2023 (12) TMI 1153 - AT - Companies Law

Oppression and Mismanagement - Regarding implementation of the Resolution Plan is pending for adjudication - Sections 388B, 397, 398, 401, 402 and 408 of the Companies Act, 1956 - HELD THAT - There is no dispute that the Appellant has filed the application no. 03 of 2014 for seeking various reliefs which is already mentioned herein before but this is also not in dispute that while the application was pending, an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by the Canara Bank as the financial creditor against M/s Deccan Chronicle Holdings Limited (Corporate Debtor therein) which was assigned CP No. 41/7/HDB/2017 has been admitted vide order dated 05.07.2017 and the Adjudicating Authority has initiated the CIRP proceedings. It is also not in dispute that the said CIRP proceedings have reached to the stage of consideration of Resolution Plan. In such circumstance, once the Company against which the aforesaid application has been filed by the appellant on the allegation that there is mismanagement in the company and fraud has been played by the persons in control of the company, has gone into CIRP and, moratorium is imposed on Section 14 and the reins of the Companies are handed over to the IRP, the present application by itself does not survive as no relief be granted in the said application. Thus, no error has been made by the Ld. Tribunal in dismissing the application as such. The appeal is thus found to be without merit and is hereby dismissed.

Summary

Issues involved:
The issues involved in this case are the application filed under Sections 388B, 397, 398, 401, 402, and 408 of the Companies Act, 1956, seeking various reliefs against mismanagement and fraud in the company, amidst insolvency proceedings initiated against the company.

Judgment Details:

Application for Various Reliefs:
The appellant filed an application seeking reliefs including restraining a director from acting, attaching assets, and appointing majority directors. The Tribunal noted that the company had entered Corporate Insolvency Resolution Process (CIRP) and a Resolution Plan was pending adjudication. The Tribunal concluded that no relief could be granted in the application due to the company's status under CIRP and moratorium imposed, leading to the dismissal of the appeal.

Interim Relief Sought:
The interim relief sought included maintaining status quo in management, appointing a Special Officer, restraining directors from acting, and depositing illegally siphoned sums. These interim measures were requested pending the final decision on the application, but the Tribunal's decision to dismiss the application rendered these interim reliefs moot.

Arguments and Decision:
The Counsel for the Appellant argued that there was an error in assuming the application was for winding up, emphasizing the independent cause of action. However, the Tribunal found that the insolvency proceedings against the company impacted the application's viability. The Tribunal upheld the dismissal of the application, stating that no error was made in considering the application in light of the company's CIRP status.

Conclusion:
The Tribunal found the appeal without merit and dismissed it, citing the company's CIRP status and the inability to grant relief in the application due to the ongoing insolvency proceedings. No costs were awarded in this matter.