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TMI Blog2022 (5) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... sent 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, the Appellant No. 2 and Respondent No. 2 along with other Respondents entered into a Memora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 NCLT failed to appreciate that in light of the status quo order i.e. parties to maintain status quo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Company Petition before the NCLT Kochi Bench alleging acts of Oppressions and Mismanagement including fraudulently di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 support of the factual and legal arguments the Ld. Counsel relied upon the judgments. In view of the submissions as made the Ld. Sr. Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Board meeting held on 10.02.2021, the Company proposed to avail ECLGS and the same was put up in the agenda along with the notice for the 245th Board Meeting which was circulated by an email dated 02.02.2021, during the Board meeting held on 10.02.2021 the proposal was discussed the Respondents (being minority shareholders) also participated in the Board meeting. However, the Respondents 1 and 2 expressed their dissenting view, which was duly recorded and noted in the minutes of the meeting. However, the Appellant Company being a Board managed Company with no restraint on its functioning, the Board then passed appropriate Resolution to avail ECLGS in the best interest of the Appellant No. 1 Company. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 this Tribunal on 17.01.2020, after hearing both the parties? This Tribunal need not interfere with the progress of the Company by any additional funding through ECLGS Scheme under GECL Scheme of NCGTC. However, since there is status quo order given by this Tribunal, any action for the aforesaid purpose should be with the prior permission of this Tribunal. Nothing prevented the Respondents in approaching this Tribunal with a petition to modify or vacate the interim order dated 17.01.2020 before venturing to get nay well considered re-planning and re-organisation of the existing loans. The judicial propriety demands such an order from this Tribunal, while this tribunal ceased of the issue involved in this matter. If Respondents appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erim 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 final should invariably in the paramount interest of the Company. 33. In the present case the Respondents herein have alleged that the Appellants have violated the orders of the status quo dated 17.01.2020 by availing ECLGS i.e. Emergency Credit Line Guarantee Scheme offered by the Govt. of India and the Appellant Company in it 245th Board meeting dated 10.02.2021 taken a decision by majority of Board of Directors to avail ECLGS during subsistence of status quo order dated 17.01.2020. Taking such a decision in the Board meeting is in the interest of the Company or not is a moot question to be considered by this Tribunal. The Ld. Counsel for the Appellant contended that they have filed an affidavit dated 03.03.2021 bringing to the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 said that the Appellants have come before this Tribunal with unclean hands. 39. On the other hand, the Ld. Counsel for the Appellants submitted that by way of this impugned order the Appellant No.1 Company cannot carry on its day-to-day affairs independently by taking its decisions apt to the requirements of the Company. However, by way of the impugned order it amounts to interference with day-to-day running of the Company as going concern. The Ld. Counsels for the Appellants also relied upon the following judgments on the aspects of status quo order should not be vague. 1987 (supplement) SCC 394 in the matter of "Bharat Coking Coal ltd vs. State of Bihar & Ors." para 5. Further, the Hon'ble High Court of Karnataka in the matter of "N Ramaiah vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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