2019 (5) TMI 1417 - AT - Companies Law

Company Petition Maintainability Upheld: Asset Sale Regulated with Business Continuity Emphasis

Oswal Agro Mills Limited, Oswal Greentech Ltd. And Mrs. Aruna Oswal Versus Mr. Pankaj Oswal And Ors.

The National Company Law Tribunal found the Company Petition maintainable under Sections 241, 242 & 244 of the Companies Act, 2013 despite initial ... Oppression and Mismanagement - stay of proceedings pending before the Tribunal - whether this Appellate Tribunal should modify or make variations of the interim order passed on 12th December, 2018? - HELD THAT:- The Appellant has not prayed for any interim relief in appeal. The order dated 12th December, 2018 was passed by this Appellate Tribunal as it was alleged by the learned Senior Counsel for the ‘Petitioner' that they have issued notice on 24th October, 2018 with regard to sale of ‘Chembur Land’, which Appellant Company intend to sell. From the record, we also find that the Company is a Real Estate business of construction to the allottees. If the interim order dated 12th December, 2018 is allowed to continue, it would result in stopping the entire business and operations of the Appellant Company as not only immovable assets, even the movable assets of the Appellant Company cannot be dealt with in normal course of its business - Such power having vested with the Tribunal, this Appellate Tribunal can also pass interim order in the interest of the Company. Taking into consideration the fact that the interim order dated 12th December, 2018 if allowed to continue, it will result in stopping the entire operations and business of the Appellant Company, as Company in normal course cannot sell or allot properties to the allottees, which will affect the business of the Company, we modify the interim order dated 12th December, 2018 and direct the parties not to sell the ‘Chembur Land’ of the Company without prior permission of this Appellate Tribunal or till the final decision of these appeals whichever is earlier. The order dated 12th December, 2018 is recalled and stands modified. Issues:1. Maintainability of the Company Petition under Sections 241, 242 & 244 of the Companies Act, 2013.2. Challenge to the order of the National Company Law Tribunal regarding the maintainability of the petition.3. Interim orders related to the sale of 'Chembur Land' and other assets of the Company.4. Application for variations of the interim order and its consideration by the Appellate Tribunal.Issue 1: Maintainability of the Company PetitionThe 1st Respondent filed a petition alleging oppression and mismanagement by the Appellant Company. The Respondents challenged the maintainability of the petition under Sections 241, 242 & 244 of the Companies Act, 2013. The National Company Law Tribunal observed discrepancies in the filed documents and granted an opportunity to file a reply. The Tribunal later held the petition as maintainable, leading to appeals by the Appellant Company and Others.Issue 2: Challenge to the Tribunal's OrderThe Respondents challenged the Tribunal's order regarding the maintainability of the petition in Company Appeal (AT) No. 172 of 2018. The Appellate Tribunal disposed of the appeal, directing a determination of maintainability while allowing the Respondents to file a reply. Subsequently, the Tribunal reaffirmed the maintainability of the petition, leading to further challenges through present appeals.Issue 3: Interim Orders on 'Chembur Land' and Company AssetsDuring the hearing, the Appellate Tribunal issued an interim order prohibiting the sale of moveable or immovable property without mutual consent or prior approval. The Appellant Company sought variations to the order, highlighting their intention not to sell 'Chembur Land.' The Tribunal considered the implications on the Company's business and modified the interim order to restrict the sale of 'Chembur Land' without prior permission from the Appellate Tribunal or until the final appeal decision.Issue 4: Application for Variations of Interim OrderThe Appellant Company filed an application seeking modifications to the interim order, emphasizing their commitment not to sell 'Chembur Land.' The Appellate Tribunal, after considering the arguments, modified the interim order to prevent disruptions to the Company's operations while ensuring oversight on the sale of 'Chembur Land.' The application for variations was disposed of, and the appeals were scheduled for further consideration.This detailed analysis covers the maintainability of the petition, challenges to tribunal orders, interim measures regarding asset sales, and the application for variations, providing a comprehensive overview of the legal judgment.