Delhi High Court
Mohd. Jafar vs Nahar Industrial Enterprises Ltd. on 19 August, 1997
Equivalent citations: 1997VAD(DELHI)460, [1998]93COMPCAS717(DELHI), 68(1997)DLT340, 1997(42)DRJ647, (1998)118PLR60
JUDGMENT M.K. Sharma, J.
(1) This is an appeal filed by the appellant under Section 10F of the Companies Act against the judgment and order dated 31.5.1996 passed by the Company Law Board, Northern Region Bench, New Delhi in Company Petition No. 449/17/95-CLB.
(2) The respondent Company presented a petition before the Company Law Board under Section 17 of the Companies Act, 1956 for confirmation of alteration of Clause (ii) of the Memorandum of Association of the Company for shifting the registered office of the Company from the National Capital Territory of Delhi to the State of Punjab as approved by special resolution passed at the Annual General Meeting held on 29.9.1995. The appellant is a member of the respondent Company holding 100 equity shares. He filed objections to the aforesaid petition filed by the respondent Company under Section 17 of the Companies Act. The Company Law Board heard the Counsel appearing for the petitioner as also for the Objector and the Assistant Registrar of Companies and thereafter rejected the objections filed by the appellant and confirmed the resolution relating to alteration in the Memorandum of Association of the respondent Company, subject to the condition that the certified copy of the order confirming alteration together with printed copy of the Memorandum as altered shall be filed by the Company with the Registrar of Companies within 3 months from the date of the order The special resolution as recast was set out in the schedule to the order.
(3) Being aggrieved by the aforesaid order passed by the Company Law Board, the appellant has preferred this appeal. The Counsel appearing for the appellant submits before me that the Company Law Board committed grave error in law in not a appreciating that the aggregate sum paid even by the 7 members whose ballot papers were filed by him far exceeded Rs. 50,000.00 and thereby arrived at a wrong finding that the challenge to the Minutes was not possible as envisaged under Section 179 of the Companies Act. The learned Counsel also submits that the questions of law also do arise out of the order and findings recorded by the Company Law Board and, therefore, the order passed by the Board is required to be interfered with.
(4) In the light of the aforesaid submissions made by the learned Counsel appearing for the appellant, I have also heard the learned Counsel appearing for the respondent. The learned Counsel appearing for the respondent submits that the issue now sought to be raised by the learned Counsel for the petitioner that the aggregate sum paid by the 7 members whose ballot papers far exceeded Rs. 50,000.00 was neither taken up in the objection filed by the appellant before the Company Law Board nor was the same argued before the Company Law Board and therefore, the same cannot be permitted to be argued for the first time at the appellate stage particularly when the same relates to questions of fact. The learned Counsel further submits that the questions sought to be raised as questions of law by the appellant are not questions of law but are merely conclusions of fact from which no question of law arises.
(5) In the context of the arguments of the learned Counsel for the parties let me consider the legal position with regard to ambit of power of the Court in a case of the present nature. Section 10F of the Companies Act provides as follows: "10-F.appeals against the orders of the Company Law Board.--Any person aggrieved by any decision or order of the Company Law Board may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days."
(6) A bare perusal of the aforesaid provision would make it crystal clear that an appeal lies before the High Court from a decision of the Company Law Board on any question of law arising out of the order passed by the Company Law Board. In this context reference may be made to the decision of the Supreme Court in Commissioner of Income Tax, Bombay v. Scindia Steel Navigation Company Ltd.; reported in 1961 (42) Itr 589, wherein the Supreme Court has held in the context of similar provisions in the Income Tax Act that the Court cannot direct the Tribunal to refer questions unless it is one which arises out of the order of the Tribunal and was specified by the applicant in his application under Section 66(1). The Supreme Court in that case laid down four propositions in this connection which are as follows : (1)When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order; (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order; (3) When the question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order; (4) When the question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it.
In the light of the facts of the present case read with 10-F and in the light of the aforesaid decision the question of law sought to be raised by the appellant falls within the fourth category as would be apparent from the discussions hereunder.
(7) On perusal of the order passed by the Board I find that the appellant sought to raise two main grounds of objection. The first objection related to short notice of the meeting. The Board, on appreciation of evidence and the legal position found that the notices were posted in time although the same might have been received by the appellant on 25.9.1997. The Board has further recorded that the appellant was in no way prejudiced as he had actually attended the meeting. It was also found by the Board that there was no other complaint of short notice excepting that of the present appellant. In the context of the aforesaid position and on consideration of the decision of the Calcutta High Court in Calcutta Chemicals Co. Ltd. v. Dhresh Chandra Rai, 1985 (58) Company Cases 275, the Board held that late receipt of notice by one member cannot invalidate the meeting provided the notices were posted in time. In view of the aforesaid finding the first objection raised by the appellant/Objector was rejected. In my considered opinion, on appreciation of evidence on record the Board has recorded a finding which in my opinion, is a finding of fact, out of which no question of law could be said to have arisen. The next objection raised by the Objector is with regard to the poll on the resolution. In respect of the said issue by the appellant/Objector, the Board recorded a finding that in order to demand a poll atleast 10% voting power is required as provided for under Section 179 of the Act and that the petitioner could not bring about a support of members holding atleast 1/10th of the voting power. The Board further held that the Minutes of the Meeting should be deemed to be true record of the proceedings which prove and establish that the resolution was passed by show of hands and that the Objector was unable to prove to the contrary. The findings of the Board in that respect to the effect that the appellant had failed to bring about the support of members holding atleast 1/10th of the voting power is also a finding of fact and in my considered opinion, therefore, no question of law arises therefrom.
(8) Coming to the issue now sought to be raised by the appellant that the aggregate sum paid even of the 7 members whose ballot papers were filed by the Objector far exceeded Rs. 50,000.00 so as to bring the case of the appellant within the provisions of Section 179(1)(a)(ii), on perusal of the records I find that the said issue was not urged in the written objection filed by the appellant before the Company Law Board. The learned Counsel appearing for the appellant in that context drew my attention to paragraphs 1 & 7 and in none of those paragraphs I find that the appellant had stated that the aggregate sum paid even by the 7 members whose ballot papers were filed by the appellant far exceeded Rs. 50,000.00 . The learned Counsel for the appellant sought to state that the aforesaid aspect was argued before the Board. However, on perusal of the order passed by the Company Law Board I do not find any mention of the aforesaid angle in the order at all. The learned Counsel appearing for the respondent states that he personally represented the respondent at the time of arguments of the matter before the Board but n such argument was made by the learned Counsel for the appellant before the Board. Since the aforesaid aspect was not urged in the objection filed by the appellant nor was argued and dealt with by the Company Law Board while recording its finding in the impugned order it cannot be said that the said issue arises out of the order of the Board. The Board has categorically recorded the two objections raised by the appellant before the Board to which reference has already been made and none of them related to the provisions of Section 179(1)(a)(ii). Therefore, in my considered opinion, the aforesaid question now sought to be raised by the Counsel for the appellant cannot be said to have arisen out of the order of the Board. Even otherwise the aforesaid issue raised appears to be questions relating to facts which should have been taken up in the objection petition filed by the appellant/Objector before the Company Law Board and having not done so the same cannot be allowed to be urged at this appellate stage.
(9) In the light of the aforesaid discussion, therefore, I find no merit in the present appeal and the same is dismissed, but without any costs.