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TMI Blog2017 (1) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... by R14, R17, and R20, in their capacity as Trustees - JRD Tata Trust, Tata Education Trust, Tata Social Welfare Trust holding 13.66% in Tata Sons Ltd (Rl) by issuing a requisition notice u/s 169 of the Companies Act 2013on 3rd January 2017, on which, R2-10,12 and 23 at the behest of Rl, though being parties to the CP, issued a notice on 5th January 2017 to hold Extra Ordinary General Meeting (EGM) on 6th February 2017 to get an approval for removal of R11 from the office of Director of the company with immediate effect annexing an Explanatory Statement with a disclosure of background that R11 was on 24th October 2016 replaced as Executive Chairman with a further resolution to continue him as Director of the Company. The Explanatory Statement further says that Mr. Cyrus Mistry (R11) since subsequent to his removal as Chairman of R1 made unsubstantiated allegations casting aspersions not only on R1 as a whole but also made internal communications public, which are marked as confidential causing enormous harm to the Tata Group, its stake holders, including employees and shareholders, causing significant erosion in the market value of the Tata Group companies which has consequently re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Courts Act for having committed breach of the order dated 22nd December 2016 by issuing requisition notice for removal of R11, and to punish R1, its directors R2-10, R12, R13, R13 and other officers for having issued the notice dated 5th January 2017, for requisitioning an EGM for removal of R11 from the Board of Directors. 6. These Petitioners have gone ahead in this contempt application seeking a restraint order against R1 not to convene or hold EGM scheduled on 6th February 2017 or any other date or from transacting any business thereat. 7. In this background, it is imperative to place the text of the order to examine as to whether the conduct of the Respondents has really been reflecting disobedience to the orders dated 22.12.2016 and also to see whether any directions have been issued against the Company restraining it from carrying its functions, the text of the order is as follows: "The Petitioner Counsel mentioned this Company Petition arguing for about 90 minutes inter alia asking reliefs (e), (f) and (g) covered under IA 17/2016. As soon as the Petitioner Counsel has completed his submissions, when this Bench put it to the Senior Counsel Shri Aryama Sundaram appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016 being passed by this Bench, it is not only relevant but also bounden duty of this Bench to put across as to what was the situation warranted this Bench to pass such an order on 22.12.2016. 9. It was recorded in the order itself that the petitioners counsel argued 90 minutes inter alia asking three interim reliefs (e), (f) and (g), on hearing the submissions, this Bench raised a query as to what are the allegations made against the Respondents making case under section 241 of the companies Act 2013 and what is the material placed to support such allegations? Then this Bench, though the answering Respondents already expressed that this petition should be dismissed at the threshold on the ground of maintainability, put it to the Petitioners counsel whether this Bench was to pass orders on merits or to give directions for completion of the pleadings, such as filing reply, rejoinder and hear the main company petition at the earliest, to which, the petitioner counsel agreed for directions for completion of the pleadings. Having the answering Respondents, withholding themselves arguing over the maintainability, agreed for directions for completion of pleadings, accordingly this Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such party will not agree for filing affidavit, rather insists upon to take amendment application and to pass an order, which not only consumes the time of this Bench, but also bothers appellate forum, so there won't be any let up for main company petition. If disposal of main petition does not take place, it is quite obvious company being a going concern, as long as it runs, it cannot stop acting, so is the case with new applications, they also keep coming. Some may be for genuine cause, some trot out to keep the management busy with the litigation; the net result in genuine as well as ingenuine cases is inordinate delay in disposing the matters, sometimes paralyze the companies as well. Sometimes, litigants start filing applications, if it does not work out, then land up before some other forum, what ultimately comes out is not material to them, main thrust is to throw this gauntlet of litigation around the rival party. If it is a genuine case, the party aggrieved will suffer, if it is an ingenuine case, the answering party suffers, but one thing is inevitable that is delay, for now there being a mandate to expedite dispensation of justice at the earliest, we believe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within the frame work of the company, equally important or more important is the interest of the company, if the action under this jurisdiction is malafidely aimed at denigrating the company under the garb of section 241, such action cannot be considered as subject matter falling within the ambit of section 241 of the Companies Act 2013. 14. If this Bench was of the view to pass interim reliefs in favor of the petitioners, it would have not suggested the petitioner counsel to elect either to argue on the petition or to take directions for completion of the pleadings, had it been satisfied to pass interim orders, this Bench ought to have heard the respondent side as well and would have also heard them before passing such orders. It should also be kept in mind that it was suggested to the Petitioners counsel, not to the Respondents; therefore, it could not even be imagined that the Respondents side would agree to pass blanket order against them even without opening their mouth to reply to the arguments of other side, hence it is inconceivable to any prudent man to assume a consent order was passed against R1 Company not to take up issues to meet the requirements of the company or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents did not advance their submissions because the Bench was not inclined to pass any interim orders on the submissions made by the Petitioner Counsel. Normally, if this Bench is inclined to pass interim relief, it will grant interim relief as well as directions for completion of pleadings. But this bench has not done so; it has only suggested the Petitioner Counsel to take directions for the completion of the pleadings. Basing on such suggestion, the Petitioners having agreed for a direction for completion of pleadings, consent order was passed first for completion of pleadings, then additional consent that none of them will file any interim applications or initiate any action or over this subject matter pending disposal of Petition. The word "subject matter" in relation to a Company Petition, speaks about the issues raised in the Company Petition i.e. over the alleged actions said to have taken place before filing the Company petition, here in this additional understanding it has not spoken about either interim reliefs or reliefs sought in the Company Petition, therefore, the subject matter in the Company Petition or issues in the Company Petition cannot be said as reliefs sough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel argued left and right over contempt jurisdiction by referring various rulings. 21. The petitioner side Counsel submits that a Consent order would become an undertaking given to the Court therefore, any non-compliance or violation of such orders tantamount to contempt whereas the Respondent counsel submits that there are no orders against any of the Respondents, the order is only limited not to proliferate this Company petition into interim applications and to stop proceeding on the same subject matter before other forums. The Respondent Counsel has gone further ahead that even assuming that consent order is against the Respondent, violation of such order would not amount to willful disobedience on the part of the Respondents. To fortify that consent order does not amount an undertaking and contra argument consent order amounts to undertaking, both the counsel relied upon citations State of Bihar v. Rani Sonabati Kutnari AIR 1961 SC 221; Babu Ram Gupta v. Sudhir Bhasin and another [1980] 3 SCC 47; Sanjay Gupta v. Rajiv Gupta & Anr 2014 SCC On Line Del 6894; Rama Narang v. Ramesh Narang and Another [2009] 16 SCC 126 and Sudhir Vasudeva v. M. George Ravishekaran and Others [2014] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manohar Prasad v. N. Ratnam Raju and Another [2004] 13 SCC 610, Bihar Finance Service House Construction Cooperative Society Ltd. v. Gautam Goswami and Others [2008] 5 SCC 339 and Union of India and Others v. Subedar Devassy PV [2006]1 SCC 613." 23. For the reasons aforementioned, this Bench hereby dismisses the Contempt Application filed by the Petitioners. Both the Counsels on either side vehemently argued transgressing to the merits of the case, however, this Bench need not go into the merits of the case at this juncture, henceforth we have not dealt with arguments gone on the substantial aspects of the Company Petition. 24. The Petitioners happened to raise a point in the Contempt petition that the Board of Directors convening to hold EGM on 6.2.2017 for removal of R11 from the Directorship he has been holding. Over this aspect, the Petitioners and R11 has liberty to raise that point before NCLT, thereby notwithstanding whether the procedure followed in proposing for his removal as a Director in Shareholders meeting leaving it open to exercise the democratic rights of the Shareholders, this Bench does not and will not want to curtail the liberty conferred upon them by the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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