Judgment : 1. Admit. Counsel for the Respondents waive service. With the consent of Counsel and at their request taken up for final hearing. 1A. The Appeal under Section 10F of the Companies Act, 1956 arises out of an order passed by the Company Law Board (‘CLB’) on 7th August, 2009. By that order the CLB in a petition under Section 397 of the Companies Act, 1956 declined to stay the holding of an Extra Ordinary General Meeting of the Second Respondent, but nonetheless directed that the resolutions passed at the meeting shall not be implemented “till the completion of the suit proceedings in the High Court of Bombay and also the arbitration proceedings”. The dispute between the parties relates to a company by the name of Mukat Pipes Limited, a public limited company which has been listed, the Court is informed, on the Stock Exchanges at Delhi, Mumbai and Ludhiana. About 40% of the shareholding is held by the members of the public, consisting of nearly 12,000 shareholders. The bone of contention relates to about 43.38% of the shareholding which stood in the name of Rajinder Singh. The Appellant and the Third Respondent are brothers of Rajinder Singh who died on 11th May, 2005. The First Respondent is the widow of the deceased. Rajinder Singh and the mother of the Appellant and the Third Respondent formed a partnership firm by the name of Muktanandan Corporation on 17th September, 1975. According to the Appellant the partnership was reconstituted by a supplemental deed dated 2nd April, 2003 with the earlier two partners, the Appellant and the First and Third Respondents. About 33,24,400 shares of the Second Respondent were held in the name of Rajinder Singh. The case of the Appellant is that though these shares stood in the name of Rajinder Singh, the shares were purchased out of the funds of the partnership and the ownership of the shares has been reflected in the books and records of the partnership firm signed and acknowledged by Rajinder Singh during his lifetime. Upon the death of Rajinder Singh on 11th May, 2005 the shares were transmitted to the name of the First Respondent. 2. On 13th December, 2005 the First Respondent filed a company petition under Section 397 before the Principal Bench of the CLB at New Delhi. Upon the death of Rajinder Singh on 11th May, 2005 the shares were transmitted to the name of the First Respondent. 2. On 13th December, 2005 the First Respondent filed a company petition under Section 397 before the Principal Bench of the CLB at New Delhi. The Appellant and the Third Respondent filed an application under Section 111A challenging the transmission of shares to the name of the First Respondent. Both the petitions were disposed of by a judgment dated 14th February, 2007 of the CLB. By its judgment the CLB held that the resolution of the Board of Directors dated 5th December, 2005 for the retransmission of shares to the individual partners of the partnership firm viz. the Appellant and the First and Third Respondents would have to be set aside. The order of the CLB holds that the First Respondent validly held shares representing 43.38% of the capital and consequently, the First Respondent would be entitled to atleast two directors out of a total of five directors on the Board of the company who would be appointed at the next Annual General Meeting which was directed to be convened within a period of one month. The order stipulated that the First Respondent would continue to have “the same proportion of representation on the Board in the event of increase in the number of directors in future”. The petition under Section 111A of the Companies Act, 1956 was dismissed. The CLB held that the question as to the genuineness or otherwise of the supplementary partnership deed could not be enquired into for which the Respondents to the proceedings viz. the Appellant and the Third Respondent hereto would have to approach a Court of law for relief. 3. The order of the CLB was carried in appeal before this Court under Section 10F. During the course of the proceedings on 4th May, 2007 Consent Terms were filed before this Court in terms whereof the Company Appeal was disposed of. The Consent Terms record as follows: “1. A general meeting of Respondent No.2 Company will be held on 11/6/2007 at 11.00 a.m. at an agreed venue in Bombay to inter alia consider the ratification of the appointment of (i) Mr. Sandeep Ahluwalia and (ii) Mrs. Mandeep Pahwa Ahluwalia as directors. 2. The Consent Terms record as follows: “1. A general meeting of Respondent No.2 Company will be held on 11/6/2007 at 11.00 a.m. at an agreed venue in Bombay to inter alia consider the ratification of the appointment of (i) Mr. Sandeep Ahluwalia and (ii) Mrs. Mandeep Pahwa Ahluwalia as directors. 2. In view of the fact that the impugned order observes that the Appellant should agitate his grievances with regard to the disputed 33,24,400 shares in civil suit, the Appellants will be at liberty to file a suit within a period of 8 weeks in respect of the disputes arising in the Company Petitions filed before the Company Law Board. The suit and all proceedings therein will proceed without being in any manner influenced by the findings of the Company Law Board in any manner whatsoever. The directions contained in the impugned order regarding the appointment of Directors will be subject to orders passed in the suit or in any interlocutory proceedings therein. 3. Respondent No.1 for a period of eight weeks from the date of this order will not sell, alienate, pledge or create any third party rights of the disputed 33,24,400 shares which are pledged with I.D.B.I. in favour of any other third party except to discharge the dues of I.D.B.I.” 4. Prior to the passing of the order of this Court dated 4th May, 2007, but after the order of the CLB, the First Respondent and her daughter were appointed as additional directors at a meeting held on 8th March, 2007. 5. The Third Respondent instituted a suit before this Court on the Original Side in terms of the directions issued by the CLB on 14th February, 2007 in which a Motion for interlocutory relief was taken out. By the ad interim orders of this Court dated 7th June, 2007, 3rd July, 2007 and 24th July, 2007 an Annual General Meeting of the company which was scheduled to be held on 10th August, 2007 came to be deferred. Consequently, the exercise of rights under the said shares by the First Respondent came to be restrained. On 16th December, 2008 a Learned Single Judge of this Court dismissed the suit at the hearing of the Notice of Motion. The order of the Learned Single Judge was challenged in appeal by the Third Respondent. Consequently, the exercise of rights under the said shares by the First Respondent came to be restrained. On 16th December, 2008 a Learned Single Judge of this Court dismissed the suit at the hearing of the Notice of Motion. The order of the Learned Single Judge was challenged in appeal by the Third Respondent. During the pendency of the appeal, the interim orders were continued and the appeal was to be heard at the stage of admission. 6. The First Respondent called for the convening of an Annual General Meeting on 27th April, 2009. In the meantime, on 16th April, 2009 the Appellant issued a notice for the dissolution of the partnership, Muktanandan Corporation. The Appellant thereupon filed an arbitration petition before this Court under Section 9 of the Arbitration and Conciliation Act, 1996 inter alia for the appointment of a Receiver and for the grant of an injunction in respect of the books of account, goodwill and the assets of the firm including the corporate and legal benefits arising from the 33,24,400 shares of the company. The arbitration petition, the Court has been informed was heard until 2nd May, 2009 on a day to day basis. In the appeal filed by the Third Respondent against the dismissal of the suit, the Division Bench directed by an order dated 24th April, 2009 that the decisions in the AGM, will not be implemented till further orders. On 27th April, 2009 an AGM was held at which the First Respondent and her daughter were appointed as directors of the company. 7. The arbitration petition under Section 9 was allowed by a Learned Single Judge of this Court on 7th May, 2009. The Learned Single Judge held that prima facie the shares in question constituted property of the partnership firm and that Rajinder Singh held the shares on behalf of the firm. The Learned Single Judge entered a prima facie finding that those shares were never treated by him as his self acquired shares. Consequently, by the order of the Court the Court Receiver came to be appointed as Receiver in respect of the shares. The Learned Single Judge entered a prima facie finding that those shares were never treated by him as his self acquired shares. Consequently, by the order of the Court the Court Receiver came to be appointed as Receiver in respect of the shares. Pending the disposal of the arbitral proceedings and for a period of four weeks thereafter, the parties were restrained by an order of injunction from transferring, alienating, disposing of or creating any third party rights in respect of the assets and properties of the firm and from acting upon the corporate and legal benefits arising from the said shares. On 12th June, 2009 Surindra Engineering Limited, which is a shareholder of the Second Respondent requisitioned an Extra Ordinary General Meeting of the company on 8th August, 2009. On 13th July, 2009 when the appeal filed by the Third Respondent against the order of the Learned Single Judge dismissing the suit was heard, a Notice of Motion was moved by the First Respondent before the Division Bench for ad interim relief seeking stay of the convening and holding of the Extra Ordinary General Meeting on 8th August, 2009. No relief was granted on the Motion. Eventually by an order dated 23rd July, 2009 a Division Bench of this Court allowed the appeal and set aside the order of the Learned Single Judge dated 16th December, 2008 dismissing the suit. 8. An appeal was filed by the First Respondent challenging the judgment of the Learned Single Judge dated 7th May, 2009 on the petition under Section 9 of the Arbitration and Conciliation Act, 1996. The judgment was reserved in the appeal on 3rd August, 2009. Once again, an oral application was made before the Division Bench for postponing the Extra Ordinary General Meeting of the Second Respondent which was scheduled to take place on 8th August, 2009 by the advocate for the First Respondent. The prayer for the grant of a postponement of the Extra Ordinary General Meeting was not acceded to by the Division Bench. 9. On 3rd August, 2009 the Appellant was served with an application (Application 389 of 2009) purportedly filed by the First Respondent under Section 634A of the Companies Act, 1956 before the New Delhi Bench of the CLB. The prayer for the grant of a postponement of the Extra Ordinary General Meeting was not acceded to by the Division Bench. 9. On 3rd August, 2009 the Appellant was served with an application (Application 389 of 2009) purportedly filed by the First Respondent under Section 634A of the Companies Act, 1956 before the New Delhi Bench of the CLB. The notice mentioned that the First Respondent would be moving an application before the New Delhi Bench of the CLB on 4th August 2009 at 2.30 p.m. for the grant of relief. The relief that was sought in the application was the stay of the holding of the Extra Ordinary General Meeting of the company on 8th August, 2009 on the ground that the convening of the meeting is in violation and contravention of the order of the Principal Bench dated 14th February, 2009 in the petition under Sections 397 and 398 of the Companies Act, 1956. This Court has been informed that the application was heard by a member of the CLB at 2.30 p.m. on 4th August, 2009. Initially an order was passed staying the Extra Ordinary General Meeting on 8th August, 2009. But the Member of the CLB later scored off the signed sheet and placed the proceedings on 7th August, 2009 for hearing. On 5th August, 2009 an appeal under Section 10F was filed before this Court against the registration of Company Application 389 of 2009 and the entertainment of the application by the CLB. On 6th August, 2009 a Learned Single Judge of this Court recorded the submission of the Appellant that the application under Section 634A that was filed before the CLB was not maintainable inasmuch as the order of the CLB dated 14th February, 2007 of which execution was sought had merged with the order passed by this Court on 4th May, 2007 in the appeal under Section 10F. It was also contended that the Member who had passed the order dated 4th August, 2009 had no jurisdiction to entertain the application in view of the Company Law Board Regulations, 1991 read with an order dated 25th March, 2008 constituting Benches for the purposes of exercising and discharging powers and functions under the Act. It was also contended that the Member who had passed the order dated 4th August, 2009 had no jurisdiction to entertain the application in view of the Company Law Board Regulations, 1991 read with an order dated 25th March, 2008 constituting Benches for the purposes of exercising and discharging powers and functions under the Act. On behalf of the First Respondent it was urged before the Learned Single Judge that the Principal Bench of the CLB had jurisdiction to hear the application of the First Respondent and the order dated 4th August, 2009 was accordingly passed by the Principal Bench of the CLB. The Learned Single Judge, by his order dated 6th August, 2009 held that it was not appropriate to interfere with the order dated 4th August, 2009 since the application filed by the First Respondent had been fixed for hearing on 7th August, 2009. This Court also recorded that at the same time it was necessary to take notice of the fact that the Extra Ordinary General Meeting had been convened at the instance of a shareholder Surindra Engineering Limited which was not a party to the proceedings before the CLB. The CLB was directed by this Court to pass orders after considering all issues arising under the application including the issue pertaining to maintainability and jurisdiction and to issue atleast a reasoned prima facie finding by 5.00 p.m. on 7th August, 2009 as regards the holding of the Extra Ordinary General Meeting which was scheduled to take place at. 4.00 p.m. on 8th August, 2009. 10. The Member of the CLB, Mrs. Vimala Yadav, J., who had heard the proceedings on 4th August, 2009 was not available on 7th August, 2009. Accordingly the application was heard on 7th August, 2009 by another Member (Vasudevan J.). By his order dated 7th August, 2009 the Member of the CLB, while declining to grant an absolute stay on the holding of the Extra Ordinary General Meeting directed that the resolutions that may be passed at the meeting shall not be implemented until the proceedings in the suit before this Court and the arbitral proceedings were concluded. According to the Appellant a copy of the order was made available at 7.40 p.m. on 7th August, 2009 together with the attendance-cum-order sheet. According to the Appellant a copy of the order was made available at 7.40 p.m. on 7th August, 2009 together with the attendance-cum-order sheet. The Appellant has made a serious grievance of the fact that though when the attendance-cum-order sheet was signed by the advocates, the attendance sheet was of proceedings before the New Delhi Bench of the CLB, this was subsequently struck off by substituting the words “Principal” so as to read as if the proceedings and the hearing took place before the Principal Bench of the CLB. The Company Appeal has thereupon been listed before this Court. With the consent of the learned counsel, the Appeal has been taken up for hearing and final disposal. 11. Principally, on behalf of the Appellant, the jurisdiction of the CLB to entertain the application purportedly under Section 634A has been called into question. The submission of the Appellant before this Court has been that (i) the order passed by the CLB on 14th February, 2007 merged with the order of this Court dated 4th May, 2007 passed on an appeal under Section 10F and that consequently no application for execution of the order dated 14th February, 2007 could have been entertained; (ii) The Appeal was lodged before the New Delhi Bench of the CLB; pleadings and affidavits were filed before the New Delhi Bench on that basis and the appeal was heard and disposed of by Vasudevan, J. who was a Member of the New Delhi Bench. Vasudevan, J. was at the material time not a Member of the Principal Bench of the CLB and he would have no jurisdiction to entertain the application, even assuming that an application for the execution of the order dated 14th February, 2007 could lie before the Principal Bench of the CLB; (iii) The CLB which has been constituted under the provisions of Section 10E has provided for the distribution of work between its Benches. The distribution of work between the Benches is governed by the CLB Regulations, 1991 as amended in 2008. On 25th March, 2008 a statutory order has been issued by the CLB under Section 10E(4B) constituting Benches for the exercise and discharge of its powers and functions. The distribution of work between the Benches is governed by the CLB Regulations, 1991 as amended in 2008. On 25th March, 2008 a statutory order has been issued by the CLB under Section 10E(4B) constituting Benches for the exercise and discharge of its powers and functions. Under the regulations and the order dated 25th March, 2008 the Principal Bench had no jurisdiction whatsoever to entertain the application even assuming that it was an application for execution of the order dated 14th February, 2007. In any event, Vasudevan, J. was not a Member of the Principal Bench at the material point of time and was therefore not entitled to adjudicate upon the matter. 12. On behalf of the First Respondent it has been submitted that (i) The order of the CLB dated 14th February, 2007 did not as a matter of fact merge with the order of this Court dated 4th May, 2007, since the order of the CLB was neither set aside, modified or confirmed by this Court; (ii) Even assuming that there was a merger of the order of the CLB with the order passed by this Court on 4th May, 2007, even then an application for execution of the order dated 14th February, 2007 could only lie before the CLB in view of the provisions of Sections 37 and 38 of the Code of Civil Procedure, 1908; (iii) Upon the transfer of jurisdiction of the High Court under Sections 397 and 398 to the CLB, Rule 6 of the Company Court Rules will continue to apply and hence all applications for execution of orders passed by the CLB must be governed by the provisions of the CPC; (iv) The order dated 14th February, 2007 was passed by the Principal Bench of the CLB. On 25th March, 2008 an administrative direction was issued for the constitution of Benches and the concept of Regional Benches of the CLB was brought in for the first time thereby. When the application under Section 634A was filed by the First Respondent the Chairman who sits at Delhi was on leave between 22nd July and 7th August, 2009. Consequently, a notice was issued on 24th July, 2009 by the Registrar of the CLB to the effect that in his absence applications before him would be heard by the Member of the CLB. Consequently, a notice was issued on 24th July, 2009 by the Registrar of the CLB to the effect that in his absence applications before him would be heard by the Member of the CLB. This, it was urged, would mean that the Member who was present in Delhi during his absence. Consequently, the application was rightly heard by Vasudevan, J. who was a Member of the New Delhi Bench, though he heard it in the name of the Principal Bench; (v) Reliance was placed on the provisions of Regulations 3(2) and 3(3) and the definition of the expression “Bench” and “Member” in the regulations. The submission was that the orders passed by the CLB under Regulation 4 specifying matters which may be dealt with by the Regional Benches does not limit the inherent jurisdiction of the Principal Bench to hear matters assigned to the Regional Benches; (vi) In any event, the principle laid down in Section 21 of the Code of Civil Procedure would govern and an objection as regards the place of suing cannot be allowed to be taken unless it is taken in the court of first instance at the earliest possible opportunity and unless there has been a consequent failure of justice. In the present case it was urged that no material has been placed before the Court to establish that there is a consequent failure of justice; (vii) The orders passed by this Court in the arbitration petition under Section 9 and in the appeal arising out of the order of the Learned Single Judge contain only a prima facie finding that the shares in question though held by Rajinder Singh constitute an asset of the partnership. A Special Leave Petition has been filed before the Supreme Court which is pending. In the meantime, in the event that the Extra Ordinary General Meeting is allowed to proceed and the resolutions proposed thereon are passed, that would result in a change in the management of the company by the ouster of the First Respondent as a director of the company. This, it was submitted should not be allowed. 13. In dealing with the rival submissions it would at the outset be necessary for the Court to elucidate the statutory basis for the exercise of jurisdiction by the CLB and by its Benches. Section 10E of the Companies Act, 1956 provides for the constitution of the CLB. This, it was submitted should not be allowed. 13. In dealing with the rival submissions it would at the outset be necessary for the Court to elucidate the statutory basis for the exercise of jurisdiction by the CLB and by its Benches. Section 10E of the Companies Act, 1956 provides for the constitution of the CLB. Sub section (4B) of Section 10E provides that the Board may by an order in writing form one or more Benches from among its Members and authorize each such Bench to exercise and discharge such of the powers and functions of the Board as may be specified in the order. Every order or act done by a Bench in the exercise of such powers or the discharge of such functions shall be deemed to be the order or act, as the case may be, of the Board. Every Bench as referred to in sub section (4B) is conferred with certain specified powers which are vested in a civil Court while trying a suit, under the Code of Civil Procedure 1908 in respect of certain matters. In other words, what sub section (4B) of Section 10E emphasizes is that the Board is empowered to constitute Benches from amongst its Members. Each such Bench is authorized upon constitution to exercise and discharge such of the powers and functions of the Board, as may be specified in the order. 14. The CLB Regulations were notified in 1991 and came to be amended in 2008. Regulation 3 provides that subject to Regulation 4 every Bench of the Board formed under sub section (4B) of Section 10E may consist of one or more Members. The order of the Chairman forming a Bench shall specify the powers which shall be exercised and functions which shall be discharged by the Bench. Consequently, once a Bench has been constituted and formed the powers and functions which are to be exercised or, as the case may be, discharged are structured by the order of the Chairman constituting the Bench. Under sub Regulation (3) of Regulation 3, the Chairman in relation to each Bench formed has to specify the Member of the Bench before whom every matter requiring the decision of the Board (otherwise than a matter affecting the final disposal of the petition) shall be placed for orders. Under sub Regulation (3) of Regulation 3, the Chairman in relation to each Bench formed has to specify the Member of the Bench before whom every matter requiring the decision of the Board (otherwise than a matter affecting the final disposal of the petition) shall be placed for orders. In the absence of the Member so specified every such matter has to be placed before any other Member of the Bench who is present. The expression “Bench” is defined by Regulation 2(e) to mean that a Bench of the Board and to include the Principal Bench, Additional Principal Bench and a Member sitting singly. The expression “Member” is defined by Regulation 2(m) to mean a Member whether technical or judicial of the Board and to include the Chairman and Vice Chairman. 15. Regulation 4 provides that it shall be lawful for the Chairman to provide that matters falling under Sections 247, 250, 269, 388B of the Act and under Section 2A of the Monopolies and Restrictive Trade Practices Act, 1969 shall be dealt with by the Principal Bench. Sub regulation (3) of Regulation 4 postulates that it shall be lawful for the Chairman to provide that matters falling under all other Sections of the Act shall be dealt with by Regional Benches viz. by the Benches at New Delhi, Chennai, Kolkata and Mumbai. The exception in the proviso to sub regulation (3) is that matters which were pending before the Principal Bench and Additional Principal Bench as on 1st April, 2008 shall continue to be disposed of in the name of the Principal Bench and Additional Principal Bench respectively. The Chairman has been conferred the power to transfer any matter pending before the Regional Benches to the Principal Bench either upon the request of all the parties or for other reasons which have to be recorded in writing. Regulation 7 provides that all proceedings other than proceedings before the Principal Bench under Regulation 4 shall be instituted before the Bench within whose jurisdiction the registered office of the company is situated. 16. Under the provisions of the Regulations, the CLB discharges its judicial functions through Benches. The Principal Bench at New Delhi is now a Bench with a stipulated jurisdiction covering certain specific provisions of the Companies Act, 1956 and of the MRTP Act 1969. 16. Under the provisions of the Regulations, the CLB discharges its judicial functions through Benches. The Principal Bench at New Delhi is now a Bench with a stipulated jurisdiction covering certain specific provisions of the Companies Act, 1956 and of the MRTP Act 1969. The Regional Benches are vested with the residuary jurisdiction to adjudicate upon matters falling under all other Sections of the Act, save and except for those upon which the jurisdiction has been conferred upon the Principal Bench. Consequently, it is evident that proceedings under Sections 397 and 398 of the Companies Act, 1956 not being specifically assigned to the Principal Bench of the CLB, fall squarely within the jurisdiction of the Regional Benches. Which Regional Bench would be vested with the jurisdiction to adjudicate upon a particular case would depend upon where the registered office of the company is situated. That is because proceedings other than those before the Principal Bench have to be instituted before the Bench within whose jurisdiction the registered office of the company is situated. Undoubtedly, under Regulation 3(3) the Chairman is empowered to specify the Member of the Bench before whom every matter requiring decision (otherwise than for final disposal) shall be placed for orders. In the absence of the Member so specified, a matter can be placed before any other Member of the Bench who is present. The expression “Bench” obviously would mean a Member of the particular Bench which is assigned the jurisdiction to entertain and try matters of that description. 17. On 25th March, 2008 the CLB constituted Benches by issuing a statutory notification in exercise of powers conferred by sub section (4B) of Section 10E read with Regulation 4. For the purposes of these proceedings it would be appropriate to extract the text of the notification in its entirety. 17. On 25th March, 2008 the CLB constituted Benches by issuing a statutory notification in exercise of powers conferred by sub section (4B) of Section 10E read with Regulation 4. For the purposes of these proceedings it would be appropriate to extract the text of the notification in its entirety. The notification reads as follows : “In exercise of the powers conferred by Sub-Section 4(B) of Section 10(E) of the Companies Act, 1956 (1 of 1956) read with Regulation 4 of Company Law Board Regulation, 1991, amended from time to time and in supercession of all earlier orders, the Company Law Board hereby constitutes the following Benches for the purpose of exercising and discharging its powers and functions in the manner specified below:- (a) Matters pending before the Principal Bench as on 31st March 2008 shall be dealt with by Principal Bench consisting of any one of the following:- 1. Shri S. Balasubramanian, Chairman 2. Shri K.K. Balu, Vice Chairman 3. Smt. Vimla Yadav, Member 4. Shri Kanthi Narahari, Member 5. Shri V.S. Rao, Member (b) Matters pending before the Additional Principal Bench as on 31st March 2008 shall be dealt with by the Additional Principal Bench at Chennai consisting of any one of the following:- 1. Shri S. Balasubramanian, Chairman 2. Shri K.K. Balu, Vice Chairman 3. Shri Kanthi Narahari, Member (c) From 1st April, 2008 onwards the Constitution of the following Benches shall be as under: (1) Matters relating to sections 247, 250, 269 and 388B of the Act and under Section 2A of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) shall be dealt by Principal Bench at New Delhi consisting of any one of the following: 1. Shri S. Balasubramanian, Chairman 2. Shri K.K. Balu, Vice Chairman (2) Matters relating to all Sections except 247, 250, 269 and 388B of the Act and under Section 2A of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) shall be dealt by New Delhi Bench consisting of any one of the following: 1. Smt. Vimla Yadav, Member 2. Shri S. Balasubramanian, Chairman (3) Matters relating to all Sections except 247, 250, 269 and 388B of the Act and under Section 2A of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) shall be dealt by Kolkata Bench consisting of any one of the following: 1. Shri S. Balasubramanian, Chairman 2. Smt. Vimla Yadav, Member 2. Shri S. Balasubramanian, Chairman (3) Matters relating to all Sections except 247, 250, 269 and 388B of the Act and under Section 2A of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) shall be dealt by Kolkata Bench consisting of any one of the following: 1. Shri S. Balasubramanian, Chairman 2. Shri K.K. Balu, Vice Chairman (4) Matters relating to all Sections except 247, 250, 269 and 388B of the Act and under Section 2A of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) shall be dealt by Mumbai Bench consisting of any one of the following: 1. Shri V.S.Rao, Member 2. Shri S. Balasubramanian, Chairman (5) Matters relating to all Sections except 247, 250, 269 and 388B of the Act and under Section 2A of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) shall be dealt by Chennai Bench consisting of any one of the following: 1. Shri K.K. Balu, Vice Chairman 2. Shri Kanthi Narahari, Member 3. Shri S. Balasubramanian, Chairman 2. The Benches may, at their discretion, hold sittings in any other city or town falling within their respective geographical jurisdiction or any other place outside their jurisdiction with the consent of the parties. 3. Any Bench may, if deemed necessary, instead of disposing the case by itself, refer the matter to the Principal Bench for joint consultation and disposal.” 18. The notification dated 25th March, 2008 clearly specifies that matters which were pending before the Principal Bench as on 31st March, 2008 shall be dealt with by the Principal Bench consisting of five specified Members. In the present case it is necessary to note the admitted position that the petition under Section 397 had been disposed of by the CLB on 14th February, 2007. No proceeding was pending before the Principal Bench as on 31st March, 2008. The second important facet that may be noted is that Vasudevan, J. was not a Member of the Principal Bench as notified on 25th March, 2008. It may be noted that Vasudevan, J. came to be appointed as a Member of the Principal Bench by a notification issued by the Government of India on 14th September, 2009, much after he passed the impugned order on 7th August, 2009. It may be noted that Vasudevan, J. came to be appointed as a Member of the Principal Bench by a notification issued by the Government of India on 14th September, 2009, much after he passed the impugned order on 7th August, 2009. On the date of the impugned order Vasudevan J. was admittedly not a Member of the Principal Bench. With effect from 1st April, 2008 the constitution of Benches came to be governed by the statutory order dated 25th March, 2008. The order specifies that matters relating to Sections 247, 250, 269 and 388B of the Act and Section 2A of the MRTP Act, 1969 fall within the purview of the Principal Bench. The two Members of the Principal Bench were notified to be (i) S. Balasubramanian – Chairman and (ii) K.K. Balu – Vice Chairman. Matters other than those falling under the aforesaid Sections of the Companies Act, 1956 and of the MRTP Act, 1969 are to be heard by the Regional Benches at New Delhi, Kolkata, Mumbai and Chennai. Consequently, on and from 1st April, 2008 the Principal Bench at New Delhi ceased to have any jurisdiction whatsoever to adjudicate upon matters arising under Sections 397 and 398 of the Companies Act, 1956. 19. The facts as they have emerged from the record of these proceedings clearly establish the following: 1] The Company Application that was filed by the First Respondent was instituted before the New Delhi Bench of the CLB; 2] The Company Application was initially heard by Mrs. Vimla Yadav, J. who was a Member only of the New Delhi Bench with effect from 1st April, 2008; 3] Affidavits were filed by the Appellant as well as by the First Respondent before the New Delhi Bench of the CLB; 4] The impugned order that was passed by Vasudevan, J. clearly spells out in paragraph 18 that the application had been made before the New Delhi Bench. The order erroneously states that the case was originally heard by the Chairman, but goes on to state that it was later taken on by a Member of the New Delhi Bench. Vasudevan, J. was on 7th August, 2009 not a Member of the Principal Bench. The Company Application was filed for execution of the order dated 14th February, 2007 passed by the Principal Bench of the CLB. Vasudevan, J. was on 7th August, 2009 not a Member of the Principal Bench. The Company Application was filed for execution of the order dated 14th February, 2007 passed by the Principal Bench of the CLB. The application was filed before the New Delhi Bench and was heard initially by Mrs. Vimla Yadav, J. and by Vasudevan, J. subsequently. Neither of them were Members of the Principal Bench. Yet the title of the order of the CLB purports to state that the proceeding was before the CLB, Principal Bench, New Delhi. If the application for execution was filed on the basis that execution was sought of an order passed by the Principal Bench on 14th February, 2007, it is inexplicable as to how it was heard and decided by the New Delhi Bench of the CLB. 20. An effort was made to urge before this Court that the Chairman of the CLB was absent from judicial work from 27th July, 2009 to 7th August, 2009. A notice was issued by the Bench Officer of the CLB on 24th July, 2009, notifying the absence of the Chairman and stating that the mentioning of new petitions / applications shall be made before “Hon’ble Member on the mentioning days during the absence of Hon’ble Chairman”. A notice by the Bench Officer can by no stretch of imagination be construed as conferring jurisdiction on Vasudevan, J. to hear and dispose of an application purportedly for the execution of an order passed by the Principal Bench of which he was admittedly not a Member. 21. The effort which has been made before the Court on behalf of the First Respondent to rely upon the provisions of Rule 6 of the Companies (Court) Rules 1959 suffers from a clear error of approach. The Companies (Court) Rules 1959 govern the practice and procedure before the Company Court. Rule 6 of the Companies (Court) Rules provides as follows: “R.6. Practice and Procedure of the Court and provisions of the Code to apply - Save as provided by the Act or by these rules, the practice and procedure of the Court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and these rules. The Registrar may decline to accept any document which is presented otherwise than in accordance with these rules or the practice and procedure of the Court.” 22. The Registrar may decline to accept any document which is presented otherwise than in accordance with these rules or the practice and procedure of the Court.” 22. Rule 6 is prefaced by the words “save as provided by the Act or by these rules”. Rule 6 also provides that the provisions of the Code so far as applicable – shall apply to all proceedings under the Act and the Rules. In other words, Rule 6 of the Companies Court Rules is subject to an express provision that is made by the Act and is subject to those provisions. Sections 634 and 634A of the Companies Act, 1956 make a specific provision for the execution of orders. Section 634 provides that any order made by a Court under the Act may be enforced in the same manner as a decree made by the Court in a suit pending therein. Section 634A deals with enforcement of orders of the CLB and provides that any order made by the Board may be enforced by that Board in the same manner as if it were a decree made by a Court in a suit pending therein. It is lawful for the Board to send, in the case of its inability to execute the order to the Court within the local limits of whose jurisdiction, in case of an order against a company, the registered office of the company is situated. Reference may be made in this connection to the judgment of the Supreme Court in Stridewell Leathers (P) Ltd. v. Bhankerpur Simbhaoli Beverages (P) Ltd. (1994) 1 SCC 34 ). The Supreme Court held that appeals against orders passed even by the Principal Bench of the CLB at New Delhi would have to be filed and entertained under Section 10F only in the High Court where the registered office of the company is located and not in the Delhi High Court even though the order may have been passed in Delhi. The Court held that the expression “the High Court” in Section 10F of the Companies Act, 1956 means the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situated as indicated by Section 2(11) read with Section 10(1)(a) of the Act. The Court held that the expression “the High Court” in Section 10F of the Companies Act, 1956 means the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situated as indicated by Section 2(11) read with Section 10(1)(a) of the Act. Accordingly in that case an appeal against the order of the CLB was held to lie before the Madras High Court which had jurisdiction in relation to the place at which the registered office of the company concerned was situated and not the Delhi High Court merely because the order was made by the CLB at Delhi. The Companies Act, 1956 is a comprehensive code defining inter alia the constitution of the CLB, the exercise of jurisdiction by the CLB and the appellate jurisdiction of the High Court under Section 10F. The special provisions of the Companies Act, 1956 in relation to the filing of appeals and the execution of orders must alone be looked at as opposed to the general principles which are contained in the Code of Civil Procedure 1908. 23. The reliance that has been placed on Section 21 of the Code of Civil Procedure, 1908 is misconceived. Section 21 postulates that no objection as to the competence of the executing Court with reference to the local limits of its jurisdiction shall be allowed by any appellate or revisional Court unless such objection was taken in the executing Court at the earliest possible opportunity and unless there has been a failure of justice. These provisions have been construed in the judgment of the Supreme Court in Harshad Chiman Lal Modi v. DLF Universal Ltd. (2005) 7 SCC 791 ). The Supreme Court held that jurisdiction of a Court consists of (i) territorial or local jurisdiction; (ii) pecuniary jurisdiction and (iii) jurisdiction over the subject matters. Insofar as territorial and pecuniary jurisdiction is concerned, an objection which is not taken at the earliest possible opportunity cannot be allowed to be taken at a subsequent stage. Jurisdiction over a subject matter however stands on a different footing and where a Court has no jurisdiction over a subject matter of a suit by reason of a limitation imposed by a statute, charter or commission it cannot take up the cause or matter. Jurisdiction over a subject matter however stands on a different footing and where a Court has no jurisdiction over a subject matter of a suit by reason of a limitation imposed by a statute, charter or commission it cannot take up the cause or matter. An order passed by a Court having no jurisdiction would be a nullity and neither consent nor waiver or acquiescence can confer jurisdiction upon a Court. 24. That leads the Court to the question as to whether it was at all open to the First Respondent to file an application before the CLB for enforcement of the order dated 14th February, 2007. The submission of the First Respondent is that there was no merger of the order dated 14th February, 2007 in the subsequent order of this Court dated 4th May, 2007. Consequently it has been urged before the Court that the application for execution of the order dated 14th February, 2007 was competent and was correctly made to the CLB at New Delhi. Now as already noted earlier, by its order dated 14th February, 2007 the CLB held that the First Respondent was on the basis of a valid holding of 43.38% of share capital entitled to atleast two directors out of a total of five on the Board and who are liable to be appointed at the next Annual General Meeting. The judgment of the CLB was carried in appeal under Section 10F of the Act. The order of this Court dated 4th May, 2007, to which a reference has already been made earlier, provides that during the pendency of the appeals parties arrived at a mutually acceptable solution and Consent Terms which had been agreed upon have been placed on the record. The Company Appeal was disposed of in terms of the Consent Terms. The Consent Terms provide that a General Meeting of the company would be held to consider the ratification of the appointment of the First Respondent and her daughter. The Third Respondent was in view of the order passed by the CLB granted liberty to file a suit to agitate his grievance in regard to 33,24,400 shares which were in dispute. The Consent Terms provide that a General Meeting of the company would be held to consider the ratification of the appointment of the First Respondent and her daughter. The Third Respondent was in view of the order passed by the CLB granted liberty to file a suit to agitate his grievance in regard to 33,24,400 shares which were in dispute. The Consent Terms provide that the suit and all proceedings therein would proceed without being influenced by the observations of the CLB and that the directions contained in the order of the CLB regarding the appointment of directors would be subject to the orders that may be passed in the suit or in any interlocutory proceedings therein. The Appeal was disposed of in terms of the agreed understanding “without prejudice to the rights and contentions of the parties”. In other words, the consequence of the order of this Court dated 4th May, 2007 was that the entire issue relating to the shareholding comprising 33,24,400 shares would abide by the result of the suit which was to be instituted in pursuance of the observations contained in the order of the CLB. Consequently even the directions entitling the First Respondent to the appointment of two out of five directors was subject to the orders that may be passed in the suit or in any interlocutory proceedings therein. The order of this Court confirms in certain respects the directions issued by the CLB but makes it clear that those directions would have to abide by an adjudication that may be rendered in a duly constituted proceeding referred to in the Consent Terms. Once the order passed by this Court on 4th May, 2007, albeit with the consent of the parties, came to hold the field there was no occasion to enforce the order of the CLB by filing an application for the execution of the order dated 14th February, 2007. 25. The Supreme Court held in Gojer Bros (Pvt.) Ltd. v. Ratan Lal Singh (1974) 2 SCC 453 ) that “the juristic justification of the doctrine of merger may be sought in the principle that there cannot be, at one and the same time, more than one operative order governing the same subject-matter”. 25. The Supreme Court held in Gojer Bros (Pvt.) Ltd. v. Ratan Lal Singh (1974) 2 SCC 453 ) that “the juristic justification of the doctrine of merger may be sought in the principle that there cannot be, at one and the same time, more than one operative order governing the same subject-matter”. The Supreme Court held that the judgment of an inferior court, if it is subject to an examination by a superior court, ceases to have existence in the eye of law and is treated to have been superseded by the judgment of the superior court. In paragraphs 17 and 19 of the judgment the Supreme Court laid down the principle in the following terms: “An application of this very principle yields the result that if the court of appeal confirms, varies or reverses the decree of the lower court, the decree of the appellate court is the only decree that can be amended Brij Narain v. Tejbal Bikram, (1910) 37 IA 70 : ILR 32 All 295); or that the limitation for executing a decree runs from the date of the decree capable of execution and that is the decree of the appellate court which supersedes that of the court of first instance Jowad Hussain v. Gendan Singh, 53 IA 197 : AIR 1926 PC 63 : 51 MLJ 781); or that if mesne profits are ordered from the date of suit until the expiry of three years after the date of the decree, the decree to be considered is the decree capable of execution so that if the decree of the trial Court is confirmed in appeal, three years will begin to run from the date of the appellate decree Bhup Indar v. Bijai, (1900) 27 IA 209 : ILR 23 All 152 : 5 CWN 52). ... The fundamental reason of the rule that where there has been an appeal, the decree to be executed is the decree of the appellate court is that in such cases the decree of the trial Court is merged in the decree of the appellate Court. ... The fundamental reason of the rule that where there has been an appeal, the decree to be executed is the decree of the appellate court is that in such cases the decree of the trial Court is merged in the decree of the appellate Court. In course of time, this concept which was originally restricted to appellate decrees on the ground that an appeal is a continuation of the suit, came to be gradually extended to other proceedings like revisions and even to proceedings before quasi-judicial and executive authorities.” The same principle has been reiterated in the subsequent judgment in Kunhayammed v. State of Kerala (2000) 6 SCC 359 ). Propositions 1 and 3 enunciated in the judgment of the Supreme Court are relevant to the question involved in this case and are as follows: “(i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law. .... (iii) The doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it.” 26. The doctrine of merger must apply to an appellate judgment of the High Court rendered in an appeal under Section 10F of the Companies Act, 1956. The doctrine of merger is applicable where the appellate court or the court of superior jurisdiction is capable of reversing, modifying or affirming the order put in issue before it. Clearly under Section 10F the High Court in an appeal is vested statutorily with the jurisdiction to affirm, modify, vary or reverse a judgment of the CLB. The doctrine of merger applies as a consequence. Upon the order of this Court dated 4th May, 2007, the order of the CLB merged with the final direction that was issued by this Court. The doctrine of merger applies as a consequence. Upon the order of this Court dated 4th May, 2007, the order of the CLB merged with the final direction that was issued by this Court. There was in that situation no basis whatsoever for the First Respondent to file an application for the enforcement ostensibly of the directions contained in the order of the CLB dated 14th February, 2007. 27. The CLB by its order impugned in these proceedings has declined to injunct the holding of the Extra Ordinary General Meeting but has nonetheless proceeded to issue a direction that the resolutions that may be passed at the meeting shall not be enforced pending the disposal of the suit and the arbitral proceedings. In the view which has already been taken by this Court, the order passed by the CLB was wholly without jurisdiction and would have to be quashed and set aside on that ground alone. But, in order to render a complete determination, it would be necessary for this Court to observe that the basis on which the CLB proceeded to issue an order of restraint on the enforcement of the resolutions that may be passed at the meeting, pending the disposal of the suit and the arbitral proceedings is specious. The attention of the CLB was drawn to the orders passed by the Learned Single Judge of this Court and by the Division Bench in appeal in the proceedings instituted under Section 9 of the Arbitration and Conciliation Act, 1996. As a consequence of the orders passed in the proceedings under Section 9 the Court Receiver has been appointed as Receiver of the 33,24,400 shares among all the assets of the partnership firm and a prima facie finding has been arrived at to the effect that the shares, though they stood in the name of Rajinder Singh constituted an asset of the partnership. These findings, prima facie, though they are continue to operate and hold the field, unless they are set aside in appeal. The CLB as a tribunal which is subject to the jurisdiction of this Court was required by norms of judicial discipline to follow, interpret and apply the orders passed by the Learned Single Judge and by the Division Bench in appeal. That the CLB has chosen not to do so discloses a lack of judicial discipline. 28. The CLB as a tribunal which is subject to the jurisdiction of this Court was required by norms of judicial discipline to follow, interpret and apply the orders passed by the Learned Single Judge and by the Division Bench in appeal. That the CLB has chosen not to do so discloses a lack of judicial discipline. 28. The manner in which the proceedings were entertained by Vasudevan, J. who had clearly no jurisdiction to entertain the proceedings in the first place leaves much to be desired. Once the jurisdiction of diverse Benches of the CLB is structured and governed by the regulations framed under Section 10E and by the statutory notification dated 25th March, 2008, every Member of the CLB is bound to ensure that he acts strictly within the folds of the powers which are conferred upon him and does not bypass those powers. The credibility of every judicial institution lies in a restrained exercise of power and in the exercise of power which conforms to the law which regulates the conferment and the structure of its jurisdiction. Judges above all are bound by the law and as upholders of the law they are liable to erode public confidence in the administration of justice if they act in a manner in which Vasudevan J. acted in these proceedings. The consequence of the order passed by the Member of the CLB would be to obstruct the effective exercise of rights by a shareholder of the company from seeking recourse to his remedy of convening an Extra Ordinary General Meeting and for seeking enforcement of the resolutions that may be passed at such a meeting. In Life Insurance Corporation of India v. Escorts Ltd. (1986) 1 SCC 264 ) the Supreme Court affirmed the right of every shareholder to convene a meeting including a meeting for the removal of a director. The right of a shareholder to convene and hold such a meeting cannot be questioned. Judicial intervention in such matters particularly by a Bench which had no jurisdiction to entertain the proceedings justifiably gives rise to a feeling of grave disquiet. This Court must with a measure of restraint observe that the provisions of the regulations ought to have been observed by the Member of the CLB. Unfortunately they were not. 29. In the circumstances, the appeal would have to be allowed and is accordingly allowed. This Court must with a measure of restraint observe that the provisions of the regulations ought to have been observed by the Member of the CLB. Unfortunately they were not. 29. In the circumstances, the appeal would have to be allowed and is accordingly allowed. The order passed by the CLB on 7th August, 2009 is set aside. In the circumstances, Application 389 of 2009 shall stand dismissed. The application for stay is refused.