Document Fragment View

Matching Fragments

1. This is an appeal under Section 10F of the Companies Act, 1956 (hereinafter referred to as the Act) against the order dated 23rd January 2002 passed by the Principal Bench, New Delhi of the Company Law Board (hereinafter referred to as the Board) in company petition No. 97 of 1997 under Section 634A of the Act.

2. The brief facts relevant for the decision of the present appeal are as under:

The respondent before this Court who is the petitioner in the Company Law Board had filed a petition under Sections 397-98 of the Companies Act, 1956 (hereinafter referred to as the said Act) alleging that he held 14.5 per cent of the capital of the company and challenged as oppressive the proposal of the company to issue more than 70 per cent shares which were to be allotted to the share holders who were in whole time employment of the company and to another company under the same management.

6. This order was challenged in appeal before this Court and the primary plea of the learned counsel for the appellant herein, Mr. U.K. Chaudhary, is that in view of the provisions of Section 634A of the Act the application under Section 634A to enforce the order dated 28th May 1998 cannot be equated with a decree and any order sought to be enforced under Section 634A had to be a decree and consequently since the order dated 28th May, 1998 was not a decree the application under Section 634A was not maintainable. He further contended that the Section 634A only envisaged a final order which ought to be a decree and the terms of compromise of 28th May 1998 clearly indicated that it was not a final order. He further submitted that the words "In accordance with the above agreed terms and in order to facilitate the parties to come to a final settlement we adjourn the case to 5.8.98 at 4.00 p.m. when the parties can make their submissions as per Clause 4 above in the agreement dated 28th May, 1998 clearly stipulate and indicate that a settlement had not been arrived at and the agreement sought to be enforced was merely a facilitatory and not a final agreement.

7. Mr. Rajiv Sawhney, learned counsel for the respondent, on the other hand, contended that the phraseology of Section 634A clearly indicates that an order made by the Company Law Board may be enforced by the Board in the same manner as if it were a decree made by a Court in the Civil Suit, could not be a decree in view of the words "as if it is a decree". Section 634A of the Companies Act reads as under:

"634A. Enforcement of orders of Company Law Board - Any order made by the Company Law Board may be enforced by that Board in the same manner as if it were a decree made by a court in a suit pending therein and it shall be lawful for that Board to send, in the case of its liability to execute such order, so the court within the local limits of whose jurisdiction:-

9. A bare perusal of Section 634A of the Act clearly shows that the plea of Mr. Chaudhary regarding the narrow interpretation sought to be given to words "any order" cannot be countenanced as the phrase "any order" must be given its full natural meaning and effect and consequently will clearly include the order passed on 28th May 1998. Further the stipulation in the section that the order can be enforced by the Board in the manner similar to a decree is a clear pointer to the fact that said order could not be a decree as sought to be contended by the learned counsel for the appellant. In fact if the order contemplated by Section 634A is construed be a decree, the words "in the same manner as if it was a decree" are totally redundant and superfluous and a Court cannot construe the mandate of the statute to hold that the legislature intended to use superfluous words.