2022 (1) TMI 772 - AT - Companies Law

Oppression and mismanagement - seeking inter alia injunction against the Respondent from proceeding with the Rights Issue as it was being issued with a motive to dilute the shareholding of the Appellant in the Respondent Company - section 241 and 242 of Companies Act - HELD THAT - It is seen that the matter was listed on 04.01.2022 and it is pertinent to mention that NCLT has recorded that the Petitioner was heard in full‟. It is significant to mention that in all the aforenoted Orders passed by NCLT both sides were present and heard. The matter was listed for 06.12.2021 as a specially ordered matter‟. There are force in the contention of the Learned Counsel for the Respondent that it could not be heard on 14.01.2022 on account of the pandemic and was hence posted to 18.02.2022 - Section 242(4) of the Act empowers the Tribunal to pass any Interim Order on an Application made by any party to the proceeding, which it thinks fit for regulating the conduct of the Companies affairs upon such terms and conditions as appear to it to be just and equitable. There is an Order of Status Quo in a Petition filed by the Appellant in the absence of any Prayer to that effect/issue, we observe that NCLT has not passed any Order on the merits of the case on hand. From the bare perusal of the Impugned Order, the Tribunal has the power to make Interim Orders which it thinks fit for regulation of the conduct of the affairs of the Company - keeping in mind the ingredients of Section 241 and 242 of the Act, arrives at the resultant conclusion, without expressing any opinion on the merits of the matter, also not delving deep into the case, as allegations of oppression and mismanagement consist of mixed questions of fact and law, which cannot be decided at this interim stage, directs the NCLT Kolkata Bench to take up the matter on 18.02.2022, without any further adjournments, dealing with all issues raised, in accordance with law. Appeal disposed off.

Summary

Issues:
Challenge to Impugned Order dated 06.12.2021 by NCLT in CP/275(KB)2021 under Section 421 of the Companies Act, 2013.

Analysis:
1. The Appellant challenged the NCLT's Impugned Order, which restrained the Appellant from exercising statutory rights to remove a director and interfered with the Administrator's functioning. The Appellant argued that the Order was unjustified as it was unrelated to the pending issue of a Rights Issue. The Appellant contended that the NCLT's Order disrupted timelines and impeded the Administrator's control. The Appellant highlighted the lack of a formal application or prayer related to the issue addressed in the Order. The Tribunal, without expressing an opinion on the case's merits, directed the NCLT Kolkata Bench to consider the matter on 18.02.2022, emphasizing the need to address all raised issues in accordance with the law.

2. The Respondent defended the NCLT's actions, stating that the Appellant's challenge was a pressure tactic and that no collusion was proven. The Respondent emphasized the Tribunal's power under Section 242(4) to make interim orders regulating company affairs. The Respondent argued that the NCLT had not made a decision on the case's merits and that the matter was listed for further hearing on 18.02.2022. The Respondent highlighted the absence of a cause of action in the Appellant's letters and the necessity to address the issue raised by the Appellant in the pending case.

3. The Tribunal acknowledged the power conferred by Section 242(4) to issue interim orders for regulating company affairs. Despite the existing status quo order, the Tribunal noted that the NCLT had not made a decision on the case's merits. The Tribunal refrained from delving deep into the case, recognizing the complexity of allegations of oppression and mismanagement. The Tribunal directed the NCLT Kolkata Bench to address all issues raised in the matter on 18.02.2022 without further adjournments, in line with the provisions of Sections 241 and 242 of the Companies Act, 2013.

This comprehensive analysis covers the key arguments, legal provisions, and the Tribunal's directives in response to the challenges raised in the legal judgment.