Appeal dismissed; interim stay refused on proposed EGM as relief under Sections 241-242 denied for unclean hands

NCLAT, Chennai dismissed the appeal and refused the interim stay sought to keep the proposed EGM proposal of the respondent in abeyance. The tribunal held that interim relief under Sections 241-242 is discretionary and declined relief because the appellant came with unclean hands and had prima facie committed continuous breaches of a service contract; the appellant's conduct was deemed unbecoming of an officer owed allegiance to the respondent. The impugned interlocutory order was found to beReasoned and equitable, and the appeal was rejected.

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Issues: Whether the refusal by the Tribunal to grant interim relief staying the proposed Extraordinary General Meeting in proceedings under Sections 241 and 242 of the Companies Act, 2013 should be interfered with on appeal.

Analysis: The appeal challenges an interlocutory order declining interim relief. The Tribunal recorded findings that (a) a board resolution fixed an EGM for consideration of removal; (b) an audit report alleged shortfall in cash receipts attributed among doctors; (c) the audit was based on patient registers and referred to other doctors as well; (d) the applicant had allegedly attended outside patients contrary to contractual terms; and (e) multiple concurrent litigations existed and relevant documents were not disclosed by the applicant. The Tribunal also noted that a forensic audit resolution was earlier adopted without objection and found the applicant's conduct inconsistent with entitlement to equitable interim relief. Granting interim relief was treated as an exercise of discretion requiring a prima facie case and clean hands; on the recorded facts the Tribunal concluded discretion was not to be exercised in favour of the applicant.

Conclusion: The refusal to grant interim relief is upheld and the appeal is dismissed; decision is in favour of Respondent.

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