An appeal under Section 10F of the Companies Act requires a question of law to have been adjudicated by the Company Law Board; issues not raised previously cannot be introduced later.

JUDGMENT :

K.R. SHRIRAM, C.J.

This is an appeal filed under Section 10F of the COMPANIES ACT , 1956 (the Act) assailing an order passed by the Company Law Board on 01.01.2001.

2. The substantial questions of law proposed read as under:

Whether the order appealed against in C.P.No.81 of 1998 is barred by the principle of res judicata for the following reasons, namely,

(a) The genuineness of the allotment of shares in 1979 was not in fact in issue in C.P.No.49 of 1987;and

(b) The genuineness of the 1979 allotment have been made a ground of attack in C.P.No.49 of 1987.”

3. Appellant held 34% of paid-up share capital of respondent-1 Sovereign Dairy Industries Ltd. and had filed a petition under Section 397 /398 of the Act alleging various acts of oppression in the affairs of the company. Respondent No.2 is the brother of appellant and others were either shareholders or purchasers of properties of the company. The dispute primarily is between two siblings, appellant and respondent No.2.

4. The company was incorporated in July 1974 with the main object of carrying on all kinds of dairy business. Company ceased to carry on any business or commercial activities since 1979. The Company had neither filed balance sheets nor annual reports with the Registrar of Companies or had even called Annual General Meeting for several years. The company had allotted 30250 shares in favour of respondent No.3 and one Surendra Manilal Mehta and two others in the year 1979, by virtue of which, respondent No.3 became majority shareholder of the company with 39% of the share capital. It was stated that the company became unviable and bankrupt on account of the mismanagement by second respondent. It was also alleged that the plant and machinery were found missing. The company became indebted to Bank of Madura Limited. The rentals of the godown sheds of the company were misappropriated by second and third respondents, etc.

5. In an Extraordinary General Body Meeting held on 31.03.1986, second respondent sought authorisation to sell some 45 acres of land belonging to the company in order to repay the debt of Bank of Madura. Appellant obtained an order of stay in the civil Court. It was subsequently dismissed as not pressed.

6. At the Extraordinary General Meeting held on 27.03.1987, second respondent claimed to own 10000 shares and his wife 50000 shares. Appellant challenged these allotments in C.P.No.49 of 1987 before the High Court of Madras as acts of oppression and mismanagement under the provisions of Section 397 /398 of the Act. The allotments were ultimately set aside by the High Court and second respondent was removed from the Directorship of the company for not holding qualifying shares as per the Articles of Association of the company.

7. The 10000 shares allotted to second respondent and 50000 shares allotted to the wife of second respondent were allegedly against repayment of loan given by those two individuals to the company. As there were no records maintained and these alleged loans were made in cash, the High Court was pleased to set aside those allotments. The Articles of Association provides for minimum qualifying shares of 100, but as second respondent had only 10 shares in his name, even when the Extraordinary General Meeting was convened by him, second respondent was removed from the Directorship.

8. The High Court by its order dated 28.08.1998 appointed an Advocate Receiver to conduct an Extraordinary General Meeting to elect a fresh Board of Directors and to hand over charge of the company to the new Board of Directors. The