TaxTMI 
TaxTMI 
2021 (7) TMI 1357
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Anshula Laroiya, Adv, Mr Shaunak Mitra, Adv, Mr Paritosh Sinha, Adv, Mr Saubhik Chowdhury, Adv, Mr Dripto Majumdar, Adv, Ms Ayusmita Sinha, Adv, Mr Ramji Srinivasan, Sr Adv, Mr Jishnu Choudhury, Adv, Mr Paritosh Sinha, Adv, Mr Saubhik Chowdhury, Adv, Mr Dripto Majumdar, Adv, Ms Ayusmita Sinha, Adv, Mr Krishnendu Datta, Sr Adv, Ms Manju Bhuteria, Adv, Mr Sarvapriya Mukherjee, Adv, Mr Deepan Kumar Sarkar, Adv, For Respondent No.5 : Mr Ranjan Bachawat, Sr Adv, Mr Sayan Roy Chowdhury, Adv, Mr Satyaki Mukherjee, Adv, Mr Paritosh Sinha, Adv, Mr Saubhik Chowdhury, Adv, Mr Dripto Majumdar, Adv, Ms Ayusmita Sinha, Adv, Mr Sudipto Sarkar, Sr Adv, Mr Sabyasachi Choudhury, Adv, Mr Sankarsan Sarkar, Adv, Mr Darius Khambata, Sr Adv, Mr Abhrajit Mitra, Sr Adv, Mr Debanjan Mandal, Adv Mr Kunal Vajani, Adv, Mr Sanjiv Kumar Trivedi, Adv, Mr Soumya Roy Chowdhury, Adv, Ms Iram Hassan, Adv, Mr Kunal Mimani, Adv, Mr Sanket Sarawgi, Adv, Mr Shahzeb Ahmed, Adv, Mr Tushar Hathiramani, Adv, Ms Mahima Cholera, Adv, Mr Shubhang Tandon, Adv For Intervenor: Ramesh Chandra Prusti, Sanjib Das and Sukriti Dutta, Advocates ORDER Per: Rajasekhar V.K., Member (J) 1. Preamble 1.1. This Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cted not to reflect the names of the respondent Nos. 3, 4 and 5 as directors of the respondent No. 1 company. g. Interim Injunction restraining the respondents from otherwise then in accordance with the decisions dated 22nd April 2021 and 14th May 2021 of the APL Committee; h. Interim Injunction restraining the respondent Nos. 1 and 2 and Respondent No. 7 from acting contrary to and/or in any manner inconsistent with the judgment dated 18th September 2020 and with regard to exercise rights in relation to the shareholding recognized decision dated 9th December 2019 of the APL Committee; i. Interim Injunction restraining the Respondent Nos. 2 to 5 and 7 from holding or convening any meeting of the Board or any Annual General Meeting or any Extra-Ordinary General Meeting of the Respondent No. 1 pending disposal of this Company Petition; j. Interim Injunction restraining the Respondent Nos. 2 to 5 and 7 from committing further acts of oppression and mismanagement of the Respondent No. 1; k. Maintain status quo with respect to Board of Directors of the Respondent No. 1 as on 27th March 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts in TS No. 6/2004 filed applications before the Hon'ble Calcutta High Court seeking implementation of the decisions dated 19.07.2019 and 30.07.2019. These proceedings before the Hon'ble Calcutta High Court have been referred to "2019 Proceedings." 2.4. The Petition has been filed alleging that the convening of EGM to put directors on the boards of the Subject Companies and to remove existing directors constitute acts of oppression and mismanagement by Respondent No. 2 and against the APL Committee, particularly, against Mr. Harsh Vardhan Lodha and their nominees, who are allegedly acting contrary to the interests of the estate of Late Priyamvada Devi Birla and creating obstruction and interference in application of various orders passed in relation to the Estate and the decisions of the APL Committee. 2.5. The act of Mr. HV Lodha causes interference in the exercise of rights and powers of the APL Committee in relation to control and management of three Non-Banking Financial Companies (NBFCs), viz., August Agents Limited ("August Agents"), Insilco Agents Limited ("Insilco") and Laneseda Agents Limited ("Laneseda") (collectively referred to as "Respondent No. 1 Companies....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on 14.04.2021, [15]wherein, the respondent No. 1 and other Subject Companies, for the very first time apprised the APL Committee of various requisitions issued by VTL to the Subject Companies in exercise of its rights flowing from the shareholding. In their letters, the Subject Companies stated that they had discussed the notices at the meetings of their Board of Directors held on 14.04.2021 and it was decided [by majority] to bring the matter to the notice of the APL Committee for its guidance and directions to the Boards, since it exercises the ultimate controlling interest in the Subject Companies as well as VTL. The notices dated 27.03.2021 [16]which were issued by VTL to the Subject Companies were as follows: (a) Proposing candidature of Shri Rakesh Puri as a director on the Boards of the Subject Companies; (b) Proposing candidature of Dr. Aravind Srinivasan as an independent director on the Boards of the Subject Companies; (c) Proposing candidature of Shri Shiv Dayal Kapur as an independent director on the Boards of the Subject Companies; (d) Shifting of the Registered Offices of the Subject Comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pecifically state that no such requisition has been received by the Subject Companies nor any such EGM is convened by the validly constituted board of directors of the Subject Companies. 2.17. Issue of such notices without intimation to the APL committee is a clear violation of judgments dated 18.09.2020 [22] and the order dated 01.10.2020 [23]In terms of the said judgment dated 18.09.2020, [24] the rights including voting rights flowing from the controlling interest or controlling shareholding in the entities of the MP Birla Group including the Subject Companies have to be exercised as per the directions and guidance of the APL Committee. 2.18. The intent and purport of the VTL Notices, the special notice dated 12.05.2021 [25] as well as the notice dated 25.05.2021 [26] is to severely and adversely affect the controlling interest of the Estate in the Subsidiary Companies. The unwarranted proposals in the VTL Notices, the special notice dated 12.05.2021 as well as the notice dated 25.05.2021 is a camouflaged attempt to render nugatory the collective decision-making process of the lawful directions of the Subject Companies in adherence with the said judgment dated 18.09.2020 [27] ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (Retd) Mohit Shah and Mr. AC Chakrabortti. There is a third member of the committee who has not been made a party. The first prayer is for the notice to be served on all the respondents. The Petitioner No. 2 is Punjab Produce and Trading Company Ltd. ("PPTC" or "P2"). P2 is more than 10% vis-a-vis Vindhya Telelinks Limited (R2). 3.3. The Respondent No. 1 in CP No. 112/KB/2021 is Insilco Agents Limited (R1), a wholly owned subsidiary of Vindhya Telelinks Limited (R2). Shri Rakesh Puri (R3), Dr Aravind Srinivasan (R4) and Shri Shiv Dayal Kapur (R5) are three persons who have been inducted into the board of R1 on 22.04.2021. P1 objected to this and wrote letters to all concerned. So far as the reflection of the names of R3, R4 and R5 on the RoC records are concerned, they have been put on hold for the time being. Shri Krishna Damani (R6) is proposed to be removed in an Extraordinary General Meeting (EGM) scheduled on 19.06.2021. Shri Harsh Vardhan Lodha (HVL or R7) aims to be one of the beneficiaries of the will of the late Priyamvada Devi Birla. HVL has been added as a party to the proceeding is because it is the specific case of the petitioners that all that is being done is at th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g was itself negligible, how could they maintain the petition. In this matter, the petitioners collectively held 0.0016% in Birla Corporation Ltd., which is the flagship company of the MP Birla group. The ownership of the entire MP Birla group of companies is interlinked and intertwined and cannot be separated. Para 2 of the judgment explains how PDB was in management and control of the MP Birla group. The background of the present litigation is that at one point of time, Mr. RS Lodha was trying to control the shares of all these associated companies, which would really go to show that PDB was in control. 3.9. Mr. Joy Saha relied on para 5 [33] of the judgment, wherein the submission of the respondents there is no dispute that the late PDB was in control of R1 to R28, has been recorded. He submitted that this position has not been challenged so far, and that he would be relying on this for the purposes of this petition. 3.10. Mr. Joy Saha submitted that it is an admitted fact that before the demise of PDB, even though her direct shareholding in the company was negligible, by virtue of her controlling respondents 1 to 28 which held or hold over 60% shares in the company, she was n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts have to contend otherwise, then all the previous orders have got to be set aside. 3.15. Mr. Joy Saha thereafter placed the judgment of the Hon'ble Calcutta High Court dated 10.05.2013[38] in Birla Education Trust & others v. Birla Corporation Ltd. & others, wherein it has been recorded in para 3 that the company in question (Birla Corporation Ltd.) was originally promoted by Late GD Birla, which subsequently came under the control of MP Birla group of companies headed by late MP Birla. On death of MP Birla, his widow Priyamvada Devi Birla (PDB) came to exercise control over 62.9 percent of the shares of the company which was held by different entities, over which, it appeared that PDB had control. [39] R2 in that proceeding is Harsh Vardhan Lodha, who is the R7 in the present proceedings. 3.16. Mr. Joy Saha drew particular attention to para 16 of the order, which is extracted as follows: -"Foundation of the claim of R2 (HVL) to manage the affairs of the company is derived from his control or influence over the entities having 62.9% of the shareholding of the company. The Division Bench of this court has empowered the APLs to exercise all rights flowing from the ownership o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es recorded as representatives of the estate of the deceased and to take all necessary steps to enjoy rights and privileges incidental to the ownership of the shares and stocks, which consists of controlling power of MP Birla group of companies and safeguard the interest of the ultimate beneficiaries. [46] 3.19. The order further records as follows: "It has also been noticed that the Coordinate Bench clearly arrived at a finding that in view of the several decisions of this Court at various interlocutory stages in the instant probate proceedings, it has now been settled that exercise of the controlling power over the MPB group of companies is a valuable asset of the estate of Mrs. Birla. .... Such findings of this Hon'ble Court arrived at different stages of the interlocutory proceedings, was not only binding upon the parties but also was binding upon that Court and accordingly the Coordinate Bench held that it had no hesitation to hold that such controlling power was an important and valuable asset belonging to the estate of Mrs. Birla. This finding has never been challenged by the plaintiffs."[47] (Emphasis as in original). 3.20. Mr. Joy Saha stressed on the finding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is important for two aspects - decision of APL to be by majority; and the deceased had controlling shareholding. 3.24. Mr. Joy Saha then took us through the observation of the court that the three noticee companies took a stand that under the Companies Act, 2013, only the members on the register of the respective companies are entitled to take decisions regarding voting rights. are amenable to the jurisdiction of the probate court for the present and no order of restraint can be passed against them. On this, the court recorded that the APL Committee would have the right to exercise all such powers and perform all such acts as the late PDB would have exercised had she been alive. PDB had controlling shareholding in the investment companies either by direct investment or along with other investment companies and PDB as the investment companies together with the manufacturing companies through cross shareholdings had controlling interest. This view has been confirmed both by the Division and Single Bench of the High Court, and therefore, the APL Committee is well within its power to ask all entities which were under the control of PDB to exercise their voting right in regard to thei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rding their apprehensions that an EGM of the Subject Companies would be convened by its holding company (VTL). In para 17 of this letter, the Subject Companies ask that they should be marked as under management dispute. 3.29. Nevertheless, VTL proceeded to convene a requisitions' meeting under section 100 of the Companies Act, 2013, on 22.04.2021 [60] and passed resolutions for appointment of Rakesh Puri, Dr Aravind Srinivasan and Shiv Dayal Kapoor. The decisions were conveyed on the same day to the Subject Company. 3.30. On 23.04.2021, [61] P1 lodged its protest in the matter. On the same day, i.e., 23.04.2021, P1 also wrote to the RoC [62] and RBI [63]. Insilco also wrote a letter dated 26.04.2021 [64] to the RBI. Insilco addressed a letter dated 06.05.2021 [65] to Mr. Krishna Damani for a Board Meeting on 10.05.2021, the meeting was also duly held, and minutes recorded. Requisition for removal of Mr. Krishna Damani is given on 12.05.2021.[66] Notice dated 18.05.2021 [67] for a Board meeting to be convened in this regard on 25.05.2021. After the board meeting, notice for EGM is given on the same day, i.e., 25.05.2021.[68] Explanatory Statement [69] is also attached; however....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lenged, because it seeks to interfere in the internal affairs of VTL which has its registered office in the State of Madhya Pradesh. 4. The APL committee which seeks to represent the estate of PDB, and P2 are not shareholders and therefore, cannot maintain the petition. 5. Directorial disputes cannot form the scope of adjudication in a petition alleging oppression and mismanagement. The 'control ' argument 4.2. At the outset, Mr. Jishnu Saha placed for consideration the table indicating the shareholders of the promoters as on 31.03.2020 in Birla Corporation Limited.[70] Insilco holds 7.81%, August Agents 7.8% and Laneseda 7.78%. The only one company in which these three don't hold shares is Birla Cables Limited (BCab). It is, therefore, through these companies that control over BCL and Universal Cables Limited (UCL) is exercised. Hence, so far as the affairs of the subject companies are concerned, it must take into question whether by exercising control over the board of the Subject Companies, there is an attempt to influence the affairs of Birla Corporation. The reason why this submission is made is because, ultimately, one wil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....steps into the shoes of PDB, then the will of the minority will prevail. Such a move is never in the interest of the other shareholders and never in the interest of the company. 4.6. In interpreting what this beneficial interest will be and how it should proceed, there is one fresh inclusion in the 2013 Act, which is the definition of "control," [75] Mr. Jishnu Saha submitted. Elaborating on this, Mr. Jishnu Saha also placed the definition of the term "promoter," [76] and submitted that this is beyond the scope of 'member' as originally understood. Therefore, he urged the court not to read any restricted meaning into the term "member" occurring in section 241 of the Companies Act, 2013. Mr. Jishnu Saha further placed for consideration the judgment of the Hon'ble Supreme Court in Arcelormittal India Private Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1, decided on 15.11.2019 which, in his view, recognises various facets of management and control. 4.7. Mr. Jishnu Saha too placed reliance on the judgment of the Hon'ble Calcutta High Court dated 18.09.2020 and endorsed the submissions of Mr. Joy Saha, learned senior counsel appearing for P1 on the issue of the powe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uents ... had to be taken into consideration if the Tender Evaluation Committee had adopted the approach of a prudent businessman. 3. Para 27 - The conclusion would not be different .... when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons. He also stated that he was relying on paras 29, 30 and 31 of the judgment. 4.10. Developing the notion further, Mr. Jishnu Saha relied on the judgment of the Hon'ble Calcutta High Court in Bajarang Prasad Jalan & another v. Mahabir Prasad Jalan, MANU/WB/0222/19981998 decided on 18.09.1998 wherein the Court held that in a complaint of oppression, the corporate veil can be lifted not merely of a holding company but also of its subsidiary when both are family companies. 4.11. Mr. Jishnu Saha thereafter quoted the judgment of the Hon'ble Supreme Court in Shankar Sundaram v. Amalgamations Ltd. & others, Civil Appeal 4575 & 4757/2017 decided on 27.03.2017 and placed paras 3 and 4 of the judgment. He submitted that if one is holding 10% shares in a holding company, then one is entitled to mainta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wad (2005) 11 SCC 314 decided on 20.01.2005 wherein the court quoted the judgment of the House of Lords in Scottish Cooperative Wholesale Society Ltd. v. Meyer that the court ought not to allow technical pleas to defeat the beneficent provisions of section 210 (of the English Companies Act, 1948). Beneficial owner of shares argument 4.16. Mr. Jishnu Saha submitted that in National Travel Services v. CIT, Delhi-VIII, (2018) 3 SCC 95 decided on 18.01.2018 while interpreting the provisions of section 2(22)(e) of the Income Tax Act, 1961, as amended in 1988, the Hon'ble Supreme Court had held in para 18 that one cannot be a registered owner and beneficial owner in the sense of a beneficiary of a trust or otherwise at the same time. In that case, the Hon'ble Court held that "shareholder," post the 1988 amendment, has only to be a person who is the beneficial owner of shares. Argument that legal representatives can maintain a petition even without being on the Register of Members 4.17. Mr. Jishnu Saha submitted that the APL committee had no legal character. The case in point in World Wide Agencies Pvt. Ltd. v. Margaret T. Desor & others. (1990) 1 SCC 536, decided on 19.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e board, he has a duty to the board and also to the person who nominates him. This is recognised in para 216 onwards. 5. Arguments of Mr. Sudipto Sarkar, learned Senior Counsel for the Subject Companies, and for Respondent No. 6 (R6) 5.1. Mr. Sudipto Sarkar, learned senior counsel appearing for the Subject Companies and for R6, submitted that he supports the petitioner in the petitions. He submitted that there can never be a gap in title to property. The APL Committee is custodia legis. The title of the deceased for the time being vests in the administrator. 5.2. Mr. Sudipto Sarkar submitted that under the Companies Act, control has been recognised. The court has to be examined where the control lies. This is where the real ownership of shares is. Our statutes provide powers of investigation to various bodies. What is important in this case is, the CLB judgment originally and affirmed by the HC, gave a finding that the estate was the real owner of the shares. When that is unchallenged, that title has gone to the Administrator Pendente Lite. This is very important. If the court finds that the majority interest in the company needs to be protected, then the court should examine wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in those petitions. The said contempt petition was dismissed with the clear finding that the extent of the estate is yet to be decided in the pending appeals. Only thereafter, the present petition has been filed, with ulterior motives. This amounts to a complete and gross abuse of process. Therefore, the petition is not maintainable and deserves dismissal in limine. 6.4. Mr. Shyam Divan submitted that he is pressing for prayer (a) of his application - that the present petition under sections 241/242 and 244 be dismissed. It will be in the nature of a demurrer action. The alternate prayer will be that it be dismissed as against R2, and that R2 be struck off from the array of the Respondents. 6.5. Mr. Shyam Divan led us through the Division Bench judgment of the Hon'ble Calcutta High Court dated 22.04.2021.[80] He drew particular attention to paragraphs 42, 43, 45, 57 and 66 of this judgment. (a) Para 42.[81] records that the APL committee considered the flowchart titled Tier-wise Broad Structure of Control of MP Birla Group of companies through key companies and came to the conclusion that the APL committee was not in a position to take a final decision reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, is yet to be conclusively defined and quantified. (2) The APL committee has not quantified the same. This is very very important. This decision has attained finality. They have advisedly not done it. It is with a sense of responsibility that they have not done so because there is complete ambiguity and uncertainty in this regard. (3) The extent of control can also be the influence PDB had over the shareholders/promoter groups. (4) There is also no allegation of dissipation or depletion of the estate or transfer of shares in violation of any status quo order. (5) The APL Committee recorded its wish not to take over the management and control over the affairs of the companies and also recorded that no final decision as to what constituted the estate of PDB. 6.7. Mr. Shyam Divan submitted that this is what ought to have been placed before the court when a serious issue of maintainability is raised. Most important, there are alternative interpretations - PDB's influence could have been due to her personality. These findings in para 57[86] factually destroy what the petitioners have placed before thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....societies have their own boards. It might be that because of PDB's personality, each of these societies chose to go along with her recommendation. But this does not devolve on the APL. If this figure of 10.58% is removed, then the claimed control of 53.89% falls straight away. Similar is the situation with respect to other companies. 6.11. Mr. Shyam Divan thereafter submitted that control could manifest itself through various features, including the personality of the individual, the persuasiveness of the individual, etc. The public limited companies are all doing very well. There is no allegation that there is no diminution or frittering away of the assets. This is the tissue of falsehoods put forward by the APL and canvassed in such cavalier fashion. In any case, even if it is conceded for arguments' sake that the APL Committee may have control, it has not been quantified at all the APL Committee has absolutely no control over the companies mentioned at Sl Nos. 6 to 9 and 10, 11 & 12 of the list [93] which are wholly owned subsidiaries. Even the case they have come up with in respect of the three companies, are falsified in the findings of the 22.04.2021[94] order. It is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion, no pleading in the petition at all that either of the petitioners is a member of the Subject Companies/R1. Mr. Divan then proceeded to cite section 90[101] - which provides for investigation of beneficial ownership of shares in certain cases. He thereafter placed section 241. [102] The opening words of the section are clear - any member of the company can apply. Even in section 244, [103] for the waiver clause to be considered, the person applying for waiver should be a member of the company. 6.15. Mr. Shyam Divan submitted that this is important - because the law recognises a member, and the law recognises a SBO. But the law chooses not to confer any right u/s. 241 on the SBO of the company. The statute grants a very wide range of reliefs and power under the 2013 Act. But, the scope of the reliefs is circumscribed by the provisions - it is only those persons whom the law recognises, who can come before this Tribunal for relief. If one is a member then certainly one can approach. If not, at the threshold itself, the petition must be rejected. There is complete absence of any reference to control. The notion of control is alien to the provisions of section 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... - right available only to members. For 241, 242 and 244, membership is an absolute necessity. (4) JP Srivastava & sons (supra): 2005 1 SCC 172 decided on 26.10.2004 para 20 - The question is, did the appellants who were the original petitioners have the requisite number of shares when the petition was filed. The question itself raises two further issues viz. who were the petitioners and did they in fact hold the necessary shares? Para 47 - The other ground on which the fora dismissed the petition was that the beneficial interest in 551 shares of the 1029 held by the Trust had already vested in the beneficiaries prior to the filing of the petition complaining of mismanagement and oppression. This is again an incorrect legal proposition. An equitable or beneficial interest in shares does not make the owner of the interest a member of the company. [See M/s. Howrah Trading Co. V. Commissioner of Income Tax AIR 1959 SC 775; Therefore, even assuming that in terms of the Trust Deed the shares had devolved on the beneficiary of the Trust, this would not mean that the owner of the shares as registered with the company would not be competent to file the petition under Se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp;Mr. Shyam Divan next placed the board meeting minutes held on 10.05.2021. [110] (board meeting Sl No. 2/2021-22) essentially to provide context. Item 23[111] concerns the letters/emails of Shri RP Singh in connection with the board meetings of 09.11.2020, 09.02.2021 and circular resolution dated 28.12.2020. Shri RP Singh states that he has not received notices of meetings of 09.11.2021 and 09.02.2021. The minutes of the meeting of 10.05.2021[112] have been placed on record. Court's observations: are sitting fees paid for every meeting? If so, was RP Singh paid sitting fees for the meetings of 09.11.2020 and 09.02.2021? 6.22. Mr. Shyam Divan submitted that if what Mr. RP Singh says is correct, a BEN-1 form of December 2019 sees the light for the first time one year later on 28.12.2020. Here is a 100% holding company. There is no question of any SBO at all. Unless one is a SBO in VTL, there is no descent into R1. Then there is the conduct of the board of R1: a request sent by a 100% holding company is brushed aside by the board of the 100% subsidiary. This is a disquieting state of affairs, Mr. Divan submitted. 6.23. The APL committee was appointed on 23.08.2012. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6.25. Mr. Shyam Divan elaborated that the APL Committee can't first rock the boat, then come here and seek stopping of the EGM in an extraordinarily murky set of circumstances. The arithmetic at Sl No. 6 onwards does not stand up to scrutiny for establishing a case for control at all. It certainly does not stand up to scrutiny for grant of any equitable relief since there is no case that there is diminution or frittering away of assets. Irreparable injury: 6.26. In Life Insurance Corporation of India Ltd. (LIC) v. Escorts Ltd., (1986) 1 SCC 264 decided on 19.12.1985 the Hon'ble Supreme Court held that in para 100 that every shareholder of a company has the right, subject to statutorily prescribed procedural and numerical requirements, to call an extraordinary general meeting in accordance with the provisions of the Companies Act. He cannot be restrained from calling a meeting and he is not bound to disclose the reasons for the resolution proposed to be moved at the meeting. Nor are the reasons for the resolutions subject to judicial review. ... it does not require the shareholders calling a meeting to disclose the reasons for the resolutions which they propose to move at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....directors of 14.04.2021,[117] the APL Committee being aware of this, should have conducted an inquiry. The APL Committee is a human agency, and so there must be a modicum of integrity. The APL Committee should have satisfied itself as to the veracity of the allegations. 2. The interlocutory relief now being sought is not deserving of being granted at all, because it will perpetuate the illegalities that R1 company was doing for some time. 3. The grant of interim relief is not to resurrect a situation especially in a situation of this case. The directors of the Subject Companies do not command the confidence of the holding company. 4. PDB herself could have maintained such an action. If she could not have, could the APL committee maintain this? 7. Submissions of Mr. Darius Khambata, learned Senior Counsel for R7 & applicant in CA No. 82/KB/2021 7.1. Mr. Darius Khambata, learned senior counsel appearing for R7 and applicant in CA No. 82/KB/2021, submitted that he adopts Mr. Divan's very erudite argument on maintainability, and would only add a few supplementary arguments. 7.2. Mr. Khambata drew attention to the defini....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ven a hint of either piercing, ignoring or shrouding the corporate veil. This is not the case of the petition. They are not seeking disregard of the veil. 2. Far from seeking a shrouding the corporate veil, which this petition does not do, they have chosen the distinct legal entities part. The two are treated separately. 3. Though the 100% shareholding of the subsidiaries have been held in the name of VTL, nevertheless, a claim to beneficial ownership of the shares is made on the basis of observations of the judgments of the CLB and the High Court. 4. The petitioners assume that there is this huge control that PDB has exercised, therefore, the APL is entitled to succeed to this. 7.7. Mr. Khambata invited attention to the following averments contained in the petition: - (1) The assertion by the petitioners that R1 is a wholly owned subsidiary of R2; ,[119] (2) The application is directed against the egregious acts of R2, Mr. Harsh Vardhan Lodha etc; ,[120] (3) A chart is presented showing how the APL Committee (P1) along with P2 claims 53.89% shareholding in VTL a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a continued his submissions and stated that if, in a given case, a shareholder is genuinely concerned by an act of a 100% subsidiary, he has to complain of oppression in the holding company. He would do so on the footing that he as a shareholder, has no interest in the subsidiary. Here what has been done is the exact opposite. Mr. Khambata submitted that the propositions laid down by the Hon'ble Supreme Court in Bacha F Guzdar (supra) AIR 1955 SC 74: (1955) 1 SCR 876 decided on 28.10.1954 have stood like a rock, undisturbed so far. 7.9. Mr. Khambata cited LIC v. Escorts (supra) (1986) 1 SCC 264 decided on 19.12.1985, at para 84 to submit that a shareholder's interest in a company is an interest represented by his shareholding. He also cited the Gwalior Sugars case (supra) and submitted that an equitable or beneficial interest in shares does not make the owner of the interest a member of the company (2005) 1 SCC 172 decided on 26.10.2004, at para 47 In other words, there is no legal right shown as to how one can ignore the rights of VTL and come directly to the subsidiary. This is enough to show that the petition should be dismissed in limine. 7.10. Mr. Khambata submitted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... no properties belonging to the said deceased other than those specified in the aforesaid affidavit of assets. ,[127] The affidavit in support ,[128] contains a Schedule where the properties in public companies is set out. [129] At item (i), the shareholding in VTL is stated to be 500 shares. These are the actual shares held by PDB in VTL. The probate petition filed by the Lodhas is also annexed. ,[130] This petition also states the same thing in so far as the shareholding is concerned. Therefore, on this aspect alone, there is complete consensus ad idem. After Mr. RS Lodha passed away in 2007, a fresh set of proceedings commence for appointment of an administrator. In GA 3714/2008, a schedule of assets is filed. ,[131] This is the same Ann 'C' in the schedule of assets. VTL - 500 shares. The application for the administrator pendente lite was also in respect of the assets disclosed in the affidavit. A river can never rise above its source. This is the source, Mr. Khambata pointed out. 7.14. Mr. Khambata submitted that it may be that by reason of her personality, friendship, family, interconnection etc. she was able to command a majority voting in VTL. But that is di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of the High Court. The APL Committee applied to the companies to include their names in the register of members. The letter to VTL was made on 27.12.2012 ,[135] by the same Mr. AC Chakrabortti who names himself as the majority member of P1 today. The letter records that the Hon'ble High Court has also directed the Committee of approach to approach the companies in which the deceased held shares and stocks and get themselves recorded as the representatives of the estate ... and to take all necessary steps to exercise the rights and privileges incidental to the ownership of the shares and stocks which consists of controlling power in MP Birla group of companies and safeguard the interest of the ultimate beneficiaries. The rights in law flow from the registration in the register of members. Anything else is attributable to force and personality. So, the same Mr. Chakraborti does not say that we hold 53.89% controlling interest in the shares. Even in the letter dated 15.06.2019 addressed by the current APL Committee for change in name of 500 shares by endorsing the name of Hon'ble Justice Mohit Shah in place of Hon'ble Justice AP Shah, the APL Committee is very conscio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ereof was placed - on or around 6th November 2020, the petitioners came to know that VTL, ... holds and controls shareholding of 53.86%, ... amongst other things they brought to the fore the assertion that they controlled 53.86% of the shares in VTL. Rule was directed to be issued. One of the specific prayers was to hold that aiding and abetting HVL for non-compliance of the decision of the APL committee dated 19.07.2019 according to which the shareholding of the estate of PDB was 53.86%.,[142] On this contempt petition, a judgment was delivered on 22.04.2021. [143] 7.21. Reading from para 42 of the judgment, Mr. Khambata placed para 42 of the judgment, [144] in which the decision of the APL Committee dated 19.07.2019 is quoted - "26. At the cost of repetition, the committee is not to take any final decision regarding what forms part of the estate of late Mrs. PDB ... APL committee will have to proceed on the basis of the possibility ... including tier 3 and tier 4 companies also." Mr. Khambata queried whether this not at variance with what the petitioners have stated in the petition in para 19. [145] Again, in para 43[146] of the judgment, decision No. 34 is set up - the APL comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is court and say that orders should be passed interfering with the management of these companies before this matter is decided. 7.24. In Sangramsinh P. Gaekwad (supra), (2005) 11 SCC 314 decided on 20.01.2005 the Hon'ble Supreme Court had held that if there are disputes of title to shares, and these are being decided by a court competent jurisdiction is seized of the matter, then it should be left to the court. Here the ownership is not in question. However, the issue of control etc. is very much pending before the probate court. Until that happens the petitioner cannot file and maintain the present petition. Mr. Khambata urged that this Tribunal should not decide this in the present proceedings. Distinguishing Aruna Oswal's case (supra), (2020) 8 SCC 79 decided on 06.07.2020 which was quoted by Mr. Jishnu Saha, Mr. Khambata submitted that in that case, the deceased was a member of the company, and it was not a case of the representatives asserting control. The question of control cannot be decided in a section 241 proceeding, Mr. Khambata posited. Here is an APL Committee seeking to assert rights beyond the shareholding. That is a matter where the probate court is already....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the company on 22.04.2021.[160] itself. With this, the composition of the board now includes not only the directors who existed on the board as on 22.04.2021, but also the three new directors appointed on that date. This position is captured in paras 68 & 69 of the petition. .[161] Thereafter, the board meeting of 10.05.2021.[162] was held after due notice to all members of the board given on 06.05.2021. Sl No. 4 notes that the board of directors was apprised of the decisions. RoC filings were also completed. 8.4. Therefore, Mr. Kathpalia submitted that he represents the validly constituted board and that his instructing attorneys - Sinha & Co - have the authority in law to represent R1 company. Mr. Sudipto Sarkar nor his counsel on record are not empowered to appear and represent on behalf of R1, and therefore, they should not be recognised as representing R1 company, Mr. Kathpalia asserted. 8.5. Adverting to the petition itself, Mr. Kathpalia submitted the entire petition is predicted on the premise that a 100% shareholder should not be permitted to exercise its rights. The petitioners have made specific prayers for setting aside these appointments. Prayer (b), (c) and p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itute the board. 8.8. In this background, R1 has moved an application questioning the maintainability of the present petition. 8.9. The word 'member' is an exhaustive term. Member equates shareholding as held in Killick Nixon (supra). The legislature is therefore conscious of the meaning and importance of the word 'member'. The legislature is also conscious of SBO, which it provides and described in sections 89 and 90 of the Companies Act, 2013. When the legislature prescribes a remedy under section 241, it limits it to member. It does not give the gateway to a SBO. Section 241 is a complete code and therefore exhaustive of all the matters that it deals with. This is not a technical issue. This is a jurisdictional issue, Mr. Kathpalia submitted. 8.10. Admittedly, there is no membership. The petitioners are alive to the fact that this petition is not maintainable, which is why P2 is introduced. P2 is there because P2 holds shares in R2. Otherwise, P2 has no role to play. This is perhaps the Freudian slip that is present in the petition. If a petition is incompetent without a member, then the petition must fail. Because, if this petition is directed against R1, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the processes required to be followed have been fully followed, and they are not under challenge. 9.3. The obfuscation is being played out at two levels. The first question is to establish eligibility. Questions that must be asked are - What is the oppression? Who has oppressed whom? This sort of "double derivative action" takes the shareholding away to the concept of a "virtual" shareholding. In Margaret Desor (supra), the deceased held shares. In Bajarang Jalan (supra) also, the transferor held shares. 9.4. Mr. Ramji Srinivasan submitted that something will turn on the date in prayer (r) - 27.03.2021. The APL wants to control R1 company, which is contrary to the decision of that very APL that it does not wish to manage or control the companies till the issue is decided by the court. APL itself recognised that it was an appointee of the court, but for a limited purpose. That situation has not changed today. Merely because the constitution of the board changes, the stand of APL cannot change. That is contrary to the understanding that the APL itself had taken before the court and its own decision on 19.07.2019. That is disturbing the status quo. 9.5. Taking us through the cont....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hey have not come clean before the court. On the face of it there is more than what meets the eye. Any injunctive relief will be a direct interference in the rights of the shareholder who has appointed R3 and in the exercise of R3's rights as a director. 9.10. Mr. Ramji Srinivasan submitted that in the absence of anything to show that the EGM of 19.06.2021 will really affect the R1 company, no injunction can be granted. In this case, there is no prima facie case, nor any question of irreparable loss or injury. And certainly the balance of convenience is not in their favour, especially not after the context in which Mr. Divan has placed. On a demurrer today, it is clear and evident that the stand of APL is different before this court from the stand that before the HC. R1 company led by its old board manufactured a dispute before the RoC even before it began. They created a smoke screen. 9.11. VTL has made an investment in this company. It is an asset of the company. In the course of management of affairs of VTL, let us assume that there may be mismanagement of certain assets held and controlled by VTL. If the allegation is that one group of shareholders is mismanaging the affa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....out eligibility. Para 202 only strengthens the case of the Respondents which state that the interest of the company requires that the majority shareholders must have their say in the management. 9.19. In Margaret Desor's case (supra) the deceased was a member. Therefore para 20, 24 & 25 applied. This is not the case here. The APL Committee is not a member. 9.20. In Metro Infrastructure Dev Ltd. v. Bengal Tools, it was held that a transferee under a scheme acquires the rights and interest of the transferor. Here, the decision has no relevance because PDB did not have any shares. 9.21. In TCS v. Cyrus Mistry (supra), it was held that to justify interference, there has to be oppression or prejudice against members. Further, the nominee directors have to act as per the will of the person nominating. There are no directors on the board of R1 who are nominees of the APL Committee. Therefore, there is no question of any allegiance owed to APL Committee. 9.22. Vodafone (supra) or any other decision will not change the normal course of company law that the holding and subsidiary are independent legal entities is not altered. This is the rule and not the exception. There is no pleadi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as to why they are parties together. There is no explanation for the joinder of parties. Mr. Rathi is the scheming brains in the proceedings. 10.6. Elaborating on this, Mr. Bachawat urged the court to see who the signatory on behalf of P2 is. He drew our attention to the affidavit verifying the petition.[172] It is verified by one Mr. Mukesh Rathi. He is mysteriously described as the authorised agent of PPTC. Mr. Bachawat placed the letter dated 02.05.2021, .[173] which is the letter by which Mr. RP Singh has been complaining about the wrongful acts of Mr. SK Daga and Mr. Kishore Damani. There are references to Mr. Rathi at least six times in this letter. He is not an officer of August Agents or of Insilco. Here is a gentlemen who has been seeking to interfere with the minutes of board meeting of Insilco.[174] His allegation is all over the place. There was no reply to this letter from any quarter. Therefore, at the minimum, one would have assumed that these allegations would be addressed in the present petition at least. However, the petition does not contain a single sentence to defend these allegations, nor a word of explanation. And the gentleman against whom the allegations h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... three company petitions. All the allegations levelled in the petition are against R2/VTL. Then an action should have been filed against VTL. One cannot complain against VTL's action, but maintain an action against the subsidiary. There is an about turn now. For ten years this was not there. The submissions in the petition and to the high court are completely different. Today it is not an independent action by the APL committee. There too someone was piloting the action, here too it is so. We as companies have been harassed for years, until the order dated 18.09.2020.[179] passed by Hon'ble Justice Munshi made it clear in sixteen places that no order can be passed against the companies. So, the justification for the present petition just is not there, Mr. Bachawat said. 10.12. The petitioners have relied extensively on Hon'ble Justice Munshi's order. [180] This is the portion that the petitioners kept showing. "All the entities of the group would have exercised their voting right in accordance with the directions of PDB had she been alive. Accordingly, now such entities would exercise voting right flowing from their investment in the companies controlled by PDB in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5 on 22.04.2021. The requisition under section 100 of the Companies Act, 2013 by VTL was dated 27.03.2021[182] and my qualification as an independent director have been set out.218 It was told to the court that there is something very sinister about my appointment. Pertinently, R4 was appointed three months ago and there is no pleading in the petition nor was there any oral submission made during the course of oral argument impinging my appointment or that of R5. There is not a whisper about lack of compliance with procedure there is not one word in the petition regarding the discharge of my functions, and how it is contrary to the company, its employees etc. 11.3. Mr. Krishnendu Dutta placed the statutory provisions in perspective-section 102(2) lays down that every appointment of a director shall be made in a general meeting. Section 160 sets out the procedure for the rights of persons other than retiring directors to stand for directorship. Section 166 casts a duty on directors to discharge in good faith and in the interest of the company. 11.4. It boils down to this: there is not a whisper of allegation against me or my independence. In such a scenario, how will the appointme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 13.2. Speaking through six different voices, it was stated that the estate of PDB was confined to 500 shares, and that VTL has three 100% subsidiaries. Pl see that the late PDB held controlling interest in twenty-eight companies of the MP Birla group. This is very important. The court proceeds on that basis. This is 'accord.' He drew our attention to the CLB's order dated 25.04.2005 in Gauri Shankar Kayan (supra),[184] wherein it has been recorded that - "Shri Sarkar appearing for the petitioners submitted that it is an undisputed fact that the respondents 1 to 28 collectively hold more than 60% shares in the company and that they were under the control and management of late Mrs. Birla before her demise." .[185] The response of the respondents to this is also noted in para 5 thereof.[186] - "There is no dispute that late Mrs. Birla was in control of R1 to R28 and that the will executed by her is under challenge before the Calcutta HC." Therefore, there is accord on the fact that Mrs. Birla was controlling the 28 cos. These companies included VTL. 13.3. In the 10F appeal, Hon'ble Justice Indira Banerjee notes that there is accord about Mrs. Birla controlling....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. 13.9. This decision is challenged before HC. Therefore the decision is directly and substantially in issue before Hon'ble Justice Munshi. 13.10. Two issues have now acquired finality - (1) estate holds controlling interest of 60% shareholding in Birla Corporation. (2) it has been given the right to vote in respect of 60% shares. 13.11. When the APL Committee takes the decision, this matter is directly in issue. [193] The court holds that the view that the APL Committee has the right to exercise all such powers and perform all such acts as the late PDB would have exercise had she been alive, and that PDB had controlling shareholding in the investment companies either by direct investment or along with other investment companies and also had controlling interest through cross shareholding in the manufacturing companies, has been confirmed by the Single and Division Benches of the High Court. Accordingly, now such entities would exercise voting right flowing from their investment in the companies controlled by PDB in the manner to be guided by the APL Committee. Page 406 of the petition [194] 13.12. Therefore, a specific complaint was made to the High Court that the APL Com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....older, the shares devolved on the legal heirs instantaneously. This was in 2005. In other words, the controlling interest is with the estate of late PDB. Likewise, while denying that Shri Lodha is controlling the interests of the estate, the learned estate for the respondent contended that the provisions of the said Code are not applicable in the case of transmission of shares. So, the court notices Margaret Des or (supra), the court notices the controlling interest, and no change has been brought about. 13.16. Mr. Jishnu Saha further submitted that there is nothing in Hon'ble Justice Indira Banerjee's judgment[196] in the section 10F appeal to say that Margaret Des or (supra) has no application. Therefore, this position was accepted. The issue was again framed in Hon'ble Justice Patel's order dated 23.08.2012, wherein it is recorded that the privileges of a member of a company can only be exercised by that person whose name is entered in the Register of members. A receiver whose name is not entitled in the register of members cannot exercise any of those rights. [197] The finding of the court[198] is rendered after noticing Margaret Desor (supra) [199] - the legal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding company are to be treated as a single entity. If so, the question is whether the owner of a share in a holding company can maintain an action against a subsidiary. The judgment that Mr. Khambata pointed out was the Herbertsons judgment. The judgment does not consider DHN Foods or New Horizons and is therefore not good law. Now, this is taken beyond the pale of all controversy because the Hon'ble Supreme Court clearly says that a holder of a 10% share in a holding company is entitled to maintain an action and one cannot shut him out. 13.20. Referring to the argument of Mr. Shyam Divan said that there is no allegation of dissipation of assets, siphoning of funds, of wrong doing etc, and also no averment regarding lifting of the corporate veil in the petition. Mr. Jishnu Saha submitted that the corporate veil has already been lifted by the High Court. It has said that the APL Committee can exercise voting rights. Therefore, there is no need to plead this in the present petition. The APL Committee's character has already been stated by the court. There is a fait accompli. One cannot set the clock back. So, there is no challenge to the question that a wholly owned subsidia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ital of any of the companies. 13.25. Mr. Jishnu Saha continues - The first thing is that once the court recognises that APL Committee recognises the right to vote, then it acquires the character of a shareholder. Secondly, if the court's orders regarding voting are not adhered to, then it would defeat the interest of the APL Committee. It will overwhelm a shareholder who has been recognised to have controlling interest. The APL Committee has a booming voice to speak in these issues. If notice is served only on VTL, and that if no direction from APL Committee is sought, then it is also in the teeth of the order of the HC. 13.26. So far as the argument of SBO not becoming member is concerned, it was stated that it was not recognised, the petitioners have not come with that case. They have come with a case that they are shareholders of a holding company which has a right to maintain an action in respect of its subsidiary. 13.27. Today if directors are being appointed to wrest control of the company, in that case that is an act of oppression since it brings about a material change in control. This is the affirmative voting right. That is why a director is a lackey of a person wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The board of Insilco's decision to commend the BEN-2 forms is not under challenge. 14.2. So, the first point is, without doing any violence to the arguments made by Mr. Jishnu Saha, they are members in their own right. In any event, the petitioners qualify under 2(55)(iii). The right of the APL Committee is already decided. The shareholding of the promoters in Birla Corporation as stated in its annual accounts as at 31.03.2020. It is their declared position in their balance sheet. They are estopped from arguing to the contrary now, against the orders of the CLB, the High Court and Supreme Court. Today if they say that they are all individual entities, what meaning should we give to the orders spanning from 2005 onwards, Mr. Joy Saha wondered. 14.3. Addressing the arguments of Mr. Khambata read out isolated paragraphs of each order. It is completely conclusive. On 03.08.2020, the Division Bench declines stay of Hon'ble Justice Munshi's order. Here the argument that is made is that the annual returns of Birla Corporation does not matter. The annual returns reveal that the APL Committee has control over 53.89% shareholding in VTL. Complying with the SEBI SAST Regulations....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he present petition. On the arguments of Mr. Divan for R2: 14.9. Mr. Joy Saha submitted that the shareholding of the APL Committee has already been quantified, and there is an erroneous observation in the order of 22.04.2021 passed by the Hon'ble High Court in the contempt petition. However, the APL Committee was neither a party, nor was it heard in the contempt petition, though the presence is recorded. There was an erroneous recording of facts which ought to have been pointed out by the parties to these proceedings. There are several docs which show that the APL Committee had quantified the shareholding. [202] On 23.12.2019, the ben-1 forms were filed with R1 cos. Thereafter, decision was taken. So, the APL Committee had actually quantified the shareholding. 14.10. The interlocking effect of the shareholding is shown in the petition.[203] PDB was the natural human face that bound these. The respondents had stated that the petitioners had conjured this up by including charitable societies of MP Birla group. Mr. Joy Saha submitted that this position obtains from the annual report of Birla Corporation. The APL Committee has also quantified the shareholding. All these are part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t with by Mr. Jishnu Saha. I now deal with Aruna Oswal. Aruna Oswal's judgment was also on the question where when there is a nominee and there is a dispute regarding ownership which is pending adjudicating in the civil court, it was held that if there is a nominee, the shares go to the nominee. If there is anyone else claiming ownership, then it has to go to a civil court. 14.18. Mr. Joy Saha submitted that he had already answered Mr. Ramji Srinivasan's point that the petitioners came here because they lost in the High Court on 22.04.2021. On the other point of forum shopping and constructive res judicata, Mr. Joy Saha submitted that this is easily answered by the point that all these orders from 2005 onwards have culminated in the contempt in 2020 and the present cause of action has arisen on 27.03.2021. Therefore, there is no question of applicability of constructive res judicata. 14.19. Mr. Bachawat's arguments have already been answered by Mr. Jishnu Saha. He stated that there is no question of status quo ante and quoted a judgment. Mr. Bachawat is representing a supposedly independent director. In spite of that he questions the vakalatnama etc. Mr. Sabyasachi Ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mitted by the Respondents, the last order is of 22.04.2021. That order is with regard to HVL's appointment. It does not alter Hon'ble Justice Munshi's order in any manner. 15. Analysis of the positions 15.1. We have carefully considered the very elaborate pleadings both in the petitions and in each of the demurrer applications filed by some of the respondents. We have also heard at some length, the learned senior counsel appearing on both sides, and arguments have really been advanced both on merit and on maintainability aspects. 15.2. I understand that my learned brother is preparing a separate order and therefore, I proceed to deal with the case with whatever little understanding of the law that I have been gifted with. 15.3. Straight off the bat, I will address the arguments with regard to the maintainability of the petition since that has to be decided as a preliminary issue. 15.4. The issues that arise for consideration are broadly as follows: (a) What is the scope of the expression, "member" occurring in section 241, 242 and 244 of the petition? Should it be read narrowly and strictly in terms of the definition in section 2(55) of the Comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 10 ibid of the depository mandates that only the name of the depository is entered in the register of members as the registered owner, while the person holding shares is deemed to be the "beneficial owner" of the shares. The use of the conjunction "and" would prescribe that only a person who holds shares, and whose name is entered as beneficial owner in the records of a depository, would be covered under the third limb of section 2(55). This would naturally exclude those persons whose shares are not registered with a depository. Therefore, strictly speaking, the petitioners would not, at first blush, be covered. 15.8. To overcome this, Mr. Joy Saha invited us to read the expression "depository" in relation to R1 company as "RoC," since the RoC would be the custodian of the forms required to be filed for this purpose. That would mean that the Subject Companies would qualify for inclusion in the third limb of section 2(55) as "member." 15.9. I am unable to persuade myself to accept this view, since the term "depository" is also defined in section 2(32) of the Companies Act, 2013, as follows:- "Depository" means a Depository as defined under clause (e) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 15.15. Therefore, for a beneficial interest to be recognised, forms are required to be filed both by the registered owner of the shares as well as by the person holding beneficial interest in the shares. Without that, it is not possible for a company to recognise the beneficial owner of a share. In the case of the Subject Companies, at least upto the filing of the petitions, the holding company, VTL, had not filed or recognised the APL Committee as the beneficial owner of the shares in any of the Subject Companies. 15.16. Coming back to the definition of 'Member,' it is trite law that when a word has been defined, that definition should prima facie be applied wherever that word is used in a statute. It is assumed that the legislature is fully alive to the definition, and has intended that the term as defined shall govern what is proposed under that enactment. It is an exhaustive definition and not an inclusive one, leaving no interstices for judicial intervention. Reading the provision of 'Member' in the manner that I have been invited to do by the learned senior counsel for the petitioner, will be doing violence to the language of the statute. Therefore, on thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is delay. Just as there is no explanation as to why, if the BEN-1 form was indeed filed with the Subject Companies on 09.12.2019, no steps were taken to ensure that the same were accepted by the Subject Companies and necessary declarations registered with the RoC. 15.21. Both Mr. Jishnu Saha and Mr. Joy Saha also asserted that the non-compliance was in the teeth of Hon'ble Justice Munshi's order dated 18.09.2020. Admittedly, Hon'ble Justice Munshi's order was subjected to challenge before the learned Division Bench, which upheld the order for all material purposes, vide its order dated 01.10.2020. Again, there is no explanation as to why, when there was, in the eyes of the petitioners, an express disregard of Hon'ble Justice Munshi's order, just as there was of the APL Committee's decision, no legal steps were taken to ensure compliance. 15.22. In the case of the APL Committee's decisions, the APL Committee could very well have approached the probate court seeks appropriate directions by arraying the Subject Companies as party respondents. That was not done. If there was a violation of Hon'ble Justice Munshi's order dated 18.09.2020, then t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thirty days with the RoC. The APL Committee chooses not to do anything in the matter, either in the form of addressing the RoC or approaching courts for redressal of their grievance; (d) On 09.02.2021, Mr. RP Singh, one of the directors of the Subject Companies objects to the passing of a circular resolution dated 28.12.2020, holding that there was no such meeting of the board of directors held. He also states that all previous and subsequent meetings have been upon prior notice and that there is no notice only of the "meeting" of 28.12.2020. This factual assertion remains uncontroverted or challenged in the petition. The inconvenience in addressing this issue is also evident when the learned senior counsel for the petitioners brushes aside this issue as of no consequence, and that this aspect should especially not come from a respondent who is an independent director; (e) There is reconstitution of the board of the Subject Companies on 22.04.2021 following a requisitionists meeting held on the same day, of which notices were given to the Subject Companies on 27.03.2021. Till date there is no legal challenge to the calling of the EGM of 22.04....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... alleging oppression and mismanagement was filed by Shankar Sundaram against the holding and subsidiary companies, twenty-eight of them. It was the specific contention of Shankar Sundaram that all the companies were run at the best of the second respondent, and there was no concept of corporate management throughout the group. The entire group is in the nature of a partnership with the second respondent in the role of a controller. There was no autonomy in the affairs of the subsidiary companies and all business and other decisions were taken only by the second respondent. Therefore, the entire group is for all practical purposes a single economic unit. 15.30. The CLB upheld the contentions of the respondents that the expression 'affairs of the company' in sections 397 and 398 of the Companies Act, 1956, does not include the affairs of the subsidiaries, and that a shareholder of a holding company cannot array subsidiaries as parties seeking relief against them under section 402 of the Companies Act, 1956. Against this, a section 10F appeal was filed before the Hon'ble Madras High Court. 15.31. Two diametrically opposite views were canvassed before the Hon'ble Madr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....everse: they are trying to tag the holding company to the subsidiary. There are no allegations of any oppression or mismanagement in the Subject Companies, which are all wholly owned by VTL Limited. If the logic in Shankar Sundaram (supra) is applied to the hilt as it should be, then it would be proper for the petitioners to file the petitions primarily against VTL Limited in a Bench having territorial jurisdiction, and tag the Subject Companies along in that petition, and not before this Bench. 15.34. In its own way, Shankar Sundaram (supra) tests the boundaries of class action and derivative action in a manner not seen before. 15.35. At this present juncture, it is clear that the BEN-1 forms were not properly filed with the Registrar of Companies. Indeed, they do not appear to have been properly filed even with the Subject Companies themselves. Let us keep this aside for the time being. 15.36. The petitioners have a second route to stake claim in the Subject Companies. They claim that by virtue of their majority shareholding in the holding company, they are entitled to parachute into the Subject Companies and carry the same controlling interest into the subsidiary in order mai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... section 241, 242 and 244, where all three sections use the expression "Member," it is not possible to read the term to include persons who are, to borrow a term in familial relationships, "once removed" from the company, i.e., who would at best be treated as beneficial owners of shares in the holding company that holds 100% of the shares of the Subject Companies. One must continually remind oneself not to get too carried away to ignore the statute and guard against attempts to read equity into every act at the cost of the statute itself from where one takes appointment. 15.42. I am, therefore, not convinced with the arguments of the learned senior counsel for the petitioners in this regard, and hold that the beneficial interest in the holding company will not automatically translate into beneficial interest in the subsidiary by operation of law. 15.43. Mr. Joy Saha asserted that there is nothing in the notice requisitioning the EGMs of 22.04.2021 and 19.06.2021 or in the explanatory statement accompanying the notices about any wrong doing on the part of the directors sought to be removed, and therefore the change in the board was unwarranted. 15.44. There is no statutory requir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2.07.2021), the entire order had to be rebuilt from scratch, resulting in considerable delay in making available the order on the NCLT website. I have to take this blame upon myself, and I apologise to each one of them - the senior counsel, the instructing counsel and their counsel on record, and the end litigants for this delay. All of them have suffered because of this. 2. In these circumstances, the order is being digitally signed and made available to the parties today. 3. Because of the split verdict delivered by the Bench, the matter will stand referred to the Hon'ble President for referring the matter to a third Member to break the deadlock. Joint Registrar is hereby directed to send the entire papers along with a certified copy of the order passed by both the Members to the Registrar, NCLT, for placing the same before the Hon'ble President. Harish Chander Suri, Member (T) A. This is a case with peculiar facts. On the one hand one group is claiming rights of the Significant Beneficial Owner (SBO) of Priyamvada Devi Birla Estate through Administrators Pendente Lite Committee (petitioner no. 1) duly appointed by the Hon'ble High Court of Calcutta, while on the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....titioner No. 1 (i) Mr. Joy Saha, the learned Senior Advocate representing Petitioner No. 1, submitted that the Administrators Pendente Lite Committee (APL Committee) of the Estate of late Priyamvada Devi Birla (PDB) was appointed vide Order dated 23rd August, 2012 by Hon'ble High Court in the testamentary proceedings in relation to the Wills and Estate of PDB. The APL Committee was appointed for preservation and protection of the Estate and the Hon'ble High Court of Calcutta is yet to decide on the issues relating to ultimate beneficiaries of the Estate. However, the APL Committee is vested with the Estate by the orders of Hon'ble High Court which includes the "controlling block of shares in the M.P. Birla Group of Companies". Mr. Joy Saha, the learned senior counsel has submitted that the position regarding the extent of the Estate has already been adjudicated and decided by various judgments passed by the Company Law Board and affirmed by the Hon'ble High Court of Calcutta. He submitted that this Tribunal is bound by all those judgment and orders by the Company Law Board and the Hon'ble High Court. He has referred to and relied upon orders ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntment of one new Director, namely, Mr. Rakesh Puri and two independent directors, namely, Dr. Aravind Srinivasan and Mr. Shiv Dayal Kapoor, apart from a proposal for changing the registered office of Respondent No. 1 within the local limits of Calcutta. The learned counsel underlined the fact that the notice dated 27th March, 2021 was issued by Respondent No. 2 without any intimation or consent of the APL Committee. The said notice dated 27th March, 2021 was considered by the Board of Directors of Respondent No. 1 in its meeting dated 14th April, 2021 and it was observed that the said notices are invalid in law and did not make any reference of direction/consent of the APL Committee and since the APL Committee is recognised as the SBO of the said shareholding, they were also intimated of the same. On being intimated about the notices dated 27th March, 2021 issued by Respondent No. 2 to Respondent No. 1, the APL Committee proposed to hold its meeting on 22nd April, 2021 at 5 P.M. Just before the said meeting, the APL Committee was informed by Respondent No. 1 that from the master data of Respondent No. 1 reflected on the portal of the Ministry of Corporate Affairs, the appointment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2 holds more than 10% shareholding in Respondent No. 2 company thereby providing the petitioners locus standi to maintain the present petition. It is submitted that the notices dated 27th March, 2021 and 12th May, 2021 issued by Respondent No. 2 are invalid in law and demonstrate a clear case of oppression and mismanagement. The cumulative effect of the appointment of new directors and removal of Shri K. Damani is an attempt to supersede the present Board of Directors of Respondent No. 1 and clearly oppress the controlling interest of the APL Committee in Respondent No. 1. The issuance of such notice for such appointment at the behest of Respondent No. 2, without the support or guidance of APL Committee is non-est, and the said notice and the vote cast at the EGM purportedly held on 22nd April, 2021 are in contravention of judgment dated 18th September, 2020 of the Hon'ble High Court of Calcutta. It is submitted that the removal of Shri K. Damani who has been Director of Respondent No. 1 since 1999 has been sought by Respondent No. 2 at the behest of Respondent No. 7. It is submitted that Respondent No. 7 has continuously sought to obstruct the decisions of the APL Committee to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....agement. The learned counsel sought support from the case World Wide Agencies Pvt. Ltd. & Ors V. Margaret T. Desor & Ors, 1990 (1) SCC 536. It is submitted that the issue as to who is ultimately entitled to the Estate is yet to be determined by the Probate Court. The scope and extent of the Estate has also been decided previously but has again been brought into question by Respondent No. 2 and 7 before the Probate Court. (viii) The learned counsel further submitted that this Tribunal is bound to follow its earlier judgments in this regard and need not delve on this issue any further. It is submitted that Respondent No. 1 is a 100% subsidiary wherein the said shareholding is held by Respondent No. 2 and the APL Committee is the SBO of such shareholding. The learned senior counsel tried to make his point with the help of judicial pronouncements and submitted that the 100% subsidiary and holding companies are to be treated as a single economic entity. (D.H.N. Food Distributors Limited (in Liquidation) & Ors v. London Borough of Tower Hamlets,(1976) 3 All ER 462, New Horizons Limited & Ors v. Union of India (UOI) & Ors, 1995 (1) SCC 478, Bajrang Prasad Jalan & Anr v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....intain the present petition. He further submitted that the notion of "control" and "Significant Beneficiary Ownership" is alien to Sections 241 and 242 of the Companies Act, 2013. The learned counsel sought support from various judgments including [S.P. Jain v. Kalinga Tubes Ltd. (1965) 2 SCR 720, Dale & Carrington Invt. Ltd. (P) Ltd. & Anr. v. P.K. Prathapan & Ors, (2005) 1 SCC 212, M/s. India Awake for Transparency v. M/s. Hasham Investment and Trading Co. Pvt. Ltd. & Ors, J.P. Srivastava(supra), Killick Nixon Ltd. v. Bank of India, (1985) 57 Comp Cas 831 (Bom). (iii) The learned counsel further submitted that there is no question of granting any urgent interim relief because there is no contravention or any loss to the Estate and that the petition is an abuse of process of law. Respondent No. 2 is a public listed company with more than 13000 shareholders. Petitioner No. 1 holds only 500 shares in Respondent No. 2. It is submitted that the APL Committee has never sought transmission of the so-called controlling shareholding. The learned counsel repeatedly said that Respondent No. 2 is the registered shareholder in respect of 100% shareholding in Respondent No.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ondent No. 1 to call an EGM. On 11th May, 2021, a circular resolution dated 11th May, 2021 was passed for calling of another EGM for removal of Respondent No. 6, Mr. Krishna Damani as director of Respondent No. 1. The learned counsel further argued that the APL Committee since its formation in August, 2012 has never raised any objection regarding any general meeting. He submitted that the APL Committee should have conducted an enquiry into the matter before passing the decision dated 22nd April, 2021 and it was only thereafter it should have filed this case for oppression and mismanagement. It is submitted that counter allegations against directors of Respondent No. 1 have also been made by another director of Respondent No. 1, namely Shri R.P. Singh and he submitted that the conduct of the Board of Directors of Respondent No. 1 is malicious. There was no discussion on Form BEN-1 filed by the APL Committee on Respondent No. 1 before the Board of Directors and that no notice was given to Shri R.P. Singh, one of the Directors and records appear to be questionable. The Board of Directors did not act upon the notice dated 27th March, 2021, of Respondent No. 2. The learned counsel submi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....August, 2005, the appeal was dismissed. In the said judgment also there was no finding that the Estate holds majority shares in the company. The learned counsel thus submitted that these judgments have no relevance to a petition under Section 241 and 242 of the Companies Act, 2013. (x) It is submitted that in the judgment dated 27th August, 2010, the Hon'ble Calcutta High Court had held that the Estate may be controlling the companies but the same may be because of influence of Mrs. Priyamvada Devi Birla. Mrs. Birla may have control over around 60% shareholding in the different entities of the M.P. Birla Group. But that does not mean that she is a member in relation to such shareholding and can maintain a petition under Sections 241 and 242 of the Companies Act, 2013. The learned Counsel further submitted that in the judgment dated 10th May, 2013 also, the Hon'ble High Court did not decide the issue of control. In the judgment dated 4th May, 2020, the judgment dated 10th May, 2013 was rejected and the Hon'ble High Court specifically held that the jurisdiction to adjudicate upon issues regarding voting rights in relation to the controlling shareholdin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tered shareholder and the SBO which is beyond the purview of Sections 241 and 242 of the Companies Act. It is submitted that the rights of the APL Committee as the SBO and its decision dated 9th December, 2019 have been challenged before the Probate Court. Therefore, Section 430 of the Companies Act has no applicability in instant case and these issues are to be decided by the Probate Court. (xiv) The learned counsel finally submitted that the petition is not maintainable because Petitioner No. 1 is not a member. A company is only concerned with the person whose name is entered into the Register of Members. An equitable and beneficial interest holder is not entitled to maintain a petition under Section 241 and 242 of the Companies Act, 2013. It is submitted that Respondent No. 2 is a separate juristic entity from Respondent No. 1. The 100% shareholding of Respondent No. 1 is an asset of Respondent NO. 2. The petitioners cannot have any interest in the assets of Respondent No. 2. There is no pleading or case for piercing or shrouding the corporate veil between Respondent No. 1 and Respondent No. 2 [Hertbertsons Ltd. v. Kishore Rajaram Chhabria]. &nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not be maintained by any person other than a member. It is submitted that Petitioner no. 2 has only been made a party to the present proceedings for the purposes of giving a foothold on the jurisdictional aspect and nothing else. (xvii) It is submitted that it is inconsequential whether the Registrar of Companies has or has not accepted the returns/filings regarding the appointment of new directors. The Registrar of Companies only carries out ministerial tasks and has been regarded as a mail box, regard being had to [Garima Rungta v. Union of India & Ors, WPA No. 6697 of 2020 dated 8th March 2021 (unreported), Golconda Industries Limited v. Registrar of Companies,: ILR (1968) Del 275, Areva T & D India Limited and S.K. Bhattacharya & Anr. v. Union of India (UOI) & Ors]. Submissions on behalf of respondent nos. 3, 4 and 5 (xviii) It is submitted on behalf of these respondents 3, 4 and 5 that Mr. Mukesh Rathi has signed the Vakalatnama on behalf of petitioner no. 2 as well as respondent no. 1. Mr. Mukesh Rathi has further been authorized to do so by Mr. S.K. Daga, against whom complaint has been made by Mr. R.P. Singh. This ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....law. Therefore, the issues now sought to be raised regarding the same are a clear afterthought and wholly inconsequential. (xxii) It is further submitted that the issuance of the notice for calling EGM, holding of the EGM and voting therein are invalid as the same was done by respondent no. 2 without any intimation or consideration or guidance or direction of petitioner no. 1. In terms of the judgment dated 18th September, 2020, respondent no. 2 could have exercised voting rights in relation to the 100% shareholding in respondent no. 1 only as per the guidance or directions of petitioner no. 1. This was not done in this case. (xxiii) Since the appointment of the director was itself unlawful, any consequential act carried out by such directors including convening of board meetings has no basis in law. Hence, the board meetings held by the unlawfully appointed directors cannot be recognized by this Tribunal at all. (xxiv) Mr. Krishna Damani has been a director in respondent no. 1 since 1999. All throughout there has not been any allegation against Mr. Krishna Damani at all. The concocted allegations now sought to be made aga....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case, it is an admitted position that PDB during her lifetime had controlling interest over the MP Birla Group and such controlling interest has devolved on petitioner no. 1 now. (v) In terms of judgment dated 18th September, 2020, respondent no. 2 was to exercise voting rights in relation to the controlling shareholding as per the guidance and direction of the APL Committee. The notices in this case have been issued without any intimation to petitioner no. 1 and therefore the very foundation of the actions of respondent no. 2 are oppressive and bad in law. Respondent no. 2 should have informed petitioner no. 1 of its proposal to issue the requisite notices and then act on the guidance and direction of petitioner no. 1 on such notices. (vi) The learned Senior counsel submitted that the holding company and a wholly owned subsidiary such as respondent no. 1 are same and single economy entity. The pleadings in the application also reflect this. There is no requirement of lifting of corporate veil. [D.H.N. Food Distributors (supra)] There was no requirement of transmission of indirect shareholding which was controlled by the Estate. Under the Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is bound by the earlier decisions. No fresh adjudication is required on the issue regarding extent of the Estate. The judgments in Aruna Oswal (supra) and Sangramsinh P. Gaekwad (supra) have no applicability in the present case. (iii) It is submitted that Petitioner no. 1 by its decision dated 9th December, 2019 specifically determined the position of the Estate vis-a-vis the companies within the M.P. Birla Group from the view point of significant beneficial ownership. It has determined that Petitioner no. 1 is the beneficial owner of 53.89% shares of respondent no. 2 and 100% shares of respondent no. 1. Most importantly, respondent no. 2 has not even challenged this decision. In the decision dated 9th December, 2019, it was also determined that declaration under Section 90(1) in Form BEN-1 is sufficient compliance of provisions of Section 89(2) of the Act as well. Therefore, the contention that, merely filing of form by petitioner no. 1 with respondent no. 2 will have no legal consequences, is baseless. (iv) Further, in relation to respondent no. 1, petitioner no. 1 has been undisputedly recognized as the SBO of 100% shares. This has not be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cate submitted that the reliance on the order dated 22nd April, 2021, by the respondents, is completely misplaced. Such order was passed in contempt proceedings. Petitioner no. 1 was not a party in the said contempt applications and did not file any pleading nor was it heard by the Hon'ble High Court. The scope of adjudication in contempt proceedings is very limited - the Court only looks into the question as to whether the contemnor has committed a contempt or not. (x) The learned counsel further argued that order dated 4th May, 2020 has no application in facts of the present case. The order dated 4th May, 2020 was passed by the Hon'ble High Court in appeal arising from challenge to ad interim orders. In the order dated 4th May, 2020, the Hon'ble High Court had set aside the said ad interim orders on the question of grant of ad interim relief without consideration of question of jurisdiction. The Hon'ble High Court specifically held that the issues involved in the main matters and the merits of the case are kept open and are to be decided in the main pending applications. In relation to such main pending applications, the judgment dated 18th Sep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t petition is concerned, this is a complex mixed question of fact and law. The issue of maintainability is integrally interrelated and interdependent on the adjudication of the lis in the petition itself as well as the alleged acts of oppression and mismanagement. (ii) There is no dispute on the fact that the petitioner no. 2 holds the requisite shareholding that is more than 10% in respondent no. 2 and holds interest in respondent no. 1 being the wholly owned subsidiary of the said respondent no. 2. (iii) It is an undisputed position that the APL Committee by its decision dated 9th December, 2019 has categorically determined that the Estate is the SBO of 53.89% in respondent no. 2 and 100% in respondent no. 1. The determination in the decision dated 9th December, 2019 is reproduced hereinbelow: "1) Members of APL Committee will make a declaration under subsection (1) of Section 90 in respect of the shares in various companies in the M.P. Birla Group in which the estate of late Smt. P.D. Birla has Significant Beneficial Ownership, being the companies as set out in Annexure 'A' to this Report....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... before the Calcutta High Court.......... In the petition, the petitioners themselves have averred that Shri Lodha is controlling respondents 1 to 28. If it is so, the question of investigation under Section 247(1A) to find out facts about the shares does not arise.........." "8........... In the present case the facts sought to be found out relate to over 60% shares in the company and if the membership relating to these shares cannot be ascertained without investigation, then, certainly, investigation can be ordered. It is an admitted fact that before the demise of Mrs. Birla, even though her direct shareholding in the company was negligible, by virtue of her controlling respondents 1 to 28 which held/hold over 60% shares in the company, she was not only materially interested in the company and was also able to control the company.......... In other words, the controlling interest in the company is still with the estate of late Priyamvada.........." "9. Thus I find that the estate of late Mrs. Birla, controlling majority of the shares in the company is intact and that the said estate has not br....
X X X X Extracts X X X X
X X X X Extracts X X X X
....therefore, they do not require a separate consideration at this stage at least. (x) I have also considered the judgments dated 4th May, 2020 and 22nd April, 2021 of the Hon'ble Calcutta High Court on which heavy reliance is placed by the respondents. The said judgments have to be read in the light of the issues therein before the Hon'ble Calcutta High Court. In both the said judgments, the decision dated 9th December, 2019 of the APL Committee was neither in issue nor was it considered. The order dated 4th May, 2020 of the Hon'ble Calcutta High Court was passed in a challenge to an ad interim ex parte order or an ex parte order and the Hon'ble Calcutta High Court had set aside the said orders on the issue of jurisdiction. The Hon'ble Calcutta High Court had categorically held that all the issues on merits are to be finally decided by the Learned Single Judge and the same have not been gone into therein. These issues have now been decided in a final judgment and order dated 18th September, 2020 which is in operation. The order dated 22nd April, 2021 was passed by the Hon'ble High Court in certain contempt proceedings. The Hon'ble High ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of oppression and mismanagement, the present case raises a novel issue wherein the registered shareholder and the SBO of shares are at loggerheads. The decisions cited by the parties regarding the locus to maintain an application under Sections 241 and 242 either relate to the old Companies Act, 1956 or do not deal with a case of a SBO. Therefore, this novel issue requires an in-depth consideration and examination in light of the provisions of the Companies Act, 2013. (i) It is also important to recognize the changes brought about by the Companies Act, 2013. The concept of SBO has been introduced in the Companies Act, 2013 with a material purpose which cannot be lost sight of at this stage without going into the merits and demerits of the issues in this lis. There is no dispute that the legal regime regarding SBO under the Companies Act, 2013 is not pari materia to the legal regime under the Companies Act, 1956. In fact, Section 2(55) of the Companies Act, 2013, wherein a member is defined, recognizes the position of a SBO. In the judgment dated 18th September, 2020, the High Court had considered various provisions of the Companies Act, 2013 including Sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 100% registered shareholder of respondent no. 1 had the absolute and unbridled right to issue the notices dated 27th March, 2021 and 12th May, 2021 and act thereon. The respondents have also questioned the conduct of the Board of Directors of respondent no. 1 in not acting upon the notices of respondent no. 2. (o) The notices dated 27th March, 2021 and 12th May, 2021 are the core battle grounds of the present controversy. The petitioners are aggrieved by the same and claimed that the said notices and the acts thereafter as being unlawful. On the contrary, the respondents claimed that they were well within their rights to issue the said notices and act thereon. (p) It is an undisputed fact that the notices dated 27th March, 2021 and 12th May, 2021 have been issued by respondent no. 2 without any intimation to or guidance or direction of the APL Committee, which appears to be against the directions of the Hon'ble High Court by its final order and judgment dated 18th September, 2020 that the entities of the M.P. Birla Group including respondent no. 2 have to exercise their voting rights in relation to the controlling shareholding of the Est....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent no. 2 only after respondent no. 6 has sought to act in terms of the judgments of the Hon'ble Calcutta High Court and recognition of the APL Committee as the SBO. The proposal to seek such removal immediately after seeking appointment of new directors also demonstrates that the facts of this case and the allegations made against Mr. Krishna Damani are required to be adjudicated upon only after affidavits are filed in this case. (v) The returns filed in relation to the resolutions supposed to have been passed at the EGM held pursuant to the notice dated 27th March, 2021 have not been accepted by the Registrar of Companies recognizing that respondent no. 1 company is having a management dispute. The master data of respondent no. 1 company even as of date reflects the position of directorship and the registered office as it existed on the date of notice dated 27th March, 2021 or the alleged EGM held on 22nd April, 2021. The said action by the Registrar of Companies has not been challenged by any party. It is also important to point out that the decision of the Registrar of Companies was not simply a procedural act of removal of forms. The Registrar of Compan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed which are prima facie case, balance of convenience and irreparable loss. In Dalpat Kumar V/s. Pralhad Singh, AIR 1993 SC 276, Hon'ble Apex Court explained these three factors as follows:- i] There is a serious disputed question to be tried in the court and that on the facts before the court, there is probability of his being entitled to the relief asked for by the applicant; ii] The Court's interference is necessary to protect the party from the species of injury. In other words irreparable injury or danger would ensue before the legal right would be established at trial; and iii] That the comparative hardship or mischief or inconvenience which is likely to occur from withholding the injunction will be greater than the one likely to happen by granting it. Prima facie case does not mean that the plaintiff should have a cent percent case which will in all probability succeed in trial. Prima facie case means that the contentions which the plaintiff is raising, require consideration on merit and are not liable to be rejected summarily. { Prakash Singh V/s. State of Haryana 2002 (4) Civil L.J. 71 (P.H.) } To see t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....;ble Supreme Court in the case of M. Gurudas and Ors. Vs. Rasaranjan and Ors. - AIR 2006 SC 3275, can be summarized as "While considering an application for injunction, the Court would pass an order thereupon having regard to prima facie, balance of convenience and irreparable injury". Having considered the facts stated in the petitions in details, and all the documents placed before us, including the applications filed by the respondents praying for dismissal of the applications, and having heard all the learned Senior Advocates at length, I have considered and placed all the facts straight in sequence necessary to resolve the whole controversy between the parties. Before proceeding to take a decision as regards interim relief, I was given to understand that my brother Member (Judicial), has decided to dismiss all the petitions. Since I have my different view, I do not concur with him or share his view in this matter, and have written my dissenting opinion. This is a preliminary hearing on the petition seeking interim reliefs, and even though the learned Senior counsel for the respondents have tried their best to convince the Bench that this petition be dismissed in limine, but ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he appointment of the APL Committee/petitioner no. 1, by the Hon'ble High Court will become meaningless and frustrated, which would result in further multiplicity of litigation. I would therefore, deem it fit to grant, and grant the interim reliefs to the petitioners in terms of prayers (a), (b) and (d) of the three petitions, namely CP/112/KB/2021, CP/113/KB/2021 and CP/114/KB/2021, till the final disposal of the petitions. In view of the peculiar facts and circumstances, the final hearing of the petitions shall, however, be expedited. **************** [1] Pages 112-115 of the petition [2] Pages 115-117 of the petition [3] Pages 126-161 of the petition [4] Pages 356-380 of the petition [5] Pages 383-402 of the petition [6] Pages 590-629 of the petition [7] 90. Register of significant beneficial owners in a company.- (1) Every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty-five per cent or such other percentage as may be prescribed, in shares of a company or the right to exercise, or the actual exe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the petition [46] Pages 870-871 of the petition [47] Pages 886-887 of the petition [48] Page 888 of the petition [49] Pages 892-893 of the petition [50] Page 939 of the petition [51] Page 984 of the petition [52] Pages 992-993 of the petition [53] Pages 1047-1061 of the petition [54] 89(2): Every person who holds or acquires a beneficial interest in share of a company shall make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed. [55] 90(4): Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed within such time, in such form and manner as may be prescribed. [56] Page 1684 of the petition [57] Page 1704 of the petition [58] Page 1235 of the petition [59] Page 1237 of the petition [60] Page 1252 of the petition [61] Page 1349 of the petition [62] Page 1351 of the petition [63] Page 1375 of the petition [64] Page 1630 of the petition [65] Page 1669 of the petition [66] Pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the petition [84] Page 1097 of the petition [85] Page 1105 (8th line from the top and last two lines at the bottom of the page) [86] Page 1105 (8th line from the top and last two lines at the bottom of the page) [87] Page 840-999 of the petition [88] Page 239 of CA No. 85/KB/2021 [89] Page 240 of CA No. 85/KB/2021 (middle of the page) [90] Page 240 of CA No. 85/KB/2021 (five lines from the bottom) [91] Page 51 of the petition [92] Page 53 of the petition [93] Pages 52-53 of the petition [94] Pages 1062-1109 of the petition [95] Pages 52-53 of the petition [96] Page 25 of the petition [97] Page 26 of the petition [98] Page 73 of the petition [99] Page 31, para 3 of the petition [100] 2(55). "Member," in relation to a company, means - (i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members; (ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company; (iii) every person holding shares of the company and whose name is entered as a b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. [103] 244. Right to apply under section 241.- (1) The following members of a company shall have the right to apply under section 241, namely:-- (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one tenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; (b) in the case of a company not having a sh....