2013 (6) TMI 181 - HC - Companies Law

Demerger - order was passed on 8th May, 2007 restraining the appellant from making any representation in the name or on behalf of the company. - Contempt application - The consistent case is that the signatures were forged. - held that - Having considered the submissions of the parties the application filed by the respondents was under Regulations 44 and 47 of the 1991 Regulation and although the application was not treated under Regulation 47 but the same was treated under Regulation 44 of the 1991 Regulation and order passed on 5.2.2009. An interim order was passed on 8.5.2007 whereby the MKA group was restrained from representing the Company. During the subsistence of the said order the letter was issued and therefore the CLB was entitled to pass the said order. Admittedly the said order was passed after giving an opportunity of hearing to the parties, but while passing the order no reason has been recorded and it is only for non-recording of reason the same is set-aside - This will however not prevent the Tribunal if so entitled to pass an order after hearing the parties and passing a reasoned order. In fact the order passed is an interim order and after filing of affidavits the application be disposed off in accordance with law.

Summary

Issues:
1. Contempt application for alleged violation of order dated 8th May, 2007.
2. Lack of reasons assigned in the order dated 5th February, 2009.
3. Jurisdictional error due to non-grant of reasons.
4. Application filed under Regulations 44 and 47 of the Company Law Board Regulations, 1991.
5. Dispute over the order dated 8th May, 2007 being ex parte or not.
6. Consideration of parallel proceedings initiated by the MKA group.
7. Compliance with principles of natural justice and quasi-judicial requirements.
8. Significance of the inspection report submitted by the Registrar of Companies.
9. Interpretation of orders passed on 17th April, 2009 and 5th February, 2009.

Analysis:
1. The appeal was filed under Section 10F of the Companies Act, 1956, challenging the order dated 5th February, 2009, which was based on a contempt application for an alleged violation of the order dated 8th May, 2007. The appellant claimed that the order under appeal was passed without sufficient reasons, which is a requirement under Section 10E(4C) and 5 of the 1956 Act, emphasizing the importance of natural justice principles in quasi-judicial proceedings.

2. The lack of reasons assigned in the order dated 5th February, 2009, was a crucial issue raised by the appellant, citing precedents like 1990 (4) SCC 594 and 2010 (3) SCC 732, which emphasized the mandatory nature of providing reasons in judicial orders. The absence of reasons was considered a jurisdictional error, leading to the set-aside of the order based on established legal principles.

3. The application filed under Regulations 44 and 47 of the Company Law Board Regulations, 1991, was a key aspect of the case. The appellant argued that the application should have been dismissed as it was not treated as a contempt application, and the order passed lacked justification. The dispute over the nature of the application and its treatment under the relevant regulations raised questions regarding the validity of the subsequent order.

4. A significant contention revolved around whether the order dated 8th May, 2007, was ex parte or not. The respondent argued that the order was issued after hearing both parties and was part of proceedings under Sections 397 and 398 of the Companies Act, 1956. The interpretation of this order and its implications on the subsequent events formed a critical part of the legal argument.

5. The consideration of parallel proceedings initiated by the MKA group was another issue addressed in the judgment. The appellant's conduct in acquiescing to previous orders and the timing of subsequent appeals were scrutinized to determine the legitimacy of the challenges raised against the order dated 5th February, 2009.

6. The significance of the inspection report submitted by the Registrar of Companies was highlighted during the proceedings. The report revealed details regarding the resignation of the MKA group from directorship, which influenced the arguments presented by both parties regarding the authority to participate in company matters.

7. Interpretation of orders passed on 17th April, 2009, and 5th February, 2009, was crucial in determining the outcome of the appeal. The court analyzed the nature of these orders, distinguishing between interim and final orders, and emphasized the need for reasoned decisions in quasi-judicial proceedings to ensure compliance with legal requirements and principles of natural justice.