TaxTMI 
TaxTMI 
2009 (9) TMI 574
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....t No. 1 herein) seeking to incorporate certain subsequent events in the company petition by way of amendments. The appellant herein sought a weeks time to file their objections. Except for seeking permission to amend the Company Petition no other relief was sought in the said application No. 138 of 2009. However, on an oral application made by the respondent No. 1, the Company Law Board inter alia passed the following order which is impugned herein. 2.......I allow one weeks time to the respondents to file their objection, if any by 3-8-2009 with a copy to the petitioner and the petitioner is free to mention the case for necessary orders on amendment on 6-8-2009 at 2.30 p.m. Till the amendments to the petition are completed and interim prayer is heard the respondents are directed not to precipitate the matter as envisaged by Justice Khanwilkar at Bombay High Court and the said two weeks extension given by the Hon'ble High Court is further extended till the interim relief in this petition is decided by this Bench. This order is issued under Rule 44 of the Company Law Board Regulations 1991. 3. The questions of law arising in this appeal are :- (i)Whether the Company Law Boa....
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....passed by the Company Law Board the appellant preferred an appeal therefrom before this Court under section 10F of the Companies Act, 1956 being Appeal No. 35 of 2009. This Court by its order dated 1-6-2009 modified the order passed by the Company Law Board dated 22-5-2009 and directed the appellant to issue notice to the effect that the Board Resolution dated 18-5-2009 would be considered and put to vote in the Annual General Meeting to be held on 24-6-2009 but the said decision would be subject to the order that may be passed in Company Application No. 95 of 2009. Being aggrieved by the order dated 1-6-2009 passed by this Court, respondent No. 1 filed Special Leave Petition in the Hon'ble Supreme Court being SLP No. 14584 of 2009. The Hon'ble Supreme Court by its order dated 23-6-2009 stayed the consideration of the Resolution for allotment of preferential allotment in the Annual General Meeting of the appellant to be held on 24-6-2009 and requested this Court to dispose of the Company Appeal No. 35 of 2009 expeditiously. (iv)Appeal No. 35 of 2009 was heard and disposed of by this Court by its order dated 16-7-2009. In its said decision, this Court has recorded that the Hon'bl....
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....n 27-7-2009 the Counsel for the appellant sought an adjournment to file affidavit in reply to the said company application. According to the appellant towards the end of the arguments the Counsel for respondent No. 1 orally sought protection till the time the amendments were completed. The Company Law Board considered the oral prayer and passed the order as set out in paragraph 2 above, effectively restraining the appellant from implementing any decision of the Board of Directors of the appellant in relation to the issue of the said meeting held on 18-5-2009 till the interim reliefs in the petition are decided by the Company Law Board i.e., application No. 95 of 2009. (viii)The SLP filed by respondent No. 1 impugning the order passed by this Court dated 16-7-2009 came up for admission before the Hon'ble Supreme Court of India on 7-8-2009 when respondent No. 1 herein through his Advocates sought to withdraw the SLP. The Advocates for the appellant opposed the application for withdrawal and pointed out to the Hon'ble Supreme Court that respondent No. 1 took a protective order from this Court for a period of two weeks to enable him to appeal to the Supreme Court from the order pass....
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....equent events i.e., the decision of the Board of Directors dated 18-5-2009 by way of an amendment. The amendment application at the request of the appellant was adjourned for a period of about ten days i.e., on 6-8-2009. Until such amendments are allowed and subsequent events brought on record, the Company Law Board ought not to have passed any interim orders because passing of such interim order is directly contrary to the decision of the Hon'ble Supreme Court in the case of Shanti Prasad Jain (supra). Mr. Chinoy has further submitted that though the earlier interim order passed by the Company Law Board dated 22-5-2009 was set aside by this Court by its order dated 16-7-2009 relying upon the aforesaid decision of the Hon'ble Supreme Court in Shanti Prasad Jain (supra), the Company Law Board despite being aware of the said order, chose to ignore the said order passed by this Court and once again on an oral application of respondent No. 1, passed the same interim order pertaining to a matter not forming part of the petition. The order is passed without giving any reasons for grant of interim relief such as prima facie case, balance of convenience and irreparable loss. It is further ....
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....ndent No. 1 before the Company Law Board on 27-7-2009 and sought time to file their reply the Company Law Board was justified in granting interim relief in favour of respondent No. 1 and against the appellant pending hearing of the amendment application and until the Company Application filed by respondent No. 1 for interim reliefs is decided. Mr. Bookwalla has relied on the decision of the Hon'ble Division Bench of this Court in the case of Dr. Bais Surgical & Medical Institute (P.) Ltd. v. Dhananjay Pande [2005] 128 Com. Cas. 273^1 wherein the Hon'ble Division Bench of this Court, dismissing the appeal filed from the order of Company Law Board in a petition under sections 397 and 398 and directing the parties to maintain status quo as regards the property and shares has inter alia held that where an order serving the nature of a short-lived and almost ex parte and ad hoc arrangement is passed, the challenge ought to be based on such ground that the order could be seen to be such that by no stretch of interpretation of pleadings such order could be wholly sustained. Mr. Bookwalla relying on the said decision has further submitted that no prejudice whatsoever is seen to have been c....
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....ie case, balance of convenience and irreparable loss and record its opinion one way or the other on the contentious issue. (iii)In the circumstances the only option available to the Court is to set aside the impugned order and to relegate the parties for reconsideration of application on its own merits in accordance with law. (iv)The impugned decision is manifestly wrong and untenable. The appropriate course is to set aside the impugned decision and instead relegate the parties before the Board for reconsideration of the application No. 95 of 2009, which will have to be considered on its own merits and in accordance with law after giving fair opportunity to both sides to file the affidavit and/or to amend the pleadings, as may be advised if permissible by law. (v)Upon submission of the Counsel for the respondents, that the respondents may consider taking the matter in appeal an order directing the appellant to maintain status quo for a period of two weeks, is ordered directing the appellant not to precipitate the matter which regard to preferential issue for a period of two weeks. 8. After the aforesaid order was passed by this Court on 16-7-2009, respondent No. 1 admit....
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....d the same interim order, pertaining to the decision of the Board of Directors of the Appellant dated 18-5-2009. (ii)Though in the order of this Court dated 16-7-2009 whilst setting aside the earlier order of the Company Law Board dated 22-5-2009, it was categorically observed that no reason has been recorded by the Company Law Board which necessitated issuance of the injunction order dated 22-5-2009 and that it would be a different matter if the Board were to consider all the relevant aspects for grant or non-grant of interim relief such as prima facie case, balance of convenience and irreparable loss and record its opinion one way or the other on the contentious issue, the Company Law Board in its impugned order once again passed an interim order having the same effect as that of its earlier interim order dated 22-5-2009, without giving any reasons and without considering all the relevant aspects. (iii)The earlier order of injunction dated 22-5-2009, passed by the Company Law Board against the appellant in application No. 95 of 2009, was set aside by this Court as being manifestly wrong and untenable and it was categorically observed by this Court that the said application ....