Appeal against a CLB order restraining directors from functioning. Single judge dismissed appeal but noted defects in procedure and order terms, permitting appellants to seek modification/set-aside and declining to pass protective orders.
Appeal dismissed; leaves open application for modification of remitted to Company Law Board.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY APPEAL (LODGING) NO.7 OF 2009
IN
COMPANY PETITION NO.129 OF 2008
Ketan V. Parekh & Ors. ....Appellants
V/s.
Union of India & Ors. ....Respondents
Mr.Zal Andhyarujina with Mr.Rajesh Khandelwal i/b
Juris Matrix for the Appellants.
Ms.Jyoti Singh with Mr.Avinash Singh Gautama and
Ms.Mrudula Khedekar for Respondent No.1.
CORAM : S.J. VAZIFDAR, J.
DATED : 26TH FEBRUARY, 2009.
P.C. :
1. This is an appeal under Section 10-F of the
Companies Act, 1956 against the order of the Company
Law Board dated 23.12.2008.
2. Considering the facts and circumstances of
this case, I am not inclined to interfere with the
order. This is despite the fact that there was no
justification for making the application without
notice to the Appellant. Ms.Singh, the learned
counsel appearing on behalf of Respondent No.1 fairly
stated that there is nothing stated in the Petition
regarding the necessity of having made the application
ex-parte and without notice. Nor was she able to
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furnish any justification for the same even today.
3. The impugned order restrains the directors
from functioning as the directors of the company.
Normally this would be a drastic order. However,
admittedly in the present case, no business is being
carried on by the company. I appreciate that the
order has the effect of even restraining the company
and its directors from prosecuting any litigation and
complying with the statutory requirements. It is
necessary for the company to do so either by the Board
of Directors independently or pursuant to protective
orders of the Company Law Board, if necessary.
However no immediate requirements in this regard are
pointed out.
4. The second part of the order requires the
directors to declare their assets and properties and
to file the same. There is however, no time limit
stipulated for the same. Thus the Appellants can
without any prejudice to them apply for setting aside
the order.
5. In these peculiar facts, it would be
appropriate to permit the Appellants to make an
application before the Company Law Board for
modification of or setting aside the order.
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Considering the facts and circumstances of this case,
no protective orders are required to be passed by this
Court despite the fact that there was no justification
pointed out for having moved the application without
notice to the Appellants. The application for
vacating or modifying the order, if made, shall be
heard as expeditiously as possible and shall not be
tagged to the final hearing of the petition.
. The Company Appeal is accordingly disposed
of.
3 issues framed by the court
Whether the High Court should interfere with the Company Law Board's order restraining directors from functioning absent justification for ex-parte procedure.
Whether protective orders are necessary given the impracticality of the impugned order due to lack of time limits and underlying business inactivity.
Whether the Appellants should be permitted to apply for modification or setting aside of the order in the Court below.
1 provisions across 1 enactments
Ketan V. Parekh & Ors.
Union of India & Ors.
S.J. Vazifdar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court