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2019 (5) TMI 1028

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..... ntee Commission has stated that after completion of trial in the suit, when the suit was coming up for final hearing, the petitioners have sought liberty to withdraw the suit pending in the civil court. The petition to withdraw the civil suit was filed before this Tribunal, when it ought to have been filed before the civil court. The R1 has stated that this is contrary to the procedure prescribed in Order 23 Rule 1 CPC. Further, no liberty was granted to the petitioners. As per section 424(1) of the 2013 Act, the Tribunal shall not, while disposing of any proceeding before it, be bound by the procedure laid down in the Code of Civil Procedure but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, shall have power to regulate their own procedure. Experience of other Tribunals and quasi-judicial bodies whose parent Acts carry similar provisions as section 424(1) of the 2013 Act, shows that while the provisions of CPC may not fully apply but parts of it apply in substance so long as it satisfies the contours of natural justice. Whether the P1 to P3 are entitled for guarantee commission as per the resolution passed by the Company? - W .....

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..... ation of the affairs of the Company under section 213 of the 2013 Act? - HELD THAT:- I am not satisfied that there exist any circumstances that would justify making an order for investigation of the affairs of the R1 Company. Hence, there is no order for the investigation of the affairs of the R1 company. Petition disposed off. - CP NO. 42/241/HDB/2017 - Dated:- 19-3-2019 - MR K. ANANTHA PADMANABHA SWAMY, MEMBER (JUDICIAL) For The Petitioner : Yogesh Kumar Jagia, Counsel and Ms. Tanya Nagi, Adv For The Respondent : S. Ravi, Sr. Counsel Ch. Pushyam Kiran, P. Sri Harsha Reddy, P.V. Markandeyulu, B.V. Papa Rao, V.K. Sajith, B.S. Prasad, Srinivasan Rajan, Ms. Divya Datla and P.S. Shastry, Advs ORDER PER : MR K. ANANTHA PADMANABHA SWAMY, MEMBER (JUDICIAL) 1. Under consideration is a petition filed under sections 213,241, 242 and 244 of the Companies Act, 2013 (the 2013 Act) and sections 398(1)(b) and 398(2), 406 and 409 the Companies Act, 1956, (the 1956 Act) alleging various acts of oppression and mismanagement in the affairs of Spectrum Power Generation Limited (the Company). The petitioners have sought the following prayers: (a) Pass an order declaring that Resolution passed in the m .....

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..... oppressive. (k) Pass an order to declare and annul issue of 6 crores equity share to ACB (India) Limited and CellcapInfovin India Pvt. Limited on 19.02.2010. (l) Pass an order to declare and annual issue of 35 crore equity shares to ACB (India) Limited and Cellcaplnfovin India Pvt. Limited on 29.06.2010. (m) Pass an order to declare null and void all the resolutions passed by board or members of Respondent No.1 company against the interest of the petitioners being harsh, burdensome, prejudicial and oppressive. (n) The Board of directors of the Respondent No.1 company be superseded and an administrator/or special officer be appointed to take charge over the management and affairs of the Company and of all books paper, records and documents of the company as well as its assets and properties. (o) Alternatively a committee be constituted by this Tribunal consisting of representatives of the petitioners to function as such administrator and/or special officer for management and control of the affairs of the company on such terms and conditions as to this Tribunal may deem fit and proper. (p) Injunction restraining the respondents from altering or changing in any manner the shareholding .....

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..... sonal guarantee in favour of State Bank of India (SBI) and also created charge on their personal immovable assets which are at present valued at one thousand crore rupees. The 2nd respondent refused to extend personal guarantee and subsequently refused to infuse equity capital. The NTPC also refused to subscribe equity capital. Those refusals also culminated into rescinding the promoter agreement dated 29.06.1993 by the board of directors in the meeting held on 14.12.1995. (e) The rescinding of the agreement became the reason for litigation. The 2nd Respondent and NTPC have filed civil suits before Delhi High Court in CS (OS) 1251/1996. On 05.11.1997, Delhi High Court declined interim relief to the plaintiffs in the civil suit. Aggrieved by this, both 2nd respondent and NTPC, have filed appeals in FAO (OS) Nos.265-266/1997 before the Division Bench of the Delhi High Court, which dismissed the appeal on 07.07.2000. This dismissal order was also appealed before the Hon'ble Supreme Court in SLP (C) 10768-10769/2000 and 14864/2000, which ordered the parties to maintain status quo. (f) During the pendency of the appeals, the IDBI held meeting with all the stakeholders and arrived on .....

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..... were not re-elected, the petitioners have become minority in the board. (k) After the petitioners have become minority in the board, a resolution was passed on 01.11.2004 not to make provision for payment of guarantee commission to the petitioners' group in the books of account for the year ended 31.03.2003 on the sole ground that such payment is contrary to the loan agreement executed with FIs, even though an amount of ₹ 36,84,56,950/- was provided as on 31.03.2002 towards payment of guarantee commission. (l) The statutory auditor on 04.11.2004 in their report qualified on the decision of the management of not making provision for guarantee commission which was clarified by a purported directors report dated 01.11.2004 which was a prima facie forged, fabricated and ante dated for the reasons that the board approves the accounts u/s. 215(3) of the Act, 1956 for the year ended 31.03.2003 and submitted to the auditors for their report, the auditors submitted their report on 04.11.2004 whereas the board clarified the qualification of the auditor by their report dated 01.11.2004. (m) It was only mentioned in the board report dated 01.11.2004 that the old guarantee commission .....

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..... rmed that no meeting took place on 10.03.2006. (s) Subsequently on 08.08.2006 the ARCIL commenced their action to handover the company to the R2 accordingly commenced bid for the project of the company. (t) On 02.10.2006, the R2 incorporated P1nnacle Overseas Assets Limited (POAL) (arrayed in the present petition as Respondent No.32) in the British Virgin Islands (BVI), which is a tax haven. POAL's shareholders were Cellcap Securities Limited and Lehman Brothers Opportunity Limited. Cellcap Securities Limited was under the control of the Cellcaplnfovin India (P.) Ltd. and Aryan Beneficiaries Private Limited (presently ACB India Limited), the companies under the control of the R2. (u) The ARCIL fixed the last date for bidding as 17.10.2006, however, the same was extended to 24.10.2006. On 23.10.2006, the POAL pledged 60% of its shares held in the company to HSBC, Hong Kong and got a sanction of ₹ 150 crore. The Company has never issued any shares to POAL and it is evident from the MCA filings. On the last date i.e. 24.10.2006, POA filed its bid to ARCIL and as settled in advance the ARCIL accepted the bid of POAL on 12.12.2006. (v) After the bid of the POAL accepted, a sch .....

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..... ting the above facts submitted that the action of the R2 group and banks and FIs are burdensome, harsh and prejudicial to the interest of the petitioners and other shareholders. The learned Counsel relied upon the following judgments in support of his submission. (a) (para 47) Kamal Kumar Dutta v. Ruby General Hospital Ltd. [2006] 70 SCL 222 wherein the Supreme Court held that as we fail to understand the view taken by learned single judge of the High Court directing the appellants to file suit for redressal of all grievances, we cannot sustain this order. We are the opinion that the view taken by the Calcutta High Court cannot be sustained. (b) [1981] 3 SCC 333 Para 49 - Needle Industries India Ltd. v. Needle Industries Newey (India) Holding Ltd. - wherein the Supreme Court held that the true position is that an isolated act, which is contrary in law, may not necessarily and by itself support the inference that the law was violated with a mala fide intention or that such violation was burdensome, harsh and wrongful. But a series of illegal acts following upon one another can in the context lead justifiably to conclusion that that they are a part of the same transaction of which th .....

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..... at that meeting be invalid. (e) Mehool Bhuva v. Indo Nippon Chemical Co. Ltd. [ 130 SCL 422 (Bombay CLB) - wherein it is held that - the duty of the company acting through its board to incorporate in the explanatory statement all the material facts, I am of the view, that the impugned notice does not meet the requirements of the provisions contained in section 173(2). Therefore, I hold that unless the requirements of section 173 are satisfied, the resolution will not be valid in law. (f) [1977] 47 CC 92 (Bom.) - In the matter of Bennett Coleman & Co. v. Union of India - wherein it is held that an examination of the aforesaid sections clearly brings out two aspects, first, the very wide nature of the power conferred on the court, and, secondly, the object that is sought to be achieved by the exercise of such power with the result that the only limitation that could be impliedly read on the exercise of the power would be that nexus must exist between the order that may be passed thereunder and the object sought to be achieved by these sections and beyond this limitation which arises by necessary implication it is difficult to read any other restriction or limitation on the exerci .....

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..... hat learned counsel undertook to withdraw the application and on that undertaking the arguments were proceeded with and within a few days the said application was withdrawn. A party cannot blow hot and old at the same time first insisting on withdrawal of the application and later claiming that such withdrawal would be a bar to proceed with the petition. Since, the practice of this board has been to proceed with the matter once the parallel proceedings are withdrawn, we would like to continue that practice and as such we declare that this petition does not deserve to be dismissed in terms of Order 23, Rule 1. (l) [2015] SCC Online CLB 91- In the matter of Narrotam Singh v. Notam India (P.) Ltd. - wherein it is held that It need not be reiterated here that civil court adjudicates the validity of an act on the anvil or legality of an act, but whereas the process of adjudication under sections 397 & 398 of the Act is different, it will perceive the issue on the anvil if equity, at times though act is illegal, still it may be held not right, at time thought act is not in compliance of any provision of law, still it may be held right, it all depends on whether, by this act any membe .....

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..... se does not lead to a conclusion which is irreconcilable with a binding appreciates the factual matrix before it can obviously be of value only if a subsequent case presents identical facts, which remains a rarity. In view of the above submissions, the learned Counsel for the petitioners prayed for allowing the petition. 4. The R1 company filed a detailed counter and the learned counsel for the R1 company submitted as follows: (a) There is no illegality in converting the equity shares of the petitioners' into preference shares as the said conversion was done in accordance with and by way of a Scheme of Arrangement which was upheld by the Division Bench of Hon'ble High Court of AP. Since the allegations are raised after a decade of the scheme of arrangement, the petition is hit by delay and laches. (b) A bare perusal of the reliefs sought for in the petition would show that the alleged acts of oppression and mismanagement are that have been stated in the petition pertain to the years between 2004 and 2010. The present petition is filed in the year 2017 as such the petition is barred by limitation. The period of limitation for filing the present petition is three years as pre .....

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..... the Company and subsequently the company came out of the financial difficulties. It is the contention of the petitioners that R2 failed to obtain substantial reliefs in the suit, therefore, the statements that the R2 oppressed the petitioners is contrary to their own statement. The appeal against the order made by the suits filed by the shareholders and it is not relevant to the present proceedings. (g) It is true that the guarantee commission was reflected in the accounts for the year ending 31.03.1999, and it was subsequently resolved in the AGM held on 14.02.2005 to reverse back the provision for guarantee commission to the petitioners and their group companies. The said issue is pending before the Civil Court in OS No.4051/2004. The petitioners have included the guarantee commission in the accounts contrary to the loan agreements. The nominee directors of the banks and FIs have not objected to the said provision of guarantee commission, is due to that the petitioners did not represent the details of provisions made towards guarantee commission in the financials placed before the board of directors. As per the accepted accounting principles, the guarantee commission ought to hav .....

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..... financial statements of the Respondent company when the company was under the control of the petitioners. (l) Section 217(3) provides that the board shall be bound to give the fullest information and explanation in its report, on every reservation, qualification or adverse remark contained in the auditor's report. In view of the above, it is advisable that the directors' report succeeds the date of the auditors' report. However, where the directors' remarks on the auditors' report are given an addendum to the director's report, the directors' report would precede the auditors' report. In the above instance there was no requirement to give separate explanation to the auditors' qualification on the accounts for the year 2002-03 as comprehensive explanatory note had already addressed the issue in the notes to accounts. Therefore, the directors' report would precede the auditor's report. (m) The Respondent Company in its notice dated 01.11.2004 for the EOGM dated 01.12.2004 has disclosed all material facts which have bearing on the question on which the shareholders have to form their judgment including the concern or interest of the manageme .....

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..... ture the Company's capital. Since ARCIL felt the options are very limited, it has decided to call for the bid for taking over the company. The calling for bids was challenged by the Petitioners upto the Hon'ble Supreme Court and their cases were dismissed at every stage. It would show that the bidding process was subjected to legal scrutiny and it was found to be in order. (r) The P1 and the R2 were removed from the board of directors when the company was taken over by the POAL in the year 2007 and the R2 has nothing to do with the affairs of the Company. (s) According to the term of the stipulation of the lenders, the unsecured loans have to be treated as subordinate to the term loans of FIs and banks. Accordingly the company held back release of unsecured loans and further revised the interest payable on the said unsecured loans as the same is not payable to the petitioners as the petitioners have mismanaged the affairs of the company when they were at the helm of affairs of the company. The petitioners ought to have taken an action if they are aggrieved by the action of the Company, whereas the petitioners remained silent for decades and decided to agitate the same befor .....

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..... and they are not entitled for any guarantee commission as per the terms and conditions of the lender banks. The learned Counsel for the Respondent No.1 relied upon the following judgments: (a) [1965] 2 SCR 720 - in the matter of Shanti Prasad Jain v. Kalinga Tubes Ltd. - wherein it is held that the conduct must be burdensome, harsh and wrongful and mere lack of confidence between the majority shareholders and the minority shareholders would not be enough unless lack of confidence springs from oppression of the minority by a majority in the management of the company's affairs, and such oppression must involve at least an element of lack of probity or fair dealing to a member in the matter of his proprietary rights as a shareholder. (b) In the matter of Chatterjee Petrochem (India) (P.) Ltd. v. Haldia Petrochemicals Ltd. [2011] 14 taxmann.com 179/110 SCL 107 wherein judgment of Kalinga Tubes Limited is referred. (c) in the matter of Esquire Electronics Inc. v. Netherlands India Communications Enterprises Ltd. [2017] 82 taxmann.com 473 (NCL - AT) - wherein it is held that section 433 of the Companies Act, 2013 makes it clear that the provisions of Limitation Act, 1963 apply to pro .....

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..... sense that it is the members who can alone either given consent or join with the petitioner who wishes to take out an application under section 397 and/or 398 of the Act. (i) [1987] 1 SCC 5 - in the matter of Sarguja Transport Service v. State Transport Appellate Tribunal - wherein it is held that the principle underlying Rule 1 of Order XXIII of the Code should be extended in the interests of the administration of justice to cases of withdrawal of writ petition also, not on the ground of res judicata but on the ground of public policy as explained above. The learned Counsel for the R1 Company while reiterating the above submitted that the petitioners have not made any case for the interference of this Tribunal and therefore prayed for the dismissal of the petition. 6. The R5 has filed its counter and the learned Counsel for the R5 offered no comments for the most of the allegations as they are matter of record, however, inter alia submitted that: (a) The petition is barred by limitation. (b) The allegation that Rolls Royce was with Kishan Rao group and later on with the influence of Dr. A.V. Mohan Rao it tilted on his side because of excess of payment to them for repair and that t .....

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..... rtain such petitions, but they chose to file the same before the Civil Court. Opting of the court not having the jurisdiction to entertain the subject matter of oppression and mismanagement alleged to have happened in the year 2004-05 and continuation thereof will not save the limitation. 9. The learned Counsel for the R6 relied on the following judgments in support of his submissions: (a) (2010) 157 Comp Cas 61 (Ker)-In the matter of K. Subramony v. Official Liquidator, Malabar Phyto Chemicals Ltd. - wherein it is held that the nominee directors are not engaged in regular management of company and not assigned any work of company. Therefore they cannot be held responsible for acts and omissions which officers of the company are required to comply with. (b) [Criminal Petition Nos. 3167, 3169 and 3170 of 2007] - in the matter of O. R. Mahajan v. State of AP rep by public prosecutor and ROC - wherein it is held that the nominee directors are appointed on the basis of terms and conditions of loan agreement and the directors are not involved in the day to day affairs of the Company. In view of the above submissions, the learned Counsel for the R6 prayed for dismissal of the petition. 1 .....

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..... a bona fide purchaser in the ARCIL bid, therefore, this respondent cannot be held liable for the events taken place prior to its entry into the Company. (b) The allegation that the R32 was incorporated for taking over the management of the Company is baseless and the petitioners have not produced any material to support their allegations. This respondent legitimately obtained loan from HSBC and the petitioners are not the shareholders of R32. The petitioners being neither shareholders nor lenders have no locus standi to pray for an investigation into affairs of the company. (c) The petition is hopelessly barred by limitation. The petitioners ought to have approached the CLB then and there for their grievances, whereas they have not chosen to file the petition within the limitation. As per the provisions of section 433 of the Act, the limitation of three years is applicable to the petition filed before the NCLT. (d) The bidding process was done by the ARCIL as per law and the ARCIL identified the R32 as the successful bidder by its letter dated 12.12.2006. The petitioners have also unsuccessfully contested the bidding by a company promoted by them. (e) The petitioners have also unsu .....

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..... ve acts, transferred management and control of the Company and now enjoying in USA and incomplete disregard of judicial process, is not responding to any of the proceedings which demonstrate his complicity. The financial crunch arisen due to failure of R2 to discharge his agreed obligations under promoter agreement followed by prolonged litigation. (c) The management of company was taken over by the banks and FIs in the AGM held on 30.09.2003 and the entire increase in outstanding secured loans as alleged by the respondents took place only under the management of nominee directors of financial institutions which has also taken note in order dated 23.01.2008 passed by Hon'ble High Court of Andhra Pradesh in the writ Petition No.8223/2007. (d) The R1 Company has not filed any document to show that the P1 has mismanaged the affairs of the Company and it is a fact that the nominee directors have appreciated P1 in the 52nd meeting held on 10.05.2002. (e) Under the scheme of arrangement and converting the equity shares to the preference shares with coupon rate of 0.05% redeemable after 15 years the promoters were thrown out of the company and the conversion of 100% equity to preferen .....

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..... rantee commission amounts to understatement of profit which is violative of accounting standards as prescribed by section 211(3A) of the 1956 Act. The averments of the Respondents that it has been shown under the sundry creditors in schedule 10 while finalizing the accounts for the year ended 31.03.2003 and therefore it was objected is contrary to the minutes of the 52nd board meeting held on 10.05.2002. The guarantee commission was reversed only to prejudice the interest of the petitioners. (n) The loan agreements were silent about the guarantee commission and a specific reference was made of undertaking dated 11.08.1994 of the P1 and by that said undertaking the P1 did not surrender his right to claim guarantee commission. If negative covenants are part of agreements, the banks and FI required such undertaking. The said undertaking was given only by P1 whereas the guarantees were given by P2 and P3 also. (o) The statutory auditor is in connivance with the petitioners is baseless and it has been made only to cover up their fraudulent activities. The Respondent using alibi are attempting to justify creation of ante-dated documents on the opinion of ICAI. The auditor's report is .....

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..... POAL interest was secured by way of equity of ₹ 150 crores. 14. The petitioners have filed a rejoinder for the counter statement of R5 and while referring the rejoinder statement, the learned counsel for the petitioners denied most of the averments of the said counter and inter-alia submitted that: (a) The maintainability of the petition itself is upheld by this Tribunal by admitting the petition by order dated 06.04.2017 which has attained finality. (b) The R2 has not filed any counter statement which shows the connivance with the banks and FIs. (c) This Respondent is to file strict proof that the R4 has not involved in ousting the petitioners out of the company. (d) The averment that the payment of guarantee commission to the individuals who provide the guarantee is contrary to loan agreement and hence the resolution dated 25.04.1994 is not valid. The R5 is barred from raising the issue who has consented in the 52nd board meeting held on 10.05.2002. The provision for making payment of guarantee commission was in the financials of the company upto the year ended 31.03.2002 and the R5 first time denied the guarantee commission by voting in favour of audited balance sheet in t .....

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..... d as respondents as they have collectively supported the cause of the R2. (f) The provisions of the section relied by the R12 and R13 have no application to the facts of the case and further R12 and R13 are attempting to misread the provisions to suit their convenience. The reliance of JJ Irani Committee referred by R12 and R13 is also misconceived as they have not brought on record the outcome of recommendations of such committee. (g) The immunity under SEBI Act does not automatically extend to nominee directors for commission or omission of acts of prejudice, oppression or mismanagement and nominee directors are liable to members as the other directors in board. 16. The petitioners have filed rejoinder statement for averments made by the R32 in its counter and the learned Counsel for the petitioners while denying most of the averments of the counter statement inter alia submitted that: (a) The promoters agreement was entered into on 29.06.1993 and it was terminated on 14.12.1995. There was lot of litigation from 1996 to 2003. On 29.12.2005 the banks and FI assigned the entire debt to ARCIL. The ARCIL called IEI through private circulation on 28.07.2006. (b) The R2 incorporated Pi .....

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..... These facts of allotting shares to ACB (India) Limited show the manipulation and fabrication of statutory records at their whims and fancies and same is now being justified without placing any document of offer of subscription, whether it was right issue or preferential etc. (h) As per the audited balance sheet as at 31.03.2007 the Company has stated that ₹ 50 crores was stated to have been received from POAL which was credited under shares suspense account. This shows that no share was issued to POAL even as at 31.03.2007. (i) In view of the complicity of R32 with R2 which is evident from annexure of the petition (P31) having knowledge about acts prior to 2006, all allegations levelled by the petitioners which are not responded in the counter to be deemed to have been accepted. (j) Since the petition is admitted, the plea of the R32 that the petition is barred by limitation does not sustain. (k) The POAL was incorporated by the R2 only for the purpose of taking over the Company illegally and there is no bar seeking an order under section 213 of the Act to have an inspection of the affairs of the Company. The inspection will bring the truth that when the POAL was incorporate .....

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..... civil Suit No.4051/2004 before the VII Addl Senior City Civil Judge, Hyderabad. I find that the petitioners had prayed for the following reliefs in that plaint: - (a) A declaration that the defendant is obligated to show the provisions of guarantee commission payable to the plaintiffs in the Balance Sheet and other records for the year 2002-03 and thereafter; and (b) A mandatory injunction directing the defendants to reflect and continue to provide for the provisions relating to guarantee commission to the plaintiffs for the guarantee given by the plaintiffs and their group companies for the benefit of the defendant till such time the properties and all the guarantees of the plaintiffs which were the subject matter of the guarantee are not released and returned to the plaintiffs; and (c) A permanent injunction restraining the defendant from reversing/writing back the provision of guarantee commission payable to the plaintiffs in connection with the guarantees that were executed by the plaintiffs for the benefit of the defendant company. 22. In the present petition before this Tribunal, the petitioners have made the following prayers: - (a) Pass an order declaring that Resolution pa .....

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..... o the other provisions of this Act, shall have power to regulate their own procedure. Experience of other Tribunals and quasi-judicial bodies whose parent Acts carry similar provisions as section 424(1) of the 2013 Act, shows that while the provisions of CPC may not fully apply but parts of it apply in substance so long as it satisfies the contours of natural justice. 27. It is settled law that no party should be allowed to pursue two parallel remedies in respect of the same subject matter, as laid down by the Hon'ble Supreme Court in Jai Singh v. Union of India [1977] 1 SCC 1. However, acceptance of the contention of the R1, especially when the civil court proceedings have been withdrawn following an order of this Tribunal, will render the petitioners without a remedy at this stage. 28. Therefore, now the issue before this Tribunal is- (1) Whether the P1 to P3 are entitled for guarantee commission as per the resolution passed by the Company; (2) Whether the act of the Company reversing the payment of guarantee commission and not making provisions for making payment of guarantee commission is in order or not; (3) Whether withholding the unsecured loan provided by the petitioner .....

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..... s not understood why the banks and FIs insisted on an undertaking from the P1 which he submitted on 11.08.1994. It is pertinent to note that the making payment of guarantee commission was passed in the 1st AGM held on 25.04.1994 whereas the undertaking was given by the P1 on 11.08.1994. The recital at para (ii) (page 419 of the counter of R1 Volume No.I) becomes important which reads as follows: (ii) claim or receive any remuneration or commission except those fixed or to be fixed in accordance with the provisions of the Companies Act, 1956 from time-to-time and approved by you; and ... The R1 company while reiterating the said undertaking of the P1 has given a different set of undertaking at para 22 in page 14 of its counter. 32. All the above facts would show that the payment of guarantee commission was decided in the 1st AGM held on 25.04.1994 and the undertaking was given on 11.08.1994. It is also pertinent to note that the R2 has not filed any counter statement rebutting the allegations against him and in the absence of any rebuttal it would be deemed that the allegations are accepted. 33. It is clear from the minutes of the 1st AGM held on 25.04.1994 that the P1 to P3 are ent .....

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..... on 27.01.2007, it was resolved to reverse the interest payable on the unsecured loan of ₹ 1,22,65,850/- and TDS of ₹ 28,64,023/- deducted and deposited with revenue authorities. 40. The R1 company stated that the pending contempt proceedings was the reason for not making payment whereas the petitioners contended that there no such order made by the Hon'ble High Court of Delhi. It is the contention of the P1 to P3 that the company owes ₹ 27.50 crores of outstanding loan and the same are to be settled with 18% interest p.a. Like the reversal of guarantee commission, the R1 company has also reversed the entry regarding unsecured loan citing the reasons that the petitioners mismanaged the affairs of the Company. 41. It is the contention of the P1 to P3 that the Hon'ble Delhi High Court in order dated 13.09.2002 in IA No.4350/2002 in suit No.904/2002 took judicial notice of the unsecured loan to R1 Company. The Suit itself was dismissed as withdrawn by order dated 23.09.2010. However, R1 has in their audited financials even as on 31.03.2015 claimed that the loan is not being repaid because of the pendency of the suit. 42. The R1 Company has taken a defence in .....

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..... tioners have been oppressed, on page 21 of the written synopsis, the Petitioners have stated that dismissal of writ petition challenging bid of POAL and its approval by ARCIL or challenge to scheme of rearrangement under section 391 of 1956 Act cannot be construed that the issue of oppression and mismanagement was decided. Therefore, this argument cannot be accepted. 47. As may be seen from the common orders of the Division Bench of the Hon'ble Andhra Pradesh High Court in OSA No. 1/2009 and OSA Nos. 62, 65 and 66/2007, the petitioners have alleged that the ARCIL took over the R1 Company under the SARFAESI Act and through a sham and dubious bidding process and allotted the same to POAL (para 20 of the order). The Petitioners have also challenged the provisions of the scheme itself that provided for conversion of the entire equity capital into preference share capital (para 28 of the order) as well as the exercise of voting rights by IDBI as pledgees of the shares (para 35 of the order). 48. The Hon'ble Division Bench found, in page 57 of its order, that what is obvious is that the objectors (the petitioners herein), having participated in the bidding process and failed in t .....

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