LexSATISH CHANDRA versus UNION OF INDIA
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A SATISH CHANDRA v. UNION OF INDIA '. AUGUST 1, 1994 B (AM. AHMADI AND B.L. HANSARIA, JJ.] Company Law-Companies Act, 1956-Sections 397, 443-Companies (Amendment) Act, 1988-Sections 4, 5, 16, 21, 27-Legislative Competence of-Held, valid-<:lassification of powers-<:onfemient of power on Company C Law Board to deal with oppression and mismanagement-Retention of powers of winding up by High Court-Held, valid. Constitution of India-Article 32-Companies (Amendment) Act, 1988-Legislative Competence of-Held, valid. D Companies Law-Companies (Amendment) Act, 1988/Company Law Board Regulations, 1991-Regulation 7-Provision directing minority to ap- proach Board-Not oppressive-Hence, valid. The petitioner challenged Sections 4, 5, 16, 21 and 27 of the Com· panies (Amendment) Act, 1988 by which the Company Law Board was E constituted on the grounds that the legislature was not competent to enact the Amendment Act, that there was no intelligible dilTerentia in classifica· tion of powers in as much as power visualised under Section 397 of the Principal Act bas been conferred on the Board whereas, power under Section 443 was retained by the High Court. F G The petitioner contended that the Interests of minority share holders is not protected since they have to approach the Board before filing a petition, that the Bench of the Board does not function in all the States and that the minority share holders would not be able to obtain relief against their oppression. The petitioner also contended that the Parliament should not have enacted the Amendment Act since it bas experienced failure once In 1967. Disposing of the Writ Petition, this Court H HELD : 1. The provisions of the Companies (Amendment) Act, 1988 390 S.CHANDRA V. U.0.1.[HANSAR!A,J.] 391 assailed in this case do not suffer from any constitutional infirmity. [392·B] A 2. The question of legislative competence does not arise in this case, since the Board is not a substitute for the High Court and appeals from the orders of the Board lie to the High Court. There is no lack of intelligible and acceptable dilierentia in having two fora for the purposes of Sections 397 and 443 of the Principal Act considering the drastic nature of the B provisions. [392-G, H, 393-A] Sampath Kumar v. U.O.I., AIR (1987) SC 386, distinguished. 4. The minority is not neglected, since there is provision for the Board to have sittings in the four metropolitan cities of the country in C which very large percentage of important companies have their registered offices. [393-E-F] 5. The failure of the Parliament may not be treated snfficient for not trying the experiment again. The question relating to the wisdom of the D Parliament is not amenable to examination when the constitutionality is under challenge. [393-H] [The Court recorded the fact that the qualifications of Members of the Board as amended in Rules 1994 do leave sufficient room for appoint- ment of persons with judicial experience as a Judicial Member of the E Board.] (394-C] CIVIL ORIGINAL JURISDICTION: Civil Writ Petition No. 679 of 1992. (Under Article 32 of the Constitution of lnclia.) Salish Chandra, (In-person) and Sarai Chandra for the Petitioner Altaf Ahmad, Additional Solicitor General, S.A. Matto, Heman! Sharma, P. Parmeswaran and Ms. A. Subhashini for the Respondent. The Judgment of the Court was deliverd by F G HANS ARIA, J. This petition under Article 32 of the Constitution challenging certain provisions of the Companies (Amendment) Act, 1988, hereinafter the Act, by which an independent Company Law Board (for short, the Board) was constituted has served its purpose well on framing H 392 SUPREME COURT REPORTS [1994) SUPP. 2 S.C.R. A of the Company Law Board (Qualifications, Experience and other Condi- tions of Service of Members) Rules, 1993, which were published in the extraordinary Gazette of Government of India dated April 28, 1993, fol- lowed by amendment of these rules by notification dated 3.6.94 which, imer a/ia, substituted a new rule 8 in place of original rule 8. We have said so B because the provisions of the Act assailed, namely, sections 4, 5, 16,21 and 27 do not suffer from any constitutional infirmity. The challenge to the aforesaid sections has, however, been on the ground of legislative incom- petence as well as lack of valid classification in having conferred the power visualised by section 397 of the Principal Act on the Board, as
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