2026 (2) TMI 242 - AT - Companies Law

Interim injunction against removal as director denied where EGM challenge was not properly before the company petition; appeal dismissed.

Contradictory pleadings and parallel civil proceedings defeated a claim for interim relief restraining removal as director; the appellant's attempt to ... Interim relief - injunction - forum shopping - contradictory interim orders - entertainment of company petition - challenge to EGM decision under Section 242(4) - oppression and mismanagement - maintainability of relief while parallel civil proceedings are pending - HELD THAT:- It is seen that contradictory statements have been made during the proceedings of this Company Appeal by the Appellant. First, he states that, the Suit has been withdrawn, the suit has been withdrawn, which has been strongly refuted by the Respondent contending thereof that, in fact, the suit has not been withdrawn and it is still pending consideration and his application under Order VII Rule 11 of C.P.C. is pending consideration. It come to our notice that, the Appellant was removed from the Directorship of the Company by the EGM, held on 03.10.2025, but, the decision of EGM itself has not been made as a subject matter of challenge in the principal Company Petition, as it was filed much prior to it on 18.09.2025. However, the said relief has been attempted to be introduced by the Appellant. Later on, filing a Company Application CA No. 186 / 2025 under Section 242(4) of the Companies Act in CP No. 125 / BB / 2025, wherein he has made the prayer to hold the EGM dated 03.10.2025 to be null and void. We make it clear at this juncture itself that until and unless the decision of the said EGM dated 03.10.2025, removing him from the Directorship of the Respondent No. 1 Company to challenge in the principal Company Petition, there cannot any injunction granted in favour of the Appellant for his continuance as a Director. Since, the Company Petition itself is pending consideration, there cannot be a contradictory Interim Stay Order, as it was solicited by the Applicant in his Company Petition in the relief sought therein, in context of his removal from the Directorship of the Company. In that eventuality, considering the reason, which has been assigned in the impugned order and also considering the surrounding facts and circumstances, which we have already dealt with herein above, we do not think that, it is a fit case to interfere with the impugned order. Accordingly, the Company Appeal, lacks merit and the same is accordingly dismissed. Issues: Whether the Appellate Tribunal should interfere with the impugned order declining interim relief sought in the company petition and permitting respondents to file their reply, where related civil court interim orders had been vacated and the company petition remained pending.Analysis: The appeal challenges an order that denied interim relief sought to restrain removal from directorship and termination of employment while permitting respondents time to file objections to the company petition. The impugned order records that an earlier ex parte interim order in civil proceedings was vacated and that the petitioner had initiated parallel civil proceedings and later filed a company petition raising allegations of oppression and mismanagement. Contradictory statements about the status of the civil suit, the pendency of an application under Order VII Rule 11 and the subsequent holding of an EGM effecting removal were considered. The impugned order's grant of time to file replies indicates the company petition has been entertained; however, an interim injunction in favour of the appellant would conflict with the civil court's order vacating its earlier interim relief. The surrounding facts, including alleged forum shopping and the pendency of substantive proceedings, weigh against granting interlocutory relief in this appeal.Conclusion: The appeal does not warrant interference with the impugned order; the appeal is dismissed (against the appellant) and connected interlocutory application(s) stand closed.Ratio Decidendi: Where substantive proceedings are pending and an earlier interim order in alternate proceedings has been vacated, an appellate interference to grant contradictory interim relief is not appropriate, particularly where forum shopping and the pendency of the company petition are established.