2021 (2) TMI 123 - Tri - Companies Law

Seeking to refrain the act of the Respondent Company to initiate the corporate restructuring by way of incorporating a Holding Company - seeking to bring three of the group companies under it thereby establishing a holding-subsidiary relationship and to require the maintenance of status quo as regards to shareholding pattern of the Company - seeking not to resort to alienation, transfer, lien, lease etc of the movable/immovable properties of the R-1 Company - Power to punish for contempt - Section 425 of the Companies Act - HELD THAT - As rightly pointed out by the learned counsel for the respondents 1, 4, 15, 24, 25, if the respondents have violated the interim orders passed by this Tribunal on 4.11.2019 and 6.1.2020, the only remedy available to the applicants is to initiate contempt proceedings against the erring respondents. The application is not maintainable.

Summary

Issues:
Violation of interim orders by the Respondent Company regarding corporate restructuring and maintenance of status quo.

Analysis:
The Petitioner filed an application seeking to refrain the Respondent Company from initiating corporate restructuring by establishing a holding-subsidiary relationship and to maintain status quo as per previous orders. The Tribunal had previously passed interim orders directing the maintenance of status quo regarding shareholding patterns and property transfers. The Respondents were directed not to alienate or transfer any properties until further orders. Subsequently, the Tribunal clarified that the restrictions applied only to specific companies and not to others where the Petitioners did not hold shares. The Petitioner argued that the Respondents were planning corporate restructuring in violation of the Tribunal's orders, sending notices to shareholders and disregarding the status quo directive. The Petitioner highlighted the involvement of specific Respondents in deceptive activities and questioned the role of a self-proclaimed "Consultant" in the restructuring process.

During the hearing, the Respondents opposed the application, claiming it was not maintainable as the appropriate remedy for violations of interim orders was a contempt petition. The Tribunal examined its powers under Section 425 of the Companies Act, which grants authority to punish for contempt. The Tribunal clarified that if the Respondents had indeed violated the interim orders, the proper course of action for the Petitioner would be to initiate contempt proceedings. Consequently, the Tribunal dismissed the application as not maintainable, but allowed the Petitioner to pursue appropriate proceedings if aggrieved. The judgment emphasized the need for adherence to legal procedures and the availability of remedies for parties affected by violations of court orders.

In conclusion, the Tribunal's decision focused on the procedural aspect of addressing violations of interim orders, highlighting the importance of contempt proceedings in such situations. The judgment underscored the necessity for parties to follow legal avenues for redressal, ensuring compliance with court directives and upholding the rule of law in corporate matters.