Calcutta High Court
The Punjab Produce And Trading Co. ... vs Birla Corporation Limited And Anr on 5 September, 2023
ORDER SHEET
OD-11
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
IA No. GA/1/2023
In
CS/186/2023
THE PUNJAB PRODUCE AND TRADING CO. PRIVATE LIMITED AND ANR.
VERSUS
BIRLA CORPORATION LIMITED AND ANR.
BEFORE:
The Hon'ble JUSTICE ARINDAM MUKHERJEE
Date: 5th September, 2023.
Appearance:
Mr. Jishnu Saha, Sr. Adv.
Mr. Ajoy Krishna Chatterjee, Sr. Adv.
Mr. Anirban Roy, Adv.
Mr. Rajarshi Dutta, Adv.
Mr. Sankarsan Sarkar, Adv.
Ms. Pritha Basu, Adv.
Mr. Debartha Chakraborty, Adv.
Mr. Kritin Saraf, Adv.
For the plaintiffs/petitioners.
Mr. Ranjan Bachawat, Sr. Adv.
Mr. Sayan Roy Chowdhury, Adv.
Mr. Satyaki Mukherjee, Adv.
Mr. Saubhick Chowdhury, Adv.
Ms. Tapasika Bose, Adv.
For the defendants/respondents.
Mr. Avishek Guha, Adv.
Mr. Rajat Gupta, Adv.
Ms. Akansha Chopra, Adv.
For the proforma defendant no.2.
The Court:- Affidavit of service filed in Court today is taken on
record.
In a suit for declaration and injunction the plaintiffs have taken out
this application for interim relief in aid of the final relief(s) claimed in this suit.
The plaintiffs' case in support of prayer for ad interim relief is briefly as
follows:-
i) The plaintiff no.1 is a promoter of the defendant no.1, namely
Birla Corporation Limited (BCL).
ii) The plaintiff no.1 is entitled to seek appointment of non
independent and non-executive director in BCL by making
requisition under the provisions of Section 160 of the
Companies Act, 2013 (hereinafter referred to as the 2013 Act).
On 24th July, 2023, the plaintiffs made a requisition under
Section 160 of the 2013 Act for appointing the plaintiff no. 2 as
a non-independent and non-executive director.
iii) On 11th August, 2023 the notice of the Annual General
Meeting (AGM) of BCL was issued (Page-104 Volume-1 of the
petition). The notice though was given for the first time as will
appear from page-470, according to the plaintiffs, but was
dated 9th May, 2023. The said notice did not contain any
resolution taking into account the requisition made by the
plaintiff no. 1 i.e., The Punjab Produce and Trading Co. Private
Limited (in short PPTCPL) under Section 160 of the 2013 Act.
iv) BCL published an addendum on 14th August, 2023 which is,
according to the plaintiffs, issued on 21 st August, 2023
through publication in newspaper. By the addendum the
resolution to permit the plaintiff no. 2 as a non-independent
and non-executive director was included in the AGM scheduled
to be held on 5th September, 2023 with an explanatory
statement which contained demeaning and scurrilous
allegations against the plaintiff no.2 who was nominated by the
plaintiff no. 1 to be considered for being appointed as non-
independent and non-executive director.
v) The plaintiffs wrote three letters to BCL protesting against the
delayed inclusion of the resolution regarding their requests for
considering the plaintiff no.2 to be elected as non independent
and non-executive director and the demeaning and scurrilous
comments against the said plaintiff in the explanatory
statement, but there was no response from the side of the
plaintiffs.
The plaintiffs refer to Sections 152, 160 and 178 of the 2013 Act and
Rules 8 and 13 of the Companies (Appointment and Qualification of Directors)
Rules, 2014 and submits that the nomination of a person for being considered
to be appointed as a Non-Independent and Non-Executive Director is different
from that of an independent director which is borne out from a plain reading of
Sections 152 and 160 of the 2013 Act.
The plaintiffs say that in view of the provisions of Section 178 read
with the provisions of Rules 8 and 13 of the 2014 Rules there is no necessity
for publishing and circulating an explanatory statement with regard to a
candidate nominated for being appointed as non independent and non-
executive director. The defendants according to the plaintiff with a specific
game plan delayed the inclusion of the requisition made by the plaintiff no. 1
in respect of plaintiff no. 2 with a mala fide intent of not including the same.
After finding that such resolution cannot be blocked included it but to make
sure that the plaintiff no. 2 is not appointed as a non-independent and non-
executive director in defendant no. 1 published the explanatory statement,
though not required in law only to tarnish the image of the plaintiff no. 2
amongst the members of defendant no. 1 so that the members do not vote in
favour of plaintiff no. 2. The delay has been intentionally made so that the
plaintiff no. 1 does not get the minimum period required under statute to
replace the plaintiff no. 2.
The plaintiffs further say that the comments made in the explanatory
statement is going to influence the voters at the AGM and may is likely to
pursue the voters from voting against the plaintiff no.2. It is also the case of
the plaintiffs that admittedly the plaintiff no.1 has the authority under Section
160 of the 2013 Act to make a requisition, but such requisition has been
objected to on an alleged ground that the plaintiff no.1 has an interest contrary
to the interest of the defendant no.1 and that the plaintiff no.2 is an unfit
candidate due to his age and experience and being recommended by the
plaintiff no. 1. Even though the second proviso to Rule 8 of the 2014 Rule,
according to the plaintiffs, does not require the plaintiff no.2 to take security
clearance yet the defendants had given an impression in the explanatory
statement that the plaintiff no.2 is required to take such clearance for having
his candidature considered for appointment of non-independent and non-
executive director.
In the aforesaid facts and circumstances, the plaintiffs have
instituted the suit on 1st September, 2023 and had prayed before this Court to
include in the list and take up the present application out of turn in view of the
urgency.
The plaintiffs, therefore, seek a restraint order as against the
defendants from convening the AGM and if not at least with regard to the
resolution for appointment of the plaintiff no.2 as non-independent and non-
executive director. The plaintiffs also say that the application will be definitely
and the suit to a great extent will become infructuous if urgent interim
protection is not granted to the plaintiffs and the AGM scheduled to be held
today is not stopped.
On behalf of the defendants the following submissions have been
made:
i) The plaintiffs have approached the Court at a belated stage to
snatch an interim order if possible to disrupt the normal
functioning of the defendant no.1 which can smoothly be done
only after holding and declaring the results of all the
resolutions put to vote in the AGM. The plaintiffs had the
notice and knowledge about the explanatory statement which
is the main subject of challenge as far back as on 14 th August,
2023 and definitely by 21st August, 2023 but except writing
three letters the plaintiffs took no steps to challenge the same
which was always open to the plaintiffs. The plaintiffs came
just at the eve of the AGM to stall the same, if possible with the
sole aim to disrupt the smooth functioning of the defendant
no. 1 as the plaintiff no. 1 has an interest against the
defendant no. 1.
ii) The electronic voting at the AGM has started from 2 nd
September, 2023. If the plaintiff no.1 has voted at the AGM by
this time the plaintiffs have disentitled them from seeking any
ad interim relief as claimed in this application.
The defendant no. 1 says that decision for AGM was taken in the
meeting of BCL on 9th May, 2023. All issues were decided. The resolutions are
required to be printed and published and as such were sent for printing. It
was, therefore, not possible to consider the requisition made by the plaintiff
no.1 under Section 160 of 2013 Act prior to 14 th August, 2013. The defendants
have taken all possible measures to include the plaintiffs' requisition at the
earliest available opportunity and as such there was no delay far less
intentional delay from the side of the defendants.
The defendant no.1 says that admittedly the plaintiff no.2 is aged
over 75 years. Due to his age he can be considered to be appointed as non-
independent and non-executive director provided he is supported by 75
persons of the total votes to be casted at the AGM. In order to accept the
requisition of plaintiff no. 1 to consider plaintiff no. 2 for being appointed as a
non-independent and non-executive director the Board of BCL according to the
defendant no.1, has to give reasons as to why even though the plaintiff no. 2 is
above 75 years of age is considered for being appointed as non-independent
and non-executive director. The explanatory statement which the plaintiffs say
is issued de hors the statute, only to prejudice the plaintiffs is necessary for
such purpose and also in view of the provisions of Rule 17 (1A) of the
Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulation, 2015.
The defendant no.1 also says that it is a public limited company and
listed at the Stock Exchange and as such it has to follow these procedures
while holding its AGM.
The defendant no.1 also says that the plaintiffs though allege violation
of statutory provision but in effect there is no allegation as to statutory
violation in the pleadings or otherwise.
The defendant no.1 also says that in view of the provisions of Section
430 of the 2013 Act this court is not the proper forum and the plaintiffs are
required to approach the National Company Law Tribunal (in short 'NCLT').
The defendant no.1 placed before the Court a copy of an application being CP
112/KB/2021 filed by the plaintiff no.1 before the NCLT for seeking relief
regarding a previous AGM of the defendant no.1. The defendant no.1 also says
that the prayer for mandatory injunction as claimed in this application cannot
be granted in an ad interim form without affording the defendant no.1 to file
an affidavit.
The defendant no.1 has relied upon two judgments respectively
reported in 2017 SCC OnLine Bom 345 (Dashrath B. Rathod And Others
Vs. Fox Star Studios India Pvt. Ltd. And Others) and (2020) 3 SCC 770
(Union Bank of India Vs. Rajat Infrastructure Private Limited And
Others). Dashrath B. Rathod (supra) has been relied upon for the proposition
that a plaintiff approaching the Court at a belated stage just to snatch an ad
interim order like that as has been sought for by the plaintiffs should not be
entertained and/or encouraged. Rajat Infrastructure (supra) has been relied
upon for the proposition that no order contrary to law, if prayed for, can be
granted.
In reply, the plaintiffs say that they have exercised their voting right
through e-voting method but are not disqualified to seek an ad interim order
as there is no mechanism for separate voting on the resolutions through
electronic mode. This is, however, disputed by the defendants on the ground
that voting right has to be exercised separately in respect of each of the
resolutions. If the resolution in respect of which the plaintiffs are seeking an
ad interim order has been voted by the plaintiffs, they cannot ask for any ad
interim order.
The plaintiffs also say that the judgments have no relevance or
application to the facts of the case. The embargo under Section 430 of the
2013 Act is not a complete bar in filing a suit before this Court. That apart
and in any event the reliefs claimed in the suit and the ad interim order as
prayed for cannot be granted by the NCLT.
After hearing the parties and considering the materials on record, I find
that there is no embargo in allowing the AGM of defendant no.1 to be held and
declaration of results in respect of all the resolutions except the resolution
concerning the nomination of plaintiff no.2 for being appointed as the non-
independent and non-executive director. On the left out resolution, at this
stage I find that the Board of the defendant no.1 has accepted the requisition
of the plaintiff no.1 and has placed the same for voting in the AGM. The result
on such resolution is in the hands of the voters at the AGM. Whether the
plaintiff no.2 will get 75% and above votes or will get less than that can be
found only after the counting takes place. At this stage the Court cannot
therefore, form an opinion without affidavits being called for regarding the
assertion and counter-assertions made by the parties mainly in connection
with the delay, the necessity of the explanatory statement and its impact. At
the same time if the result in respect of the resolution concerning the plaintiff
no.2 is declared and acted upon, the application will become infructuous. It
may be so that after affidavits, the Court may form an opinion to allow the
publication of the result but at this stage the same cannot be permitted.
The jurisdictional issue raised by the defendant no. 1 also requires
further consideration as it cannot be conclusively said at this stage that this
Court lacks the jurisdiction in view of the provisions of Section 430 of the 2013
Act. The exercise of voting right in respect of only one resolution cannot be
segregated at this stage. It can be done once the report of the AGM is available
to find out whether the plaintiff no. 1 exercised its voting right in respect of the
pending resolution. The delay on the part of the plaintiff no. 1 as alleged by
the defendant no. 1 also does not disentitle the plaintiffs from seeking ad
interim relief.
In the aforesaid facts and circumstances, only going by the balance of
convenience and inconvenience and the irreparable injury that may be caused
to the plaintiffs if the result of the resolution regarding the plaintiff no.2 is
published and given effect to when the minimum parameters as to prima facie
case is met on the plaintiff no. 2 being allowed to contest and keeping in mind
that refusal of interim order may lead to multiplicity of judicial proceedings,
the defendants and each one of them, their men, servants, agents and/or
assigns are restrained by an order of temporary injunction from publishing the
result or acting in terms of the result with regard to the resolution pertaining
to the election of plaintiff no.2 as a non-independent and non-executive
director at the AGM of the defendant no.1 held today (05.9.2023) in any
manner whatsoever till 30th November, 2023 or until further orders whichever
is earlier.
It is, however, made clear that voting with regard to such issue shall
take place and is in no manner interfered with by this order. It is also made
clear that in respect of all other resolutions the result can be declared and due
effect thereof can also be given.
The matter requires further scrutiny as I have already held. Let
affidavits be filed.
Let affidavit-in-opposition be filed by 18 th September, 2023; reply
thereto, if any, be filed by 29th September, 2023. Let this matter appear in the
monthly list of October, 2023.
(ARINDAM MUKHERJEE, J.)
snn/pa
