- (1.) 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petition under Sections 397/398 of the Act in this Court that remained pending for about seven years and then, was withdrawn in order to avail of a more efficacious remedy before the CLB.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.) 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.";