High Court of Andhra Pradesh
S. Ravi Kiran
v.
Secretary, Ministry of Company Affairs,
P.S. NARAYANA, J.
WRIT PETITION NO. 14788 OF 2007
October 29, 2007
Section 237 of the Companies Act 1956 - Investigation of company’s affairs in other cases - Petitioner, a shareholder of third respondent - Company, being aggrieved by non-receipt of annual report and notice of extra ordinary annual meeting of company and not getting any return on his investment , filed writ petition seeking direction to first respondent to appoint a competent person as investigator for investigating affairs of company - Whether since power has been conferred on CLB to order investigation, if there are circumstances necessitating same, it was incumbent on petitioner to approach CLB and there arose no reason for exercising discretionary power vested in Company Court to order such investigation - Held, yes - Whether, therefore, writ petition was not maintainable - Held, yes
The petitioner had purchased certain shares of third respondent - company. According to him, he had neither received any annual report nor notice of any extraordinary annual general meeting of the company since he purchased the shares of the company and further, he could not get even a single rupee as return on his investment. Those facts were allegedly brought to notice of the Registrar of Companies, but no action was taken on the matter. Therefore, the petitioner filed writ petition seeking a direction to the first respondent to appoint a competent person as investigator for investigating the affairs of the third respondent-company from 1995 onwards and to file a report in the High Court. The second respondent took stand that remedy, if any, available to the petitioner was to approach the CLB in accordance with provision of the Act and, hence, writ petition was not maintainable.
Section 237(b) empowers the CLB, if there are circumstances necessitating
investigation, to order accordingly. This power has been granted to the CLB in
terms of the amendment effected in the Act in 1988. Before the amendment,
sanction had to be given in terms of such clause (b) by the Central
Government. When the power vested in the executive Government is invoked, one
incumbent may perhaps feel that justice may not be meted out. But after the
amendment in 1988, the power vested with the Central Government had been taken
away and vested with the CLB. When the power is conferred on the CLB, it was
incumbent on the petitioner to approach that statutory Board which would examine
and do justice, as the circumstances demand. In such circumstances, there arose
no reason for exercising the discretionary power vested in the
As could be seen from the different provisions of the Act, and also the
scheme of the Act, since the petitioner was having a remedy to approach the CLB
or to invoke such other remedies available to him under the law or under the
provisions of the Act, the petitioner was to be given liberty to pursue the
other legal remedies available to him, in accordance with law. [
Accordingly, the writ petition was disposed of. [