Mathireddy Appala Naidu & Ors. v. This appeal under Section 10

THE HON’BLE SRI JUSTICE V.V.S.RAO COMPANY APPEAL NO.15 OF 2009 JUDGMENT: This appeal under Section 10F of the Companies Act, 1956 is filed against the order of the Company Law Board, Chennai (CLB) in C.P.No.12 of 2008 dated 12.06.2009. By impugned order, learned CLB gave such an observation that ‘parties have mutually agreed to settle the disputes’. The appellants are Directors of seventh respondent company which was established for carrying out business in processing and marketing of cashew nuts. Respondents 1 to 4 herein filed C.P.No.12 of 2008 under Sections 397 and 398 of the Companies Act before CLB alleging that resolution of Board of Directors appointing first appellant and allotting 40,000 shares to third appellant are illegal and unlawful. Appellants herein opposed the application and are contesting the matter. The appellants allege that they received order dated 12.06.2009 which purports to be a consent order. They allege that they never filed any Joint memo consenting for settlement or for an agreed order, and therefore, impugned order suffers from error. This Court heard learned counsel for appellants with reference to question of law which allegedly arises out of impugned order. A perusal of impugned order would show that at the intervention of learned CLB, the parties have mutually agreed to settle the disputes keeping in view the paramount interest of the company and accordingly filed Memo on

12.06.2009. Accordingly, CLB set aside the allotment of 40,000 equity shares to third appellant, set aside the appointment of first appellant as Director and appointed an advocate as Chairperson to convene the meeting of members for the purpose of filling up the vacancy of Director and Managing Director. On the face of it, impugned order appears to be consent order and therefore, appellants cannot be heard to allege that they did not file any such Memo nor they can allege that they did not agree for impugned order. These are questions of facts, which cannot be agitated in an appeal under Section 10F of the Companies Act. The Company Appeal is, therefore, dismissed in limine. _______________

(V.V.S.RAO, J)

21.08.2009