2020 (2) TMI 1395 - Tri - Companies Law

Seeking ad-interim injunction against the Respondents - case of applicant is that 7 acres of land purchased, if sold will cause huge loss to the Company and its shareholders, which could not be compensated in terms of money - HELD THAT - It is an admitted factual position that 7 acres of land was registered in the name of the first Respondent Company vide Sale Deed No. 3543 dated 12.05.2006, with regard to which a Resolution has been passed by the Board of Directors of first respondent on 13.04.2019 giving authority to Vipul Limited and Karamchand Realtech Private Limited to deal with the land in any manner. The Board resolution is under challenge and the transaction is pertaining to the related party, which prima-facie is in violation of the provisions of Section 188 of the Companies Act, 2013 and in case 7 acres of land is sold by the Respondents during the pendency of Application filed under Section 8 of Arbitration Act, the Applicants/Petitioners will become remediless, which eventually will lead to multiplicity of the litigation. The Applicants/Petitioners have made a case prima-facie for grant of ad-interim injunction in relation to 7 acres of land, the balance of convenience is in favour of the Applicants/Petitioners and in case ad-interim injunction is not granted, till the outcome of the application filed under Section 8 of the Arbitration Act, by the Respondent, the first Respondent Company and its Shareholders will lose the property. Therefore, issuance of ad-interim injunction is necessary to protect the right of the Applicants/Petitioners, the Company, and its Shareholders, which will not cause prejudice to the respondents in any way. The Company Petition No. 94 of 2019 has been filed under Section 241 r/w 242 of the Companies Act, 2013, in which, the Respondents have filed an application under Section 8 of the Arbitration Act, for referring the matter to the Arbitrator, which is yet to be decided, However, under Section 242 (4) of the Companies Act, 2013, this Tribunal on application of any party to the proceedings is empowered to make any 'Interim Order' which it thinks fit for regulating the conduct of the Company's affairs upon such terms and conditions which appear to it to be just and equitable. The Respondents are restrained from dealing with 7 acres of land registered in the name of the first Respondent Company - application allowed.

Issues Involved:
1. Validity of Board Resolution dated 13.04.2019.
2. Entitlement to ad-interim injunction on the sale of 7 acres of land.
3. Applicability and interpretation of the Joint Development and Collaboration Agreement (JDCA) and Memorandum of Understanding (MoU).
4. Jurisdiction and authority of the Tribunal under Section 241 and 242 of the Companies Act, 2013.
5. Impact of previous orders and Res Judicata on the current application.

Issue-Wise Detailed Analysis:

1. Validity of Board Resolution dated 13.04.2019:
The applicants/petitioners challenged the Board Resolution dated 13.04.2019, which authorized Respondents No. 2, 3, 7, and 8 to deal with 7 acres of land purchased by the first Respondent Company. The applicants contended that this transaction was with related parties, namely Vipul Group and Karamchand Realtech Private Limited, without any consideration, violating Section 188 of the Companies Act, 2013. The Tribunal noted that the resolution prima facie violated Section 188, as related parties should not vote on such resolutions.

2. Entitlement to Ad-Interim Injunction on the Sale of 7 Acres of Land:
The applicants sought an ad-interim injunction to prevent the sale of 7 acres of land during the pendency of the application under Section 8 of the Arbitration Act. The Tribunal found that selling the land could cause irreparable harm to the company and its shareholders, which could not be compensated monetarily. The Tribunal granted the ad-interim injunction, restraining the respondents from dealing with the land until the final disposal of the application under Section 8 of the Arbitration Act and the main Company Petition No. 94 of 2019.

3. Applicability and Interpretation of the JDCA and MoU:
The JDCA dated 29.08.2006 and the MoU dated 13.09.2008 were central to the dispute. The applicants argued that the 7 acres of land were part of the JDCA project area. However, the respondents contended that the MoU revised the project land, excluding the 7 acres. The Tribunal noted that the MoU did not specifically identify or demarcate the 7 acres as excluded from the project land. Therefore, the Tribunal found no basis for the respondents to claim the land without consideration.

4. Jurisdiction and Authority of the Tribunal under Section 241 and 242 of the Companies Act, 2013:
The Tribunal emphasized its authority under Section 242(4) of the Companies Act, 2013, to make interim orders for regulating the conduct of the company's affairs. The Tribunal highlighted its power to protect the company's property and shareholders' interests, deeming it just and equitable to grant the ad-interim injunction.

5. Impact of Previous Orders and Res Judicata on the Current Application:
The respondents argued that the application for ad-interim injunction was not maintainable due to previous orders and the principle of Res Judicata. However, the Tribunal referred to the Supreme Court's judgment in Arjun Singh vs. Mohindra Kumar & Ors., stating that interlocutory orders could be altered or varied based on new facts or situations. The Tribunal found that the earlier ad-interim injunction had expired, and new circumstances justified the current application.

Conclusion:
The Tribunal allowed the application, granting an ad-interim injunction restraining the respondents from dealing with the 7 acres of land until the application under Section 8 of the Arbitration Act is decided and, if dismissed, until the final disposal of the main Company Petition No. 94 of 2019. The Tribunal emphasized its jurisdiction under Section 242(4) of the Companies Act, 2013, to protect the company's property and shareholders' interests. The order was pronounced in the open court with no order as to costs.

← Previous Next →