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Cyrus Investment Pvt. Ltd. and Anr. Versus Tata Sons Ltd. and Others

2017 (2) TMI 657 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI

Appeal from orders of Tribunal - maintainability of petition - Held that:- If the Tribunal has fixed the Company Petition for hearing both on the question of maintainability and if so required on merit, we find no reason to interfere with such order passed by Tribunal. However, we are of the opinion that during the final hearing the question of maintainability should be decided first and if it is answered in negative, against the appellants, the question of waiver of the petition be decided if a .....

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6, 18th January 2017 and 31st January 2017. It will be open to the appellants to file a petition for amendment and may argue on the question of removal of 11th respondent, if he is removed by the decision of the EGM during the pendency of the Company Petition. In case the question of maintainability and/or waiver on merit is decided in favour of the appellants, it is always open to the Tribunal to pass appropriate order restoring the original position of Respondent No. 11, was at the time of fil .....

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ana Nijhawan, Mr. Kabir Chillwar and Mr. Satik Mahapatra, Advocates For The Respondent : Dr. Abhishek Manu Singhvi with Mr. Rajiv Nayar, Senior Advocates, Mr. Amit Sibbal, Mr. Darpan Wadhwa, Mr. Prateek Seksaria, Ms. Suman Rohatgi ad Mr. Aditya Shankar, Mr. Rajan Karanjawala, Ms. Ruby Singh Ahuja, Ms. Tahira Karanjawala, Mr. Anupam Prakash, Mr. Arjun Sharma, Mr. Arvind Chari, Ms. Eisha Mahapatra and Ms. Suman Yadav, Advocates, Mr. S.N. Mookherjee, Sr. Adv., Mr. Shuva Mandal, Mr. Dhruv Dewan, Mr. .....

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ainst Orders dated 22nd December 2016, 18th January 2017 and 31st January 2017 passed by the National Company Law Tribunal, Mumbai (hereinafter referred to as Tribunal') in C.P. No. 82/2016/Contempt Application No. 03/2017. 2. In these appeals the grievance of the appellants is that the Tribunal by impugned orders summarily refused to pass interim order and failed to decide the following prayer:- (a) Appellants' prayer for an interim relief seeking to restrain the respondents from removi .....

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aintainability of objections in the respondents' replies. 3. The grievance of the appellants is that by the impugned order dated 22nd December 2016, the Tribunal has fixed a very tight schedule on the parties on the basis of its then assessment of the matter, without any pleadings having been filed in absence of granting any specific interlocutory reliefs to the appellants and only on the basis that no further action or proceedings would be initiated in the matter. 4. Learned senior counsel .....

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e appellants to file a Contempt Petition. 5. It is further contended that by impugned order dated 18th January 2017, the Tribunal took a view that the attempt to remove 11th respondent from the Board of Directors did not constitute contempt of court, inter alia on the ground that contempt jurisdiction is a narrow and strict jurisdiction. It is further contended that second impugned order dated 18th January 2017 did not at all deal with the stay application on merits and only set out the views of .....

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that the Tribunal on a wrong presumption that by order dated 18th January 2017 had already rejected the request for stay on the proposed removal of 11th respondent. Though, the very order dated 18th January 2017 had in fact sought parties to file their pleadings in the form of affidavits in relation to proposed removal of 11th respondent. 7. Learned counsel for the appellants submitted that the order dated 18th January 2017 had been well understood by the parties and they filed their affidavits .....

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anuary 2017 which is not based on record. 9. Mr. Sundram, learned senior counsel for the appellants contended that if EGM convened for 6th February 2017 is not stayed they will perpetuate the 'oppression and mismanagement' as already alleged and such action will be blatant disregard for the order of the Tribunal passed on 22nd December 2016. 10. From the perusal of order dated 22nd December 2016, it is clear that a consent order was passed by the Tribunal which is as follows:- IA NO. 17/ .....

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im reliefs he sought in the IA, to which the Petitioners Senior Counsel Shri Aryama Sundram, Rl 1 Senior Counsel Shri Janak Dwaraka Das and the answering Respondents Senior Counsel Dr Abhishek Manu Singhvi, Shri S.N Mookerjee, Shri Ravi Kadam and Shri Mohan Parasaran conceded for the following Consent Order as mentioned below: The answering Respondents' side has agreed to file reply within 15 days hereof The Counsel appearing on behalf of Rll, who is evidently sailing along with the Petition .....

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by all the parties, more specially by the Petitioner Counsel, R11 Counsel and the Counsel on behalf of the answering Respondents, that they will not file any interim Application or initiate any action or proceedings over this subject matter pending disposal of this Company Petition. They have also further agreed that they will not violate the time schedule mentioned above. Since the answering Respondents Counsel was about to argue over the maintainability of the Company Petition seeking dismissa .....

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for hearing the respondents side submissions and rejoining submissions if any. 11. Section 421 of the Companies Act, 2013 deals with 'Appeal from orders of Tribunal'. As per sub- section (2) of Section 421, no appeal shall lie to the Appellate Tribunal from an order made by Tribunal with the consent of the parties. The relevant portion of Section 421 is quoted hereunder:- 421. Appeal from orders of Tribunal. - (1) Any person aggrieved by an order of the Tribunal may prefer an appeal to t .....

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eing not maintainable. 13. The second impugned order dated 18th January 2017 has been passed by the Tribunal in Contempt Application No. 03 of 2017 preferred by appellants. The Contempt Application was preferred by appellants alleging willful disobedience by respondents of order dated 22nd December 2016 passed by the Tribunal. It was alleged that respondent Nos. 14, 17 and 20 in their capacity as Trustees, JRD Tata Trust: Tata Education Trust and Tata Welfare Trust holding majority of shares in .....

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ute a deliberate and contemptuous violation of order dated 22nd December 2016 and, therefore, it was necessary to restrain and injunct the respondents from holding such a meeting or transacting any business. 15. The Tribunal, by impugned order dated 18th January 2017 while held that no case of contempt has been made out, given the background in which the order dated 22nd December 2016 was passed, the relevant portion of which reads as follows:- 8. We must at the outset, before dealing with the c .....

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hat are the allegations made against the Respondents making case under section 241 of the companies Act 2013 and what is the material placed to support such allegations? Then this Bench, though the answering Respondents already expressed that this petition should be dismissed at the threshold on the ground of maintainability, put it to the Petitioners counsel whether this Bench was to pass orders on merits or to give directions for completion of the pleadings, such as filing reply, rejoinder and .....

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ch can remain cognitive to the things happening before it and accordingly records them if required. We strongly believe that privilege is inbuilt in the majesty of adjudicating authority. For courts will remain impersonal to the parties and remain cognitive to the deliberations and proceedings taking place before it, this Bench, as stated above, places here the facts happened before it to the extent that are relevant. 11. For this matter being agreed to be posted for completion of pleadings, thi .....

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posal of the matter as generally in petition under Section 241 (old Section 397and 398 of Companies Act 1956), once proceeding is launched, if no interim order is passed, one after another application is filed such as application for inspection, or some other cause or amendment petition to bring new facts and there is no end to it. 17. At this juncture, it is relevant to notice that under Section 422, 90 days' time is prescribed for Tribunal for expeditious disposal of a petition. Where appe .....

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not been disposed of because of one or other interlocutory application(s) is filed by one or other party. 19. In Central Bank of India v. Vrajlal Kapurchand Gandhi, [2003] 6, SCC 573 the Hon'ble Supreme Court decided the remedy against conclusiveness and statement in judgment, if parties taking a different view. In the said case the Hon'ble Supreme Court referring the earlier decision in State of Maharashtra v. Ramdas Srinivas Nayak [1982] Vol.II, page 463 and Bhav Nagar University v. P .....

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have made the record. 20. In view of the decision of Hon'ble Supreme Court, we are of the opinion that the observation of the Tribunal as to what transpired and situation warranted to pass such order on 22nd December 2016 is well within the domain of the Hon'ble Members who passed the order. This Appellate Tribunal cannot sit in appeal nor can substitute its opinion and cannot presume the situation which warranted on 22nd December 2016 to pass the order. As the Appellate Tribunal had no .....

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rim reliefs, we cannot substitute our observation. The observation of Tribunal is noted below:- 14. If this Bench was of the view to pass interim reliefs in favor of the petitioners, it would have not suggested the petitioner counsel to elect either to argue on the petition or to take directions for completion of the pleadings, had it been satisfied to pass interim orders, this Bench ought to have heard the respondent side as well and would have also head them before passing such orders. It shou .....

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counsel appear on either side, can it be assumed that one side directly agreed for consent order without even giving their reply submissions? 22. For the reason aforesaid no interference is called for against the order dated 18th January 2017 passed by the Tribunal, the appeal against the said order is dismissed. 23. From third impugned order dated 31st January 2017 it is clear that the Company Petition was posted for hearing of the main Company Petition pursuant to order dated 22nd December 20 .....

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Petition which was scheduled to be taken on 31st January 2017. 24. From bare perusal of paragraph 14 of order dated 18th January 2017, it is clear that the appellants made prayer for interim relief against the proposed EGM scheduled to be held on 6th February 2017 but the Tribunal refused to pass any interim relief. From the order it appears that the Tribunal was not happy in the manner the appellants were pursuing the matters. The same is clear from the observations, as quoted below:- 3. Lookin .....

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s directed in the Order dated 22.12.2016 and on the Affidavits as directed in the order dated 18.1.2017. 4. To which, the Petitioner Counsel has stated that this Bench must decide the waiver plea sought by him in their Affidavit, before hearing main Company Petition. On hearing such submission from the Petitioner Counsel, this Bench again made it clear to the Counsel that this Bench has not prevented the Petitioner side to argue the main Company Petition because this Bench held in the Order date .....

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e is insisting upon this Bench, to decide waiver point and the maintainability point, despite opportunity is given to them to argue the main Petition. The Petitioner Counsel, while this Bench passing this Order, again stated that unless a ruling is given on the waiver of application, the main Company Petition cannot be argued. 9. If at all this Bench asked the Petitioners side to argue on the waiver of Application and maintainability of the Petition before hearing main petition, then the questio .....

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ing the Petitioner Counsel stating that they will not argue the main Company Petition unless the waiver plea under proviso to Section 244 of the Companies Act 2013 is decided. 14. On reading para 24, 25 and 26 of the order above, it appears that though the Petitioner vehemently argued over this interim relief on EGM to be held on 6.2.2017 without any separate application, this bench having felt that this issue must be taken into consideration while hearing the main Company Petition, it has been .....

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ner Counsel is again directed to argue today at 2.30 p.m. on the main company petition and the affidavits subsequently come on record as directed earlier. 19. After lunch hour, the Petitioner Counsel has again said he cannot argue on main petition unless orders are passed on the point of waiver and stay over the EGM to be held on 6.2.2017. The petitioner counsel, while this Bench dictating order, said he cannot argue , he is not saying he will not argue. 21. It is not that this Bench has asked t .....

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ous order, it is not open to the parties seeking the same relief subsequently. 24. When it has been directly put to the party to argue the matter, if the counsel insisted for the adjournment, it is nothing but refusal to make submissions as directed by this Bench. If any party refuses to proceed with the matter as directed earlier, we believe, it is nothing but disobedience to the orders already passed by this Bench. 25. Though we believe it is disobedience to the order passed by this Bench, we, .....

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id date. Therefore, this Appellate Tribunal cannot make any comment about the conclusiveness of the facts so stated by the Tribunal which cannot contradicted by filing an affidavit before this Appellate Tribunal. What we can observe that some unfortunate situation took place may be of misunderstanding for which the case could not be taken up to decide any matter in one or other way. 27. In the aforesaid background, we are not inclined to interfere with the impugned order dated 31st January 2017. .....

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such undertaking amounts to maintenance of status quo until final hearing or the Company Petition. 30. It is contended that apart from the 'oppression and mismanagement' already alleged, if the respondents are allowed to hold EGM on 6th February 2017, it will amount to further 'oppression' by respondents against the appellants who are minority shareholders. 31. Further case of the appellants is that the 11th respondent is a member of the Board of Directors of 1st respondent comp .....

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company. On the other hand, according to the respondents the appellants have only 2.2% of the equity and preferential share capital. This ground has been taken by respondents before the Tribunal while they raised the question of maintainability of the petition under Section 241 of the Act 2013 filed by the appellants. 34. To be on the safe side, the appellants filed Waiver Petition under proviso to sub-section (1) of Section 244 of Act 2013, which empowers the Tribunal to waive any of the requi .....

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who was elected as 'director of the company in a decision of the AGM. It is also submitted that 11th respondent is not a nominee of appellants. In fact, there is nothing on the record to suggest that the 1st respondent company made any provision allowing the appellants to have a nominee to be retained as director of the 1st respondent company. It is true that if the 11th respondent was appointed by shareholders in its earlier AGM, it is always open for the shareholders to call for EGM for r .....

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ved that the Tribunal was not inclined to stay the EGM. 38. In these appeals we are not deliberating the question as to whether prima facie case has been made out or not, as no such argument was advanced nor deliberated by the Tribunal. The question of maintainability of the Company Petition is also pending. In this background while we are not inclined to pass any interim order, observe that if EGM is held on 6th February 2017 and the 11th respondent is removed, it is always open to the Tribunal .....

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ional law a little further, Gower describes the members in general meeting and the directorate as the two primary organs of a company and compares them with legislative sovereignty rests with Parliament, while administration is left to the Executive Government subject to a measure of control by Parliament through its power to force a change of government. Like the government, the Directors will be answerable to the 'Parliament' constituted by the general meeting. But in practice (again l .....

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powers except such as the general law expressly provides must be exercised in general meeting. Of course, powers which are strictly legislative are not affected by the conferment of powers on the Directors as Section 31 of the Companies Act provides that an alteration of an article would require a special resolution of the company in general meeting. But a perusal of the provisions of the Companies Act itself makes it clear that in many ways the position of the directorate vis-a-vis the company .....

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anies Act 1956) it is open to the Tribunal to pass any interim order in the interest of the members of the company or in public interest or in the interest of the company, if a prima facie case of 'oppression and mismanagement' is noticed. However, in view of the fact that in the present case as the appellants have raised the question of maintainability which is yet to be determined and their waiver application is pending we are not inclined to pass any interim relief at this stage. 41. .....

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nappa Reddy, J. observed that the policy to decide the preliminary issue required a reversal in view of the unhealthy and injudicious practices resorted to for unduly delaying the adjudication of industrial disputes for the resolution of which an informal forum and simple procedure were devised with avowed object of keeping them from the dilatory practices of civil courts. The Court observed that all issues whether preliminary or otherwise, should be decided together so as to rule out the possib .....

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