The court's decision highlighted the wide amplitude of power of the CLB under Section 402 of the Companies Act, the need to safeguard the interest of the company, and the importance of doing substantial justice between the parties.

1. Present appeal has been filed under Section 10F of the Companies Act, 1956, (for short ‘Act’) challenging the judgment and order dated 12th January, 2012 whereby the appellant company's petition being Co. Pet. 95/ND/2010 has been dismissed by the Company Law Board (for short 'CLB') after observing as under:-

“35. ............

(ix) I find no way to grant a relief and give direction to the R-1 Company to give representation on the Board of the R-1 Company to the Petitioners in C.P. No.95, who of their own had agreed to hold 50% shares without asking for any representation on Board. It is settled law that directorial complaints cannot be entertained in a petition under Sections 397/398 of the Act unless it is a composite complaint and is in the case of a Company in the nature of quasi-partnership. On facts and in law the R-1 Company can in no manner be held to be a Company in the nature of a quasi-partnership, there is no equal shareholding, there is no equal representation on the Board, nor is there any oral or written understanding to that effect. In the Articles of Association and Memorandum of Association there is no agreement or understanding amongst its shareholders that they would have a right to participate in the management of R-1 Company. However, there is no stopping them to ask the shareholders to consider this item in the Agenda for AGM/EOGM..........”

2. Mr. Subramonium Prasad, learned counsel for appellant submitted that in the absence of finding of oppression and mis-management, the CLB after dismissing the aforesaid petition as well as two other petitions filed by the remaining shareholders could not have proceeded to direct the appellant to purchase/buy the shares of respondents No.1 to 6. In this connection, he relied upon a judgment of the Supreme Court in Incable Net (Andhra) Limited and Others vs. AP Aksh Broadband Limited and Others (2010) 6 SCC 719 wherein it has been observed as under:-

“52. The decision in V.S. Krishnan case is more apposite to the facts of the case. Quoting Halsbury, this Court observed that the expression “oppression” within the meaning of Sections 398, 399 and 402 of the Companies Act had been interpreted to mean that the conduct of the majority shareholders towards the minority shareholders was harsh, burdensome and wrong and that such conduct was mala fide and was for a collateral purpose which would result in an advantage for some shareholders over others, although the ultimate object might be in the interest of the company. However, the facts disclosed in this case do not establish such conduct on the part of Respondent 5. Until the conduct of the majority shareholders was found to be oppressive in terms of the above description, under Sections 397 and 398 of the Companies Act, 1956, the Company Law Board was not competent to invoke its jurisdiction under Section 402 of the said Act to set right, or put an end to such oppression”.

3. As far as the CLB's power to direct one of the unwilling parties to enter into a contract for purchase of shares is concerned, this Court is of the opinion that the power of the CLB is of extremely wide amplitude. Section 402 of the Act is reproduced hereinbelow:-

“402. Powers of [Tribunal] on application under section 397 or 398-- Without prejudice to the generality of the powers of the [Tribunal] under section 397 or 398, any order under either section may provide for--

(a) the regulation of the conduct of the company's affairs in future;

(b) the purchase of the shares or interests of any members of the company by other members thereof or by the company;

(c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital;

(d) the termination, setting aside or modification of any agreement, howsoever arrived at, between the company on the one hand; and any of the following persons, on the other, namely: -

(i) the managing director,

(ii) any other director,

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(v) the manager, upon such terms and