TMI Blog2023 (10) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2016. The essence of this ad-interim injunction, even though granted only till the next date of hearing, is that Ld. NCLT, after considering and noticing relevant facts and arguments of the parties, allowed the EGM dated 21.11.2016 to be conducted to only discuss the ordinary business and take necessary approvals connected with the filing of the statutory compliances. The ad-interim injunction also restrained the Respondents from alienating the moveable assets to those that were enlisted in the agenda of the EGM to be held on 21.11.2016. The Learned Senior Counsel for Respondents has argued that the Articles 59 and 60 were not designated as entrenched articles as neither a specific notice under section 5(5) was given and moreover, only four out of thirteen members attended the EGM of Orbit Electricals Pvt. Ltd. held on 30.9.2014, which does not fulfil the requirement of section 5(4) - we are satisfied after considering the arguments and averments that Articles 59 and 60 can in a prima facie manner be considered as entrenched articles and therefore, their amendment/deletion in the EGM dated 3.5.2019 could have been done, after satisfaction of the provisions of sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UDGMENT [Per. Dr. Alok Srivastava, Member (Technical)] In the present appeal, filed under Section 421 of the Companies Act, 2013 (in short Companies Act ), the Appellants have challenged order dated 31.12.2019 (in short Impugned Order ) passed by National Company Law Tribunal, Mumbai (in short NCLT ) in MA No. 1449/2019 filed in Company Petition No. 47/2016. 2. In the Impugned Order, the Ld. NCLT has disposed of MA No. 1449/2019 holding that the Resolutions approved in the Extraordinary General Meeting ( EGM ) held on 03.05.2019 were in accordance with law and therefore, no interference is required in the said decisions/resolutions. 3. In short, the facts of the case, as are relevant to this appeal, are that Pralhad P. Chhabria ( PPC ) held majority shareholding in Orbit Electricals Pvt. Ltd. (Respondent No. 1, R-1 ) and he, on account of old age and weak health, decided to create a trust by the name of Pralhad Chhabria Trust for the benefit of the beneficiaries namely Mrs. Aruna Katara (his daughter), Mr. Vijay Chhabria (his nephew), Mr. Deepak Chhabria (his nephew), and Mr. Prakash Chhabria (his son) who were all part of his extended family. On this basis, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged by Deepak Chhabria ( DC ) and Vini Chhabria ( VC ) in CP No. 47/2016 with prayers for final relief of declaring the meeting of Board of Directors dated 31.03.2016 as illegal and the resolutions passed in the alleged Board Meeting as null and void. Additionally, the petitioners also sought interim relief for inspection of the register of members and minute books of the Board of Directors meetings, committee meetings and shareholder meetings for a specified period and requested for staying the operation of the resolutions passed in Board Meeting dated 31.03.2016. 8. While CP No. 47/2016 was pending, PC Orbit Electricals preferred MA No. 645/2017 challenging the maintainability of CP No. 47/2016 which was decided by the NCLT vide order dated 05.12.2018 by which CP No. 47/2016 filed by DC VC was held to be maintainable. Thereafter, an appeal namely, CA (AT)No. 39/2019 was preferred against an order dated 05.12.2018 of NCLT which was disposed of by the NCLAT by order dated 13.03.2019. According to this order, the order of NCLT regarding maintainability of CP No. 47/2016 was upheld and further the NCLAT held that CP No. 47/2016 was pending since November, 2016, this peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or her nominee successor in I2IT. He has argued that in this manner PPC ensured that the financial interest of each Member of the next generation would be properly looked after and the various Members of the family would ensure that the interest of other Members is well protected. 13. Mr. Ramji Srinivasan, Ld. Sr. Counsel has further pointed out that as per the intention of PPC and Memorandum of Understanding (MoU) dated 11.10.2011, which was executed between FCL FIL, which also supported and cemented the business interests of the next generation family members that PPC had in mind. He has further submitted that in order to ensure that the AoA of Orbit Electricals would also be in consonance with his intention as ingrained in the trust deed and MoU, amendments in the relevant articles were also made so that the Board of Orbit Electricals may not go against PPC s intention of providing a fair and just division of assets between his own children and nephews. 14. Mr. Srinivasan, Ld. Sr. Counsel has also argued that in the AoA of Orbit Electricals, Article 12 clearly states that the shares of Orbit Electricals shall be held exclusively by the PPC family and/or KPC family and/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate provisions in the AoA , Trust Deed , his Last and Final Will to concretize his intention. 18. Mr. Srinivasan, Ld. Sr. Counsel for the Appellant has further argued that the Gift Deed , which was executed on 28.03.2016 in an extremely hasty manner, without any knowledge or information to the other branch of the family, is itself doubtful and under cloud of suspicion. In this connection he has pointed out to a glaring deficiency in the Gift Deed and the Securities Transfer Form for transfer of shares by submitting that while the Gift Deed and the Transfer Form of shares were both executed on 28.03.2016, there is no mention in the Gift Deed of the Trust Deed or the Last Will of PPC. He has further pointed out that in the Securities Transfer form (Form No. SH-4) dated 28.3.2016 it is mentioned that stamp affixed is Rs. 3,60,00,000/- whereas in fact the stamp was purchased only on 30.03.2016, i.e. two days after the Securities Transfer Form was signed and a statement of the value of stamp affixed was made in the Securities Transfer Form. 19. Mr. Srinivasan has further argued that since the Gift Deed and the Securities Transfer Form were both purportedly exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to these articles being entrenched articles , he has pointed out that after the Companies Act, 2013 was enacted, an EGM dated 30.09.2014 was held to approve/revalidate the AoA including Articles 59 60. He has also claimed that notice for the EGM mentioned action under Section 14 and other provisions of the Companies Act, 2013 and further, about the contention of the Respondent that explicit mention of approval under Section 5 was required in the notice, he has pointed out that a mention was made that action is being taken under Section 5 and other relevant provisions of the Companies Act, 2013. He has also pointed out that Section 184 of the Companies Act, 2013 stipulates that an interested party should not vote in any matter where he has any interest but PC voted in the EGM held on 03.05.2019 in favour of the said resolutions. 23. Mr. Srinivasan, Ld. Sr. Counsel for the Appellants has also rebutted the arguments of the opposite party regarding the authenticity of the gift deed and transfer form of shares by stating that these are matters to be decided under the Companies Act, 2013 regarding which CP No. 47/2016 is still pending before the NCLT, Mumbai. He has argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form, PPC has fulfilled the requirement of Article 15A. He has further pointed out that Article 15A (ii) comes into operation only upon the death of PPC when all the equity shares lying in his name shall devolve to the Pralhad Chhabria Trust but since the gift deed was executed before the death of PPC, Article 15A (ii) shall not come into play. 28. In his arguments, Mr. S.N. Mukherjee, Ld. Sr. Counsel has referred to a Civil Suit filed by Deepak Chhabria (DC) and Kishan Chhabria (KC) on 18.11.2016, and argued that as would be evident from the array of parties in the Civil Suit and the prayers made therein certain interim reliefs were prayed for and this application for interim relief was disposed of on 02.12.2020. An important interim relief sought was the exercise of voting rights in respect of disputed 100,300 shares and interfering or obstructing in the management of FCL, and amendment of AoA of Orbit Electricals (P) Ltd. He has further pointed out that these prayers were not acceded to by the Civil Court. He has therefore, claimed that this order operates as res-judicata with regard to the prayers for interim relief made in MA 1449/2019. He has further pointed out that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, therefore, the Appellants cannot claim their right on the basis of some non-existent family arrangement. 33. Mr. Mukherjee, Ld. Sr. Counsel has also brought to our attention order dated 21.09.2018 in Civil Application (ST.) No. 27067 of 2018 to contend that the Hon ble High Court in the appeal on the order of the lower court declined to grant any interim relief and therefore the appellants are now trying their luck in the present case to get interim relief which is not lawful. 34. Mr. Mukherjee, Ld. Sr. Counsel has also adverted to the Civil Suit No. 1372/2017 filed by Vijay Kishan Chhabria on 24.10.2017 wherein similar prayers, as made in MA 1449/2019, were made and since he could not get required relief, his brother DC later filed an application asking for the same relief. 35. Mr. Mukherjee, Ld. Sr. Counsel, has also brought to our attention the MoU dated 11.10.2011 executed between FIL FCL and contended that since both the parties are not before this Tribunal, this MoU does not have any relevance in so far as MA 1449/2019 is concerned and any reliance placed by the Appellants regarding their rights in management of FCL should be disregarded. 36. Mr. Mukherjee, L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of 100,300 disputed shares in the Company Orbit Electricals, and certain other reliefs. 39. Mr. Mukherjee, Ld. Sr. Counsel has argued that the Board meeting of Orbit Electricals took place on 27.03.2019 03.04.2019 when it was decided to convene the EGM to consider the resolutions relating to amendment/deletion of Articles 59 60 of the AoA and further that the notice for EGM dated 03.05.2019 included Items no. 1 2 in Special Business relating to the amendment/deletion of Articles 59 60. 40. Mr. Mukherjee, Ld. Sr. Counsel has rebutted the contention of the appellants that Articles 59 60 were entrenched articles and, therefore, such resolutions were approved in the EGM. He has further rebutted the argument of the Appellants that in view of Section 184 of the Companies Act, 2013, Prakash Chhabria could not have chaired the EGM by pointing out that Section 184 only applies to a Board meeting and not EGM, and moreover this provision would not apply to a private/family company. He has adverted to notification dated 05.06.2015 of the Ministry of Corporate Affairs, Government of India where it is clearly indicated that Chapter XII, Sub-Section (2) of Section 184 would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors. 44. Mr. Povvayya, Ld. Sr. Counsel has argued that PPC was in full control of his senses when he made the gift deed on 28.03.2016 as he was signing cheques and authorizing payments at that time. He has further pointed out that earlier when the AoA were amended on 30.09.2014, only four out of thirteen members attended and the resolution was carried through and so there is no requirement of all the members to agree with the special resolution. He has further argued that since there is a valid gift deed executed by PPC in favour of his son PC, the transfer of shares has to be effected by a procedural process which is defined in law, which is what has happened. Mr. Povvayya, Ld. Sr. Counsel has further argued with regard to the holding of Board meeting dated 31.03.2016, it may be pointed out that DC signed the attendance register and accepted the sitting fee, and furthermore in the same Board meeting FCL was paid about Rs. 9.15 Crores for sale of 61,00,000 shares of I2IT Pvt. Ltd. which was accepted by DC on behalf of FCL. In such a situation, he has argued, DC cannot now turn around to say that the Board meeting on 31.03.2016 did not take place. He has further argued that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MA 1449/2017. 47. Furthermore, he has argued that the Board of Directors meeting of Orbit Electricals noted this transfer of a total of 8548 shares in favour of PC and Aruna Katara and another ten shares transferred to PC trust in its meeting dated 15.03.2012 in which DC was present and he voted in favour of these transfers. Mr. Krishnendu Datta, Ld. Sr. Counsel has further pointed to the section Said Shares in the trust deed in Definitions Clause 4(c) to claim that the shares of Orbit Electricals were to be settled, donated or gifted by the settlor or by any other trustee or by any other person to the trust in the future and therefore, the shares would have to accrue to the trust only in the future by way of settling, donating or gifting. 48. On the issue of Articles 59 and 60 being entrenched articles , Mr. Krishnendu Datta, Ld. Sr. Counsel has pointed out that on 30.09.2014 the AoA of Orbit Electricals were amended and at that time only four of the thirteen members attended. He has made this argument in connection with the argument of the Appellant that all the members of R-1 Company Orbit Electricals should have voted for Amending articles 59 and 60 since they were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if there is any overreach of the AoA and any detriment to the interests of the shareholders, it would be considered and decided by the shareholders in the extraordinary general meeting. 52. Mr. Poovayya, Ld. Sr. Counsel has further pointed out that in the criminal complaint filed much later in 2020, of an event that took place in 2016 with EOW, Pimpri, the matter went up to the Hon ble Supreme Court, and by an order in SLP (Cr) No. 6814 of 2023 Hon ble Supreme Court has also not shown any inclination that the criminal complaint be pursued further. 53. In rejoinder, Mr. Ramji Srinivasan, Ld. Sr. Counsel for Appellant has rebutted the argument of Ld. Sr. Counsels for Respondents that since the Appellants have failed to obtain any interim relief from the Ld. Civil Court in Pune, they are trying to get a similar relief in the company court proceedings by arguing that the reliefs sought in the civil proceedings were very different from those prayed for in the company court proceedings. The fact is that in the company court proceedings the appellants have raised the issue that the Board meeting dated 31.03.2016 did not take place, and on that basis, prayed that the actions taken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f requisite stamp duty on 28.3.2016, Mr. Srinivasan, Ld. Sr. Counsel has pointed out that it is claimed that stamp duty amounting to Rs. 3.60 crores was affixed on the Securities Transfer Form on 28.03.2016 when the Gift Deed was executed, even though the date of purchase of the stamp paper shows it as 30.3.2016ed only on 30.03.2016 i.e. two days after a mention regarding affixing of stamp on the transfer form was made in the Securities Transfer Form. He has thus argued that Gift Deed as well as the Securities Transfer Form were executed in suspicious circumstances and further reinforces that the fact that they were approved in a purported Board meeting on 31.03.2016 whose purpose was to approve these sham documents, and the meeting actually did not take place. He has also argued that it was possible for a short notice to be issued regarding the items of resignation of PPC as Chairman of Orbit Electricals and approval of the Gift Deed but it was not done. 57. Mr. Ramji Srinivasan, Ld. Sr. Counsel has also pointed out that Articles 59 60 are entrenched articles by the very nature of is contained in them and, therefore, in accordance with sub-sections 3 4 of Section 5 all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the Extra-ordinary General Meeting proposed to be held on 3rd May 2019, till the final hearing and disposal of the present petition. (d) That this Hon'ble Tribunal be pleased to restrain Respondent No. 2 from exercising any rights, voting rights or otherwise, in respect of 100,300 disputed shares of Respondent No. 1 Company, the transfer of which is under challenge before this Hon'ble Tribunal. (e) That this Hon'ble Tribunal be pleased to direct the Board of Respondent No. 1 not to hold any meeting till transfer of 16,619 undisputed shares lying in PPC's name to the Pralhad Chhabria Trust . 62. We also reproduce the prayers made in CP 47/2016 to appreciate the context in which MA 1449/2019 was filed. The relevant prayers are reproduced as here under:- In view of the facts mentioned hereinabove, the Petitioners pray for the following reliefs: a) That this Hon'ble Tribunal be pleased to declare that there was no meeting of the Board of Directors on 31st March 2016 and in view thereof, be also pleased to declare that all the resolutions allegedly passed at such meeting are null and void; b) That this Hon'ble Tribunal be pleas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay the operation and effect of the resolutions passed on 28th October 2016, approving the Notice of the AGM dated 29th October 2016 and the Directors Report and the Annual Report of the Respondent No.1 for the financial year 2015-2016, passed at the Board Meeting held on 28th October 2016; d) That this Hon'ble Tribunal may be pleased to stay the Annual General Meeting to be held on 21st November 2016. e) That Respondent Nos. 2-4, through themselves and/or through their agents, servants or any other officer of Respondent No. I be retrained by an order of injunction to directly and/or indirectly deal with transfer, alienate, encumber and/or dispose off the assets, both movable and immovable of Respondent No.1 to any person/entity whatsoever. f) That an Administrator(s) and/or Special Officer(s) and/or Independent Committee of Management be appointed to carry on the business of and to manage the affairs of the Respondent No.1 for such period and on such terms and conditions as this Hon'ble Tribunal may deem fit; 63. On the basis of the above-extracted prayers, we note that the appellants Deepak K Chhabria and Vini Deepak Chhabria have prayed for restraining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbit Electricals. 66. We also note that the Ld. NCLT considered the prayers for interim relief in CP 47/2016 and by order dated 18.11.2016 the following orders in the nature of ad-interim injunction till the next date of hearing were given. The relevant interim order is as given below:- 6. Heard both the sides, at length and carefully perused the Compilation filed in the light of the provisions of the Companies Act and the precedents cited. The case- laws cited supra have been studied, however, keeping brevity in mind and the urgency, legal points are not discussed in detail. After due consideration of the pleadings of both the sides, I am of the considered opinion that the urgency with which this Petition is mentioned today is justifiable because the AGM is called on 21st November, 2016 i.e. on coming Monday. In this forthcoming Meeting, certain major decisions are listed in the Agenda. Before an Order is pronounced, it is worth mentioning at this juncture that the arguments related to the Meetings held in the past of Respondent No.1 Company or the conduct of the Respondents, being a subject matter of the main Petition, it is not justifiable to take any decision or comment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 that EGM dated 21.11.2016 was allowed to be conducted to discuss only the ordinary business of Orbit Electricals and to only take necessary steps connected with statutory compliances required to be made urgently. Further, Orbit Electricals and other Respondents were restrained from not alienating the moveable assets as listed in the agenda of EGM scheduled to be held on 21.11.2016. The essence of this ad-interim injunction, even though granted only till the next date of hearing, is that Ld. NCLT, after considering and noticing relevant facts and arguments of the parties, allowed the EGM dated 21.11.2016 to be conducted to only discuss the ordinary business and take necessary approvals connected with the filing of the statutory compliances. The ad-interim injunction also restrained the Respondents from alienating the moveable assets to those that were enlisted in the agenda of the EGM to be held on 21.11.2016. All this points to the fact that the NCLT, while granting ad-interim injunction did not, prima facie, consider the case of the petitioners strong enough to give them a free hand in holding the Board meeting to discuss various issues including alienation of movable properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll-founded because the main Petition is not about a Civil dispute to settle right of inheritance among the Chhabria brothers. Rather, the relief is confining to one aspect i.e. demanding an adjudication on the validity of the Board meeting of 31.03.2016. The decisions cited on behalf of the Applicant are far from the facts of this case, hence needs no elaborate discussion in this Judgment. 8. In the light of the detailed discussion and on due consideration of the case laws discussed in foregoing paragraphs, this Bench is of the conscientious view that the Petition CP 47/241, 242, 243(b), 244/(MB)/2016 is maintainable for due adjudication under the provisions of Companies Act, 2013, hence listed for hearing on 27.03.2019. This Miscellaneous Application is, in the result, 'dismissed'. A cost of 25,000/- Imposed on the Applicants to be paid to the other side . 69. The above order of Ld. NCLT was challenged by Prakash Pralhad Chhabria and Orbit Electricals before NCLAT in CA (AT) No. 39/2019 wherein the following was observed and held in the NCLAT order dated 13.03.2019. 3. Learned counsel appearing on behalf of the respondents (appellants herein) referred differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or early hearing of CP 47/2016 while, inter-alia upholding the impugned order dated 05.12.2018 and holding that the said Company Petition was maintainable. 71. It is clear from the above order of this Tribunal that the petition CP No. 47/2016 was held maintainable and further the parties were asked to cooperate in hearings for early settlement of the issues raised in the company petition. It, therefore, would have been in the interest of both the parties and the company that the petition would have been adjudicated but unfortunately that could not happen till now. Therefore, if the respondents in this appeal, taking advantage of the pendency of the CP No. 47/2016, start effecting some very basic and fundamental changes in the AoA of the company Orbit Electricals, moreso when the proposed changes are not aligned with the intention of the family patriarch PPC in how the entire family business may be managed as exhibited in documents like the Trust Deed, MoU, it would result in making permanent changes in the management of the family run companies, to the complete and permanent detriment and disadvantage of the appellants. Thus the crucial thing would be early adjudication of CP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orbit Electricals(R-1) from acting on the Board resolution passed on 03.04.2019 and also the notice dated 09.04.2019 calling for EGM of Orbit Electricals. It is correct that on the basis of notice dated 09.04.2019 the EGM was actually held on 03.05.2019 in which resolutions mainly relating to amendment and deletion of articles 59 60 respectively of the AoA of Orbit Electricals were approved. These articles 59 and 60 have been claimed by the Appellant to be entrenched articles in accordance with Section 5 of the Companies Act, 2013 Section 5 of The Companies Act, 2013 is reproduced below:- 5. Articles. (1) The articles of a company shall contain the regulations for management of the company. (2) The articles shall also contain such matters, as may be prescribed: Provided that nothing prescribed in this sub-section shall be deemed to prevent a company from including such additional matters in its articles as may be considered necessary for its management. (3) The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more restrictive than those appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding up of the Company. Name of Company Authorised Representative Finolex Cables Ltd. - Mr. Deepak K. Chhabria Finolex Industries Ltd. - Mr. Prakash P. Chhabria Finolex Plasson (India) Ltd. - Mr. K.P. Chhabria I2IT Pvt. Ltd. - Mrs. Aruna M. Katara. Finolex Infrastructure Ltd. - Mr. Pralhad P. Chhabria or Mr. Kishan P. Chhabria Finprop Advisory Services Ltd. - Mr. Pralhad P. Chhabria or his nominee Magnum Machine Technologies Ltd. - Mr. Pralhad P. Chhabria or his nominee Any other Company Mr. Pralhad P. Chhabria or his nominee 60. This Memorandum of Association and Articles of Association of Orbit Electricals Pvt. Ltd. approved by the Company in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1956 and only through section 5(3) the concept of entrenched articles has been introduced in Companies Act, 2013. The relevant sub-sections (3), (4) and (5) of Section 5 are as follows:- 5. Articles xx xx xx xx (3) The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more restrictive than those applicable in the case of a special resolution, are met or complied with. (4) The provisions for entrenchment referred to in sub-section (3) shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company. (5) Where the articles contain provisions for entrenchment, whether made on formation or by amendment, the company shall give notice to the Registrar of such provisions in such form and manner as may be prescribed. 77. We further note that Articles 59 and 60 were re-approved after enactment of the Companies Act, 2013 by a unanimous vote of all the members present and voting in a G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not vote in favour of the amendment/deletion. 80. The Learned Senior Counsels for Respondents have raised the issue of Civil Suit No. 1418/2016 (Kishan P. Chhabria Anr. vs. Prakash P. Chhabria Ors.), which is regarding enforcement and specific performance of the family arrangement and also, inter alia, challenging the validity of the gift deed dated 28.3.2016. The Learned Senior Counsels for Appellants have raised the issue of Civil Suit No. 1312 of 2017, which is relating to the shares held by Prakash P Chhabria i.e. 116922 shares which were transferred on 13.2.2012 in favour of Prakash P. Chhabria Trust, where Vijay Chhabria is one of the beneficiaries. Regarding the Civil Suit No. 1418/2016, we are of the view that it is a suit involving a civil dispute including the validity of gift deed dated 28.3.2016. In our view, the present appeal is regarding interim order in connection with holding of the EGM dated 3.5.2019 and therefore, we do not think that the judgments in the Civil Suit No. 1418/2016 will have any bearing in the present case. The Civil Suit No. 1312/2017 also relates to an incident and event of transfer of 116922 shares on 13.2.2013, much before the board me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectively, were not carried out through unanimous resolution as Deepak Chhabria did not vote in favour of the resolutions. Therefore, it is clear that the requirement of section 5(4) of the Companies Act, 2013 was not met where it is laid down that the amendment in the said articles should be agreed to by all the members of the company in the case of a private company. Thus, prima facie we are of the view that articles 59 and 60 are in the nature of entrenched articles and therefore the resolutions regarding their amendment/deletion in the manner they were approved in EGM dated 3.5.2019 do not satisfy the requirement of section 5(4) of the Companies Act, 2013. 86. The Learned Senior Counsels for Respondents have cited the judgment of Hon ble Apex Court in the matter of Life Insurance Corporation of India v. Escort Ltd. and Others [1986 (1) SCC 264], wherein it is held that only shareholders of the company can maintain a case regarding their proprietary rights in relation to oppression and mismanagement. We note that in the present case, the maintainability of CP 47/2016 has been held by Learned NCLT by its order dated 5.12.2018, which has been further upheld by Hon ble NCLA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t matter. 90. We have made every effort not to express any final opinion regarding the veracity or otherwise of the Gift Deed and Securities Transfer Form and also the dispute in relation to the Trust Deed, MoU (between FCL and FIL), Will of Parlhad P. Chhabria and the Articles of Association of the company Orbit Electricals Pvt. Ltd. as well as the question whether Board Meeting dated 31.3.2016 was actually held. We have only adverted to the Articles of Association of Orbit Electricals Pvt. Ltd. since the issue of holding of EGM on 3.5.2019 and the resolutions passed therein are of significance insofar as MA 1499/2019 was concerned. We also would like to state that any views or opinion expressed by us even inadvertently regarding the merits of the case in relation to CP 47/2016 may not be taken into consideration as a final view while adjudicating CP 47/2016. 91. In order to consider whether a prima facie case has been made out in favour of the Appellants regarding the EGM dated 3.5.2019 and the implementation of the Resolutions passed in this EGM, we also look at the voting share of members present and voting in the EGM. It is noted that the shareholding of Prakash Pralha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transacted in the said Board meeting without prior notice to the members of the Board of Directors. The actual holding or otherwise of the board meeting on 31.3.2019 is to be examined while adjudicating C.P. No. 47 of 2016. We are only expressing doubt about the existence of this meeting in a prima facie manner. 95. We also note that the Securities Transfer Form (attached at pp.523-525 of the Convenience Compilation of the Appellant) and the Gift Deed dated 28.3.2016 (attached at pp.91-94 of the Convenience Compilation) were all executed on the same date i.e. 28.3.2016, and perhaps before the purported Board meeting took place at 10.30 am on the day. We further note from the Securities Transfer Form that the value of stamp affixed was Rs. 3.60 crores, and while the Securities Transfer Form signed and executed on 28.3.2016 shows that this stamp was affixed on the same date, the stamp paper (attached at pg. 25-97 of the Convenience Compilation of Appellant) shows that it was purchased on 30.3.2016. Thus, apparently the stamp paper was purchased two days later but in a seemingly haste the Transfer Form for shares was signed on 28.3.2016. 96. It is not clear as to why there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se his majority shareholding in Orbit Electricals to effect the change of AR. Therefore, the holding of EGM on 3.5.2019 and the decisions taken therein will upset the balance to the disadvantage of Deepak Chhabria. Therefore, the balance of convenience lies in favour of Deepak Chhabria, the appellant who by virtue of being AR of Orbit Electricals in FCL has been able to continue as Chairman of FCL. 100. With regard to the issue whether irreparable loss would accrue to the Appellant, we note that while Deepak Kishan Chhabria may continue as Chairman of Finolex Cables Ltd. on account of the Articles of Association as they existed prior to EGM dated 3.5.2019, Trust Deed and the MoU entered into between FCL and FIL. Amendment and deletion of articles 59 and 60 respectively would not only tilt the balance of convenience against Deepak Chhabria but it may also cause irreparable loss to him upon his removal as Chairman of FCL. Thus the amended Articles of Association of Orbit Electricals Ltd. have the potential to change the entire scenario by pushing him out from the management of Finolex Cables Ltd. 101. In the light of detailed discussion in the aforementioned paragraphs, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 104. The party Orbit Electricals Pvt. Ltd. preferred Civil Appeal No. 6108 of 2023 with Civil Appeal No. 6176 of 2023 against the order dated 21.9.2023 which is extracted above, on which Hon ble Supreme Court was pleased to pass the following order:- ORDER 1. The National Company Law Tribunal dismissed the application filed by the first respondent for the grant of interim relief by an order dated 31 December 2019. The first respondent is in appeal before the National Company Law Appellate Tribunal. Admittedly, no interim relief operated in favour of the first respondent during the pendency of the appeal. 2. The appeal has been heard and orders were reserved by the NCLAT on 21 September 2023. However, while reserving orders, the NCLAT has directed the parties to maintain status quo as was available prior to EOGM dated 03.05.2019 till the judgement is delivered. No reasons have been indicated by the NCLAT even prima facie for issuing the interim order, particularly in the context of the fact that there was no interim relief operating since the dismissal of the application for interim relief on 31 December 2019. It is admitted that no relief was obtained by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
