Interference with the discretion exercised by Board.

THANGAMANI J.

The appellants claim to be the managing director and director respectively of Senka Carbon P. Ltd., the second respondent herein. Some of the shareholders of the company entertained a grievance against them that from its very inception, the financial affairs of the company have been grossly mismanaged and the second appellant has made personal gain at the cost of the company and its shareholders. The entire action on the part of the appellants are mala fide, a gross abuse of power, inequitous and motivated to exclude the majority shareholders and unjustly enrich themselves. Both have connived together in managing the affairs of the company in such a manner so as to make vast secret profits. Thereupon, the present first respondent, Shree Consultations and Services P. Ltd., came forward with Company Petition No. 59 of 1992 before the Company Law Board, Principal Bench, New Delhi, seeking a declaration that the appellants have ceased to be directors of the company, appointment of some fit and proper person as administrator of the company in the place of the board of directors, rendition of accounts by the appellants and other appropriate reliefs including suitable orders and directions for management, regulation and conduct of the company as the Company Law Board deems fit and proper. The said Shree Consultations and Services P. Ltd. purported to file this company petition for themselves and for and on behalf of the members who have given their consent to the petition being presented on their behalf. The letter of consent of members included in the schedule is in annexure A-2. The appellants, while resisting the petition, inter alia, contended before the Company Law Board that the petition did not comply with the mandatory requirements of section 399(3) of the Companies Act inasmuch as the consent in annexure A-2 filed before the Company Law Board was not a valid and proper one under the Act. This question as to compliance with the requirements of section 399(3) and the maintainability of the petition goes to the root of the matter since the Company Law Board would have no jurisdiction to entertain or make any orders in the petition if it was not properly instituted. So, the Company Law Board considered the maintainability of the petition as the preliminary objection and in its order dated May 14, 1993, came to the conclusion that the consent found in annexure A-2 satisfied the requirements of section 399 and hence the petition was maintainable. Accordingly, it fixed the date of further hearing of the main petition. And the correctness of this order is challenged in the present appeal under section 10F of the Companies Act. Let us now extract the provisions of sections 397, 398 and 399 in order to appreciate the relevant contentions of both sides:

"397. Application to court for relief in cases of oppression.-(1) Any members of a company who complain that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members (including any one or more of themselves) may apply to the court for an order under this section, provided such members have a right so to apply in virtue of section 399.

(2) If, on any application under sub-section (1), the court is of opinion-

(a) that the company's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members; and

(b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up;

the court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.

398. Application to court for relief in cases of mismanagement.-(1) Any members of a company who complain-

(a) that the affairs of the company are being conducted in a manner prejudicial to p