2012 (7) TMI 1176 - HC - Companies Law

Summary

Issues:
- Jurisdiction of the Company Court to pass an order of injunction
- Extension of an order of injunction granted by the Division Bench
- Discretionary power of the trial Judge in extending interim orders

Jurisdiction of the Company Court to pass an order of injunction:
The appellant filed a Company Petition against the respondent for winding up based on the inability to pay debts under specific sections of the Companies Act, 1956. Initially, an order of injunction was granted on certain properties, but later vacated by the Company Court citing lack of jurisdiction to pass injunction orders beyond protecting creditors' interests. The Division Bench ruled that the Company Court has inherent powers to issue interim orders, including injunctions, beyond creditor protection. The Division Bench set aside the order vacating the injunction and directed the Company Court to reconsider the matter. The Division Bench emphasized the Company Court's authority to grant injunctions, leading to the restoration of the earlier injunction order.

Extension of an order of injunction granted by the Division Bench:
After remand, the matter was heard, and the appellant's counsel requested an adjournment due to personal reasons. The trial Judge adjourned the matter without extending the interim injunction, leading to an appeal by the appellant. The appellant argued that the trial Judge's decision not to extend the injunction without providing reasons was against legal principles. The respondent contended that the trial Judge's discretion in not extending the injunction should not be questioned, citing previous judgments. The Division Bench found that the trial Judge's failure to extend the injunction interfered with the appellant's rights conferred by the Division Bench's order. The Division Bench set aside the trial Judge's order and restored the injunction, emphasizing the need for reasons when interfering with established rights.

Discretionary power of the trial Judge in extending interim orders:
The Division Bench highlighted the trial Judge's discretionary power in granting interim orders, emphasizing the need for reasons when not extending an injunction that interferes with established rights. The Division Bench referred to previous judgments outlining considerations for trial Judges in passing interlocutory orders. The Division Bench concluded that the trial Judge's failure to extend the injunction without reasons was improper and directed the Company Court to prioritize deciding the pending applications for injunction and vacating the interim order. The Company Court was requested to expedite the decision within three weeks, emphasizing the importance of providing opportunities to both parties in the proceedings.