TaxTMI 
TaxTMI 
2021 (5) TMI 187
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....order dated 23.01.2021 in CA/06/2021 in CP/393/2019 passed by the National Company Law Tribunal, Division Bench - I Chennai. 2. Earlier, the National Company Law Tribunal, Division Bench - I, Chennai while passing the impugned order in CA/06/2021 in CP/393/2019 at paragraph 20 to 27 had observed the following: 20. " Significantly during the course of submissions made by the Learned Senior Counsel for the Applicants/Petitioner it was stressed that the parties before the Tribunal in relation to the main C.P were close relatives, which prompted this Tribunal to suggest for mediation with the parties with a view to resolve the dispute and on consent the Mediator has also been appointed to conduct the mediation who is in the stature of Retired Judge of the Hon'ble High Court of Madras. 21. However, as already stated the delay in the mediation proceedings seems to have led to frustration on the part of the Applicants/Petitioner, which had prompted them to move this Application before this Tribunal, as well as make submissions during the course of arguments in relation to the Committee Meetings proposed to be held on 18.09.2020 as well as on 10.10.2020. 22. H....
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....ng the valuable properties of the First Respondent/Company unprotected, despite manifest urgency and large scale under valued sales by the Respondents? especially in the light of the 'Arbitral Award' dated 18.03.2021 rendered during the pendency of the present 'Appeal'. 4. The Learned Counsel for the 'Appellants' contends that the 'Arbitral Award' dated 18.03.2021 is between the same parties and it finds that the Respondents cannot be entrusted with the management of the properties. Also, that the 'Tribunal' failed to pass any protective orders, by exercising its 'inherent powers' and also failed to urgently hear the 'Company Petition'. 5. It is represented on behalf of the 'Appellants' that the impugned order has caused 'Miscarriage of Justice' not only to the 'Appellants' but equally to the First Respondent/Company. Besides this the impugned order, reposes faith in the wrong doers/respondents by expecting them to 'implicitly obey all the orders passed' and this reinforces the continuous oppression of the 'Appellants' and gross mismanagement of the First Respondent/Company. 6. According to the Learned Counsel for the 'Appellants' that the 'Appellants' are the petitioners ....
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.....2019 at page 187 (Relevant pages 189, 190, 192., 193). In the Committee meeting held on 12.10.2019, the observer in respect of Agenda-43 has merely agreed to the decisions stating that 'The Members of the Committee with the Respondents being 4 in number decide to go ahead with the sale of the property being the subject matter of the Agenda, while the Petitioners representative being one member of the Committee dissent for the same (vide page 191 of the Appeal Type set papers) The observer in respect of Agenda-5 has merely agreed to the decisions stating that "The Members of the Committee with the Respondents being 4 in number decide to go ahead with the prince of Rs. 80 lakhs per ground being fixed for the property which is the subject matter of the Agenda, while the Petitioners representative being one member of the Committee dissent for the same. (vide page 193 of the Appeal Type set Papers) (b) In the Committee meeting held on 18.09.2020, the Respondent being four number decided to sell 17 properties of the 1st Respondent that are worth approximately more than 200 crores. The Observer, despite knowing fully will that the Appellants were not present for the mee....
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....nd honestly and in this regard, its 'Directors' are its 'Trustees' who are bound to in its best interest, as per section 166 of the Companies Act, 2013. 15. The Learned Counsel for the 'Appellants' contends that the 'Tribunal' in terms of sections 241 and 242 of the Companies Act, 2013 is to act in the best interest of the Company and in the present case it had failed to act thereby committed a serious error of jurisdiction. Appellants Decisions: 16. The Learned Counsel for the 'Appellants' refers to the decision of Hon'ble Supreme Court, in Tin Plate Dealers Association Private Limited and others V Satish Chandra Sanwalka and others reported in (2016) 10 SCC Page 1 wherein at paragraph 39 it is observed as under: "The question whether a single act of oppression would enable the CLB to intervene or oppression must be the cumulative result of continuous acts should not require any debate in the facts of the present case which demonstrate a series of unacceptable decisions and actions on the part of the part of the Gupta Group. In the last resort, satisfaction that oppression has been committed has to be reached in the facts of each case." 17. The Learned Counsel....
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....) 5 Comp I.J 463, that the courts in India have applied the same tests while testing exercise of powers by Directors of companies as in other Common wealth countries." (Paras 21. 19. 20 and 28) 18. The Learned Counsel for the 'Appellant' seeks in aid of the decision of the Hon'ble Supreme Court in Vurimi Pullarao v Vemari Vyankata Radharani reported in 2020 (14) SCC Page 110 at Special Page 113 wherein at Paragraphs 15 to 17, 20, 21 and 24 it is observed and held as under: "The plaintiff who is entitled to assert a claim for relief on the basis of a cause of action must include the whole of the claim. A plaintiff who omits to sue in respect of or intentionally relinquishes any portion of the claim, shall not afterwards be entitled to sue in respect off the portion omitted or relinquished. This is the mandate of Order 2 Rule 2(2). Order 2 Rule 2(3) stipulates that a person who is entitled to OC nan one relief in respect of the same cause of action may sue for all or any of such reliefs. However, a plaintiff who omits to sue for all the reliefs, without the Leave of the court, shall not afterwards sue for any relief so omitted. The leave of the court will obviate....
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....or performance and the failure of the defendant to perform the contract. The plaintiff also asserted that she was going to institute a suit for specific performance of the agreement dated 26-10-1995. Under the agreement dated 26-10-1995, time for completion of the sale was reserved until 25-10-1996. Notice of performance was issued on 11-10-1996 to which the defendant had replied on 13-10-1996. The cause of action for the suit for specific performance had arisen when the plaintiff had notice of the denial by the defendant to perform the contract. On 30-10-1996, when the suit for injunction was instituted, the plaintiff was entitled to sue for specific performance. There was a complete identity of the cause of action between the earlier suit and the cause of action for the subsequent suit. However, the plaintiff omitted to sue for specific performance. This is a relief for which the plaintiff was entitled to sue when the earlier suit for injunction was instituted. Having omitted the claim for relief without the leave of the court, the bar under Order 2 Rule 2(3) would stand attracted. (Para 20) Virgo Industries (Eng.) (P)Lid. v. Venturetech Solutions (P) Lid. (2013) 1 SCC 6....
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.... expression has a reference to a right in the property which the plaintiff seeks to enforce. That expression includes the cause of action and the relief claimed. Unless the cause of action and the relief claimed in the second suit are the same as in the first suit, it cannot be said that the subject-matter of the second suit is the same as that in the previous suit. Now coming to the case before us in the first suit Dr. Madan Lal was seeking to enforce his right to partition and separate possession. In the present suit, the plaintiff is seeking possession of the suit properties from a trespasser. In the first case, his cause of action arose on the day he got separated from his family. In the present suit the cause of action, namely, the series of transaction which formed the basis of his title to the suit properties, arose on the death of his adoptive father and mother. It is true that both in the previous suit as well as in the present suit the factum and validity of adoption of Dr. Madan Lal came up for decision. But that adoption was not the cause of action in the present suit. It was merely an antecedent even which conferred certain rights on him. Mere identity of some of the i....
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....favour. It is also clear that the cause of action, in both the suits, a must be identical. In order that it be identical, what matters, is the substance of the matter." (Paras 39 and 31) 21. The Learned Counsel for the 'Appellant' relies on the decision of the Hon'ble Supreme Court reported in N.R. Narayanswamy V B.Francis Jagan 2001(6) SCC at pages 473 & 474 wherein at Paragraphs 8 & 10 it is observed as under: "It is apparent from Section 45 of the Karnataka Rent Act that fresh application under the Rent Act could be summarily rejected only if (i) the proceedings are between the same parties or under whom they or any of them claim, and (ii) substantially the same issues as have been finally decided in a former proceeding under the Act arc raised. Thus, the section as such, i1ncorporates principles of res judicata. In the present case it would have no application as the previous proceedings for taking possession of the premises were not pressed and stood disposed of without deciding any issue. (Para 8) Rule 1, sub-rule (4) of Order 23 CPC would have no application in a proceeding initiated for recovering the suit premises on the ground of bona fide requirement....
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....functioning of the First Respondent/Company by means of the present 'Appeal', while simultaneously reaping the benefits of a successful mediation is in violation of Rule 29 of the Companies (Mediation and Conciliation) Rules, 2016 is nothing but an abuse of process of court and must not be entertained. 27. The Learned Counsel for the Respondent Nos. 1to 5 comes out with a plea that the 'Appellants' submissions were limited to seek an 'injunction' on the sale of the First Respondent/Company's properties and the said attempt not only fails to have any correlation with the ambit of 'Appeal' but it is also covered by the consent of the 'Tribunal' dated 16.04.2019, which had attained 'Finality'. 28. The Learned Counsel for the Respondents No. 1 to 5 contends that in the consent order a Five member 'Committee' was constituted in proportion to the shareholding of the family/parties, the said Committee is to discuss and decide the minimum price of the lands to be sold, based on the prevailing market rates, any differences in opinion in respect of 'ERP' rates is to be resolved by the 'Observer' amicably, for the plots books and sold, the 'Sale Reports ' are to be submitted to the 'Com....
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....lants' were constrained to file an unnumbered application to remedy the same and a plea was taken that the misrepresentation was allegedly a mere mistake. 33. The Learned Counsel for the Respondents 1 to 5 brings to the notice of this 'Tribunal' that the 'Appellants' are attempting to travel beyond the purview of the 'Appeal' by seeking an injunction on the sale of properties and to lend support to the contentions, the Learned Counsel for the Respondent 1 to 5 relies on the decision of Hon'ble Supreme Court in Tata Consultancy Services v Sirus Mistry reported in (2021) SCC online SC 2 (vide paragraphs 17.9 and 17.15) wherein when the relief is not even sought before the 'Tribunal' such a reliefs cannot not be granted by the 'Appellate Tribunal'. 34. The Learned Counsel for Respondents No. 1 to 5 submits that for the first time the 'Appellants' have raised the concerns pertaining to the conduct of the 'Observer' and in fact, they are made to make out a case for the grant of interim reliefs. As matter of fact, no such allegations were raised against the 'Observer' before the 'Tribunal' although it took charge on 12.06.2019. In reality, paragraph 18 of the impugned order rightly....
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.... 'Appellants' had opted to mediate their disputes and thereby abandoned said application. 39. Moreover, any restraint in respect of the sale of the properties will cause prejudice and irrepairable harm to the interest of the First Respondent/Company, its stakeholders (including 600 employees, and their families as well as other third party purchasers) especially because of effect of Covid 19 pandemic. 40. The Learned Counsel for the First Respondent projects a plea that pending adjudication on 'serious issues of maintainability' no interim reliefs of the like claimed by the 'Appellants' in the instant appeal can be granted and in this regard, places reliance on the judgment of this Tribunal in Solitaire Capital India and another Vs Vipul SEZ Developers Private Limited & ors, Comp App (AT) No. 268 /2019 (vide para no. 8). 8th Respondent's Submissions: 41. The Learned Counsel for the 8th Respondent contends that the submissions of the 'Appellants' on the merits of the Company Petition and seeking for 'interim orders' were negative by the 'Tribunal' and indeed, the 'scope' of the present 'Appeal' is limited to the extend that the validity of the order in dismissing the app....
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.... of the main Company Petition for 'Arguments'. 46. The Respondents No.1 to 4 before the Tribunal, had filed a Counter Affidavit interalia stating that keeping in mind the business of the 1st Respondent/Company, the Tribunal passed an Order dated 16.04.2019, wherein a Five Member Committee was constituted, the representation of which is proportionate to the shareholding of the parties to the Company Petition and the Appellants/Applicants and the Respondents were to meet in the presence of an observer viz., Mr.Om Prakash Ellanty, (Learned Senior Counsel), to discuss among other things and finalise the rates for the properties to be sold and the said Committee is functioning in accordance with the order dated 16.04.2019 ever since, including in respect of the committee meetings that took place on 18.09.2020 and 10.10.2020 respectively. As a matter of fact, the Appellants/ Applicants were given notice of the meetings dated 18.09.2020 and 1 0.10.2020, but they had not attended the same. In short, the Appellants/Applicants were aware of the decisions in respect of the properties being sold considering the fact that they were the subject of committee meetings, which they had not chosen....
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.... suitable relief to the concerned Petitioner(s). Section 242(1) of the Act gives the 'Tribunal' an unfettered power to make such Order as it thinks fit, with a view to bringing to an end the matters complained of. Section 242(2) of the Companies Act, 2013 showers certain specific powers. Section 242(4) of the Companies Act is similar to the ingredients of Section 403 of the Companies Act, 1956. It is to be pointed out that allegations of oppression and mismanagement concerning mixed question of law and fact could not be decided at the Interim Stage. 51. The term 'Oppression' is any act exercised in a manner harsh, wrongful and burdensome manner. The 'Phrase' 'Affairs of Company' are being conducted 'points out a continuous wrong', the proceedings are meant to be in public interest of the Company or in the commercial interest of the company. The Tribunal can take preventive and a curative action for regulating the conduct of the Company's affairs in future and to bring to an end the matters complained of. It is to be pointed out that unfair utilisation of powers and impairment of confidence in probity with which the company's affairs have to be conducted, (in contra distinction) ....
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.... Law, 'Mediation' is an 'Alternate Dispute Resolution'. At any stage of the Proceedings before the Central Government or Appellate Tribunal or the Tribunal any of the parties may apply for appointment of a 'Mediator' for considering any matter relating to such Proceedings. Any person affected, may file objection before the 'Central Government', 'Tribunal' or the 'Appellate Tribunal', as the case may be. 58. On behalf of the 'Appellants' a reference is made to an 'Arbitral Award' dated 18.03.2021 in regard to the resolving of the parties dispute concerning the dissolution of partnership firms and for consequent division of all the assets held inter se the parties viz. M/s.V.G.P. Panneerdas & Company, M/s. VGP Investments and VGP Beach Housing arising out of Partnership Deeds dated 27.08.1993 and 01.01.1994 respectively. 59. According to the 'Appellants', the Arbitral Tribunal in its award held that "the Respondents 1 to 4 have full control over all the resources which they enjoy without sharing with others. They have falsely denied all the books of accounts as having been lost and the data in computers computed. They cannot be trusted with management of properties during the p....
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....ner was withdrawn on 02.08.2017, with no liberty being granted by the 'Tribunal' to file fresh Petition, is taken by the Respondents 1 to 4 in their 'Interim Counter' filed in pending C.P.393 of 2019. It is not in dispute that an unnumbered Application dated 15.04.2019 seeking to rectify the error committed by the 'Petitioners' therein is pending before the 'Tribunal'. 65. The 'Tribunal' passed an Interim Order on 16.04.2019 in main Company Petition No.393/2019 to the effect that keeping in view the interest of the R1 Company both the parties had agreed for setting up of 'five member committee' headed by one 'Observer' and constituted a 'five member committee' comprising three representatives being appointed by the Respondent Nos.2, 3 and 4, one by the Respondent Nos.5 and 6 ; one by the 1st Petitioner and Mr.R. Shankaranarayanan, Senior Advocate was appointed as an 'Observer' and further it was mentioned that the Committee shall have the mandate to decide ERP rates as per the market value, prevailing in the area where the properties are situated, etc. 66. Also the 'Tribunal' in the Interim Order dated 16.04.2019 in the main Company Petition No.393/2019 had proceeded to obser....