Hon'ble MAHESHWARI, J.—This appeal under Section 10-F of the Companies Act, 1956 (‘the Act’) is directed against the order dated 15.09.1997 whereby the Company Law Board, Principal Bench, New Delhi (‘the CLB’), while dealing with the company petition filed by the petitioner Shri Mahendra Singh Mewar (the respondent No.1 herein) under Sections 397 and 398 of the Act in relation to the affairs of the respondent No. 2 company, Lake Palace Hotels and Motels Ltd. (formerly Lake Palace Hotels and Motels Pvt. Ltd.), held that the interest-free financial assistance to the tune of Rs. 55 lacs, as provided by the respondent No. 2 company to the appellant company, Lake Shore Palace Hotel Pvt. Ltd, under a ‘common facilities’ agreement dated 30.09.1983, was prejudicial to the former and its members; and, even while noticing that the agreement had since been terminated and the amount repaid, directed that the respondent No. 2 company shall take action to recover interest from the appellant company at the then prevailing bank rates on the outstanding loan amount after adjusting for repayment from time to time and share of profits, if any passed on. 2. In brief, the facts and the background aspects, so far relevant for the present appeal, could be noticed as follows: The respondent No. 1 filed the aforesaid company petition before the CLB on 03.06.1993 as a member of the respondent No.2 company with reference to Sections 397 and 398 of the Act while alleging particularly that various acts and omissions of the persons in charge of the affairs of the company were leading to oppression of the minority shareholders and to mismanagement. It is noticed that on the similar nature allegations, the respondent No.1 earlier filed one company petition under Sections 397/398 of the Act in this Court that remained pending for about seven years and then, was withdrawn in order to avail of a more efficacious remedy before the CLB. Though the said company petition before the CLB was filed by the respondent No.1 on various grounds, but some of them were given up during the course of arguments while some other have been decided against him in the impugned order dated 15.09.1997. However, the ground relating to the aforesaid agreement dated 30.09.1983 has been accepted in part and thereupon, the CLB has passed the order impugned against the appellant company for recovery of interest. 3. However, the ground relating to the aforesaid agreement dated 30.09.1983 has been accepted in part and thereupon, the CLB has passed the order impugned against the appellant company for recovery of interest. 3. The CLB took note of the various grounds taken, and eleven different prayers made, in the petition but the final submissions having been confined to the following four prayers:- “1. Framing a scheme for the management and control of the company so that R-2 (respondent No. 3 herein) is divested of his power to control. 2 to 8. (not pressed) 9. Ordering refund of Rs. 55 lakhs taken by R-3 (the appellant herein) through a prejudicial agreement with the company and to declare that such act was without authority. 10. Appointing a Special Auditor to audit the books of accounts of the company for the past years. 11. To pass such orders to bring to an end the matters complained of.” 4. The CLB also took note of the crux of the allegations ultimately pressed on behalf of the petitioner in the following:- “The two allegations which were ultimately pressed on behalf of the petitioner relate to (a) clandestine manipulation of accounts, fraudulent inflation of expenses and misappropriation of funds (b) misuse of the position by R-2 and other directors for entering into an agreement with R-3 wholly prejudicial and against the interest of the company. In addition, the allegation of investment of substantial funds of the company in other companies were also considered as part of the ground for the prayer for investigation and appointment of a special auditor.” 5. As regards the first major allegation about manipulation of accounts, inflation of expenses, misappropriation of funds etc., and the prayer for special audit, the CLB, after analysis of the factual aspects available on record, rejected the contentions urged on behalf of the petitioner; and concluded as under:- “......In view of the above, we are fully satisfied that there is no room for any doubt as to the genuineness of the expenses and no ground exists for coming to a conclusion that a special audit is warranted, especially in the absence of any concrete details provided by the petitioners to the contrary other than expressing certain doubts.” 6. The CLB, thereafter, proceeded to examine the other contention regarding the agreement dated 30.09.1983 as entered into between the appellant company and the respondent No. 2 company whereby and whereunder, certain facilities were required to the offered by the appellant and the respondent No. 2 was to advance an amount of Rs. 55 lacs, repayable in 30 years with provision for profit sharing out of the common facilities. 7. It was contended on behalf of the petitioner that under the agreement in question, money was spent to facilitate, help and improve the activities of a competitor to the prejudice of the company; that the ownership of the facilities to be developed was to remain with the other company and continuation of the facilities after termination of the agreement was uncertain; that a interest-free advance of Rs.55 lacs over a period of 30 years without casting any obligation on the other company would cost the advancing company about Rs.35.84 crores by way of loss of interest; that the company had, in fact, spent a sum of Rs.50.78 lacs between April to June of the year 1982 which was debited to the account of the other company based on a purported resolution dated 29.12.1981; and that the company having spent much before entering into the agreement, caused loss of interest to the tune of Rs.7.16 lacs. With reference to these facts, the petitioner-respondent No.1 contended that the agreement in question was nothing but a device to divert the funds of the advancing company though it had borrowed Rs.2.14 crores from a private trust on interest at the rate of 15% per annum. The agreement, according to the petitioner, was commercially inexpedient and wholly one sided; and the terms thereof were against the interest of the advancing company and its shareholders. It was also stated by the petitioner that no facilities were actually created as per the agreement and only after institution of the petition that the respondent company proceeded to take some action. 8. The submissions of the petitioner were replied on behalf of the advancing company in the manner that the petitioner had the notice of the meetings dated 25.06.1983 and 30.09.1983 where the agreement in question was finally approved. 8. The submissions of the petitioner were replied on behalf of the advancing company in the manner that the petitioner had the notice of the meetings dated 25.06.1983 and 30.09.1983 where the agreement in question was finally approved. It was stated that the Department of Tourism, Government of India, which had classified Lake Palace Hotel in Five Star Deluxe Category, withdrew such classification in the year 1973; and the company was required to file a fresh application for being rated in Five Star Deluxe Category. For this purpose, according to the respondent, certain compulsory and essential services and amenities were to be provided but for the hotel being located on an island, the company could not possibly provide for such facilities like proper swimming pool, beauty parlour, health club, indoor and outdoor recreation etc.; that the process of renovation and upgradation was undertaken in the year 1982 but there was no space to provide for the above facilities and acquiring the facilities outside the island would have involved very heavy expenditure and inconvenience. It was asserted that during this period, since the appellant company was developing a Five Star Deluxe Hotel across the lake, it was considered worthwhile and expedient to make an arrangement for sharing some of the facilities; and in this context, the agreement in question was entered into so that the hotel could be saved from degradation. However, subsequently, as the appellant company was unable to provide all the required facilities and the advancing company did not get sufficient returns, the agreement was mutually altered so that repayment of Rs.2 lacs every year could be obtained and payment of charges amounting to Rs.2 lacs, to be paid annually by the advancing company for sharing the facilities, was waived. It was asserted that since the year 1984-85, repayment was being made at Rs.2 lacs per annum and the advancing company was also getting half share of the income accruing to the other company by use of some of the facilities created by the agreement. The answering respondent further pointed out that in the month of October 1993, it was decided to terminate the agreement; and after notice and deliberations, ultimately one year’s time was granted for repayment. 9. The answering respondent further pointed out that in the month of October 1993, it was decided to terminate the agreement; and after notice and deliberations, ultimately one year’s time was granted for repayment. 9. After taking note of the stand of the contesting parties and the features of the agreement in question, the CLB formed the opinion that the so-called common facilities were not made available to the advancing company (the respondent No.2); and that duration of loan, of 30 years, was also unduly long and for this entire period, the respondent No.2 had to bear the expenses running in crores of rupees while it was borrowing money at the market rate of interest. Though the facts were given out that the agreement had already been terminated and entire loan repaid, the CLB, however, considered it appropriate that the respondent No.2 should be compensated by way of interest on the outstanding loan for the entire period from the year 1983 until the date of repayment at the rate of interest at which the funds were borrowed after adjustment for any share of profit already passed on. An argument was raised that the concluded contract could not be questioned in the petition under Section 397/398 of the Act and no modification in the agreement with third party could be made without its consent to which, the CLB observed that the respondent No.2 before it (respondent No.3 herein) was having substantial interest in the appellant company as well; that the agreement had had a continuing adverse effect on the advancing company due to the interest liability; and that the appellant company had been a party to the proceedings; and further that the full amount was liquidated only during the pendency of the proceedings. The CLB though found no case for ordering special audit but considered it proper to issue directions with regard to payment of interest by the appellant company. The considerations, observa-tions, findings, and the directions of the CLB in this regard read as under:- “Intercorporate loans and investments by private companies are not very closely regulated by company law as it is done in case of public companies. In other words the law is comparatively relaxed as far as private companies are concerned. The considerations, observa-tions, findings, and the directions of the CLB in this regard read as under:- “Intercorporate loans and investments by private companies are not very closely regulated by company law as it is done in case of public companies. In other words the law is comparatively relaxed as far as private companies are concerned. In this case the company appears to have obtained the approval of the board of directors at a meeting for which due notice was stated to have been served on the petitioner, he being a director of the company at that time. Though, normally, such intercorporate loans of private companies are not critically looked into, when such transaction is being questioned in a petition under Sec 397/398, it is necessary to consider whether any prejudice is caused to the company or members concerned. Though the board of directors is the best judge in taking commercial decisions in a company, any transaction in which malafide is alleged in a proceeding under Sec 397/398, the details of such transaction have to be looked into. From the details, if it is found that if any undue benefit accrues to any one at the expense of the company, the matter has to be tested strictly on merits. In the present case, the petitioner is a shareholder in R-1 company. R-3 company is a private company in which petitioner has no interest but the Managing Director and two other Directors have interest. If a transaction of interest free loan though approved by the board of directors is entered into, the financial implications of such transaction on the company have to be matched with a corresponding benefit which can accrue to that company. The respondents in this case, have tried to justify, that the interest free loan is against certain facilities which are to be availed of from R-3 company. It ultimately has transpired that all facilities of that kind have not been created which could be availed of by R-1 company. This is also evident from the auditors report which we have studied in respect of the year 1988-89, which clearly states that the R-3 company does not possess many facilities. If these facilities are essential and such facilities were actually availed and utilized by R-1 company there was no need for terminating the agreement in 1993 as it has been done. If these facilities are essential and such facilities were actually availed and utilized by R-1 company there was no need for terminating the agreement in 1993 as it has been done. Even the termination should not have been deferred upto 1993, if the facilities were not available at all. In the circumstances it is clear that interest free financial assistance was provided to R-3 at the cost of R-1 company which is unfair and prejudicial to both R-1 company and its members. The duration of the loan of 30 years is also unduly long and for this entire period R-1 company had to bear interest which runs into crores of rupees. It is also established that while R-1 company extended the interest free loan it was simultaneously borrowing money at market rates of interest. In the circumstances, even though the entire loan has now been repaid, it is appropriate that R-1 company should be compensated by way of interest on the outstanding loans for the entire period from 1993 till the date of repayment at the same rate of interest at which it had borrowed funds from the banking system after adjusting for any share of profits already passed on. Accordingly we direct R-1 shall immediately take action to recover from R-3, interest at the then prevailing bank rates on the outstanding loan amount after adjusting for repayments from time to time and share of profits, if any, passed on to R-1 company. At this juncture we note the objections of the Counsel for the respondents that a concluded contract cannot be questioned in a 397/398 petition and that no modification in an agreement with a third party could be made without his consent. In this connection it is necessary to point out that R-3 is not totally an outsider. It is a company in which R-2 has substantial interest. The agreement has had a continuing adverse effect on the company due to interest liability on the amount of R. 55 lakhs. Besides, R-3 has been a party to these proceedings. Even though the agreement was terminated in 1993, the full amount was liquidated only during the pendency of the proceedings before us. In view of these facts, we do not consider that objections of the Counsel in this regard are well founded. Besides, R-3 has been a party to these proceedings. Even though the agreement was terminated in 1993, the full amount was liquidated only during the pendency of the proceedings before us. In view of these facts, we do not consider that objections of the Counsel in this regard are well founded. The loan transaction as referred to above is reflected clearly in the books of accounts and also commented upon by the auditors of the company. The petition has not also alleged further transaction beyond this single transaction. After giving our ruling on this transaction, there is nothing further to be done on this matter as a special audit.” 10. There were further submissions made by way of subsequent application about other intercorporate investments but the CLB found nothing prejudicial in such investments nor agreed for removal of any of the Directors. The CLB concluded on the petition as under:- “In view of the above we consider it appropriate to dispose of this petition only with the direction with regard to payment of interest on the loan granted by R-1 to R-3 company and without conceding any other prayer of the petitioner.” 11. The learned counsel for the appellant has strenuously argued that the order as passed by the CLB against the appellant company remains not only unjustified but beyond jurisdiction too inasmuch as by directing recovery of interest over the amount advanced under the agreement dated 30.09.1983, the CLB has essentially ordered modification of the terms of the said agreement between the parties and that could not have been done without the consent of the appellant, who is to be prejudicially affected by such a modification. The learned counsel also contended that no prejudice was caused to the respondent No. 2 company by the agreement in question that was made way back on 30.09.1983 during the life time of Maharana Bhagwat Singh who was the Managing Director of the said company; and was necessitated for saving its hotel from down-gradation from Five Star Category for want of various facilities. The learned counsel further submitted that the respondent No.1 himself was the Director of the company when the common facilities agreement was entered into and was having notice of the meeting of Board of Directors wherein the said agreement was approved. The learned counsel further submitted that the respondent No.1 himself was the Director of the company when the common facilities agreement was entered into and was having notice of the meeting of Board of Directors wherein the said agreement was approved. The respondent No.1, according to the learned counsel, having failed to attend the meeting and having failed to raise the matter in any of the Board's meetings, had clearly acquiesced in the agreement and it was not open for him to challenge the past and concluded transactions; and the baseless challenge was also rendered redundant with the contract having been terminated on 09.10.1993. It is also the ground of the appeal that the CLB has erred in assuming, with reference to the auditor’s report for the year 1988-89, that the appellant company was not possessing many facilities; and such observations had been of misreading of the auditor’s report wherein reference was made to the facilities not possessed by the respondent No.2 company and not the appellant company. It has also been contended that there was no reason or justification with the CLB for passing the order for payment of interest against the appellant company in this matter where the respondent No.1 earlier filed the petition before this Court and withdrew the same seven years later for no plausible reason, and then, in these de novo proceedings too, either several of the prayers were not pressed by the petitioner or the imprecise allegations were rejected by the CLB itself. 12. It is noticed that this appeal was admitted for consideration on 27.01.1998 and by way of interim order, the operation of the impugned order dated 15.09.1997 as passed by the CLB against the appellant was ordered to remain stayed. The interim order was confirmed to last until the final decision of the appeal on 23.02.2000. Nobody has appeared for any of the respondents at the time of hearing. 13. After having examined the matter in its totality, this Court is clearly of the view that the order impugned, so far made against the appellant company, remains unsustainable and deserves to be set aside. 14. Nobody has appeared for any of the respondents at the time of hearing. 13. After having examined the matter in its totality, this Court is clearly of the view that the order impugned, so far made against the appellant company, remains unsustainable and deserves to be set aside. 14. This Court is inclined to agree with the submissions that the CLB could not have ordered recovery of interest over the amount advanced under the agreement dated 30.09.1983 because such an order essentially resulted in modification of the terms of the agreement between the parties; and such a modification could not have been made without the consent of the appellant company in view of clause (e) of Section 402 of the Act. Worthwhile it shall be to refer to the scheme of the relevant provisions as contained in Part-A of Chapter VI of the Act on the powers of Company Law Board for prevention of the oppression and mismanagement. Sections 397 and 398 of the Act provide the basis and foundation for a petition by member of a company complaining of mismanagement or oppression, as the case may be; and wide powers are found with the Company Law Board to deal with the given situation with Section 402 of the Act describing the nature of reliefs which could be granted in a petition under the aforesaid provisions of Section 397/398 of the Act. Section 402 of the Act, in its present form, reads as under:- "402. Section 402 of the Act, in its present form, reads as under:- "402. Powers of Tribunal on application under section 397 or 398.— Without prejudice to the generality of the power of the Tribunal under section 397 or 398, any order under either section may provide for - (a) the regulation of the conduct of the company's affairs in future; (b) the purchase of the shares or interests of any members of the company by other members thereof or by the company; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d) the termination, setting aside or modification of any agreement howsoever arrived at, between the company on the one hand, and any of the following persons, on the other, namely:- (i) the managing director, (ii) any other director, (iii)***** (iv)***** (v) the Manager, Upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in all the circumstances of the case; (e) the termination, setting aside or modification of any agreement between the company and any person not referred to in clause (d), provided that no such agreement shall be terminated, set aside or modified except after due notice to the party concerned and provided further that no such agreement shall be modified except after obtaining the consent of the party concerned; (f) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under section 397 or 398, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (g) any other matter for which in the opinion of the Tribunal it is just and equitable that provision should be made." (Note: At the time of dealing of the petition by the CLB, the expression “Company Law Board” occurred in place of “Tribunal”; and sub-clauses (iii) and (iv) of clause (e) referred to managing agent and secretaries and treasurers respectively, which were omitted by Act No.53 of 2000 with effect from 13.12.2000). 15. 15. Noticeable it is that even when the aforesaid clauses (a) to (g) are illustrative of the wide powers available with the CLB for redressal in a situation of oppression and mismanagement, clauses (d) and (e) deal with particular category of cases relating to the agreement/s. While clause (d) provides for termination, setting aside or modification of an agreement between the company and any of its functionaries like Managing Director or Director etc., clause (e) provides for termination, setting aside or modification of an agreement between the company and any person not referred to in clause (d). As per the stipulations in clause (e), this nature relief cannot be granted except after due notice to the party concerned i.e., the party likely to be affected. Moreover, and significantly, an agreement between the company and any person not referred to in clause (d) cannot be modified except after obtaining the consent of the party concerned. 16. Thus, notwithstanding the general powers conferred by Sections 397 and 398 of the Act and even by the other clauses of Section 402 of the Act, so far an agreement with a third party (i.e., the person not referred to in clause (d)) is concerned, a special provision has been made to the effect that such an agreement shall not be terminated, set aside, or modified except after due notice to the party concerned. And then, yet another extra-special provision, over the said special provision, is made to the effect that no such agreement with the third party shall be modified except after obtaining consent of the party concerned. In regard to this extra-special provision, for its very nature, the principle contained in the maxim Generalia specialibus non derogant would apply; which means that if a special provision has been made on a certain matter, that matter is excluded from the general provisions (vide the principles expounded in Gadde Venkateshwara Rao vs. Government of Andhra Pradesh & Ors.: AIR 1966 SC 828 ; Dilawar Singh vs. Parvinder Singh @ Iqbal Singh & Anr.: AIR 2006 SC 389 = RLW 2006(1) SC 186; and Padma Ben Banushali & Anr. vs. Yogendra Rathore & Ors.: AIR 2006 SC 2167 = RLW 2006(3) SC 2474). vs. Yogendra Rathore & Ors.: AIR 2006 SC 2167 = RLW 2006(3) SC 2474). Hence, whatever might be or might have been the general powers of CLB in the petition under Sections 397/398 of the Act, so far modification of an agreement between the company and a third party was concerned, the CLB could not have ordered its modification without the consent of such third party. 17. The CLB, in the present case, though has ordered a fundamental modification in the terms of the agreement between the appellant company and the respondent No. 2 company but then, the consent of the appellant company, the third party for the purpose of clause (e) of Section 402, was not obtained. Neither the order impugned records so nor there is any other material on record to show that any such consent was obtained. On the contrary, the record shows that an argument in regard to the aforesaid requirements of the consent of the appellant company was advanced before the CLB but the same was negatived with the observations that the respondent No.3 was having a substantial interest in the appellant company who was party to the proceedings; and that the agreement had a continuous adverse effect on the company (respondent No. 2); and that despite termination of the agreement in the year 1993, full amount was liquidated only during the pendency of the proceedings. With respect, this Court is unable to find the aforesaid observations sufficient to meet the contention urged on the anvil of clause (e) of Section 402 ibid. The appellant company, even if a party to the proceedings, had not consented to such modification; and merely for the respondent No.3 having an interest in it, the appellant company was not denuded of its independent entity. The deduction about the alleged adverse effect on the respondent No. 2 company or the facts that the contract was terminated in the year 1993 and the amount was liquidated during the pendency of the proceedings were hardly of any bearing on the core question as to whether the agreement could be modified in any manner in the proceedings under Sections 397/398 of the Act so as to impose the liability of interest on the appellant over and above the terms of the agreement without its consent. This Court is clearly of view that in the given fact situation, such modification, inflicting extra liability of interest on the appellant company, could not have been ordered in these proceedings beyond the terms of the agreement in question and without the consent of the appellant. 18. Even on the merits of the case, the CLB appears to have proceeded rather on the wrong assumption that according to the auditor's report of the year 1988-89, the appellant company was not possessing many facilities and that the facilities were not availed by the respondent No.2 company. The relevant contents of the auditor’s report dated 01.09.1989 in relation to balance-sheet of the respondent No.2 company as on 31.03.1989, as occurring in its paragraph 9, are as under:- “....(iii) The Company had entered into an agreement with another Company in which the former Managing Director and two other Directors were interested. Under the said agreement, a sum of Rs.55.00 lacs was advanced to the other Company which would make available to the quests of Lake Palace Hotel, the user of various facilities which it does not possess and for sharing equally the net income from the venture. The other company is repaying the instalments as stipulated. This arrangement, interalia, is subject matter of the Company Petition referred to above. The arrangement continued during the year.” 19. It appears that the pronoun “it”, as used by the auditor in his report, was taken by the CLB to mean as if the appellant company was not possessing many of the facilities. The report, read as a whole, makes it clear that the expression “it does not possess” referred to the respondent No.2 company, in whose regard the audit report was being made, and not to the appellant company. In fact, the respondent No.2 company was to be made available some such facilities which were not possessed by “it” i.e., the respondent No.2; and such facilities were to be made available by the appellant company. Of course, it transpires from the record that “all” the requisite facilities were not made available by the appellant company to the respondent No.2 company; but it does appear at the same time that some of the facilities were indeed made available; and it is difficult to conclude that the appellant company was not possessing the requisite facilities. Of course, it transpires from the record that “all” the requisite facilities were not made available by the appellant company to the respondent No.2 company; but it does appear at the same time that some of the facilities were indeed made available; and it is difficult to conclude that the appellant company was not possessing the requisite facilities. The order impugned, obviously, proceeds on an unjustified deduction on an improper reading of the relevant document. 20. The reasons foregoing appear sufficient to conclude this appeal and there appears no necessity of entering into any other aspect of the matter as urged on behalf of the appellant, about the reason and justification for the agreement in question that the same had been to safeguard the interest of the respondent No.2 company in its Five Star gradation; or about the acquiescence of the petitioner in regard to the agreement in question and inordinate delay in challenge before the CLB. Suffice is to observe that the order impugned, so far made against the appellant company, cannot be sustained. 21. As a result of the foregoing, this appeal succeeds and is allowed; and the part of the impugned order dated 15.09.1997, insofar it directs recovery of interest from the appellant company by the respondent No.2 company, is set aside. No costs.