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Sharma Realty Pvt. Ltd. & Others Versus Vinod Muktinath Sharma

2016 (6) TMI 243 - BOMBAY HIGH COURT

Scope of the court admitting an appeal under section 10F - interim order of CLB - Held that:- It is the case of the appellant that the order has been passed in a cursory manner and the reason for stating this is, by that order the Company Law Board has in effect stopped the business of the appellant no.1. The appellant no.1 carries on business of development of land by constructing apartments on that and selling the apartments. Therefore, by way of impugned order, it is alleged, the appellant no .....

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o.2, who is appellant no.2 herein, had filed the reply and appellant nos.1 and 3 herein had sought time to file reply. They were granted four weeks time to file the reply and the respondents, who are petitioners before the board were granted two weeks thereafter to file the rejoinder. On 14th December, 2015 the appellant nos.1 and 3 did not file any reply but sought extension by another four weeks to file the reply. The time was granted and consequently the respondents herein, i.e., petitioners .....

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es. The order does not stop the appellants business of developing the land by constructing apartments. If according to the appellants now the site plans have been sanctioned, in other words, the circumstances have changed, it will be open to the appellants to move the Company Law Board for suitably altering the interim order and the Company Law Board may consider and decide the same on merits. Moreover, the proceedings before the Company Law Board is at a preliminary or introductory stage awaiti .....

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K. R. Shriram, J. For the Petitioner : Ravi Kadam, senior advocate a/w. Mr. Ashish Kamat, Mr. Kunal Mehata and Mr. Pravin Kamble i/b. ANP Chambers For the Respondent : Mr. Navroz Seervai, senior advocate a/w. Mr. Nikhil Sakhardande, Mr. Pralhad Paranjape and Mr. Akshay Udeshi i/b. M/s. Sanjay Udeshi & Co. ORDER P. C. 1. This appeal is filed against an interim order dated 29th October, 2015 passed by the Company Law Board. It is a short order and it will be useful to reproduce the order. The .....

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was reduced. However, it has been restored which is evident from gift deed and transfer deeds. Even income tax return 20092010 shows that his shareholding was restored to 33.3%. The documents gift deed and share transfer deed are duly signed by the father of the petitioner namely respondent no.2. These documents show that the share certificates amounting to 33.5% have been transferred to the petitioner although no entry in the Register of Members of the company has been made. The main prayer is .....

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rd the interest of the petitioner particularly when learned counsel for the respondent has accepted that no construction for flats has commenced so far and the site plan is awaiting sanction from the authorities. 2. Section 10F reads as under : 10F. Appeals against the order of the Company Law Board. Any person aggrieved by any decision or order of the Company Law Board 2[made before the commencement of the Companies (Second Amendment) Act, 2002] may file an appeal to the High Court within sixty .....

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dgment of the Apex Court in the matter of Purnima Manthena and another vs. Renuka Datla and others (2016) 1 SCC 237. 3. In a appeal under section 10F of the Act, the High Court will entertain an appeal against the decision or order, only if a question of law arises out of such order. 4. When a question of law is neither raised nor considered by the board, it would not be a question arising out of its order notwithstanding that it may arise on the findings given by the Board. In the matter of Com .....

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the Appellate Court is restricted to the question as to whether on the facts as noticed by the Company Law Board and as placed before it, its conclusion was against law or was founded on a consideration of irrelevant material or was as a result of omission to construe the relevant material. 5. While dealing with appeals against orders granting or refusing a prayer for interlocutory injunction, the Apex Court, in the matter of Wander Ltd. And Anr. vs Antox India P. Ltd. 1990 SCC 727 , reiterated .....

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a decision which is the foundation thereof, suffers from perversity, following a patent error on a fundamental principle of law or disregard to relevant materials or cognizance of irrelevant or nongermane determinants. The Apex Court in Purnima Manthena case (supra) has held that the Appellate Court should generally not interfere if the pleadings of the parties are incomplete at the threshold stage and the lower forum concerned seeks only to ensure a working arrangement visavis the dissension an .....

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n the scope of Section 10F of the Act qua an appeal preferred against the decision of the Company Law Board after a fullfledged adjudication before the High Court. While negating the argument, that the High Court could not have disturbed the findings arrived at by the Company Law Board and record its own findings on certain issues which it could not go into, this Court held that if a finding of fact is perverse and is based on no evidence, it can be setaside in an appeal even though the appeal i .....

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rs (supra), that the CLB is the final authority on facts and that no question of law arises unless its findings are perverse, based on no evidence or are otherwise arbitrary, this Court reiterated that in an appeal under Section 10F on a question of law , the jurisdiction of the appellate court is restricted to the question as to whether on the facts as noticed by the Company Law Board and as placed before it, its conclusion was against law or was founded on a consideration of irrelevant materia .....

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final order, this Court distinguished a right of appeal as a creature of statute from an inherent right of filing a suit, unless barred by law. It was underlined that while conferring such a right of appeal, a statute may impose restriction or condition in law, limiting the area of appeal, to question of law or sometime to a substantial question of law and ruled that whenever such limitations are imposed, those are to be strictly adhered to. 44. This Court in Wander Ltd. (supra), while dealing .....

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. It was enunciated, that appeal against exercise of discretion is an appeal on principle and the appellate court would not reassess the materials and seek to reach a conclusion different from the one reached by the court below, if it was reasonably possible on the materials available. It was held as well, that the appellate Court in such a situation would normally not be justified in interfering with the exercise of discretion of the Court below, if made reasonably and in a judicial manner, sol .....

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remain uncertain till they are established at the trial on evidence, it is required to act on certain wellsettled principles of administration of such interlocutory remedy which is both temporary and discretionary. Referring to the fundamental object of interlocutory injunction, this Court noted with approval that the need for such protection of the plaintiff against injury by violation of his rights must be weighed against the corresponding need of the defendant to be protected against any inju .....

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eof by a court of appellate jurisdiction and the balancing of the competing factors in the grant of interlocutory remedy, hallowed by time, indeed are well settled. A question of law, as is comprehended in Section 10F of the Act, would arise indubitably, if a decision which is the foundation thereof, suffers from perversity, following a patent error on a fundamental principle of law or disregard to relevant materials or cognizance of irrelevant or nongermane determinants. A decision however, on .....

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ay be termed to be one. Be that as it may, in any view of the matter, the appellate forum though exercising a jurisdiction which otherwise may be coordinate with that of the lower forum, ought to confine its judicial audit within the layout of the adjudgment undertaken by the forum of lower tier. This is imperative, more particularly in the exercise of the appellate jurisdiction qua a decision on discretion rendered at an introductory stage of any proceeding, otherwise awaiting final adjudicatio .....

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nsummate appreciation of the rival assertions and the recorded facts and the documents at a later stage. 46. Section 10F of the Act engrafts the requirement of the existence of a question of law arising from the decision of the CLB as an essential precondition for the maintainability of an appeal thereunder. While the language applied therein evinces that all orders, whether final or interlocutory, can be the subjectmatter of appeal, if it occasions a question of law, in our comprehension, the S .....

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equity is an appeal on principle and no interference is merited unless the same suffers from the vice of perversity and arbitrariness, such constrictions may not necessarily regulate and/or restrict the domain of examination in a regular appeal on facts and law. Section 10F, thus, statutorily demarcates the contours of the jurisdictional exercise by an appellate forum depending on the nature of the order impugned i.e. interlocutory or final and both cannot be equated, lest the pending proceeding .....

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anagement as conceptualised in Sections 397 and 399 of the Act, the respondent No. 1 had retraced the march of events from 9.4.2013, the date on which, according to her, when the meeting of the Board of Directors, invalid in law, was convened and conducted by Mr. G.V. Rao , who allegedly had no authority to do so, he having resigned from the company. She had asserted her express and implicit reservation in this regard and her disapproval not only of the constitution of the Board of Directors sin .....

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merger to the undue benefit of other Directors of the Board of the company. In contradiction, the appellants and the contesting Directors have not only endorsed the validity of the meetings on or from 9.4.2013 contending that respondent No. 1 though intimated thereof, had opted out therefrom and on the basis of the record, have sought to demonstrate her participation in the meetings, amongst others on 24.5.2013, 22.8.2013 and the Annual General Meeting held on 18.12.2013 as permitted by the CLB, .....

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lso the enhancement in her remuneration as the Executive Director as minuted in the Annual General Meeting dated 18.12.2013. There is no denial by her as well as of the pendency of the demerger proceeding before the High Court. 48. 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 indepth exercise to fathom and analyse the fac .....

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t under Section 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 meri .....

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ntious issues are involved, having regard to the stage at which the order of the CLB had been passed, no exhaustive examination of the factual and legal aspects ought to have been undertaken by the High Court to record its conclusive deductions on the basis thereof. Keeping in view the stage wise delineation of the jurisdictional frontiers of the forums in the institutional hierarchy as codified by law, the High Court's quest to unravel the entire gamut of law and facts involved at the preli .....

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the High Court has, by the impugned decision, decisively furnished its views and conclusions on all vital issues, as a consequence, leaving little or none for the CLB to decide. This is not the role of the appellate forum as is contemplated under Section 10F of the Act qua the stage from which the appeal had been preferred from the order of the CLB. 51. …. 52. In the wake up of above, we feel persuaded to interfere with the impugned decision of the High Court, without observing any final .....

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at the instance of the existing Board of Directors, we make it clear, as has been assured before us, that she ought to be allowed to function in the aforesaid capacity being provided with all facilities and privileges attached to the office as permissible in law, so much so that she does not have any occasion to complain in this regard. This indeed ought to be in accord with the letter and spirit of the undertaking offered by the Board of Directors to the CLB. The respondent No. 1 too would coo .....

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e CLB is, however, directed to dispose of the proceeding before it as expeditiously as possible. As the suit filed by the respondent No. 1, as noted hereinabove, is also pending, we hereby direct the Civil Court before which it is pending, to deal with the same with expedition as well, so as to provide a quietus to the lingering family discord in the overall wellbeing of the company and its constituents. 7. Now lets us examine whether the order impugned is perverse or arbitrary. 8. It is the cas .....

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. 9. The board in paragraph 5 of the order dated 29th October, 2015 has only stayed alienation of land in question until the next date of hearing. The order has been passed on 29th October, 2015 and the next date of hearing was 4th December, 2015. The reason why this interim arrangement was also ordered can be found in the last paragraph of the order. It is because only respondent no.2, who is appellant no.2 herein, had filed the reply and appellant nos.1 and 3 herein had sought time to file rep .....

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