2021 (2) TMI 518 - AT - Insolvency and Bankruptcy

Validity of illegal circular resolutions by which the employment agreement of Respondent Nos. 2 to 4 were extended - Seeking directions to nullify any actions taken by Respondent Nos. 2 to 4 pursuant to these illegal appointment/extension of employment agreements - seeking appointment of professional management for Respondent No. 1 - HELD THAT - There is no procedure prescribed in the Act and Rules that separate interim applications can be filed only after the question of admission of main case is over. Ld. Counsel for the Respondents frankly admitted that there is no provision in the Act or Rules that for interim reliefs separate applications are not maintainable or such applications can be filed only after admission of the main Petition. Section 242 (4) of Companies Act provides that it cannot be said that application for interim reliefs are not maintainable or such applications can be filed only after admission of the main Petition or if the interim reliefs claimed in the interlocutory applications are entirely covered by the reliefs sought in the main Petition then the applications are not maintainable. Appeal allowed.

Summary

Issues:
1. Admissibility of interim applications before the admission of the main petition.
2. Discriminatory treatment in the adjudication of petitions.
3. Legal foundation for disposing of interim applications.
4. Maintainability of interlocutory applications.
5. Procedure for regulating the conduct of the company's affairs.

Analysis:
1. The Appellant filed an appeal against the order passed by the National Company Law Tribunal, challenging the disposal of seven interim applications and seeking various reliefs under Sections 241 & 242 of the Companies Act, 2013. The Tribunal disposed of the applications summarily, citing that separate interim applications can be filed after the admission of the main case. The Appellant argued that this procedure was not legally mandated and discriminatory treatment was meted out as the Respondent's petition was admitted for final hearing while theirs was deferred without any plea on maintainability.

2. The Appellant contended that there is no provision in the Act or NCLT Rules stipulating that interim applications can only be filed post the admission of the main petition. The Tribunal's order was criticized for being self-contradictory and inconsistent, as it disposed of the interlocutory applications but proceeded to list the matter for consideration of interim reliefs without admitting the petition for final hearing. The Appellant emphasized the urgency and extraordinary circumstances necessitating the consideration of the interlocutory applications.

3. The Tribunal's disposal of the interim applications without a legal foundation was highlighted as irregular. The absence of objections from the Respondents regarding the maintainability of the interlocutory applications was noted. The Tribunal's unconventional procedure of disposing of the applications before admission of the petition was deemed questionable, leading to the conclusion that the impugned order was not in line with the provisions of the Act and Rules.

4. Consequently, the impugned order in one petition was set aside, and the interlocutory applications were restored for further consideration by the Tribunal with a directive to provide a reasonable opportunity to the parties. However, the order in the other petition was found to be appropriate, warranting no interference. The Tribunal was urged to expedite the decision-making process, and the Registry was instructed to promptly communicate the order to the concerned Tribunal for action.

This detailed analysis of the judgment provides insights into the legal intricacies surrounding the admissibility of interim applications, discriminatory treatment in adjudication, the necessity of a legal foundation for disposing of applications, and the procedural aspects governing the conduct of a company's affairs under the Companies Act, 2013.