondent had not made any such prayer in any of the applications, it was contended that the directions qua WIPL do not flow from any of the pending applications but flow from the general powers of the CLB to pass such directions. 45. With regard to the directions issued in respect of PTPL, it is contended that since other applications were pending before the CLB, it could pass such orders. 46. It is contended that the agreement entered into between PTPL and WIPL was contrary to the liberty granted by this court by order dated 19.10.2011. It is contended that the agreement dated 30.01.2013 was a nullity and the subsequent addendum agreement was also a nullity and contrary to the liberty granted by order dated 19.10.2011 and the subsequent addendum agreements dated 09.02.2013 and 30.02.2013 would not validate the agreement dated 30.01.2013. 47. It is submitted by the respondent no.1 that WIPL by infusing Rs. 150 Crores had attempted to virtually take over PTPL and the investigation directed by the CLB was to investigate into the coalition between WIPL and PTPL. 48. It is contended that the impugned order only expressed a strong prima facie view on the invalidity of the agreemen....
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....ctors to investigate and report on the membership of any company and other matters relating to the company, for the purpose of determining the true persons. (a) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or (b) who are or have been able to control or materially to influence the policy of the company. (1-A) Without prejudice to its powers under this section, the Central Government shall appoint one or more inspectors under sub-section (1), if the Tribunal, in the course of any proceedings before it, declares by an order that the affairs of the company ought to be investigated as regards the membership of the company and other matters relating to the company, for the purpose of determining the true persons- (a) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or (b) who are or have been able to control or materially to influence the policy of the company.] (2) .......... 55. Section 247(1) empowers the Central Government, for good reason, to appoint one or more inspectors to investigate and repor....
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....y proceeding before it". The use of the expression "in the course of any proceeding before it" implies that there must be some proceedings pending before the CLB before the power to direct investigation can be ordered. The use of the expression "the company" implies further that it refers to the company in respect of which the proceedings are pending before the CLB. The use of the expression "in the course of any proceeding before it" cannot be read liberally so as to empower the CLB to direct investigation into the affairs of any company connected or unconnected with the proceedings or which is merely a party to the proceedings. In a proceeding under section 397 for oppression and mismanagement, the expression "the company" would refer to the company in respect of which the allegation of oppression and mismanagement has been made and not to other companies that may be party to the proceedings either as petitioner or as performa respondent. Section 247(1A) would not empower the CLB to direct investigation into the affairs of a company which is merely party to the proceedings but is not the company in respect of which there is any allegation of oppression and mismanagement. 60. The....
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....en against the backdrop of the company that it keeps. If a word or an expression is capable of several sets of meaning in its literal import, the one best suited to the context would be the most acceptable. But a word or an expression in a statute cannot be given a meaning that it would ordinarily not bear only by referring to the context and the perception of what it ought to have implied. Language is, at best, an imprecise form of communication, which is even more inexact when in cold print. The spoken word has the advantage of the accompanying tone or gesture to convey a more specific meaning of that which is being communicated. The interpretation of that which is communicated in writing should lend more towards how it is capable of being understood rather than how it was intended to be perceived. The true meaning of a written word is as it ought to appear to a reasonable reader. The fundamental tenets of statutory interpretation recognise the gulf between the words in a statute and the varied understanding thereof and attempt to bridge the gap. 62. In BIRLA CORPORATION LTD. V. EAST INDIA INVESTMENT CO. PVT. LTD., (2006) 133 COMP CAS 515(CAL), the Calcutta High Court has laid d....
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....al that justify formation by the CLB of prima facie opinion of the necessity of an investigation in the interest of the company and/or in public interest must be demonstrable. The CLB should not direct a roving fishing investigation at the behest of persons who have some ulterior intent in seeking investigation. The power to direct investigation under section 247(1A) is to be invoked bona fide and in public interest. 64. In the case at hand, the CLB has passed the order in the nature of an interim order in an application seeking impleadment. There is clearly no formation of opinion by the CLB that the „true persons‟ who are or have been financially interested in the success or failure of the company, are different from the persons who appear to be the members of the company or the „true persons‟ who are or have been able to control or materially influence the policy of the company, are different from the persons who appear to be in the control of the company and a probe into the company's affairs is desirable in the interest of the company itself, and/or in public interest and that such an investigation was required into the affairs of WIPL. There was a....
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....nsel Mr. Ramji Srinivasan was heard on admission of four applications filed by the Petitioner i.e. CA Nos. 85, 86, 87 and 88 of 2013 on 19.11.2013. CA No.85/(ND)/2013 sought urgent interim directions for preventing a breach of the status quo dated 25.05.2009 passed by this Board. CA No. 86 sought setting aside the agreement dated 30.01.2013 between WIPL and PTPL and R-2. CA No.87 prayed for initiating contempt proceeding against R-2, 3, 4 & 6 and all others abetting such breach of the order dated 25.05.2009 and present CA No.88/C.No.1/2013 sought impleadment as shown in para 1 (supra)." 70. In paragraph 7, the CLB has recorded as under:- "7. During the next two hearings i.e. on 10.01.2014 and 07.02.2014 pleadings in the above mentioned CA were not complete. On 13.03.2014, as agreed, it was directed that while hearing on interlocutory applications mentioned above, CA No. 86/C.No.I/2013 (which should have been CA No.88) seeking impleadment shall be heard in order of precedence and the remaining applications thereafter. It is in these circumstances that arguments commenced on CA No.88 first and conc....
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....solutely necessary that an investigation is, carried out by the Central Government into the affairs of WIPL as regards the Membership of the company, its Board of Directors and the source from which WIPL had obtained a sum of 150 crores to be granted initially as loan to PTPL and its nexus with the true persons behind it who aimed at securing full control of PTPL and its group companies. I therefore direct the Central Government to appoint a team of inspectors of unimpeachable integrity for investigating the affairs of WIPL for the purpose of determining the true persons who are or have been instrumental in providing funds to WIPL to the extent of 150 crores and also for determining the true persons who are or have been financially interested in gaining control over PTPL and its group companies through WIPL and the success or failure of such strategy whether real and apparent of WIPL or who are or have been able to control or materially to influence the policy of WIPL. The investigation shall also be focused, while ascertaining such true persons, on the purpose in reconstituting the Board of WIPL with Mr. Shekhar Sharda and Mr. Amit Kumar Jha, who were not only at an earlier point ....
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.... the CLB, without deciding on the impleadment and without even hearing the praties on merits, has held that the agreement dated 30.01.2013 aims at a complete takeover of PTPL by WIPL and the agreement is fraudulent, mischievous, in breach of and a complete abuse of order passed by the CLB on 25.05.2009 and the liberty granted by the order dated 19.10.2011 by the High Court, and is therefore a nullity. 80. The CLB after returning the finding as above, records that since at that juncture, it was only considering the impleadment of proposed respondents, it would confine itself to observing that it is doubtful if an agreement which is a nullity could be revived or modified by any addendum agreement which would be considered while considering the setting aside of agreement dated 30.01.2013. The order further records that after hearing the parties, the CLB would pass appropriate order whether the agreement dated 30.01.2013 and the further addendums are also liable to be set aside. 81. The impugned order further records the contentions of the counsel for the respondent no. 1 (Petitioner before CLB) on CA No. 88, raising doubts about the financial capacity of WIPL to grant a loan of Rs. ....
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....e said amount has been invested by WIPL in PTPL. Whether WIPL did or did not have the financial capacity to invest the said amount is not a relevant consideration for the impleadment application and does not arise for consideration in the application for impleadment which is premised on the very contention that the said amount of Rs. 150 Crore was infused by WIPL in PTPL. Furthermore, it is also admitted by the respondent no.1 that the said amount has been infused by WIPL. For impleadment, what is relevant is whether the proposed parties are necessary or proper parties and whose presence is required for the complete and effective disposal of all the issues arising in the proceedings. The impleadment application is yet to be decided. Whether this issue is relevant for the disposal of the other pending applications is yet to be considered by the CLB as the other applications are yet to be heard and decided. 85. Similarly, the direction by the CLB to the Central Government to induct one of its nominee as a director on the Board of PTPL without whose presence no Board Meeting of PTPL shall be held and without whose affirmative vote no Resolution would be passed by the Board of PTPL an....