BEFORE THE COMPANY LAW BOARD
PROCEEDINGS BEFORE THE COMPANY LAW BOARD
The Company Law Board is an independent quasi-judicial body in India which has powers to overlook the behaviour of companies within the Company Law. It was constituted in its present form on May 31, 1991, under Section 10E of the Companies Act, 1956 replacing the erstwhile Company Law Board which was primarily as a delegate of the Central government since 1.2.1964. The Company Law Board has framed Company Law Board Regulations 1991 wherein all the procedure for filing the applications/petitions before the Company Law Board has been prescribed. The Central Government has also prescribed the fees for making applications/petitions before the Company Law Board under the Company Law Board (Fees on applications and Petitions) Rules,1991.
There was a specific objective behind section 397/398 of the Companies Act, 1956 and a great responsibility is cast upon the Company Law Board to protect the interests of the minority shareholders, to put an end to the matters complained of and to regulate the affairs of the Company. The absence of an effective remedy to address the serious grievances of the shareholders in the Company will directly impact the growth of corporate world. To the extent possible, differences between the shareholding groups in any Company is to be addressed and every effort is to be taken to ensure that the Company functions smoothly rather resorting to winding-up. The same is the object behind constitution of BIFR and section 391 to 394 of Companies Act, 1956. It is more important to protect the interests of the shareholders in a Company and it is very important to deal with the issues of oppression and mis-management. A proceeding under section 397/398 of the Companies Act, 1956 is really complicated and as usual there exist difficulties when it comes to execution of an order.
The important aspect of a proceeding before the Company Law Board is about the procedure and the applicability of the provisions of Civil Procedure Code. The intention behind constitution of Special Tribunals is to simplify the procedure and to avoid the enormous delay in Courts due to strict applications of provisions of Civil Procedure Code. Despite all this, technicalities were pleaded in a proceeding under Section 397/398 of the Companies Act, 1956 very often.