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TMI Blog2014 (4) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Dastur Dadhich & Kalambi, Mr. Pranav Sampat, Advocate a/w Ms. Priyanka Kapadia, Advocate i/b. M/s. Kaitan & Co. for the Respondent ORDER 1. The Company Application No. 98/2014 has been filed by the Petitioners/ Applicants seeking following orders: a. to pass an order thereby appointing an Administrator and/or Special Officer and/or an Independent Committee of Management or such other body or person as this Hon'ble Board deems fit and proper to carry on the business and manage the affairs of the Respondent No.1 Company; b. In the alternative to prayers (a) above, to pass an order thereby appointing a special committee of management with an independent Chairman and with one representative of the Applicants herein and one representative of the Respondents Nos. 2 and 3, to carry on the business, management and affairs of the Respondent No.1 Company; c. to pass an order thereby appointing any suitable person as Special Commissioner or Officer for agreements and other papers with regard to the affairs and business of the Respondent No.1 Company, particularly with regard to the minutes of meetings of Board of Directors and Annual General Meetings and resolutions passed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Petitioners other than Petitioner No.1 in his favour cannot be said informed consent as required in terms of the provisions contained in Section 399 (3) of the Act and therefore, the petition is not maintainable. 4.3 Feeling aggrieved by this order, the Answering Respondents approached the Hon'ble High Court of Madhya Pradesh and filed an appeal under Section 10F of the Companies Act, 1956. 4.4 It is pertinent to mention here that, in the meantime, on 2/04/2014 the Petitioners filed the above numbered C.A No.98/2014 for the reliefs stated hereinabove. 4.5 The appeal came to be heard before Hon'ble High Court of Madhya Pradesh and it was disposed off vide an order dated 2/04/2014. For the sake of convenience, I would like to reproduce the relevant extract of the order passed by Hon'ble High Court of Madhya Pradesh. "It is undisputed before this Court that the Respondents have filed an application for appointment of Receiver and Company Law Board has fixed the matter on 7/04/2014 for considering the said application. It is submitted by the Ld. Counsel for appellants that the appellant is facing serious prejudice on account of the order of the CLB therefore, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngh [1989] Comp Cas 103, of P. Punnaiah & Ors. V/s Jeypore Sugar Cp. Ltd. & Ors. [ 1994] 4 SCC 341 it was argued by Mr. Zal Andharujina the Ld. Counsel representing the Answering Respondents that the requirement of consent in writing as per the provisions contained in Section 399 (3) of the Act, 1956 is satisfied only if the consent letters throw some light on the consenters having applied their mind to the various allegations made in the petition and the reliefs sought for. According to the Ld. Counsel, unless otherwise, the application of mind by the consenters is apparent from their consent letters, such consent cannot be deemed to have satisfied the provisions of Section 399(3) read with 399 (1) of the Act. The Ld. Counsel pointed out that in the present case, the consent letter only states that the consent is given for filing a petition under Section 397/398 and 402 of the Act without any further details as to the allegations made in the petition and the reliefs sought for therein. He, therefore, contends that it can be presumed safely that the consenting shareholders were not aware of such consent cannot be said a valid consent given under the provisions of the Section 399 (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son can do himself, he can do it through his agent, except certain functions which may be person in nature or otherwise does not admit of such delegation. The consent contemplated by Section 399(3) falls under the general rule and not under the exception." In addition to the above, it is pertinent to note that the Answering Respondents have made a vague allegation challenging the validity of the Power of Attorney / consent. None of the Petitioners have come forward to contend that he is not a signatory to the Power of Attorney and/or they have not authorised the Petitioner No.3 to verify the contents of the petition and present and pursue it on their behalf. 10. Besides, the Hon'ble Apex Court has consistently held that a petition should not be dismissed on procedural defects. It is pertinent to note here that in the course of arguments the Ld. Counsel appearing for the Petitioners has stated at bar that if the Board directs, she may file separate affidavits of all the Petitioners. In view of the reasons discussed hereinabove, I do not find any force in the contention of the Ld. Counsel that the Board should atleast pass an order for enquire on this issue. Based on the above d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the family settlement is sub-judice in the civil court at Pune. The Ld. Counsel on this ground prayed to dismiss the Petitioner being not maintainable. 13. On the otherside, the Ld. Counsel for the Petitioners drew my attention to the MOU and submitted that the Parties failed to adhere the terms of the MOU within a stipulated time as recorded therein. According to the Ld. Counsel, time was the essence of the MOU and therefore, the MOU /Family Arrangement arrived at between the Parties have become redundant due to non-performance of its terms and conditions and due to efflux of time. She further contends that mere filing of a civil suit for specific performance of the MOU does not bar the Petitioners, who are undisputedly shareholders/ members of the Company, to invoke the special jurisdiction of the CLB conferred upon it by virtue of the provisions contained in Sections 397/398 read with Section 402 of the Act in case of acts of oppression and mismanagement committed by the majority shareholders towards the Petitioners being minority shareholders. 14. I have considered the rival submissions. It is a matter of record that the Answering Respondents herein have filed a civil suit fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Akul Plaza for which monthly update shall be given to the other Party. The Ld. Counsel contends that having agreed to the said terms now the Petitioners are not entitled to seek injunction in respect of these properties, the sale of which is necessary to meet the various statutory and other liabilities of the Company. It is further submitted that in case this prayer is not granted by the Board, the Company may suffer irreparable loss. The Ld. Counsel submitted that on account of the exit of the Respondent No.12 from the Company, the Company has paid a huge amount in the sum of Rs. 130 crores approx. to it. In addition to, the Company still owes huge sum payable to the other Creditors including the secured creditors. The Ld. Counsel pointed out that approx. a sum of Rs. 4 crores is being paid by the Answering Respondents to its bankers as interest component in respect of the financial assistance availed by the company. Besides, there are urgent needs of funds which the Company bonafidely require to meet its day to day operations. He, therefore, contended that in case the permission is not granted as prayed, the Company may be ruined and this may not be detrimental to the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondents alongwith the resolutions to be passed merely by circulation to give effect to the same, without any discussion and/or explanation on this issue. According to the Ld. Counsel, even their resignations were not notified on the web-site of the ROC within time as required by law. It is submitted that only after the said confrontation with regard to non- compliance of the required formalities as filing of Form - 32 and removal of their names from the Registrar of Companies (ROC) website that Respondent No. 3 belatedly disclosed the aforesaid resignations for the purpose of passing the necessary resolutions. It is further submitted that an e-mail, Respondent No.3 has also requested for extension of financial year of the Company from September, 2013 to March, 2014 without assigning any reasons. It is alleged that the Answering Respondents are grossly mismanaging the affairs of the Company. She, therefore urged that in order to manage the affairs and business of the Company in a effective manner, an administrator and /or Special Officer and /or Independent Committee of Management, or such other body or person may be immediately appointed. 21. Opposing the said prayer, Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 3/03/2014 to be clarified viz. there is no finding of the Company Law Board on the Family Arrangement, including whether the family arrangement has been acted upon or not. iv. Existing Agreements entered into but not finally acted upon for the Akola Oil Industry Plot's to be placed before the. Judge. 23. Apart above, Mr. Zal Andhyarujina, the Ld. Counsel appearing for the Answering Respondents on instructions, stated on their behalf that the Answering Respondents will have no objection, if the Petitioner No.3 who is on Board of Directors of the Company attends its Board Meetings to be held by it hereinafter and he assured that any suggestion given by the Petitioner, if any, will be welcomed by them. The Ld. Counsel, therefore, prayed that the order passed on 3/03/2014 may be vacated or modified accordingly. 24. I have considered the submissions advanced by the Ld. Counsel representing the respective Parties. Having held that the petition is maintainable, I believe that this Board is empowered to pass such interim order(s), as may be necessary-to-secure the ends of justice, in the exercise of its rights and powers conferred upon it by virtue of the provisions contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the Board of Directors of the Company. Thus, the Respondent Group, who is in majority, has to take all decisions alone in respect of the sale of the immovable assets of the Company. Therefore, the apprehensions expressed by the Petitioner Group as to the oppression and mismanagement due to possible arbitrary decisions in the sale of the properties by the Respondent Group cannot be said without any basis, particularly, looking into their past conduct in relation to tempering of the Audit report prepared by M/s Ernst & Young. 27. Yet, I am of the view that to allow the prayer for appointment of an administrator by superseding the management of the Company as sought by the Petitioners would be very harsh step at, this stage, having regard to the facts and circumstances of the case. Therefore, the prayer made by the Petitioners to appoint an Administrator / Committee of Management etc. deserves to be rejected. 28. However, to rule out the possibility of any leakage of funds in the sale of property(ies), it would be appropriate that the sale is held under the supervision of a Retired Judge of the High Court to which the Parties have agreed. It is pertinent to note here that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lahoti will be entitled to Rs. 75,000/- per visit subject to maximum Rs. 1.5 lakhs per month. In addition to, he shall also be entitled to travelling allowances to which he was entitled as a sitting Judge of Hon'ble High Court. The expenses of the said Ld. Observer-Cum- Facilitator shall be borne in equal proportions by the Petitioners and the Answering Respondents and will be paid in advance before the scheduled meetings. In all such meetings the Petitioner No.3 may also remain present e. Hon'ble Mr. Justice Lahoti is hereby granted complete immunity from any kind of civil and criminal proceedings already launched or to be launched anywhere in the Country or outside against the Company and its Directors for all acts done prior to and subsequent to the date of appointment as an Observer- cum-Facilitator with an additional immunity and protection during all such legal proceedings for and against the Company. f. It is further directed that at the written request and at the expenses of the Petitioners, which they may negotiate with the Hon'ble Observer- cum-Facilitator, the Hon'ble Observer-Cum-Facilitator shall also be entitled to attend and supervise the Board M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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