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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY APPLICATION (L) NO. 31 OF 2012
IN
COMPANY APPEAL (L) NO. 27 OF 2012
Vrajlal Talakshi Gala ......Applicant.
(Orig. Appellant)
Vs.
Orient Realtors Private Ltd. & Ors. ......Respondents.
(Orig. Respondents)
Magnetic Properties Pvt. Ltd.& Anr. .....Proposed
Respondents.
Mr. Arif Y. Bookwala, Senior Counsel a/w Mr. Cyrus Ardeshir, Mr. C.D.
Mehta and Ms. Faiza Dhanani i/by M/s. Dhruve Liladhar & Co. for the
Applicant.
Ms. Usha Rahi i/by M/s. Mayur Narendra and Co. for Respondent
Nos. 1 and 2.
Mr. Ravi Kadam, Seniolr Counsel a/w Mr. Z.A. Jariwala i/by M/s.
Thakore Jariwala & Associates for proposed Respondent (Magnetic
Properties Pvt. Ltd.).
Ms. R.A. Dada, Senior Counsel a/w Ms. M. Dada i/by K.K. Associates
for proposed Respondent. (M/s. Dishan Read Estate Pvt. Ltd.)
CORAM :- ANOOP V. MOHTA, J.
RESERVED ON :- 11 OCTOBER 2012.
PRONOUNCED ON :- 29 OCTOBER 2012.
P.C.:-
The Applicant has taken out this Application for the following reliefs in pending Appeal (Lodging) No. 27 of 2012 under Section 10F of the Companies Act, 1956.
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2 The basic prayers are as under:-
"(a) that without prejudice to the earlier ad-interim and interim orders passed herein, this Hon'ble Court be pleased to grant leave to the Applicant/Appellant to amend the Company Appeal and all pending Company Applications therein in terms of Schedule-I annexed hereto;
(b) that pending the hearing and final disposal of the present Appeal, Court Receiver, High Court, Bombay or some other fit and proper person be appointed as a Receiver of the property known as "Kemps Shoppe" situated at Kemps Corner with all powers under Order 40 Rule 1 of Code of Civil Procedure, 1908 with further directions to forthwith take possession including by taking forcible possession and lock and seal the said property;
(c) that the pending the hearing and final disposal of the Company Appeal, the Respondent Nos.1 to 4 and proposed Respondent Nos.1 and 2, be restrained by an order and injunction of this Hon'ble Court from in any manner dealing with, disposing off, alienating, encumbering, transferring or occupying the said premises and/or the immovable property/properties, belonging to the Respondent No.1 Company, which is Kemps Shoppe situated at Kemps Corner;
(d) that pending the hearing and final disposal of the Company Appeal, the Respondent Nos.1 to 4 and proposed Respondent Nos.1 and 2, be restrained by an order and injunction of this Hon'ble Court, from in any manner taking any further steps in pursuance of the Supplementary Deed of Conveyance allegedly executed on 30th March, 2012 by and under which the Proposed Respondent No.1 is claiming rights in the said property and any such document purportedly ::: Downloaded on - 09/06/2013 19:19:57 ::: 3 caal31.12.sxw ssm executed by and between the proposed Respondent Nos.1 and 2 under which the proposed Respondent No.2 is claiming rights in the said property."
Schedule-I provides the averments for joining of Respondent Nos. 18 and 19 (Purchasers) in Appeal and injunction order against them referring to the property in question of the Company.
3 The relevant facts are as under:-
On 28 April 2008, an interim order passed by the Hon'ble Company Law Board restraining the Respondents from dealing with the fixed assets of the Company. In February 2010, an Application filed by the Applicant/Appellant for further reliefs as the Respondents put up a banner for sale/lease of the premises. On 4 March 2010, an order passed by the Hon'ble Company Law Board rejecting the application. In April, 2010, Appeal under Section 10F, filed by the Applicant/Appellant. On 16 August 2010, an order passed in the Appeal by this Hon'ble Court confirming the order dated 28 April 2008 and restraining the Respondents from creating any third party rights.
4 On 15 September 2010, the Hon'ble Company Law Board dismissed the matter. On 23 September 2010, the Applicant/Appellant ::: Downloaded on - 09/06/2013 19:19:57 ::: 4 caal31.12.sxw ssm filed an application for restoration of the Petition, a copy of the same served on the Respondents' Advocates on 23 September 2010. The Hon'ble Company Law Board placed the matter for final hearing. On 20 October 2010, order passed by the Hon'ble Company Law Board that the Application for restoration be heard along with the main Petition on 1 December 2010.
5 On 17 November 2010, Respondent No. 2, on behalf of Respondent No.1, purportedly entered into a Deed of Conveyance with the Proposed Respondents. On 1 December 2010, final hearing of Application for restoration and the main Petition was heard in part.
On 2 February 2011, the matter was heard and kept part-heard and listed on 24 March 2011 and the final hearing of the Petition was concluded. The matter was reserved for orders.
6 On 19 July 2011, by an order passed by the Hon'ble Company Law Board restoring the Company Petition on file and so also interim order. On 22 February 2012, the matter was listed for final hearing.
However, the Hon'ble Member had directed the parties to only file written submissions in the matter and reserved for orders.
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7 On 30 March 2012, Respondent No. 2 on behalf of Respondent
No. 1 entered into a Supplementary Deed of Conveyance to the Deed of Conveyance dated 30 November 2011. On 25 May 2012, the impugned order has been passed by the Hon'ble Member at Chennai.
8 On 29 May 2012, the Respondent purportedly disposed off the only asset of the Company by Deed of Conveyance registered on 29 May 2012. From 30 May 2012 to 3 Jun3 2012, the Hon'ble Member was not available. On 4 June 2012, the stay Application mentioned before the Member, after notice. None appeared on behalf of the Respondent. On 5 June 2012, once again, despite notice, none appeared on behalf of the Respondent. On 6 June 2012, despite notice, none appeared on behalf of the Respondent. Therefore, the Member stayed order dated 25 May 2012.
9 In June 2012, Section 10F Appeal filed before this Hon'ble Court. On 15 June 2012, stay granted to the operation of order dated 25 May 2012. On 6 July 2012, the Appeal admitted and pending the final hearing and disposal of the Appeal, stayed the operation of order dated 25 May 2012.
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10 Section 10F of the Companies Act reads as under:-
"10F. Appeals against the order of the Company Law Board. : - Any person aggrieved by any decision or order of the Company Law Board made before the commencement of the Companies (Second Amendment Act, 2002) may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order:
Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days."
11 The Supreme Court in V.S.Krishnan v. Westfort Hi-tech Hospital Ltd 1 has observed about the Section as under:-
"16. It is clear that Section 10-F permits an appeal to the High Court from an order of the Company Law Board only on a question of law i.e. the Company Law Board is the final authority on facts unless such findings are perverse, based on no evidence or are otherwise arbitrary.
Therefore, the jurisdiction of the appellate Court under Section 10-F is restricted to the question as to whether on 1 2008 (8) 3 SCC 363 ::: Downloaded on - 09/06/2013 19:19:58 ::: 7 caal31.12.sxw ssm the facts as noticed by the Company Law Board and as placed before it, an inference could reasonably be arrived at that such conduct was against probity and good conduct or was mala fide or for a collateral purpose or was burdensome, harsh or wrongful. The only other basis on which the appellate Court would interfere under Section 10-F was if such conclusion was (a) against law or (b) arose from consideration of irrelevant material or
(c) omission to construe (sic consider) relevant materials."
12 In view of the above it is necessary to note in the present case an ad-interim order dated 28 April 2008 got vacated as Company Application itself was dismissed on 15 September 2010 for default.
On 17 November 2010, Respondent No. 2 on behalf of Respondent No.1, entered into a Deed of Conveyance with proposed Respondents.
The main matter got restored on 19 July 2011 along with the interim order. The supplemental Deed of Conveyance dated 30 March 2012 was entered into to the Deed of Conveyance dated 30 November 2011. The basic allegations, therefore, are that the Respondent is alleged to have disposed of the only asset of the company on 29 May 2012, inspite above situation.
13 Admittedly no such steps and/or application for such reliefs claimed and/or filed before the Company Law Board at the relevant time referring to deed of conveyance and the supplementary deed in ::: Downloaded on - 09/06/2013 19:19:58 ::: 8 caal31.12.sxw ssm question were taken. These new facts and circumstances, in view of the above events, just cannot be gone into for the first time in this application pending the final hearing of Section 10F appeal against the rejection of the petition under Section 397 of the Companies Act.
The issue of transfer of assets of the company in the present case needs detailed enquiry and trial. The transfer is whether bona fide or illegal and/or its effect on the transactions and existing transfer of possession, therefore, unless decided by the basic forum, there is no question of adjudicating the same for the first time in this appeal, by permitting the Appellant to join proposed Respondents in such fashion. The scheme and purpose of Section 10F is quite limited.
14 The "aggrieved person" though can challenge the order passed by the CLB that itself is in no way sufficient or entitle them to bring these new facts first time in the appeal with prayer to add those proposed Respondents as parties. In my view, it is impermissible. The remedy is elsewhere.
15 The authorities, so cited in view of the above admitted position are of no assistance to grant prayer so made. There cannot be debate on law but issue is its applicability on given facts and circumstances.
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Therefore, there is no question of appointment of any receiver unless validity of the transactions is decided finally by the competent Court / Tribunal. These factual issues cannot be gone into and/or adjudicated in Section 10F appeal basically at this stage of the proceedings and at the instance of the Appellant. The joining of proposed party and prayer for reliefs so made against the Respondents, therefore, also cannot be granted for the same reasons. However, liberty is granted to take out appropriate application and / or steps in accordance with law. All points are kept open.
16 Resultantly, the Application so filed is rejected. No order as to costs.
17 The learned counsel appearing for the Applicant prays to continue the status quo already granted / passed on 12 August 2012 and which has been in force till date. Counsel appearing for the proposed Respondents have opposed this application. However, considering the fact that the status quo has been in force since August 2012, I am inclined to continue it till 26 November 2012.
( ANOOP V. MOHTA, J. ) ::: Downloaded on - 09/06/2013 19:19:58 :::