Rescon Manufacturing Co. Pvt. Ltd. & Ors. vs Sanjeev Ramesh Doshi & Ors.

01.12.2022: Heard Mr. Vinamra Kopariha, Ld. Counsel for the Appellant and Mr. Aman Singhania, who is voluntarily appearing on behalf of the Respondent.

On Interlocutory Application No 4429 of 2022, which has been filed in CA (AT) No. 212-213 of 2022 for condonation of delay, Ld. Counsel for the Appellant submits that due to the reason that the Appellant was intending to change the counsel, some time was consumed in filing the appeal. Accordingly, within 45 days of the time as prescribed under Section 421(3) of the Companies Act, 2013 (hereinafter referred as to ‘Act’), the appeal could not be filed. However, it has been argued that the Appeal has been filed within further period of 45 days. Some other reasons have also been assigned for belated filing of the appeal. Ld. Counsel for the Respondent opposed the prayer for condonation of delay. However, considering the fact that both impugned orders i.e order dated 11.08.2022 and 15.09.2022 were assailed within extended period of 45 days, this Tribunal is having jurisdiction to condone, if satisfied with the reason. We are of the opinion that in view of reason assigned in the application, limitation is required to be condoned. Accordingly, the Application for condition of delay is allowed and in filing appeal, delay is condoned.

The present appeals i.e. CA(AT) No. 212-213 of 2022 have been preferred against two orders passed by ‘National Company Law Tribunal, Mumbai Bench, Court –IV’ (hereinafter referred as to ‘NCLT’) in CA-411/2022 in CP/99(MB)/2020. By first order i.e. order dated 11.08.2022, an application filed by the Respondents, who were Petitioners before the NCLT, for rectification in the order dated 12.07.2022, has rectified the same and it has been indicated that on 12.07.2022 while dictating order in CA 338 of 2022 in CP/99(MB)2020, it was ordered to maintain status quo. It was also ordered that status quo order would be effective from 12.07.2022 till date of hearing i.e. 15.09.2022. The second order i.e. 15.09.2022 only indicates that due to paucity of time, the matter was adjourned to 01.12.2022 and status quo dated 12.07.2022 and 11.08.2022 were directed to remain effective till the next date of hearing and next date of hearing was fixed to 01.12.2022.

Before proceedings to examine correctness of the order, it is necessary to reiterates certain facts. It is not in dispute that in the month of January, 2020, the Respondent had filed CP/99(MB)2020 under Section 241 -242 of the Act making allegation of ‘Oppression’ and ‘Mismanagement’. In the said petition, the reply was filed by the Appellants herein on 30.03.2022. Subsequently, in the month of June, 2022, the Respondent herein (Petitioner before the NCLT) filed another application i.e. CA 338 of 2022 for passing some interim order, in view of the fact that the Respondents were of the opinion that in the meanwhile the Appellants herein were trying to create ‘third-party rights in respect of the property of the company’. The said petition was in virtually mode heard on 12.07.2022. Order dated 12.07.2022 is reproduced herein below:

On perusal of the aforesaid order, it is evident that while directing for listing the case on 15.09.2022, no interim order was passed by the Ld. NCLT. However, subsequently, on 01.08.2022 after the order was passed on 12.07.2022, the Respondents herein filed an application which was numbered as CA 411/2022 seeking rectification in the order dated 12.07.2022. On filing of the said application, the first impugned order was passed on 11.08.2022 which is quoted herein below:

Ld. Counsel for the Appellant submits that after the said order, the Appellant filed reply before the ld. NCLT which is at page 147 of the Appeal Paper Book. In the said reply, the stand was taken that on 12.07.2022 the order was uploaded on the NCLT website portal, in which there was no any interim order. Ld. Counsel for the Appellant has drawn our attention to statement made in Para 15 of the reply which was filed on 14.09.2022. It is apt to reproduced para 15 herein below:

Thereafter, on 15.09.2022, the matter was again taken up, however, due to paucity of time, no order was passed on reply and status quo order was directed to be extended till the next of hearing and the date was fixed to 01.12.2022. During the course of hearing, it was reiterated by the Ld. Counsel for the Appellants that on first date i.e. on 12.07.2022 though it was virtual proceedings, no status quo order was passed and even, thereafter, on an application filed by the Respondents, the Ld. NCLT on assumption that earlier there was status quo order and due to oversight it was not recorded, directed to presume, as if, on 12.07.2022 there was order of status quo and same order was directed to continue and it is continuing till date. According to Ld. Counsel for the Appellant if the order which was already uploaded, was not indicating any status quo order or interim order, there was no reason for rectifying the same on the prayer made by the Respondents herein. He further submits that since in the main ‘Company Application’, reply has already been filed, it would be appropriate to direct the NCLT to finally decide the issue instead of lingering the appeal and continuing the status quo order, which is not sustainable in the eye of law.

Ld. Counsel for the Respondents opposing the prayer in the appeal, has argued that the proceedings on 12.07.2022 was virtual proceedings and it appears that due to oversight in the said order, the ‘status quo’ word was missed and subsequently when the application was filed by the Respondents to rectify the order, the Ld. NCLT on verification of records, had passed order and felt that in open court, interim order was passed which was missed to be recorded in the same. Accordingly, the Ld. NCLT has not committed any error in correcting the mistake which occurred earlier. According to him, there is no reason for interference with either of the order dated 11.08.2022 as well as 15.09.2022. He further submits that matter is already pending before the NCLT and as such only direction can be issued to finally decide the main petition. He further submits that of course the Respondents had filed main petition in the year 2020 but since in the year 2022, it was noticed that the Appellants herein were trying to create third-party rights, the Respondent filed application for passing of the interim order which has been allowed.

Besides hearing ld. Counsel for the parties, we have carefully perused the materials available on record and after going through the same, we are prima facie of the view that order dated 11.08.2022 is not sustainable in the eye of law. Once an order was uploaded and in uploaded order, there was no word indicating as to whether there was ‘status quo’ order or not, subsequently, on application filed by the Respondents, the NCLT was not having any authority to pass such order. Moreover, it is true that the ‘Court’ or the ‘Tribunal’ is having ample jurisdiction to pass interim order in the proceedings in view of the facts and circumstances, but if such order is to be passed, there must be some reason for passing the same.

On perusal of amended order dated 11.08.2022, we find that no reason has been indicated for passing status quo order or interim order. In a proceedings while passing an order of injunction, there are requirement to examine at least three main ingredients (i) ‘Prima facie case’, (ii) ‘Balance of convenience’ & (iii) ‘Irreparable loss’. However, in the amended order, all those ingredients are missing.

The order dated 11.08.2022 further appears to be erroneous due to the reason that once after first order i.e order dated 12.07.2022, an application was filed by the Respondents requesting for rectifying the order, the respondents in their petition which was filed on 01.08.2022 and has also been brought on record at running page No. 141-145, in para 3 and 4, the Respondents mentioned that in order dated 12.07.2022, the word “No Third-Party rights shall be created in the properties of Respondent No.1 and that reply to be filed by Respondents within 15 days from the date of the order” was missing. However, even on such application wherein there was no indication that in the earlier order dated 12.07.2022, the ‘status quo’ word was missing, the Ld. NCLT has committed error in introducing the said word by its order dated 11.08.2022 whereby the word “status quo” was inserted with retrospective effect i.e. order dated 12.07.2022. At this juncture, it would be appropriate to reproduce para 3 &4 of the application filed by the Respondent (Applicants before NCLT) before the NCLT.

Of course, a plea was taken by Ld. Counsel for the Respondents that before passing rectification order, the Ld. NCLT had examined the record but nothing is reflected in the impugned order and as such, submission of Ld. Counsel for the Respondent may not be acceptable.

In any event, we are of the opinion that Ld. NCLT has committed error in passing the order dated 11.08.2022 and again reiterated the same by its order dated 15.09.2022. Accordingly, both the orders may not be allowed to continue and both orders are hereby set aside. However, it is made clear that if any fresh application is filed by the Respondents for any interim relief, the Ld. NCLT would be at liberty to decide the same in accordance with the law after hearing both the parties.

Before parting with this order, it is also required to request the Ld. NCLT that, if pleadings, in main petition is complete then he may take appropriate steps for final disposing of the same and both the parties are directed to render full assistance to the Ld. NCLT for expeditious disposal of the main petition.

With above observations and directions, the appeal is allowed.

Pending application, if any, stands disposed of. No order as to costs.