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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Anil Kshetarpal, J.
Lieutenant Sharad Saxena – Appellant
Versus
M/s. Efn Global Impex Pvt. Ltd & Ors. – Respondents
CAPP-5-2013 (O&M)
Decided On : 12-05-2022
Companies Act - Delay Condonation, Limitation for Filing Petition - Section 10F of the Companies Act, 1956 - Summary of Acts and Sections: Section 10F of the Companies Act, 1956 - The judgment discusses the condonation of delay in filing an appeal under Section 10F of the 1956 Act and the limitation for filing a petition before the Company Law Board under Section 397 and 398 of the 1956 Act. It highlights the interpretation of Section 10F and the application of the Limitation Act, 1963, and discusses the continuous cause of action in cases of oppression and mismanagement.
Fact of the Case:
The appellant, Sh. Sharad Saxena, filed a petition under Section 397 and 398 of the 1956 Act, alleging oppression and mismanagement by respondent No.2. The Board found various illegal share transfers and allotments, but failed to grant appropriate relief.
Finding of the Court:
The Court found that the delay in filing the appeal under Section 10F of the 1956 Act was beyond the maximum period for condonation of delay and declined to condone the delay. It also held that the petition was not barred by limitation and was not suffering from delay and laches.
Issues: The issues involved the condonation of delay in filing the appeal under Section 10F of the 1956 Act and the limitation for filing a petition under Section 397 and 398 of the 1956 Act.
Ratio Decidendi: The judgment established that the delay in filing the appeal under Section 10F of the 1956 Act cannot be condoned beyond the maximum limit prescribed in the Act. It also clarified that in cases of continuous acts of oppression and mismanagement, a fresh period of limitation accrues on every single default, and each act gives rise to a fresh cause of action.
Final Decision: The Company Appeal No.5 of 2013 was allowed, and Company Appeal No.1 of 2015 was dismissed. The illegal share transfers and allotments were declared invalid, and appropriate relief was granted to the appellant.
JUDGMENT
Anil Kshetarpal, J. - Through these separate Company Appeals filed under Section 10F of the Companies Act, 1956 (hereinafter referred to as 'the 1956 Act'), both the parties have questioned the correctness of the order passed by the Company Law Board (Tribunal) (hereinafter referred to as 'the Board') on 18.01.2013. In the considered opinion of the Court, the following questions arise for adjudication:-
i. Whether the delay, in filing the appeal under Section 10F of the 1956 Act, beyond the maximum period for condonation of delay prescribed therein, can be condoned?
ii. Whether the limitation for filing a petition before the Company Law Board under Section 397 and 398 of the 1956 Act, begins to run from the date on which the first step/act of oppression or mismanagement was carried out, particularly when such acts/steps from a series of actions which continue till the filing of the petition?
2. In these appeals, this Court is faced with a situation where the Board after recording findings in favour of Sh. Sharad Saxena, the appellant in CAPP-5-2013, has failed to grant appropriate relief.
Some facts are required to be noticed.
3. The facts are being noted from CAPP-5-2013. The respondentCompany i.e. M/s EFN Global Impex Pvt. Ltd. came to be incorporated on 06.06.1995, with an authorized share capital of Rs.50,000/- divided into 5000 equity shares of Rs.100/- each. The Company was closely held company by the Saxena family. Originally, the Company was promoted by Mr. Muneesh Kumar Saxena, being majority shareholder along with Mr. Ranjit Singh Yadav.
4. The appellant-Sharad Saxena is stated to have acquired majority share holding to the extent of 45.13% in the following manner:-
| S. No. | Date | No. of Shares | Allotment/Purchase |
| 1. | 12.09.1997 | 1,000 | Allotted by Company |
| 2. | 16.09.1999 | 310 | Purchased from Respondent No.7. |
| 3. | 01.03.2000 | 1,305 | Allotted by Company |
| 4. | 10.03.2002 | 2,349 | Purchased from Respondent No.3 |
|
| Total | 4,964 |
|
5. On 30.09.2005, the respective share holding of the Company was as under:-
| S. No. | Share Holder | No. of Shares held | Percentage share-holding |
| 1. | Appellant | 4,964 | 45.13% |
| 2. | Respondent No.2 | 3,665 | 33.32% |
| 3. | Respondent No. 6 (as Custodian EWF) | 2,371 | 21.55% |
|
| TOTAL SHARES as on 30.09.2005: | 11,000 | 100% |
6. It is clarified that respondent No.3-Sh.Mahender Kumar Saxena and respondent No.2-Sh.Muneesh Saxena are the father and brother of Sh.Sharad Saxena.
7. The appellant was the employee of the Company as well as one of its Director. Sh. Sharad Saxena filed petition under Section 397 and 398 of the 1956 Act complaining against the oppression and mismanagement of respondent No.2, while enlisting the various acts reflecting such oppression and mismanagement. The petition was filed for grant of the following reliefs:-
'(a) The Hon'ble Company Law Board may be pleased to issue ex-parte interim orders restraining the Respondents from alienating, selling and/or creating any third party interests in the immovable properties owned by the Company being Plot No.G1-654 and 655, RICCO Industrial Area, Chopanki, District Alwar and Room nos.114, 115, 116, 203, 206, 209 and 210, Commercial Arcade, South City-I, Gurgaon, Haryana, any other immovable property obtained/purchased by the Company and the plant and machinery owned by the Company;
(b) The Hon'ble Company Law Board may be pleased to issue interim orders for verification, inspection and sealing or all statutory records of the Company to ensure that no further records are fabricated by the Respondents;
(c) The Hon'ble Company Law Board may be pleased to issue ex-arte interim orders restraining the Respondents from taking any decisions in respect of the affairs of the Company with immediate effect;
(d) The Hon'ble Company Law Board may be pleased to issue interim orders restraining the Respondents from operating the bank acco
The main legal point established in the judgment is the interpretation of Section 10F of the Companies Act, 1956, and the application of the Limitation Act, 1963, in cases of oppression and mismanage....
An appeal under Section 10F of the Companies Act requires a question of law arising from the Company Law Board's decision; issues not previously adjudicated cannot be raised anew.
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.
Point of Law : If a finding of fact is perverse and based on no evidence, it can be set aside in appeal even though the appeal is permissible only on the question of law. The perversity of the findin....
Failure to act in terms of the contract cannot be said to have amounted to either oppression or mismanagement.
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 ....
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