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TMI Blog2016 (5) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... e that has been caused to individuals and to the public as a whole. Here it is managerial personnel against whom an allegation of defrauding investors for an amount of ₹ 5600 crores is made; therefore, an enquiry has to be conducted as expeditiously as possible to decide whether their removal of directors is necessary or not. The doctrine u/s 10 of CPC is not applicable to the present case. - Application dismissed - Decided against the applicant. - CA 116/2016 in CP 1/2015 - - - Dated:- 5-4-2016 - B.S.V. PRAKASH KUMAR, Member (Judicial) For The Petitioner : Mr. Navin Chawla, Mr. Siddhath, Ms. Prema Shah Deo Advocates, Mr. Kirtiman Singh (CGSC). For The Respondent : Dr. A.M.Singhvi and Shri Amit Sibal, Senior Advocates, Mr. Ankur Saigal, Mr. Raghav Dwivedi, Mr. Amit Bhandari, Advocates, Mr. Nooruddin Dhilla and Ms. Priyanka Vora Order Financial Technologies (India) Ltd, ( in short FTIL -Rl ) filed this CA under Regulation 44 of Company Law Board Regulations 1991 (which is analogous to section 151 of CPC) to stay or adjourn sine die, this CP 1/2015 till the hearing and final disposal of WP 2743/2014 and Suit No. 221/2014; Suit No. 991/2013; Suit No. 121/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time directors, five executive directors and five additional directors. 5. For the sake of brevity, I hereby summarize the substance of this case into saying that having UoI noticed that FTIL, being holding company of NSEL, indulged in fraud, misfeasance, default in carrying out the obligations and functions under law, which is prejudicial to public interest, UoI has filed this CP under the sections as aforesaid. 6. The pleadings are complete in this matter; the matter was in fact posted for main hearing to 06.04.2016. In this case, the Honourable High Court of Madras passed orders to expedite hearing of main case. While this matter is ready for main hearing, FTIL filed this CA on 29.03.2016 for stay of final hearing or to adjourn this matter sine die until other matters are heard and disposed of. 7. On perusal of this CA moved by FTIL, it appears that FTIL says that since UoI, in the merger proceeding pending before Hon'ble High Court of Bombay, filed final order on 12.02,2016; since Hon'ble High Court of Madras passed an order on 07.03.2016 modifying the order dated 11.12.2015, directing CLB to dispose of this CP as expeditiously as possible subject to the outcom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of allegation that the directors are found to be involved in the mismanagement of the affairs of the company . 10. Therefore, the counsel for UoI submits that merely by UoI filing final order in the merger proceeding on 12.02.2016 will not create any new cause of action to FTIL to raise the same issue that was already decided by Honourable High Court of Bombay holding that the proceedings in this CP are entirely different from the proceedings of compulsory merger, therefore there is no merit in this application. 11. The counsel of UoI further says that Honourable High Court of Madras, has only stated on 07.03.2016 that CLB shall dispose of this CP as expeditiously as possible subject to the outcome of the proceeding pending before Honourable High Court of Bombay, for which, UoI has no objection, if this Bench passes orders subject to the outcome of the proceedings pending before Honourable High Court of Bombay. Moreover, that order was passed in an application for extension of time for hearing main CP. In that order, it was nowhere said that CLB proceedings shall be stayed. 12. The petitioner counsel further submits an amendment of sur-rejoinder depicting main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the functioning of companies. Whenever the management of the company flouts the provision of law so as to do any of the things above mentioned, UoI, as a custodian of public interest, is conferred with powers to take action under various provisions of the Act. Section 388B is one such provision that empowers the Central Government to initiate action against the delinquent managerial personnel. In any proceeding, the only point to be seen is whether fair hearing is provided to the party before passing an order or not. The managerial personnel cannot say that such an action could not be taken by UoI when some other proceeding is pending. I must say that no provision of law is brought into existence to invalidate another provision of law, In fact courts will harmonise the statutes in such a way that they may not clash each other to invalidate the purpose for which they have come into existence. 16. The trump card of the argument of the counsel appearing on behalf of FTIL is that compulsory merger proceedings are to protect the public interest, likewise, the proceedings in this CP are also to protect public interest, for the compulsory merger proceedings being prior proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit in the arguments above for more than one reason. The Civil Suits pending before High Court are not the cases filed by UoI, they are in fact the cases filed by public sector undertakings and other individuals seeking monetary reliefs basing on contractual obligations. No doubt facts may be same in both the cases, but it does not mean that the other reliefs that could be granted against the defendants cannot be pursued by other parties. I don't think I need to go any further to say that State is empowered to take action against the persons indulged in causing injury or harm to the society or public. Sometimes individual rights will become public rights; it all depends on the situation. Sometimes an act may be harmful to the individual and the society as a whole, Though 'act' is one, the remedies to an individual will be different from the remedies available to the public, whose cause is generally taken up by the State, If any contractual promise is violated by another, as long as it is mere breach of promise, the cause of action may be limited to civil remedy, when such breach is subsumed in a fraudulent action, the cause of action arise not only gives a right to c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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