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2015 (5) TMI 556 - Board - Companies LawCharges of oppression and mismanagement under Section 397/398 read with Sections 399, 402, 403 & 406 of the Companies Act, 1956 - Application to pass ad-interim orders - Matter already under consideration of BIFR under the SICA - SICA being a Special Act shall prevail over the provisions of the Companies Act - Held that - It is clear that in this case the Dalmia Group is making an attempt to abuse the process of law. Prima facie, it is established that the Respondent Nos.2 and 3, firstly, entered into an MOU with Seth Developers Pvt. Ltd. and Suraksha Realty Ltd. without following due course of law. The Respondent Nos.2 and 3 extracted huge amounts from the said Companies under the MOU for sale/development of the Vile Parle Property and then the Company entered into an MOU with M/s Arrow Engineering Pvt. Ltd. and further extracted the monies. Now, the Respondents are trying to enter into a new transaction with M/s. Parmida Developers Ltd. in contravention of the provisions contained in Section 173 (1) of the Act. Furthermore, there is ample prima facie material is available on record which clearly establishes that the amounts received in the name of the Company have been siphoned off by the Dalmia Group for their own personal benefits/group entities. Suffice it to say, at this stage, the actions and deeds of M/s Dalmia Group speak a lots of falsehood and unethical means for achieving their goals, which can hardly be approved. A prima facie case, therefore, is established in favour of the Petitioners. However, it is a settled proposition of law that while granting an ad- interim injunction order, the Court is required to examine, not only the prima facie case but also the other factors, like balance of convenience and question of irreparable loss . In a catena of decisions, it is laid down that the satisfaction of the court that there is a prima facie case by itself is not a sufficient ground to grant an ad-interim injunction. The court further has to satisfy itself that non-interference by the court would result in irreparable injury to the party seeking relief(s) and there is no other remedy available to the party except one to grant ad-interim injunction. The court while granting or refusing to grant ad-interim injunction should exercise sound judicial discretion to find the amount of substantial mischief or injury which is likely to be caused to the parties, if the injunction is refused as compared to that which is likely to be caused to the other side if the injunction is granted. Further, the balance of convenience must also be in favour of the person seeking ad interim injunction. In the present case, the examination of the resolution under challenge passed by the Board of Directors itself suggests that the proposed Agreement/MOU sought to be implemented by the Company is subject to the approval of BIFR and Hon'ble Supreme Court in the pending matters. Therefore, the MOU, if implemented by the Company, will be non-est and void, until both the Forums approve the impugned resolution. For the said reason, the question of irreparable loss to the petition does not arise. Further, the balance of convenience is also not in favour of the Petitioners. No prejudice is going to be caused to the Petitioners as they are adequately protected by the interim orders of the Hon'ble BIFR and Hon'ble Supreme Court as referred to hereinabove. In addition, upon a careful consideration of the aforesaid proposition of law, propounded by the Hon'ble Supreme Court, I am of the considered view, that to upkeep the strict standard of judicial discipline and propriety, it would be unjust and inappropriate to pass ad-interim orders at this stage. Now, I proceed to consider to effect of the law propounded by the Hon'ble Supreme Court in the cases of Tata Motors 2008 (5) TMI 423 - SUPREME COURT OF INDIA and Raheja Universal 2012 (10) TMI 233 - SUPREME COURT , on the question of maintainability of the petition. The next question therefore arises to answer is as to whether the present petition deserves to be dismissed due to overriding provisions of the SICA, as sought to be contended by the Ld. Sr. Counsel appearing for the Company. Having given my thoughtful consideration, I am of the view that although, the provisions of the SICA prevail over the provisions of the Companies Act as held in the cases referred to above yet, it would not be appropriate to dismiss the petition on this ground alone. To my mind, the proper recourse available to the petitioners in law is to seek approval/permission from the BIFR for further prosecution of the present petition. - Application for ad-interim orders rejected.
Issues Involved:
1. Allegations of oppression and mismanagement under Sections 397/398 of the Companies Act, 1956. 2. Qualification of Petitioners under Section 399 of the Companies Act, 1956. 3. Impact of pending BIFR proceedings on the maintainability of the petition. 4. Request for ad-interim reliefs to restrain certain actions by the Respondents. Issue-wise Detailed Analysis: 1. Allegations of Oppression and Mismanagement: The Petitioners filed a Company Petition under Sections 397/398 read with Sections 399, 402, 403, and 406 of the Companies Act, 1956, alleging acts of oppression and mismanagement by the Respondents in the conduct of the affairs of the Company. Specific allegations included unauthorized borrowings, fraudulent transactions, and misappropriation of funds leading to significant financial losses for the Company. The Petitioners highlighted various instances of alleged misconduct, including entering into multiple Memoranda of Understanding (MOUs) for the sale and development of the Company's Vile Parle Property without following due process and in violation of SEBI regulations and court orders. 2. Qualification of Petitioners under Section 399 of the Companies Act, 1956: The Respondents raised a preliminary objection regarding the Petitioners' qualification under Section 399 of the Act, arguing that the Petitioners did not hold the requisite shareholding. The Petitioners successfully established that they held 10% of the total shareholding at the time of filing the petition, thus meeting the qualification criteria under Section 399. The court noted that the question of whether the acquisition of shares by some Petitioners was mala fide would be considered at a later stage after the exchange of pleadings. 3. Impact of Pending BIFR Proceedings on the Maintainability of the Petition: The Respondents contended that the petition was not maintainable due to a pending reference before the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). They argued that SICA, being a special law, would prevail over the Companies Act. The court referred to the Supreme Court decisions in Tata Motors Ltd. v. Pharmaceutical Products of India Ltd. and Raheja Universal Ltd. v. NRC Limited, which established that SICA overrides the Companies Act in case of inconsistencies. However, the court distinguished the present case by noting that the MOU in question was not part of the BIFR rehabilitation scheme and was entered into without BIFR and Supreme Court approval, thus making the petition maintainable. 4. Request for Ad-interim Reliefs: The Petitioners sought ad-interim reliefs to restrain the Respondents from alienating or dealing with the Vile Parle Property, transferring funds or assets, and implementing a Board Resolution dated 21/11/2014. The court acknowledged the prima facie case established by the Petitioners, highlighting the Respondents' attempts to abuse the process of law and siphon off funds for personal benefit. However, the court emphasized the need to consider factors such as balance of convenience and irreparable loss. Given the existing interim orders from the BIFR and Supreme Court, the court concluded that the Petitioners were adequately protected and that granting ad-interim reliefs would be inappropriate at this stage. The court advised the Petitioners to seek approval from the BIFR for further prosecution of the petition. Conclusion: The court disposed of the ad-interim prayers, advising the Petitioners to seek approval from the BIFR for further prosecution of the petition. The matter was listed for further directions on February 20, 2015.
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