2025 (11) TMI 1808 - AT - Companies Law

Appeal partly allowed, coercive-action restraints deleted; club's disciplinary powers restored, subject to existing Articles of Association directive

The Calcutta Cricket & Football Club Versus Karan Singh Grewal & Ors.

NCLAT allowed the appeal in part by deleting paragraphs 24 and 25 of the NCLT order, which had effectively restrained the club from taking coercive action ... Direction for stay of proceedings u/s 241 & 242 of the Companies Act, 2013 pending before the NCLT - initiation, conduct and conclusion of disciplinary proceedings against its Members - HELD THAT:- NCLT having already issued direction to the Club to adhere to its Articles of Association and has not granted. Prayers made by Respondent No. 2 & 3 in its earlier application in I.A. No. 123 & 164 of 2024, there was no occasion to issue any direction to the Club not to take any coercive action against Members, since by order dated 30.09.2024. Prayers of the Respondent No. 2 & 3 to the Club from taken any action against Respondent No. 2 & 3 was refused. There was no occasion to pass direction as contained in para 24 of the order. We, thus, are of the view that observation and direction, in para 24 & 25 need to be deleted from the impugned order. As far as, the submission of the Respondent that the Club is to strictly adhere to the Articles of Association, the said direction is already operating under order dated 30.09.2024. Appeal disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the Adjudicating Authority, in an interlocutory application filed by certain members, was justified in directing that no adverse action be taken by the club against its members till disposal of the company petition by the Supreme Court. 1.2 Whether the Adjudicating Authority was justified in observing that, in case of non-compliance with specified clauses in running its administration, an administrator may be appointed to run the club till the matter is decided by the Supreme Court. 1.3 Effect of the earlier order directing the club to strictly adhere to its Articles of Association in disciplinary proceedings and the refusal of earlier prayers to restrain the club from taking action against specific members. 2. ISSUE-WISE DETAILED ANALYSIS 2.1 Directions restraining adverse action against members pending Supreme Court proceedings Legal framework (as discussed) 2.1.1 Proceedings under Sections 241 and 242 of the Companies Act, 2013 were initiated by four members before the Adjudicating Authority. In those proceedings, on an earlier interlocutory application, the Adjudicating Authority had, by order dated 30.09.2024, directed the club to strictly adhere to its Articles of Association when initiating, conducting and concluding disciplinary proceedings, and when suspending its members, and to review past disciplinary action on the touchstone of the Articles of Association. 2.1.2 The Supreme Court, by order dated 18.07.2025, directed that the Adjudicating Authority shall not proceed further with the company petition under Sections 241 and 242 till the next date of hearing. Interpretation and reasoning 2.1.3 The Tribunal noted that by the earlier order dated 30.09.2024, the Adjudicating Authority had already declined the specific prayers of the concerned members to restrain the club from taking any action against them, while only directing adherence to the Articles of Association in disciplinary matters. 2.1.4 In this context, the impugned order dated 04.07.2025, particularly paragraph 24, directing that no adverse action be taken by the club against its members till the issue pending before the Supreme Court is decided, went beyond the scope of the earlier adjudication in the interlocutory applications of those members. 2.1.5 The Tribunal considered that only a show cause notice had been issued and disciplinary proceedings were not yet concluded, and that there was already an operative direction requiring strict adherence to the Articles of Association. 2.1.6 It was observed that, since the earlier order had refused the prayer to restrain the club from taking action against the specific members, there was no occasion for the Adjudicating Authority subsequently to restrain the club generally from taking any coercive or adverse action against members. Conclusions 2.1.7 The direction in paragraph 24 of the impugned order, restraining the club from taking any adverse action against its members till the matter before the Supreme Court is decided, was held to be unwarranted and unsustainable in light of the earlier order dated 30.09.2024. The Tribunal ordered deletion of paragraph 24 from the impugned order. 2.2 Observation regarding possible appointment of an administrator Interpretation and reasoning 2.2.1 Paragraph 25 of the impugned order stated that, in case of failure of the club to comply with certain clauses in running its administration, the Adjudicating Authority would not hesitate to appoint an administrator to run the affairs of the club till decision of the Supreme Court. 2.2.2 The Tribunal noted that this observation was made in the context of the same interlocutory application where the earlier reliefs had already been substantially addressed by the order dated 30.09.2024, and only adherence to the Articles of Association had been directed. 2.2.3 The Tribunal had, at the interim stage in the appeal, already stayed paragraph 25, considering that there was 'no occasion' for such an observation in the facts of the case. Conclusions 2.2.4 The Tribunal held that the observation and direction contained in paragraph 25 were unwarranted and directed that paragraph 25 of the impugned order be deleted. 2.3 Continuing obligation to adhere to Articles of Association Interpretation and reasoning 2.3.1 The Tribunal reaffirmed that the earlier order dated 30.09.2024, directing the club to strictly adhere to its Articles of Association in initiating, conducting and concluding disciplinary proceedings against its members and in suspending members, was already in force. 2.3.2 The Tribunal accepted the submission that the club remains obliged to follow its Articles of Association in all disciplinary proceedings, including those concerning the concerned members, and observed that this obligation is adequately secured by the subsisting earlier order. Conclusions 2.3.3 While deleting paragraphs 24 and 25 of the impugned order dated 04.07.2025, the Tribunal left untouched and operative the earlier direction dated 30.09.2024 requiring strict adherence to the Articles of Association. The appeal was disposed of accordingly by modifying the impugned order to the limited extent of deleting paragraphs 24 and 25.