Bilal Nazki, J.@mdashBy this judgment we propose to dispose of all the three letters patent appeals. These appeals have been filed against the common judgment of a learned single Judge of this Court in C.A. Nos. 4 and 5 of 1999 which were filed against the order dated 15-6-1999 passed by the Company Law Board in C.P. No. 15 of 1994. The parties shall be referred to as "the petitioners" and "the respondents" as they appeared in C.P. No. 15 of 1994. LPA Nos. 442 and 443 of 2001 have been filed by the respondents and LPA No. 134 of 2002 by petitioners 6 to 9. We have heard Mr. Parasaran, learned senior counsel appearing for the respondents and Mr. M.S. Prasad, learned counsel appearing for the petitioners and gone through the record.
2. Shorn of the unnecessary details, the facts which gave rise to the litigation can be summarised as below:
Basically this is a dispute between father-in-law and son-in-law. Father-in-law has died and his legal representatives have been brought on record. The petitioners 1 to 8 filed an application before the Company Law Board under Sections 397 and 398 of the Companies Act seeking certain reliefs. According to them, they were holding 10.65% in total issued share capital of M/s. Ramadas Motor Transport Ltd. - 1st respondent. The main allegation, according to the order of the Company Law Board, was with respect to oppression and mismanagement in the affairs of the company which related to closure of parcel offices, sale of lorries and vehicles, fabrication of minutes books and documents, removal of petitioner No. 9 as Director of the Company, increase in share capital by way of right issue, diversion of funds to companies managed by former employees, fabrication of Board minutes and diversion of funds for personal gains by the respondents. On the basis of these allegations, the petitioners sought various reliefs. They prayed for supersession of the Board by declaring that the respondents 2 and 3 were not fit to hold the post of Director of the company. They also prayed for appointment of two representative directors from the petitioners'' group. They further prayed that the respondents 2 and 3 be ordered to compensate the company of the money misappropriated by them. They also sought a declaration that the removal of the petitioner No. 9 as Director of the company as null and void. They also sought cancellation of right issue made in 1994.
3. The petitioners had earlier filed a petition on 24-2-1994 being CP No. 7 of 1994. The petitioners in this petition had sought the relief relating to the right issue and the Board had given certain directions. The respondents raised an objection on maintainability of the petition in view of Section 399 of the Companies Act. Therefore the petitioners were allowed to amend the petition and accordingly CP No. 15 of 1994 was filed on 11 -4-1994. The petitioners thereafter filed an application being CA No. 83 of 1995 seeking permission to file evidence by way of affidavits and also for summoning of certain witnesses. The matter came up before the Company Law Board on 21-7-1995. The Board, on 27-7-1995, declined permission to file affidavits, but permitted them to lead evidence by producing witnesses, if they so desired. On 16-10-1995 the petitioner No. 9 gave oral evidence and was cross-examined on 17-10-1995 and 18-10-1995 which was not conclusive. Since the parties belong to Andhra Pradesh, the Board was of the view that further cross-examination should take place at Madras or at Hyderabad on a date which had to be notified later. In the meantime on 15-2-1996 the petitioners filed CA No. 65 of 1996 seeking certain reliefs including the relief of appointment of an administrator. In a hearing held on 30-7-1996 the petitioners sought liberty to amend the application which was granted. The petitioners further submitted that they wanted to lead evidence of other persons. Therefore the Board gave permission for filing of a list of such witnesses by 16-8-1996. On 23-5-1997 the Board gave directions to the petitioners to file a list of witnesses which was filed on 3-9-1997. According to the order of the Board, by that time the petitioners had filed another petition in respect of a connected company viz., Gopal Automotive Limited. Therefore, the Board suggested the parties to settle the disputes not only in respect of two companies, but also in respect of four other group of companies in which the petitioners had some interest. The suggestion made by the Board was that the shares held by the petitioners in all these companies should be purchased by the respondents at a value to be determined by an independent chartered accountant. This suggestion was reiterated by the Board in a hearing held on 29-9-1997. However no progress was made as the respondents were not ready for compromise- An application for appointment of an administrator was heard on 28-11-1997 and an order was passed on 18-12-1997 rejecting the application. After the list of witnesses was filed, the Board decided to record the evidence at Chennai on 9-6-1998. At the request of the counsel for the petitioners summons to the witnesses were handed to him for service, but on the date fixed at Chennai no witness was produced and accordingly recording of evidence was closed. In a hearing held on 8-9-1998 the counsel for the petitioners informed that one of the petitioners has expired and as such legal heirs had to be substituted in his place. On this ground the hearing was adjourned till December, 1998 and finally the petition was heard and concluded on 22-3-1999. During the hearing the parties before the Board gave written submissions. There were allegations of mismanagement and oppression which were denied and after hearing the parties, the Board passed an order directing that the shares held by the petitioners should be purchased either by the respondents themselves or by the company. The Board also found that in order to give effect to the directions it was necessary that the shares of the company be valued by an independent chartered accountant. The Board also fixed a date and directed that the valuation be based on the balance sheet as on 31-3-1998.
4. Two appeals came to be filed against this order of the Board being CA Nos. 4 and 5 of 1999. CA. No. 4 of 1999 was filed by the respondents and C.A. No. 5 of 1999 by the petitioners 4 to 9. We fail to understand as to why an appeal was filed by the petitioners because in the memorandum of appeal itself filed before the learned single Judge they did not show any grievance as also in LPA No. 134 of 2002 which will be discussed by us at a later stage. In order to appreciate the fact that the petitioners were not aggrieved of the order of the Board, it would be sufficient to reproduce para 31 of the memorandum of appeal being CA No. 5 of 1999 :
"Notwithstanding the above mentioned grounds the petitioner has no grievance of the order passed by the Company Law Board which has emphatically stated that respondents were not agreeable to the suggestion of Company Law Board to settle the matters with the petitioner and therefore u/s 402 of the Companies Act, the respondents or the respondent company is being directed to purchase the shares of the petitioners."
5. Therefore the petitioners were not serious in attacking the order of the Board. On the other hand, the appeal being CA No. 4 of 1999 filed by the respondents had urged the Court that the decision of the Company Law Board to the extent of the directions to the respondents to purchase the shares of the petitioners after valuation be set aside. In appeal the learned single Judge of this Court in a very detailed judgment materially upheld the order of the Board The learned single Judge held :
"I hold that the directions given by the Board are proper and just in the circumstances of the case. Hence though I did not agree with the findings of the Board on the merits of the case, I am in full agreement with the end result in the case."
He also imposed costs of Rs. 25,000 on the respondents in CA No. 5 of 1999. Now the judgment of the learned single Judge and the order of the Company Law Board have been assailed by Mr. Parasaran, learned senior counsel appearing for the respondents mainly on three grounds. In the first instance, he contended that the learned single Judge has gone into the questions of fact which was beyond the scope of the appeal, secondly he contended that if the oppression was not proved, Section 402 of the Companies Act would not apply and thirdly he contended that there was no evidence on record to decide the issues between the parties. We will come to the third question first as to whether there was sufficient evidence on record for dealing with the appeal by the learned single Judge. We have already referred to the order passed by the Board. There was a statement made by the 9th petitioner, he was cross-examined, but his cross-examination remained inconclusive. There was no other oral evidence produced. A prayer had been made before the Board that the petitioners be allowed to produce evidence through affidavits which was dismissed. The findings of the Board are not assailed at all. Now coming to the judgment of the learned single Judge about the availability of evidence on record, it will be necessary to mention certain paras from the judgment itself. The judgment of the learned single Judge has been reported in Sri Ramdas Motor Transport Ltd. v. Karedla Suryanarayana [2002] 36 SCL 361 (AP). In para 111 the learned single Judge noted a judgment reported in Thamma Ramachandra Rao v. Madras State [1956] ALT 24 (NRC) to hold that the appellate Court was not bound to remand the case for trial of an issue on which no finding was recorded, but is entitled to give its own decision, if the evidence on record is sufficient. The learned senior counsel has no quarrel with the principle that if the appellate Court comes to a conclusion that the original court has not dealt with the issues in proper perspective or has not decided the issues which came for trial, the appellate Court can do so provided there was sufficient evidence on record. He submits that in view of the finding of the Board that only the statement of the 9th petitioner was recorded partly, no evidence was led and affidavits were not allowed to be filed, therefore there was nothing more to show that this was a case which was based on no evidence at all. Therefore the learned single Judge should not have decided the matter on the basis of evidence which the learned single Judge himself referred to as scanty evidence. In para 112 of the judgment the learned single Judge held :
"I am satisfied that even with the scant evidence that is available on record in this case, whether admissible or inadmissible, the dispute can be adjudicated without remanding the matter for fresh disposal by the Board by verifying the xerox copies of the records by summoning the originals, more so in the light of the submission of 9th petitioner that their group is satisfied with the direction given by the Board." (p. 416)
6. The learned senior counsel submits that the learned single Judge found that there was scanty evidence, it was also inadmissible, but still he held that the matter could be adjudicated without remanding the matter. He submits that this is against the settled principles of law. Now let us see what was the evidence which the learned single Judge himself referred to as scanty evidence, whether admissible or inadmissible evidence. In para 37 which was titled, "Whether the procedure followed by the Board can be sustained in law", the learned single Judge finds fault with the Board for not summoning the records. The learned single Judge says that C.A. No. 69 of 1994 was filed by the petitioners for summoning the records, but the Board did not pass an order. A similar prayer had been made in CA. No. 65 of 1996. These applications were not pressed at any stage and the learned single Judge noted :
"... But the counsel might have felt that he will be in a position to convince the board without summoning the originals, he did not press for summoning the originals at that stage. That does not mean that the Board can act arbitrarily at its whims and fancies." (p. 389)
The findings of the learned single Judge in this paragraph give rise to unrebuttable conclusions, (1) that the documents which were on record were not original documents and were not produced by anybody and (2) that the petitioners had not taken any steps to get their applications decided as admittedly they were not decided by the Board and no order has been passed on those applications. Rather than finding fault with the petitioners and coming to the conclusion that there was no admissible evidence, the learned single Judge found fault with the Board. If an application is not pressed, it is usual that the Courts do not pass orders on such application. Now coming to para 38 titled, "whether provisions of CPC are applicable to the proceedings before the Board", the learned single Judge states :
"... But the Board simply extracted the arguments on the basis of xerox copies of the documents and recorded its findings without even discussing the oral evidence of the 9th petitioner by holding that the evidence is incomplete though it is not the case of the respondents and even without looking into the annual reports filed by the petitioners to prove that huge amounts were swindled by not bringing all the spare parts manufactured by the company into account books. The Board has neither summoned the original documents and audited accounts of the company nor gave opportunity to the petitioners to peruse the records to prove the allegations of mismanagement and pronounced the impugned order." (p 390)
7. According to the learned senior counsel, the finding of the learned single Judge also would at best be a ground for remand, rather than upholding the order of the Board. By these findings the learned single Judge found that the Board simply heard arguments on the basis of xerox copies of the documents, he did not summon the records. He also found fault with the Board that the 9th petitioner''s statement was not relied upon as it is incomplete, admittedly the cross-examination of the 9th petitioner was not complete. Now in para 39, while discussing whether CPC is applicable to the proceedings before the Board or not, the learned single Judge brands the order of the Board as an illegal order, but still he upheld the final conclusions of the Board.
8. Although the Board had not allowed the filing of the affidavits, some affidavits had been filed. The learned single Judge takes note of it in para 52:
"Admittedly in this case the affidavits of the third parties filed by the respondents are not verified. But the Board acted on these affidavits. At the same time, the Board did not refer to the affidavits filed by the petitioners, which are very much available on its file." (p. 395)
He further says :
"From the above whatever documents were relied on by the respondents they being only the xerox copies, they are not admissible in evidence...." (p. 395)
9. Some of the documents were filed by the respondents before the board which were xerox copies. Considering the arguments of the parties and a judgment of this Court reported in
"Even assuming that the counsel did not object to the procedure, the respondents having filed xerox copies are bound to prove the authenticity of the documents filed by him in a manner known to law. If such a course is not adopted by the respondents, the Board is expected to eschew the documents filed by the respondents. But the Board acting on such inadmissible evidence dismissed the application." (p. 398)
Then in para 67 the learned single Judge held :
"In the case on hand, the Board under the guise of following its own procedure in adjudicating the dispute, passed the order under challenge without following any of the well known rules of procedure and the order is the result of non-application of mind to the issues in controversy with reference to the original records. Had the Board seen the original records, it is evident to the naked eye that the resolutions of the Board were tampered by the respondents." (p. 400)
In para 68 the learned single Judge held :
"A reading of the order shows that whatever is stated by the respondent is treated as Gospel truth and the Board even went to the extent of placing reliance on the affidavits of the third parties without verification filed by the respondents retracting from the earlier affidavits given to the petitioners having held that the Board is not going to rely on the affidavit evidence in its order dated 28-11-1997. At the same time the Board did not consider the affidavits filed by the petitioners, for reasons best known to it though the respondents did not choose to rebut the same either by filing affidavits or by oral evidence. This action of the Board proves beyond doubt that it treated the parties differently and it has not acted dispassionately and good faith. In one word the scales of justice heavily swung in favour of the respondents." (p. 401)
10. Now we fail to understand when the whole procedure was against the law and the whole procedure was tilted, then how could the final conclusions of the Board be upheld, particularly so when the learned single Judge was of the firm view that there was scanty evidence, which was either admissible or inadmissible evidence. We are also not convinced as to what had been stated in para 69, whether the learned single Judge appears to have summoned the original records and compared them with the copies and on his own the learned single Judge came to the conclusion that he had no hesitation to hold that the records were tampered with by the respondents. We have not found that any chance having been given to the respondents to show that the records were not tampered with. They had not even been asked to explain as no oral evidence has been taken by the learned single judge before the conclusions arrived at by him. On non-examination of respondents, the learned single Judge dealt in para 88 :
"... I have no manner of doubt, had the counsel for the petitioners conducted the case properly; the hands of the Board would have been tied in this case. It is not known whether the counsel for the petitioners is a party to the grave illegalities committed by the Board want only or otherwise. But at the same time, the 9th petitioner spoke in crystal clear terms in his evidence on the acts complained by the petitioners and in fact the learned counsel appearing for respondents could not and did not elicit anything contrary to what the 9th petitioner has spoken in his chief examination and he stuck to his version except some minor discrepancies which did not matter much. Even the respondents'' counsel did not cross-examine the witness with reference to the documents. He being sufficiently a senior counsel, at least he would have cross-examined the witness with reference to documents filed by him or examined his witnesses in the manner in which the counsel for the petitioners examined his witness. That was also not done. Having pleaded before the board that recording oral evidence is a must he cannot now turn round and contend at this belated stage that as the petitioner failed to mark the documents, non-examination of witnesses by the respondents is not fatal to the case." (P. 407)
11. We have, in detail, referred to the conclusions and findings of the learned single Judge which leave no room to doubt that there was no evidence on the basis of which the Board could come to a conclusion that there was oppression. The learned counsel for the petitioners, on the other hand, submitted that the Board could not rely on the Photostat copies of the documents produced by the respondents without proving them. We have no quarrel with that principle of law, but the principle applies to the petitioners as well. There is no evidence except the inconclusive statement of the 9th petitioner. Therefore on the basis of this evidence, we do not think any order could have been passed. Secondly we do not agree with the approach of the learned single Judge having found fault on every score with the Board. He finally agrees with the conclusions of the Board. The learned single Judge even attributes bias to the Board which could be discerned from the paras which we have quoted hereinabove, but still he has passed an order which is in favour of the petitioners. Therefore, in our view, on this score alone the judgment of the learned single Judge cannot be upheld and the matter will have to be remanded back to the Board for retrial.
12. Now coming to the conclusion for demanding the case back to the Board, we refer to some of the paras mentioned by the learned single Judge in para 92, titled "Summary of the lapses". In para 92(3) he held :
"(3) The petitioner No. 9 went into the witness box and his cross-examination was completed on 18-10-1995. This evidence is complete on all aspects on the allegations made in the main petition. The Board started hearing the case without completing his evidence." (p. 409)
This shows that the evidence of petitioner No. 9 was not complete and there was no other evidence on the side of the petitioners. Now coming to paras 92(5) and (6), the learned single Judge held :
"(5) On the other hand, the respondents completely failed to prove their case in a manner known to law.
(6) The Board relied on xerox copies of documents, which are not admissible in evidence in dismissing the case of the petitioners without summoning the original records though serious allegations of fabrication of documents and accounts etc., are made against the respondents." (p. 409)
The findings of the learned single Judge in paras 92(3), (5) and (6) would show that none of the parties had proved their case before the Board. Now what was the reason in view of the findings arrived at by the learned single Judge for not remanding the case back for fresh disposal has been given by him in para 103 of the judgment, which is reproduced below :
"In the normal course, the matter has to go back to the Board for fresh disposal in accordance with law. If I adopt such a course, a dispute pending for over a decade will be in the Courts for another decade or two as there is every possibility of carrying the matter in appeal till all the forums that are involved in the adjudicatory process are exhausted by one or the other party." (p. 414)
13. We share the anxiety of the learned single Judge that the remand would give a new lease of life to the case for another decade or two, but, at the same time, we are conscious of the fact that for cutting the delays we cannot decide the matters on he basis of no evidence. Then the learned single Judge referred to many judgments and recorded that he was satisfied that even with the scanty evidence that was available on record, whether admissible or inadmissible, the matter could be adjudicated by him. With respects, we are not agreement with his view. It is settled law that the appellate Court can decide the matter provided there is sufficient evidence on record. Once the Court comes to the conclusion that there is no evidence on record, the decision would be based on personal opinions and conjectures alone and not on evidence.
14. The second question which is allied to the question which we have decided relates to the power of the Court to go into the questions of fact. Mr. Parasaran, learned senior counsel appearing for the respondents argued that u/s 10F of the Companies Act an appeal would be available against an order of the Company Law Board on any question of law arising out of such order. According to him, the order of the learned single Judge manifestly shows that he went into only the questions of fact and, as a matter of fact, no questions of law were decided by him. We have reproduced some of the portions of the learned single Judge''s judgment hereinabove which make it clear that the learned single Judge reappreciated the whole evidence (if any was available) and it also appears that he summoned the records from the respondents and put them into consideration while passing the impugned order. The learned counsel for the petitioners, on the other hand, submits that the questions of law arising out of an order of the Board would also include the questions of fact which would be necessary to be gone into in order to decide the questions of law. He submits that whether an order u/s 402 of the Companies Act could be passed or not was a question of law and in order to decide that question, necessary questions of fact had to be gone into.
15. Provisions similar to Section 10F of the Companies Act in other statute have received the attention of the Supreme Court earlier. In this connection the learned senior counsel appearing for the respondents refers to a judgment of the Constitution Bench of the Supreme Court reported in
". . .In view of the above considerations, we are unable to construe the words, ''any question of law arising out of such order,'' as meaning any question of law arising out of the findings in the order of the Tribunal." (p. 1644)
In para 31 the Supreme Court held :
"The result of the above discussion may thus be summed up:
(1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order.
(2) When a question of law is raised before the Tribunal, but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is therefore one arising out of its order.
(3) When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order.
(4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that if may arise on the findings given by it." (p. 1645)
16. So the law is settled that the questions which can be raised in an appeal can be only four. Firstly when a question was raised before the Tribunal and dealt with by it, such question would be a question arising out of its order. Secondly when a question of law was raised before the Tribunal, but the Tribunal had failed to deal with it, that would also be a question arising out of its order and thirdly when a question was not raised before the Tribunal, but the Tribunal dealt with it, that would also be a question arising out of its order. In addition to it, the Supreme Court held that when a question of law was neither raised before the Tribunal nor considered by it, it would not be a question arising out of its order even if it had arisen on the findings given by it. In terms of the judgment of the Supreme Court, we do not see that there was any scope for the learned single Judge to go into the reappreciation of evidence, if any. The question of law which was raised before him was whether an order u/s 402 of the Companies Act could be passed even if oppression was not proved under Sections 397 and 398 of the Companies Act.
17. Mr. M.S. Prasad, learned counsel appearing for the petitioners relies on a judgment of the Supreme Court reported in
18. For the reasons given hereinabove, we are not going to the third contention relating to the interpretation of Sections 397 and 398 of the Companies Act because we are remanding the case back to the Board and our finding on that issue may unnecessarily prejudice the parties before the Board. We are remanding the case on the ground that there was no evidence to decide the matter and unfortunately the evidence which was taken into consideration by the learned single Judge, if any, was inadmissible. In para 153 of the judgment the learned single Judge referred to xerox copies of the auction slips which were neither proved nor put to other side. Similarly there was no evidence on conclusions arrived at by the learned single Judge in paras 159, 160 and 161 of the judgment. There were some account books presented before the Court. We are not sure they were copies of the originals and an argument was made before the learned single Judge that a member of the Board was acquainted with the accounts and experts had approved the explanation given by the respondent-company. The learned single Judge dismissed the argument. In para 176 he stated :
"Mr. Raghavan tries to impress upon the Court that the Board comprises of a member well acquainted with the accounts and other experts have approved the explanation given by the respondent-company. I can only observe that as this country is having such type of Accounts Officers the black money that is being generated in the industrial circles of this country is 3 to 4 fold than the real currency, which is expected to be in circulation as per the version of Reserve Bank of India. If the members of the Board properly analysed this issue in a manner known to law and not carried away by extraneous reasons, the result of the company petition would have been otherwise." (p. 457)
In para 184 the learned single Judge noted :
"... At least there is a prima facie evidence to show that there is large scale embezzlement of funds of the company and there is large scale evasion of excise duty, sales tax, income tax, etc., and required thorough investigation. In the light of the foregoing discussion, I have no hesitation to hold that the Board in its anxiety to give a clean chit to the respondent-company has not even looked into the Annual Report of the company as approved in the Annual General Body meeting of the company...." (p. 464)
19. The learned single Judge, in our view, was of the opinion that the case needs a remand, but he has not remanded the case for the reasons given by him, with which we do not agree respectfully. Therefore, we remand the case.
20. For the reasons given hereinabove, we allow LPA Nos. 442 and 443 of 2001, set aside the judgment of the learned single Judge and the order of the Company Law Board and remand the case back to the Board for fresh disposal. Since the matter was pending before the Board and this Court for number of years, therefore we feel that the Board should decide the matter as expeditiously as possible preferably within a period of six months.
21. No orders are necessary to be passed in LPA No. 134 of 202 which is accordingly dismissed.
No order as to costs.
