TaxTMI 
TaxTMI 
2026 (7) TMI 260
X X X X Extracts X X X X
X X X X Extracts X X X X
....emise of appellant nos. 2 and 3, the right to sue survives in favour of the Legal Representatives. Factual Matrix 3. M/s. BHP Engineers Pvt. Ltd. (the Company) was incorporated by three promoters in 1982. The name of company was changed twice and finally, in 1989, it assumed its present name, i.e. M/s. BHP Engineers Pvt. Ltd.). 4. Appellants are minority shareholders who have filed a petition alleging oppression and mismanagement under Sections 397/398 read with Section 402 of the Companies Act, 1956 ['Companies Act'] in respect of M/s. BHP Engineers Pvt. Ltd. 5. Various disputes arose between appellants and respondent no. 2, including allegation of siphoning of funds, oppression of appellants and mismanagement of the Company. In 2013, CA 120/2013 was filed placing on record interrogatories, which were expected to significantly clarify the statements made by the respondents in their reply to the petition. This was in the backdrop of repeated refusals to permit inspection of records sought by the appellants, leaving interrogatories as the only effective means to elicit facts. Attempts at settlement before CLB did not reach any fruition, and appellants pressed their appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tions directly raised in the petition; iii. Inspection carried out vide letter dated 3rd September 2009 was incomplete, and several documents relating to allegation of siphoning of funds were not provided; iv. The CLB, in passing the impugned order, appears to have considered the merits of the main company petition, although only an interlocutory relief for interrogatories was under consideration; v. In the reply to the Company Petition, respondents have not given any particulars of facts with respect to which specific allegations were made and no supporting documents have been given; vi. The application for interrogatories was filed in 2013 itself when pleadings in matter were finalized. vii. The CLB erred in holding that appellant lacked bona fides, as the application for interrogatories could not be filed on an earlier occasion in light of settlement talks going on between the parties on various occasions. The object of interrogatories is to assert the truth or falsehood of allegations made in the petition. viii. Interrogatories have to be read not in isolation, but along the contents of pleadings. Submissions on behalf of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....discharge of its functions under this Act or any other law be guided by the principles of natural justice and shall act in its discretion. (6) Subject to the foregoing provisions of this section, the Company Law Board shall have power to regulate its own procedure." 12.3. Section 477 (2) of the Companies Act grants power to the CLB to summon persons and make written interrogatories. 12.4. Regulation 24 of the Company Law Board Regulations, 1991 that governs the procedure for the CLB, reads as under: "24. Power of the Bench to call for further information/evidence.- The Bench may, before passing orders on the petition, require the parties or any one or more of them, to produce such further documentary or other evidence as the Bench may consider necessary- (a) for the purpose of satisfying itself as to the truth of the allegations made in the petition; or (b) for ascertaining any information which, in the opinion of the Bench, is necessary for the purpose of enabling it to pass orders on the petition." 12.5. Further, Regulation 44 of the Company Law Board Regulations, 1991 provides the inherent power of the Bench and reads as under: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons under sections 397/398/402/403 of the Companies Act, 1956. The relevant paragraph is extracted as under: "3. The petitioner filed a rejoinder to the reply. This rejoinder was filed after the petitioner had, with the help of a court order, inspected the records of the company. After the petition was admitted and the pleadings were completed, by order dated 2nd December, 1980, it was directed that the parties may file affidavits by way of evidence and documents within four weeks. Admission and denial of documents was to take place before the Deputy Registrar. The Central Government was given liberty to file a representation and parties were given an opportunity of filing affidavits in reply to the representation, if filed. By the said order liberty was also given to the parties to summon oral evidence, if necessary. The parties were also entitled by the said order to take steps to cut short the trial by service of interrogatories, notice to admit and deny documents, notice to produce documents, etc. It was further directed that if the said steps were not taken by the parties, the case would be notified by the Deputy Registrar and listed for hearing. Reference has been ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ery to R4 Para 6.20-sale of land at Gurgaon and purchase of cheaper land Para 20 of reply admits sale of land but provides no details Interrogatory no. 5,6,7,8 and 16- on purchase of alternate land at Faridabad in the name of R4 Para 6.29-Annual turnover of RI decreased and that of R4 increased No justification in the Reply Interrogatory no. 17-why is the Company not doing business since 2006 CA 83/2013 filed seeking interim directions since R1 was disposing off remaining assets No Reply filed Interrogatory no. 14, 15-whether there was agreement to sell assets 15. Nature and scope of the interrogatories 15.1. It was contended that the impugned order wrongly opines that interrogatories were confined to CA No. 83/2013 and that application was not pressed. However interrogatories relate to averments in the petition, which were not sufficiently responded to by respondents in their reply. Moreover, Section 30 CPC allows filing of interrogatories at any time. The impugned order was incorrect in stating that interrogatories were filed after lapse of 6 years whereas they were filed in 2013 when pleadings were completed and the application was not pressed on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pporting details were furnished. The decline in turnover of respondent no.1 and the corresponding increase in turnover of respondent no.4 were not addressed. Similarly, in respect of disposal of assets, details of the relevant agreements were sought. 21. A perusal of the petition would show that petitioners claimed to constitute 1/10th (one-tenth) of the total number of members of the company and therefore entitled to file petition under Sections 397/398/402/403 of the Companies Act. 22. The company was in the nature of a family concern, which included the petitioners who belonged to the same family or were close friends. It was alleged that respondent no. 2 took charge as Managing Director of the company, in 2001, a number of changes were brought around and the status of the company was converted from 'Public Limited' to 'Private Limited'. Two more companies were incorporated namely, M/s. BHP Infrastructure Private Ltd. and M/s. BHP Conveying Equipment Private Ltd., respondent nos.4 and 5. Allegation was that funds began to be diverted from respondent no.1 Company to respondent nos. 4 and 5, and the properties and assets of the Company were transferred to these new entities ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e inherent powers of the Bench under Regulation 44 of the 1991 Regulations. Invoking these provisions is apposite in the present context. 25. Reliance on Ibrahim (supra) as regards the purview of Order XI CPC is also material. The object is to obtain information on material facts and to obtain admission of any facts. The object is to secure material documents and put an end to protracted enquiry. 26. Notice is also taken of the decision of this Court in Suresh Kumar Sanghi (supra) concerning a company petition for oppression and mismanagement where the Court stated that the parties were entitled to take steps to cut short the trial inter alia by service of interrogatories. The CLB Kolkata Bench in Sutodiya Investment & Trading Company Limited v. Tivoli Park Apartments Private Limited (supra) has also stated that interrogatories can be allowed wherever answers to them itself prove the case of the party administering the interrogatories or to destroy the case of the adversary, and that it was sufficient that interrogatories are relevant to the matters in question. 27. In these circumstances, aforesaid provisions being applicable, maintainability of the application seeking in....