2004 (12) TMI 700 - Board - Companies Law

Court denies application to vacate interim order, sets deadlines for replies, and schedules hearing.

Serum Institute Of India Ltd. Versus Inderjit Properties Pvt. Ltd. And Ors.

Serum Institute Of India Ltd. Versus Inderjit Properties Pvt. Ltd. And Ors. - TMI Issues Involved:1. Vacation of ex-parte interim order.2. Dismissal of the petition under Section 399 of the Companies Act.3. Allegation of forum shopping.4. Maintainability of the petition under Sections 397/398/399 of the Companies Act.Detailed Analysis:1. Vacation of Ex-Parte Interim Order:The respondents sought to vacate the ex-parte interim order passed on 12.10.2004, which directed the company and the respondents to maintain the status quo regarding the properties and shareholding. The respondents argued that the petitioner was indulging in forum shopping, as the Bombay High Court had already rejected a similar prayer for restraining the respondents from dealing with the property of the company. However, the court found that the cause of action and the capacity under which the petitioner claimed interim relief in the civil suit were different from the present petition. The petitioner approached the Company Law Board (CLB) in its capacity as a member, not based on any contractual right. The court decided not to vacate the interim order, considering the balance of convenience and the fact that the main petition was scheduled for a final hearing shortly.2. Dismissal of the Petition Under Section 399:The respondents contended that the petitioner was not a registered member of the company and thus did not satisfy the requirements of Section 399 of the Companies Act. They argued that the petitioner, having claimed a refund of the investment in a pending suit, could not claim any rights over the shares. The court examined whether the petitioner could be considered a member for the purposes of Sections 397/398/399, despite not being in the register of members. It referred to previous decisions where persons not in the register of members were treated as members based on the circumstances. The court concluded that the petitioner had an indefeasible right to get its name entered in the register of members and should be treated as a member for the purposes of Section 399, making the petition maintainable.3. Allegation of Forum Shopping:The respondents accused the petitioner of forum shopping, as the petitioner filed the present petition after the Supreme Court dismissed its Special Leave Petition (SLP). The court noted that the interim relief sought in the civil suit was declined primarily because no relief was sought against the company in the main suit and due to non-compliance with certain legal requirements. In the present case, the petitioner filed the petition in its capacity as a member, and the reliefs sought related to the affairs of the company. The court found substance in the petitioner's argument that the cause of action in the civil suit and the present petition were different, and thus, the allegation of forum shopping was not upheld.4. Maintainability of the Petition Under Sections 397/398/399:The court considered whether the petition was maintainable under Sections 397/398/399 of the Companies Act, given that the petitioner's name was not in the register of members. The court referred to previous cases where persons not in the register of members were allowed to maintain petitions based on the circumstances. It highlighted that the petitioner held share scripts for 152 shares with transfer instruments executed by the respondent shareholders, and the agreements indicated that there was no bar to registering these shares in the petitioner's name. The court concluded that the petitioner should be treated as a member for the purposes of Section 399, making the petition maintainable.Conclusion:The court dismissed the application to vacate the ex-parte interim order and to dismiss the petition. It directed the respondents to file their replies to the main petition by 20.1.2005, with the rejoinder to be filed by 1.2.2005. The petition was scheduled for a hearing on 11.2.2005 at 10.30 AM.