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Bpl Communications Limited And Shri ... vs Shri T.P.G. Nambiar, Electro ... on 6 May, 2005

Equivalent citations: [2006]132COMPCAS13(CLB), (2006)2COMPLJ280(CLB), [2005]64SCL74(CLB)

ORDER

K.K. Balu, Member

1. In the company petition filed under Sections 397 and 398 of the Companies Act, 1956 ("the Act") alleging several serious acts of oppression and mismanagement in the affairs of the respondent No. 1 company and its subsidiary companies, Shri U.K. Chaudhary, learned Senior Counsel appearing for the third petitioner and Shri A.L. Somayaji, learned Senior Counsel representing the petitioners 1 & 2, while moving the company petition claimed certain interim reliefs, which was resisted by Shri Anil B Divan, learned Senior Counsel appearing for the respondent 1 & 2 and Shri Arvind P. Datar, learned Senior Counsel representing the respondent No. 6 & 7 companies. This Bench on considering the elaborate arguments advanced by the learned Senior Counsel, by an ad-interim order dated 11.02.2005 directed, inter alia, that "the respondent Nos. 1, 6, 7 companies will not register any transfer of shares effected, if any, by members of such companies until further orders". Thereafter, the respondent Nos. 1, 2, 6&7 moved for vacation of the ad-interim order, upon which the order dated 11.02.2005 came to be modified on 17.03.2005 in the following manner:

"Any transfer of shares in the respondent Nos. 1, 6 and 7 Companies shall be subject to final order that may be made in the company petition. However, if any of the respondent Nos. 2, 3, 4 and 5 transfers shares in or acquires shares of the respondent. Nos. 1, 6 and 7 Companies, he/it should give 7 days prior notice to the first petitioner to enable him to move this Bench, if he so desires."

2. In the context of the above background, the petitioners have come out with an application (C.A. No. 37/2005) seeking to modify the order dated 17.03.2005 as claimed therein, in support of which Shri Sudipto Sarkar, learned Senior Counsel appearing for the petitioners 1 & 2 submitted: This Bench after considering the genuine apprehension of the petitioners that the respondents are aiming at the acquisition of the entire share holding of the respondent, No. 1, 6 & 7 companies from the other existing shareholders granted the interim reliefs in terms of the order dated 17.03.2005. These reliefs, however, do not adequately protect the genuine threat faced by the petitioners, unless the status quo in regard to the shareholding in the respondent No. 1, 6 & 7 companies is ordered to be maintained in terms of the spirit of the modified order. This order does not in anyway restrain the shareholders of the respondent No. 1, 6 & 7 companies from selling their shares and therefore, the restrictions imposed against the respondent Nos. 2, 3, 4 & 5 must be extended to the former companies, thereby any one acquiring shares of the respondent No. 1, 6 & 7 companies should give seven days prior notice to the petitioners enabling them to approach this Bench for appropriate directions, if need be. It is only the interim order which is sought to be modified and therefore, it would not amount to review by this Bench.

3. Shri U.K. Chaudhary, learned Senior Counsel, representing the third petitioner submitted: This Bench after taking note of the transfer of shares held by AWS/Mediaone in the respondent No. 7 company in favour of the respondent No. 4 company & the subsequent acquisition of these shares by the respondent No. 1 company as well as the transfer of shares of the respondent No. 16 company in the respondent No. 6 company in favour of the respondent No. 17 & 18 companies, found the justification in the genuine apprehension of the petitioners and accordingly made the order dated 17.03.2005, safeguarding the minority shareholders, which however, do not safeguard in entirety the interests of the petitioners. The nominees of the respondent No. 18 company, a competitor in the state of Maharashtra have been inducted on the board of the respondent No. 1 company, which further confirms the fear of the petitioners that the respondent No. 1 company will go out of the BPL group. The shares held by the second petitioner in the respondent No. 1 company, were transferred to the respondent No. 5 company, which were eventually transferred to the respondent No. 15 company. The consideration received on the transfer of shares to the respondent No. 15 company were not utilized as contemplated by the parties. Similarly, the second respondent had influenced the petitioner No. 2-4 companies to part with their share holding in favour of the foreign institutional investors through the companies controlled by him. The respondent No. 1 company is under the control of the second respondent who is holding 74% of the shares. If the second respondent is allowed to transfer his shareholding to outsiders, any order which may be passed in the company petition would become infructuous. Considering the findings in the order dated 17.03.2005, there has been apparent error in the order on account of the omission while granting the interim relief to protect the interests of the applicants adequately viz., the shareholders of the respondent No. 1, 6, 7 companies excepting the respondent Nos. 2, 3, 4 & 5 are free to transfer the shares to any other party, which is sought to be corrected in the present application. The existing relief does not reflect the intention of this Bench in the light of the apprehension and fear of the petitioners duly appreciated by it. By virtue of the order dated 17.03.2005, there is every likelihood of the transfer of the shareholding of the respondent No. 1 company in the respondent No. 6 company to another entity as well as the transfer of the shareholding of the respondent No. 1/respondent No. 6 companies in the respondent No. 7 company and therefore, adequate safeguards are required for which necessary clarification is needed from this Bench. If the intention of the order dated 17.03.2005 is that the respondents 1, 6 & 7 can without any restriction sell their shares, the same must be clarified exercising the powers under regulation 44 and 45 of the Company Law Board Regulations, 1991 ("the Regulations 1991") and the error apparent on record be corrected to meet the ends of justice. This Bench may treat the application (CA37/2005) as the information and take suo-motu action to clarify the order dated 17.03.2005. The CLB must go by the contents and the spirit of the application which does not amount to review of the order dated 17.03.2005 of this Bench. The Company Law Board, in exercise of the powers vested in Section 403 is empowered to grant interim reliefs any number of times during the pendency of the proceedings under Section 397/398 so as to regulate the affairs of the company. If the transfer of shares in the respondent No. 1, 6 & 7 companies is not prohibited, the petitioners would be constrained to move applications from time to lime for impleading the transferees to the company petition. The petitioners, being minority shareholders are not given any information with respect to the respondent Companies' affairs and therefore the affairs of these companies must be investigated as envisaged in Section 237 and further order investigation on the ownership of the companies in exercise of the power vested in Section 247 and impose appropriate restrictions under Section 250 in the course of the investigation. The respondent No. 8 company made all the investments in the respondent No. 6 & 7 companies. The respondent No. 9 & 10 companies invested funds for procuring licences of the respondent No. 6 & 7 companies. However, the shares held by the respondents 8, 9 & 10 were clandestinely transferred in favour of the respondent No. 3, 4, 5 companies at the instance of the second respondent in breach of good faith reposed by them. If the respondents 17, 18 & 19 are deleted without notice to them, they will question the same. These respondents cannot be represented by the respondents 1 to 7 and cannot contend that the respondents 8 to 19 and the proposed respondents 20 and 21 are not necessary parties. This Bench will see whether the respondents 8-19 and the proposed respondent No. 20 & 21 are necessary and proper parties. There is no need for any allegation of oppression and mismanagement against them. If further transfer of shares is not restrained, even if the petitioners succeed in the company petition, they will fail in their objective of getting control of the respondent No. 1 company.

Shri U.K. Chaudhary, learned Senior Counsel in support of his legal submissions relied on the following decisions:

M.V. Paulose v. City Hospital (Private) Limited - (C.P. No. 47/1993 before the CLB, Principal bench) - to show that though the Company Law Board has no review powers, yet it may be open to it to exercise its inherent powers to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Bench.

Shoe Specialities P. Ltd. v. Standard Distilleries and Breweires P. Ltd. - (1997) Vol. 90 CC 1 - to show that regulation 44 of the Company Law Board Regulations, 1991 saved the inherent power of the Board and corresponded to Section 151 of Civil Procedure Code, 1908. Under the inherent powers, the court could pass any order to prevent the abuse of process and also to meet the ends of justice.

Bebi Jhora Tea Co. Ltd., v. Barendra Krishna Bhowmick - (1980) Vol.50 CC 771 - to show that there can be no limitation on the court's power, while acting under Sections 397, 398 and 402 for regulation of the conduct of the company's affair in the interest of the corporate body and the general public.

Bennet Coleman & Co. v. Union of India - (1997) Vol.47 CC 92 -to show that the provisions of Sections 397 or 398 read with Sections 402 confer ample jurisdiction and wide powers to pass such orders as the court thinks fit regulating the conduct of the company's affairs and provide for any other matter for which in the opinion of the Court it is just and equitable that provision should be made in the interests of the Company and its shareholders.

Cosmosteels P. Ltd. v. Jairam Das Gupta - (1978) Vol.48 CC 312 -to show that the scheme of Sections 397 and 402 appears to constitute a code by itself for granting relief to the oppressed minority shareholders and for granting appropriate relief, a power of widest amplitude is conferred on the court.

4. Shri T.R. Rajagopalan, learned Senior Counsel appearing for the petitioners 1 & 2 submitted: Whenever the affairs of the company are being conducted in a manner prejudicial to the interests of the company or oppressive to the minority shareholders, Section 403 empowers the CLB on the application of any party to the proceedings, make any interim order which it thinks fit to regulate the affairs of the Company. The company petition is pending disposal by this Bench and therefore, the decisions cited by Dr. Singhvi are not applicable to the facts of the company petition and the present application would not amount to review of the order dated 17.03.2005. The grievances of the petitioners in relation to the affairs of the respondent No. 1, 6, 7 companies are squarely covered by Section 397/398 and therefore, the CLB has jurisdiction in terms of Section 403. In these circumstances, it is left to the discretion of the petitioners whether to implead or not any of the parties to the company petition and it is for the proposed party to oppose such impleadment, but not to these respondents.

5. Shri Alok Dhir, learned Counsel appearing for the fourth petitioner submitted: In the light of the findings as borne out by paragraph 13 of the order dated 17.03.2005, the reliefs granted by this Bench do not adequately safeguard the fear of the petitioners and therefore, there is a need to clarify the order which docs not amount to review of the order of this Bench. The restraint order made against the respondent Nos. 2, 3, 4&5 must be extended to the respondent No. 1, 6 & 7 companies by which any one acquiring shares of these companies must give seven days prior notice to the first petitioner, which would safeguard the interests of the minority shareholders. This being regulatory in nature will not cause prejudice to any of the share holders of the respondent No. 1, 6 & 7 companies. Furthermore, the respondent Nos. 2 to 5 must be restrained directly/indirectly from acquiring the shares in the respondent No. 1, 6 and 7 companies during the pendency of the present proceedings. The respondent No. 2 adopted a devious plan to acquire 49% shareholding in the respondent No. 7 company from the respondent No. 19 company in the name of the respondent No. -l company and thereafter, sold the shares at a differential price to the respondent No. 1 company details of which remain undisclosed. The respondent No. 6 company aimed at acquiring the entire 100% share holding of the respondent No. 7 company from the respondent No. 1 company again on a differential pricing to enable the respondent No. 7 company to become a 100% subsidiary of the respondent No. 6 company, thereby delinking it from the respondent No. 1 company. The respondent No. 8 to 10 companies are the original investors in the respondent No. 1, 6 & 7 companies and the shares held by these companies came to be surreptitiously acquired by the respondent No. 3, 4, 5 companies. In the course of the proceedings before the Principal Bench, when the status quo order was not in force, the respondent No. 16 company sold its 26% of the shareholding of the respondent No. 6 company in favour of the respondent No. 17 & 18 companies. The petitioners could not ascertain, in spite of the best of their efforts,, any information about the respondent No. 17. If the respondent No. 17 company is impleaded and notice is served upon it, it would be possible to know about this entity as well as details of the transfer of shares made in its favour. The respondent No. 11 to 15 companies are holding nearly 37.37% shares in the respondent No. 1 company. The petitioners apprehend that the second respondent would succeed in acquiring the shareholding from these institutional investors in order to consolidate the shareholding of the companies under his control and with a view to gain further free hand to deal with the affairs of the respondent No. 1 company. The respondent Nos. 11 to 15 having shareholding in the respondent No. 1 company and the respondent Nos. 17 and 18 holding shares in the respondent No. 6 company must be restrained from transferring their shares without giving seven days prior notice to the petitioners. If any transfer of shares is effected during the pendency of the CLB proceedings and third party interest is created, any order that may be made by this Bench, without impleading such third parties, will not bind them. No details are available with the Registrar of Companies and the petitioners are denied inspection of records by the respondent companies. They have neither chosen to file the counter statement, in spite of the directions of this Bench.

The company petition elaborately deals with the respondents 8 to 19. The respondent No. 11 to 15 companies exercise indirect control over the respondent No. 1 company. The petitioners have sought reliefs against respondents 16 to 21. The respondent No. 16, 19 companies are sellers and respondent No. 17 & 18 companies are purchasers of the shares. The acquirers and the transferees not being parties to the company petition, they will not be aware of any order that may be passed against them by this Bench. The order will neither be binding on them. Unless notices are sent to these parties, it would not be possible to establish the malafide intention of the second respondent to acquire the shares to consolidate his position. These respondents are necessary parties for proper adjudication of the disputed issues. Moreover, the companies are technology based entities and any delay in impleading these respondents would have adverse impact on account of valuation of shares of these companies, especially when the valuation keeps changing depending upon change of technology. At any rate, these respondents cannot be deleted without affording an opportunity of hearing to them. By virtue of the subsequent allotment of shares the shareholding of the petitioners has been reduced from 30.19% to 7.24%, which constitutes an act of oppression on the part of the respondents. It is not clear as to why the proposed respondent company Nos. 20 & 21 should acquire one share each in the respondent No. 6 & 7 companies and there must be some purpose behind this acquisition. The intention of these companies in such acquisition is not known. There is no need to bring new shareholders in the fold of the respondent No. 6 & 7 companies. It is not happening in the normal course of business. Any transfer or allotment cannot be cancelled without hearing the transferor/transferee/allottee. Though the matter came before this Bench on 13.04.2005, the respondents never disclosed the transfer effected by the CDC Financial Services (Mauritius) Ltd. in favour of Black Lion Ltd. It shows that the respondents lack probity and do not maintain any transparency in respect of the transactions which are being effected in the course of the proceedings. Shri Alok Dhir, learned Counsel, relied on the following decisions:

A. Vellayan v. Cynosure Investments Private Limited - (C.P. No. 55/2002 before CLB, Additional Principal Bench - to show that a necessary party is one without whom no order can be made effectively. A proper party is one in whose absence an effective order can be made, but whose presence is necessary for a complete and final decision on the question involved in the proceeding. A party must be directly or legally interested in the subject matter of the litigation.

Dalpat Kumar v. Prahlad Sing - AIR SC 276 - to show the guiding principles required to be followed by the court while granting or refusing any injunction pending the suit.

Morgan Stanley Mutual Fund v. Kartick Das - (1994) Vol. 81 CC 318 - wherein the apex court has laid down the principles for the grant of an ad-interim injunction in the area of the functioning of the capital market and public issues of the corporate sector, which are satisfied by the petitioners.

Rajdhani Roller Flour Mills Pvt. Ltd. v. Mangilal Bagri - (1991) vol.70 CC 788 - to show that the right of inspection of documents and books of a company is not limited to the board of directors under Section 209(iv) of the Companies Act, 1956. In order to prove the allegations made in a petition under Section 397 and 398 of the Companies Act, 1956, the shareholders of the company are also entitled to be allowed inspection of the books of account and other relevant papers of the company. Where there are allegations and counter-allegations in the petition regarding misuse of the funds of the company in an arbitrary manner, it is only with the help of the books of account that the matter can be investigated and the parties should, in such a case, be at liberty to look into the books of accounts and substantiate their case.

Shankar Sundaram v. Amalgamations Ltd. - (2002) Vol.III CC 252 and Bajrang Prasad Jalan v. Mahabir Prasad Jalan -- to show that the affairs of the holding company would include the affairs of the subsidiary companies under Section 397 & 398 and that the affairs of the subsidiary companies can be looked into in such proceedings.

6. In the above circumstances, the applicants/petitioners sought for the following interim reliefs: -

(i) to modify the order dated 17.03.05 restraining the respondent Nos. 2, 3, 4 and 5 from directly/indirectly acquiring the shareholding in the respondent No. 1, 6 and 7 companies during the pendency of the company petition;

(ii) to restrain the respondent No. 1 from transferring its shareholding in respondent No. 6 company;

(iii) to restrain the respondent Nos. 1 & 6 from transferring their shareholding in the respondent No. 7 Company;

(iv) to set aside any transfer of shareholding, if any, effected by the respondent No. 1 in the respondent No. 6 Company;

(v) to set aside any transfer of shareholding, if any, effected by the respondent Nos. 1 & 6 in the respondent No. 7 Company;

(vi) to restrain the respondent Nos. 11-15 having shareholding in the respondent No. 1 Company and the respondent Nos. 17 and 18 having shareholding in the respondent No. 6 Company from transferring their shareholding without giving 7 days prior notice along with the details of the transfer with liberty to the petitioners to approach this Board with their objections, if any, to such transfer of the shareholding by the respondent No. 1, 6 and 7 companies;

(vii) to direct that the status quo be maintained with respect to the shareholding of the respondent No. 1, 3-7 companies;

(viii) to direct the respondents to make available the books of accounts and statutory and other records of the respondents No. 1, 3 to 7 to the petitioners for inspection and provide photocopies of the same;

(ix) to furnish copies of the notices of meetings of the board of directors and general meetings together with proof of service on all directors and shareholders in respect of the respondent No. 1, 6, 7 companies;

(x) to appoint an independent Chairman or observer for the board meetings of all the respondent companies;

(xi) to restrain the respondents No. 2 to 5 from exercising the voting rights for the illegal allotment of 5,57,840 shares issued to the respondent No. 3 Company, and 3,79,68,337 shares issued to the respondent No. 4 Company till the pendency of the company petition;

(xii) to appoint an Interim Administrator for taking charge of and administration and management of the business affairs and properties of the respondent No. 1, 3 to 7 companies;

(xiii) to issue appropriate directions for restraining the transfer of the shares pledged by the Petitioner No. 2 Company for the loan facilities availed by the respondent No. 7 Company;

(xiv) to direct that the bank accounts of the respondent No. 1, 6 & 7 Companies be operated jointly with a signatory of the petitioner's group and to provide fortnightly details;

(xv) to issue directions for investigation as regards the memberships of the respondent No. 17, 18 and 19 companies in order to determine the persons who are financially interested in these companies;

(xvi) to direct that M/s Coimbatore CableNet Private Limited and Tayana Consult Private Limited be impleaded as the respondent Nos. 20 and 21 respectively to the company petition;

(xvii) to issue an ex-parte order directing the respondent Nos. 20 and 21 to maintain the status quo of their shareholding in the respondent No. 1 Company pending the disposal of the company petition and not to alienate/encumber/sell and/or dispose off in any manner any of the shares held by them in the respondent No. 1, 6 & 7 companies during the pendency of the company petition and to maintain the status quo of the shareholdings of the respondent Nos. 1 to 7 and 20 and 21 till the disposal of the company petition;

(xviii) to issue an ex-parte interim order restraining the respondents No. 20 and 21 from exercising the voting rights for the illegal allotment of 499769241 shares issued to the respondent No. 20 company and 199198770 shares issued to the respondent No. 21 till the pendency of the petition.

7. Shri Anil B. Divan, learned Senior Counsel appearing for the respondents 1 & 2 submitted: By virtue of the provisions of Order 39, Rule 4 of the Code of Civil Procedure, 1908 where an order for injunction has been passed after hearing the parties, it cannot be modified unless such modification has been initiated by a change in the circumstances. Though the provisions of the CPC are not strictly applicable to the CLB proceedings, yet, recourse could be taken to the principles therein, as held by this Board in Kishore Kundan Sippy and Anr. v. Samrat Shipping & Transport Systems Pvt. Ltd. - (2003) Vol.115 CC 868. This Bench after hearing the elaborate arguments advanced on behalf of the parties came to the conclusion that the shares being movable property, a shareholder has a free right to transfer his shares and such right can be taken away by the articles of association and not otherwise and therefore, ordered that any transfer of shares in the respondent Nos. 1, 6 & 7 shall be subject to final order that may be made in the company petition and further that if any of the respondent Nos. 2 to 5 transfers shares in or acquires shares of the respondent No. 1, 6 & 7 companies, they should give seven days prior notice to the petitioner. The application seeking modification of the order dated 17.03.2005 would amount to review of the order, power of which is not vested with the Company Law Board and would amount to an abuse of the process of law. There are no new circumstances which have arisen subsequent to the order dated 17.03.2005 made by this Bench warranting any modification. Any interim order passed under Section 403, upon hearing the interested parties, cannot be modified or revoked. The averments forming part of the application that the order dated 17.03.2005 removing the barrier on the transferability of the shareholding of respondent No. 1, 6 & 7 companies is highly unwarranted cannot be made before the CLB and must be agitated only in the appeal against the subject order. Moreover, there is no error or omission apparent in the order and the petitioners cannot approach the CLB invoking the provisions of regulation 44 of the Regulations, 1991 and Section 403 of the Act for modification of the order. All averments contained in the application (CA 37/2005) have already been agitated, argued and considered by this Bench before passing the orders dated 11.02.2005 and 17.03.2005. No new and fresh circumstances have either been pleaded or advanced at the time of arguments on behalf of the applicants. The charges that the respondent Nos. 2 to 5 influencing the transfer of the shareholding by the respondent Nos. 11 to 15 in the respondent No. 1 company in favour of any third party to whom the management of the respondent No. 1, 6 & 7 companies would be transferred by the respondent Nos. 2 to 5 for their enrichment at the cost of the BPL group are not new submissions being at this stage. There is no requirement for any direction that all shareholders of the respondent No. 1, 6 & 7 companies must give seven days prior notice to the petitioners, before transferring or acquiring shares of these respondent companies. The order dated 17.03.2005, according to the applicants, will have severe adverse repercussions on them in which there is no enabling provision empowering the CLB to review its order. By virtue of Order 47, Rule 1 of the CPC, any court may allow review on specified grounds, viz., (i) discovery of new and important matter or evidence, which after the exercise of due diligence, was not within the applicant's knowledge or could not be produced by him at the time when the order was made; (ii) mistake or error apparent on the face of the record; or (iii) for any other sufficient reason. These requirements of review have neither been pleaded nor proved by the applicants. The apprehension of the applicants that the respondent Nos. 2 to 5 taking advantage of the order dated 17.03.2005 are attempting to transfer the shares held by the respondent No. 1 company in the respondent No. 6 company, thereby structuring the change of management of the respondent No. 6 company in favour of third parties is quite vague. The respondent Nos. 2 to 5 having been directed to give seven days prior notice to the petitioners before effecting any transfer or acquisition of shares of the respondent No. 1, 6, 7 companies, the prayer that they must be restrained from indirect acquisition of the shareholding of the respondent No. 1, 6, 7 companies is beyond the scope of this application. This Bench has not given any finding on the balance of convenience on the part of the petitioners or whether the petitioners have made out prima-facie case or injury that may be caused if in the event of not granting any interim order and therefore there is no need at this stage to pass any order modifying the order dated 17.03.2005.

8. Dr. A.M. Singhvi, learned Senior Counsel representing the respondent No. 1 company submitted: At the time of mentioning the company petition, this Bench by an ad-interim order dated 11.02.2005 directed that the respondent No. 1, 6, 7 companies will not register any transfer of shares effected, if any, by members of such companies until further orders. Thereafter, on completion of the pleadings in regard to the interim prayer claimed by the applicants after hearing the parties elaborately and balancing the equities the order dated 17.03.2005 was made, modifying the ad-interim order on the following lines:

"Any transfer of shares in the respondent Nos. 1, 6 and 7 Companies shall he subject to final order that may be made in the company petition. However, if any of the respondent Nos. 2, 3, 4 and 5 transfers shares in or acquires shares of the respondent Nos. 1, 6 and 7 Companies, he/it should give 7 days prior notice to the first petitioner to enable him to move this Bench, if he so desires."

The applicants are seeking to review the order dated 17.03.2005 passed on merits by resorting to the present application (CA No. 37/2005) being abuse of the process of law is not maintainable in law. The application for reviewing the order would lead to modification or change or alteration of the order, which is prohibited in substance and therefore, what cannot be done directly can never be achieved-indirectly. The application (CA No. 37/2001) itself is styled as modification. The pleadings on the alleged error or omission in the order dated 17.03.2005 do not satisfy the requirements of regulation 45 of the Regulations, 1991. The entire averments made in the application would show that the applicants seek to modify the order dated 17.03.2005 in view of the findings of by the Bench, which according to the petitioners are unwarranted. The prayer claimed by the applicants would amount to review of the order which is not permissible under Section 403. There are no new circumstances or fresh facts subsequent to the filing of the company petition and, therefore, the application seeking modification of the order of this Bench does not lie. However, the plea now made pursuant to the application seeking modification of the order was not only considered by this Bench, but also rejected and granted the reliefs as per the order dated 17.03.2005. The averments made in paragraph 9 of the application clearly indicates that if the order is not modified, it would have severe adverse repercussions on the petitioners and therefore, without modification of the order dated 17.03.2005, the prayer for any restraint order claimed by the applicants cannot be granted by this Bench. The CLB has neither jurisdiction nor power to review its order. The applicants urge the CLB to traverse beyond its jurisdiction thereby committing gross jurisdictional error.

The respondents, in fact, are aggrieved on account of the direction that if any of the respondent Nos. 2, 3, 4 & 5 transfers shares in or acquires shares of the respondent No. 1, 6 & 7 companies, he/it should give seven days prior notice to the first petitioner to enable him to move this Bench. But, the respondents cannot approach this Bench for modification of the relevant portion of the order dated 17.03.2005. The intention of the legislature in omitting regulation 27 which empowered the CLB to review its order would mean that any person aggrieved by an order of the CLB is bound to prefer an appeal exercising his rights under Section 10F of the Act. Any modification would amount to review and therefore cannot lie. When the apex court is vested with the power to review it does not encourage, but disallows review applications. Moreover, an application for review will be disposed of by circulation to the same Judge or Bench of Judges that delivered the judgement or order sought to be reviewed, without any oral arguments. The CLB being a creature of law has no power of review, without express power bestowed on it and in the absence of any governing law or statute empowering the CLB, it cannot review its order. The reliefs claimed in the application (CA No. 37/2005) raise the jurisdictional issue and the CLB without deciding the jurisdictional issue as a preliminary issue cannot enlarge its jurisdiction and proceed with considering the merits of the application, following the principles of Order 14, Rule 2 of the Code. The prayer of the applicants must be rejected at the threshold stage itself. This process would save time, energy and resources.

While arguing the application (CA No. 21/2005) for deletion of certain respondents, Dr. Singhvi, learned Senior Counsel submitted that the respondents 8 to 10 belonging to the petitioner group having sold their shares long back are no more the shareholders of the respondent No. 1, 6, 7 companies. If any information or data or materials are required from any of these respondents, they can be summoned under directions of this Bench. Similarly, there are no allegations in the company petition against the respondents 11 to 15, who are the foreign shareholders and no reliefs have either been claimed against them, in which case, there is no question of claiming any interim relief against these respondents 11 to 15. The respondent No. 16 & 19 companies have transferred their shares in the respondent No. 6 company and respondent No. 7 respectively, against whom there are no charges of oppression or mismanagement. The transactions entered into by the respondent No. 16 & 19 companies are in no way directly or indirectly related to the respondent No. 1, 2 & 5 companies. The respondent No. 17 & 18 companies are purchasers of 26 per cent shares in the respondent No. 6 company. These are wholly unnecessary parties and unconnected with the disputes. The CLB in the event of necessity at appropriate time, if need be, may send notice to these parties and hear them before passing any final order in the company petition. All allegations set out in the company petition are against the second respondent and not against the respondent Nos. 8 to 19 companies and the grievances are in relation to breach of the shareholders agreement. These respondents must be deleted from the array of parties in the company petition. The CLB invoking the provisions of Order I, Rule 10 CPC is empowered to suo-motto delete these parties from the proceedings.

The claim of the applicants for the interim reliefs as made out in their communication dated 01.04.2005 is highly mischievous especially when they themselves restricted their prayer at the time of moving the company petition as under:

a) to direct that status quo be maintained with respect to the shareholding of the respondent No. 1, 6 and 7 companies;

b) to direct that the respondent No. 1, 6 and 7 companies shall not alienate or sell or dispose off in any manner the assets of the respondent No. 1, 6 and 7 companies; and

c) to direct that the respondent No. 1, 3 to 7 companies shall make available the books of account to the petitioners for inspection.

Dr. Singhvi, learned Senior Counsel further submitted: The respondents have not filed their reply to the company petition in view of the pendency of the application for deletion of the respondent Nos. 8 to 19. There is, therefore, no intention on the part of the respondents to delay the CLB proceedings. The respondent No. 4 company is not a shareholder in the respondent No. 1 company. While challenging the jurisdiction of the Principal Bench in the earlier proceedings and in the appeal before the Karnataka High Court, the respondent No. 4 company at no point of time claimed that it is a shareholder of the respondent No. 1 company, the fact of which can be verified from the register of members maintained by the respondent No. 1 company. The respondent No. 1 company received a request on 13.04.2005 for the transfer of 1,48,70,000 Non-Convertible Preference Shares of Rs. 100/- each from CDC Financial Services (Mauritius) Ltd to Black Lion Ltd and the transfer was registered in the books of respondent No. 1 company. This does not in any way cause prejudice to the petitioners. The first respondent company came out for second time with the rights issue which was approved by the board of directors at the board meeting held on 13.12.2003, wherein a nominee of the ICICI Bank also participated. The requisite, extraordinary general meeting was held on 12.03.2004 for which due notice has been sent to all shareholders including the petitioners. However, the first petitioner did not choose to subscribe to the right shares even though offered to him and therefore the petitioners cannot now belatedly question this issue. All shares of the petitioner group are pledged and the first petitioner has no stake in the respondent No. 1 company and defaulted in repayment of dues to ICICI Bank. The first petitioner is taking the initiative to restructure the companies under his control for which huge funds are required and he is exerting pressure tactics on the respondents to see whether any amount could be realised from the second respondent. Against this background, the petitioners are not entitled for any other interim reliefs, as claimed by them. Dr. Singhvi, the learned Senior Counsel placed reliance on the following decisions:

Zahira Habibullah Sheikh v. State of Gujarat - - to show that an application for direction and modification when there is no apparent error on record would be virtually for rehearing, alteration and review of the judgement and any such move is clearly mis-conceived and nothing but sheer abuse of the process and deserves to be dismissed with exemplary costs. An application may be described as one for "clarification" or "modification" though it is really one of review, it cannot be permitted by the court. What cannot be done directly cannot be permitted to be done indirectly. The court cannot entertain an application for "clarification", "modification" or "recall" if the application is in substance a clear move for review.

Naresh Trehan v. Hymatic Agro Equipments Private Ltd. -(1999) Vol.98 CC 7 - to show that an application for review cannot be considered by the CLB as it does not have the powers to review and further such review on the grounds taken in the application would actually mean modifying the earlier order which could only be done by the High Court on appeal.

Gopalakrishna Sengupta v. Hindustan Construction Company - (2002) Vol.112 CC 166 - to show that the Company Law Board is not empowered under the Company Law Board Regulations, 1991 to review its order or grant any relief thereafter.

Delhi Administration v. Gurdip Singh Uban - AIR 2000 SC 3737 - to show that the court should not permit hearing of an application for "clarification", "modification" or "recall" of orders, if such an application is in substance one for review.

In re. AKG Acoustics (India) Ltd. - (1996) 3 Comp LJ 355 - to show that the provisions in regulation 27 of the Company Law Board Regulations, 1991 with regard to the power of review have been withdrawn specifically and that the Company Law Board is no longer vested with the powers of review of its orders.

K. Rajamouli v. A.V.K.N. Swamy - - to show that by virtue of Section 152 of the CPC, a clerical or arithmetical mistake in judgements, decrees or orders or errors arising therein from any accidental slip or omission may at any time be corrected by the court either of its own motion or on the application of any of the parties. However, the omission in not granting the pendente lite interest could not be held to be accidental omission or mistake and therefore, neither the trial court nor the appellant court has power to award pendente lite interest under Section 152 of the CPC.

Express Newspapers (Private) Ltd. v. The Workers - and Mitsubishi France v. Neyveli Lignite Corporation Limited - - to show that jurisdictional fact must be decided as a preliminary issue upon which only the merits of the dispute must be dealt with in order to avoid the ordeal of trial.

Kishore Kundan Sippy v. Samrat Shipping and Transport Systems Private Ltd. - (2003) Vol.115 CC 868 - to show that the provisions of the Code of Civil Procedure, 1908 are strictly not applicable to the proceedings before the Company Law Board, but recourse can be resorted to the underlying principles therein. Order I, Rule 10(2) of CPC confers power upon the court either to strike out or add a party to a proceeding to enable the court to effectually and completely adjudicate upon and settle all the questions involved in the suit. The parties to a proceeding should either be proper parties or necessary parties. If there are no averments against a party or such a party is a third party being neither a shareholder nor director in the company and where no substantive relief has been sought against such a party, he is not necessary party to the proceeding. If any relief is to be granted against such party, on hearing the merits of the case, notice can be issued by the CLB to him in terms of the power vested under Section 402(g).

Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay - - to show that the person to be joined must be one whose presence is necessary as a party, unless the person must have direct or legal interest in the litigation and the question in action cannot be effectually and completely settled, he is not a necessary party. However, if the person has relevant evidence to give on some of the questions involved, he would be named a necessary witness.

Sarvinder Singh v. Dalip Singh show that a necessary party is one whose presence is absolutely necessary and without whose presence the issue cannot effectually and completely be adjudicated upon and decided between the parties. A proper party is one whose presence would be necessary to effectually and completely adjudicate upon the disputes.

State of Punjab v. Darshan Singh - (2004) SCC 328 - to show that the corrections of clerical or arithmetical mistakes in judgements, decrees or orders as envisaged in Section 152 of the CPC are correcting only accidental omissions or mistakes and not all omissions and mistakes which might have been committed by the court while passing the judgement, decree or order. When the omission sought to be corrected goes to the merits of the case, the proper remedy for the aggrieved party is to file an appeal or revision before higher forum or review application before the very forum.

Smt. Sushila Rani v. Commissioner of Income Tax to show that even if the authorities under Kar Vivad Samadhan Scheme have inherent powers to correct an error of clerical or arithmetical nature, the same should be so obvious apparent or patent as not to admit any debate or discussion.

9. Shri C.A. Sundaram, learned Senior Counsel appearing for the respondent Nos. 6 & 7 submitted: The applicants while moving the company petition on 10.02.2005 urged, inter-alia, for the status-quo to be maintained in respect of the shareholding of the respondent No. 1, 6 & 7 companies. The reliefs claimed in the application (CA No. 37/2005) are covered by the order dated 11.02.2005. This Bench, after considering the oral submissions made on behalf of either parties passed the order dated 11.02.2005, directing the respondents 1, 6, 7 companies not to register any transfer of shares, if effected by any member of these companies, which came to be modified by the subsequent order dated 17.03.2005, while disposing the applications for vacation of the ad-interim order dated 11.02.2005. All submissions now advanced have already been put forth before this Bench, as borne out by the paragraphs 1 & 5 of the order dated 11.02.2005 and the paragraphs 5, 6 & 7 of the order dated 17.03.2005 respectively. This Bench already took note of the plea now made in the application (CA No. 37/2005) that by virtue of the order dated 17.03.2005, the shareholders of the respondent 1, 6 & 7 companies except the respondent Nos. 2 to 5 are at liberty to transfer their shareholding to any other party, which will result in the change of management of the respondent No. 1, 6 & 7 companies to any third party, thereby causing indirect disinvestment of the BPL business to another entity, rendering the institution of the company petition as infructuous and thought it fit to direct that any transfer of shares in the respondent No. 1, 6 & 7 companies shall be subject to final order that may be made in the company petition. The apprehension of the applicants that the respondents No. 2 to 5 companies taking advantage of the order dated 17.03.2005 are proceeding with the transfer of the shares held by the respondent No. 1 company in the respondent No. 6 company, thereby structuring the change of management of the respondent No. 6 company in favour of third party causing enormous prejudice to the petitioners have already been urged on behalf of the applicants before passing the order dated 17.03.2005. There have been no new developments subsequent to filing of the company petition either before the Principal Bench or this Bench and there is no scope for any modification which is required to be made by this Bench. The application in the existing form must be strictly construed and it does not meet the ingredients as contemplated under regulation 44 & 45. There are no averments satisfying the requirements of either the regulation 44 or regulation 45. Even if the CLB is vested with the power of review, the present application cannot be considered for want of any fresh allegations or change in the circumstances after passing of the order dated 17.03.2005.

While arguing the company application (CA No. 21/2005), it has been submitted that the respondent Nos. 11 to 19 are not in the management and no acts of oppression and mismanagement have been levelled against them. The petitioners have no grievances against the respondent Nos. 11 to 19 who are entitled to hold shares by themselves in the respondent No. 1 & 6 companies. The apprehension that the respondent Nos. 2 to 5 are attempting to consolidate their shareholding by persuading the respondent Nos. 11 to 19 to dispose of their shares in the respondent No. 1 company and that the respondent No. 17 & 18 companies being the transferees are the strategic investors, wherein the respondent Nos. 2 to 5 arranged to park temporarily the shares of the respondent No. 6 company cannot be the grounds for impleading these respondents. The provisions of Sections 237, 247 and 250 cannot be enforced against the respondent No. 11 to 17 and 19 companies as these companies do not come within the ambit of Section 3 of the Act. There is no averment against the proposed respondent No. 20 & 21 companies. Merely because these parties are likely to be affected, their presence is not required by this Bench. No order can be made in the application (CA No. 41/2005) without hearing the proposed respondent No. 20 & 21 companies and therefore, notice must be necessarily served on them. No interim relief can either be sought against these proposed parties without having claimed any main relief. Even if all the reliefs claimed in the company petition are granted, the prayer sought in the company application No. 41/2005 cannot be granted. The company petition must necessarily be amended incorporating the necessary averments in relation to the proposed respondent No. 20 & 21 companies and seek appropriate reliefs and thereafter, only the petitioners can claim any interim relief. These parties are not connected with any of the acts of the oppression and mismanagement complained of in the company petition. The decision in A. Vellayan v. Cynosure Investments Private Limited (supra) is not applicable, wherein there were serious charges against the party sought to be deleted, unlike in the present company petition, where no charges are levelled against the proposed respondent No. 20 & 21 companies.

The petitioners ought to have exercised due diligence in furnishing the shareholding pattern of the respondent No. 1 company. Merely because the respondents have not disclosed the shareholding pattern, the basic fact relating to the shareholding pattern cannot change. It was never contended either before the Principal Bench or the High Court of Karnataka that the respondent No. 4 company is a shareholder of the respondent No. 1 company. Before the allotment of shares in the year 2004 pursuant to the rights issue in favour of the members of the respondent No. 1 company, notices have been sent to all the shareholders including the petitioners, who cannot have any grievances on this account. The developments reported in regard to the allotment and transfer of shares in favour of the proposed respondent No. 20 & 21 have taken place much prior to filing of company petition before the Principal Bench, New Delhi. The respondents must be given an opportunity to file their reply to the company application (CA 41/2005), without which no interim relief can be granted at this stage. Shri C.A. Sundaram, the learned Senior Counsel, in support of his arguments relied on the following decision:

Bharat Mehta v. Emcorp Finance Ltd. - (2003) Vol.47 SCL 122 -to show that necessary parties are parties whose presence is essential and in whose absence no effective order can at all be passed:

Ramesh Hirachand Kundanwal v. Municipal Corporation of Greater Bombay to show that a necessary party is one without whom no order can be made effectively and that a proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision as the question involved in the proceeding. The party shall have direct interest in the subject matter of litigation. If addition of any party would result in causing serious prejudice and the substitution or the addition of a new cause of action would only widen the issue in question, it shall not be allowed.

Naresh Chandra Agarwal v. Bank of Baroda - AIR SC 1253 - to show that when a party is sought to be impleaded in a legal proceedings service of notice on such party cannot be a mere formality but should, in fact, be a reality.

Trojan & Co. v. Nagappa to show that the decision of a case cannot be based on grounds outside the pleadings of the parties and that it is the case pleaded that has to be found. Without an amendment of the plaint, the Court was not entitled to grant the relief not asked for by the party.

Sopan Sukhdeo Sable v. Assistant Charity Commissioner to show that the pleading has to be construed as it stands without addition or subtraction of words or change of its apparent grammatical sense. The intention of the party concerned is to be covered primarily from the tenor and terms of his pleadings taken as a whole and at the same time it should borne in mind that no pedantic approach should be adopted to defeat justice on hair splitting technicalities.

Most Rev. P.M.A. Metropolitan v. Moran Mar Marthoma - 1995 (4) SCC 286 - to show that in the absence of proper pleadings and proof, no relief can be granted touching the proposed parties.

10. Mrs. Nalini Chidambaram, learned Senior Counsel, representing the respondent No. 5 company, while adopting the arguments advanced on behalf of the respondent Nos. 1 - 3 submitted that the petitioners collectively holding 7.24 per cent shares in the respondent No. 1 company are oppressing the majority with the object of extracting funds from the respondent group to meet the financial constraints faced by them. This respondent is aggrieved by the order dated 17.03.2005 since it is bound to give 7 days prior notice to the petitioners, in case of transferring or acquiring shares of the respondent No. 1, 6 & 7 companies. The present application for review of the order dated 17.03.2005 is with a view to delay the proceedings and therefore, this Bench may fix an early date for disposal of the company petition.

11. Shri Sriram Panchu, learned Senior Counsel appearing for the seventh respondent submitted: The order dated 17.03.2005 has been passed on merits, declining the interim reliefs as claimed by the applicants. Therefore, there is no requirement of modification of the order dated 17.03.2005 or granting any other interim relief. The applicants have not established any other developments or circumstances which have arisen subsequent to the order dated 17.03.2005 made by this Bench. There has been no error apparent in the order causing concern as apprehended by the applicants. All averments presently raised by the applicants have already been put forth before passing the order dated 17.03.2005. The grievances of the petitioners that the respondent Nos. 2 to 5 are attempting to consolidate their shareholding in the respondent No. 1, 6 & 7 companies by acquiring shares from the existing shareholders of these companies at low prices so as to dispose of the licences of the respondent No. 6 & 7 companies have been given due weightage in terms of paragraph 11 of the order dated 17.03.2005. Thus, the application made by the petitioners is an appeal before the wrong forum. This Bench after giving adequate safeguards, in the light of the more fear expressed by the petitioners, directed that any transfer of shares in the respondent No. 1, 6 & 7 companies must be subject to final order that may be made in the company petition. With deletion of regulation 27 with effect from 14.05.1992, the CLB has no power to review its order. The CLB can neither exercise the inherent power to review its order in support of which relied on the decisions cited supra and therefore, the prayer of the petitioners must be rejected.

12. Shri U.K. Chaudhary, learned Senior Counsel in his rejoinder submitted: The restrictions of Order 39, Rule 4 of the CPC are inapplicable to the principles of Section 403 of the Act. The shareholding pattern set out in the company petition before the Principal Bench as well as in the present company petition has not been questioned by the respondents. However, in terms of the directions of this Bench, the respondent No. 1 company by an affidavit dated 06.04.2005 affirmed that M/s Coimbatore Cablenet Private Limited (CCNPL) acquired 49,97,69,241 shares and M/s Tayana Consultant Private Limited (TCPL) 19,91,98,770 shares involving an aggregate sum of Rs. 650 crores thereby the shareholding of the petitioners in the respondent No. 1 company has come down to 7.24 per cent which would amount to an act of oppression as held by the Supreme Court in Dale & Carrington Investments Private Limited v. P.K. Prathapan. No details of these acquirers are available with the Registrar of Companies. These outside parties unknown to the petitioners control 57% shares of the respondent No. 1 company and it has gone out of the BPL group. If CCNPL and TCPL are bought by any one, he will control the respondent No. 1 company. These transferees must be impleaded and they must be ordered to maintain the status quo in regard to their shareholding in the respondent No. 1 company till disposal of the company petition. The shareholding of the respondent No. 1, 6, 7 companies must be maintained in terms of the affidavits filed on 06.04.2005 by them. Pursuant to inspection of the register of members of the respondent No. 1 company, it came to light that 89,66,438 shares allotted on 14.06.2002 in favour of the petitioner No. 2 and 98,77,329 shares to the petitioner No. 4 were struck off. Any allotment or cancellation of shares can be made only by the board of directors. There is no opportunity for the petitioners to know about the allotment or cancellation of shares as borne out by register of members of the respondent No. 1 company. Further, the share transfer register of the respondent No. 1 company discloses the registration of transfer of 1,48,70,000 Non-convertible Preference Shares of Rs. 100/- each from CDC Financial Services (Mauritius) Ltd. to Black Lion Ltd, details of which are unknown to the petitioners. The registered office of CCNPL is located at the office premises of the respondent No. 6 company. It has been specifically pleaded in the company petition (para 7.iv in page 14) that the fourth respondent has been illegally allotted shares in the year 2002 and that it is holding 5.69 per cent of the total shareholding of the respondent No. 1 company. The same plea was taken in the proceedings before the Principal Bench, but these averments were not controverted by the respondents. Now it is reported that the respondent No. 4 company does not own any share in the respondent No. 1 company. If the respondent No. 4 is not a shareholder, any order which may be passed by this Bench will not cause any prejudice to its interest. It is, therefore, absolutely necessary to inspect the statutory and other records of the respondent No. 1 company and the Bench Officer may be directed to authenticate the statutory records of the respondent No. 1, 6 & 7 companies. Though, the respondents have given inspection of the register of members and share transfer register, they refused to part with copies of the board meetings in support of the allotment/transfer of shares. The Bench always considers the preliminary issue as well as merits of the case together and renders justice. The case laws cited on behalf of the respondents or the proposition of law laid down in those case laws do not apply to the facts of the present case.

13. Shri Alok Dhir, learned Counsel in his rejoinder submitted: The petitioners have furnished the shareholding pattern of, inter-alia, the first respondent company which has been within their knowledge both in the company petition filed before the Principal Bench and in the present company petition. However, the respondents never whispered anything on the change in the shareholding pattern as claimed in the affidavit filed on 06.04.2005. This shows the dishonest intention of the respondents. The affidavit of the first respondent company clearly indicates that there has been increase in the share capital and fresh allotment in favour of CCNPL and TCPL and further transfer of shares effected by the respondent No. 3, 4, 5 companies which resulted in acquisition of 57% of shares in the respondent No. 1 company involving an aggregate sum of Rs. 650/- crores. It is not known whether any cash or kind was brought in towards consideration of these shares by the transferees being outsiders. The allotments of shares in respondent No. 1 company without notice to the petitioners and in violation of the articles of association is prejudicial to the interest of the petitioners. The grievances arising out of the shareholders agreement would be covered under Section 397/398 proceedings. The petitioners are not aware of the procedure adopted in increasing the share capital and they have not received any notice before any such increase by the respondent No. 1 company. The petitioners are entitled to the right shares in respect of their shares pledged in favour of ICICI also, but no offer has been made to them. No details are either available with the Registrar of Companies. Unless CCNPL & TCPL are restrained from dealing with the shares acquired in the respondent No. 1 company, the petitioners would be seriously prejudiced. The affidavit further reveals that the respondent No. 4 company does not hold any share in the respondent No. 1 company. However, the respondent No. 4 company contested the proceedings before the Principal Bench and further participated in the appeal filed before the High Court of Karnataka as a shareholder of the respondent No. 1 company. The petitioners being shareholders are entitled for inspection of the other statutory records of not only the respondent No. 1 company but also its subsidiary companies in terms of their memo dated 16.04.2005.

14. After considering the elaborate arguments of the learned Senior Counsel, the following issues arise for my consideration: -

(i) Whether any modification of the order dated 17.03.2005 by this Bench would amount to review and if so, whether this Bench has review powers;

(ii) If not so, whether this Bench in exercise of the powers under Section 403 of the Act read with regulation 44 of the Regulations, 1991 is empowered to grant the interim reliefs claimed by the applicants in the facts of the present case;

(iii) Whether the respondent No. 8 to 19 companies and the proposed respondent company Nos. 20, & 21 are necessary parties to the company petition.

Issue Nos. (i) & (ii):

Before going into these contentious issues, I deem it fit to consider the relevant applicable provisions in relation to the power of the Company Law Board to review its order. By virtue of Section 10(1A), the Company Law Board shall exercise and discharge such powers and functions as may be conferred on it by or under the Act or any other law and regulate its own procedure and shall be guided by the principles of natural justice and act in its discretion as envisaged in Sub-sections (5) and (6) of Section 10E. Every Bench constituted by the CLB is vested with powers which are vested in a court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the matters specified in Sub-section (4C) of Section 10E. Regulation 44, being analogous to the provisions of Section 151 CPC envisages the inherent power of the CLB to make such orders as may be necessary for ends of justice or to prevent abuse of the process of the Bench. By virtue of regulation 27, which came to be omitted with effect from 14.05.1992, the CLB was clothed with the power of review, the relevant clause of which assuming importance read thus: -

"Review.- (1) Any party considering itself aggrieved by an order made by the Bench on account of some mistake or error apparent on the face of the record desired to obtain a review of the order made against him, may apply for a review of the order of the Bench which had made the order."

It is clear that only mistakes or errors apparent on the face of the record, viz., where no elaborate arguments necessitated to pinpoint those errors were liable to be reviewed. Any mistake or error should appear in the order itself and must be manifest on the face of record. When there is no apparent error on record and the application is in substance a clear move for review and any such move is nothing but sheer abuse of the process liable to be rejected. Any application described as one for modification, if it is really one of review, it cannot be permitted in view of the fact that what cannot be done directly cannot be permitted to be done indirectly as held in Zahira Habibullah Sheikh v. Stale of Gujarat and Delhi Administration v. Gurdip Singh Uban. Any erroneous decision or when the omission sought to be corrected goes to the merits of a case is not liable to be reviewed, as held in K. Rajamouli v. A.V.K.N. Swamy and State of Punjab v. Darshan Singh (supra). Against this background, the application (CA No. 37/2005) must be examined and while doing so the pleading has to be construed as it stands without addition or subtraction of words or change of its apparent grammatical sense. Furthermore the intention of the party must be gathered primarily from the tenor and terms of his pleadings taken as a whole, as laid down by the apex court in Sopan Sukhdeo Sable v Assistant Charity Commissioner (supra). It is true that the application does not whisper of any mistake or error apparent on the face of the order dated 17.03.2005, that the grievance of the petitioners, goes to the merits of the finding of this Bench, and that the various substantial reliefs claimed in the application speak for themselves (i.e.,) the prayer being really one of review, yet the order dated 17.03.2005 not having been "finally passed" in the company petition, but only an interim order and all decisions cited by Dr. Singhvi, learned Senior Counsel on the power of review by the courts and the CLB having arisen out of the final judgements or orders, it shall be seen whether the CLB has jurisdiction to grant any of the interim reliefs claimed in the application (CA No. 37/2005), in modification of the order dated 17.03.2005. In this connection, the decision in M.V. Paulose v. Citi Hospital (Pvt.) Ltd. supra assumes importance, wherein this Board while reiterating that the CLB with the omission of regulation 27 has no review powers, held that "it may be open to the Board to exercise its inherent powers to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Bench." Having found that the judicial precedents on record in relation to the power of review are confined to the judgements or orders "finally passed" by the Judicial/Quasi Judicial authorities and that the CLB in exercise of its inherent powers invoking regulation 44 may make such orders as may be necessary for the ends of justice or to prevent abuse of the process, as reiterated by the Madras High Court in Shoes Specialities Pvt. Ltd. v. Standard Distilleries and Breweries Pvt. Ltd. (supra), the jurisdiction of the CLB to grant any further interim reliefs in modification of the order dated 17.03.2005 as claimed by the applicants assumes relevance. The scheme of Sections 397 and 402 is a complete code in itself empowering the Court (now the CLB) to grant appropriate reliefs to the oppressed minority shareholders, as laid down by the Supreme Court in Cosmosteels Pvt. Ltd. v. Jairam Das Gupta (supra). Section 403 empowering the CLB to grant the interim order provides that "...Pending the making by it of a final order under Section 397 and 398, as the case may be, the Company Law Board may, on the application of any party to the proceeding, make any interim order which it things fit for regulating the conduct of the company's affairs, upon such terms and conditions as appear to it to be just and equitable."

It is clear that the CLB has during the pendency of a petition under Sections 397 and 398 has wide and ample powers to make any interim order which it thinks fit for regulating the conduct of the company's affairs on such terms and conditions as appear to the CLB as just and equitable. Section 403 does not fetter the rights of any aggrieved party to make an application in the course of the pendency of a petition under Sections 397 and 398, whenever necessitated by a change in the circumstances for appropriate interim order(s) in order to regulate the conduct of the company's affairs. At any time during the pendency of a petition, any interim order passed may suitably be modified, in the event of any change in the circumstances, requiring such modification or if the CLB is satisfied of the circumstances requiring modification on the lines of the principles enunciated in Order 39, Rule 4 CPC, which can be applied to the proceedings before the CLB, as held by this Board in Shri Kishore Kundan Sippy v. Samrat Shipping & Transport Systems Pvt. Ltd. (supra). There is, therefore, no merit in the plea of the respondents advanced in this behalf. The arguments advanced on behalf of the petitioners before grant of the interim order dated 11.02.2005 and the subsequent modification thereof by the order dated 17.03,2005 will throw light on the question whether the petitioners are justified to claim the various interim reliefs now sought by them. Towards this end, a summary of the arguments is given as under:

The first petitioner, being the founder promoter of the BPL Group, promoted M/s BPL Communications Ltd. ("the respondent No. 1 company"), which is a holding company and is operating through its subsidiaries, which are mainly engaged in the operation of cellular business.

The second respondent, when became the son-in-law of the first petitioner, was introduced to the BPL Group Companies. The second respondent using his position as son-in-law of the first petitioner manoeuvered to become the Chairman of the respondent No. 1 Company without any investment of his own and subsequently the Chairman of the respondent No. 6 & 7 companies and acquired control over the respondent No. 3 Company holding 16.28% of shares of the respondent No. 1 Company. The second respondent with a view to consolidate his position and to usurp control of the respondent No. 1 Company, floated the respondent No. 4 & 5 companies in breach of trust and managed the increase in the shareholding of the respondent Nos. 3, 4 and 5, which accounted for 32.42% of the total shareholding of the respondent No. 1 Company, thereby reducing the shareholding of the petitioner group to 30.19%.

The respondent No. 1 company was holding 51% of shareholding of the respondent No. 7 Company, while the remaining 49% of its shareholding held by the respondent No. 19. However, the respondent No. 7 company had approved the acquisition of the entire 49% shareholding of the respondent No. 19 by the respondent No. 4 as well as the simultaneous acquisition of the said 49% from the respondent No. 4 company by the respondent No. 1 company. This process, while benefiting the respondent No. 4 company caused loss to the respondent No. 1 company on account of the differential pricing of the purchase of shares both by the respondent No. 4 company and the respondent No. 1 company.

The board of directors of the respondent No. 6 company approved the acquisition of 100% shareholding of the respondent No. 7 company from the respondent No. 1 company benefiting the second respondent whereby the respondent No. 7 company would become a subsidiary of the respondent No. 6 company, while it continues to be the subsidiary company of the first respondent Company.

The second respondent had gained control over Astra Telecom Private Ltd, (ATPL), an investment company promoted by the BPL Group and had influenced the transfer of 28,50,000 shares of the first respondent Company held by the petitioner No. 3 Company in favour of ATPL for Rs. 10/- per share, upon which sold the said shares to the respondent No. 11 for US$ 8.25 per share, causing huge loss to the petitioner No. 3 company and misappropriating the benefits of the transfer for his personal enrichment.

The second respondent had got transferred 26.17 lakh shares of the petitioner No. 3 company in favour of the respondent No. 5 company at par without effecting payment, but subsequently transferred these shares to the respondent No. 15 at US$ 8.5 per share, thereby the second respondent and the respondent No. 5 company derived illegal profit to the tune of Rs. 96 crores. The second respondent further influenced the transfer of 9,23,825 shares of the first respondent Company held by the petitioner No. 2 company in favour of the respondent No. 5 company, which were eventually transferred to the respondent No. 15. But the consideration received on account of the transfer of shares to the respondent No. 1 5 were not utilised for the specified purpose.

The respondent No. 16 disposed its entire shareholding of 26% in the respondent No. 6, without permission of the BPL group and in breach of the shareholders agreement in favour of the respondent No. 17 (16.1%) whose identity is not known and the respondent No. 18 (9.9%). There is every likelihood of further transfer of the said 26% shareholding with a view to acquire the entire holding of the respondent No. 6 company so as to divest the mobile business of the BPL group by the respondents 2 to 5.

The second respondent has been acting with the ulterior objectives of reducing the shareholding of the petitioners to minority in complete breach of the trust reposed on him by the BPL Group, in order to siphon away the funds of the respondent No. 1, 6 and 7 companies and making serious efforts to sell the cellular licenses being valuable assets which would cause serious prejudices to the petitioner group.

This Bench, after considering the extensive arguments advanced on behalf of either parties, by an order dated 11.02.2005 directed that "the respondent Nos. 1, 6, 7 Companies will not register any transfer of shares effected, if any, by members of such Companies until further orders", in the absence of such an ad-interim order the BPL group would have collapsed. During the pendency of the earlier proceedings before the Principal Bench of this Board and the appellate Courts, when the status quo order in regard to the shareholding in the respondent-Companies was not in force, the respondent No. 16 sold its 26% of the shareholding of the respondent No. 6 Company in favour of the respondent No. 17 & 18 Companies, causing serious prejudice to the petitioners.

The game plan of the respondent No. 2 is to take away the respondent No. 1, 6, 7 Companies from the BPL group, depriving its founder of the whole of his huge investments made in the mobile business of the BPL group.

The second respondent is attempting to divide the BPL Group into two distinct groups viz., The Consumer Electronics Business Group and The Innovision Business Group. The second respondent is duty bound to run the respondent No. 1, 6, 7 Companies, forming part of the BPL group, especially when he never brought any funds towards promotion of any of these companies. The Companies are closely held family companies and no outsiders must be permitted to acquire shares.

The respondent No. 17 & 18 companies, who are the strategic investors, wherein the respondent Nos. 2-5 have arranged to temporarily park the shares which will be acquired by the respondent Nos. 2-5, who may eventually acquire the entire shareholding in the respondent No. 6. The presence of the respondent Nos. 11-19 is thwarted by the respondent group on the plea that those respondents are not necessary parties to the proceedings.

The ad-interim order dated 11.02.2005 is a regulatory and not prohibitory order in relation to the conduct of the affairs of the respondent No. 1, 6, 7 Companies. The Supreme Court restrained the transfer of shares in the respondent No. 1, 6, 7 Companies. This Board prohibited the registration of transfer of shares by any member in the respondent No. 1, 6, 7 companies, to avoid multiplicity of parities on account of further transfer of shares, while any contract for sale of shares would be completed between the seller and purchaser as and when shares are sold. If shares are sold to outsiders and the registration of transfer is not prohibited, this Board will not be in a position to pass any binding order on such future purchasers.

The transferability of shares is not absolute. The respondent No. 1, 6, 7 Companies, being closely held family Companies, there is legitimate expectation that the Companies must be held by the family members of the BPL group. The respondent No. 1, 6, 7 Companies are in the nature of partnership and in view of the breach of good faith on the part of the second respondent, this Bench is bound to impose suitable restrictions in transfer of shares in these Companies.

According to the first respondent Company the shares of the respondent No. 7 company were freely transferable as per the provisions of the Companies Act and hence AWS/MediaOne was fully entitled to sell and transfer its shareholding to any third party". Accordingly, AWS transferred its shares held in the respondent No. 7 in favour of the respondent No. 4, which were subsequently acquired by the first respondent Company, thereby gaining 100% control over the respondent No. 7 Company.

The respondents are aiming at the acquisition of the entire shareholding of the respondent No. 1, 6, 7 Companies from the other existing shareholders and further planning to manoeuvre the disposal of the licences of the respondent No. 6, 7 Companies, which would cause immense prejudice to the petitioners.

This Bench after taking judicial note of the limited reliefs sought against the respondents and the apprehensions expressed by the petitioners that the respondents are aiming at the acquisition of the entire shareholding of the respondent No. 1, 6 & 7 companies from the other existing shareholders so as to manoeuvre the disposal of the licences of the respondent No. 6 & 7 companies and further that the second respondent has been acting with the ulterior objectives of reducing the shareholding of the petitioners to minority in order to siphon away the funds of the respondent No. 1, 6 & 7 companies and in view of the underlying principles involved in free transferability of shares as enunciated by the apex court in V.B. Rangaraj v. V.B. Gopalakrishnan, consciously ordered modifying the order dated 11.02.2005 as under: -

"Any transfer of shares in the respondent Nos. 1, 6 and 7 Companies shall be subject to final order that may be made in the company petition. However, if any of the respondent Nos. 2, 3, 4 and 5 transfers shares in or acquires shares of the respondent Nos. 1, 6 and 7 Companies, he/it should give 7 days prior notice to the first petitioner to enable him to move this Bench, if he so desires."

By virtue of the above order it was intended that the foreign institutional investors holding 37.39% shares of the respondent No. 1 company least concerned with the squabbles of other shareholders should not in any way be prejudiced on account of any order of this Bench, especially when they have every right to transfer their shares in the respondent No. 1 company in terms of the Articles of Association of the respondent No. 1 company and therefore, it was stipulated that any transfer of shares in the respondent No. 1, 6 & 7 companies shall be subject to final order that may be made in the company petition. At the same time, it was felt that since the respondents 2, 3, 4 & 5 form part of the second respondent group they should give seven days prior notice to the first petitioner whenever the respondents 2, 3, 4 & 5 transfer or acquire shares of the respondent No. 1, 6 & 7 companies and further felt that the fear of the petitioners on account of any acquisition of shares from the foreign institutional investors by the second respondent must be adequately taken care. Accordingly, the order dated 17.03.2005, came to be passed, following the principles governing the grant of injunction laid down by the Supreme Court in Dalpat Kumar v. Prahlad Singh (supra). I do not find any mistake or error apparent in the order dated 17.03.2005 as made out by the petitioners, which is required to be corrected by this Bench invoking the provisions of regulation 45 of the Regulations, 1991. Furthermore, I do not find any change in the circumstances established since the date when the company petition was moved seeking the interim reliefs against the respondents, and therefore, there is no scope for granting any other interim reliefs urged by the petitioners. All submissions made on behalf of the petitioners to support their claim for various interim reliefs were already agitated as borne by summary of their arguments and appropriately considered by this Bench, leading to the order dated 17.03.2005. This Bench, however, in exercise of the powers under Section 402, while disposing the company petition on merits, will on proving the alleged acts of oppression and mismanagement, would make appropriate orders taking into account the reliefs presently claimed by the petitioners, regulating the conduct of the affairs of the companies. Any relief prayed against the proposed respondents 20 & 21 will arise only after affording an opportunity of hearing to them. The respondent No. 1 company pursuant to the order dated 01.04.2005 filed affidavits dated 06.04.2005 and 12.04.2005 disclosing the shareholding position of the respondent No. 1 company. It is observed that the shareholding position of the respondent No. 1 company furnished in the company petition viz., petitioner group - 30.19 per cent (out of which 16.92% pledged to ICICI), second respondent group - 32.42 per cent and foreign institutional investors 37.39 per cent is at variance with the shareholding position disclosed in the affidavit dated 06.04.2005 of the respondent No. 1 company. The affidavits dated 06.04.2005 and 12.04.2005 clearly indicate that between 11.07.2003 and 17.07.2004 the proposed respondent No. 20 came to acquire 49,97,69,241 and the proposed No. 21 acquired 19,91,98,770 shares of the respondent No. 1 company by way of transfer (3,79,68,337 from the respondent No. 4 company + 6,36,25,236 from the respondent No. 3 company + 4,36,05,298 from the respondent No. 5 company) and allotment (55,37,69,141 shares) and that one Shri C.K. Nityanand got one share by way of transfer. In the light of the changed shareholding position of the respondent No. 1 company the shareholding of the parties stood altered as at 17.07.2004 in the following manner: -

1. The petitioner group reduced from 30.19% to 7.24 %

2. The second respondent group reduced from 32.42% to 5.81%

3. Foreign institutional investors reduced from 37.39% to 20.43%.

Notwithstanding the material change in the shareholding pattern in the respondent No. 1 company which took place between the period 11.07.2003 and 17.07.2004, the respondents did not choose to come out with the changed shareholding position till they were directed to furnish a status report on the shareholding position of the respondent No. 1 company. At the same time, the learned Senior Counsel representing the respondent Nos. 1 & 2, while opposing on 10.02.2005 the grant of any interim relief categorically submitted that ... "the second respondent who is in the management should not be interfered by the petitioner group who is commanding 13.27 per cent of the shareholding in the first respondent Company." (para 3 page 3) Though the learned Senior Counsel reiterated that "The shareholding of the petitioner group got reduced on account of the failure on the part of the first petitioner to subscribe to the rights issue offered by the first respondent Company during April 2002, even after extending the closing date for the rights issue to 31.5.2002, but insisted for issue of further shares without requirement of induction of any fresh funds in lieu of the purported outstanding amounts payable to the petitioner group. The shareholding of the petitioner group further got reduced by sale of their substantial holding effected in the year 1997-98. The shares constituting 14.81% shares of the first respondent Company belonging to the respondent No. 4 (to be read as petitioner No. 4) company pledged in favour of ICICI Bank are currently in the name of ICICI Bank. The second respondent is in no way responsible for dilution of the shareholding of the petitioner group, (para 4 page 3 of the order dated 10.02.2005), the allotment and transfer of shares in favour of the proposed respondent Nos. 20 & 21 were never revealed at the time of advancing his arguments. The learned Counsel further contended that "Any order which may be passed by this Bench would adversely affect the interests of the foreign institutional investors accounting for 37% of the shareholding of the first respondent company", (para 2 page 6 of the order dated 11.02.2005). The learned Senior Counsel for the respondent No. 6 & 7 companies, while seeking to vacate the ad-interim order dated 11.02.2005 of this Bench categorically stated that .. "But in real terms the second respondent is already in control and management of the respondent Nos. 1, 6 & 7 companies in which case, there is no need for the present interim order." (para 10 page 10 of the order dated 17.03.2005). It is, therefore, far from doubt that the shareholding of the petitioner group and second respondent group and the foreign institutional investors stood at 30.19%, 32.42% and 37.39% respectively as borne out by the company petition has never been controverted by the respondents. However, the affidavits dated 06.04.2005 and 12.04.2005 show altogether a different picture of the shareholding position of the respondent No. 1 company according to which while the second respondent lost the controlling interest, the proposed respondent Nos. 20 & 21 acquiring 57% of the shares, of which details are unknown gained control over the respondent No. 1 company. When the petitioners were given inspection of the register of members of the respondent No. 1 company, it came to light that the allotment of 89,66,438 shares made in favour of the second petitioner and the allotment of 98,77,329 shares in favour of the fourth petitioner made on 14.06.2002 are found to be struck off. The share transfer register reveals that the respondent No. 1 company registered the transfer of 1,48,70,000 Non Convertible Preference Shares of Rs. 100/- each from the CDC Financial Services (Mauritius) Ltd. in favour of Black Lion Ltd., which is affirmed in the affidavit dated 16.04.2005 filed on behalf of the respondent No. 1 company. According to the respondents, the allotment of shares in favour of the proposed respondent Nos. 20 & 21 was made pursuant to the rights issue made by the respondent No. 1 company in January, 2004 following the relevant applicable provisions of the Act, which is under serious dispute and cannot be gone into at this stage. The plea of the respondents that the allotment of shares in favour of the proposed respondent Nos. 20 & 21 and the consequent reduction of the shareholding of the petitioner group to 7% has been widely published in the newspaper is not justifiable, without any pleading and proof. Thus, the petitioners, being the shareholders of the respondent No. 1 company have made out a prima-facie case for inspection of the statutory and other records and more so when the right of inspection of the shareholders has been approved by the Delhi High Court in Rajdhani Rollar Flour Mills Pvt. Ltd. v. Mangilal Bagri (supra). The defence taken by the respondents that the petitioners ought to have exercised due diligence in ascertaining the shareholding position of the respondent No. 1 company is not tenable in view of the fact that the records of the respondent No. 1 company with the Registrar of Companies are reportedly incomplete and the existing records do not throw any light on these developments. In the light of the proposition laid down in Shankar Sundaram v. Amalgamations Ltd. and Bajrang Prasad Jalan v. Mahabir Prasad Jalan (supra) that the affairs of the holding company would include the affairs of the subsidiary companies for the purposes of Section 397 and 398 and that the affairs of the subsidiary companies can be looked into in such proceedings and in particular on account of the emerging facts as brought out by the affidavits dated 06.04.2005 and 12.04.2005 filed on behalf of the respondent No. 1 company, I deem it fit that the petitioners must be given inspection of the statutory and other records of the respondent No. 1, 6 & 7 companies.

Issue No. (iii):

Whether the respondent No. 8-19 companies and the proposed respondent Nos. 20 & 21 are necessary parties to the CLB proceedings shall be examined in the light of the principles enunciated in the various decisions cited by the learned Senior Counsel on behalf of the contesting parties.

The petitioners have specifically pleaded: The second respondent attempted to gain control over the respondent No. 1 company, inter-alia, through the unauthorised transfers effected from the petitioner Nos. 2 to 4 and the respondent No. 8 & 9 companies, in gross abuse of his fiduciary capacity as the Managing Director. Accordingly, the second respondent got certain shares in the respondent No. 6 company by way of transfer from the respondent No. 8 & 9 companies in favour of the respondent No. 3 company, a portion of which in turn got transferred to the respondent No. 5 company promoted by the family and friends of the second respondent. The second respondent stage managed the swapping of shareholding of the respondent No. 6 company with the shares of the respondent No. 1 company in such a manner that the respondent No. 3 & 5 companies got disproportionately higher shareholding in the respondent No. 1 company, while drastically reducing the shareholding of the petitioner group companies. 9,23,825 shares of the respondent No. 1 company held by the petitioner No. 2 company were transferred in favour of respondent No. 5 company, which eventually came to be transferred to the respondent No. 15 company in order to settle the account of the respondent No. 8 & 9 companies, which remain unsettled. The second respondent in the entire process fiddled away with the money of the petitioners and the respondent No. 8, 9 & 10 companies for creating an asset base for himself and the companies under his control.

The respondent No. 1 company in its application (CA No. 24/2005) while seeking to vacate the ad-interim order dated 11.02.2005, inter-alia, contended that the respondent No. 10 company had licenced the use of the "BPL brand" name to the respondent No. 1 company which had incurred considerable amounts of effort and money to promote and popularise the "BPL brand". However, the respondent No. 10 company failed to pay its dues to the advertisement agencies by which the respondent No. 6 & 7 companies suffered enormous prejudice due to the defaults of the licensor. Securities and Exchange Board of India had initiated civil and criminal proceedings in the year 1999 and 2000, against the first petitioner, the respondent No. 10 company and its directors for artificially manipulating the price of publicly traded shares of the respondent company No. 10. In view of this, some of the investment bankers declined to proceed with the international and domestic initial public offering (IPO) of the respondent group companies planned during the year 2000 and further faced severe difficulties in raising funds from the financial institutions pursuant to the default made by the respondent No. 10 company to its financial institutions on account of the erroneous perception in the financial circle that the respondent group companies form part of the BPL consumer electronics group under the management of the petitioner group. The respondent No. 1, 6 & 7 companies do not form part of the BPL group as borne out by the communication dated 18.02.2002 of the Chairman and Managing Director of the respondent No. 10 company and the second respondent, wherein it is categorically reported that the mobile business consisting of the respondent No. 1, 6 & 7 companies falls within the Innovation Business Group, which is separately managed under the chairmanship of the second respondent.

The above charges and allegations can only be met by the respondent No. 8, 9 & 10 Companies whose presence is necessary to adjudicate the question involved in the subject matter of the litigation as held in A. Vellayan v. Cynosure Investments Private Limited and Bharat Mehta v. Emcorp Finance Limited (supra). Though the respondent No. 8, 9, 10 companies are neither the shareholders nor claimed any relief against them in the company petition, yet the transactions on account of the respondent Nos. 8, 9, 10 purportedly at the behest of the second respondent if remain established, these acts may perhaps constitute acts of oppression in the affairs of the respondent No. 1 company, warranting this Bench, guided by the principles of natural justice, to afford an opportunity of hearing to them.

According to the petitioners, all transfers effected in favour of the foreign institutional investors were from the shareholding of the BPL group companies made at the behest of the second respondent. The petitioners apprehend that the second respondent has conceived a devious plan to consolidate the shareholding of the respondent No. 6 & 7 companies by manipulative practices to hound out the foreign institutional shareholders and thereafter, sell the entire mobile business to his own benefits. This is the precise reason for the impleadment of the respondent No. 11 to 15 companies to the company petition. Considering the allegations in the company petition which should alone be looked into, the presence of these respondents, not having any direct interest in the litigation, in my view, need not be necessary as held in Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay (supra). At the same time, if the petitioners are in a position to establish their apprehension independently without the presence of the respondents 11-15, the petitioners would be entitled for the reliefs on account of these alleged acts of oppression complained of in the company petition.

The need for impleadment of the respondent No. 16, 17 & 18 companies to the company petition, according to the petitioners, is that the respondent No. 16 company sold its 26% holding in the respondent No. 6 company to the respondent No. 17 company (16.1%) whose identity is not known and the respondent No. 18 (9.9%), during the pendency of the earlier CLB proceedings when the status quo order in regard to the shareholding of the respondent group companies was not in force, at the behest of the second respondent. The specific charges of the petitioners are that the respondent No. 17 & 18 companies are the strategic investors, wherein the respondent Nos. 2 to 5 arranged to temporarily park shares with a view to gain control over the respondent No. 6 company. Whether the transfer made by the respondent No. 16 company of its entire shareholding of 26% in the respondent No. 6 company reportedly in breach of the shareholders agreement in favour of respondent No. 17 & 18 companies would amount to an act of oppression and mismanagement, cannot be adjudicated without going into the transaction relating to the transfer of shares so impugned by the petitioners. If the impugned transfer of shares said to be at the behest of the second respondent is found to be oppressive of the petitioners it may result in cancellation of the transfer and the consequent rectification of the register of members of the respondent No. 6 company by deleting the name of the respondent No. 17 & 18 companies, but at the same time, equity demands prior notice to the parties concerned who are likely affected by such an order of this Bench. These reliefs cannot be granted without hearing the transferor and transferees and without whose presence the issue cannot be effectually adjudicated, in which they are necessary parties as held in Sarvinder Singh v. Dalip Singh (supra).

According to the petitioners, the second respondent stage managed the transfer of the holding of the respondent No. 19 company in the respondent No. 7 company in favour of the respondent No. 4 company without offering the shares to the BPL group of companies in terms of the shareholders agreement dated 14.12.1995 and thereafter, the sale of these shares at a differential price to the respondent No. 1 company, thereby benefiting the respondent No. 4 company and simultaneously causing huge loss to the respondent No. 1 company. The transfer of shares from respondent No. 19 company to the respondent No. 4 company and the subsequent transfer in favour of the respondent No. 1 being oppressive of the petitioners are sought to be nullified, which cannot effectually be decided in the absence of the respondent No. 19. To put it in a nutshell, if the transactions in relation to the respondent No. 8 - 10 and 16-19 companies as alleged by the petitioners which are in serious dispute are established they may, perhaps, constitute acts of oppression in the affairs of respondent No. 1 company. These contentious issues cannot be effectually and completely adjudicated in the absence of the respondent No. 8 to 10 and 16 to 19 companies irrespective of the fact that no reliefs are claimed against many of them. The prayer in regard to the impleadment of the proposed respondent Nos. 20 & 21, and for the restraint order against these parties though has been argued, the learned Senior Counsel appearing for the respondents sought time to file detailed counter in CA No. 41/2005 thereby affording them adequate opportunity in the matter, in which I find some force. The proposed respondent Nos. 20 & 21 not being parties to the company petition must be heard before restraining them from dealing with the impugned shares.

In view of the foregoing conclusions and in exercise of the powers under Section 403, I hereby order as under: -

(i) The order dated 17.03.2005 shall remain in force without any modification;

(ii) The respondent Nos. 11-15 shall be struck out from the array of parties in the company petition, reserving the right of this Bench to direct their presence, if need be ;

(iii) The respondent No. 1, 6, 7 companies shall cause production of the statutory and other records as set out in the memo filed on 16.04.2005 by the petitioners since the year 1999 for authentication at a place mutually convenient for the petitioners and the respondents. Shri R. Venkatavaradhan, Advocate Chennai (Phone:24997114) is hereby authorised to authenticate these records in the presence of both the parties or their Authorised Representatives and submit his report by 31.05.2005. The Advocate-Commissioner shall be paid a sum of Rs. 25,000/- towards his remuneration to be borne by the petitioners. The respondents shall give inspection of these records to the petitioners or their Authorised Representatives and furnish copies thereof, as may be demanded by the petitioners at their cost.

(iv) The respondent No. 1, 6, 7 companies shall file a status report with the Bench Office with copy drawn in favour of the petitioners, in the event of any change in the shareholding of any of these companies within seven days of every such change, if any.

(v) The petitioners shall forthwith serve copies of the application (CA No. 41/2005) upon the proposed No. 20 & 21 companies, which shall file counter-statement by 15.06.2005 and rejoinder, if any, by 07.07.2005.

(vi) The petitioners shall serve copies of the company petition upon the respondent No. 8 to 10 companies and respondent No. 16 to 19 companies without any loss of time, which shall file counter-statement by 15-06-2005 and rejoinder to be filed by 07-07-2005.

(vii) The respondent Nos. 1 to 7 will file counter-statement to the company petition and the application in CA No. 41/2005 by 15.06.2005 and rejoinder to be filed by 07.07.2005. The company petition and the application in CA No. 41/2005 will be heard on 11.07.2005 at 10.30 A.M. With these directions, the applications in CA No. 37/2005 and CA No. 21/2005 stand disposed of.