TaxTMI 
TaxTMI 
2025 (6) TMI 2112
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....mar Sharma, Member (Judicial)] These are a set of five Company Appeals, as amongst the same set of parties based on same facts. Thus, for the purposes of brevity, they are being decided together. The question which would be arising for consideration would be to whether, when the principal Company Petition has been decided on merit by Judgment of 10.01.2025, as it was rendered in CP No.6/241/HDB/2023, and the Appellant being aggrieved against the said Judgment has already filed an Appeal being, CA (AT) (CH) No.23/2025, which is pending before this Appellate Tribunal, whether at all the previous Interlocutory Orders or the orders of disposal of Interlocutory Applications passed during the pendency of the proceedings of the Company Petition, which under the principles of law of merger now stands merged with the final Judgment of 10.01.2025, which has already been challenged in Comp App (AT) (CH) No.23/2025, could at all now be subjected to challenge by filing of an independent Appeal under Section 61 of the I & B Code, contrary to the principles of merger. As a matter of fact, all Interlocutory Orders that have been passed during the pendency of the Company Petition, would stand....
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....rights of parties. The orders that are passed during the pendency of the proceedings, since being the orders of a lesser magnitude, have been taken over by the final Judgment having a greater magnitude. All Interlocutory Orders will cease to exist because all the Interlocutory Orders, which are passed during the proceedings on Interlocutory Applications, stand merged with the final Order. A similar view was taken in the Judgment reported in 1968 Vol 70 Punj LR 803. Though it was in the context of the proceeding under Section 14 of the Hindu Succession Act, 1956, but it has laid down the same principle that, an order which is passed during the proceeding, which are of lesser magnitude not deciding a dispute will stand merged with the final Judgment where all issues stand determined finally, which is having a vital implication as it has resulted into deciding a rights or liabilities to its finality. The Hon'ble Apex Court in yet another Judgment as reported 2005 Vol 5 SCC Page 492 in Pramod Kumar Jaiswal & Ors. vs Bibi Husn Bano & Ors. while dealing with the issue of effect of merger in its para 5, which is extracted hereunder, has laid down almost similar principles: - "....
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....in the same person without any intervening estate, and that the person in whom they unite shall hold them both in the same right. To illustrate the first essential, if A, who is tenant for life, with remainder to B for life, remainder to C in fee, purchases and takes a conveyance of C's fee, the intervening life interest of B, since it is vested, excludes the possibility of merger." (see p. 993) In Megarry's Manual of the Law of Real Property, 8th Edn., it is explained as follows: "Merger is the counterpart of surrender. Under a surrender, the landlord acquires the lease, whereas merger is the consequence of the tenant retaining the lease and acquiring the reversion, or of a third party acquiring both lease and reversion. The principle is the same in both surrender and merger: the lease is absorbed by the reversion and destroyed. For merger to be effective, the lease and the reversion must be vested in the same person in the same right with no vested estate intervening. This is based on the principle that a man cannot be a lessee of himself. The House of Lords in Rye v. Rye [1962 AC 496 : (1962) 1 All ER 146 (HL)] said that a per....
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....owed up. Merger in law is defined as the absorption of a thing of lesser importance by a greater, whereby the lesser ceases to exist, but the greater is not increased; an absorption or swallowing up so as to involve a loss of identity and individuality. (See Corpus Juris Secundum, Vol. LVII, pp. 1067-68.)" It could be summarised that a merger presupposes the existence of two independent things or estates which stands dissolved into a greater, which would have an implied effect of extinction of a lesser one by the process of absorption, that means that it is a derivative of the right automatically merging into the final determined right. Chronologically, for the purposes of better elucidation, a brief facts as engaging consideration in each of these five Company Appeals are being dealt with hereunder: - 1. Comp App (AT) (CH) No.88/2025 puts a challenge to the order that was passed on IA No.58/2023 in Company Petition No.6/241/HDB/2023. This Company Appeal is accompanied with a Delay Condonation Application being IA No.833/2025, where the Appellant has sought a condonation of 28 days of delay, that has chanced in filing of the Company Appeal under Section 421 of the Compa....
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....he Company Petition itself has been finally adjudicated on 10.01.2025, there was no judicial propriety or necessity for the Tribunal to pass any orders on merit on IA No.58/2023 that, was rightly closed, owing to the fact that the relief sought in IA No.58/2023 would stand merged with the final Judgment of 10.01.2025 deciding the Company Petition, as rendered in CP No.6/241/HDB/2023. In fact, it would be a mockery of the judicial proceedings drawn at the behest of the Appellant by filing the instant Appeal under Section 421 of the Companies Act, 2013, because it will amount to be an abuse of process by filing an appeal against an order on an IA preferred during the pendency of main Company Petition, when the Appellant is already in Appeal as against the final Order of dismissal of his Company Petition. Owing to the aforesaid fact that since the passing of an order on IA No.58/2023, was not at all relevant, the same was rightly directed to be closed by the Impugned Order of 10.01.2025, as rendered in IA No.58/2023 as preferred in CP No.6/241/HDB/2023 since the Company Petition itself stood dismissed and therefore the Company Appeal (AT) (CH) No.88/2025 would stand accordingly dis....
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....e application itself, were repetition of allegations, which was subject matter of consideration in the principal Company Petition which has been decided, which emanated from certain operational decisions taken by the Board of Directors of Company involving allocation of significant amount of money. The Tribunal, while rejecting the said application, had also observed that operational decision of the Company's management cannot be interfered with and hence the relief which was sought for cannot be granted. The order of IA No.256/2023 and that the claim raised in context of shareholding of Respondent No.8 (G. Krishna Reddy) was unconnected to the subject matter of Company Petition itself. So, the dismissal of the said application was made on the following grounds: - 1. It pertains to the shareholding of the Respondent No.8, which is not connected with the main matter of the Company Petition. 2. Since the matter relates to the operational decision of the company's internal management, it cannot be interfered with. Since the allegations are vague and unsubstantiated, it did not require to be addressed on merits. 3. And last, more importantly, at the stage....
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....above it is humbly prayed that (a) Status quo ante as on 07.02.2023 (date of filing the petition) regarding the shareholding patter of the Respondent No.1 company till the disposal of the Company Petition. (b) Status quo regarding directorship of the Respondent No.1 Company as on 07.02.2023. (c) Direct the Respondents not to conduct Board and Shareholders meeting without the leave of this Hon'ble National Company Law Tribunal (d) Appoint an Independent Administrator to manage the affairs of the Respondent No.1 Company till the disposal of the Petition (e) Any other order(s) this Hon'ble Bench may deem fit". In fact, looking to the nature of interim relief, as extracted above, it was nothing but an interlocutory arrangement of directing the parties to maintain a status quo during the pendency of the Company Petition. Since, during the pendency of this application, the Company Petition itself has been finally decided, no orders were required to be passed on the interim relief with the final adjudication already made in the Company Petition, more particularly when it has been dismissed, which in itself will result into the closure of the....
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....l and Financial Assets, if any, till disposal of the main CP, and to nullify meetings and resolutions deemed illegal, and direct the Respondent No.9, ROC to mark the company under management disputes and to pass any necessary orders deemed appropriate to address this matter effectively". The said Interlocutory Application was closed by the Impugned Order, holding there of that since the Company Petition itself has been dismissed and the Appellants' right is decided in negative against him, the application has become infructuous. The Tribunal rightly held that the said application has been rendered infructuous, owing to the final dismissal of the Company Petition itself, and subsequent to it, there was no necessity to consider the application on merits. This Company Application too, and the order passed on it under the principal of merger, will get merged in the final order and, will lose its legal significance and the Appellant cannot be separately challenged by virtue of filing of the Company Appeal as against the order passed on IA No.62/2024. Hence the order taken thereof by Learned Tribunal cannot be faulted in any manner whatsoever. For the above reasons, the Company Ap....
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....f justice". The nature of relief, which was sought for by the Appellant was by way of an interim arrangement, seeking a direction to the Respondent, not to shift the registered office and to stay or prevent the activities that were being carried out by the Respondent, which may have an effect of tampering the documents till the company records are made available to the Tribunal. The nature of relief that has been modulated therein is basically in form of an interlocutory arrangement. The said aspect was being considered by the Learned Tribunal while passing the order, observing thereof that the relief prayed for during the pendency of Company Petition, could not be granted for the reason that the registered office has already been shifted on 18.03.2023, in accordance with the decision of the board in its meeting dated 21.02.2024, that shifting was necessitated because of the maintenance problem, that prior to the shifting of the office, all the directors were duly informed of the same by convening the meeting at the office of Respondent No.1 company. We are of the opinion that this aspect will have no bearing as far as the instant Company Appeal is concerned because the same cou....