2017 (8) TMI 672 - HC - Indian Laws

Declining to issue license to the petitioner for running a FL-11 Hotel - conduct of EOGM - authorisation to Managing Director to seek licence - Held that - There was an interim order, Ext. P7, passed by the Tribunal, appointing Justice M. Ramachandran, former Judge of this Court to conduct the EOGM. It is also not in dispute that the EOGM was convened in accordance with the directives issued by the Tribunal and several decisions were taken. One among the resolutions adopted in the EOGM is in respect of the renewal of FL-11 Bar license, and has apparently authorized the 2nd petitioner as the Managing Director of the 1st petitioner company to seek issuance of license. May be true, the subject disputes are pending by and between the parties before the Tribunal. But, at the same time, the Hotel is run by the 1st petitioner company and any income generated to the account of the company will not in any manner prejudice the Directors. The apprehension voiced by the learned counsel appearing for the additional 3rd respondent is that, if the license is renewed in favour of the 2nd petitioner, it will cause irreparable injury to the additional 3rd respondent, since it will be treated as a right conferred on the 2nd petitioner. However, the said apprehension may not have much bearing since the subject matter is ultimately pending before the Tribunal, which is at liberty to take appropriate decisions. Therefore, in the interregnum, in order to protect the interests of the company and its shareholders, I think it is only appropriate and fair to make a provision to run the hotel, with FL-11 license, if the petitioners are legally entitled to run the same in accordance with the Rules. There will be a direction to the 2nd respondent to re-consider the application submitted by the 2nd petitioner to renew FL-11 license of Hotel Windsor Castle, Kodimatha, Kottayam, as a properly constituted application, and if otherwise the application is in order and in accordance with law, I see no reason to decline the license.

Summary

Issues:
1. Petition challenging the order declining to issue a license for running a FL-11 Hotel.
2. Disputes regarding the management of the petitioner company.
3. Validity of the decisions taken in the Extraordinary General Body Meeting (EOGM).
4. Consideration of the application for renewal of FL-11 license.
5. Concerns regarding potential irreparable loss and injury to the additional 3rd respondent.
6. Compliance with legal requirements for license transfer and distance rules from the nearest Highway.

Issue 1: Petition challenging the order declining to issue a license for running a FL-11 Hotel:

The petition was filed by a company aggrieved by the order declining to issue a license for a FL-11 Hotel. The 2nd respondent's order was based on disputes regarding the management of the company and lack of clarity on the rights held by the respective parties.

Issue 2: Disputes regarding the management of the petitioner company:

There were litigations pending before the National Company Law Tribunal regarding the management of the company. The 2nd petitioner was elected as the Managing Director, but this was challenged by the additional 3rd respondent. The Tribunal directed to hold an Extraordinary General Body Meeting (EOGM) to resolve these issues.

Issue 3: Validity of the decisions taken in the Extraordinary General Body Meeting (EOGM):

Decisions taken in the EOGM included seeking renewal of the FL-11 license. The 2nd petitioner was authorized to apply for the license. The 2nd respondent declined the renewal application citing an interim order and lack of proper documentation for the transfer of licenses.

Issue 4: Consideration of the application for renewal of FL-11 license:

The court noted that the EOGM had authorized the 2nd petitioner to seek the renewal of the FL-11 license. The court set aside the order declining the license renewal and directed the 2nd respondent to reconsider the application if found to be in order and in accordance with the law.

Issue 5: Concerns regarding potential irreparable loss and injury to the additional 3rd respondent:

Concerns were raised about potential harm to the additional 3rd respondent if the license was renewed in favor of the 2nd petitioner. The court considered the interests of the company and its shareholders in making the decision.

Issue 6: Compliance with legal requirements for license transfer and distance rules from the nearest Highway:

The court emphasized the need to comply with legal requirements for license transfer and distance rules from the nearest Highway as per relevant judgments. The licensing authority was directed to verify these aspects before issuing the license.

In conclusion, the court set aside the order declining the license renewal and directed a re-consideration of the application, ensuring compliance with legal requirements and distance rules. The decision aimed to protect the interests of the company and its shareholders while allowing for further resolution of disputed issues before the Tribunal.