TaxTMI 
TaxTMI 
2004 (11) TMI 612
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.... to the present application are that the Company is a joint venture company, incorporated pursuant to a Shareholders Agreement dated 30.06.1995, entered into between PPL and JVSL, with the present shareholding at the ratio of 74% and 26% respectively. At the 8th annual general meeting held on 20.12.2003, every item of the business was duly transacted by the shareholders save the re-appointment of M/s. Price Waterhouse & Co., as the statutory auditor, who has been the statutory auditor of the Company, for the past 8 years in terms of the SHA dated 30.06.1995, on account of the differences between them, which resulted in adjournment of the annual general meeting on several occasions for the sole and specific purpose of completing the business of appointment of the statutory auditor. However, at the adjourned annual general meetings, the statutory auditor could not be appointed for want of a quorum on account of JVSL purportedly staying away from the said meetings. In view of the irreconcilable differences between the shareholders on the re-appointment of M/s. Price Waterhouse & Co., JVSL filed an application on 18.08.2004 before the third respondent under Section 224(3) for the appoi....
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....of Section 151 of the Code of Civil Procedure, 1908 is empowered to stay the proceedings under Section 224(3). * JVSL further gave a special notice for moving a resolution in terms of Section 225 of the Act to appoint another auditor in the place of M/s. Price Waterhouse & Co, which is pending, in which case JVSL cannot invoke the provisions of Section 224(3). * The counter affidavit filed on behalf of the third respondent has been signed by the Joint Director whose authority is not known and must be ignored. * While claiming that the power under Section 167 cannot be extended to include stay of any proceedings before the third respondent exercising the power under the Act, JVSL is in a hurry-to file a caveat before the High Court of Karnataka, anticipating any action by PPL against the order which may be passed by the third respondent. * The subject matter and parties before the CLB and the third respondent are the same and the extraordinary facts and circumstances of the present case warrant the immediate interference by the CLB. * In the event of the proceedings under Section 224(3) are not being stayed, Shri Datar, learned senior Cou....
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.... invoke Regulation 44, exercising the inherent power. In the present case the CLB by virtue of Section 167 is empowered to call or direct the calling of a meeting of the members and to give such ancillary or consequential directions, which are expedient in relation to the calling, holding and conducting of the meeting. Any interim relief must be confined to the reliefs sought for in the main petition. This power of the CLB cannot be extended to include stay of any proceedings before a quasi-judicial or statutory authority. The third respondent is exercising its jurisdiction under Section 224 (3). The CLB a statutory Tribunal constituted under Section 10E does not have writ or appellate jurisdiction over the third respondent, a statutory authority exercising powers under the provisions of the Act, in which case the CLB cannot exercise the inherent power under Regulation 44, prohibiting such authority from validly exercising its statutory functions under Section 224(3). Any such interference would amount to abuse of the process of a statutory authority. The applicant is at liberty to challenge any order, which may be passed by the third respondent in a competent court of law. The ....
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....ion before the third respondent has been filed not by the Company but by JVSL and, therefore, the application before the third respondent is not maintainable. 7. After considering the pleadings and arguments of learned senior Counsel, the short question that arises for my consideration is whether the CLB in exercise of the inherent power shall stay the proceedings under Section 224(3) pending before the third respondent, in the facts and circumstances of the present case, before which, I think it fit that the relevant material provisions of the Act and Regulation 44 must be borne in view. By virtue, of Section 10E(1A), the Company Law Board shall exercise and discharge such powers and functions as may be conferred on it, by or under this Act or any other law, and shall also exercise and discharge such other powers and functions of the Central Government under this Act or any other law as may be conferred on it by the Central Government, by notification in the Official Gazette under the provisions of this Act or that other law and shall be guided by the principles of natural justice and must act in its discretion and regulate its own procedure as envisaged in Sub-section (5) & (6....
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....urther according to the rules of reason, justice and law, without any violation of the provisions of the Act and the discretion has to be regulated according to the known rules of law, in support of which reference is invited to the decision of this Board in Cannanore Whole Body Scan v. Saibunnisa - (1998) Vol. 93 CC 99, the relevant portion of which is reproduced here below: "...by virtue of Regulation 44 of the Company Law Board Regulations, 1991, this Bench has inherent powers to pass such orders as may be necessary to meet the ends of justice. It is also true that this Bench while exercising its powers under the Act, shall be guided by the principles of natural justice and shall act in its discretion as enunciated in Sub-section (5) of Section 10E of the Act. At the same time, this Bench shall necessarily act according to the rules of reason, justice and law. There cannot be any violation of the provisions of the Act. The discretion has to be regulated according to the known rules of law. There are innumerable decisions to the above effect". Furthermore, the Supreme Court in Cotton Corporation of India v. United Industrial Bank Ltd., - (1983) 4 SCC 625 held that the....
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....under Section 224(3), in exercise of the inhernet power of the CLB. Similarly, the CLB shall function within the limits of its jurisdiction and has all the powers conferred expressly by the statue as in the case of a Tribunal constituted under the Customs Act 1962 and held by the apex court in Union of India v. Paras Laminates (P) Ltd. (Supra). Merely, because there is no enabling provision prohibiting the CLB from staying the proceedings before the third respondent as urged by Shri Datar learned Senior Counsel, relying upon the decision in New India Assurance Co. Ltd. v. R. Srinivasan (Supra), the CLB cannot exercise the inherent power in violation of provisions of the Act. The Madras High Court in PPN Power Generating Company Limited v. PPN (Mauritius) Company (order dated 08.10.2004 in C.M.A.N.P.D. (B) No. 2101 of 2004), while dealing, inter alia, with the question of the CLB having any inherent power, on an analysis of a plethora of decisions including the decision in Income Tax Officer, Cannanore v. M.S. Mohammed Kunhi cited supra came to the following conclusion: - "From the above said decisions, though it is held that even in the absence of any specific provision, t....