TaxTMI 
TaxTMI 
2019 (10) TMI 287
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....und that the Respondents (Original Petitioners) did not fulfill the eligibility criteria as fixed under Section 244 of the Act and in these circumstances they had no locus to file the petition. Even before the pleadings were completed, the Tribunal while declining to go into the merits of the case passed impugned order dated 9th August, 2018 ordering status quo ante in relation to the Directorship of the Appellant Company as well as its shareholding as it existed prior to 30th July, 2018 further staying the resolutions qua removal of Respondent Nos. 1 and 2 herein from the Directorship of the Appellant Company and the follow up action. Subsequently, during pendency of the Company Petition, I.A. No. 271/JPR/2019 preferred by the Respondents herein for preponing the date of hearing of the Company Petition from 1st October, 2019 to an early date came to be disposed of by the Tribunal on 29th August, 2019 preponing the hearing to 20th September, 2019. However, while advancing the date of hearing, the Tribunal passed further directions declaring the Board Meeting dated 12th August, 2019 as invalid, restoring the position of Company to its previous position and restraining the Appellant ....
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....m directions is decided only on the basis of undisputed facts and the material which can legitimately be taken into account at the interlocutory stage and the Tribunal is not required to express opinion on the merits of the matter. It is further submitted that in appropriate cases, the Tribunal may grant interim relief which may tantamount to grant of final relief but a strong prima facie case besides other considerations would have to be established. In such case, the Tribunal may restore the status quo of the last non-contested status preceding the controversy. Lastly it is contended that the Tribunal has considered Board Meeting notice dated 27th July, 2018, letter dated 30th May, 2018 and EGM notice dated 19th July, 2018 for coming to a prima facie conclusion. It is further submitted that the impugned order is not in the nature of final relief as it restricts both the parties. 4. Heard learned counsel for the parties and perused the record. Before proceeding to examine the legality and correctness of the impugned orders, it would be appropriate to glance through the legal framework incorporating provisions with regard to prevention of oppression and mismanagement warranting pa....
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....Tribunal is vested with wide discretion to make any interim order on the application of any party to the proceedings, which it thinks fit for regulating the conduct of company's affairs. Such interim order can be subjected to terms and conditions which appear to the Tribunal to be just and equitable. The nature of interim order would depend upon the nature of complaint alleging oppression or mismanagement and the relief claimed therein. A member alleging that the affairs of the company have been or are being conducted in a manner prejudicial or oppressive to him or any other member or prejudicial to the interests of the company must come up with specific allegations of oppression and mismanagement and demonstrate that the affairs of the company have been or are being run in a manner which jeopardizes his interests or interests of other members or the interests of the company. Passing of interim order necessarily correlates to regulating the conduct of company's affairs. It is therefore imperative that the member complaining of oppression or mismanagement makes out a prima facie case warranting grant of relief in the nature of an interim order. The making of an interim order by the ....
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....excerpt from the impugned order: "This Tribunal, however, at this stage is not inclined to go into merits of the case without the pleadings being completed. However, it is evident that both the parties are at each other and has tried to remove the other from the Management of the Company, as evident from the notice which has been circulated by the petitioners for calling convening and holding of an EoGM for removal of the respondents Nos. 2 and 3 who are admittedly the initial promoters of the company. On the other hand, it is also prima facie evident from the facts that the respondents on its part has not only removed the petitioner from directorship without due and proper notice but has also sought to cancel the shares on the ground that the initial allotment itself is illegal and that the appointment of petitioners 1 and 2 amongst other are not proper and to this effect forms has also been filed concerned with Registrar of Companies, being form 12 dated 30.07.2018 relating back to 28.09.2015." 7. It is abundantly clear that the Tribunal, while declining to go into the merits of the case on account of pleadings being incomplete, made certain observations on the aspect ....
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....ncel the shares on the ground of initial allotment being illegal. Prima facie it was not a case of unilateral action on the part of one or the other party which could be said to be prejudicial to the interest of its adversary. It appears to be a duel and not a one sided aggression. Notwithstanding the fact that the Tribunal has not indicated any undisputed facts springing out of admitted or non-controversial documents to draw conclusions as regards existence of a prima facie case in favour of Respondents, the Tribunal proceeded to pass direction in the nature of status quo ante restoring the position in regard to Directorship and Shareholding of Appellant Company as it existed prior to 30th July, 2018. This has purportedly been done "in the interest of the company as well as its shareholders". Consequent orders are as a follow up with further directions in terms of impugned order dated 29th August, 2019 in I. A. No. 271 which was only for preponing the date of hearing of Company Petition but was disposed of with a declaration regarding invalidity of Board Meeting dated 12th August, 2019. The question for consideration is that despite observations of the Tribunal that parties were t....
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..... Priya Choudhary and Mr. Sahil Yadav from the Board of Directors and while holding that it was not inclined to go into the merits of the case without the pleadings being completed, proceeded to pass directions in the nature of status quo ante being maintained as it existed prior to 30th July, 2018. The matter does not rest here. Shockingly, the Tribunal made some observations regarding the validity of notices qua holding of Board Meeting and EoGM without knowing the respective stands of the parties which could be ascertained only after the pleadings were completed. In the given circumstances, observations of Tribunal though short of finding in regard to existence of a Prima facie case, much less a strong prima facie case, are unwarranted. It is not in controversy that the Appellant had questioned the eligibility of Respondents in maintaining the Company Petition, which required to be dealt with in the first instance after the pleadings were completed. The Tribunal gave a short shrift to the matter by ignoring such objections and hastily proceeded to pass the impugned order dated 9th August, 2018 which ex-facie suffers from non-application of mind. It does not at all speak of the a....