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Issues: (i) Whether the respondents should be restrained from proceeding with the second rights issue and directed to maintain the collected amounts in a separate account and status quo in respect of shareholding pending disposal of the main petition; (ii) Whether the challenge to the allotment made on 02.03.2024 and the alleged use of escrow funds should be decided in the present applications or taken up with the pending contempt proceedings.
Issue (i): Whether the respondents should be restrained from proceeding with the second rights issue and directed to maintain the collected amounts in a separate account and status quo in respect of shareholding pending disposal of the main petition.
Analysis: The applications arose in the setting of a pending oppression and mismanagement petition and an earlier order regulating further allotment of shares and safeguarding the funds collected under the rights issue. The subsequent rights issue was proposed during the pendency of the main petition, and the Tribunal found that the subject matter fell within its control for interim protection. On the facts placed before it, the Tribunal considered it appropriate to preserve the existing position and prevent further alteration of the shareholding pattern or utilisation of the amounts already collected until final disposal of the main petition.
Conclusion: The respondents were restrained from proceeding further with the ongoing rights issue, the amounts collected were directed to be kept in a separate account and not utilised, and status quo regarding shareholding was ordered to be maintained till disposal of the main petition.
Issue (ii): Whether the challenge to the allotment made on 02.03.2024 and the alleged use of escrow funds should be decided in the present applications or taken up with the pending contempt proceedings.
Analysis: The grievance regarding the allotment of shares on 02.03.2024 and the alleged breach of the earlier order was already the subject of a contempt petition in which the respondents had been called upon to file replies. In view of that parallel proceeding, the Tribunal treated the controversy over those acts and the use of escrow funds as overlapping with the contempt jurisdiction and directed that it be considered along with that petition. The respondents were, however, required to file details of the allotment and the escrow accounts by way of compliance affidavit.
Conclusion: The challenge concerning the 02.03.2024 allotment and use of escrow funds was not finally decided in these applications and was directed to be considered with the contempt petition, subject to compliance directions for disclosure.
Final Conclusion: Interim protection was granted against continuation of the second rights issue, while the alleged prior violation concerning the earlier allotment and fund utilisation was left to be considered in the pending contempt proceedings alongside compliance disclosure obligations.
Ratio Decidendi: Where a subsequent corporate action during pendency of a petition may alter the status quo and affect the subject matter in dispute, the Tribunal may grant interim restraint and preservation orders to maintain the existing position until final adjudication.
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