ORDER
S. Balasubramanian, Chairman
1. This petition filed under Section 248/250 of the Companies Act in the matter of Blossom Breweries Ltd. was dismissed by this Bench as not maintainable vide its order, dated 12.11.1997 [see Bakhtawar Construction Company (P) Ltd. v. Blossom Breweries Ltd. (1998) 1 Comp LJ 150 (CLB)]. The petitioners, thereafter filed an appeal against this order in the High Court of Mumbai and the said High Court, while setting aside the order of this Bench, remanded the case back to this Bench for considering the petition on merits [see Bakhtawar Construction Company (P) Ltd. v. Blossom Breweries Ltd. (1998) 3 Comp LJ 489 (Bom)]. Accordingly the petition was heard.
2. Shri Sarkar, Senior Advocate, for the respondents, made a preliminary submission that since the matter has been remanded back to the Company Law Board by High Court, the Bench should keep in mind the various findings given by the High Court while deciding the petition. He made this point with reference to the observation of the High Court at page 9 of the order :
“Under Section 247, an investigation has to be made by the Inspector, whereas under Section 248, an investigation has to be made merely by calling for information from the company”.
This decision of the High Court, he submitted, has been made after that court examined the construction of both Sections 247 and 248 and as such, this observation has to be taken as a finding and not as an obiter dicta. If it is so, then, the Company Law Board should call for information only from the company and not from other respondents. He also referred to para 6 of that order wherein it is stated :
“Company petition 36 of 1997 is remanded back to the Company Law Board for consideration and decision in accordance with law”
to state that when the High Court has directed that the matter should be dealt with by the Company Law Board in accordance with law, it means that the law as propounded by High Court, i.e., the Company Law Board should call for information only from, the company. He further submitted that in view of this finding, and also considering the ruling of the High Court at page 10 of the order, that proceedings can be initiated before the Company Law Board under Section 248, the Company Law Board has no suo moto powers to call for information from anyone other than the company. The words ‘any person’ as used in Section 248, would, he submitted, in view of the finding of the High Court, mean only the company and the Company Law Board cannot traverse beyond to call for information from other respondents, as sought for by the petitioners. According to him, in the present petition, the only proper parties are the petitioners and the company and not other respondents in view of the High Court’s findings. On the proposition that the lower court to which a matter has been remanded is bound by the decision of the appeal court, he relied on Konappa Mudaliar v. Kusalru AIR 1970 Mad 328, wherein the High Court observed :
“It is not open to the lower court when an appellate court remands a case to it, to do anything but carry out the terms of the remand even if it considers that the order of remand was not in accordance with the law. It cannot apply what it may consider the correct position of law.”
Accordingly, he submitted that we should first decide as to whether the respondents are necessary parties to the proceedings before dealing with the merits of the case. In the alternative, he suggested, that we should defer the hearing of the petition till the appeal that his clients have filed against the order of the Single Judge before the Division Bench.
3. Dr. Singhvi, Senior Advocate, for the petitioners, submitted that the Company Law Board is bound to proceed with the petition in accordance with the provisions of Section 248 as the learned Judge of the High Court has remanded the petition back to the Company Law Board for consideration and decision in accordance with law. As per the statutory provisions in Section 248 of the Act, Company Law Board may require any person whom it has reasonable cause to believe (a) to be or to have been, interested in those shares or debentures ; or (b) to act in relation to those shares or debentures or legal adviser, agent of someone interested therein. The section also provides that persons who fail to give information required from them or give false information are liable for punishment with imprisonment or with fine or both. Therefore, according to the learned counsel, this section provides for calling for information only from persons and not from the company and as such, the observation of the High Court that an investigation has to be made merely by calling information from the company is only an obiter and not a finding. According to him, the scope of the Section 248 was never considered by the High Court and, as a matter of fact, the issue was not raised by any of the parties before the High Court. When Section 248 provides that the Company Law Board may require any person to give information in respect of shares in a company, it has power to do so and as only respondents 2 to 5 can give the information the. Company Law Board should direct them to give such information. Referring to Municipal Corporation of Delhi v. Gurnam Kaur (1988) Supp 2 SCR, wherein the Supreme Court held :
“Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative”,
he submitted that the observation of the learned Judge without any argument on the point has to be considered only as an obiter. He also referred to the same judgment wherein the Supreme Court observed :
“A decision should be treated as given per incuriam when it is; given in ignorance of the terms of a statute or of a rule having the force of a statute (page 938).
Therefore he submitted that even assuming that the observation of the learned Judge is a finding, since it is not in accordance with the statutory provisions, the Company Law Board should ignore the same especially, in view of the directions contained in the last para of that judgment. He also referred to CIT v. Sun Engineering (P) Ltd. (1992) 3 Comp LJ 193 (SC): AIR 1993 SC 43, wherein the Supreme Court observed :
“It is neither desirable, nor permissible to pick out a word or a sentence from the judgment of the Supreme Court, divorced from the context of the question under consideration and treat it to be complete ‘law’ declared by the Supreme Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of questions which were before the court. A decision of the court takes its colour from the questions involved in the case in which it is rendered.”
Relying on this, Dr. Singhvi urged that we should read the entire judgment as a whole and should not accept the contention of Shri Sarkar that we should call information only from the company, especially, when the learned Single Judge has directed the Company Law Board to deal with the matter in accordance with law. In regard to the plea of Shri Sarkar that we should decide the issues raised by him as a preliminary issue, Dr. Singhvi, relying on P. Maheshwari v. Delhi Administration (1983) 3 ACR 949, submitted that Tribunals like Company Law Board should not encourage parties to raise preliminary objections and seek an order on such objections and instead the entire matter along with the preliminary objections should be considered together and decided upon.
4. We advised the counsel, notwithstanding the preliminary issue raised by Shri Sarkar that other than the company, other respondents are not necessary parties to the proceedings and that we should call information only from the company, that they should argue on the merits of the case also, and that we would decide as to whether we should pass an order on the preliminary issue as well as the merits. Accordingly the counsel argued on the merits of the case also.
5. We have considered as to whether we should first deliver an order on the issue raised by Shri Sarkar or we should deliver a composite order including our findings on the merits of the case especially in view Maheshwari case, supra, cited by Dr. Singhvi that Tribunals should desist from partial adjudication. Since, without deciding on the issue raised by Shri Sarkar on the scope of the proceedings which would actually shape the final order to be passed on the petition, we have ventured to examine this issue first and then decide whether issue an order on the same first.
6. The contention of Shri Sarkar is that since the matter is being heard on remand by the High Court, we are bound to go by the directions/findings given by that court. We are in full agreement with him in this regard and as a matter of fact the case relied on by him viz., Konnappa case, supra, has been applied by us in some other cases. Now the issue for consideration as to what have been the findings of the High Court. One point stressed by Shri Sarkar is that the High Court has given a finding that we should call for the information only from the company and as such we cannot go beyond this finding. According to Dr. Singhvi it is not a finding but it is only obiter and as such the Company Law Board should proceed with the matter in accordance with law as directed by the High Court itself in the last para of its order.
7. Whether any observation made by a court is a finding or an obiter has to be tested on the basis of the issues examined by the court and the circumstances under which such observation was made. In the present case the controversy has arisen on the scope of inquiry under Section 248. While, as pointed out by Dr. Singhvi, as per Section 248 of the Act inquiry is to be made from persons as indicated in that section, the learned judge has observed that under Section 248 investigation has to be made by merely calling for information from the company. Whether it is a finding or obiter has to be examined as to in what context this observation was made. Para 4 of that judgment reads as follows :
“Now it is clear from the rival submissions made that it is the provisions of Section 248 of the Companies Act which falls for consideration in the present petition. . .”.
After quoting Section 248(1), the judgment further proceeds :
“It is clear from the provisions of Section 248 that the power of investigation into ownership of any share or debentures of a company for good reasons can be exercised either by the Central Government or by the Company Law Board. Now first taking up the question whether Sections 247 and 248 operate in the same field or they operate in different fields.”
After referring to Section 247(1) the learned Judge proceeds further to state :
“Thus from reading of two provisions, it is clear that the area of inquiry under Section 247 is different and more wider than the area of inquiry under Section 248. It is further to be seen here that apart from being the area of inquiry being different, even the method of inquiry is different. Under Section 247, an investigation has to be made merely by calling for information from the company.” (emphasis supplied)
8. From the above, it appears to us, by applying the test of the Supreme Court in Sun Engineering case, supra, that the learned judge has given a finding on the scope of Section 248 after examining the provisions of both Sections 247 and 248 that under Section 248, an investigation is to be made merely by calling for information from the company. It seems to us that this observation is a ratio decidendi and not an obiter. However, in the last para of the judgment, the learned judge has directed the Company Law Board to deal with the petition in accordance with law. The terms ‘in accordance with law’ have been interpreted by Shri Sarkar as to mean the finding given by the learned Judge that we should call for information from the company, while according to Dr. Singhvi — it means that we should go by what Section 248 stipulates. We find substance in the contention of both the counsel in regard to the last para of the order of the learned Judge. We cannot proceed with the merits of the case without giving our decision on the preliminary issue and that any decision given by us on this issue, considering the various proceedings between the parties, would only add one more litigation between the parties by way of appeal. This would not have mattered to us as every litigant has a right to challenge our finding through an appeal. But in this case, the respondents have already filed an appeal against the judgment of the learned Single Judge, before the Division Bench. We are therefore, of the firm view that we should defer passing any order on this petition till the outcome of the appeal filed before the Division Bench is available, as, without deciding the preliminary issue which touches upon the scope of our final order, in case the petitioners succeed on the merits of the case, we cannot proceed with the merits of the case. Accordingly, we defer our decision on the petition till such time the parties advise us on the outcome of the appeal. The status of the appeal will be reported on 30.8.1999 at 4 p.m. In case the appeal is disposed of in the meanwhile, the parties are at liberty to apply earlier.