Company Law Board
Shri Raghbir Singh, Shri Harjit Singh ... vs Sikri Multiplex Cinema Pvt. Ltd. on 30 July, 2007
Equivalent citations: [2008]143COMPCAS470(CLB)
ORDER
Vimla Yadav, Member
1. In this order I am considering Respondents' Applications No. 329/05; 212 and 219/06 on maintainability of the petition and C.P. No. 76 of 05. C.P. No. 76/05 was filed under Sections 397 and 398 of the Companies Act, 1956 (hereinafter referred to as 'the Act') alleging that the return of allotment of shares made on 10.5.2000 in Form No. 2 dated 30.5.2000 filed with the ROC on 1.6.2000 was again filed by Respondent No. 2 with the ROC on 5.6.2002 in Form No. 2 dated 30.5.2000 changing the names of allottees and also the number of shares allotted to them; and that on 5.6.2002 Respondent No. 2 also filed Form No. 32 in respect of the appointment of Respondent No. 3 as Director allegedly made on 20.5.2001 and also in respect of cessation of Petitioner No. 3 as Director by allegedly forging the signatures of Petitioner No. 3 on the letter of resignation; that Respondent No. 6 (the ROC) had allegedly failed to take action against fabricated and manipulated returns of allotment in Form No. 2 and illegal and malafidely filed Form No. 32 dated 5.6.2002 and 3.2.2003; that Respondent No. 2 had allegedly siphoned off the funds of the Respondent No. 1 company.
2. The Respondent No. 1 company namely M/s Sikri Multiplex Cinema Pvt. Ltd., having its registered office at 3, Sant Fateh Singh Nagar, Dugri Road, Ludhiana, Punjab was incorporated on 10.1.2000 under the Companies Act, 1956 with the main object of acquiring land premises to build, construct and run a cinema hall as proprietors or hirers of theatres, cinema places, cinematographic shows and exhibitions. The authorized Share capital of the Respondent Company is Rs. 1,50,00,000/- (Rs. One Crore Fifty Lacs only) divided into 15,00,000/- equity shares of Rs. 10/- each. The total paid capital of the Company is Rs. 83,20,000/- (Eight three Lacs twenty thousand only) and the sons of the petitioner No. 1 i.e. Petitioner No. 3 and Respondent No. 2 subscribed equally i.e. 1000 equity shares of Rs. 10/- each and as per the terms of the Articles of Association of the company, both the petitioner No. 3 and the Respondent No. 2 were appointed as first directors of the company. The petitioners and the respondents are a family headed by the Petitioner No. 1 being the father of Petitioner No. 2, Petitioner No. 3 and Respondent No. 2. The other respondents are Respondent No. 2's wife, son and family concern. It is noticed pat the petitioners had earlier filed C.P. No 15 of 2004 challenging these acts of oppression and mismanagement. The petition was withdrawn as per the Company Law Board's order dated 22.3.2005 with 'liberty to apply'.
3. Sh. Virender Ganda, counsel for the Petitioners contended that the reason for withdrawal of the petition was that the report of the Central Forensic Scientific Laboratory (CFSL) on the alleged letter of resignation sent for verification/comparison of the signatures on the resignation with the forged signatures of Petitioner No. 3 was awaited. Further, it was contended that the liberty given was unconditional without any condition attached thereto. Sh. Krishna Kumar, Counsel for the Respondents contended that as per IA No. 71/05 in C.P. No. 15/04 the proceedings were sought to be stayed on the ground of investigation being carried out in FIR No. 54 dated 10.4.2004 as per para 9 of the said Application. Further, Sh. Paranjit Singh, the petitioner vide his affidavit on record stated that in view of the investigation the proceedings before the Company Law Board be stayed. The Company Law Board had vide its order dated 22.3.2005 dismissed the petition as withdrawn with the 'liberty to apply' as the petitioner had made a complaint against the Respondents to the Police Authority for forging records relating to the company in their FIR No. 54 dated 10.4.2004 with the Police Station Sarabha Nagar, Ludhiana and as the CFSL had confirmed the forgery of the allotted letter of resignation dated 31.5.2001, the Respondents had approached the Hon'ble High Court of Punjab and Haryana at Chandigarh for anticipatory bail in the matter. The Hon'ble Court passed the following order on 2.8.2005:
Therefore, anticipatory bail is granted subject to the condition that none of the disputed documents like letter of resignation dated May 31, 2001 and the Memorandum of family settlement dated September 16, 2002 shall have any legal validity for a period of six months from today. Since such a condition can seriously effect the civil rights of the parties, it is further directed that the parties may approach the Civil Court, if they have not already done so, and seek injunctions or appointment of receiver of the properties in dispute. The legal effect of the documents is being kept in abeyance for six months to enable the parties to obtain appropriate directions from the Civil Court, whereafter the decision of the Civil Court shall come into effect.
Relying on the Hon'ble High Court's orders whereby Petitioner No. 3 was restored as director of the company as also the shareholding of the petitioner in terms of Form No. 2 dated 10.5.2000, the legal effect of disputed documents having been kept in abeyance for a period of six months a fresh petition by way of C.P. No. 76 of 2005 was filed.
4. The Respondents have raised preliminary objections on the maintainability of this petition by way of C.A. No. 329 of 05. Further, C.A. No. 212 of 06 was also filed by the Respondents to bring on records the proceedings in the Civil Court, Ludhiana in Writ Petition No. 10106 of 2005 wherein the interim prayers sought by the petitioners were rejected and it was contended that the present petition was not maintainable. Further more, C.A No. 219 /06 was filed praying that C.A. No. 329/05 and 212/06 be disposed of at the first instance without going into the merit of the matter and copy of the order dated 4.7.2006 passed in CWP No. 9614/06 by the Hon'ble High Court of Punjab and Haryana at Chandigarh was placed on record. Accordingly, the issue of maintainability of C.P. No. 76 of 2005 was heard first. On 13.7.2006 Respondents filed their written objections to the continuance of the proceedings in the C.P. No. 76/05 reiterating that a Special Leave Petition had been filed by the Petitioners against the Hon'ble High Court of Punjab and Haryana's order dated 2.8.2005 and/or similar issues raised in the present C.P of 76/05 were also sought to be raised and, therefore, it was contended that the petition should be issued and or atleast the Company Law Board should await the decision of the Hon'ble Supreme Court in any event before deciding even the issue of maintainability However, on 24.8.2006, the Respondents filed their written submissions on maintainability of the petition after having argued the matter in detail. The petitioners filed their written arguments on 7.11.2006. Though the order was reserved, the proceedings were kept pending awaiting the decision in the SLP No. 581/06 which was filed by Mr. Paranjit Singh (P-3) as the Respondents had vehemently argued that propriety demanded that the same issues were not allowed to be taken up or agitated in this forum as this would amount to not only overreaching to Hon'ble Supreme Court but may also tantamount to contempt of the directions of the Apex Court. On 8.1.2007 SLP was dismissed by the Hon'ble Supreme Court holding as under:
Delay condoned.
We have heard counsel for the parties.
We find that this Special Leave Petition has become infructuous because taking advantage of the observations contained in the last part of the impugned order, the petitioner moved the Civil Court but without any favourable result, in view of the pendency of the proceeding before this Court.
In the meantime, we are informed that the police has filed a cancellation report which has been challenged in a separate proceeding. We do not wish to make any observation in that regard.
The Special Leave Petition is dismissed as having become infructuous. Nothing said in this order shall be construed as expression of opinion on the merit of the case.
However, the parties mentioned the matter on 2.7.2007 and after hearing the matter after dismissal of SLP, the order of maintainability of C.P. No. 76 of 2005 was reserved for orders.
5. It was argued by the counsel for the Respondents that the present petition has suppressed material facts and a deliberate attempt has been made to distort the facts, with a sole attempt of misleading this Hon'ble Board. The petition refers to the earlier company petition No. 15 of 2004 filed under Section 397 and 398 and also to the order dated 24.2.2004. No reference whatsoever has been made to the subsequent order passed by the Hon'ble Company Law Board on 22.3.2005 when the Hon'ble Company Law Board was pleased to record that inview of the desire of the petitioner to withdraw the petition, the petition was allowed to be withdrawn. As a consequence of the dismissal of the petition as withdrawn, all the reliefs that had been sought for in the C.P. No. 15 of 2004 stand disposed off and same or similar relief cannot be sought for as having become resjudicata. In the present petition the fact of the petition having been withdrawn and the same having been dismissed have been suppressed. The petition C.P. No. 15 of 2004 and the present C.P. No. 76 of 2005 are identical in as much as same facts have been pleaded and the cause of action sought to be made out is identical. In these circumstances, the petition is liable to be dismissed on this ground alone. The petition is the gross abuse of process of court as would be apparent from the conduct of the petitioners in not only not disclosing the fact of dismissal of the petition but also the fact that the Hon'ble Company Law Board had declined to hold that the family settlement was not binding on the petitioners. On the contrary when the matter had come up for hearing in the proceedings in 15 of 2004, the petitioner No. 1 appeared in person and had accepted the fact that there had been a family settlement and that though he did not dispute the facts that he was party to the said settlement, had only wished to review his decision. It was pointed out that the Company Law Board had observed that it was not open for the petitioner to raise the issue pertaining to the family settlement nor seek review of it in the present proceedings. Consequently, the petitioners realized that they could not be entitled to get any relief in the proceedings much less the directions as sought for in the petition. The present petition refers to the order passed by the High Court of Punjab and Haryana in the matter pertaining to FIR No. 54 dated 10.4.2004. The said proceedings including the order dated 2.8.2005 referred in the petition, have been rendered infractuous and/or are inoperative and/or are of no consequences and the petitioners are not entitled to any relief and the present petition based on the said order is wholly misconceived. That the petitioners are also guilty of forum shopping and having taken up alternate proceedings by initiating civil proceedings in the Court of Civil Judge, Senior Division, Ludhiana. A civil suit has been filed by the petitioner inter alia, pleading the same and/or substantially identical facts. In the said suit the issues with regard to the shareholding which are the subject matter of the present petition have also been raised and it was contended that the family settlement is not binding on the petitioner and the same is liable to be set aside. In the said suit it was further prayed that the family settlement in respect of cinema site and with M/s sikri Muliplex Cinema Ltd, the Respondent No. 1, herein be declared illegal and void. As a consequence of the said suit filed before the court of Civil Judge, Senior Division, Ludhiana on 7.9.2005, the present petition before this Hon'ble Board is in any event not maintainable and is liable to be rejected on this ground that the petitioners have already availed for an alternate remedy which is still being pursued. The suit had been filed in the Civil Court, Ludhiana wherein same or similar issues had been raised and are pending. In the said suit before the Civil Court, the respondent had also raised specific issues that in view of the proceedings before the Hon'ble Company Law Board, the Civil Suit should not proceed. The petitioners, however, objected and insisted that the proceedings before the Civil Court should continue. Further, the order that may be passed by the Hon'ble Court, Ludhiana may have direct bearing in as much as the issues raised in the said proceedings are identical and whether the arguments of the petitioners have been incepted and if so to what extent, would be known only when the detailed order is made available. In the aforesaid circumstances, it was pointed out that the petition before this Hon'ble Board should in any event be dismissed on the ground of maintainability and/or in the alternative stayed, to await the detailed judgment order in the said proceedings. Further, a writ petition 10106 of 2005 had been filed in the High Court of Punjab and Haryana wherein same and/or similar issues had been raised and specific relief had been sought for taking possession of Orient Cinema in running conditions along with building, machinery equipments, etc. Parties have vehemently agitated the issues with regard to the title of the property before the Civil Court as well as the High Court of Punjab & Haryana at Chandigarh. In the aforesaid circumstances, it is further clear that the issue being sub-judice before the Civil Court/the High Court the matter cannot be proceeded before this Hon'ble Board in any event and further the present proceedings if not dismissed on the ground of maintainability ought to be stayed to await the final decision in the Civil Court as well as in the High Court of Punjab & Haryana at Chandigarh in the matter of 10106 of 2005. The petition C.P. No. 76of 2005 may be dismissed on the ground of not being maintainable.
6. Sh. Krishna Kumar counsel for the Respondents informed the Board about the sudden death of Sh. Kamaljit Singh, Respondent No. 2 in a fatal accident on 8.1.2007.
7. The counsel for the Respondents argued that with the dismissal of the Special Leave Petition No. 581 of 2006 of Sh. Paranjit Singh (Petitioner No-3) as having become infractuous vide the Hon'ble Supreme Court's order dated 8.1.2007, the Hon'ble High Court's order dated 2.8.2005 was rendered infractuous. The counsel had earlier raised preliminary objections on the maintainability of C.P. No. 76/05. It was argued that the present petition is only Forum shopping. My attention was drawn to the affidavit dated 19.3.2005 filed to bringing on record the filing of the Writ Petition No. 1167 of 2005.
8. The counsel for the Respondents contended that the main and the substantial issues were already the subject matter of proceedings before the Hon'ble Supreme Court. Even though a petition had been filed by the petitioner before the Hon'ble Supreme Court as far back as October/November, 2005, this fact had been suppressed and not brought to the notice of the Hon'ble Board. Notice had been issued when the matter had come up for hearing on 23.1.2006. This fact had also been suppressed. The matter was heard on 18.11.2005, 9.12.2005, 25.1.2006, 8.2.2006, 23.2.2006, 9.3.2006, 23.3.2006 and 22.5.2006. Even on 6.6.2006 when the matter came up for hearing the petitioners did not mention the order passed by the' Hon'ble Supreme Court on 23.1.2006. Since the controversies raised in the proceedings before the Hon'ble Supreme Court were subject matter of the SLP, it was submitted that propriety demanded that the same issues were not allowed to be taken up or agitated in this forum as this would amount to not only over reaching the Hon'ble Supreme Court but may also tantamount to contempt of the directions of the Hon'ble Supreme Court. In the circumstances it was submitted that further proceedings in the matter, may not be taken up and/or in any event deferred till the disposal of the SLP (Crl.) No. 581 of 2006. The SLP now stands dismissed.
9. Arguing on the maintainability of the C.P., the counsel for the Respondents pointed out that the petition 76 of 2005 is liable to be rejected at the first instance and without taking into consideration even the prima facie case as (a) the petition has been filed solely and wholly on the basis of and squarely relying upon the order dated 2.8.2005 passed by the Hon'ble High Court of Punjab and Haryana at Chandigarh in Crl. M. No. 26652-M of 2004. After referring to the order at para 4 of the petition it was mentioned in para 5 of the petition that, "in view of the order dated 2.8.2005, the petitioner No. 3 was restored as Director of the company as also the shareholding of the petitioner in terms of Form 2 dated 10.5.2000, the legal effect of the disputed documents was kept in abeyance for a period of six months. Further, in para 6 of the petition it was contended that, "in view of the circumstances explained herein before, a fresh petition is being filed before the Hon'ble Company Law Board." The counsel contended that nowhere in the Punjab and Haryana High Court the liberty was given to other petitioners to file the petition. The said order dated 2.8.2005, it was pointed out, has lapsed and in any event is no longer operative. Further, in any event the said order was a conditional order and would have become operative at the relevant time if and only if the anticipatory bail had been availed by the Respondent. The respondent No. 2, however, never availed of the rights that were available by virtue of the said order and consequently the said order was never invoked or brought into force for the reason that there was no necessity for the same and as the FIR had been held to be false and investigations thereto directed to be closed. Consequently the basis of filing the petition and continuing the proceedings no longer in any event survives. Further, it was pointed out that on 1st August, 2005 itself, the police had come to the conclusion that the FIR filed by Shri Paranjit Singh was false and not maintainable and the investigation had been closed. Letter to the said effect was written by ADGP Crime, Punjab, Chandigarh to Senior Superintendent of Police, Ludhiana. "The letter specifically mentions that "there is no truth in the FIR and it has been lodged only to grab the property from Mr. Kamaljit Singh and to involve him in frivolous litigation." It was pointed out that the order dated 2.8.2005 by granting anticipatory bail on conditions, referred to and relied upon by the petitioner, for filing the present company petition 76 of 2005, therefore, becomes wholly misconceived and without any basis. The very substratum of the order dated 2.8.2005 does not survive as the said order was to be in respect of proceedings relating to FIR No. 54 dated 10.4.2004 which as stated above was no longer maintainable.
10. Sh. Krishan Kumar further contended that admittedly, the names of the petitioners are not in the Register of Members. This fact was verified when the books were authenticated by the Ld. Bench officer pursuant to the orders of the Company Law Board. One of the petitioners Shri Paranjit Singh who held at one point of time 1000 shares had transferred the said shares and ceased to be a member on 14.5,2003. Hence, since 14.5.2003, there had been no mention of petitioner No. 3's name in the register of members. Shri Raghbir Singh, petitioner No. 1 and Shri Harjit Singh petitioner No. 2 never held any shares and hence question of their name being a shareholder and the name entered in the register could never arise. Consequently, as on the date of filing of the petition in September, 2005 the petitioners are not shareholders and are rank outsiders/trespassers. It was contended that they have no locus to file the present petition and the petition is liable to be rejected summarily on this ground alone. Since the petitioners are not shareholders at all, the question of their holding 10% of the total shareholding, the minimum required for filing a petition under Section 397, by virtue of Section 399, cannot in any event arise. Hence, on this ground alone the petition is liable to be rejected. Further, it was argued that the fact that they are not shareholders has been fortified by the following documents-
a. The family settlement dated 16.9.2002, admitted to have been executed by the petitioner No. 1, corroborates the contentions of the Respondent with regard to shareholding as well as Directorship and the petitioner cannot have any claim to either the shares or Directorship.
The said document is valid and operative as on date as the effect of the same has not been stayed by any Court.
b. Letter dated 28.1.2004 issued by the Department of Company (now Corporate) Affairs, Office of the Registrar of Companies, No. PC/23249/5444, wherein it is specifically held by the office that "as per the records of this he is neither shareholder nor the director of the company.
c. On 14.1.2004 a false purported return of allotment is filed by the petitioner No. 1 claiming to be Chairman and Managing Director and seeking to allot shares to the petitioners, contending that the allotment have been made on 14.1.2004, meaning thereby would like to show themselves as shareholders w.e.f. 14.1.2004. It was argued that, the allotment cannot be made for the reason that the petitioner No. 1 was not even a shareholder and Director, much less the Chairman and Managing director. Hence, the documents have no validly and it is a total fraud. Further, it was argued that an FIR has been filed against this fraudulent act and the investigation is continuing. Furthermore, the ROC has refused to take cognizance of the said return.
d. Records of the company including the statutory records have always been at the registered office of the company, and the same have been duly authenticated by the Bench Officer of this Hon'ble Board.
11. The Counsel for the Respondents reiterated that the petition No. 15 of 2004 is identical to the present petition in all respects and except for other reference to the order dated 2.8.2005 and contention of the interest arising out of the said order as claimed by the petitioner, both the petitions are identical. After the lapse of the order dated 2.8.2005, the present petition 76 of 2005, becomes of no consequences and/or infructuous. Consequently, the present petition 76 of 2005 is not maintainable and is barred in law. On this ground alone the petition is liable to be rejected. The expression "liberty to apply" cannot be construed to permit refiling of the petition on the same set of facts or same cause of action. It is apparent that what was contemplated was that in the event the investigations resulting in the filing of FIR No. 54 dated 10.4.2004 results in any specific right accruing to the petitioner, the petitioners may apply before the Hon'ble Board. In the present case the FIR No. 54 dated 10.4.2004 has been closed and further investigation was dropped. Consequently, any attempt to invoke "the liberty granted" in the order dated 22.3.2005, would be wholly misconceived in the facts of the present case and hence the company petition No. 76 of 2005 ought to be dismissed at the threshold itself without even considering the facts summarily.
12. Further, it was argued by the counsel that in the present proceedings, the petitioners, being fully aware of the fact that no case could be made out to seek relief, had chosen to initiate various proceedings by way of suit/writs which are as under, i. Civil Suit before in the Court of Civil Judge, Senior Division, Ludhiana dated 9.8.2004.
ii. Suit for decree of declaration to the effect of memorandum of family settlement filed by petitioner No. 1 in the Court of Civil Judge, Senior Division, Ludhiana dated 7.9.2005.
iii. Civil Writ Petition No. 1 158 of 2004 filed in the High Court of Punjab and Haryana at Chandigarh by the petitioners.
iv. Civil Writ Petition filed by the petitioners before the High Court of Punjab and Haryana being Civil Writ Petition No. 1167 of 2005.
v. Civil Writ Petition No. 10106 of 2005 filed before the High Court Punjab and Haryana, Chandigarh, inter alia, challenging the order dated 5.4.2005.
vi. Special Leave petition (Crl.) No. 581 of 2006 in the Hon'ble Supreme Court of India.
The issues raised in the petition are primarily in the nature of issues which only Civil Court can deal with and cannot be the subject matter of proceedings under Sections 397 and 398 of Companies Act, 1956. It is for this reason that the petitioners have chosen to file a Civil Suit which is still pending. The present petition is not maintainable for this reason as well.
13. It was argued by he counsel for the Respondents that the grounds raised in the petition, do not give any cause of action which could be termed as either mismanagement or oppression within the meaning of Sections 397 and 398 of the Companies Act. Consequently, none of the grounds constitute any cause of action to maintain a petition under Sections 397 and 398 of the Companies Act. These are issues which only Civil Courts which deal with specific Civil rights can consider. The petition under Sections 397 and 398 is not maintainable for this reason as well that there is no mismanagement or oppression alleged or averred so as to invoke Section 397 and 398 of Companies Act.
14. Sh. Virender Ganda, Counsel for the Petitioners argued that as per the return of allotment (form No. 2) dated 10.5.2000, filed on 1.6.2000, the petitioners were admittedly holding 67.5% of the total paid up share capital. As per the Memorandum of Association and Articles of Association, the petitioner No. 3 being, one of the two subscribers was also a shareholder apart from being one of the only two directors of the company. The total number of the shareholders of the company are 5(five). The petitioners being 3(three) of them are more than 1/10 of the total number. The petitioners are, therefore, qualified to file a petition under Section 397 and 398 in terms of Section 399 of the Companies Act, 1956. The reliance was placed on a judgment and order dated 29.7.2002 of the CLB in the matter of Amartex Industries Ltd, wherein the Company Law Board had observed as follows:
We have considered the pleadings and arguments of the counsel. First we shall consider as to whether without being member of the company, one could file a petition under Sections 397 and 398 of the Act as one of the basic requirement in terms of Section 399 of the Act to file such a petition is that one should be a member of the company with requisite percentage of shares in terms of that section. This Board has been of a consistent view that, if a shareholder, earlier holding requisite percentage of shares in terms of Section 399, complains, as an act of oppression, that his incapacity has arisen on account of further issue of shares, then the Board would examine the same first to find out whether the act of oppression in relation to allotment of shares has been established. If established, the issue relating to maintainability would no longer survive and if not established the petition would not be maintainable. Shri Ganda referred to some of the decisions of this Board in this regard. We do not find any legal impediment to extend the same view in regard to transfer of shares also, more particularly, in a family company like the one in the present proceedings and when such a transfer is alleged to be an act of oppression. In other words, without examination of the issue, the petition cannot be dismissed in limini.
15. Further, it was pointed out by the counsel that there have arisen various disputes among the family members, in respect whereof the litigations are pending in Civil and Criminal Courts, High Court and Supreme Court of India, etc. It was pointed out that the proceedings pending elsewhere are independent and the relief claimed therein are different than those claimed in this petition. For example, (a) the respondent in the matter of forgery of the resignation letter of petitioner No. 3 and FIR No. 54 dated 10,4.2004, had approached and prayed the Haryana and Punjab High Court at Chandigarh seeking anticipatory bail. The High Court as per order dated 2.8.2005 had granted the anticipatory bail and made certain observations about the disputed documents. The petitioners had filed Special Leave Petition No. 581 of 2006 before the Hon'ble Supreme Court against the aforesaid order dated 2.8.2005 of the High Court seeking cancellation of anticipatory bail. However, the SLP stands dismissed as having become infructuous. The Civil matters are pending elsewhere wherein:
i Disputed Memorandum of family settlement has been challenged.
ii. Allotment of land by Ludhiana Improvement Trust has been challenged, etc. Nowhere in the aforesaid proceedings, the alleged, return of allotment dated 10.5.2000 filed on 5.6.2002, revising the earlier return of allotment dated 10.5.2000, filed on 1.6.2000 or the unlawful removal of petitioner No. 3 as Director or the illegal appointment of respondent No. 3 as Director, have been challenged. All these 3 issues are exclusively subject matter of the company petition pending before the CLB as company petition No. 76 of 2005 and nowhere else. In fact, the respondents have been pleading before the other Judicial authorities that those proceedings should be stayed/dismissed in view of the matter being pending before the Company Law Board.
16. I have considered the pleadings and detailed arguments of the parties on C.A. No. 329/05; 212/06 and 219/06 in C.P. No. 76/05 on maintainability of the petition and the prayer that the order on the preliminary objections be issued before proceeding with the merits of the case. The objections raised are that the High Court's order dated 2.8.2005 in the matter pertaining to FIR No. 54 dated 10.4.2004 which was referred to for filing fresh petition No. 76 on 19.9.2005 on identical grounds which were raised in C.P. No. 15/04 which was withdrawn with 'liberty to apply', had become final on dismissal of the SLP, the High court's order whereby the legal effect of the impugned documents was kept in abeyance for six months did not survive any longer thus the very basis of filing the fresh C.P had gone. The Petitioners have not been able to refute this objection. The 'fresh petition No. 76/05 was filed relying on the Punjab & Haryana High Court's order dated 2.8.2005. The Petition to the High Court was moved by the respondents for anticipatory bail in FIR No. 54 subsequent to the CFSL's report in the matter. The High court's order was for a limited period of six months whereby the legal effect of the impugned documents had been kept in abeyance for six months restoring Petitioner No. 3 as Director and also the shareholding of the Petitioner in terms of the Form No. 2 dated 10.5.2000. This order had already lapsed on expiry of six months. The order was for a limited time with the lapsing of which the order is no longer operative. And with the dismissal of the SLP No. 581, the High Court's order which is no longer operative has become final. However, the argument of the counsel for the petitioners that the basis of filing of the fresh company petition was that the CFSL's report on forging of Petitioner No. 3's signature was awaited is also not tenable in view of the fact that when C.P No. 15/04 was withdrawn on 22.3.05, the CFSL's report was already available and even the FIR against the cancellation of which the Petitioner's appeal is pending stood cancelled as on the date of filing of the fresh company petition. The basis on which the fresh company petition was filed is no longer available to the Petitioners. The same facts as in C.P. No. 15/04 have been pleaded/repeated, no new cause of action has been brought on record. The respondents' objection that the petitioners have indulged in forum shopping is also found to be correct as the issues raised in the present company petition have been raised in several proceedings including even in the SLP which stands dismissed as infractuous. The fact that there is a family settlement dated 16.9.2002 has also not been denied, though it has not been accepted and has been challenged, the proceedings are pending.
17. The Respondents' another objection that the Petitioners are not eligible under Section 399 of the Act to file a petition under Sections 397 & 398 of the Act has also not been refuted by the Petitioners. As per the admitted MOU, the Petitioner ceased to be Member and Petitioner No. 3 who had 1000 shares had already transferred the said shares and ceased to be a Member on 14.5.2003. The Petitioners' reliance on the ratio of judgment in the case of Amartex Industries Ltd. is also not applicable in the present case in as much as that besides the MOU and forum shopping the petitioners have not come to the Company Law Board with clean hands. The allegation of unclean hands is found to be correct. The main and the substantial issues were already the subject matter of proceedings before the Hon'ble Supreme Court. Their entire prayer was that the last para of the Hon'ble High Court's order dated 2.8.2005 be modified in view of the detailed contentions made in the petition before the Hon'ble High Court and repeated in the SLP filed before the Apex Court. Though the SLP was filed in October/November 2005, this fact was suppressed and not brought to the notice of the Company Law Board despite the Petitioners having several opportunities of hearings on 18.11.2005, 9.12.2005, 25.1.2006, 8.2.2006, 23.2.2006, 9.3.2006, 23.3.2006 and 22.5.2006 before the Company Law Board. It were the respondents who brought this fact to the notice of the Board on 6.6.2006 and it was prayed that since the controversies raised in the proceedings before the Hon'ble Supreme Court were subject matter of the SLP, the propriety demanded that the same issues were not allowed to be taken up or agitated in this forum as this would amount to not only overreaching the Hon'ble Supreme Court but may also tantamount to contempt of the directions of the Apex Court. Had the Respondents not brought this to the knowledge of this Bench, it would have resulted in an embarrassing situation. Further, it is noticed that the correct facts regarding C.P. No. 15/04 which stood dismissed were also not disclosed fully to the Company Law Board as pointed out above. Furthermore, the Company Law Board's observation regarding the family settlement in the proceedings in C.P. No. 15/04 that it was not open for the petitioner to raise the issue pertaining to the family settlement nor seek review of it in the proceedings in C.P. No. 15/04 was also suppressed from the Company Law Board. It is a settled proposition of law that the conduct of the parties is a very relevant factor to be considered in the equitable proceedings under Sections 397/398 of the Act. It has been held that the Petitioner seeking equitable relief must come with clean hands and good conduct, failing which the Petitioner would constitute a gross abuse of the process of the Court, and the Petitioner is not entitled for any relief under Sections 397/398 of the Act. In the present case, the petition fails even on this ground alone. However, the Petitioners have not been able to refute other preliminary objections on maintainability as well.
18. In view of the foregoing, I have no other option but to allow C.A No. 329/05, 212 and 219/06 of the Respondents. C.A. No. 329/05; 212 and 219/06 stand disposed off.
19. Since I have come to the conclusion that the petition is not maintainable purely on point of law, without any need to advert to the facts of the case, this order is being issued, dismissing the petition No. 76/05 as not maintainable. All interim orders stand vacated.