The court ruled that both oppression and just and equitable grounds must be established for the CLB to exercise jurisdiction under the Companies Act, emphasizing strict interpretation of Articles of Association.

JUDGMENT :

MANISH PITALE, J.

These two appeals have been filed under Section 10F of the Companies Act, 1956, challenging the order dated 19.09.2006 passed by the Company Law Board, Principal Bench, New Delhi (hereinafter referred to as 'CLB'), taking exception to different parts of the same order. While the appellants in Appeal No.6 of 2006 are aggrieved by the direction contained in the impugned order of the CLB, declaring that the original petitioner before CLB i.e. Aasia Properties Development Limited (respondent No.1) in the said appeal was entitled to nominate one director on the Board of the Company - Juhu Beach Resorts Limited, the appellant in Appeal No.11 of 2006 i.e. the aforementioned Aasia Properties Development Limited, now known as Hinduja Realty Ventures Ltd., is aggrieved by the findings rendered by the CLB on the aspect of manipulations of records of the Company relevant for the date of acquisition of 1/3^rd shares of the Company by the said petitioner, as also denial of prayer for representation on the Board of the Company. The appellants in both the appeals have made rival submissions on analysis of Section 397 read with Section 402 of the Companies Act, 1956 by the CLB and its effect on the question of alleged oppression suffered by the original petitioner before the CLB.

2. For the sake of convenience, the appellants in Company Appeal No.6 of 2006 are referred to as ‘Rahejas’ and the appellant in Company Appeal No.11 of 2006 is referred to as ‘Aasia Properties’. Although Aasia Properties subsequently became Hinduja Realty Ventures Ltd., since the original petition before the CLB was filed by Aasia Properties, this order shall refer to the said party as 'Aasia Properties' for the sake of convenience.

3. It would be appropriate to briefly refer to the facts leading upto filing of these appeals. On 15.01.1974, the aforementioned Juhu Beach Resorts Limited, which is respondent No.2 in Appeal No.6 of 2006 and respondent No.1 in Appeal No.11 of 2006 (hereinafter referred to as the 'Company') was incorporated as a private limited company under the Companies Act. In 1978, two groups of shareholders i.e. Shah Group and K. Raheja Group took over the Company with the Shah Group holding 1/3^rd shares numbering 633 shares and the K. Raheja Group holding the balance 2/3^rd shares numbering 1267 shares. On 26.06.1981, Ashok Hinduja, who was a director of Aasia Properties (then known as 'Mecca Properties'), was appointed as an additional director in the Company. While Aasia Properties claims that the said Ashok Hinduja participated in the affairs of the Company on an oral understanding that the Hinduja Group would have proportional representation and equity of rights in management, the said claim is stoutly denied by Rahejas. It is an admitted position that there is no written document about such alleged oral understanding.

4. Rahejas claim that in an Annual General Meeting of the Company on 27.06.1981, the appointment of Ashok Hinduja as an additional director was not confirmed and that in any case, in 1982, the said Ashok Hinduja resigned as an additional director. In this regard, reliance is placed on Form 32 filed with the Registrar of Companies. Aasia Properties claims that it acquired shares of the Company from various members of the K. Raheja Group in the year 1982, thereby acquiring 1/3^rd shares in the Company. It was specifically claimed that such 1/3^rd shares were acquired on 30.08.1982. On the other hand, Rahejas claim that such transfer of shares to the extent of 1/3^rd shares took place in favour of Aasia Properties on 28.01.1983. In the meanwhile, on 15.01.1983, the aforesaid Shah Group transferred its shares in favour of B. Raheja Group and according to Rahejas, the effect of the same was that the K. Raheja Group and B. Raheja Group together had 2/3^rd shares, while Aasia Properties had 1/3^rd shares in the Company.

5. It is the case of Aasia Properties that thereafter there were further transfer of shares by Rahejas,