Gauhati High Court
Chand Mall Pincha And Ors. vs Hathimal Pincha And Ors. on 17 June, 1998
Equivalent citations: [1999]95COMPCAS368(GAUHATI)
JUDGMENT D.N. Chowdhury, J.
1. The appeal under Section 10F of the Companies Act is arising out of and directed against an order passed by the Company Law Board ("the CLB in short"), Principal Bench, New Delhi, in C. P. No. 17 of 1996, dated June 11, 1998. The above order in fact is an upshot of its earlier judgment and order dated January 10, 1997, in a proceeding under Chapter Vl.of the Act before the Company Law Board, questioning among others the decision to raise the authorised and paid-up capital, the, issue and allotment of 4,000 equity shares of Rs. 100 each to the sixth respondent of C. P. No. 17 of 1996 as well as the appointment of respondent No. 4 as the director. The Company Law Board did not accept the plea of oppression due to non-appointment of N. K. Pinch (petitioner there) as director, the appointment of Rajib Pincha (respondent No. 4) as the new director. The Company Law Board however on assessment of the fact situation, set aside 'the allotment of 4,000 shares to the sixth respondent. To resolve the impasse, the Company Law Board ordered both the groups to offer their bid for the shares in the company and whoever offers the highest bid, is to take control of the company. Both the parties preferred appeals before this court which were numbered and registered as 0, J. (Company Appeal) No. 42 of 1997 and 0. J. (Company Appeal) No. 44 of 1997, and by a common judgment and order dated March 18, 1998, both the appeals were dismissed and consequently the parties offered their respective bids and acted as per the decision of the Company Law Board. The respondents offered a price of Rs. 11,004 per share while the appellants offered the price of Rs. 7,771 per share. As per its judgment and order dated January 10, 1997, which was upheld in appeal, the Company Law Board directed the respondents, the appellants here, to sell their shares at Rs. 11,004 per share to the petitioners, the respondents in this appeal. The total amount for 2,325 shares was worked out by the Company Law Board at Rs. 2,55,84,300. The respondents were ordered to pay Rs. 35 lakhs on or before July 2, 1998, and the balance in one or more instalments by August 11, 1998. After the entire consideration is paid, these shares will be transferred in the name of the petitioners (respondents here) or their nominees. A board is reconstituted for the interregnum which also included appellant No. 1, Mr. Chand Mal Pincha. The Company Law Board by its above order prohibited the private sale of tea incurring any expenditure other than normal course of business and restrained the company from disposing of the assets of the company. Any payment exceeding Rs. 20,000 is to be made by cheques jointly signed by appellant No. 1, Mr. Chand Mall Pincha, and one of the directors from the side of the respondents. The above order contains the following stipulations :
"The unsecured loans provided by the respondents which according to them is of the order of Rs. 27.5 lakhs and subject to verification by the statutory auditors, shall also be paid during this period. All the payments shall be by way of demand drafts in the name of Shri C. M. Pincha, and shall be handed over to L. P. Agarwala' and Co., advocates on record, under acknowledgment. Should there be any default in making the payment of either the first instalment on the stipulated date or balance on or before August 11, 1998, as stipulated in our order dated June 9, 1997, the respondents will be at liberty to purchase the shares of the petitioners at Rs. 7,771 as offered by them.
The present board of directors will cease to function with immediate effect and the board as referred to by us in the second paragraph will assume charge of the management of the company. Should there be any default in payment of the first instalment on July 2, 1998, or the final payment by August 11, 1998, the respondents are at liberty with notice to the other side, to mention the same before us for further directions. No further extension beyond August 11, 1998, will be allowed for making the full payment. The present board of directors shall hand over all the documents and other connected papers to the petitioners' group within a week's time.
We also appoint Shri Mohanty, Bench Officer, Calcutta, to supervise the handing/taking over the documents and other records of the company. The company will provide transport and other assistance to Shri Mohanty and pay him Rs. 3,500 as his honorarium. The handing and taking over of the records will commence on Monday and be completed latest by Thursday (June 15 to 18, 1998).
The newly constituted board shall be at liberty to take all decisions relating to operation of bank accounts and all other earlier instructions to the banks by earlier board of directors shall cease to be in force. The banks will act on the authority of this order.
In case the other minority, shareholders wish to sell their shares to the petitioners, they may do so as the same price 6f Rs. 11,004 per share and this amount shall be paid in one or more instalments within a period of six months from the date of sale.
All interim orders are vacated except the one relating to keeping in abeyance the decision taken in the recently held EOGM.
The above directions have, the concurrence of the parties and dictated in their presence."
2. Mr. Anil Kumar Bhattacharyya, learned senior counsel, assisted by Ms. Usha Barua, Mr. Apurba Sarma, Mr. Arup Kumar Sharma, for the appellants assailed the above order mainly on the ground that the Company Law Board erred in law in handing over the management of the company to the respondents without any consideration against the shares held by the appellants. Mr. Bhattacharyya, learned counsel, found fault with the order of the Company Law Board for not ensuring the full payment payable by the respondents to the appellants prior to handing over of the management. Mr. Bhattacharyya, learned senior counsel, in course of his lengthy argument, invited my attention to the order of the Debt Recovery Tribunal restraining the respondents from dealing with their personal assets. Mr. Bhattacharyya expressed his misgiving and mistrust about the ability of the respondents in raising funds to clear the stipulated sura as per the order of the Company Law Board.
3. Mr. Jatindra Mohan Choudhury, the learned senior counsel, assisted by Mr. Pallab Kataki, advocate, appearing on behalf of the respondents, seriously questioned the maintainability of the appeal both on the facts as well as in law. Mr. Choudhury, learned senior counsel submitted that the present order in fact is passed as a sequel to the earlier judgment and order of the Company Law Board dated January 10, 1997, which was subsequently upheld by the company judge in appeal and thus attained its finality.
4. A right of appeal is neither a natural nor an inherent right. A right of appeal is only a creature of the statute.
"The remedy or procedure by appeal is of civil law origin, and was introduced therefrom into courts of equity and admiralty. It was entirely unknown to the common law.
Consequently, the remedy by appeal in actions at law and in equity is purely of constitutional or statutory provision . . . ."(14, Corpus Juris Secundum, Volume 4)
5. The right of appeal, except when secured by the Constitution, so as to have become a constitutional right, is dependent entirely on statute and subject to the control of the Legislature.
"Although it has been said that appeal exists by grace of statute or court rule, a right of appeal cannot be conferred by court rule, or broadened by court rule. Where the Legislature has prescribed limitations on the right, such limitations cannot be enlarged by a court." (14 Corpus Juris Secundum, Volume 4),
6. The order impugned here now is only a step in aid in implementation of the earlier order of the Company Law Board which has already attained its finality. The parties acted upon the order passed by the Company Law Board on January 10, 1997, and offered their respective bids. The impugned order contains the working arrangement to make workable the earlier judgment of the Company Law Board. The interests of the appellants were taken care of. Shares of the appellants will stand transferred to the respondents or their nominees only on payment of the consideration money. The Company Law Board passed the order with the consent of the parties. Section 96(2) of the Civil Procedure Code envisions that no appeal shall lie from a consent decree. At any rate, consent operates as an estoppel. Under Section 107 of the Code of Civil Procedure (sic) provides for an appeal to the High Court only on any question of law arising out of such order. An erroneous finding of fact recorded by the Company Law Board is not appealable. No appeal lies against mere finding of fact for the reason that the statute does not provide for such appeal. Where the Legislature has defined the limits on the right, such perimeter or bounds cannot be enlarged by a court of law. All errors thus are not reviewable on appeal.
7. The mere fact that the High Court would have come to a different conclusion on the facts and circumstances of the case, does not make the matter appealable : Gappulal v. Thakurji Shriji Dwarkadheeshji, AIR 1969 SC 1291 ; Mattulal v. Radhe Lal, AIR 1974 SC 1596.
8. On an overall consideration of the matter in its entirety and for the reasons as stated above, the appeal is dismissed. It will, however, be open to the appellants to move the Company Law Board seeking for any directions or orders for the protection of their interests as and when occasion arises and the Company Law Board will be free to pass such orders or directions as per law.
9. The appeal thus stands disposed of. There shall be no order as to costs.