2017 (1) TMI 1678 - Tri - Companies Law

Oppression and mismanagement - Contempt petition - non-compliance of order - allotment of further shares by holding a valid EOGM - HELD THAT - Prima facie it appears that the Respondents are at fault in not obeying the directions of the respected coordinate Bench. While delivering the final verdict, the CLB Bench has held that 'the Petitioner has successfully established his allegations regarding the of oppression and mismanagement(reproduced from para 39 of the Order). The directions were unambiguous that a valid EOGM is to be convened to allot further shares. The Petitioner has, therefore, asked the Respondent No.l Company by several letters to furnish copy of 'Register of Members'. Merely filing an Appeal ipso facto does not put any bar on the implementation of an Order. No cogent or convincing reason has been given by the Respondents in not implementing the directions of the CLB. Alienation of immovable properties of Respondent No.l Company - HELD THAT - In the said Order, it was directed that the Petitioner should be given an opportunity to match the offer if the Respondent No.l Company is alienating its assets. In one of the hearings held before the NCLT Bench, Ahmedabad on 29th September, 2016, it is very strange that the Ld. Representative of the Respondents has stated that a Resolution was passed by the Board of Directors to alienate the immovable properties of the Respondent No.l Company. The apprehension of the Applicant is, therefore, reasonable because no opportunity appears to have been granted to match the selling price of the property as directed. The Applicant / the Original Petitioner has also pleaded to hold the Respondents for guilty of contempt - That instead of initiating contempt proceedings against the Respondents, as an alternate, it is hereby ordered that the Respondents shall pay a sum of (Rupees Ten thousand only) to the Applicant as cost of the litigation. The main Petition shall now be listed for hearing on 6th March, 2017 - Application disposed off.

Summary

Issues involved:
Implementation of an Order of Company Law Board, Mumbai Bench; Non-compliance of specific directions in the Order; Alleged contempt of court; Alienation of immovable properties without giving opportunity to match offer; Relief sought by the Applicant.

Analysis:

1. Implementation of Company Law Board Order:
The judgment deals with an application concerning the implementation of an Order of the Company Law Board, Mumbai Bench. The Applicant claimed that certain directions in the Order had not been followed by the Respondents, leading to the current dispute. The Respondents, on the other hand, argued that the delay in filing the application and the pendency of an appeal before the High Court automatically stayed the implementation of the lower forum's Order. However, the Tribunal found that the Respondents were at fault for not obeying the directions of the Company Law Board. The Tribunal emphasized that the mere filing of an appeal does not automatically suspend the implementation of the Order unless a stay has been specifically granted by the higher court.

2. Non-compliance of Specific Directions:
The Applicant contended that the Respondents failed to comply with a specific direction in the Order related to convening a valid Extraordinary General Meeting (EOGM) to allot further shares. The Tribunal noted that the Respondents did not provide the requested documents, citing the pending appeal as a reason for non-compliance. However, the Tribunal found this justification unjustifiable, especially in the absence of a stay order from the higher court. The Tribunal held that the Respondents had not provided any convincing reasons for their non-compliance with the directions.

3. Alleged Contempt of Court:
The Applicant also alleged contempt of court due to the alienation of immovable properties by the Respondent Company without providing an opportunity to match the offer, as directed in the Order. The Tribunal found the Applicant's apprehension reasonable and directed the Respondents to refrain from alienating or dealing with assets without proper notice to the Petitioner. The Tribunal emphasized the importance of following the directions to ensure fairness and compliance with the Order.

4. Relief Sought by the Applicant:
In light of the circumstances and the non-compliance by the Respondents, the Tribunal decided not to initiate contempt proceedings but ordered the Respondents to pay a sum as the cost of litigation to the Applicant. Additionally, the Tribunal directed the Respondents to provide the Petitioner with a copy of the Register of Members and to report compliance with the directions promptly. The Tribunal highlighted the need for the Respondents to strictly abide by the directions to prevent future non-compliance.

In conclusion, the judgment addresses various issues related to the implementation of a Company Law Board Order, non-compliance with specific directions, alleged contempt of court, and the relief sought by the Applicant. The Tribunal emphasized the importance of following court directions and ensuring fairness in dealings to maintain legal compliance and integrity in corporate matters.