Inherent powers under civil procedure can nullify resolutions passed in breach of a stay order and restore status quo ante.

Section 151 of the Code of Civil Procedure empowers the court to undo acts done in wilful breach of a stay order and to prevent a party from benefiting from its own wrong. A stay order operates as a prohibitory direction, and steps taken in defiance of it need not be recognised if justice requires the wrong to be reversed. The court may therefore treat a meeting held in violation of the stay, and the resolutions passed there, as having no legal effect and restore the parties to the position they occupied before the order was disobeyed.

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Issues: Whether the court can invoke its inherent powers to treat resolutions passed at a meeting held in violation of a stay order as void and restore the parties to the position they occupied before the order was disobeyed.

Analysis: A stay order, like an injunction, is a prohibitory order, and once it is brought to the notice of the court or party concerned, proceedings taken in breach of it cannot be allowed to stand if justice requires the wrong to be undone. The inherent power preserved by section 151 of the Code of Civil Procedure is wide enough to enable the court to set aside steps taken in disobedience of its order and to prevent a party from deriving advantage from its own wrong. The fact that resolutions may have been passed or rights may be claimed to have arisen from the meeting does not prevent the court from refusing to recognise a meeting held in defiance of its stay order.

Conclusion: The court could validly exercise its inherent power to disregard the meeting and the resolutions passed in breach of the stay order, and the parties were to be restored to the position existing before the stay order was served.

Final Conclusion: Relief was granted by treating the impugned meeting and resolutions as having no legal effect, while the connected proceedings were dismissed.

Ratio Decidendi: Section 151 of the Code of Civil Procedure empowers the court to undo acts done in wilful violation of its stay or injunction orders and to restore the parties to status quo ante where necessary to secure the ends of justice.

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