TMI Blog2006 (9) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in respect of a company TCIL Bellsouth Limited (hereinafter referred to as respondent No. 1 or TBL). 2. In the amended appeal, the appellant has framed as many as 10 questions of law. However, keeping in view the controversy and the questions raised, I frame the following two questions of law which require adjudication in the present appeal;- a) Whether Company law Board was right in refusing interim reliefs as civil suit and writ petition are pending? b) Whether the appellant is entitled to interim relief/injunction? 3. In order to decide the contentions raised by the parties, admitted facts may be noticed. a) On 5th June, 1989 the appellant and Bellsouth International Incorporated, jointly floated and incorporated the respondent no. 1 company. b) As per Article 128 of the Articles of Association, the President of respondent No. 1 is the Chief Executive Officer of the company, who shall be responsible for general supervision and give directions in respect of its daily affairs, subject to directions of the Board Directors. The said article further provides that as long as the appellant holds shares in the respondent No. 1, the Board of Directors shall appoint a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g appointment of Dr. Indu B Singh as permanent chairman of respondent no. 1, declaring that appointment of Mr. A K Jolly as CEO was null and void and he was not fit to be appointed, with advise to the appellant to furnish names of three persons with biodata for consideration and till then Dr. S N Singh, Director was authorised to look after the affairs of the company in consultation with the chairman and exercise the same powers as CEO/president. Mr. Y.K Saxena was appointed as Company Secretary and GM (Finance) and he was also given authority to write the minutes of the meeting of the Board of directors and also given power and authority to operate the bank accounts of the respondent No. 1 company. j) The purported Board meeting dated 30th June, 2005 and the alleged resolutions passed therein are not specifically subject matter of the Civil suit. Perhaps the appellant was not aware of the purported resolutions passed by the Board on 30th June, 2005 when the suit was filed. k) The appellant protested against appointment of Dr. S N Singh as CEO and stated that the purported resolutions passed by the board of directors dated 30th June, 2005 were null and void. They also represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purported resolutions were also passed for issue of fresh capital and appointment of Dr. S N Singh as CEO for a period of four years w.e.f 1st July, 2005. q) However, it may be relevant to state here that this court while vacating injunction order and passing directions vide order dated 5th October, 2005 in WP(C) 12428/2005 did not take cognizance of the new Article and relied upon the earlier Article 128 to vacate the interim order. r) It is the case of the appellant that it's representative Mr. A.K Chandershekhar was not allowed to participate and vote in the Extraordinary General Body-meeting, in-spite of the fact that the said representative had produced certified copy of the resolution authorising him to vote and represent the appellant. Similarly, Mr. V Parthasarthy and Mr. A V V Krishnan were not permitted and allowed to attend and vote as proxies of Mr. G.D Gaiha and Mr. A.K Duggal. It is the case of respondent No. 2 that the aforesaid persons though present in the said meeting were not allowed to attend and vote because they had failed to produce certified copy of the resolution to represent and vote on behalf of the appellant. However, it is admitted by them t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the reliefs at this stage. However, since the petitioner has questioned the validity of the annual general meeting held on 30-9-2005 on the ground that there was no valid quorum and that the respondents 3 to 5 have also questioned the factum itself of holding of said meeting, I only direct that none of the resolutions passed in that alleged meeting which have so far not been implemented, shall be implemented till the petition is disposed of. Likewise the resolutions which have been implemented will be subject to final order in the petition. Earlier interim orders will continue. 5. Learned tribunal has held that as civil suit is pending and as the question of operation of bank account is also subject matter of a writ petition, the Company Law Board cannot consider granting reliefs as it may lead to conflicting decisions. With regard to the validity of puproted General Body-meeting held on 30th September, 2005 on the ground that there was no valid coram, failure to allow the appellant to participate etc., learned Company Law Board has directed that resolutions passed in the said meeting that had not been implemented shall not be implemented till the petition is disposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o decide an application for interim relief merely because a civil suit or a writ petition has been filed. It cannot abdicate its obligation and adjudicatory role because one party has approached civil court or a writ petition has been filed by the opposite party. 9. There is no legal statutory bar on the Company Law Board to decide prayer for interim reliefs. There was no adjudication and decision of any court that could operate as res-judicata against the appellant. Courts do apply principle of judicial-comity . This normally applies when courts give effect to laws and judicial decisions of another country. But this principle is not as a matter of absolute obligation. This principle is applied out of deference and mutual respect and regard, founded on identity of positions and similarity of institutions. This principle also applies when we have courts and forums within the country exercising concurrent jurisdictions. Courts in such cases apply Rule of Priority. Court that first exercises jurisdiction acquires exclusive jurisdiction to further proceed with the matter. When same subject matter is proceeded in two courts/forums, the decision in the first case controls and may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om simultaneously trying two parallel suits between the same parties in respect of the same matter in issue. The fundamental test to attract Section 10 is, whether on final decision being reached in the previous suit, such decision would operate as res-judicata in the subsequent suit. Section 10 applies only in cases where the whole of the subject-matter in both the suits is identical. The key words in Section 10 are the matter in issue is directly and substantially in issue in the previous instituted suit. The words directly and substantially in issue are used in contradistinction to the words incidentally or collaterally in issue . Therefore, Section 10 would apply only if there is identity of the matter in issue in both the suits, meaning thereby, that the whole of the subject-matter in both the proceedings is identical. 9. xxxx 10. As stated above, Section 10 CPC is referable to a suit instituted in a civil court. The proceedings before the Labour Court cannot be equated with the proceedings before a civil court. They are not the courts of concurrent jurisdiction. In the circumstances. Section 10 CPC has no application to the facts of this case. 11. xxxx 12. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g which has been instituted with an oblique motive and to cause harassment to the other side. 14. The scope and ambit of the petition under Section 397 and 398 of the Act as in the present case is very wide. It is just and equitable remedy to secure justice to parties. In the present matter the civil court has not passed any order inspite of the fact that the interim application has remained pending. The interim application is yet to be heard and decided. The Company Law Board, therefore, should not have adopted touch me not approach but gone into the question on merits. The issue before the civil court is extremely attenuated and is related only to right of appointment of Mr. A K Jolly as CEO and the conduct of the respondent nos. 1 and 2 in appointing Dr. S N Singh as CEO. The larger and broader issue of oppression and mismanagement is not the subject matter of the civil suit. The said civil suit was filed on June/July, 2005. The petition for oppression and mismanagement was filed much later in November, 2005 and the subsequent events after filing of the suit are also subject matter of the petition for oppression and mismanagement. There is no possibility of conflict of ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the bank account. It was further observed that the bank while deciding the question will keep in view articles 121 and 128 of the articles of association which had been interpreted by the learned single Judge. Thereafter, admittedly the respondent no. 1 had filed an appeal which was dismissed and no further orders have been passed. 16. It may be pertinent to state here that the aforesaid writ petition has been filed by respondent no. 1 and not by the appellant. Therefore, no relief as such can be granted in favour of the appellant with regard to operation of bank accounts. The writ court, it is obvious, has not directed that the respondent No. 2 or his nominee can operate the bank account. On the other hand the findings of the writ court in the order dated 5th October, 2005 are to the contrary. Thus, in the facts of the present case there was no reason and cause for the Company Law Board to refuse to go into the question of reliefs prayed for and asked for by the appellant. Lastly, the bank itself has allowed operation of the account. Thus for all practical purpose the writ has become infructous. 17. Learned counsel for the respondent had argued that no substantial questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot disturbing any finding of fact given by the Company Law Board. On the basis of the admitted facts that this court is examining whether learned tribunal was correct in law in refusing to decide prayer for interim reliefs in view of the civil litigation and the writ petition. Therefore, to my mind, questions of law do arise in the present case and this court has jurisdiction under Section 10 F of the Act to answer the questions of law mentioned above. 22. Learned counsel for the respondent also submitted that interim order passed by the Company Law Bord cannot be made subject matter of an appeal under Section 10 F of the Act. I do not agree. Appeal under Section 10 F is maintainable against an order passed by the Board. Section 10 F does not state that appeal is maintainable only against an order finally disposing of the proceedings. The only limitation imposed by the said provision is that a question of law should arise out of the order passed by the Board. A question of law may arise, when an order decides an interim application or grants or refuses to grant interim relief. It cannot be said that no substantial question of law can emanate from an interim order, however incorr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . I shall go by the facts as stated by both the parties and on the basis of the admitted factual position apply principles of law to decide whether prima facie case has been made for grant of interim relief. 27. The appellant herein admittedly owns 44.9% of the paid share capital of the respondent No. 1. The respondents 3 to 5 who hold 15.1% shares, are supporting the appellant. Together they hold 60% of the total paid up share capital. Respondent nos. 3 to 5 have stated that no resolutions were passed in the General Body Meeting dated 30th sept., 2005 amending and modifying Articles 127 and 128 of the Articles of Association. Admittedly the appellants were not permitted and allowed to participate and vote in the said meeting, though it is the case of the respondent no. 2 that proper certified resolution was not produced, which fact is, however, denied by the appellant. Similarly, Articles 121 and 128 have been interpreted by this court in favour of the appellant. It will be unjust and unfair not to allow the shareholders holding 60% of the paid up share capital not to have any say in the working of the company especially in view of Articles 127 and 128 of the Articles of Associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping in view the nature of controversy, the present case justifies maintenance of status quo ante as it existed from the beginning when Mr. Sudhir Saxena was working as CEO/President of the respondent No. 1 and before the disputes arose. 29. In Dorab Cawasii Warden v. Coomi Sorab Warden Ors., (1990) 2 SCC 117, Supreme court observed: 16. The relief of interlocutory mandatory injunctions are thus granted generally to preserve or restore the status quo of the last non-contested status which preceded the pending controversy until the final hearing when full relief may be granted or to compel the undoing of those acts that have been illegally done or the restoration of that which was wrongfully taken from the party complaining. But since the granting of such an injunction to a party who fails or would fail to establish his right at the trial may cause great injustice or irreparable harm to the party against whom it was granted or alternatively not granting of it to a party who succeeds or would succeed may equally cause great injustice or irreparable harm, courts have evolved certain guidelines. Generally stated these guidelines are: (1) The plaintiff has a strong case for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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