Powers of High Court on Company Law

In a judgement that makes clear the role of the High Court while entertaining a special statutory appeal against an order of the Company Law Board, Justice Ramesh Ranganathan ruled the High Court is not restricted by the stated “substantial question of law” framed by the court.
In a dispute relating to Power Production Company parties went to the company law Board with various allegations including an application under Section 111 of the Companies Act for rectification of the share holdings and also allegations of oppression of the share holders. The unsuccessful appellant who was directed by the Company Law Board to approach the civil court for settling the disputes as the matters involved complicated questions of fact, approached the High court. The High Court while admitting the case framed two questions of law from out of the ten raised by the Appellant and ordered notice to the company. At the hearing of the Appeal counsel for the company contended that the enquiry be restricted to the two framed questions of law. Senior Counsel S. Ravi appearing for the Appellants successfully contended that even if they fail to identify questions of law, it is the duty of the court to frame such questions .
Elaborating on the scope of the enquiry by the court Justice Ramesh said: “All that Section 10(F) requires is that the question of law, which the court is called upon to decide must be a question which was in issue before the CLB. Where the question itself was under issue, there is no further limitation imposed by the Section that the appeal should be limited to those aspects of the question which had been argued before the CLB. It will be an over refinement of the position to hold that each aspect of a question is itself a distinct question for the purposes of the Section.” and added, “ As long as the contentions urged before this court fall within the framework of the questions of law which were in issue before the CLB such questions can be examined in an appeal under Section 10 F of the Act”.
The judge also drew parallels from Section 100 of the CPC which provide for appeals on substantial questions of law and reasoned that merely because the Court chooses to identify a couple of such questions at the time of admission of the appeal it “would not disable it later from adjudicating upon any other questions of law which may arise out of the order of the CLB, more so those questions which broadly fall within the ambit of the questions of law formulated by the appellants in their memo of appeal. Exercise of power by this court under Section 10 F is limited to an examination of those of law which arise out of the order of the CLB and is not confined only to those questions of law noticed by it while admitting the appeal. No statutory provision either under the Act or the Rules and Regulations made thereunder, have been brought to the notice of this Court which require it to limit the examination only to the questions identified by it as questions of law at the stage of admission of the appeal”.
The 153 paragraphed verdict would well be a ready reckoner for Corporate lawyers in days to come also on other aspects which would however would well be subject to attention in another piece. Making clear that the inhibition pleaded is not supported by the language of the statute the judge made clear that the ambit of the court is wider than pleaded.
L. Ravichander.