Case Note & Summary
The appeal arose from an order of the Chairman, Company Law Board (CLB) rejecting an application to transfer a partly-heard company petition from the Western Bench to the Southern Bench or to permit the transferred Member to complete the hearing. The appellant had been a respondent in the original company petition filed under Sections 397 and 398 of the Companies Act, 1956 alleging oppression and mismanagement. The petition had been heard for 23 days by Member Shri Kanthi Narahari of the Western Bench, who was then transferred to the Southern Bench. The appellant sought transfer of the petition or permission for the Member to continue hearing, invoking Regulation 44 (inherent powers) of the CLB Regulations, 1991. The Chairman rejected the application, holding that he lacked power to grant such reliefs. On appeal under Section 10F, the Bombay High Court first considered the maintainability of the appeal. It examined the test of a quasi-judicial order, referring to Indian National Congress (I) v. Institute of Social Welfare and Dr. Manju Varma v. State of U.P., and held that the impugned order was quasi-judicial because it involved a lis between contesting parties, required adjudication, and was a reasoned decision after directing pleadings. The order was thus amenable to appeal under Section 10F. On the merits, the Court analyzed the scheme of the Companies Act and CLB Regulations. It found that the CLB is constituted under Section 10E of the Act and its territorial benches are governed by Regulation 12. The Chairman's inherent power under Regulation 44 cannot override specific provisions or territorial jurisdiction. A Member transferred to a different Bench ceases to have jurisdiction over matters of the original Bench. The reliefs sought—transferring a part-heard matter to a different Bench or allowing a Member to preside over a Bench other than the one posted to—were beyond the Chairman's powers. The Court also held that the order did not suffer from perversity or arbitrariness. Consequently, the appeal was dismissed, affirming the Chairman's order.
Headnote
A) Appellate Jurisdiction - Appeal under Section 10F - Amenability of CLB Chairman's Order - Companies Act, 1956 Section 10F; Company Law Board Regulations, 1991 Regulation 44 - The order of the Chairman of the Company Law Board on an application for transfer of a petition, made under the inherent powers and where contested pleadings were directed and heard, possesses quasi-judicial character and is amenable to appeal under Section 10F of the Companies Act, 1956. Held, the impugned order was not purely administrative. (Para 4)
Issue of Consideration
Whether the impugned order of the CLB Chairman is amenable to appeal under Section 10F of the Companies Act, 1956; whether the Chairman had power to grant the reliefs sought; whether the order amounts to abdication or fettering of jurisdiction; and whether the order is perverse or arbitrary.
Final Decision
Appeal dismissed; impugned order held quasi-judicial and amenable to appeal under Section 10F; Chairman lacked power to grant reliefs sought; no perversity or arbitrariness found.
Law Points
- test for quasi-judicial order
- lis and contest between parties
- inherent powers under Regulation 44 of CLB Regulations
- appeal under Section 10F of Companies Act
- 1956
Case Details
2012 LawText (BOM) (11) 50
Company Appeal (Lodging) No. 28 of 2012 along with Company Application (Lodging) No. 28 of 2012
Mr. Janak Dwarkadas, Mr. N.H. Seervai, Mr. F.E. De'vetre, Mr. Virag Tulzapurkar, Mr. Dara Zaiwalla, Mr. Aspi Chinoy, Mr. Mayur Khandeparkar, Mr. D. J. Khambata
Nafan BV, Saf Yeast Co. Pvt. Ltd., A.M. Arunachalam, A.M. Muthiah, TNM Arunachalam, Helios Food Additives Pvt. Ltd., Sharp and Tannan, Lesaffre et Cie
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Nature of Litigation
Appeal under Section 10F of Companies Act, 1956 against order of Chairman, Company Law Board rejecting application for transfer of company petition or permission for transferred Member to continue hearing.
Remedy Sought
Set aside the CLB Chairman's order dated 31 May 2012 and obtain transfer of Company Petition No. 62 of 2009 to Southern Bench or allow Member Kanthi Narahari to preside over Western Bench to complete hearing.
Filing Reason
Appellant aggrieved by rejection of application; contended order not amenable to appeal, Chairman lacked power, and order was perverse.
Previous Decisions
Company Petition No. 62 of 2009 partly heard by CLB Member Kanthi Narahari for 23 days; Member transferred; Company Application No. 275 of 2012 filed before Chairman; rejected on 31 May 2012; present appeal filed.
Issues
Whether the impugned order is amenable to challenge under Section 10F of the Companies Act, 1956?
Whether the Chairman of the CLB has the power under the Act and the CLB Regulations to grant the reliefs prayed for?
Whether the impugned order amounts to an abdication or fettering of jurisdiction?
Whether the impugned order is perverse, arbitrary and unsustainable in law?
Submissions/Arguments
Appellant argued that the order was administrative and not appealable under Section 10F; Chairman had inherent power under Regulation 44 to pass orders in interest of justice; refusal to exercise power was abdication of jurisdiction.
Respondents contended that the order was quasi-judicial and appealable; Chairman lacked power to transfer case or allow Member to hear matter outside his assigned Bench; application rightly rejected.
Ratio Decidendi
An order of the CLB Chairman on a contested application under the inherent power (Regulation 44) is quasi-judicial and appealable under Section 10F of the Companies Act, 1956. However, the Chairman has no power to transfer a part-heard matter to a Member transferred to another Bench or to permit such Member to preside over a different Bench, as it would violate territorial jurisdiction and the statutory scheme.
Judgment Excerpts
Whether the impugned order is amenable to challenge under Section 10F of the Act?
The judicial/quasijudicial character of the impugned order is established by the fact that the Company Application invoked, inter alia, Regulation 44 of the CLB Regulations, which is the inherent power of the CLB.
Procedural History
Company Petition No. 62 of 2009 filed by Respondent No.1 before CLB Western Bench under Sections 397 and 398; expedited by High Court order; heard for 23 days by Member Kanthi Narahari; Member transferred to Southern Bench on 7 May 2012; Appellant filed Company Application No. 275 of 2012 before CLB Chairman seeking transfer or permission for Member to continue; Chairman rejected application on 31 May 2012; Appellant filed appeal under Section 10F.
Acts & Sections
- Companies Act, 1956: 10F, 397, 398, 10E
- Company Law Board Regulations, 1991: 4, 44, 12
