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TMI Blog2020 (2) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... eal (AT) Nos. 236, 237 & 298 of 2019 - - - Dated:- 17-2-2020 - Mr. S. J. Mukhopadhaya, Chairperson and Bansi Lal Bhat Member (Judicial) For Appellant: Mr. S.N. Mookherjee and Mr. Sudipto Sarkar, Sr. Advocates with Mr. Abhijeet Sinha, Ms. Priyanka Goswami, Mr. Siddharth Naidu, Mr. Shubhankar, Mr. Bharat Monga, Mr. Shambho Nandy and Mr. Kamesh Vedula, Advocates. For Respondents: Mr. A.S. Chandhiok, Sr. Advocate with Mr. V.P. Singh, Mr. Aditya Bhat, Ms. Roopali Singh, Mr. Abhijnan Jha, Mr. Devashish Marwah, Mr. Abhishek, Ms. Sweta Karkar, Ms. Priya Agarwal and Mr. Shivam Mr. Arun Kathpalia, Sr. Advocate with Mr. Krishnendu Datta, Mr. Puneet Singh Bindra, Mr. Simran Jeet and Mr. S. Singh Ms. Diksha Gupta and Mr. Kauser Husain, Advocates. JUDGMENT The Appellant/ Petitioner filed application under Sections 241-242 of the Companies Act, 2013 alleging prejudicial action and oppression on the part of the Respondents. The National Company Law Tribunal ( Tribunal for short), Bengaluru Bench, initially passed interim order on 12th June, 2019. However, subsequently on the application moved by the Respondents, the Tribunal by impugned order dated 23rd August, 2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtake manufacturing in India and provide its domestic supply chain network. The 1st Respondent- GE Triveni Limited was thus set up as a joint venture between General Electric Company and Triveni Turbine Limited . General Electric Company applied for and was granted FIPB approval for investment in it by the Government of India after which it remitted funds for acquiring shares in GE Triveni Limited . At the inception, General Electric Company held its shares in GE Triveni Limited through GE Pacific Mauritius , an affiliate of General Electric Company who became party to the joint venture eo nomine. Subsequently this was transferred to GE Pacific Mauritius . 6. It was submitted that General Electric Company chose its affiliate 3 rd Respondent- Nuovo Pignone Spa to enter into a (a) technology license agreement with GE Triveni Limited for General Electric Company s providing relevant technology; and (b) Marketing Services Agreement for providing General Electric Company s international sales and marketing network to GE Triveni Limited . GE Triveni Limited was also granted a license to use General Electric Company s trademarks and tradenames. 7. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th 5 th Respondents approached the Hon ble High Court of Karnataka against the interim order on the ground that they are foreign companies and the Tribunal lacks jurisdiction over them. The Hon ble High Court asked the Respondents to file appropriate applications seeking vacation of the interim order before the Tribunal and directed it to hear the matter. In the course of hearing such applications filed by 4th 5th Respondents, The Tribunal asked them to file an affidavit explaining how they will ensure that Triveni s apprehensions as set forth in para 373 of the company petition are addressed. The 4th and 5 th Respondents filed a joint affidavit of undertaking stating that if the interim order was vacated, they would ensure that - (a) within 21 days the shareholding of 2nd Respondent- DI Netherlands BV is transferred to a fully owned affiliate of 5th Respondent- General Electric Company ; and (b) agreements entered with GE Triveni Limited will remain fully enforceable. By filing such an Affidavit, 4th and 5th Respondents in fact submitted to the jurisdiction of Tribunal. Although the Tribunal did not accept this Affidavit, it vacated the interim order on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is data confirms the Appellant s claims of fraud, oppression, collusion and breach of fiduciary duty'. Curiously, data was never supplied to GE Triveni Limited despite Tribunal s interim order of 12th June 2019. At the time, upon inquiry, it was learnt that the CTO s laptop had crashed and took over 2 weeks to be repaired. 14. It was also submitted that upon receipt of data, it was found that data for one whole year, i.e. June 2017 to September 2018 was completely missing This was an extremely crucial period for GE Triveni Limited when Appellant raised several concerns with 4th and 5th Respondents relating to various acts of fraud, oppression and prejudice. 15. According to the counsel for the Appellant, the Appellant believes that the missing data was deliberately destroyed / tampered with and that the data which has so far been received is only the tip of the iceberg. It is necessary to get the complete data and review the same. 16. Further, it was submitted that in the Board meeting held on 30 th October 2019, GE Triveni s Board was reminded of a past request made to 4 th and 5th Respondents to provide to GE Triveni Limited details of the enquiries / order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et. (g) whether all enquiries between above 30-100 MW received by 4th and 5 th Respondents or their affiliates are being forwarded to GE Triveni Limited for manufacture and supply. (h) measures that ought to be taken for ensuring that company s affairs are conducted in a manner which ensures that it does not lose out on any business opportunity going forward; (i) whether, to what extent and how General Electric Company / Baker Hughes LLC, A GE Company will remain involved in the affairs of GE, what would their respective obligations be towards GE Triveni Limited and how these will be performed; 19. Mr. Arun Kathpalia, learned Senior Counsel appearing on behalf of Nuovo Pignone Spa and General Electric Company ; Dr. Abhishek Manu Singhvi, learned Senior Counsel appearing on behalf of DI Netherlands BV and Mr. A.S. Chandhiok, learned Senior Counsel appearing on behalf of Baker Hughes LLC, A GE Company opposed the prayer. 20. Learned counsel appearing on behalf of General Electric Company - (5 th Respondent) submitted that the ex-parte order was passed without jurisdiction and thus rightly vacated by the impugned order. The subject matter of the ex par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act, 2013 and is limited for the purposes of inspection, inquiry or investigation only, i.e. Chapter XIV of the Companies Act, 2013. 25. It was submitted that the Section 384(5) of the Companies Act, 2013 makes it clear that the mutatis mutandis application of Chapter XIV (i.e. to the extent necessary), even in the case of a foreign company is limited to such a company s Indian business, which is not the case in the present matter. As neither the ex-parte Order nor the Impugned Order concerned itself with inspection, inquiry or investigation into the affairs of any of the parties, Section 228 of the Companies Act, 2013 is not applicable in the present matter. 26. It was further submitted that the Appellant cannot seek the relief of investigation at this stage. The Appellant did not even agitate any relief relating to investigation at the time of passing of the ex-parte order. The exparte order, which was passed in favour of the Appellant, does not even record any submission relating to the prayer for investigation, let alone reject such prayer. Consequently, the Appellant cannot now, at the stage of the Appeal, seek any relief for investigation. 27. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law that allegations of breach of contractual obligations do not trigger Sections 241-242 of the Companies Act, 2013. 31. It was further submitted that the Company Petition is thus nothing but a dressed up petition to evade the agreed dispute resolution mechanism. The Impugned Order followed the legislative mandate set out under Section 45 of the Arbitration Conciliation Act. Unless the grounds set out under Section 45 are attracted, a judicial authority must mandatorily refer parties to arbitration. 32. Learned Senior Counsel appearing on behalf of 2nd and 3 rd Respondents submitted that in any event, an objection to the maintainability of the arbitral proceedings ought to be heard by the arbitral tribunal. Without prejudice to the above, the Appeal arises out of an order passed under the Arbitration Conciliation Act, 1996 and is not maintainable as the Arbitration Act does not provide for an appeal against such an Order. The Impugned Order was passed in respect of an application filed under Section 45 of the Arbitration Conciliation Act, 1996, and was thus passed under Section 45 of the Arbitration Conciliation Act, 1996. 33. According to learned counsel, once i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Section 45 does not even require the filing of a formal application. 39. He relied on the decision of the Hon ble Supreme Court in Chloro Controls India Private Limited v. Severn Trent Water Purification Inc. and Ors.─ (2013) 1 SCC 641 wherein the Hon ble Supreme Court observed: 131. Another very significant aspect of adjudicating the matters initiated with reference to Section 45 of the 1996 Act, at the threshold of judicial proceedings, is that the finality of the decision in regard to the fundamental issues stated under Section 45 would further the cause of justice and interest of the parties as well: 131.1. To illustratively demonstrate it, we may give an example. Where party A is seeking reference to arbitration and party B raises objections going to the very root of the matter that the arbitration agreement is null and void, inoperative and incapable of being performed, such objections, if left open and not decided finally at the threshold itself may result in not only parties being compelled to pursue arbitration proceedings by spending time, money and efforts but even the arbitral tribunal would have to spend valuable time in adjudicating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Contesting Respondent Nos. 4 5 and taking into consideration the aforesaid fact, we allow 4 th and 5th Respondents to transfer the title of all the shares to any party without affecting the business of Appellant- Triveni Turbine Limited and the 1st Respondent Company- GE Triveni Limited and should not affect all the five agreements entered into between parties as referred to in their undertaking before the Tribunal and recorded above. 7. In so far as providing data is concerned, the necessary data for running the business of 1st Respondent Company- GE Triveni Limited , if required to be provided pursuant to the aforesaid five agreements, be provided by concerned Respondents to the 1st Respondent Company- GE Triveni Limited , if available. All transactions of shares if made shall be subject to the decision of these appeals. 8. The obligation of 4th ( Baker Hughes LLC, A GE Company ) and 5th Respondent ( General Electric Company ) as existing on 12th June, 2019, shall also continue till the next date. Post both the appeals for admission (after notice) on 25th September, 2019 on the top of the list. 42. The aforesaid interim order having already pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that sub-section, if the Tribunal, in the course of any proceeding before it, directs by an order that the affairs of the company ought to be investigated as regards the membership of the company and other matters relating to the company, for the purposes specified in sub-section (1). (3) While appointing an inspector under sub-section (1), the Central Government may define the scope of the investigation, whether as respects the matters or the period to which it is to extend or otherwise, and in particular, may limit the investigation to matters connected with particular shares or debentures. (4) Subject to the terms of appointment of an inspector, his powers shall extend to the investigation of any circumstances suggesting the existence of any arrangement or understanding which, though not legally binding, is or was observed or is likely to be observed in practice and which is relevant for the purposes of his investigation. 47. However, that question does not arise at this stage and may be raised and decided by the Tribunal at appropriate stage when I.A. Nos. 494 495 of 2019 which are pending will be decided, if such issue has been raised by the Appellant. No fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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