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

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

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the observation made in the impugned orders dated 22nd December 2016, 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 restorin .....

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r, Mr. Pallav Pandey, Mr. Akshay Sharma, Mr. Shashi Shekhar, Ms. Mohana 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, M .....

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HOPADHAYA, J. The joint appeals have been preferred by appellants against 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 f .....

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ice waiver application filed by the appellants upon receipt of the maintainability 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 proc .....

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ondent as the Director of the 1st respondent company. This led to the 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 de .....

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ed 31st January 2017 is concerned it has been assailed on the ground 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 .....

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Tribunal ruled that the stay application has been rejected on 18th January 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 conse .....

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after completion of the pleadings, instead of dealing with the interim 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 appearin .....

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respond to the same within 15 days. It has also been further agreed 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 arg .....

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ners' side submissions and Rll side submissions and on 1.2.2017 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 pe .....

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against the order dated 22nd December 2016 is, thereby, dismissed being 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 E .....

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ng to appellants that if EGM is allowed to be held, it would constitute 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 re .....

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d (g), on hearing the submissions, this Bench raised a query as to what 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 .....

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instead of pressing on interim reliefs. 10. We believe that this Bench 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 th .....

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8th January 2017, the Tribunal also has given a ground for early disposal 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 prescr .....

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our notice that those cases are pending since 2013, onwards and have 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 S .....

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he minds of the Judges, to call the attention of the very Judges who 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 22 .....

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bunal suggested to complete the pleading instead of pressing on interim 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 we .....

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s of the company or even about removal of Rll. When battle of senior 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 o .....

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ebruary 2017, after completion of submissions over the main Company 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. .....

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rs side completes their submissions over the main Company Petition as 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 .....

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in accordance with the orders already passed. 8. The Petitioner side 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 maintainab .....

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the main company petition, this Bench is virtually perplexed of seeing 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 .....

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n pursuance of the order dated 22.12.2016 and 18.1.2017, the Petitioner 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 .....

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orious. If at all any issue has already been dealt with in the previous 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 .....

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January 2017 show as to what transpired during the hearing on the said 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 in .....

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was given by the respondents that they will not take any action and 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 res .....

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lants they jointly have 18.37% of shareholding of the 1st respondent 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 24 .....

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ndent is not a shareholder of 1st respondent company but an outsider 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 earli .....

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the Tribunal has not passed any interim order of stay. It also observed 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 a .....

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and the Memorandum of Association. Carrying the analogy of constitutional 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 'Parliame .....

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confer on the Directors the right to exercise all the company's 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 .....

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ition under Section 241 of the Act 2013 (Section 387 and 398 of Companies 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 pendin .....

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n D.P. Maheshwari v. Delhi Admn. this Court speaking through O. Chinnappa 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 o .....

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