2024 (4) TMI 121 - AT - Companies Law

Tribunal's Cost Award for Unnecessary Involvement Upheld, Dismissing Appeal on Deleting Respondents' Names in Company Petition.

The NCLT Ahmadabad Bench's decision to delete the names of certain respondents from a petition under Sections 241-243 of the Companies Act, 2013, was ... Oppression and Mismanagement - Deletion of names of Respondent No. 4 to 8 and 13 from the array of the Respondents - Section 241, 242 and 243 of Companies Act - HELD THAT:- The very fact that the stay granted against the Respondent No. 4 to 8 and 13 continued for two years and was vacated on 18.12.2019 may be with an observation that Respondent No. 4 to 8 were nowhere related with such transaction, the recourse of which lie in the civil court and also the fact that the said order was not challenged rather the civil suit was filed by the Appellants and thereafter in order to avoid legal complication of maintaining the main petition on the same cause of action against Respondent No. 4 to 8 and 13 against whom the civil suit has also been filed on the same cause of action, application for deletion of their name and the prayer made in the main petition would be enough to show that Respondent No. 4 to 8 and 13 were unnecessary dragged in the litigation initiated against them in the main petition in which Respondent No. 4 to 8 and 13 had to file their reply, contested the application and the said proceedings continued for two years till the stay was vacated and the application bearing 219 of 2020 was filed in the year 2020 is sufficient to hold that Respondent No. 4 to 8 and 13 had rightly been awarded the amount of Rs. 5,00,000/- by the Tribunal on account of being unnecessarily dragged in the main petition in which stay was also operating against them in respect of the plot in question which is stated to have been purchased by them lawfully as alleged. There is no error in the approach of the Tribunal in so far as direction granted in the impugned order, which does not call for any interference by this Court - Appeal dismissed. Issues involved:The judgment involves issues related to an appeal against an order passed by the National Company Law Tribunal, Ahmadabad Bench, regarding deletion of names of respondents from the array of parties in a main petition under Section 241, 242, and 243 of the Companies Act, 2013, and the imposition of a cost of Rs. 5,00,000/- on the appellant for the respondents' alleged losses.Details of the Judgment:Issue 1: Deletion of Names of RespondentsThe Appellant filed CP No. 46 of 2017 against 'Gangotri Infrastructure Pvt. Ltd.' and Respondent No. 2 to 13 under Section 241, 242, and 243 of the Companies Act, 2013. The order of stay against Respondent No. 4 to 8 and 13 was vacated on 18.12.2019. An application was filed to delete their names from the main petition, which was allowed by the Tribunal. The Tribunal directed the Appellant to file an amended company petition after deletion of names of Respondents No. 4 to 8 and 13 and pay a token amount of Rs. 5,00,000/- to be distributed to them equally. The Appellant challenged the direction to pay the amount, arguing that the respondents were unnecessarily dragged into the litigation and their names were deleted to avoid legal complications. The Court held that the respondents were rightly awarded the amount as they had suffered losses due to being involved in the main petition unnecessarily.Issue 2: Imposition of CostThe Tribunal directed the Appellant to pay a token amount of Rs. 5,00,000/- to Respondents No. 4 to 8 and 13 for their alleged losses in business and reputation. The Appellant contended that the imposition of cost was unwarranted as the respondents were initially impleaded in the main petition but later their names were deleted to avoid legal objections. The Court observed that the respondents were unnecessarily involved in the litigation and had to contest the application for two years until the stay was vacated. The Court upheld the Tribunal's decision to award the amount to the respondents, considering the circumstances of the case and dismissed the appeal without any order as to costs.