Company's attempt to retransfer shares after 12-year legal battle fails, execution order upheld

NCLAT Principal Bench dismissed appeal challenging execution order in oppression and mismanagement case. Company made illegal share transfer on 24.5.2010 which was previously set aside by Tribunal and NCLAT, with directions to restore status quo from 19.5.2010. Despite clear orders, appellants attempted fresh transfer dated 28.11.2017 to retransfer shares back to appellant company. NCLAT held no valid justification existed for fresh transfer after 12-year legal battle where respondents had won. Execution order dated 03.06.2022 contained no error. Appeal dismissed, confirming respondents' restored shareholding position.

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Issues Involved:
1. Compliance with Tribunal's Order dated 16.04.2019.
2. Validity of subsequent fresh transfer dated 28.11.2017.
3. Execution of Tribunal's Order despite pending appeal before Supreme Court.

Compliance with Tribunal's Order dated 16.04.2019:
The Appellants challenged the Impugned Order dated 3rd June 2022, alleging non-compliance with the Tribunal's Order dated 16.04.2019. They argued that they had already complied with the directions through Board Resolutions dated 24.11.2017 and 10.05.2019. The Appellants claimed that they transferred 14,96,000 shares to Respondent No.1 Company as per the Tribunal's Order dated 15.11.2017 and further rectified the register of members accordingly. However, the Tribunal found the Appellants in non-compliance, noting that the shares were still reflected in the name of Appellant No.2 Company as per Form MGT 7 filed on 21.11.2019.

Validity of Subsequent Fresh Transfer dated 28.11.2017:
The Appellants argued that the fresh transfer of 14,96,000 shares on 28.11.2017 was an independent transaction and not subject to the Tribunal's earlier proceedings. They contended that the fresh transfer was pursuant to Board Resolutions dated 27.11.2017 and 28.11.2017 and a share purchase agreement. The Tribunal, however, set aside all steps taken pursuant to its directions in para 161(ii) to (vi) of the Order dated 15.11.2017, which included the fresh transfer dated 28.11.2017. The Tribunal emphasized that any steps taken by the parties pending appeals were nullified by its earlier Order dated 16.04.2019.

Execution of Tribunal's Order Despite Pending Appeal Before Supreme Court:
The Appellants filed a Civil Appeal before the Supreme Court challenging the Tribunal's Order dated 16.04.2019 but did not obtain a stay. The Tribunal proceeded with the execution, stating that an appeal does not operate as a stay unless specifically ordered by the superior court. The Tribunal referenced Order 41 Rule 5 of CPC, reinforcing that execution should not be stayed merely because an appeal is pending.

Conclusion:
The Tribunal upheld the execution of its Order dated 16.04.2019, dismissing the appeal and reiterating that the fresh transfer dated 28.11.2017 was invalid. The Appellants were directed to comply with the Tribunal's earlier directives, including payment of costs with interest. The Tribunal emphasized that the status quo as of 19.05.2010 should be restored, nullifying all subsequent actions, including the fresh transfer.

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