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2016 (3) TMI 123 - BOMBAY HIGH COURT

2016 (3) TMI 123 - BOMBAY HIGH COURT - TMI - 3rd party rights over Swami Samarth Nagar property - whether the appellants are not parties to the company petition pending before the Company Law Board - Held that:- The Company Law Board has passed the order on the basis that there was no entry showing that the money of ₹ 9,51,00,000/- shown as consideration to respondent no.3-company has come into the account of the company. The Company Law Board has also passed the order on the basis that pr .....

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ard has passed the interim arrangement order. The counsel for the appellants stated that the appellants have received IOD from the municipal authorities, they have spent lot of money etc. and therefore, the interim order passed by the Company Law Board is hurting them and the balance of convenience is in their favour. But none of these facts have been placed before the Company Law Board by the appellants. The Company Law Board has given them an opportunity to place all these facts by including t .....

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an appeal under Section 10F- “existence of a question of law arising from the decision”. In my view, therefore, this appeal is not maintainable. - Company Appeal (L) No. 69 of 2015, CLB/Company Petition No. 31 of 2015 - Dated:- 26-2-2016 - K. R. Shriram, J. For the Appellants : D. Madon & Adv. Vishal Kanade a/w Mr. Tushar Goradia & Ms. Swapna Roopvate For the Respondent : Dr. Milind Sathe with Ms.Bindi Dave, Mr.Pradeep Bakhara, Mr.Neel D'souza i/by Wadia Ghandy & Co. ORDER P. C. .....

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ting upon in furtherance of a purported development agreement and power of attorney or carrying out any construction or creating 3rd party rights etc. relating to the property which for ease of reference, we shall call Swami Samarth Nagar. The Company Law Board has, pending the disposal of the said company application, where the main relief sought is to implead the appellants as party respondents, restrained the appellants from alienating or creating 3rd party rights over the Swami Samarth Nagar .....

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respondent nos.1, 2 & 3 in the company petition. Except the appellants and respondent nos.1 & 2 nobody else appeared today. The petition pending before the Company Law Board has been filed by the respondent nos.1 & 2, alleging oppression and mis-management against respondent nos.4 & 5 in the conduct of affairs of respondent no.3-company, invoking the jurisdiction of the Company Law Board conferred upon it by virtue of sections 397 and 398 read with sections 402 & 403 of the C .....

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uities between the parties and to protect the interest of the petitioners the following ad-interim orders are being passed :- (a) The Respondent Nos.2 and 3 are directed to file an affidavit within a period of 10 days thereby disclosing on oath all transactions dealing and steps undertaking and all approvals sanctions and permission obtained and the status in respect of the properties assets of the company as set out in the schedule Annexure O to the petition. (b) The petitioners shall be given .....

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g such assets or properties of the Company without prior permission of the petitioners. (d) It is made clear that the properties in respect of which the development rights have already been given, such properties may be developed. However, such properties/flats/apartments shall not be sold without given an opportunity to the petitioners allowing 30 days time to match the offer with the prospective buyers. (e) The Respondents shall provide a copy of the bank account of the Company on weekly basis .....

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s and the other respondents herein recording that the respondents 1 & 2 have learnt that respondent no.4 has, without any authorization from the Board of Directors or shareholders of respondent no.3, sought to create/grant/transfer rights in respect of the property owned by respondent no.3-company viz. Swami Samarth Nagar Property and put them on notice that any creation or grant or transfer of rights in respect of Swami Samarth Nagar property in favour of the appellants was illegal and void .....

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reement dated 13.10.2014. 5. At this point, it is necessary to note that in the appeal memo the appellants have annexed a copy of an agreement contained in a letter dated 19.11.2014 from the company to the appellant no.1 in which it is mentioned that as per the development agreement entered into between the appellants and the respondent no.3 the appellants had handed over 10 cheques for an aggregate amount of ₹ 9,51,00,000/- on execution of the agreement as consideration; but as there were .....

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er passed an order dated 18.5.2015 in which it is recorded that it is the case of respondent nos.4 & 5 herein that the development rights in respect of Swami Samarth Nagar property has been transferred to the appellant no.1 but there is nothing on record to show that any consideration was received in lieu of granting development rights. It was also observed by the Company Law Board that Respondent no.4 herein had by entering into the agreement with appellant had acted prejudicial to the inte .....

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no.3 herein shall maintain status-quo with respect to the Swami Samarth Nagar property among other properties. It is necessary to observe that the agreement letter dated 19.11.2004 referred to above has not been produced at all before the Company Law Board. 7. On 11.8.2015 the respondent nos.1 & 2 took out an application to implead the appellants herein and for other reliefs which have been mentioned in paragraph-1 above. The Company Law Board on an urgent application taken out by respondent .....

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is Application is maintainable. 11. On seeing the company accounts, it is evident that there is no entry showing that the money of ₹ 9,51,00,000/- shown as consideration to the company property has not come into the accounts of the company, therefore, for time being it is to be understood that no money has come into the company showing it as consideration to Swami Samarth Property. 12. For having this Bench already stated in the order dated 18th May, 2015 that R2 dealt with the affairs of .....

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12 quoted above. 9. The counsel for the appellants raised two primary grounds on which the impugned order is challenged and they are that the provisions of section 402F are not at all applicable to the facts and circumstances of the case and in any event, there is a time limit of 3 months prescribed under Section 402F for any applicant to move the Company Law Board and the application has been filed beyond the 3 months period consequent to which Company Law Board should not have passed any order .....

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t should be noted that the allegation of the respondent no.1 & respondent no.2 is that respondent no.4 had no authority to transfer the development rights of the company respondent no.3 in Swami Samarth Nagar property to the appellants. It is also alleged that there are no Board Resolution or Shareholders' meeting authorizing respondent no.4 to transfer the development rights in Swami Samarth Nagar property to the appellants. It is also alleged that the so-called ₹ 9,51,00,000/- co .....

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whether the appellants, before entering into development rights contract with the company, give notice in any newspaper of their intention and called for objection. Mr.Madon on instructions stated that no such notice was given. 11. The status of the application to implead the appellant no.1 as respondent to the company petition is still pending. The appellant no.1 has been directed to file its reply to the application within 15 days and rejoinder, if any, to be filed within 15 days thereafter. .....

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tion of a case. Prayer for grant of interlocutory injunction being at a stage when the existence of the legal right asserted by the claimant and its alleged violation are uncertain and remain uncertain till they are established at the trial on evidence, it is required to act on certain well settled principle of administration of such interlocutory remedy which is both temporary and discretionary. A need for such protection of the petitioner against injury by violation of its rights must be weigh .....

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fusing a prayer for interlocutory injunction, did reiterate that the same, being in exercise of judicial discretion, the appellate court ought not interfere therewith and substitute its own discretion except where such discretion is shown to have been exercised arbitrarily or capriciously or perversely or where the Court whose order has been appealed from, had ignored the settled principles of law, regulating grant or refusal of interlocutory injunctions. It was enunciated, that appeal against e .....

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d the matter at the trial stage, it would have come to a contrary conclusion. It was proclaimed that an interlocutory remedy is intended to preserve in status quo, the rights of the parties which may appear on a prima facie examination of a case. It was held that the prayer for grant of interlocutory injunction, being at a stage when the existence of the legal right asserted by the plaintiff and its alleged violation are both contested and uncertain and remain uncertain till they are established .....

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ercise of his rights, as sought for, which he could not be adequately compensated. The need of one, thus was required to be compared against the other, to determine the balance of convenience to ensure an appropriate exercise of discretion for an interim remedy as suited to a particular fact situation. 49. The unequivocal legal propositions as judicially ordained, to ascertain the emergence and existence of a question of law, the scope of examination thereof by a court of appellate jurisdiction .....

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a question of law to exist. A decision logically per-supposes an adjudication on the facets of the controversy involved and mere deferment thereof to a future point of time till the completion of the essential legal formalities would not ipso facto fructify into a verdict to generate a question of law to be appealed from. However, an omission to record a finding even on a conscious scrutiny of the materials bearing on the issues involved in a given case, may be termed to be one. Be that as it m .....

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It is settled that no adjudication at the preliminary stage of a proceeding in a court of law ought to have the attributes of a final verdict so as to prejudge the issues at that stage, thereby rendering the principal determination otiose or redundant. This is more so, if the pleadings of the parties are incomplete at the threshold stage and the lower forum concerned seeks only to ensure a working arrangement vis-a-vis the dissension and postpone fuller and consummate appreciation of the rival .....

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rs of inquisition by the appellate forum conditioned by the type of the order under scrutiny. The nature and purport of the order i.e., interlocutory or final, would thus logically present varying canvases to traverse and analyse. These too would define the limits of adjudication qua the appellate forum. Whereas in an appeal under Section 10F from an order granting or refusing interim relief, being essentially in the exercise of judicial discretion and based on equity is an appeal on principle a .....

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der impugned is purely of interlocutory nature, and does not decide any issue on a consideration of the rival assertions on merits, stands aborted and is rendered superfluous for all intents and purposes. 51........ 52. In the above overwhelming factual premise, the High Court, as the impugned decision would demonstrate, being fully conscious that the proceeding before the CLB was pending for final adjudication, proceeded to undertake an in-depth exercise to fathom and analyse the facts and the .....

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tion 10F of the Act was one from an interim order passed in exercise of judicial discretion at the stage of mentioning, in our view, bearing in mind the permissible parameters of exercise of appellate jurisdiction in such matters, the elaborate pursuit so undertaken by it, is neither contemplated nor permissible. The High Court, in any view of the matter, was not dealing with a regular appeal under Section 10F of the Act on a question of law from a decision rendered by the CLB on merits, after a .....

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ision which is the foundation thereof suffers from perversity following a patent error on fundamental principles of law. The order impugned is a decision on discretion rendered at an introductory stage of the proceedings awaiting final adjudication on merits following a full contest that also not in the main petition but on an interim application. Even this application to implead the appellants is still pending. In the interregnum period this order of status-quo or not to create 3rd party rights .....

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ney of ₹ 9,51,00,000/- shown as consideration to respondent no.3-company has come into the account of the company. The Company Law Board has also passed the order on the basis that prima facie it was satisfied that respondent no.4 had no authority to create rights in favour of appellants for development of Swami Samarth Nagar and that Respondent no.4 has acted prejudicial to the interest of respondent no.1 & respondent no.2 and also respondent no.3 company. In fact, the Company Law Boa .....

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