9911796707
TMI Blog2009 (9) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... any Law Board, on 14-9-2009 at 11.00 a.m. for fixing the date and time of hearing.The Company Law Board shall dispose of the company petition within six weeks from today. Parties are at liberty to move the Company Law Board on an ordinary copy of this order duly authenticated by the P.A. of this Court. Appeal allowed. - CO. APPEAL NO. 45 OF 2009 CO. APPLICATION NOS. 138 AND 847 OF 2009 CO. PETITION NOS. 45/397-398/CLB/MB/2009 - - - Dated:- 11-9-2009 - S.J. KATHAWALLA, J. Aspi Chinoy, V.R. Dhond, Samsher Garud, Ms. Komal Joshi and Lalit Kataria for the Appellant. A.Y. Bookwalla, J.S. Bakshi, C.D. Mehta, Darshan Mehta, Ms. Faiza Dhanani, Raju Subramanian and Rahul Chitnis for the Respondent. JUDGMENT 1. Heard Counsel for the parties. The learned Counsel appearing for the respective contesting respondents waive service. As a short question is involved, the appeal is admitted and finally disposed of. 2. By this appeal the appellant have impugned the judgment and order passed by the Company Law Board dated 27-7-2009 in Company Applica- tion No. 138 of 2009 in Company Petition No. 45/397 - 398/CLB/MB/2009. The Company Application No. 138 of 2009 was file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of convertible warrants for 25 million equity shares of Rs. 10 each was taken. The company petition dated 14-5-2009, was heard on 21-5-2009 when respondent No. 1, who were to seek urgent reliefs in terms of the Company Petition sought reliefs in terms of company application No. 95 of 2009 which was not served on the Appellant earlier. In the said company application No. 95 of 2009, respondent No. 1 had, till disposal of the petition, sought reliefs in relation to the decision taken by the Board of Directors of Appellant on 18-5-2009 pertaining to the issue of convertible warrants, which decision/issue was admittedly not the subject-matter of the company petition dated 14-5-2009. The Company Law Board by its order dated 22-5-2009, inter alia passed the following order : 5. After considering the arguments and pleadings I restrain the respondents Company and its Board of Directors in implementing the decisions made in the Board, of Directors meeting held on 18-5-2009 in relation to the issue of convertible warrants of 25 million equity shares of Rs. 10 each till disposal of this petition. I also direct the respondent company to give necessary information prayed for by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. In my opinion, the impugned decision is manifestly wrong and untenable. The appropriate Course is to set aside the impugned decision and instead relegate the parties before the Board for reconsideration of Application No. 95 of 2009 which will have to be considered on its own merits in accordance with law after giving fair opportunity to both sides to file affidavits and/or to amend the pleadings, as may be advised if permissible by law. ( v )When the aforesaid order dated 16-7-2009 by this Court was passed the Counsel appearing for the respondents submitted before this Court that since the respondents may consider taking the matter in appeal, this Court may direct the appellant to maintain status quo for a period of two weeks. This Court, therefore, ordered that the appellant shall not precipitate the matter with regard to preferential issue for a period of two weeks from the date of order. ( vi )Thereafter, respondent No. 1 filed an SLP before the Hon ble Supreme Court of India impugning the order passed by this Court dated 16-7-2009. ( vii )Respondent No. 1 also moved the Company Law Board by way of Company Application No. 138 of 2009 seeking amendment of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating that in view of the interim order passed by the Company Law Board the petitioner would like to withdraw this SLP. In other words the petitioner has tried, to pre-empt this Court from passing orders by moving the Company Law Board, without permission and after obtaining orders from Company Law Board petitioner seeks withdrawal which practice we deprecate. In the circumstances the Special Leave Petition is dismissed. We express no opinion on merits of the case. The question of law is expressly kept open. 5. Mr. Chinoy, the learned Senior Advocate appearing for the appellant has submitted that the order passed by the Company Law Board dated 27-7-2009 is passed without jurisdiction. He has submitted that as held by the Hon ble Supreme Court in the case of Shanti Prasad Jain ( supra ) the matters which are not part of the petition cannot be taken into account for considering the interim application. Mr. Chinoy has submitted that on 27-7-2009 when the Company Law Board passed an order effectively restraining the appellant from implementing the decisions taken by the Board of Directors in the said meeting held on 18-5-2009 the said decision of the Board of Directors was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief as regards the decision taken by the Board of Directors of the appellant in its meeting held on 18-5-2009, only after the amendment application was allowed. It is submitted that the impugned order passed without jurisdiction, is in violation of the law laid down by the Hon ble Supreme Court in Shanti Prasad Jain ( supra ) and is also in violation of the decision of this Court dated 16-7-2009, and has occasioned a serious miscarriage of justice. It is, therefore, submitted that the impugned order be set aside. 6. Mr. Bookwalla, learned Senior Advocate appearing for respondent No. 1 has submitted that the appellant by the present appeal is unnecessarily making a hue and cry as regards the order passed by the Company Law Board dated 27-7-2009, because according to respondent No. 1 it appears that the appellant company has abandoned its decision taken by the Board of Directors of the appellant in its meeting held on 18-5-2009 in relation to issue of convertible warrants and have instead in its Board Meeting held on 25-7-2009 approved the right issue of equity shares in proportion of 1:1 at the price of Rs. 150 per equity share including the premium of Rs. 140 per equity s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Company Law Board and inter alia sought to restrain the appellant from giving effect to the decision in relation to the issue of convertible warrants, taken at the Board Meeting of the appellant, held on 18-5-2009. This relief sought by respondent No. 1 was granted by the Company Law Board by its order dated 22-5-2009. The said order dated 22-5-2009, passed by the Company Law Board was set aside by this Court by its order dated 16-7-2009 in Appeal No. 35 of 2009 which was also filed by the present appellant. This Court in its said order dated 16-7-2009 whilst setting aside the order of the Company Law Board dated 22-5-2009, inter alia held/observed/directed as follows : ( i )The decision taken by the board of directors in its meeting held on 18-5-2009 had not been challenged in the main petition. In paragraph 35 of the decision of the Hon ble Apex Court in the case of Shanti Prasad Jain ( supra ) the Hon ble Apex Court has observed that the matters which were not part of the petition cannot be taken into account for considering the interim application. ( ii )No reason has been recorded by the Company Law Board which necessitated issuance of an injunction as is ordered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted and interim prayer is heard the respondents are directed not to precipitate the matter as envisaged by Justice Khanwilkar at Bombay High Court and the said two weeks extension given by the Hon ble High Court is further extended till interim relief in this petition is decided by this Bench. This order is issued under rule 44 of the Company Law Board Regulations, 1991. 10. When the aforesaid order dated 27-7-2009, was passed by the Company Law Board, the order passed by this Court dated 16-7-2009, setting aside a similar order passed by the Company Law Board on 22-5-2009, was admittedly before the Company Law Board. However, the Company Law Board has clearly disregarded the order passed by this Court dated 16-7-2009 and in effect passed the same order on 27-7-2009 which becomes clear from the following : ( i )Though the amendment application pertaining to the decision of the Board of Directors of the appellant dated 18-5-2009 was not allowed on 27-7-2009 and, therefore, was not part of the petition on 27-7-2009 the Company Law Board disregarded the decision of the Hon ble Apex Court in Shanti Prasad Jain ( supra ), observing that the matters which were not part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 16-7-2009. The Company Law Board wrongly proceeded to extend the said order, that too on an oral application of respondent No. 1 and without giving any reasons in support thereof. The Company Law Board has in the impugned order recorded that the order is issued under Rule 44 of the Company Law Board Regulations, 1991. Rule 44 of the Company Law Board Regulations reads as under : "44. Saving of inherent power of the Bench. Nothing in these rules shall be deemed to limit or otherwise affect the inherent power of the Bench to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Bench." Apart from the fact that the Company Law Board cannot use its inherent power to extend the time granted by this Court to the first respondent No. 1 for a specific purpose, the Company Law Board cannot exercise its inherent powers to pass orders without jurisdiction or in utter disregard to the orders passed by the Hon ble Apex Court or the High Court. 12 The submission advanced by Mr. Bookwalla, Senior Advocate on behalf of respondent No. 1 that the appellant company has abandoned its decision taken at the meeting of the Board of Directors ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
