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TMI Blog2016 (3) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... e municipal authorities, they have spent lot of money etc. and therefore, the interim order passed by the Company Law Board is hurting them and the balance of convenience is in their favour. But none of these facts have been placed before the Company Law Board by the appellants. The Company Law Board has given them an opportunity to place all these facts by including them in the reply to the issue as to whether the appellants can be impleaded as a party at all. I do not find any patent error on a fundamental principle of law. The Company Law Board in exercise of its discretion at the preliminary or interlocutory stage of the company application, awaiting the pleadings of the respondents viz. the appellants herein, has passed the impugned order. Therefore, as it is not a final verdict on the interim application, it lacks the essential precondition to maintain an appeal under Section 10F- “existence of a question of law arising from the decision”. In my view, therefore, this appeal is not maintainable. - Company Appeal (L) No. 69 of 2015, CLB/Company Petition No. 31 of 2015 - - - Dated:- 26-2-2016 - K. R. Shriram, J. For the Appellants : D. Madon Adv. Vishal Kanade a/w Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d had passed the following order :- I therefore, do not feel it just proper and appropriate to stop the development work going on the properties in which the development rights have already been given to the third parties. Therefore, balancing the equities between the parties and to protect the interest of the petitioners the following ad-interim orders are being passed :- (a) The Respondent Nos.2 and 3 are directed to file an affidavit within a period of 10 days thereby disclosing on oath all transactions dealing and steps undertaking and all approvals sanctions and permission obtained and the status in respect of the properties assets of the company as set out in the schedule Annexure O to the petition. (b) The petitioners shall be given inspection of the documents to which they are entitled to in the capacity of they being shareholders and directors of the Company. However, the petitioners will serve 3 days advance notice on the Company indicating date, time and details of the documents sought to be inspected. (c) The properties in respect of which the Respondents have not entered into the development rights, the Respondents are restrained from dealing w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the appellants and the respondent no.3 the appellants had handed over 10 cheques for an aggregate amount of ₹ 9,51,00,000/- on execution of the agreement as consideration; but as there were problems with the banks, the company was unable to deposit the cheques; and therefore, the cheques were being returned and in view of the consideration of ₹ 9,51,00,000/- the appellants to allot flats admeasuring built up area of 7000 sq. ft. on the appellants completing construction upto 25th level of sale portion of the Swami Samarth Nagar project. This has been signed by the appellant no.1 and respondent no.3 on whose behalf respondent no.4 has signed. 6. The Company Law Board thereafter passed an order dated 18.5.2015 in which it is recorded that it is the case of respondent nos.4 5 herein that the development rights in respect of Swami Samarth Nagar property has been transferred to the appellant no.1 but there is nothing on record to show that any consideration was received in lieu of granting development rights. It was also observed by the Company Law Board that Respondent no.4 herein had by entering into the agreement with appellant had acted prejudicial to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The appellants are aggrieved by the restraining order passed by the Company Law Board in paragraph-12 quoted above. 9. The counsel for the appellants raised two primary grounds on which the impugned order is challenged and they are that the provisions of section 402F are not at all applicable to the facts and circumstances of the case and in any event, there is a time limit of 3 months prescribed under Section 402F for any applicant to move the Company Law Board and the application has been filed beyond the 3 months period consequent to which Company Law Board should not have passed any order. Counsel further submitted that in view of provisions of section 403, an order can be passed only relating to regulating the affairs of the company from the date of the order and order against the 3rd party appellant who is neither a shareholder nor a director of the company cannot be passed. It was also argued that even though final order under Section 402 can be passed, no interim order can be passed because section 403 does not permit any interim order against 3rd party. 10. At the outset, it should be noted that the allegation of the respondent no.1 respondent no.2 is that r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be weighed against the corresponding need of a party to be protected against any injury resulting from the restraint on the exercise of its rights as sought for. Having said this, it is necessary to reproduce paragraphs-48, 49, 50 52 of the judgment of the Hon'ble Supreme Court of India in (2016) 1 Supreme Court Cases 237 Purnima Manthena Anr. Vs. Renuka Datla and Ors. The same read as under :- 48 This Court in Wander Ltd. (supra), while dealing with appeals against orders granting or refusing a prayer for interlocutory injunction, did reiterate that the same, being in exercise of judicial discretion, the appellate court ought not interfere therewith and substitute its own discretion except where such discretion is shown to have been exercised arbitrarily or capriciously or perversely or where the Court whose order has been appealed from, had ignored the settled principles of law, regulating grant or refusal of interlocutory injunctions. It was enunciated, that appeal against exercise of discretion is an appeal on principle and the appellate court would not reassess the materials and seek to reach a conclusion different from the one reached by the court below, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facets of the controversy involved and mere deferment thereof to a future point of time till the completion of the essential legal formalities would not ipso facto fructify into a verdict to generate a question of law to be appealed from. However, an omission to record a finding even on a conscious scrutiny of the materials bearing on the issues involved in a given case, may be termed to be one. Be that as it may, in any view of the matter, the appellate forum though exercising a jurisdiction which otherwise may be co- ordinate with that of the lower forum, ought to confine its judicial audit within the layout of the adjudgment undertaken by the forum of lower tier. This is imperative, more particularly in the exercise of the appellate jurisdiction qua a decision on discretion rendered at an introductory stage of any proceeding, otherwise awaiting final adjudication on merits following a full contest. It is settled that no adjudication at the preliminary stage of a proceeding in a court of law ought to have the attributes of a final verdict so as to prejudge the issues at that stage, thereby rendering the principal determination otiose or redundant. This is more so, if the pleadi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the contesting Directors before the CLB. This assumes importance as the High Court did resort to a fullfledged scrutiny of the factual and legal aspects, to test the legality and/or validity of the order dated 6.8.2014 of the CLB at the stage of mentioning. Having regard to the fact that the appeal before the High Court under Section 10F of the Act was one from an interim order passed in exercise of judicial discretion at the stage of mentioning, in our view, bearing in mind the permissible parameters of exercise of appellate jurisdiction in such matters, the elaborate pursuit so undertaken by it, is neither contemplated nor permissible. The High Court, in any view of the matter, was not dealing with a regular appeal under Section 10F of the Act on a question of law from a decision rendered by the CLB on merits, after a complete adjudication. The appeal before it, being one on principle and from an order rendered by the CLB in the exercise of its discretion at the preliminary stage awaiting the pleadings of the respondents therein, we are of unhesitant opinion that the scrutiny in the appeal ought to have been essentially confined to the aspects of which the CLB had taken cogniz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded as a party at all. I do not find any patent error on a fundamental principle of law. The Company Law Board in exercise of its discretion at the preliminary or interlocutory stage of the company application, awaiting the pleadings of the respondents viz. the appellants herein, has passed the impugned order. Therefore, as it is not a final verdict on the interim application, it lacks the essential precondition to maintain an appeal under Section 10F- existence of a question of law arising from the decision . In my view, therefore, this appeal is not maintainable. 13. In view of the above conclusion, there is no need to deal with any of the other submissions made by the appellants. 14. Appeal stands dismissed. Interim application also accordingly dismissed. (K. R. Shriram, J) 15. Both the counsels jointly submit that there is an element of urgency in the matter. Therefore, on the next date when the matter is listed before the Company Law Board, The Company Law Board may endeavour to hear the matter and dispose of the same. At the request of the counsel for the appellants, the time to file reply to the company application is extended by two weeks from today and rejo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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