Judgment:
1. In this order, we are dealing with two applications--one filed by Shri T. G. Veera Prasad and the other by Tungabhadra Machinery Tools Limited (hereinafter referred to as "TMTL"), under Section 111 of the Companies Act, 1956 (hereinafter referred to as "the Act"), seeking rectification of the register of members of Sri Rayalaseema Alkalies and Allied Chemicals Limited (hereinafter referred to as "the company"), in respect of 40,000 equity shares in the case of T. G.Veera Prasad and 50,000 equity shares in the case of TMTL. As the facts and circumstances in these applications are similar, we are disposing of these two applications by this common order.
2. According to the applicants, the company was promoted by the reputed industrial house of the TGL group. The applicants are part of this group. For the project set up by this company, the cost was originally estimated at Rs. 22.71 crores and was later revised to Rs. 27.10 crores. While approving the revised cost, the term-lending institutions stipulated that the promoters' contribution should be Rs. 341 lakhs.
Accordingly, the TGL group, its family and its concerns contributed about Rs. 200 lakhs towards equity contribution. The applicant in C, P.No. 2/111/SRB/91 and other concerns belonging to this group contributed Rs. 43 lakhs for 4,30,000 equity shares. All the share certificates belonging to the family of the TGL group together with blank transfer forms were entrusted to the second respondent in both the applications--herein, for the purpose of, if necessary, to pledge the shares with financial institutions, banks for raising finance. However, belying the confidence reposed on him, the second respondent floated a private limited company, viz., the third respondent in both the applications herein-Brilliant Investments Private Limited--(hereinafter referred to as "Brilliant") with his wife and children controlling 99 per cent, of the share capital of the third respondent on February 1, 1988, and transferred nearly 15 lakhs shares belonging to the TGL group to this company on a single day, i.e., June 21, 1988. Out of these shares, 40,000 shares belong to T. G. Veera Prasad and 50,000 shares belong to TMTL. It is alleged in the applications that the third respondent company whose share capital was only Rs. 200 could not have acquired 14.75 lakhs shares on June 21, 1988, and it did not have any resources to buy the shares. The second respondent, since he was in possession of all the share certificates and blank transfer forms, surreptitiously got these shares transferred to the third respondent without payment of any consideration to the original shareholders. Even the company, when shares amounting to nearly 20 per cent, of the share capital of the company were transferred on a single day, never bothered to look into the bona fides of the transaction. Therefore, the transfer of these impugned shares is illegal and void. It is also stated in the applications that some of the members of the TGL group had filed petitions before the High Court of Andhra Pradesh against similar transfer of their shares to Brilliant by respondent No. 2, under Section 155 of the Act for rectification and later on when a compromise was arrived at, these petitions were withdrawn.
3. The impugned shares were purported to have been transferred at the rate of Rs. 3 per share but no consideration was actually paid to the applicants. It is further stated that the applicants came to know of the impugned transfers only when some of the affected members of the company filed petitions before the High Court of Andhra Pradesh, as stated earlier.
4. The company, in its reply stated, that the transfers were considered in the meeting of the committee of directors held on June 21, 1988, in which the said second respondent and other directors were present and as the transfer instruments were proper and were accompanied by share certificates the committee approved the registration of transfers and since the second respondent was an interested party, he did not take part in the proceedings. Therefore, it is stated that the company had registered the transfers with sufficient cause and, therefore, the applicants cannot invoke the provisions of Section 111 of the Act and that too after a period of three years from the date of registration.
Thus the applications are not maintainable due to delay and laches on the part of the applicants. Even though the number of shares was large, the company being a listed company, could not refuse the registration of transfer as none of the grounds under which a listed company could refuse registration under Section 22A(3) of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as "the SCR Act"), was satisfied. Accordingly, the company has prayed that the applications be dismissed.
5. The second respondent, in his reply, refuted the allegations in the applications and he has also adopted the reply of the company. He has refuted the allegation that the impugned shares were entrusted to him and kept by him as alleged as there was no need for pledging any securities for raising funds since all financial arrangements had already been tied up. He has further stated that the third respondent was incorporated by him with his family members, but the allegations that the third respondent company was formed for the purpose of getting the impugned shares transferred in its name is not correct. He has also stated that the shares of the TGL family were transferred in favour of the third respondent company only as quid pro quo for the shares in Sree Rayalaseema Paper Mills Limited transferred by the second respondent in favour of the members of the TGL group. Even in a criminal case filed by one of the members before the First Class Magistrate's Court, Kurnool, alleging fraudulent transfer of these shares, most of the members had confirmed the genuineness of the transfers and the District Magistrate closed the case declaring the complaint as "mistake of facts".
6. The third respondent, in its reply, has stated that it is not a necessary party in these proceedings as neither the second respondent nor any of his family members are directors in respondent No. 3. It is stated that the transfer forms in respect of the impugned shares in the case of the TMTL were executed on June 17, 1988, by T. G. Veera Prasad as its director and in respect of the shares held by him, the transfer deeds were executed by him on June 13 and 19, 1988, for valuable consideration and were handed over to the third respondent which forwarded the same to the first respondent for registration. Regarding payment of consideration, the third respondent stated that in respect of payment of consideration towards shares held by TMTL, TMTL wrote a letter to the third respondent on June 18, 1988, to pay the sale proceeds of Rs. 1,5 lakhs to the first respondent to be credited/adjusted against the first respondent and on the basis of this instruction, this amount was paid to the first respondent. As far as the payment of consideration towards the shares of T. G. Veera Prasad, following the instructions of T. G. Veera Prasad, a sum of Rs. 1.2 lakhs was paid to the first respondent. Therefore, according to the third respondent, these transfers are valid and cannot be impeached.
7. This matter was heard on May 25, 1992, September 4, 1992, February 6, 1995, and February 22, 1995. The applicants herein filed an application on April 29, 1992, praying for restraining respondents Nos.
2 and 3 from effecting any further transfer of the impugned shares.
Accordingly, at the hearing held on May 29, 1992, when these applications were taken up for hearing, counsel for the third respondent gave an undertaking that it will not deal with shares held by it out of the impugned 90,000 equity shares in any manner till the date of next hearing. At the next hearing held on September 4, 1992, while giving certain directions, we also restrained the third respondent from dealing with the shares held by them in any manner without our approval.
8. Initiating the arguments Shri Kannabiran, senior advocate, appearing on behalf of the petitioner in C. P. No. 2/111/SRB/91, T. G. Veera Prasad, stated that many of the documents which the respondents had relied on are not admitted by him and he would also like to call witnesses to substantiate his statement made in the application. On our suggestion that we would consider this request later, he initiated his arguments on this application. He submitted that the applicant never transferred the shares to the third respondent and the third respondent was not in a position to invest over Rs. 1.4 crores for purchase of the shares held by the TGL family when its paid-up capital was hardly Rs. 200. The shares along with blank transfer forms kept in the custody of the second respondent had been fraudulently shown as transferred to the third respondent which is under the ultimate control of the second respondent. He disputed the genuineness of the letter dated June 20, 1988, in which T. G. Veera Prasad is alleged to have written to the third respondent for remitting the consideration to the company.
According to him, he is not admitting the said letter. He further stated that when the reply to the petition was filed, none of the documents were produced nor were they relied upon, and, therefore, according to him, all these documents had been fabricated ones after filing the reply. He further stated that the third respondent had not shown any document to prove the payment of consideration not only of this amount but also of the amounts due to other shares purported to have been transferred by the TGL family. Even though some of the documents relating to payments have been produced after the order of the Company Law Board dated September 25, 1992, he also drew our attention to the reply by the third respondent wherein there is no mention or details given about the payment of consideration. Even the accounts were filed after filing its reply by the third respondent and as such no credibility should be given to any of these documents. He also pointed out that there have been variations in the counters filed by respondents Nos. 1 to 3 regarding the payment of consideration. He drew our attention to the reply of the first respondent wherein it is stated that the applicant advised the third respondent to pay the consideration to the first respondent against the amount due by the applicant to the first respondent company. In the reply of the second respondent, it has been stated that the transfer of shares in favour of the respondents was a quid pro quo for the shares in Sree Rayalaseema Paper Mills Limited which was transferred by the second respondent to the transferor. In the reply of the third respondent, nothing has been mentioned about the mode of payment. Therefore, Shri Kannabiran argued that it is nothing but a story that has been built up on a fabricated letter purported to have been written by the applicant on June 20, 1988. He also pointed out that while the shares were transferred in 1988, even the accounting entries relating to purported payment of consideration have been made in the accounts only in 1991. Therefore, the entries relating to payment should have been fabricated. He also pointed out that, in the case in the Hyderabad Court, no reference has been made regarding this payment of consideration. Shri Kannabiran also stated that the signature in the transfer deed for 50,000 shares was not the signature of T. G. Veera Prasad. Drawing our attention to the resolution of the transfer committee of the board of directors dated June 10, 1988, in which the committee decided to record the registration of transfer, he pointed out that the words "T.G. Venkatesh interested director for Nos. 159, 161 to 188" had been clearly interpolated and this must have been done afterwards. Even the resolution does not say that he absented from voting on the resolution.
Therefore, according to Shri Kannabiran, the entire transaction is vitiated with fraud and deserves to be set aside and the name of the applicant be restored in the register of members. He further argued on the point of limitation, to state that the Limitation Act is applicable only in the case of courts and there is no period of limitation fixed in the Act under Section 111(4). To state that the Limitation Act is not applicable, he relied on the decisions in Sakuru v. Tanaji, AIR 1985 SC 1279, Kotah Transport Ltd. v. State of Rajasthan [1967] 37 Comp Cas 288 (Raj), Mrs. Promila Bansal v. Wearwell Cycle Co. (India) Ltd. [1978] 48 Comp Cas 202 (Delhi), Sha Mulchand and Co. v. Jawahar Mills Ltd. [1953] 23 Comp Cas 1 (SC), People's Insurance Co. Ltd. v. C.R.E.Wood and Co. Ltd. [1961] 31 Comp Cas 61 (Punj) and [1964] MLJR 309.
9. Concluding his argument, Shri Kannabiran stated that under Section 10E(4)(c) of the Act, the Company Law Board can order enquiry and has the power to summon witnesses and as such this is a fit case for exercising these powers.
10. Shri V. S. Raju, advocate, appearing on behalf of the applicant in C. P. No. 3/111/SRB/91, stated that when about 20 per cent, of the shares of the company was involved in the transfer, the board of directors of the first respondent company should have made a thorough enquiry into such transfer before approving the transfer. He also stated that the annual general meeting of the company was held on June 24, 1988, and the transfer was effected just three days in advance and how the shares could be transferred when the company would have announced book closure. During the book closure period, the company could not have effected the registration. Even otherwise, the company, being a listed company, the shares should have been dealt with through the stock exchange, and there is violation of Section 13 of the Securities Contracts (Regulation) Act, 1956. There is no indication in the share transfer committee's resolution that the interested director did not take part and, therefore, there is a violation of Section 298/300 of the Act. He also stated that there was no authority from TMTL to T. G. Veera Prasad to dispose of these impugned shares and the purported resolution of TMTL dated June 15, 1988, which has been annexed to the reply of the first respondent is a fabricated document as no meeting of the board was held on that day. The copy of the purported resolution has been signed as true copy by one Bhupendra R.Shah, who was a commercial director. He himself has signed the balance-sheet of TMTL up to 1991, wherein the investment in these shares are still shown to be held in the name of TMTL.
11. He questioned the affidavit of Shri B. R. Shah, dated August 30, 1992, wherein it is stated Shri Shah signed the letter dated June 18, 1988, regarding payment of consideration for the shares. According to Shri Raju, this letter itself is a fabricated one and the affidavit cannot be given any weightage. Referring to pages 44 and 134 of the volume relating to C. P. No. 3 of 1991 he stated that while at page 134, the resolution specifically mentions the authority for investment relating to specific companies, there is nothing in the resolution at page 47 regarding the names of companies. He also stated that the transfer form/format had been changed by a Government of India Notification No. 479E some time in May, 1986, but the transfer forms relied on by the company are dated June 18, 1988, which are in the old format. Thus, Section 108(1A) has been violated. According to him, there is considerable variation in the form and mode of consideration alleged to have been received by the petitioners. The respondents have not been able to produce any receipt towards receipt of consideration.
The alleged adjustment of dues is also not correct inasmuch as there was nothing to be adjusted and as a matter of fact in March, 1989, it was respondent No. 1 who owed more than Rs. 25 lakhs to the petitioner company.
12. In regard to the allegation that there have been laches on the part of the petitioner, he stated that the petitioner came to know about the transfer only in June, 1991, on the basis of the letter to the Registrar of Companies as indicated at page 275 of volume relating to documents. Relying on Mrs. Promila Bansal v. Wearwett Cycle Co. (India) Ltd. [1978] 48 Comp Cas 202 (Delhi), he stated that laches or delay will not disentitle the shareholder to an equitable relief. He also relied on Farhat Sheikh v. Escman Metalo Chemical Pvt. Ltd. [1991] 71 Comp Cas 88 (Cal) to state that even assuming there was delay in the filing of the petition this could not deprive the petitioner of the right to agitate. Technicality cannot defeat the cause of justice unless such a technicality goes to the root of the matter. As far as the jurisdiction of the Company Law Board is concerned, relying on Shri Gulabrai Kalidas Naik v. Shri Laxmidas Lallubhai Patel of Baroda [1978] 48 Comp Cas 438 (Guj) he stated that the Company Law Board has jurisdiction to entertain this petition and there is no need to relegate the matter to a civil suit.
13. Shri Raghavan, senior advocate for the respondents, stated that the petition is barred by limitation. Since the transfer took place in the year 1988, the petition should have been filed by 1991 under Section 155 of the Act which was in force till May, 1991. The period of limitation in respect of the application under Section 155 even though has not been specifically provided in the Act, has been held to be three years by various courts under Section 137 of the Limitation Act.
Therefore, this limitation is squarely applicable in this case. The petitioner cannot take advantage of the changes in the law that now the powers under Section 155 have been transferred to the Company Law Board on the ground that limitation is not applicable to the Company Law Board. In the written submissions filed after the hearing it has been submitted that the Supreme Court has held in Canara Bank v. Nuclear Power Corporation of India Ltd. [1995] 84-Comp Cas 70 ; [1995] 2 SCALE 43 (SC) that the Company Law Board is a civil court and, therefore, the provisions of the Limitation Act are applicable. It is also stated in the written submissions that as per the decision of the Madras High Court in Ramanathan Chettiar v. Kandappa, AIR 1951 Mad 314, if a right had become barred by the Limitation Act then in forte on the date of the coming into force of a new Act or amendment then such right is not revived by the application of the new enactment. It is further stated that Section 3 of the Limitation Act provides for a duty on the court to dismiss a petition if the same is barred by the Limitation Act. Shri Raghavan further stated that the proceedings before the Company Law Board under Section 111(4) are of summary nature as decided by the Full Bench of the Delhi High Court in Ammonia Supplies Corporation Pvt. Ltd. v. Modern Plastic Containers Pvt. Ltd. [1994] 79 Comp Cas 163 and as such the matter should be relegated to a suit as it involves complicated questions of law and facts which cannot be decided without full enquiry.
14. He further stated that the entire petition has been based on the basis that blank transfer forms had been handed over to respondent No.2 only for safe custody by various shareholders and unless otherwise this statement is proved by leading evidence, the petition cannot stand. There are no details as to who were the members who entrusted the share certificates with blank transfer forms, whether any receipt was obtained for the same, etc. While there were so many shareholders who were reported to have entrusted the share certificates, the others have not supported the petition other than the petitioners. There were 29 transfers effected, of which only in respect of five transfers, the matter was agitated in the Andhra Pradesh High Court. But they were all withdrawn later. Even in those petitions, identical allegations were made. In the present proceedings there are three petitioners. The other 21 members have not ventilated their grievances. If misconduct or fraud is alleged on the part of the respondents, the petitioner is bound to prove the same by leading evidence. Even otherwise delivery of blank transfer forms with certificates passes the title. If at all the petitioners have any grievance it can be only as unpaid sellers. If it is a fact that these shares had been kept in custody, the petitioner has not explained as to why they had not called back the shares from 1987 to 1990. Even when the rights shares were offered in 1991, the petitioners were offered shares only according to what they held, i.e., 2,500 shares. They were not offered rights shares in respect of the impugned shares. At least at that time they should have agitated.
Therefore, it is not correct on their part to say that they were not aware of the transfer.
15. The payment of consideration has been elaborately dealt with in the reply and also documentary evidence has been produced. Drawing our attention to letter dated March 3, 1991, from Brilliant Investment to TMTL at page 133 intimating the payment of Rs. 1.5 lakhs to the company, Shri Raghavan stated that the petitioner has not denied the receipt of this letter in his rejoinder at page 152. Even the claim of TMTL that over Rs. 25 lakhs were due from the company and as such there was no question of any adjustment against the alleged dues from TMTL to the company, Shri Raghavan further stated that if it is a fact that over Rs. 25 lakhs were due from the company, no action has been taken by TMTL to realise this amount and no counter-claim had been made by TMTL in the suit filed by the company in Hyderabad.
16. Regarding the minutes of the committee dated January 21, 1988, he stated that there were two other directors present in that board meeting and if the petitioners were to question the genuineness of the minutes, they should have made the other two directors as parties to the proceedings which has not been done. Referring to the annual return made up to June 25, 1988, at page 67 of the documents annexed which was filed with the Registrar of Companies in August, 1988, he stated that the petitioners have not been shown as the members in respect of the impugned shares, clearly indicating that this transfer had actually taken place and these documents being public documents could have been perused by the petitioners in the office of the Registrar of Companies.
(We find that this document was taken on record only in 1993).
17. As far as the change in the format of the transfer deed as pointed out by Shri Raju, Shri Raghavan stated that non-compliance with Section 108(1A) does not vitiate the transfer. On this proposition, he cited Muhundlal Manchanda v. Prakash Roadlines Ltd. [1991] 72 Comp Cas 575 (Kar). Even otherwise Shri Raghavan stated that as per the judgment of the Madras High Court in Kothari Industrial Corporation Ltd. v. Lazor Detergents P. Ltd. [1994] 81 Comp Cas 699 ; [1994] 4 Comp LJ 341, the provisions of Section 108 are not applicable to listed companies. He further stated that TMTL adopts Table A of the Companies Act.
Regulation 71 prescribes that an attendance register for all board meetings is to be maintained. If the attendance register is produced it could be seen that on June 15, 1988, there was a board meeting of TMTL in which the decision to transfer the shares was taken.
18. Summing up his arguments, Shri Raghavan stated that proceedings under Section 111(4) are summary in nature and where disputed questions of law or facts are involved, then the matter should be relegated to a suit. For this proposition, he relied on Ammonia Supplies Corporation P. Ltd. v. Modem Plastic Containers P. Ltd. [1994] 79 Comp Cas 163 ; 100 LWR, Madras High Court 921 (?). He further stated that the petitioners have alleged fraud, forgery, etc., and these allegations cannot be gone into in a summary proceeding and will have to be proved by leading oral evidence and by giving full particulars and this can be effectively done only if the matter is relegated to a suit. For this proposition he relied on Bishundeo Narain v. Seogeni Rai, AIR 1951 SC 280, Mohta Bros. P. Ltd. v. Calcutta Landing and Shipping Co. Ltd. [1970] 40 Comp Cas 119 (Cal), Order 6, rule 4 of the Civil Procedure Code and Afsar Shaikh v. Soleman Bibi, AIR 19. In reply to these arguments, Shri Kannabiran, advocate for T. G.Veera Prasad, stated that the petition contains full particulars and the very fact that there is inconsistency in the replies of the respondents especially relating to the payment of consideration, the matter should be straightaway adjudicated in favour of the petitioners.
He further stated that he is prepared to produce the necessary witnesses to bring home the truth of the various statements by the respondents and also of the statement of the petitioners. Therefore, he prayed that if the Company Law Board was not inclined to allow evidence to be led, it should, as per the powers conferred by Section 10E of the Act summon the witnesses on its own and decide this matter. Shri Raju, advocate for the petitioners, also supported Shri Kannabiran.
20. We have considered the pleadings and arguments of counsel. The stand of the respondents is that these applications are barred by limitation. To substantiate this stand, Shri Raghavan, advocate for the respondent put forth two arguments. One is that as the Supreme Court has held in Canara Bank v. Nuclear Power Corporation of India Ltd. [1995] 84 Comp Cas 70 ; [1995] 2 SCALE 43, that the Company Law Board is a court the Limitation Act is applicable to proceedings before the Company Law Board. The other argument is that under Section 155 of the Act before amendment in 1988, courts have held that the period of limitation in respect of applications under Section 155 was three years and, therefore, even assuming that the Limitation Act is not applicable to proceedings before the Company Law Board, if a right to sue had become barred by the provisions of the Limitation Act then in force on the date of coming into force of a new Act or amendment, then sueh a barred right is not revived by application of a new enactment. For this he relied on Ramanathan Chettiar v. Kandappa, AIR 1951 Mad 314. As far as the first argument is concerned, it has to be borne in mind that the Supreme Court, in Canara Bank v. Nuclear Power Corporation of India Ltd, [1995] 84 Comp Cas 70 ; [1995] 2 SCALE 43, interpreted the term "court" with reference to the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. While doing so, in paragraph 35, the Supreme Court observed that (at page 91 of 84 Comp Cas) : "The word (court) must be read in the context it is used in the statute ..." Again, in paragraph 42, the Supreme Court observed (at page 95 of 84 Comp Cas) : "It is difficult to see how it (CLB) can be said to be anything other than a court, particularly for the purposes of Section 9A of the Special Court Act." (emphasis by us).
A reading of this judgment would make it clear that for the purpose of Section 9A of the Special Court Act, the Supreme Court held that the Company Law Board should be considered as a court. As pointed out by Mr. Kannabiran, relying on various case law, Tribunals have not been held to be courts for all purposes and as a matter of fact with reference to the applicability of the Limitation Act, he referred to decided cases wherein courts have held that the Limitation Act is not applicable to Tribunals. We have also held in a few cases that the Company Law Board is not governed by the provisions of the Limitation Act. Therefore, this argument of Shri Raghavan has to fail.
21. The second limb of the argument that the right to sue had become time barred before the amendment to the Companies Act on the basis of the then existing Section 155, does not seem to be correct. The Amendment Act came into force only with effect from-May 31, 1991. Even assuming that the cause of action to file these applications arose on June 21, 1988 (which the petitioners dispute), then, events per the then existing Section 155, the right would have been alive till June 23, 1991. In other words, the right had not become time barred as on May 31, 1991, when Section 111(4) came into force and the Company Law Board was vested with the powers under this section. Therefore, they still had the right to sue on May 31, 1991, to come before the Company Law Board. As we have already held that the Company Law Board is not governed by the provisions of the Limitation Act, it cannot be said that right to move the Company Law Board has become time barred and that the applicant is trying to revive the right which had become time barred under Section 155.
22. As far as the other argument of Shri Raghavan that this matter requires to be tried on evidence is concerned, we are in general agreement with his proposition for the reasons stated below. There are two applications before us in these proceedings. In C. P. No.3/111/SRB/91, the petitioner questions the authenticity of the resolution of the board of TMTL dated June 15, 1988, authorising Shri T. G. Veera Prasad to dispose of the impugned shares. As a matter of fact, according to the applicant, there was no board meeting of TMTL on that date, while the respondents have produced a copy of the resolutions. The applicant also questions the adjustments made towards payment of consideration on the basis of an alleged letter dated June 18, 1988, from TMTL. The authenticity of the letter is questioned.
While the applicant disputes the genuineness of the signature of Shri T. G. Veera Prasad on the transfer instruments, two persons who witnessed the alleged signature have filed affidavits confirming that the transfer instruments were signed in their presence by Shri T. G.Veera Prasad. As far as C. P. No. 2/111/SRB/91 is concerned, the contention of the applicant is that the family members of the TGL group had entrusted blank transfer forms for safe custody which had been misused by respondent No. 2. Admittedly, out of 29 such transferors, only three are before us and five had impugned the transfer in the High Court of Andhra Pradesh. The whole understanding is alleged to have been oral. No written documents have been produced before us to evidence such understanding. Though Shri Kannabiran wanted to lead evidence through the petitioner, yet in view of such a large number of transferors who had not impugned the transfers, unless otherwise at least a majority of them are examined, it is not possible to take a decision on this basic statement of the applicant. In addition, the applicant also questions the genuineness of the letter dated June 20, 1988, by which he had asked the transferee company to pay the consideration for the impugned shares to respondent No. 1. There are contradictions in the replies filed by respondents regarding the mode and nature of payment of consideration. In addition the source of funds for Brilliant to acquire such a large number of shares has also to be examined.
23. Thus, there are complicated questions of facts in both the applications which cannot be decided on the basis of affidavits especially where they have a main bearing on the issues to be decided by us. Proper trial by leading oral evidence has to be conducted before adjudication.
24. Proceedings under Section 111, as has been held by various courts, particularly by the Full Bench of the Delhi High Court in Ammonia Supplies' case [1994] 79 Comp Cas 163 are summary in nature. We have also held in many cases that even though the proceedings are summary in nature, yet a discretion is vested with the Company Law Board to proceed with the matter by itself. We have also proceeded with cases wherever we felt that, on the basis of affidavits, we would be in a position to take a final deci-sion. But in the present case, we find, that from the affidavits filed and the documents annexed thereto and also the various documents that we ourselves had called for during the course of the proceedings we will not be in a position to take a final decision. Even though under Section 10E of the Act we could summon witnesses, etc., since the proceedings under Section 111(4) are of summary in nature, we do not propose to do so. Therefore, we are of the view that it is not a fit case to proceed with under Section 111(4) and, accordingly, we dismiss these applications. The applicants may file a civil suit if so advised. Interim orders passed earlier are vacated. There will be no order as to costs.