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I need not reiterate the fact that Company Law is complicated everywhere in view of its exposure, the interest of the stake holders, plethora of regulations, the stakes and the responsibility of the state or the statutory authorities. As everybody knows, in India, the jurisdiction to decide company disputes substantially rests with the Company Court and the Company Law Board. It is also true that SEBI and Securities Appellate Tribunal do decide important issues pertaining to a Company if it is a listed Public Company.

If the Company is a sick company, is in the process of revival and rehabilitation or if some liquidation proceedings are pending, then, the delay in the process is tolerated in most of the cases as I have seen. But, where there are disputes in the Company or between the groups when the Company is doing well and holds valuable properties, then, obviously, there will be lot of urgency in getting the required relief from the adjudicatory authority or forum. The disputes between the groups in the Company can result in filing the winding-up petition before the Company Court on the ground that there exist “just and equitable ground” to wind-up the Company or it will result in filing of a petition before the Company Law Board under section 397/398 of the Companies Act, 1956, seeking preventive measures alleging oppression and mismanagement by the majority in the Company.
In many cases, the minority group or the group of shareholders who approaches the Company Law Board under section 397/398 of the Companies Act, 1956, may not be able to visit the premises of the Company even and may not be able to know as to how the day-to-day affairs of the Company are being conducted. The situation will be different in listed Public Companies in view of the shareholding pattern as per the SEBI (DIP) regulations and also the requirements of listing agreement with the concerned stock exchanges. Despite the disputes between or among groups in the Company, a listed public company proceeds to function as if there exist no disputes between or among the groups in the Company.

The disputes between the groups in a Private Limited Company will be of serious in nature in many cases. The Company might not have recorded all its properties in the Books or might not have shown the true values of the properties of the Company in its books and it happens practically. That is why, even when the financial position of a Company is not good on paper, the group which approaches the Company Law Board will press for some relief or orders as if they are approaching the Board to put an end to the oppression and mis-management in the Company rather preferring to wind-up the Company. Under the circumstances narrated above, the group can press for winding-up of the Company on the ground that there exist “just and reasonable ground” and even on the ground that the Company is financially sick. But, it will not happen practically. As we see, practically, rather the shareholders or the group of shareholders in the Company, an outsider gets a Company wound-up and the liquidation proceeds.

In view of the reasons stated above, a group or the shareholders who approaches the Board under section 397/398 of the Companies Act, 1956, seek urgent orders and they expose urgency in the matter at each and every hearing. In fact, as everybody knows, only for the speedy disposal of matters and to support the corporate word, a separate adjudicatory forum like Company Law Board is constituted now and it is proposed to constitute a National Company Law Tribunal and Appellate Tribunal as everybody knows.  Despite the constitution of Company Law Board, a company dispute and especially the disposal of disputes under section 397/398 of the Companies Act, 1956 gets delayed.  It can be attributed to the attitude of the shareholders or the people involved in the case, the complications in deciding a company dispute and also work load before the Company Law Board.

As I have heard, many corporates expresses their unhappiness over the compulsory procedures to be followed. For example, if the Company Law Board decides to hear the opposite party in an application or the petition before passing orders, then, notice is to be served on the opposite party and ensuring the service of notice will be the responsibility of the applicant or the petitioner who approaches the Board seeking relief. The address available for service of notice may not be correct in some cases and it leads to delay. When the first notice and the second notice as the case may be, can not be served on the opposite party, then, there is an alternative way of serving the notice by giving a public notice in New Papers at the locality. This procedure certainly consumes time and it is inevitable and based on logical footing. While deciding matters under section 397/398 of the Companies Act, 1956, the Company Law Board is conferred with enormous powers subject to express limitations as stated under section 402 and as settled judicially and as such Company Law Board can pass orders ex-parte or even without the presence of opposite party if the situation demands. But, once the Company Law Board has decided to listen the opposite party on a particular issue, then, the applicant or the Petitioner is supposed comply with the procedure as contained in Company Law Board Regulations and settled practice.
I do strongly believe that the Company Law Board does not insist on technicalities on each and every issue as is the case before the Civil Courts for right or wrong. Despite the procedural relaxations before the Company Law Board to a great extent, there are certain procedures based on logical footing which can not be ignored.

hus, it may appear to the corporates or the petitioners who approach the Company Law Board seeking urgent relief in matters like oppression and mismanagement that delay caused in passing the orders as prayed for due to procedural requirements, but, there is no option in many cases.  

Note:
•    I have expressed my opinion on an interesting area based on my experience, my knowledge of law and based on the views expressed by some of the corporates in the course.
•    I am aware of the complications under Company Law.

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As we all aware, section 397/398 of the Companies Act, 1956 deals with oppression and mismanagement and the protection to the minority against the majority. The law makers could not have expected that a situation will come where a majority are harassed or oppressed by the minority. Sections 397/398 and other connected provisions of companies act, 1956 meant to provide relief to the minority shareholders against the majority when minority are oppressed or the property of the company is mismanaged. Sections 397/398 of the Companies Act, 1956 deals with very important issue touching the corporate world. A minority shareholder who has invested so much in the company can not be ignorant of the acts of the majority to oppress him or mismanage the company’s property. At the same time, the promoters or the majority requires protection against the minority when they resort to illegality and try to oppress the majority.

I have written many articles on few issues touching the issue of oppression and mismanagement and the relief as provided under section 397/398 of the Companies Act, 1956. I just want to again reiterate the complications in dealing with a proceeding under section 397/398 of the Companies Act, 1956 by the Company Law Board now and the National Company Law Tribunal in future if the Tribunal is established. Barring very few things, I don’t think that the complications under section 397/398 will go away with the establishment of National Company Law Tribunal and it is to be seen as to how the National Company Law Tribunal deals with the issues like winding-up, amalgamation, oppression and mismanagement and other connected issues. It is a complicated responsibility of Company Law Board to ensure that the object of section 397/398 is met when a petition is presented to it alleging oppression and mismanagement.  I had the privilege of observing so many proceedings before the Company Law Board and heard the majority share holders in the company as to how they are harassed by the minority and heard from the minority from the company as to how majority has siphoned of company’s funds and as to how they could do nothing to recover their due or in getting their rights protected.

Firstly, when shareholders present a petition to the Company Law Board under section 397/398 of the Companies Act, 1956, it will take so much time to understand the case and that is why, it is seen very often that a Board passing an interim order giving liberty to the other party to apply for the order getting vacated when the Board is satisfied that there exist a prima facie case. Reading hundreds and thousands of papers will be a difficult job for the Company Law Board unless there exist two competent counsels who stick to their point and assist the Board in arriving at a conclusion. The technicalities, the complications, the attitude, the transfer of presiding officers etc. will contribute for a long delay in getting petitions under section 397/398 disposed of despite the fact that the constitution of special tribunal like Company Law Board is expected to deal with the issues speedily as compared to traditional courts. Some cases under section 397/398 will be very complicated to deal with and ultimately an exit option may be provided to a group at the valuation done by the independent auditors. There is problem with exist option too when the Board found that it is impossible to ensure that the both groups in a Company go smoothly. Many applications under section 397/398 are filed in respect of private limited companies or closely held public companies as listed public companies are well regulated in view of SEBI regulations, the listing agreement and plethora of other requirements and shareholding pattern. Many private limited companies will not even maintain books of account properly and there tend to be under valuations, overvaluations and concealment of certain transactions in order to evade tax payments basically. As the true transactions of the Company are not recorded in many cases, there will be difficult in availing the exist option. That is why, the petitioners before the Company Law Board under section 397/398 of the Companies Act, 1956 presses for orders and corrective steps in the Company. Again, we all know the practical difficulties in getting the orders of the court executed. Even the orders of the High Court are floated at times leaving only an option to move for contempt and many litigants know the loopholes in contempt proceedings. Many reforms are actually needed to make the law really effective.

I just want to give a brief of two cases which I have personally seen and listened to the people concerned.

Promoter is thrown-out:

I have seen a case where a promoter holding 100% is thrown-out from the company. In the case I am referring to, the promoter is a technocrat and established a company. While he was looking for investors, one individual has approached him that he will bring in money and also raise substantial debt and equity for the company’s expansion. Accordingly, an MOU and Share Purchase Agreements are entered into between the Company and the outsider and the outsider has not been allotted any shares, but, been made as an additional director as provided under Company’s Articles.  The outsider who has promised to bring in so much investment into the Company has done nothing as agreed in the MOU and Share Purchase Agreements and when the promoter questions the same, the outsider has filed fictitious forms with the ROC as if there were Board Meetings and decisions were taken to mortgage all Company’s properties and as if a decision was taken to make further allotment of shares. With the filing of fictitious forms with the ROC, the promoter could do nothing for the company and he could not concentrate on expansion of the Company and he had to run from pillar to post.  The promoter had to approach the Company Law Board for getting the fictitious charge set-aside and the case is going on for months now and fortunately, it may get disposed of soon. Time is very valuable for the Companies and the stakes are high in many cases. As such, every case under section 397/398 is different and seen on a different footing.  Some cases can be disposed of very soon and even within days if possible and some cases tend to proceed for months and years.

Apparent Mismanagement:

In another case, a closely held private company consists of family members as its shareholders. One Mr.A held some 50% of the shareholding while his brother and his group held the remaining 50% shareholding in the Company. Mr.A was not concentrating on the affairs of the Company thinking that his rights and interest are secured to mandatory corporate regulations to be followed. Mr.A was living in abroad and had to travel abroad very frequently due to health problems. Suddenly, Mr.A has found that the very valuable property of the Company is sold for a throw away price to a third party. Mr.A had challenged the sale transaction, but, the third party who has purchased the property has started even developmental activity as there was no restraint from the Board or as Mr.A could not convince the Board for getting a restraint order like injunction. The case is pending before the Board for years and the majority group engages competent and costly lawyers and they keep on filing applications and now it is really difficult for the Hon’ble Company Law Board to read all the papers, find-out all the proceedings and passing final orders in the matter. Mr.A has a clear case to prove that the property is sold illegality and in violation of Articles of Association and the provisions of Law, but, still he could not get his rights secured and hoping that his rights will be preserved and protected when the Company Petition under section 397/398 is finally disposed of.

Complications:

Now, I want to just list-out few important issues and complications under section 397/398 of the Companies Act, 1956 as under:

Nature of remedy under sections 397/398. Basically, the provisions are meant to prevent the continuing oppression and mismanagement by the majority against the minority. But, who remedies the wrong doing and powers of the Company Law under section 397/398 read with section 402 and other provisions are interesting to know and dealwith.
Who all can approach the Tribunal under section 397/398?
Can the majority approach the Tribunal under sections 397/398?
How to entertain the plea questioning the maintainability of the applications.
How to deal with the dispute with regard to membership?
Conditions precedent for maintaining an application under the sections?
How to construe the world ‘oppression’?
What usually constitutes oppression?
How to construe the ‘mismanagement’?
What usually constitutes ‘mismanagement’?
Whether mere irregularity or non-compliance of the provisions of the Act be taken as oppression and mismanagement?
How to construe ‘public interest’ under the section?
Need of giving full particulars in an application under sections 397/398.
Whether the composite petition is maintainable under the section?
Whether the events subsequent to filing the application be considered?
Principles of Res subjudice and Res judicata?
Whether the rules under the Code of Civil Procedure applies to an application under section 397/398.
Is it correct to say that the Tribunal can not decide the disputed facts?
Construing the issue of proceeding against the legal representatives or impleading the legal representatives of the applicant.
Whether the affairs of the subsidiary be questioned by the members of the holding company via a via?
Difference between the proceedings under section 433 and section 397/398?
Whether the arbitration clause can oust the jurisdiction of Tribunal under the section?
Application of law of limitation?
The proper approach while entertaining an application under section.
The proper approach under the section in respect of s.25 companies.
Essentials to be looked into while entertaining the application.
The role of precedents while entertaining an application under section 397/398.
Dealing with the issue of consent under section 399.
Dealing with the issue of membership and prima facie proof.
Powers enumerated under section 402 and need of providing section 402 as section 397/398 itself is elaborative when it comes to dealing with the powers of Company Law Board.

Note: I have just given the complications under section 397/398 of the Companies Act, 1956 once again and the opinions expressed are my personal.

Entrepreneurs – Money – Law Schools

Entrepreneurs , money and law schools have a great connection in today’s fast track technology oriented liberalised economic system in which we all live . It is a game of mind . Every thing in the Universe – COSMOS is a game of  mind . Lawyers , law schools have a great role in today’s life . The rulers who created the Democracy and freedom of speech actually gave every human being the power to protect himself .

Constitutions were established for Governance leaving aside few global elite – illuminati like England . England is a country which does not have a constitution. The law schools created by the rulers of the World and then the lawyers created by these law schools have played a big role in human lives . The constitutions of the countries were also written with the help of lawyers – the legal illuminairies . People have a right to challenge any thing in the courts of law . They can even challenge the Governments . Since the advent of democracies and the freedom to speech the law schools and the lawyers have been mushrooming . England and America have some of the greatest law schools in the world . With liberalisation of financial industrial global economies the need for lawyers have unprecedentedly increased . Law has become a great and highly paid profession spinning money for the lawyers and their firms world over . Money however is the essence  for any profession or business . Money is the medium for all political , business and other transactions in the World . Entrepreneurs are taking up very large projects across the World every day . Cross border businesses involve huge sums of money and require large numbers of lawyers to put in place the various agreements involved . Since the last few years India has seen a large number of Law schools come up. This is great because there is a huge popoulation of 1B PLUS in this sub-continent . Long live the democracy . People run the law schools which create lawyers . Only thing is that lawyers should be capable of protecting the credibility of their profession by protecting the people and their rights irrespective of the money they get in lieu of their services . The aspiring lawyers also have a great responsibility towards the World and should therefore choose their law schools carefully . Some of the law schools like Yale , Columbia , Cambridge are world famous . Every body can not access these . However every country has some great law schools which are the institutions of great value and reputation . The society must realise the role of the lawyers like others in building a great responsible nation thus creating a responsible World of Governance .
They are very important people for contributing to the dispensation of Justice globally . The entrepreneurs , law schools , political world , financial , business world and all other people from all the professions must unite together to create a law abiding peaceful society for a new World order full of affluence and abundance for every one . www.mindbodynsoul.com

http://www.mindbodynsoul.com/Entrepreneur/entrepreneurs-money-law-schools.html



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SOURCES OF HINDU LAW

    India is a huge country not only in terms of its geography but also its population, which has various religions, customs and practices. However, India has two main personal laws i.e. Hindu law and Muslim Law. Before moving ahead, I would like to define the Law – ‘Law is a large body of rules and regulations based mainly on general principles of justice.’

      Hindu Law is a personal Law (Law of Marriage, Divorce, Adoption, inheritance etc) evolved through long period of time from many sources (mentioned below) by Hindu religious community of India. Therefore, I love to call it ‘Sedimentary Law‘ because Laws from various sources Sedimented and consolidated into Hindu Law. The important sources of Hindu Law are:

     1)  Ancient Source

     2)  Modern Source

          Ancient source is the main source of Hindu Law, which further subdivided into viz -

a) Sruti: the literal meaning is – ‘what was heard’, and it is originated from Vedas i.e. Rig, Yajur, Sama, and Atharva Vedas. Basically, it is praise in the forms of hymns of the earliest Hindu tradition which deals – types of marriage, adoption, partition etc.

b) Smriti: literally means – ‘what is remembered.’ It is also known as ‘Dharma Sutras’ and available in the prose from. The important Smritis are ‘Manu Smriti, Yagnavalkya Smriti, Narada Smriti etc and, it deals the civil and criminal law, procedural law, marriage Law etc.

c) Commentaries: the discrepancy between above two gives rise a third one i.e. ‘Commentaries, which later on beget two schools i.e. Mitakshara (Vijyaneshwara school) and Dayabhaga (Jimuthvahana school) associated with particular areas.

d) Customs: it is a set of rules and norms, practice by particular society for a long period of time. However, ‘customs arise whenever a few human beings come together as no association of human beings can exit permanently without adopting consciously or unconsciously, some definite rules governing reciprocal rights and obligations’ (Vinogradoff, Collected Papers). “Indeed custom is coeval with the very birth of the community itself.” (Jurisprudences).

      Modern Source refers to the rules and regulations established through legislation by educated and intellectual people. These laws almost codified laws such as -

a) Hindu Marriage Act (1955),

b) Hindu Succession Act (1956),

c) Hindu Minority and Guardianship Act (1956) and

d) Hindu Adoptions and Maintenance Act (1956)

After independence (15 August 1947), India constituted its own Constitution, where India defines itself as a secular country, like this given space to flourish all religions with its own customs and laws. Therefore, the Indian Legal System is a Common Law-cum-Civil Law. Apparently, Hindu Law is a personal law and applicable to person and family relations only.

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Tyrannies begin by promulgating policies of good intentions. Such intentions fool the public into allowing government to fund such programs. Feminism was accepted by most as simply fostering equal opportunity for women. So, government-funded programs began.

And so began the tyranny against fathers, family and freedom both here and throughout the western world. This article is a first of a series exposing the nature of this tyranny and how we must take back government’s tyrannical control of society to secure freedom for all.

…But the funding grew more programs which supported lobbying for more and for perverse changes in the laws – changes that denied men and fathers their fundamental rights. Feminist-instigated government policies and laws viewed their intentions as a ‘greater good’ than the rights that keep us all free – a view which is the hallmark of tyranny.

With ‘feminist jurisprudence’ established, especially within domestic-related jurisdictions, ‘greater good’ intentions like ‘best interest of the child’ or ‘safety of women’ are now used to deny the constitutional rights and protections of all – but most especially of men and fathers.

Based on both denials of rights and constitutional protections, fit fathers under divorce or paternity actions and men accused of specious domestic violence become the excuse and fodder for government control over their lives and their earnings. This tyranny has fostered the growth of a $100+ billion government-affiliated industry feeding off constitutionally deprived fit fathers and the public for its ever-increasing control and demands.

In a nutshell, this government’s feminist tyranny employs the noble-sounding greater good intentions as ‘best interest of the child’ and ‘safety of women’ for reason to justify denying men their rights and protections. The ‘best interest of the child’ principle is used in divorce and paternity actions to deny a fit father his parental rights to legal and physical custody of his child – at least equal to the mother’s.

This allows the court- and thereby the state- to virtually kidnap his child and, then demand extortion payments euphemistically called ‘child support’ for up to 20 years or more. The government-affiliated industry feeds off these payments, the continual litigation for more, and a host of other government-assisted programs to control and manipulate the father’s life, earnings, property and his pursuit of happiness for himself and his child.

If the father won’t – or most often can’t – comply with the extortion payments (perhaps 30% or more of his gross income), he’s jailed without constitutional due process under feminist-perverted contempt judgments. He can have his state license to practice his profession revoked, his driver’s license revoked by any administrator of his state’s revenue department and his passport taken to extort payments from him. If he leaves his country to secure freedom, he becomes a felon subject to 10 years in jail. The system reduces him to the status of a slave. And remember, he’s never done anything wrong – but he has been seriously ‘wronged’.

The ‘safety of women’ principle is used both in divorce and paternity suits and in any domestic circumstance to throw a man out of his house and restrict where he can go. It only takes an ‘accusation of abuse’ – no trial, i.e. no rules of evidence to punish him. By law, ‘abuse’ can be a subjective – and not even physical – state of the ‘woman’s (read victim’s) mind. He can be thrown in jail until a hearing – perhaps for 3 months; but if he admits he abused, he’ll be let out so he can keep his job. That’s a good way to get those phony ‘abuse numbers’ up to justify more abuse programs; extortion works wonders.

No constitutional due process to protect against false accusations means that innocent men are thrown out of their houses, lose their possessions, denied seeing their kids, and go to jail – all the time. And, of course, it means a malicious woman can count on the feminist’s government tyranny to help her steal a man’s rights, property, income and children.

Is what I’ve quickly summarized about the circumstance that men and fathers face true?

Yes. But why should you believe it to be true? You should because the constitutional protections – i.e. our fundamental rights and the high standard of due process protecting them is wholly ignored for men and fathers put into divorce, paternity actions and domestic violence actions.

The aptly named government-affiliated child support and domestic violence industry’s enormous funding allows it to propagandize the inherent ‘badness of men’. That fathers run away from marriage or don’t want to support their children. That they don’t have the best interest of their child at heart nor the safety of women.

That’s phony propaganda. But it’s important to vilify those who you’ll deny rights to. That’s the way tyrannies always work.

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