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2020 (11) TMI 62 - NATIONAL COMPANY LAW TRIBUNAL , SPECIAL BENCH, MUMBAI BENCHRevival of Credit facility - Oppression and mismanagement - sections 241, 242 & 244 of the Companies Act - HELD THAT:- There have been serious differences of opinion between the Petitioners and the Investor Directors over various issues including certain Board resolutions of the year 2018. The nitty gritty thereof would require a detailed and comprehensive hearing. The present ad interim prayers refer to the continuance of the credit facilities from the Banks. It is not controverted that the credit facilities have been continuing since 2007-08 and has been approved as recently as in September, 2018. The borrowing and lending limits have been approved in the Board meeting dated 1st August, 2019 and AGM dated 24th September, 2019. It is also not disputed that the borrowing limits are essential to carry forward the Company’s activities and objects of the AoA. The allegation of financial bungling by the Petitioners should not prima facie come in the way of availing the credit facilities. Since the credit facilities are essential for the survival of the Company, in our considered opinion the Petitioners have a prima facie case in their favour. The question of mismanagement and oppression as envisaged under Sections 241 and 242 of the Act would come within the exclusive domain of this Tribunal. While considering the same, if the decisions taken in the Board meeting are called in question the Tribunal would be within its competence to decide upon the validity or otherwise of the proceedings in the Board meeting. Therefore, in our considered opinion the decisions of the Tribunal would not be taken as conflicting to the decision of any other Court including the Hon’ble High Court of Bombay. The decisions relied on by the Respondents would not be applicable to the present case. The conduct of the Respondents ex-facie could not be held in the best interests of the Company where they also have substantial stake. The balance of convenience accordingly leans in favour of the Petitioners. Allegations of financial irregularities and mismanagement of Company’s funds require incisive inquiry and elaborate legal appraisal. But the so called alleged irregularities or impropriety in dealing with funds when established can be compensated in monetary terms. Therefore, no irreparable injury would be caused in case the credit facilities are continued and availed by the Company. There is no material on record that the Company has been in default in servicing the credit facilities. The Bank has been ready and willing to extend the credit facility but for the non-cooperation of the Respondents. Continuance of an existing credit facility would not come within the purview of financial indebtedness indicated supra. A dispute resolution mechanism between the parties under a contract would not foreclose the party’s prerogative of approaching a statutory authority for redressal of its grievances. Therefore, the provision of deadlock under Article 247 of the AoA cannot prevent the Petitioners from seeking reliefs before this Tribunal. Besides the time spent on resorting to the mechanism under Article 247 might have an adverse impact on the ultimatum given in the letter dated 26th May, 2020 of the Bank of Baroda - Respondent nos. 2 to 6 are injuncted form corresponding with others relating to matters covered in the present Company Petition. They are injuncted from preventing or inferring in the ongoing credit facility form Bank of Baroda and renewal thereof and credit facility form the Axis Bank, notwithstanding their objections in the Board meeting dated 18th December, 2019 and 2nd May, 2020. Appeal allowed in part.
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