2025 (4) TMI 638 - AT - Companies Law

Power to grant an interim protection to the opposite parties i.e. the Respondents - directing the proceedings of the tentative Annual General Meeting (AGM) which was scheduled to be held as on 27.09.2024 has been directed to be kept on hold - whether an order which does not have a long-drawn bearing on the rights of either side of the parties or which does not have any bearing on the principal adjudication of the petition and which is an interlocutory arrangement made by the Ld. Tribunal or the courts while exercising their inherent powers could at all be treated as to be an order which could be made appealable to the appellate jurisdiction? - HELD THAT - The foundation of the relief which was prayed for in the said application was based upon the earlier order which has been earlier passed by the Tribunal on 14.09.2023 which has been taken as to be a precedent for pressing upon the interim relief claimed in the application owing to the orders passed on 14.09.2023 whereby an advocate commissioner was appointed to conduct the Annual General Meeting (AGM) as per the Article of Association and the report was called upon to be submitted - When the Tribunal is exercising its exclusive jurisdiction of exercising its inherent powers the earlier interim order cannot be taken as to be an-exampleror precedent to be laid as a foundation and application for the grant of a similar relief for conducting an Annual General Meeting (AGM) by appointing an Advocate Commissioner was mandatorily required to be considered on the said basis. The reference made by the Ld. Counsel for the Appellant with regards to the extent of the exercise of the Appellate power for deciding the applications in the manner in which the ratio has been laid down in the matter of Dwarikesh Sugar Industry Limited 1997 (5) TMI 421 - SUPREME COURT . Yet again it cannot be a yardstick to be commonly applied where the proceedings are being governed by the provisions contained under Order XLI of the Civil Procedure Code 1908 more particularly when the governing circumstances of Dwarikesh Sugar Industry Limited are absolutely distinct to the appeal at hand. The proceedings which were subject matter of consideration in the matters of Opto Circuit India Limited 2021 (2) TMI 117 - SUPREME COURT were the proceedings which were held on initiation of an investigation by the Central Bureau of Investigation (CBI) which was factually based on different reasoning altogether. Even reference to para 14 and 15 which has been relied upon by the Ld. Counsel for the Appellants is accepted as laying down a guiding principle that if the statute provides a thing to be done in a particular manner it has to be ensured to be done in that manner or it has not to be done in any other manner which is unknown to law . In this regard we will have to answer the question as to whether the procedural implications as it has been pedestaled in Para 14 and 15 of the judgment of Opto Circuit India Limited would at all be made applicable in the instant case so as to treat the order of 14.09.2023 as to be the basis to judicially decide that appointment of an Advocate Commissioner by the earlier order will form to be a part and parcel of the procedure provided under law which is required to be adhered to while passing of the order on IA. No. 283/2024. In fact the ratio of Para 14 and 15 laying down for a strict adherence to the procedural law was in a case where the matter was being finally adjudicated and where there could not have been any deviation to any other process unknown to the process of law. But the same principle cannot be adopted when a Court or a Tribunal is exercising its discretionary powers which has some element of human prudence too which is variable from man to man for considering the interlocutory applications and hence the procedure cannot be derived from the earlier interim orders which as already observed is not a precedence for deciding the matter. While declining to interfere in the company appeal as against the impugned interlocutory order passed by the Ld. Tribunal while exercising its discretionary powers it is apt apt to direct the Tribunal that if the Appellant prefers the stay vacation application against the impugned order dated 27.09.2024 the same would be considered in accordance with the law without being influenced by any observations made by us in the order. And simultaneously the Ld. Tribunal is requested also make an earnest effort to decide the IA. No. 282/2024 which the Appellant expects to be decided based on the procedures of the order 14.09.2023 which is yet again directed to be considered by the Ld. Tribunal under the given facts and circumstances of the case if at all made applicable as per the provisions of law. Conclusion - The appeal against the interim order was dismissed with the affirmation that such orders are not appealable under Section 421. Appeal dismissed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment is whether an appeal under Section 421 of the Companies Act, 2013, is maintainable against an interlocutory order passed by the Tribunal. The specific question is whether an interim order, which does not substantively or permanently affect the rights of the parties, can be appealed. Additionally, the judgment examines whether the Tribunal acted appropriately in deciding one interlocutory application before another and whether the procedural norms were adhered to in the decision-making process.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

Section 421 of the Companies Act, 2013, provides for appeals against orders of the Tribunal. However, the term "order" is not defined within the Act, leading to the question of whether interim orders fall within the scope of appealable orders under this section. The judgment refers to the discretionary nature of interim orders, which are intended to maintain the status quo during the pendency of proceedings and do not affect the final adjudication of rights.

Court's interpretation and reasoning:

The Tribunal interpreted that an interim order, which is temporary and does not determine substantive rights, is not appealable under Section 421. The reasoning is that such orders are meant to protect the subject matter during ongoing proceedings and do not have a long-term impact on the parties' rights. The Tribunal emphasized that frequent interference with interlocutory orders should be avoided unless there is a clear error of law.

Key evidence and findings:

The Tribunal found that the order to suspend the Annual General Meeting (AGM) was an interim measure intended to maintain the status quo and did not affect any material right. The decision to prioritize the hearing of one interlocutory application over another was within the Tribunal's discretion and based on the exigency of the situation.

Application of law to facts:

The Tribunal applied the principles of discretionary power and interim protection to conclude that the order was not appealable. The decision to suspend the AGM was deemed necessary to prevent potential complications during the pendency of the main petition.

Treatment of competing arguments:

The appellants argued that both interlocutory applications should have been decided simultaneously or in chronological order. The Tribunal dismissed this argument, stating that there is no legal requirement to decide applications in a specific order, and the Tribunal's discretion prevails in such matters. The appellants also referenced previous judgments to support their position, but the Tribunal found these references inapplicable due to differing circumstances and legal frameworks.

Conclusions:

The Tribunal concluded that the interim order was not appealable under Section 421, as it did not substantively affect the parties' rights. The decision to hear one application before another was within the Tribunal's discretion and did not constitute a legal error.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

"An order which is passed while exercising inherent powers by the Ld. Tribunal, which is exclusively interim in nature and does not affect or determine the rights of the parties, though it could be got recalled or vacated, it could not be made appealable, when it is not having any element of deciding a substantive right of a party in a proceeding."

Core principles established:

The judgment establishes the principle that interim orders, which are discretionary and do not determine substantive rights, are not appealable under Section 421 of the Companies Act, 2013. It also highlights the Tribunal's discretion in managing interlocutory applications and the importance of maintaining the status quo during ongoing proceedings.

Final determinations on each issue:

The appeal against the interim order was dismissed, with the Tribunal affirming that such orders are not appealable under Section 421. The Tribunal retained the discretion to decide interlocutory applications based on the circumstances and urgency of each case. The judgment also left open the possibility for the appellants to seek a stay vacation application, which would be considered on its merits without being influenced by the current judgment.