2018 (4) TMI 1943 - Tri - Companies Law

Tribunal Restrains Amendments to Articles, Nullifies Agenda, Emphasizes Compliance

Casino Hotels Unit of CGH Earth Pvt. Ltd. Versus The Federation of Hotels & Restaurants Association of India & Ors.

The tribunal restrained respondents from amending Articles of Association, nullified specific agenda items, and addressed contempt proceedings. ... Seeking to restrain Respondents and/or their nominees from in any manner deleting/amending or NOT giving effect to Clauses (b) & (c) of Article 1V-Appendix A of the Articles of Association - HELD THAT:- In respect of the expenses incurred on account this litigation, the prayer has been made in CA No. 276(PB)/2018. If there is any such provision as sought to be projected by citing Articles of Association, then appropriate application be placed before R-1 by the petitioner or by respondent nos. 9,11,16,17, 18 and 20 and R-1 shall consider the aforesaid representation in accordance with the provisions of Articles of Association, specially Article 80 and pass appropriate order in accordance with law. We do not wish to proceed with the notice seeking explanation of respondent nos. 2,3, 5,7, 10 and 12 under Section 425 of the Companies Act but feel contended to observe that all the aforesaid respondents shall remain careful in future to conduct the affairs of the company. They should not give further chance to any Forum to go to the extent of issuing contempt notices to them. Application disposed off. Issues:1. Restraining respondents from amending Articles of Association2. Nullifying specific agenda items from AGM and meeting minutes3. Contempt proceedings for alleged violation of tribunal orders4. Resolution passed by respondent rendering petitioner's prayers infructuous5. Dispute over payment of litigation costs6. Observations on future conduct of respondentsIssue 1: Restraining respondents from amending Articles of AssociationThe petition sought to restrain the respondents from amending or deleting specific clauses of the Articles of Association. The tribunal initially restrained respondent 1 from holding the AGM due to objections raised regarding the agenda item violating the Articles of Association. The respondent later filed an affidavit stating that the contentious agenda item was not discussed during the meeting, complying with the tribunal's order. The petitioner acknowledged the resolution passed by respondent 1 on 17.04.2018, rendering their prayers infructuous. The tribunal clarified that any future modifications to the Articles of Association should be done with prior permission.Issue 2: Nullifying specific agenda items from AGM and meeting minutesThe petition requested setting aside and declaring null and void specific agenda items from the AGM and meeting minutes. The tribunal observed that the prayers in the petitions became infructuous due to the resolution passed by respondent 1. However, it emphasized that the resolution would remain binding and any alterations to the Articles of Association should be approved by the tribunal. The issue of expenses incurred during litigation was raised, with the tribunal suggesting that any provision in the Articles of Association should be followed for resolving the matter.Issue 3: Contempt proceedings for alleged violation of tribunal ordersContempt proceedings were initiated against certain respondents for allegedly violating the tribunal's orders. However, after considering the submissions from both sides, the tribunal decided not to proceed with the contempt notices. It cautioned the respondents to conduct the company's affairs carefully to avoid future contempt issues.Issue 4: Resolution passed by respondent rendering petitioner's prayers infructuousRespondent 1 passed a resolution on 17.04.2018, deciding not to proceed with any alterations to the Articles of Association. The petitioner acknowledged the resolution, which made their prayers in the petition irrelevant. The tribunal emphasized that the resolution would be binding and required prior tribunal approval for any future modifications.Issue 5: Dispute over payment of litigation costsThe petitioner requested that the costs of litigation be awarded in their favor and be personally payable by the respondents. Arguments were made regarding the payment of expenses under the Articles of Association, with the tribunal suggesting that the matter should be resolved in accordance with the provisions of the Articles.Issue 6: Observations on future conduct of respondentsThe tribunal closed the contempt proceedings and advised the respondents to conduct the company's affairs carefully to avoid future contempt issues. It granted liberty to certain respondents to file petitions under specific sections of the Companies Act if advised, acknowledging the unresolved issues in the current state of pleadings and circumstances.In conclusion, the tribunal disposed of the petition and related applications, emphasizing compliance with the Articles of Association and the tribunal's orders, while cautioning the parties to conduct themselves in a manner that avoids contempt proceedings in the future.