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TMI Blog2015 (5) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondents in the conduct of the affairs of the Respondent No. 1 Company (hereinafter referred to as "the Company" for short). 2. Pursuant to advance notice, the Ld. Sr. Counsel Mr. Ravi Kadam appeared for the Company and filed a short reply opposing the ad-interim reliefs. 3. Ld. Counsel Mr. Zal Andhyarujina entered his appearance on behalf of the Respondent No.5, and has sought time to enable the said Respondent to file his reply. Similarly, the Respondent No.28 appeared through his Counsel and stated that he has not been supplied with copy of the Petition, and therefore, appropriate direction may be issued in this regard to the Petitioners, and some time may be granted to the Respondents to file its reply opposing the application for ad-interim prayers. 4. On the other hand, opposing the time sought for by the respective Respondents, the Ld. Sr. Counsel appearing for the Petitioners submitted that, in case, the interim protection as prayed for is not granted by way ad-interim orders to the Petitioners, the purpose of filing the present petition may be frustrated. The Ld. Sr. Counsel, therefore, submitted that for time being, the following ad-interim orders may be passed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholding in the Company by themselves and through the Respondent Nos.8 to 37 are In the control and management of the affairs of the Company. 6.2 It is alleged by the Petitioners that in the year 2007-2008, the Dalmia Group commenced to take huge borrowings on interest from the Banks and Non- Banking Financial Institutions, including M/s Indiabulls Financial Services Ltd. (hereinafter referred to as "Indiabulls" in short), According to the Petitioners' case, the Respondent No.2 borrowed a sum of Rs. 365 crares from Indiabulls in the name of various promoters entities controlled by the Respondent No. 2 himself against pledging of shares of the Company and those of GHCL (Gujarat Heavy Chemicals Ltd.), the Respondent No. 28. However, the Dalmia group defaulted in repayment of the foan amount as a result thereof M/s Indiabulls invoked the Arbitration proceedings. In the Arbitration proceedings, an interim order came to be passed under Section 17 of the Arbitration & Conciliation Act, 1966. By the said interim order, the Dalmia Group was restrained from exercising voting rights inter alia in respect of the pledged shares in favour of the M/s Indiabulls, which according to the Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or setting aside the resolution dated 18/1/2010 passed at the EOGM. However, the said Company Petition was finally disposed off as withdrawn on the basis of the mutual settlement having been arrived at between the parties. 6.7 According to the Petitioners' case the properties of the Company were to be sold by way of public auction through invitation of competitive bids as agreed between the parties in the mutual settlement that had taken place before the CLB in the C.P. No. 3 of 2010. One of the Company's properties situated at Marol, Andheri was therefore sold by the Company by inviting tender in compliance of the said understanding. However, the Dalmia Group, committing the breach of settlement entered into between the parties restored to their efforts for the sale of Vile Parle property without undergoing the process of public auction as resolved in the purported resolution dated 18/01/2010. Pursuant thereto, the Company issued a Notice of Postal Ballot to secure the consent of the shareholders, interalia, to enter into agreements with the said Seth Developers and Realty Ltd. for the joint development or sale of the Vile Parle property of the Company. 6.8 Being aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Company increased from Rs. 107.69 crores as on 31/03/2009 to Rs. 280.73 crores as on 31/03/2014. The profit after tax of the Company reduced from Rs. 0.08 crores to a loss of Rs. 34.37 crores as on 31/03/2014; that the earning per share of the Company reduced from Rs. 0.05 per share as on 31/03/2009 to a toss of Rs. 19.54 per share as on 31/03/2014; that the Company paid Interest of Rs. 170.54 crores between the Financial Year ended 31/03/2009 and 31/03/2014 whereas loss during this period was Rs. 188.53 crores, which clearly evidences the fact that the loss is mainly on account of misdeeds of the promoters and mismanagement of the Company and not on account of the operation of the Company. It is further alleged that, due to the mala fide siphoning of funds and complete destruction of the substratum of the Company by the promoters in gross violation of law, in or about early 2012, the company had once again become a sick company and was compelled to approach the BIFR (Case No.17 of 1997) to sanction an amended scheme of rehabilitation. Canara Bank has been appointed as the monitoring agency for the same. The Company continues to be a sick company and is before BIFR till dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent No.34 for sale of the subject Vile Parle property. This information was also passed to BSE and NSE. Being aggrieved, by the aforesaid acts of oppression and mismanagement, the Petitioners are compelled to file the present petition as set out in the petition for ad-interim prayers. 7. In the backdrop of the above pleadings, now I proceed to consider the rival submissions. At the outset, I would like to deal with the preliminary objections raised on behalf of the respective Respondents. Mr. Zal, Ld. Counsel appearing for the Respondent No. 5 raised a preliminary objection and sought dismissal of the petition contending that the Petitioners collectively do not hold the requisite qualification under Section 399 of the Act, and hence, for the said reason the petition deserves to be dismissed in limine at the threshold stage itself. 8. Responding to the aforesaid contentions, the Ld. Counsel appearing for the Petitioners, prima facie, successfully established that the Petitioners, as on the date of filing of the Petition, were holding 10% of the total shareholding of the Company and thus they are qualified in terms of the provisions contained in Section 399 of the Act to file th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates the law relating to companies and certain other associations. It is prior in point of time to SICA. 23. Wherever any inconsistency is seen in the provisions of the two Acts, SICA would prevail. SICA furthermore is a complete code. It contains a non obstante clause in Section 32. 24. SICA is a special statute, it is a self-contained code. The jurisdiction of the Company Judge in a case where reference had been made to BIFR would be subject to the provisions of SICA. 25. ................ 26. ................ 27. It was ruled that the Company Court and BIFR do not exercise concurrent jurisdiction holding. (SCC p. 235, para 45) "45. It may be true that the High Court's jurisdiction is that of the appellate authority but keeping in view the terminology contained in sub-section (4) of section 20 read with section 32 of the Act, it leaves no manner of doubt that the provisions of SICA shall prevail over the provisions of the Companies Act. For the aforementioned purpose, it was not necessary for Parliament to mention specifically the provisions of sub-section (4) of Section 20 that the same shall prevail over Section 536 of the Companies Act, as was suggested by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the civil court is, thus, barred in respect of any matter for which the appellate authority or the Board is empowered. The High Court may not be a civil court but its jurisdiction in a case of this nature is limited.' 10. Refuting the aforesaid contentions raised on behalf of the Respondent No. 1 Company and also distinguishing the facts of the case in hand with the facts of the cases cited above, the Ld. Sr. Counsel appearing for the Petitioners submitted that he does not dispute the legal proposition as laid down by the Hon'ble Apex Court in the said decisions. However, according to the Ld. Counsel. the significant and distinguishing feature/fact of the present case is that the Respondents have entered into an Agreement, which is under challenge in the present petition, with M/s. Parmida Developers Limited, without prior approval of the BIFR and the Hon'ble Supreme Court, which is dearly in contravention of the orders of both the forums to maintain status quo as to the company's immovable assets situated at Vile Parle, Mumbai (hereinafter referred to as "the subject property" in short). According to the Ld. Counsel. had this MOU/Agreement been a part of rehabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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. 14. 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 implemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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