2009 (7) TMI 757 - HC - Companies Law

Operative order passed by the CLB challenged - Held that - Counsel for the Appellants submits that if the Respondent No. 1 is allowed to withdraw the said company Petition, it would result in allowing the Respondent No. 1 to withdraw from the judicial admission which cannot be countenanced. He further submits that the Court also cannot overlook the fact that the said company Petition is already admitted and advertised and it is not open to the Respondent No. 1 on its own to withdraw the said Petition which in turn is espousing the cause of the body of creditors. In my opinion, it is unnecessary to delve upon these aspects at the present having regard to the fact that I am relegating the parties before the CLB for reconsideration of the Petition for admission by setting aside the order of admitting the Petition in part under section 111A of the Act. All questions raised by the parties will have to be addressed on its own merits at the appropriate stage as and when occasion arises. The ad-interim reliefs granted on 13-3-2008, 15-4-2008 or 1-5-2008 are clearly in excess of jurisdiction of the CLB to grant such interim relief. As I am inclined to relegate the parties before the CLB, even this question can be considered by the CLB on its own merits. Appeal allowed.

Issues Involved:
1. Maintainability of the Petition under section 111A, 397, and 398 of the Indian Companies Act, 1956.
2. Interim reliefs granted by the Company Law Board (CLB).
3. The impact of the Respondent's winding-up petition on the maintainability of the current petition.
4. Allegations of forum shopping by the Respondent.
5. Jurisdiction of the CLB to grant interim relief.

Issue-wise Detailed Analysis:

1. Maintainability of the Petition under section 111A, 397, and 398 of the Indian Companies Act, 1956:
The appeal challenges the order of the CLB admitting the petition in part under section 111A of the Act. The appellants contended that the petition was not maintainable as the petitioner was not a member of the company and had previously filed a winding-up petition as a creditor. The CLB's prima facie opinion on maintainability addressed points (a), (b), and (e) but failed to discuss point (c), which asserts the petitioner's status as a creditor, and point (d), regarding forum shopping. The court noted that the CLB must address whether a party can institute proceedings under section 397/398 or 111A after having filed a winding-up petition as a creditor.

2. Interim reliefs granted by the Company Law Board (CLB):
The appellants argued that the interim reliefs granted by the CLB exceeded its jurisdiction under section 111A(4) of the Act. The court decided to leave the question of interim reliefs to the CLB for reconsideration along with the issue of admission of the company petition. The interim orders dated 13-3-2008, 15-4-2008, and 1-5-2008 were to continue until further orders by the CLB.

3. The impact of the Respondent's winding-up petition on the maintainability of the current petition:
The appellants argued that the respondent, having filed a winding-up petition as a creditor, could not maintain another petition as a member/shareholder. The court emphasized that the CLB must address whether a party can take diametrically opposite stands in different proceedings based on the same transaction. The CLB's failure to address this dichotomy warranted setting aside the impugned decision and reconsideration of the matter afresh.

4. Allegations of forum shopping by the Respondent:
The appellants alleged that the petition suffered from forum shopping as the respondent had filed multiple proceedings in different forums. The CLB's discussion on this point in Paragraph 52 of the impugned judgment was deemed insufficient. The court highlighted the need for the CLB to address whether the respondent's actions constituted forum shopping and if it affected the maintainability of the petition.

5. Jurisdiction of the CLB to grant interim relief:
The appellants contended that the CLB's authority to grant interim relief was restricted by section 111A(4) of the Act. The court decided that the CLB should reconsider the scope of its jurisdiction to grant interim reliefs along with the issue of the petition's admission.

Conclusion:
The court set aside the CLB's order dated 16-4-2009 and restored Company Application No. 255/2008 to be heard along with Company Petition No. 48/2008. The CLB was directed to reconsider the petition for admission and the restored application on their own merits, addressing all raised questions. The interim arrangements were to continue until further orders by the CLB. The parties were instructed to appear before the CLB on 17-7-2009 for scheduling the hearing.

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