Atul Batra & Ors. Vs BHP Engineers Private Limited & Ors. (Delhi High Court)
The Delhi High Court allowed a company appeal challenging an order of the Company Law Board (CLB) rejecting the appellants’ application seeking interrogatories in a petition alleging oppression and mismanagement under Sections 397 and 398 read with Section 402 of the Companies Act, 1956. The principal issue before the Court was whether the CLB was justified in refusing the interrogatories sought by the minority shareholders.
The appellants, who were minority shareholders, had alleged siphoning of funds, diversion of business, oppression, and mismanagement by the management of the company. They contended that inspection of company records had been incomplete and that the respondents had not furnished adequate particulars in their reply to the company petition. They therefore sought interrogatories to obtain information directly connected with the allegations in the petition. The CLB rejected the application, holding that the interrogatories amounted to a fishing and roving enquiry, had been filed after considerable delay, and lacked bona fides.
Before the High Court, the appellants argued that the Code of Civil Procedure, 1908 (CPC) applied to company proceedings through Rule 6 of the Companies (Court) Rules, 1959, and that the CLB possessed powers relating to discovery and inspection under Section 10E of the Companies Act, 1956, Section 477(2), and Regulations 24 and 44 of the Company Law Board Regulations, 1991. Reliance was also placed on judicial precedents recognising the availability of interrogatories in company law proceedings.
