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Judgment
Company Appeal (AT) (CH) No. 41/2025:
On perusal of the records of the Appeal and upon hearing the learned counsel for the parties, what could be reflected is that the controversy in the instant Company Appeal pertains to the affairs of Vettathu Nadu Rehabilitation Centre Pvt. Ltd. as against which the proceedings under Sections 241 and 242 were drawn in CP(C/ACT)/28/KOB/2023 by Dr. Hyderali Kalliyath & Dr. Mini Hyderali, Respondents 1 & 2 herein for the following reliefs.
“In view of the facts mentioned above, the petitioners prays for the following relief(s)
i.Order should be passed to declare the EGM proposed to be held on 23/12/2023 for the removal of petitioners from the directorship of the company as illegal and in contravention to clause 24 of AOA, section 169(2), read with Sec 115 and 102(1)(b) of Companies Act 2013
ii.Order should be passed to uphold the right of the petitioners to continue in the office of the director of 1st Respondent Company.
iii.Order should be passed to declare the fraudulently called Executive General Meeting held on 14/11/2023, without issuing notice & agenda, not transacting the item of appointment of directors in the meeting as invalid and in contravention of Section 101,102 109 and other applicable clauses of Secretarial Standard -2
iv.Order should be passed to withhold the appointment of two directors, who were inducted through malpractice by R2.
v.Order should be passed to recall any Board meeting held without constituting proper Board.
vi.Order should be passed u/s 242(2)(a) to regulate the conduct of affairs of the company.
vii Any other directions as the NCLT may deem fit to bring back the harmony of the company by protecting the interest of the members.”
Ld. Tribunal vide its order dated 21.12.2023 directed the Respondents/Appellants herein to defer the agenda item concerning the removal of the petitioners from the said EGM. The said EGM was not conducted. Subsequently, the EGM of the said company was scheduled to be held on 13.07.2024. The Respondents 1 & 2 herein filed IA/128/KOB/2024 challenging the notice for EGM to be held on 13.07.2024 and seeking its stay, contending that there is no urgency for conduct of EGM and appointment of new directors in arbitrary and unnecessary. Ld. NCLT passed an order on the said Application, dismissing it as infructuous as the EGM has already been conducted on 13.07.2024. Ld. NCLT while passing the order, did not go into the merits of the said application. However, during the hearing on 10.01.2025, the Ld. Tribunal, after observing that EGM has been conducted on 13.07.2024 and two new directors have been appointed, opined that the company should have sought prior permission from the Tribunal before implementing any changes to the Board of Directors and accordingly passed an order to the effect that the position of Directors be maintained status quo ante as on the date of filing of the Company Petition and stayed changes to composition of the Board of Directors or share holding structure of the Company till final adjudication of the matter.
The Appellants, among other things, contend that Ld. Tribunal on 29.07.2024 had refused to pass any interim order on the same matter while deciding on the IA moved by the Respondents and that the same order has attained finality, that the impugned order overrides the rights of the majority shareholders without any legal basis and that the impugned order was passed exparte without giving an adjournment as requested and without considering the counter-affidavits of the Respondents.
The Appellants further contend that, by virtue of the EGM of 13.07.2024, they were inducted as directors of the Company/Respondent No.3, and in the said capacity they have been functioning till the date of the passing of the Impugned Order. There are various facets of arguments that are being extended by the learned counsel for the parties to the Appeal, but we are refraining ourselves at this stage, from making any observations with regards to the merits of the matter. However, we have to reiterate at this point that when the nature of the interim relief granted by the Tribunal, takes the shape of a final relief, that ought to be deferred in appropriate cases to be granted by the Tribunal, until and unless it assigns a plausible reason based upon consideration of the evidence and the arguments that has been extended by the learned counsel for the parties.
That being the case, upon perusal of the Impugned Order, we are of the view the interim order granted in this case has almost taken the shape of final order. It is an established principle that when a party’s civil right is affected adversely in any Interim Order, which takes the shape of a Final Order granting a relief akin to the final relief which otherwise would have been decided upon an adjudication of the Company Petition itself, the law contemplates that, it is mandatory on part of the Tribunal to have passed a reasoned order after considering the rival contentions and after applying their mind. The said principle has been pronounced by the Hon’ble Apex Court. Though it has been made in the context of a proceedings under the Code of Civil Procedure, the basic principles, in out view, are required to be followed while passing the Interim Orders as has been decided in the matter of Birwati Chaudhary and Other Vs State of Haryana and others as reported in (2018) 9 SCC, 458. The relevant paragraphs 7 & 8 are extracted hereunder:
“7.The reason to remand the case has occasioned due to the fact that firstly, no adequate reason is given in the impugned order for not granting stay; and secondly, the reason given does not in itself justify the rejection having regard to the nature of controversy involved in the writ petition.
8.In short, justifiable reason(s) to support either the grant or rejection need(s) to be stated keeping in view the facts and the law applicable to the controversy involved. It is not so found in the impugned order and hence the order of remand is called for to decide the matter afresh in accordance with law.”
Exclusively, on this limited count itself, the Impugned Order dated 10.01.2025 would hereby stand ‘quashed’, and the Interim Application which accompanies the Company Petition preferred under Section 241 & 242 of the Companies Act, 2013, is directed to be considered and decided on merits after assigning reasons by the Learned Tribunal after considering the rival contentions of the parties including the documents, which are placed on record in support of the contentions.
Company Appeal (AT) (CH) No. 42/2025:
This Company Appeal (AT)(CH) No. 42/2025, emanates from the same Impugned Order dated 10.01.2025, as it has been passed by the NCLT, Kochi Bench in IA(C/ACT)/135/KOB/2024, as preferred in CP(C/ACT)/28/KOB/2023), though the matter is listed as defective, the defects as pointed out by the Registry is of the following nature.
“ DEFECTS:1)in the translated copy of pages 542 and 543 annexed at page 544 has no translated portion of para 2 and 2) Typed copy of hand written portion at page 545 may be enclosed.”
The defects that are pointed out by the Registry, are not so fatal for taking the Company Appeal, to be decided on its merits. Hence, the defects as pointed out by the Registry are overruled. Owing to the order that we have already passed in Company Appeal (AT) (CH) No. 41/2025, this Company Appeal, which too puts a challenge to the same Impugned Order dated 10.01.2025, would stand ‘allowed’ on account of the impugned order being set aside subject to the directions, which we have already issued in the proceeding part of today’s judgment.