TMI Blog2022 (5) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... ents herein have sought a direction restraining the Appellants 2 to 8 herein from in any manner alienating, mortgaging, selling or encumbering any of the movable or immovable properties of the company. It is seen that the NCLT made absolute the status quo order dated 17.01.2020, further by making it clear that the approvals/resolutions with respect to raising of any additional debt shall be kept in abeyance and the same will be subject to the outcome in the main Company Petition - This Tribunal is of the view that the NCLT while passing the interim order of status quo on 17.01.2020 simply stated that the parties are directed to maintain status quo in all aspects as on today until further orders, has not specifically made out whether status quo to be maintained with respect to management, shareholding and immovable assets of the Company. This Tribunal is of the view that the status quo order is in wider amplitude. It is an admitted fact that the Appellant No.1 Company is into the business of automobile sector and there are 6000 workers in the Company. As per the MOA, the main objects are to carry on the business of motor dealers of cars, motor vehicles etc. and the company has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KANTHI NARAHARI, MEMBER ( TECHNICAL ) Preamble: The Present Appeal is filed being aggrieved by the order dated 18.06.2021 (Impugned order) passed by the NCLT, Kochi Bench in CA No. 44 of 2021 in CP No. 2 of 2020 whereby the NCLT makes the interim order dated 17.01.2020 absolute, making it clear that the Approvals/Resolutions etc. with respect to raising of any additional debt shall be kept in abeyance and the same will be subject to the outcome in the main Company Petition. Brief Facts: Appellant s Submissions: 2. The Ld. Sr. Counsel for the Appellants submitted that the NCLT erred in passing the impugned order by overlooking the fact that there is no violation of the Status quo order dated 17.01.2020 by the Appellants. It is submitted that the Appellants herein are the Respondents and the Respondents herein are the Petitioners before the NCLT being CP No. 2 of 2020. The Appellant No. 1 Company has been the most successful dealership of Maruti Suzuki Vehicles in India both in terms of volumes and revenue. The Respondents 1 to 4 are the Shareholders of the Appellant No. 1 Company each owning 5% shares respectively. 3. While matter stood thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in passing the impugned order by overlooking the fact that the status quo order can only be in the context of reliefs sought in the Company Petition and cannot be an all encompassing order, preventing the Company from carrying out its regular activities on a day-to-day basis. Further, the Hon ble NCLT erred in passing the impugned order failing to take notice of the intent of the Respondents which is to obstruct the smooth flow of funds, day-to-day management and affairs of the Appellant No.1 Company by misconstruing the status quo order. Further, the impugned order is vague and very wide and will cripple the functioning of the Appellant No.1 Company, on which livelihood of around 6000 employees depends upon. 7. On the question of Law the Ld. Sr. Counsel submitted that after passing of the status quo order on 17.01.2020 there have been various Board Meetings and Annual General Meeting where various aspects including availing/renewal of Credit facilities have been discussed and dealt with in the presence of Respondents 1 and 2 herein and they are estopped from raising a plea of violation of the status quo order. 8. On the grounds the Ld. Sr. Counsel submitted that the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d managerial day- to-day matters including all financial transactions being done in the course of business. Respondent s Submissions: 13. The Ld. Sr. Counsel appearing for the Respondents submitted the brief facts in opposing the pleas sought in the Appeal in its entirety. 14. It is submitted that the Hon ble NCLT after duly considering the facts set out in the Company Application and the legal positions represented by both the parties was pleased to allow CA 44 of 2021 filed by the Respondents herein by making its earlier interim order of status quo dated 17.01.2020 absolute by clarifying that the said order of status quo shall apply to Approvals/Resolutions with respect to raising of additional debt. The Present Appeal is filed to escape the consequences of violating the order of status quo dated 17.01.2020 passed by the NCLT Kochi Bench and the present Appeal is not maintainable as there is no new interim order but is merely a clarification pertaining to an earlier interim order dated 17.01.2020 wherein the parties to the Company Petition were directed to maintain status quo until further orders. 15. The Ld. Sr. Counsel submitted that the Respondents have filed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ECLGS Scheme dated 30.05.2021 itself provide that second Charge will be created on existing charged assets as security for the loan availed under the ECLGS Scheme. Thus, ex facie the loans availed under the scheme were not mere restricting but additional facilities requiring security as second ranking charge on existing hypothecations. 20. Further, it is submitted that the Appellants have made misreading statements and averments before this Tribunal that the loan facilities availed under the ECLGS Scheme despite the subsistence of interim order, were mere restructuring and reorganisation of earlier existing facilities. The such statement is belied by the documents filed by the Appellant company before the ROC with respect to charges created against the facilities availed under the ECLGS Scheme. These documents ex facie show that the facilities availed were in addition to the pre-existing facilities and new charge was created for each of said additional facility where mostly it was a second charge on existing hypothecations. The Appellants have not filed any of these documents before the NCLT and has made contradictory and incorrect statement before this Tribunal. 21. In supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Axis Bank 7,00,00,000 3 TATA Capital Financial Services Limited 3,90,00,000 4 Kotak Mahindra Pvt Ltd. 1,55,00,000 5 HDFC Bank Ltd. 5,58,00,000 6 YES Bank Ltd. 3,70,00,000 7 ICICI Bank Ltd. 7,11,00,000 8 Indus land Bank Ltd. 2,83,00,000 Total 62,67,00,000 26. On the other hand, the Ld. Sr. Counsel for the Appellant submitted that apart from filing the CA 44 of 2021 the Respondents herein have filed an application under Section 425 of the Companies Act, 2013 read with Section 10 and 12 of the contempt of Courts Act, 1971 seeking initiation of Contempt against the Appellants and submitted that the Appellants have not violated the interim order passed by the NCLT on 17.01.2020. 27. It is a fact that the 245th B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Ajit kumar further explained that they cannot assent to this agenda item since they are not sure how the availed funds will be used and executed. 29. The contention of the Respondents herein that the NCLT Kochi Bench passed an interim order of status quo in all aspects as on 17.01.2020 until further orders, however, the Appellants convened and held 245th Board meeting on 10.02.2021 by taking certain decisions more particularly raising of debt of Rs. 62.67 Crores by the Appellant No.1 Company availing of ECLGS which is in contravention of status quo order dated 17.01.2021 which is still subsisting. It is also contended that the Appellants have not sought modification of the interim order dated 17.01.2021, however, filed an affidavit dated 03.03.2021 which is in violation of the status quo order. Findings: 30. The NCLT in the order under challenge at para 10 and 11 observed as under: 10. I have heard the Ld. Sr. Counsel appearing for the Applicants and the Ld. Sr. Counsel appearing for the Respondents and had gone through the documents produced. The only question to be considered here is whether the Respondents have violated the interim order passed by thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement, shareholding and immovable assets of the Company. This Tribunal is of the view that the status quo order is in wider amplitude. It is an admitted fact that the Appellant No.1 Company is into the business of automobile sector and there are 6000 workers in the Company. As per the MOA, the main objects are to carry on the business of motor dealers of cars, motor vehicles etc. and the company has to perform its functions as per its objectives. The NCLT ought to have specified the status quo order with regard to its either shareholding, management and immovable properties etc. Though the Respondents herein have alleged the acts of oppression and mismanagement in the affairs of the company and sought various reliefs i.e. main and interim reliefs and the Company Petition is still pending for Adjudication. While so it is not out of place to mention that the Petitioners expresses their apprehension that the assets of the Company are being sold or the Petitioners/Applicants proposed to remove from the Board of Directors of the Company, in such cases to prevent such acts the Tribunals keeping in view of the interest of the Applicants grants interim order. Any orders either interim or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to raising of additional debt, which according to the Appellants is a interference in the day-to-day affairs of the Company. 36. This tribunal also makes it clear that the business and its operations of the Company cannot be put to a grinding halt. 37. The Ld. Counsel for the Respondents herein had submitted that the no relief can be granted to the Appellants for the reason that the Appellants have not come before this Tribunal with clean hands and relied upon the judgments of the Hon ble Supreme Court in S.P. Chengalvaya Naidu vs. Jagannath (1994) 1 SCC 1 wherein the Hon ble Supreme Court held that a litigant coming before the court with unclean hands can be thrown out at any stage of litigation as held at para 5 6. Further, the Ld. Counsel relied upon the Judgment of the Hon ble Supreme Court in Oswal Fats Oils ltd. vs. Additional Commissioner (2010) 4 SCC 728. The Hon ble Supreme Court held that it is the duty of the court not to grant any relief to a person who has withheld material facts (para 15) . 38. This Tribunal considered the above Judgements however we are of the view that the Appellants have made out a prima facie case hence, it cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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