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TMI Blog2021 (12) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... which permit the CLB to make such order as it thinks fit with a view to give quitus to the matters complainted. In the instant case, the oppressive conduct of the appellants against the Foreign investors namely ORE Holdings and Athappan well found and spoken aloud in the orders passed by CLB, High Court and the Supreme Court. This Court holds that, the functus officio argument of the appellants is baseless - this Court truly not able to find any question which satisfy the test. Most of the questions, does not beg for any answer since already duly answered by the Division Bench and the Supreme Court in the earlier round of litigation. The rest of the questions are not worth to interfere the well considered order of CLB. Appeal dismissed. - Comp. Appeal Nos.5 to 10 of 2016 And C.M.P.Nos.12006 to 12009 of 2016, 12839, 12840 of 2016 and 4491, 4496 of 2021 - - - Dated:- 25-5-2021 - Honourable Dr. Justice G. Jayachandran For the Appellant : Mr.T.R.Rajagopalan, Senior Counsel for M/s Waraon and Sai Rams For the Respondents : Mr.J.Sivanadaraj for R1, Mr.Ramakrishnan, Senior Counsel, for Mr.S.Arjunsuresh for R3 COMMON JUDGMENT (The case has been hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his family members presented a scheme of rehabilitation and acquired the assets and liabilities of Vasantha Mills Limited. It is a subsidiary company of CEPL. Pursuant to the Joint Venture Agreement dated 30/01/2004 between KCP, N.Athappan, CG Holdings, CEPL, ORE Holdings, CPL and VML , the constitution of the share holdings in this company became: CEPL 34.66% ; CPL 28.19% ; N.Athappan 16.77% ; and C G Holdings 16.32% . ORE Holding Limited ( O.R.E in short ): A company incorporated as per law in force at Mauritius. It is wholly owned subsidiary of Odyssy America Reinsurance Company (OARC) incorporated in the State of Connecticut, USA. Pursuant to the Joint venture agreement dated 30/01/2004 ORE invested ₹ 75 crores in the form of equity in CEPL to get through 45% direct stake in CEPL and indirectly over it subsidiaries namely CPL and VML. ORE is the petitioner in C.P.No.76/2005 filed for an order of investigative audit to determine the amount misappropriated, misapplied or diverted by C.G.Holdings and KCP alleging mismanagement and misappropriation and the Petitioner in E.P.No.36/2011 before CLB filed to execute the common order passed in their petition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empting to usurp CEPL from KCP, which would imply taking control of the VML and CPL also. ORE by their oppressive conduct attempting to arm twist KCP to accede to its unjust demand and prayed for a scheme of exit. 5. The relief sought in C.P.No.65/2005 are :- (a) to declare that the Board Meeting of CEPL held on 21/22.09.2005 and the resolutions passed therein are null and void and not binding on the petitioners or CEPL and consequently, an order of permanent injunction restraining CEPL from giving effect to any of the resolutions purported to have been passed at the said Board Meeting; (b) to amend the Articles of Association of CEPL to include articles to the effect that so long as C.G. Holdings holds shares in CEPL, no policy decision to increase the authorised capital, sale, disposal or encumbrances of the investments in shares in the subsidiaries be taken by CEPL in general meeting, without the affirmative vote of C.G. Holdings; (c) to amend the Articles of Association of CEPL to include an Article that so long as C.G. Holdings has its nominee on the Board as a Director no quorum for any meeting of the Board of Directors would be possible without the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings and KCP; and (x) to direct C.G. Holdings and KCP to return to CEPL all moveable and Immovable assets, funds, accounts, securities and other properties of CEPL misapplied, misappropriated or diverted by them. 8.The Company Law Board (CLB) heard both the petitions together since the charges and grievances were in relation to the affairs of the one and the same company namely CEPL. Passed a detailed order on 13/08/2008. The operative portion of the said order reads as follow:- In view of the foregoing conclusions and in exercise of the powers under Sections 397 398 read with Section 402 and with a view to bringing to an end the grievances of CG Holdings, KCP, ORE and Athappan, the following order is passed: CEPL shall return a sum of ₹ 75 crores and ₹ 4 crores invested by ORE and Athappan respectively, together with simple interest at the rate of 8% per annum from the date of investment till the date of repayment within a period of 12 months in one or more instalments, commencing from 01.11.2008. While making the payment CEPL, CG Holdings and KCP shall ensure that at least 25% of the amount due is paid in every quarter. CEPL, CG. Holdings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and further directions from CLB. Particularly, pointing out that being a company incorporated at Mauritius, any transfer of funds from a resident to a non resident should be in compliance of the provisions of FEMA. As per the law in force, a company incorporated outside India not permitted to hold immovable property in India. Therefore, sought for order to permit the O.R.E to cause conveyance of the property to a willing buyer and receive the proceeds. Further, prayed for an order to apportion the money lying in the Fixed Deposit with SBI, Erode Branch between O.R.E and N. Athappan in the ratio of 75:4 12.Taking note of the difficulties brought out by the parties through the above two applications viz C.A.No.154 and 155 of 2005, CLB by its order dated 03/08/2009, modified the earlier order dated 13/08/2008 directing Vasantha Mills Limited to convey the properties to nominee of ORE. Directed SBI, Erode Branch to release 50% of the CEPL s money to ORE and N.Athappan in the ratio of 75:4 and the remaining 50% to C.G.Holdings and K.C.Palanisamy. 13.Challenging the above order of CLB dated 03/08/2009, O.R.E Holdings filed Company Appeals: 21 and 29 of 2009. N.Athappan and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r arguments in the execution petition heard and reserved for orders. 17.CLB vide its order dated 31/12/2015, allowed both the execution petitions. In E.P.No.35/2011, CLB declared N.Athappan the petitioner as the beneficial owner of the land to an extent of 7.80 acres of Vasantha Mills Limited in S.No.113, 124, 125, 123/3B and declared ORE Trust the nominee of ORE Holdings (petitioner in E.P.No.36/2015) as the beneficial owner of the property to an extent of 17.15 acres of Vasantha Mills Limited land out of survey Nos.124,125,123/3B and 113. In case, the respondents fail to execute the sale deed in favour of the petitioner, directed the jurisdictional Registrar to register the sale deed vesting the respective portion of the land in favour of the petitioners/nominee. 18.Challenging the orders of CLB dated 30/12/2015 and 31/12/2015 the present appeals are filed. 19.Vasantha Mills Limited (VML) is the appellant in the following Company Appeals:- (i)Company Appeal No.5/2016 against the order dated 30/12/2015 passed in C.A.No.2/2015 in E.P.No. 35/2011 in C.P.No.65/2005. (ii) Company Appeal No.6/2016 against the order dated 30/12/2015 passed in C.A.No.2/2015 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 434(1)(c)of the new Act does not include appeals pending in High Court. Section 434(1)(b) is a stand alone provision and it empowers High Court as the appellate forum against the decisions or orders of CLB passed before constitution of NCLT. Consequent to the commencement of Section 434(1)(b) with effect from 01/06/2016 and repeal of the old companies Act, 1956 from 30/01/2019 and in view of the saving clause in Section 465 of the companies Act, 2013. Further, appeals filed under Section 10 F of the Companies Act, 1956 in the High Court has to be continued and proceeded under Section 434(1) ( b ) of the Companies Act, 2013. 25.Section 434 (1)(c) speak about transfer of pending proceedings in the Courts to Tribunal. This provision will not apply to the pending appeals in the High Court against the decision or order of CLB. Precisely, that is the reason why section 434(1)(b) emphasis that order/decision of CLB before such date must be filed in High Court within 60 days from the date of communication of the CLB order. The Companies (Transfer of proceedings) Rules, 2016 which came into effect from 15/12/2016 also silent about transfer of appeals from High Court to NCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act 2013, from 01/06/2016 all matters, proceedings or cases pending before CLB constituted under Section 10 E of the 1956 Act are to be transferred to concern NCLT by virtue of Section 434(1)(a). All proceedings pending before the Courts, after the date of notification i.e. 15/12/2016 were also to be transferred to Tribunal (i.e) NCLT. To distinguish matters of first instance and Appeals, clause (b) in subsection (1) of Section 434 is incorporated in the Act. The Section, which deals with transfer of proceedings pending before CLB and Court, restricts to proceedings of first instance (original jurisdiction) and not appeals. That is the reason why Clause (b) finds place in the Sub-Section(1) of Section 434. This clause makes clear that the transfer of proceedings is not in respect of appeals against the order or decision of CLB passed prior to 01/06/2016 and pending on the file of High Court. Section 434 (1)(b) though on first reading may look like misfit in the scheme of drafting, on deep reading, it makes clear that this provision is incorporated with purpose. 29.As a sunset clause Section 434(1)(b) takes care of cases decided by CLB before Section 434(1)(a) came into eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw Board could have applied the decision in Arjun Singh v. Mohindra Kumar Ors., (1964) 5 SCR 946 and Pujya Sindhi Panchayat v. CL Mishra, AIR 2002 Raj 274 to the present case? (v)Whether the Hon'ble Company Law Board ought to have considered that the protection under SICA, 1985 is not merely for the benefit of the appellant but for also its workers? (vi) Whether the impugned order passed by the Hon'ble Company Law Board, was illegal and without jurisdiction? 32.In response to these appeal and question of law raised, the first respondent had filed a common counter, wherein it is stated that the application filed by VML, after reserving order in the execution petition is not maintainable and the order of the CLB dated 30/12/2015 is unimpeachable. The execution petitions, after affording full opportunity to the parties, were reserved for orders on 08/09/2015. Thereafter, the applications under Section 22 (1) of SICA was moved, to the stay the execution proceedings. Relying upon the judgments of the Supreme Court rendered in Arjun Singh vs Mohindra Kumar and Ors reported in [1964(5) SCR 946]; judgment of the Delhi High Court rendered in Apollo Finance Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, should not lead to any undesirable state of affairs. The cover of preventive umbrella of Section 22(1) of the SICA, cannot be allowed to be misused to torpedo judicial orders. Section 22 is not meant to breed dishonesty nor can it be so operated as to encourage unfair practices. ( refer: Deputy Commercial Tax Officer vs- Corromandal Pharmaceuticals [[ 1997] 2 SCR 1026] ) 36.Hence, for the above reasons, the Company Appeals No: 5 /2016 and 6/2016 deserves to be dismissed for want of merits. Accordingly, the Company Appeals No:5 and 6 of 2016 are dismissed. The orders of CLB dated 30/12/2015 passed in Application No:2/2015 in E.P.No.35/2011 in C.P.No.65/2005 and in Application No:2/2015 in E.P.No.36/2011 in C.P.No.76/2005 confirmed. 37. Comp.Appeals 7 to 10 of 2016: Out of these four appeals, VML is the appellant in Company Appeal No.7/2016 filed against the order dated 31/12/2015 passed in E.P.No.35/2011 and the Company Appeal No.8/2016 filed against the order dated 31/12/2015 passed in E.P.No.36/2011. CG Holdings Limited and K.C.Palanisamy are the appellants in Company Appeal No.9/2016 filed against the order dated 31/12/2015 passed in E.P.No.36/2011 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's group company be transferred to the successful party? (X)Would the principles enshrined in the CPC and specifically Order XXI Rule 64 of the CPC govern the power of the Hon'ble CLB while passing Orders of execution? (XI) In light of the fact that the value of property is ever changing, does a Court/Tribunal lack the power to direct the property to be conveyed in satisfaction of a money decree? (XII) Has the Hon'ble CLB acted beyond the limited powers conferred upon it by the Companies Act, 1956? (XIII) If the Hon'ble CLB, acting under section 634A of the Companies Act, 1956, would not have the power to order a direct transfer of property as a means of executing an Order, would it have the powers to do so under Sections 397- 402? (XIV)Whether the Madras High Court Order (5.8.2011) should be interpreted to water down the 2008 CLB Order and if so is ORE's prayer to seek a transfer of the property of VML as a matter of right misconceived? (XV) Whether the letter dated 08.06.2015 constituted of a valid approval by RBI to permit transfer of VML land to ORE Trust? 39.In response to the questions of law raised by the appellants, bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CLB in execution is bound to follow Order 21 of CPC ? 3. Whether in the light of the Division Bench order, the CLB had jurisdiction to order vesting of property of greater value than the principal amount decreed and interest thereon? 41.The learned Senior Counsel making a comparison of the operative portion of the CLB order ought to be executed and the order passed in execution petition, submitted that the declaration relief granted and vesting of the property are behind and beyond the decree. Without following the procedures laid under Order 21 of CPC, the CLB had passed the impugned order. The Division Bench of the High Court in its order dated 05/08/2011 had clearly stated that the properties of VML are to be kept as security and only in the event of remote need, the properties of VML i.e 17.15 acres are to be conveyed to ORE and 7.80 acres to Athappan. Thus, it is very clear through the above observation of the High Court that the property is to be held only as security and cannot to be conveyed, unless there is remote need. While so, the CLB erred in vesting the land to the decree holder without any material or justification of remote need. The property is worth s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its make-belief attempt to pay got exposed. They tried to siphon out the money laying in the Bank. Therefore, ORE Holdings filed application before CLB since, CLB in its order dated 13/08/2008 gave liberty to the parties to approach CLB in case of difficulty in implementation of the smooth exit. CG Holdings and K.C.Palanisamy ( the appellants in Comp.Appeals No.9 and 10 of 2016) also filed separate application expressing their difficulty in implementing the exit scheme. In the said circumstances, CLB modified its earlier order. However, the said modified order was challenged before the High Court. The order now executed is in consonance with the order of the appellate Court in Comp.Appeals No.21 and 25 to 27 and 29 of 2009. Therefore, the comparison of the original order of CLB dated 13/08/2008 with the order passed in the execution petition is misleading and mischievous. 45.Further, the learned Senior Counsel appearing for the respondent- ORE Holdings submitted that, after the order passed by the appellate Court, the order of the CLB got clarified through the appellate Court order dated 05/08/2011. The appellants at no point of time in the past had sought for extension of tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but which has become of no virtue whatsoever, after fulfilling or accomplishing the purpose of its creation. In Dwarakadas case cited supra, after the decree of the trial Court, the decree holder filed an application under Section 152 of the CPC praying for awarding of interest from the date of the suit, till the date of the decree by correcting the judgment and decree on the ground that non-awarding of interest pendente lite was an accidental omission. The trial Court allowed this application and directed the correction of the judgment and decree by awarding interest pendente lite . Aggrieved by the judgment and decree of the trial Court, the Judgement Debtor (JD) appealed to the High Court. The High Court partly allowed the appeal by holding the Judgement Debtor (JD) is liable to pay only a sum of ₹ 4,783.33 to the Decree Holder with interest at the rate of 6% pa. The order of the trial Court granting interest pendente lite was set aside. Challenging the High Court order, the Decree Holder took up the matter to the Hon'ble Supreme Court. In the said context, the Hon'ble Apex court said , Section 152 CPC provides for correction of clerical or arithmeti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition would be different where the judgment of a Court provides for pendente lite interest and decree omits to mentions such interest. Such a mistake could be corrected under Section 152 CPC. The correct position of law is that a decree cannot add or subtract any relief except what has been provided in the judgment. 50.The four line order of the Hon ble Supreme Court in Narpal Singh case relied by appellant counsel reads as below:- I.A.No.15-16 for clarification and direction of Court's Order dated 3.5.2007 are totally misconceived. Moreover, ordinarily no I.A. lies after a case is finally disposed of. Ordinarily, an I.A. is maintainable only in a pending case. Once a case is finally disposed of the Court becomes functus officio , and thereafter an I.A. lies ordinarily only for correcting clerical or accidental mistake. The same are accordingly, dismissed. 51. Bholi (Dead) By L.RS. vs- Lachhman Singh Ors case arise from a suit for declaration of title alleging the sale deed obtained by defendants by fraud. The plaintiff lost before the trial Court. Pending his appeal before the appellate Court, the parties entered into compromise and a decree was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the High Court fell in error in entertaining the second appeal by the impugned order. Accordingly, the impugned order passed by the High Court is set aside . 53.Coming back to the facts of the case in hand, as discussed earlier, the exit scheme framed by CLB vide its order dated 13/08/2008 accepted by all the contesting parties and not challenged before the higher forum. What was challenged was the modification of the order dated 13/08/2008 pursuant to the applications filed by CG Holdings and O.R.E.Holdings. However, the error in the modified order dated 03/08/2009 was rectified and cured by the High Court in the appeals vide order dated 05.08.2011. As the result, true test should be is whether the execution order of CLB dated 31/12/2015 is in tune with the order of the High Court order dated 05/08/2011 which modified the CLB order in exercise of its power under Section 10F of the Companies Act. 54. It is to be borne in mind, that the petitions in C.P.No.65 of 2005 and C.P.No.76 of 2005 were filed under Sections 397, 398, 399, 402 and 403 of the Companies Act, 1956 making allegations and counter allegations of oppression and mismanagement. CG Holdings and KCP prayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are residuary in nature and in addition to the powers available to the CLB under Sections 397(2) and Section 398 (2) which permit the CLB to make such order as it thinks fit with a view to give quitus to the matters complainted. In the instant case, the oppressive conduct of the appellants against the Foreign investors namely ORE Holdings and Athappan well found and spoken aloud in the orders passed by CLB, High Court and the Supreme Court. To put an end to the oppression, the CLB has formulated the exist scheme. To avail the exist scheme, CG Holdings and K.C.Palanisamy ought to have either repaid ₹ 75 crores with 8% interest to ORE Holdings within the one year period prescribed or in alternate ought to have conveyed 17.15 acres of land morefully mentioned in the order. Similarly it should have paid ₹ 4 crores with 8% interest within the one year period to Athappan or in alternate 7.80 acres of land should have been conveyed to him. Even after lapse of several years, the appellants admittedly not complied either of the two options given to them. Hence, CLB in exercise of the power conferred under Section 634A of the Companies Act, had passed the orders in Executio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pirit. CLB has not done this modification on its own, but based on the clarification and permission given by the High Court in its order dated 05/08/2011. 60. CLB took up the adjudication under Sections 397, 398 and 399 of the Companies Act to resolve the dispute arose from Joint Venture Agreement. As observed by the Hon'ble Supreme Court in the collateral proceedings, the said dispute has been fully and finally settled by the CLB and the High Court. For the enforcement of the said settlement in a meaningful manner, the modification approved by the High Court vide its order dated 05/08/2011 is inevitable. The execution order is in tune with the clarification made by the High Court in paragraphs 144 to 146 of its order dated 05/08/2011. It is also pertinent to note that RBI vide its letter dated 08/06/2015 had permitted 'ORE Trust' the nominee of ORE Holdings to get the land of VML conveyed in its favour. 61.Therefore, on cumulative consideration of the orders passed by CLB on 13/08/2008 and 03/08/2009, the order of High Court dated 05/08/2011(reported in 2011 SCC online Mad 1078) and the order of the Supreme Court dated 09/05/2013(reported in 2013(6) SCC 740), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the appellants that CLB lack jurisdiction to enforce its order. Their case is that, after modification by the High Court, CLB lack jurisdiction to enforce the order dated 13/08/2008. The appellants could not point out anything in the impugned order, which has not been intended by CLB or High Court. CLB order dated 13/08/2008 was subjected to modification vide, order dated 03/08/2009 and that order was appealed and same got interfered/clarified by the High Court vide dated 05/08/2011. Thereafter, CLB in exercise of the power vested in it under Section 634A had passed the order impugned in these appeals. Therefore the argument that CLB should not have entertained the execution petition has no legs to stand and bound to fall. Likewise, the submission that the order in the execution petition is beyond and behind the operative portion of the decree is to say the least, a misconceived submission, made ignoring the fact that modification of the CLB order dated 03/09/2009 was challenged, tested and the error whatsoever found was rectified and cured by the appellate Court. The appellants submission that the order of the CLB dated 31/12/2015 is nullity is legally unsustainable. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Bench: Nothing in these Rules shall be deemed to limit or otherwise affect the inherent power of the Bench to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Bench. 70.At this juncture, Regulation 48 is also need to be taken note, which confers CLB with the power to dispense with the requirement of any Regulations, for reasons to be recorded in writing. As observed by the learned Judge in M.S.D Chandrasekar Raja -vs- Jayabharath Textiles Pvt. Ltd. And Ors reported in [(2014) 1 LW 139] , CLB is conferred with a power under Regulation 48, to do something that even a Civil Court cannot do. A normal Civil Court cannot dispense with the requirements of any specific provision of the Code of Civil Procedure. To my mind, CPC does not confer any such power upon a normal Civil Court. Therefore, it is clear that the CLB is made by regulations, to be a Master of its own procedure, apart from being the Master of ceremonies. 71.The provisions of the Companies Act, 1956 and the judgments referred above without any doubt answers in negative the question about application of Or XXI of CPC in execution of CLB order. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time or offered to repay the investment when the dispute between them was pending before High Court and the Supreme Court. At least before the CLB when the execution petitions were pending, they should have deposited the money to show their bonafide. Having failed and deprived the respondents from tasting the fruits of the decree for more than 12 years, had raised the plea of proportionality. 77.The case under consideration is not a suit for recovery of money simplicitor or a suit for specific performance. In a joint venture agreement (JVA) entered between KCP, C.G.Holdings VML and CPL as one group, ORE as another group and Athappan as third group, investment as stated above was made by ORE and Athappan. When the proposed project could not take off due to deadlock among the directors, C.G.Holdings and KCP approached CLB for a exit scheme in C.P.No.65 of 2005. On the other hand, ORE filed C.P.No.76 of 2005 alleging mismanagement and suppression by scheme of exit and passed order containing the following three directions. (a)CEPL shall return a sum of ₹ 75 crores and ₹ 4 crores invested by ORE and Athappan respectively, together with simple interest at the rt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies Act at this stage. The Question of Law:- 80.To conclude, the scope of Section 10F of the Companies Act which give right to appeal against the decision/order of the Company Law Board before High Court is subject to existence of any question of law. Section 10F reads as under: 10F.Appeals against the order of the Company Law Board-Any person aggrieved by any decision or order of the Company Law Board made before the commencement of the Companies (Second Amendment)Act, 2002 may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days . 81. Under Section 10F an appeal to the High Court againt an order of the Company Law Board entertained only on a question of law. In other words, the Company Law Board is the final authority on facts, unless such findings are perverse based on no evidence or are otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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