Listed vs family company reality
Listed companies rarely see 397/398 because SEBI rules ensure dispersion of shareholding and transparency. Family companies are opposite. They ignore books, filings and governance. Disputes arise from trust issues, not just law. Procedural lapse is easily painted as oppression. So CLB dockets are full of family company matters.
Civil court jurisdiction grey area
Companies Act 1956 does not expressly bar civil courts. So minority or director files suit challenging company action. Civil courts are slow and lack company law expertise. They often advise parties to go to CLB. After years, party comes to CLB with same grievance. Majority then argues res judicata or abuse. Who is right? Law is unclear. Shareholder may not have been advised well initially. Should that deny his 397/398 right? No easy answer. Questions that trouble clb
Can CLB hear matter pending in civil court? Can it revisit civil court finding? Can a party file everywhere and trouble majority? Majority also files counter cases elsewhere and asks CLB to wait. This is tactical litigation. Company suffers. Business is hit. Procedural compliance in CLB adds to delay. Critics blame CLB, but root cause is overlapping jurisdiction.
Need for single forum under companies bill
Companies Bill 2009 tries to fix this by barring civil courts from company matters. Idea is good. One specialist forum like NCLT should handle everything. Other laws like SARFAESI worked with such bar. For companies it is more complex, but necessary. Without this, forum shopping will continue and 397/398 will be used as pressure tool.
Conclusion
Company dispute civil court clb jurisdiction 2010 shows urgent need for reform. Forum shopping hurts both sides and company. CLB is forced to do complicated job with limited tools. Clear bar, specialist NCLT, and strict rules against parallel litigation are needed. Only then 397/398 will protect minority without harassing majority.
