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2019 (12) TMI 1335 - AT - Companies LawValidity of conditional interim order - order of status quo - maintainability of the application under Section 241-242 of Companies Act - power of Tribunal to pass conditional order of status quo - how the petition under Section 8 of the Arbitration and Conciliation Act, 1996 is maintainable with regard to the Sale Deed or Sale of one or other asset of the Company? - HELD THAT - This issue cannot be decided by this Appellate Tribunal as the matter is pending before the Tribunal. The other question is as to whether the Arbitral Tribunal, which is already deciding the claim of the claimant can decide the question of oppression and mismanagement, if any, caused by a member or members against one or other members or group of members or the Company or such action is prejudicial to the public interest or the interest of the members or company. However, such issue, we are not going to decide in this appeal. It is for the Arbitral Tribunal to determine, if such issue has been raised. The Tribunal rightly held that predominant focus in a Company Petition under Section 241-242 of the Companies Act, 2013 is to safeguard the interest of the Company. However, if a party raises the issue of maintainability of the petition under Section 241-242 by filing a petition under Section 8 of the Arbitration and Conciliation Act, 1996, the Tribunal rightly held that such issue is to be decided but after the pronouncement by the Arbitral Tribunal and in the meantime passed interim direction as it thought fit and proper in the interest of the company. If the Tribunal is required to pass further ad-interim relief order, it may wait till the decision of the Arbitral Tribunal and then decide the main issue of maintainability and then decide on the question of passing further interim order during the pendency of the petition, if it is held to be maintainable. Appeal dismissed.
Issues:
1. Jurisdiction of the Tribunal to pass interim orders in a petition under Sections 241-242 of the Companies Act, 2013. 2. Maintainability of a petition under Section 8 of the Arbitration and Conciliation Act, 1996 in relation to the assets of a company. 3. Consideration of interests of the company in passing interim orders. 4. Role of the Arbitral Tribunal in deciding issues of oppression, mismanagement, and public interest. Analysis: Issue 1: Jurisdiction of the Tribunal to pass interim orders The appeal involved a challenge to an interim order of status quo passed by the National Company Law Tribunal (NCLT) in a case related to a pending dispute between the parties. The Appellate Tribunal emphasized the need to safeguard the interest of the company under Sections 241-242 of the Companies Act, 2013. The Tribunal justified its decision by referring to the paramount consideration of the company's interest over that of the parties involved. It noted the pendency of an arbitral proceeding and held that the interim order was necessary to prevent the disposal of company property pending the decision of the Arbitral Tribunal. Issue 2: Maintainability of a petition under Section 8 of the Arbitration and Conciliation Act The Tribunal addressed the issue of maintainability raised by the respondents through a petition under Section 8 of the Arbitration and Conciliation Act, 1996. It acknowledged the challenge to the jurisdiction of the Tribunal to pass interim orders in a petition under Sections 241-242 while an application under Section 8 was pending. The Tribunal held that the issue of maintainability would be decided after the Arbitral Tribunal's pronouncement, and in the interim, it passed suitable directions to protect the company's interests. Issue 3: Consideration of interests of the company The Tribunal reiterated that the primary focus in a Company Petition under Sections 241-242 is to safeguard the interest of the company. It highlighted the importance of awaiting the Arbitral Tribunal's decision before determining the maintainability of the petition. The Tribunal justified its interim order as a measure to preserve the company's assets until the resolution of the pending disputes and applications. Issue 4: Role of the Arbitral Tribunal in deciding issues of oppression and mismanagement The Tribunal refrained from deciding whether the Arbitral Tribunal could address issues of oppression, mismanagement, or public interest, as it was within the purview of the Arbitral Tribunal to determine such matters. It emphasized that the Arbitral Tribunal would need to address these issues if raised during the proceedings before it. In conclusion, the Appellate Tribunal dismissed the appeals, upholding the interim order of status quo passed by the NCLT. The judgment underscored the significance of protecting the company's interests and the need to await the Arbitral Tribunal's decision before addressing issues of maintainability and passing further interim orders.
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