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National Company Law Appellate Tribunal

M/S Morepen Laboratories Ldt vs Union Of India on 25 April, 2023

     NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH,
                            NEW DELHI

                  Company Appeal (AT) No. 04 of 2022

[Arising out of order dated 06.10.2021 passed by the National Company Law
Tribunal, Chandigarh Bench, Chandigarh in CA Nos. 785/2019 & 1207/2019
in CP No. 4/2005 (Disposed of)]

IN THE MATTER OF:


1.     M/s Morepen Laboratories Ltd.
       4th Floor Antriksh Bhawan, 22K G Marg,
       New Delhi-110001                             ....... Appellant No. 1.
2.     Sh. Suhsil Suri,
       Chairman & Managing Director
       C-40, Ground Floor,
       Anand Niketan, Delhi, 110021.               ........ Appellant No. 2.
3.     Sh. Sanjay Suri, Wholetime Director
       HIG-78, Sector-4, Parwanoo,
       Solan, HP-173220.                           ........ Appellant No. 3.
4.     Sh. Arun Kumar, Wholetime Director
       MIG 144 Delux Sector-4, Parwanoo,
       Dist. Solan, HP-173220.                     ........ Appellant No. 4.
5.     Sh. Manoj Joshi, Director
       D-36, 2nd Floor, Hauz Khaz,
       New Delhi-110016.                           ........ Appellant No. 5.

         Versus

Union of India
Room No. 535, 'A' Wing, Shastri Bhawan,
Dr. Rajendra Prasad Road, New Delhi-
110001.
                                                        ...... Respondent.
                                              2


                                         WITH

                    Company Appeal (AT) No. 05 of 2022

[Arising out of order dated 06.10.2021 passed by the National Company Law
Tribunal, Chandigarh Bench, Chandigarh in CA Nos. 785/2019 & 1207/2019
in CP No. 4/2005 (Disposed of)]

IN THE MATTER OF:


M/s Morepen Laboratories Ltd.
4th Floor Antriksh Bhawan, 22K G Marg,
New Delhi-110001.
                                                              ....... Appellant.
        Versus

Union Of India
Room No. 535, 'A' Wing, Shastri Bhawan,
Dr. Rajendra Prasad Road, New Delhi-
110001.
                                                            ...... Respondent.
Present:
For Appellant:             Mr. Atul Anand, Sr. Advocate with Ms. Rameeza
                           Hakeem, Ms. Vartika Aggarwal, Advocates.
For Respondent:-           Mr. Kamal Kant Jha, Senior Penal Counsel for GOI.


                                  JUDGMENT

(25th April, 2023) Justice Anant Bijay Singh;

Company Appeal (AT) No. 04 of 2022 This Appeal under Section 421 of the Companies Act, 2013 has been preferred by the Appellants being aggrieved and dissatisfied by the order dated 06.10.2021 passed by the National Company Law Tribunal, Chandigarh Bench, Company Appeal (AT) Nos. 04 and 05 of 2022 3 Chandigarh in CA No. 1207/2019 in CP No. 4/2005 (Disposed of) whereby application filed by the Union of India against M/s Morepen Laboratories Ltd. and four others under Section 425 of the Companies Act, 2013 read with the provisions of the Contempt of Courts Act, 1971 seeking issuance of contempt proceedings against the Respondents (the Appellants herein) for continuous non- compliance and wilful disobedience of the order dated 01.07.2005 passed in CP No. 04 of 2005 which was upheld upto the Hon'ble Supreme Court of India. By which order, the Tribunal passed the following orders:

"23. The submissions made by the learned senior counsel appearing for the respondent-contemnors are unsustainable. It is to be seen that the Hon'ble Apex Court while disposing of the Civil Appeal neither modified the orders of the NCLT/CLB nor issued any fresh directions. Therefore, the decision cited by the learned senior counsel have no application to the facts of the present case.

24. In these circumstances, issue notice to the respondents.

25. List on 24.11.2021."

2. Company Appeal (AT) No. 05 of 2022 This Appeal under Section 421 of the Companies Act, 2013 has been preferred by the Appellant- M/s Morepen Laboratories Ltd. being aggrieved and dissatisfied by the order dated 06.10.2021 passed by the National Company Law Tribunal, Chandigarh Bench, Chandigarh in CA No. 785/2019 in CP No. 4/2005 (Disposed of) whereby application filed by the Appellant - M/s Morepen Laboratories Ltd. seeking modification of the order dated 01.07.2005 to the Company Appeal (AT) Nos. 04 and 05 of 2022 4 extent that the appointment of two Government Directors/Government Nominee Directors is not necessary and is not required in light of the subsequent developments and events that have been placed herein, was dismissed by the Tribunal.

3. Both the instant Appeals were heard together.

4. The brief facts giving rise to the instant Appeals are as follows:

i) The Appellant No. 1 - Morepen Laboratories (the "Company") had filed CA No. 785 of 2019 seeking modification of the original order dated 01.07.2005 passed by the CLB directing appointment of two Government Directors on the Board of Morepen (the CLB order dated 01.07.2005) has been dismissed. The aforesaid application was filed by the Appellant No. 1 specifically in terms of the liberty granted by the Hon'ble supreme Court vide order dated 09.07.2019 to place subsequent developments before the authority (negating the continued necessity for appointment of Government Directors on the Appellant No. 1's Board) these being inter alia the subsequent undisputed financial turn-around of the company, payment of monies to the erstwhile Fixed Deposit holders etc. all of which constituted subsequent facts/events negating any need now for such Government directors.

ii) When notice of motion was issued in CA 785 of 2019 and the Respondent instead of filing a response to the said application preferred CA 1207 of 2019 for initiation of contempt proceedings against the Appellants for alleged willful disobedience of the order dated 01.07.2005 passed by the Hon'ble CLB. The impugned order dated 06.10.2021 the NCLT has issued notice of contempt to the Appellant No. 1 -Company and its officers i.e. Appellant Nos. 2, 3, 4 and 5 Company Appeal (AT) Nos. 04 and 05 of 2022 5 who are the Respondents-Contemnors in CA 1207 of 2019 (Filed by the Union of India seeking initiation of contempt proceedings against the company and its officers for willful non-compliance/disobedience of the CLB order dated 01.07.2005). It is against the issuance of notice in the initiation of the aforesaid contempt proceedings that the Appellants have preferred the present appeal. The Appellant No. 1 has also separately filed appeal against dismissal of CA 785 of 2021 vide impugned order dated 06.10.2021.

iii) The Appellant No. 1 in both the Appeals was incorporated on 01.12.1984 as a private limited company, became a public company on 16.3.1992 and thereafter, in 1993, was listed on the National Stock Exchange, the Bombay Stock Exchange, and various other stock exchanges such as Delhi, Ahmedabad, Jaipur, Ludhiana, and Calcutta. Today the Appellant No. 1 is a public limited company listed on the National Stock Exchange and the Bombay Stock Exchange having its registered office at Morepen Village, Nalagarh Road, Near Baddi, District Solan - 173 205, Himachal Pradesh. The 156 public listed pharmaceutical companies in India, the Appellant No. 1 is ranked 46th amongst them in terms of market capitalization of approximately Rs. 2,450 Crores. This despite the Appellant No. 1's struggles of the early 2000s when present-day Indian pharmaceutical giants like Sun Pharmaceuticals, Divis Lab, Dr. Reddy's Lab etc. all had their growth spurt.

iv) The Appellant No. 1 is engaged in the manufacturing of pharmaceuticals inter alia bulk drugs, formulations, over-the-counter drugs, home health devices, etc. In the year 1993, the Appellant No. 1 started working on new generation Company Appeal (AT) Nos. 04 and 05 of 2022 6 high value molecules viz. Ketorolac (used for short term relief of moderately to severe pain in adults usually before or after medical procedures of after surgery), Omeprazole (a proton pump inhibitor used to treat stomach and oesophagus problems such as acid reflux and ulcers by reducing the amount of acid production in the stomach), Cisapride (is a gastroprokinetic agent that increases motility in the upper gastrointestinal tract), and Loratadine (an antihistamine used to treat symptoms such as itching, runny nose, watery eyes, and sneezing from allergies). In order to fund the requisite investments in plant and machinery, the Appellant No. 1 (like any other company would availed of loans (from the then nascent debt market in India), including short-term finance at very high interest rates from several banks and financial institutions. The Appellant No. 1 apart from borrowing from banks and financial institutions also invited fixed deposits from various individual investors in order to fund its expansion.

v) With time, the Appellant No. 1 moved to production of various Pharmaceutical Ingredients (APIs) comprising of Fexofenadine (an antihistamine used to treat symptoms such as itching, runny nose, watery eyes, and sneezing from allergies), Atorvastatin (a statin medication used to prevent cardiovascular disease), Montelukast (is a leukotriene inhibitor that is used to prevent asthma attacks in adults and children over 2 years of age), Csapride (is a gastroprokinetic agent that increases motility in the upper gastrointestinal tract), and Zafirlukast (is a leukotriene receptor antagonist used for chronic treatment of asthma). With the above developments, the Appellant No. 1 expanded its business profile by moving into production of intermediates both for regulated and free markets and Company Appeal (AT) Nos. 04 and 05 of 2022 7 developed a progressive lineage of high-quality generic drugs and pharmaceutical formulation backed by a strong R&D, regulatory, and global marketing team. During such time, the Appellant No. 1 managed to set up three (3) state-of-the-art manufacturing plants Parwanoo, Baddi, and Masulkhana in Himachal Pradesh to meet its growing production needs. In its rise to the top, the Appellant No. 1 became the youngest Indian company to have approval of the United States Food & Drug Administration (the USFDA) (the gold standard in certification as it essentially allows drugs to be exported to the USA but also many other countries that accept USFDA certification including Canada) in the year 1999 (within 15 years of incorporation) for the product Loratadine. By the late 90s, the Appellant No. 1 was primed to become one of India's biggest pharmaceutical companies. While the Appellant No. 1 was expanding its core business of bulk drugs and formulations, it also expanded its clinical devices business which was at that time almost non-existent in India. To make a real push in the clinical devices business, the Appellant No. 1 entered into an exclusive joint venture/partnership in India for sales, service, and support of many reputed multinational companies like Immucor GMBH, Diagnostik Germany (for immunohematology), Beurer GMBH, Germany (blood pressure monitors, heating pads, etc.), Taidoc Technology Corporation, Taiwan (glucometers), Microlife, Switzerland (blood pressure monitors), MSI, United States of America (weighing scales), and IND Diagnostics, People's Republic of China (blood banking). By 2001, the Appellant No. 1 made some path breaking advancements by introducing its over-the-counter brand Dr. Morepen which was received well in the market.

Company Appeal (AT) Nos. 04 and 05 of 2022 8

vi) The Appellant No. 1's foray into the over-the-counter business helped it to understand new dimensions of business and thus created a new category called Fast Moving Health Goods (the FMHG). The FMHG products in the Appellant No. 1's Morep portfolio include Burnol (India's top selling ointment for burns and cuts), Lemolate Gold (for cold relief), Fibre-X Sat-Isabgol (natural laxative), Fever- X (fever reducer), Option72 (emergency contraceptive), Dabgel (antacid), More Vital+ (dietary supplement), Exygra (treatment for premature ejactulation), QuickChek (pregnancy test kit), etc. The successful entry of the Appellant No. 1 into the clinical devices business and the development of the over-the-counter brand Dr. Morepen energized the efforts of the Appellant No. 1 and sustained the Appellant No. 1 through the liquidity crunch caused by the price crash of Loratadine as explained below.

vii) By the late 90s, the Appellant No. 1 was focusing its energies on new generation high value molecules and at the top of its list was Loratadine (an antihistamine used to treat symptoms such as itching, runny nose, watery eyes, and sneezing from allergies). The patent for Loratadine was owned by Schering- Plough Corporation of United States of America (now merged with Merck & Co.). The patent of Loratadine was supposed to expire in 2000. The Appellant No. 1 had secured USFDA approval in 1999 and had its eyes set on the looming expiration of the Loratadine patent which would have enabled it to sell exclusively in USA for a period of six (6) months. The same would have generated used profits and enabled early repayment of debt and perhaps even made the Appellant No. 1 debt neutral. However, on the eve of the expiry, in the year 2000, Schering-Plough Corporation, the original patent holder of Loratadine, initiated Company Appeal (AT) Nos. 04 and 05 of 2022 9 legal proceedings seeking extension of patent expiry period for another term of two (2) years and succeeded in its efforts. Thus, the Loratadine patent was extended until December, 2002. This was a setback to the Appellant No. 1 but one that was potentially weatherable.

viii) By 2002, Claritin (brand name by which Loratadine was sold in the USA) was deemed as safe enough to be consumed without a doctor's prescription which meant that it was not covered by insurance anymore. Behind the scenes, it was the powerful insurance lobby in USA that had pushed the change through as the insurance providers were previously paying approximately USD 1 Billion every year for allergy drugs. Anybody who felt like they had allergies could walk to a nearby convenience store (not even a pharmacy) and buy Claritin. The USFDA classified it as an over-the-counter drug without any prior intimation or cooling off period which caused a bloodbath. Notably this was the first such move by the USFDA under pressure from the insurance lobby. Overnight Loratadine which sold for approximately USD 8,000/- per kg (roughly Rs. 3,82,000 Lacs) came down to USD 1,800/- per kg (roughly Rs. 86,000/-). This represented a drop of over 78% in prices. This was a setback to the Appellant No. 1 that it could not immediately weather and it sent the Appellant No. 1 into a tailspin which led to severe liquidity problems which in turn led to the Appellant No. 1 defaulting in its debt obligations to lenders including default in refund to its fixed deposit holders.

ix) By October, 2002, the Appellant No. 1 repaid the matured deposits to all its individual investors and the total outstanding due to fixed deposit holders as on 30.9.2003 was Rs. 156.1929 Crores. However, in order to meets its sudden Company Appeal (AT) Nos. 04 and 05 of 2022 10 and unforeseen liquidity problem occasioned by the Loratadine price crash, the Appellant No. 1 raised USD 15.25 Million (equivalent to Rs. 72.5 Crores) from the international market through the issue of Global Depositary Receipts (GDRs). Simultaneously, the management of the Appellant No. 1 ensured that no further investments were made by the Appellant No. 1, its subsidiaries and a board resolution was passed stating the same on 8.3.2003. The twin efforts were aimed at resolving the liquidity crunch of the Appellant No. 1 and to ensure that the fixed deposit holders are repaid. Unfortunately, before the GDR proceeds could be released for use of the Appellant No. 1, the Hon'ble Debt Recovery Tribunal- II, Delhi [hereinafter "DRT"] vide its order dated 29.4.2003 passed in O.A. No. 37/2003 restrained the Appellant No. 1 from dealing, transferring, or parting which such GDR proceeds at the behest of The Bank of Nova Scotia (a Canadian Bank which acted contrary to the interest of the Appellant No. 1, the other lenders, and the fixed deposit holders).

x) Due to the financial and legal constraints outweighing the Appellant No. 1's efforts to ensure continued repayment of matured fixed deposits, the Appellant No. 1 was unable to repay the matured FD amount to the fixed deposit holders after October, 2002. Consequently, the CLB, upon receiving complaints from some Fixed deposit holders took suo motu cognizance of the matter. On 12.6.2003, after due deliberations and hearings before the Hon'ble CLB, the Appellant No. 1 submitted a repayment scheme/option to pay the dues to the fixed deposit holders. This repayment scheme/option was duly considered by the Hon'ble CLB on 8.8.2003 and repayment was ordered to the fixed deposit holders in the manner provided by the CLB in its order dated 19.8.2003. On account of Company Appeal (AT) Nos. 04 and 05 of 2022 11 the Loratadine price crash and the restraint on the utilization of the GDR proceeds but for which the Appellant No. 1 would have been cash rich or atleast would have ensured continuous and timely repayment of matured fixed deposits, the Appellant No. I was able to only pay a sum of Rs. 5.5544/- Crores out of the total outstanding of Rs. 42.4866/- during the period 19.8.2003 to 31.1.2004 in keeping with the re-payment scheme to the fixed deposit holders. Conscious of the gravity of the default, the management of the Appellant No. 1 held a meeting on 20.2.2004 and passed a board resolution resolving that the Appellant No. 1 would issue equity shares to its fixed deposit holders in lieu of the outstanding amounts. This was a decision taken with the utmost good faith by the Board of Directors to ensure fixed deposit holders were provided a liquid and immediately redeemable option while counter-weighing it with the Appellant No. I's best interest in view of the liquidity situation.

xi) On 11.3.2004, the Appellant No. 1 approached the Corporate Debt Restructuring Cell [hereinafter "CDR Cell"] of the Reserve Bank of India for restructuring its debt towards the bank and financial institutions and to take a view on sponsoring the proposal. After considering the matter at length, the CDR Cell suggested that the Appellant No. 1 bring the matter to the attention and for the consideration of the Hon'ble High Court of Himachal Pradesh (it having requisite territorial jurisdiction) by way of a petition under Section 391 of the Companies Act, 1956 [hereinafter "the Old Act"] i.e. for a scheme of arrangement/settlement with the creditors. On 20.3.2004, the Registrar of Companies, Jalandhar/ the SIFO filed prosecution against the Appellant No. 1 and its officers before the Chief Judicial Magistrate, Solan for failure to comply Company Appeal (AT) Nos. 04 and 05 of 2022 12 with the directions contained in the order dated 19.8.2003 passed by the CLB. Although the weight of such complaints has paled into insignificance given subsequent events of undisputed financial turnaround, most of them relate to alleged non -appointment of the Government Directors the grounds for which no longer exists and some of such complaints them have been compounded, for the purpose of completeness only. On 10/11.6.2004, the Appellant No. 1 filed Re:

Morepen Laboratories Limited, Company Petition No. 5/2004 under Section 391(1) of Old Act, in order to repay its debts, before Hon'ble High Court of Himachal Pradesh at Shimla seeking directions for convening a meeting of various classes of creditors i.e. lending banks & financial institutions (secured creditors) and members of the Appellant No. 1 for approval of a scheme of arrangement and compromise [hereinafter the "S. 391 Revival Scheme"] between the Appellant No. 1 and its members, various classes of creditors i.e. lending banks & financial institutions (secured creditors), fixed deposit holders, vendors and others (unsecured creditors).

xii) The Hon'ble High Court of Himachal Pradesh vide order dated 28.6.2004 directed the Appellant No. 1 to convene meetings of various classes of creditors i.e., lending banks & financial institutions (secured creditors), fixed deposit holders, vendors, and others (unsecured creditors) and members of the Company for the consideration and approval of the Section 391 Revival Scheme as proposed by the Company with or without modification. On 2.8.2005, after hearing the objections filed by some of the banks to the order dated 28.6.2004, the Hon'ble High Court of Himachal Pradesh in the interest of various classes of creditors and shareholders and the Company vide order dated 2.8.2005, Company Appeal (AT) Nos. 04 and 05 of 2022 13 convened a meeting of various classes of creditors for the consideration and approval of the S. 391 Revival Scheme. Meanwhile, on 27.7.2006 the CDR Empowered Group of the CDR Cell considered the final restructuring proposal of the Appellant No. 1 and approved the debt restructuring package. By this debt restructuring, package all the banks and financial Institutions agreed to waive the interest with effect from 1.1.2003 to 30.6.2006 on the outstanding debt of the Appellant No. 1 and required the Appellant No. 1 to infuse funds to the tune of Rs. 10 Crores (which in fact was done by the Appellant No. 1). It may be noted that the CDR Call's approval was in fact a vindication of the Appellant No. 1's position that the Bank of Nova Scotia had acted in haste in approaching, the Hon'ble DRT. A copy of the CDR approval for the debt restructuring, package dated 27.7.2006 is marked and annexed herewith as ANNEXURE A-11.

xiii) In view of the fact that the S. 391 Revival Scheme was severable between various classes of creditors, the Appellant No. 1 through negotiations and also under the corporate debt restructuring mechanism evolved under the guidelines of the Reserve Bank of India restructured its debts with various banks/financial institutions by making payment to some of the banks/financial institutions under a One Time Settlement and further rescheduling the debts of the remaining banks/financial institutions, which envisaged the banks/financial institutions foregoing their principal outstanding ranging from 55% - 65% and the lending banks/financial institutions on implementation of CDR Scheme becoming shareholders of the Appellant No. 1. It may be noted that the commercial rationale for banks and lending institutions to agreeing to become shareholders was simple - while the Appellant No. 1 was struggling on account Company Appeal (AT) Nos. 04 and 05 of 2022 14 of the unforeseen Loratadine price crash, its future prospect and fundamentals remains strong and it could be turned around successfully thus ensuring that the haircut taken initially could be recovered subsequently. Further, consequent upon the said settlement with the lending banks/financial institutions, various company appeals pending before Hon'ble High Court of Himachal Pradesh against the orders dated 28.6.2004 and 2.8.2005 were disposed of as being infructuous vide order dated 28.4.2008.

xiv) In June 2008, the Appellant No. 1 moved Re: Morepen Laboratories Limited, C.A. No. 23/2008 u/s 391(1) of the Old Act read with Rule 9 of the Company Court Rules, 1959 for modification of the scheme of arrangement proposed earlier (necessitated by the fact that the banks and financial institutions had been settled and paid under corporate debt restructuring (CDR) package and were therefore out of the scope of any further compromise or arrangement). While the earlier scheme was composite in that it sought a restructuring of debts qua both the fixed deposit holders and the banks and financial institutions, the later one only related to fixed deposit holders and proposed issuance of equity shares to the said deposit holders wherein each deposit holders would forego 25% of his/her principal and the accrued interest and would receive shares for 75% of the principal with the share price for allotment being determined as per the Securities and Exchange Board of India (Disclosures and Investors Protection) Guidelines, 2000. The S. 391 Revival Scheme itself came to be sanctioned by a Ld. Single Judge of the Hon'ble High Court of Himachal Pradesh on 4.8.2009. However, the Respondent herein Company Appeal (AT) Nos. 04 and 05 of 2022 15 preferred an appeal against the same being Union of India v. Morepen Laboratories Ltd., Company Appeal No. 2/2009.

xv) Meanwhile, pursuant to the order dated 12.8.2009, the Board of Directors of the Appellant No. 1 had already approved the allotment and shares were issued to the fixed deposit holders. After the aforesaid allotment, the Ld. Division Bench of the Hon'ble High Court of Himachal Pradesh on 27.8.2009 allowed the Appellant No. 1 to implement the S. 391 Revival Scheme subject to its final orders (but implementation of the 5. 391 Revival Scheme had already taken place). As such the 9,24,90,413 (Nine Crore Twenty-Four Lac Ninety Thousand Four Hundred and Thirteen) shares allotted to 82,231 fixed deposit holders were listed on the National Stock Exchange and the Bombay Stock Exchange. However, in September, 2010 (one year after the allotment of shares pursuant to the S. 391 Revival Scheme) the order dated 4.8.2009 passed by the Ld. Single Judge of the Hon'ble High Court of Himachal Pradesh came to be finally set aside by the Ld. Division Bench of the Hon'ble High Court of Himachal Pradesh vide its order dated 14.09.2010. Vide the same order dated 14.09.2010 the matter was remanded back to the Ld. Single Judge of the Hon'ble High Court of Himachal Pradesh on the ground that the Respondent i.e. Union of India herein had not been heard during the adjudication before the Ld. Single Judge of the Hon'ble High Court of Himachal Pradesh. While the above matter re fresh adjudication on approval of S. 391 Revival remained pending before the Ld. Single Judge of the Hon'ble High Court of Himachal Pradesh, the 9,24,90,413 (Nine Crore Twenty-Four Lac Ninety Thousand Four Hundred and Thirteen) shares allotted to 82,231 (Eighty-Two Thousand Two Hundred and Thirty-One) fixed deposit Company Appeal (AT) Nos. 04 and 05 of 2022 16 holders were held onto by the fixed deposit holders and in a large number, traded freely on the stock exchanges. It is reiterated at this stage again that the S. 391 Revival Scheme had been affected already.

xvi) Eventually, with the enactment of the Companies Act, 2013 and the constitution of the NCLT, the matter pending before the Ld. Single Judge of the Hon'ble High Court of Himachal Pradesh came to be transferred to the Hon'ble NCLT which vide its order dated 12.3.2018 dismissed the Appellant No. 1's S. 391 Revival Scheme. The Appellant No. 1 was directed to cancel the 9,24,90,413 (Nine Crore Twenty-Four Lac Ninety Thousand Four Hundred and Thirteen) shares that had been issued to the 82,231 (Eighty-Two Thousand Two Hundred and Thirty-One) fixed deposit holders and had been listed on the stock exchanges and in lieu of cancellation repay monies to the fixed deposit holders within three months. An exception, however, was carved out for those shares that had already been traded/transferred in by the recipients. This despite the Appellant No. 1 repeatedly contending that fixed deposit holders would not come forth as they were sitting on gains and even some fixed deposit holders coming forth stating they did not want to return their shares. The Appellant No. 1 was constrained to approach this Hon'ble Tribunal against the Hon'ble NCLT's judgment dismissing the S. 391 Revival Scheme and this Hon'ble Tribunal was pleased to stay the effect and operation of the judgment of the Hon'ble NCLT vide its order dated 27.4.2018.

xvii) It is important to note that the Appellant No. 1's case before this Hon'ble Tribunal was always that it was an impossibility to cancel shares of the fixed Company Appeal (AT) Nos. 04 and 05 of 2022 17 deposit holders automatically and unless the fixed deposit holders came forward to exchange the said shares, the Appellant No. 1 was powerless. The Appellant No. 1 was supported in its contentions by the Securities and Exchange Board of India [hereinafter "SEBI"] inasmuch as even the Respondent herein wrote to the SEBI on multiple occasions such as 7.10.2010, 11.10.2010, and 18.10.2010 requesting a delisting of the 9,24,90,413 (Nine Crore Twenty-Four Lac Ninety Thousand Four Hundred and Thirteen) shares that had been issued to the 82,231 (Eighty-Two Thousand Two Hundred and Thirty-One) fixed deposit holders and the SEBI vide its letters dated 29.10.2010 and 11.11.2010 informed the Appellant No.1 that it was not possible to delist allotted shares for various reasons, chief amongst which was the shares were being traded by the fixed deposit holders. In this regard a copy of the letter dated 7.10.2010 issued by the Respondent herein to the Securities and Exchange Board of India seeking delisting of shares issued to fixed deposit holders.

xviii) This Hon'ble Tribunal, however, took a different view and, inter alia, dismissed the appeal of the Appellant No. 1 on 23.7.2019 and directed the cancellation of the shares allotted to the fixed deposit holders in lieu of money in three (3) months except in those cases where the shares had been traded already by the fixed deposit holders. Since the Appellant No. 1 had no intention of shying away from refunding monies of fixed deposit holders, it seeking to respectfully attempting to implement the judgment of this Hon'ble Tribunal and started writing individual letters to the fixed deposit holders at their last known addresses in the records of the Appellant No. 1 (it may be noted that once shares were issued, there was no cause for the fixed deposit holders to update their Company Appeal (AT) Nos. 04 and 05 of 2022 18 addresses in the records of the Appellant No. 1). Additionally, the Appellant No. 1 published a public notice in in two leading newspapers viz., Financial Express (English) and Jansatta (Hindi) on 15.8.2019. Given the poor turnout, a further public notice was published on 27.7.2020 in two leading newspapers viz., Financial Express (English) and Jansatta (Hindi). After keeping the exercise of cancellation of shares of eligible Fixed Deposit Holders open for nearly two years, the Appellant No. 1 also published public notice dated 28.7.2021 in two leading newspapers viz., Financial Express (English) and Jansatta (Hindi) announcing the closure of such exercise. Through individual communications as well as the public notice, the shareholders were informed that the shares as held by them were liable to be cancelled and they were entitled to monies in lieu thereof in terms of the judgment of this Hon'ble Tribunal. As a further matter of spreading the information about the judgment of the Hon'ble Tribunal, the Appellant No. 1 updated its website (www.morepen.com) and added a tab "FD Holders" for the purpose of ease and ready reference of fixed deposit holders. xix) Despite the three-month period granted by this Hon'ble Tribunal having elapsed and only a few Fixed Deposit Holders coming forward for surrender/cancellation of shares, the Appellant No. 1 kept the option of cancellation of shares in lieu of monies open in the interest of the Fixed Deposit Holders to allow all (eligible) Fixed Deposit Holders to come forth and surrender their shares for cancellation. At this stage it is submitted that given that the value of the shares grew/is growing further on account of the Appellant No. 1's turnaround and increasing reserves and profits year-on-year and the stock markets are at an all-time high, there is/was a natural reluctance of (eligible) Company Appeal (AT) Nos. 04 and 05 of 2022 19 Fixed Deposit Holders to come forward and surrender their shares. Thus, while it may be a matter of law that they ought to come forth and return the shares and accept monies, the Appellant No. 1 has/had no way of coercing them to comply until they come forth and tender their shares voluntarily.Till date only 4953 out of the 32,927 eligible fixed deposit holders have come forth to accept monies in lieu of the shares. This despite the Appellant No. 1's best efforts to communicate the order of this Hon'ble Tribunal to the erstwhile fixed deposit holders. Sadly, the Hon'ble NCLT in the Impugned Judgment has faulted the Appellant No. 1 for not performing an impossible task and found the subsequent events to be not worthy of modification of the order dated 1.7.2005 passed by the Hon'ble CLB on account of the Appellant No. 1's alleged failure to perform the impossible. It is noteworthy that by periodic letters dated 6.11.2019, 4.2.2020, 27.4.2020, 9.12.2020, 19.12.2020, 18.1.2021, 25.5.2021, 9.7.2021, and 28.7.2021, the Appellant No. 1 kept informing the Respondent herein of the status of the fixed deposit cases and at no point did the Respondent raise any objection whatsoever. As seen from above, the maximum number of cases of FD holders which ventured to come forth was in July-October, 2020 in the immediate aftermath of the first wave of COVID-19 which had hit the entire stock market and also after the second public notice and round of individual letters being sent out. However, once the stock market started seeing a recovery, the cases of fixed deposit holders coming forth for cancellation of shares in lieu of monies reduced to zero in 2021. The upward revision in the share price of the Appellant No. 1 - Company from March 2021 onwards would have also deterred the FD Holders from coming forward for surrender the shares held by them. Company Appeal (AT) Nos. 04 and 05 of 2022 20 The following chart shows the price differential between the market price of the shares held by FD Holder (On BSE) [March 2021 to October 2021] and the price offered by the Appellant No.1 upon surrender for cancellation of shares. xx) During the pendency of the Section 391 Revival Scheme, the Respondent preferred the instant petition i.e. CP No. 4 of 2005 on 07.01.2005 under Section 408 along with sections 397 & 398 of the Act, before the Hon'ble CLB for appointment of six Government appointed Directors on the Board of the Company. At this stage it is pertinent to note that in these proceedings, the Appellant No. 1 itself without prejudice to the rights and contentions also gave a proposal for inducting independent [non- Government nominee] Directors. The Appellant No. 1 has thus, always acted bonafide and according to the demands of the time within the four corners of law. A copy of the proposal for appointment of additional independent directors submitted by the Appellant No. 1 before the Hon'ble Company Law Board in Union of India v. Morepen Laboratories Limited and Ors., Company Petition No. 4/2005. The CLB vide judgment dated 1.7.2005 partially allowed the prayer of the Respondent herein and directed appointment of two (2) government directors rather than the six (6) prayed for. Thus, even the Hon'ble CLB was of the view that a majority of government directors is not required on the board of the Appellant No. 1 and two (2) directors to monitor and supervise the (then) affairs was sufficient. Pursuant to the aforesaid judgment, the Respondent herein vide communication dated 25.7.2005 purported to furnish the names of persons to be appointed as two (2) directors on the board of the Appellant No. 1 for a period of three (3) years or until further orders. A copy of the judgment dated 1.7.2005 passed by the Hon'ble Company Law Board Company Appeal (AT) Nos. 04 and 05 of 2022 21 in Union of India v. Morepen Laboratories Limited and Ors., Company Petition No. 4/2005 directing appointment of two (2) government directors on the board of the Appellant No. 1.

xxi) The Appellant No. 1 preferred an appeal against order dated 01.07.2005 before the Hon'ble High Court under Section 10F of the Companies Act, 1956 being Company Appeal No.3/2005. The Respondent also preferred an appeal against the CLB Order dated 01.07.2005 before the High Court of Himachal Pradesh at Shimla (the Hon'ble High Court) being Company Appeal No.6/2005 aggrieved by the fact that the Hon'ble CLB had permitted /directed the appointment of only two Government Directors instead of six as prayed for by the Respondent. A copy of the appeal preferred by the Appellant No. 1 to the Hon'ble High Court of Himachal Pradesh being Morepen Laboratories Limited v. Union of India, Company Appeal No. 3/2005.During the pendency of the aforesaid appeals before the Hon'ble High Court of Himachal Pradesh, the Appellant No. 1 filed an affidavit in April, 2007 to place on record facts to demonstrate that the then management of the Appellant No. 1 was able to turn around the Appellant No. 1 and the need for government directors, if any, stood dissipated. The Hon'ble High Court of Himachal Pradesh was also apprised of the fact that the CDR Cell had approved the corporate debt restructuring of the Appellant No. 1 and an international investor had agreed to purchase the secured debts of the Appellant No. 1. The said actions had buoyed the share price of the Appellant No. 1 showing market confidence. However, the Hon'ble High Court vide its order dated 17.5.2007 dismissed both the Company Appeal No. 3 of 2005 (filed by the Appellant No. 1 -Company) and Company Appeal No. Company Appeal (AT) Nos. 04 and 05 of 2022 22 6 of 2005 (filed by the Respondent-Union of India). Vide this order dated 17.05.2007, the Hon'ble High Court directed the Appellant No. 1 to hold a meeting of Board of Directors within two months from the date of the said udgment and appoint the two Government Directors (the Hon'ble High Court Order).

xxii) Being aggrieved the Appellant No. 1 challenged the order and judgment dated 17.05.2007 passed by the Hon'ble High Court before the Hon'ble Supreme Court in SLP No. 11189 of 2007. The Respondent also similarly preferred SLP No. 15493 of 2007, being aggrieved that against their prayer for appointment of 6 Government Directors, only two Government Directors were directed to be appointed. These two SLPs were clubbed together for hearing. The Hon'ble Supreme Court vide its order dated 16.07.2007 passed in SLP No. 11189 of 2007 (filed by the Appellant No. 1) directed maintenance of status quo in respect of appointment of Government Directors, which was extended further vide order dated 07.09.2007. The status quo order dated 7.9.2007 passed by the Hon'ble Supreme Court of India in Union of India v. Morepen Laboratories Limited, S.L.P. (C) No. 15493/2007. Vide order dated 09.04.2010, leave was granted leave in both the aforesaid SLPs and the status quo ordered by orders dated 16.07.2007 and 07.09.2007 were directed to be continued during the pendency of these appeals.

xxiii) During the pendency of the above appeals before the Hon'ble Supreme Court with a status quo order, i.e., no government directors on board of the Appellant No. 1, the Appellant No. 1 successfully turned itself around and Company Appeal (AT) Nos. 04 and 05 of 2022 23 accordingly to apprise the Hon'ble Supreme Court of India of the same, the Appellant No. 1 filed an application to place on record subsequent events before the Hon'ble Supreme Court of India. Through this application, the Appellant No. 1 placed record material and actions taken by the Appellant No. 1 to pay off the debts to its fixed-deposit holders and becoming debt-free, dissipating the need for appointment of Government Directors on its Board. The Hon'ble Supreme Court of India on 9.7.2019 dismissed both Morepen Laboratories Limited v. Union of India, S.L.P. (C) No. 11189/2007 (converted to C.A. No. 3165/2010) and Union of India v. Morepen Laboratories Limited, S.L.P. (C) No. 15493/2007 (converted to C.A. No. 3166/2010) but however specifically granted liberty to the Appellant No. 1 to agitate such subsequent events before the appropriate forum (since the Hon'ble CLB no longer existed, the Hon'ble NCLT became the appropriate forum). At this stage it is pertinent to note that meanwhile the S. 391 Revival Scheme was set aside by this Hon'ble Tribunal vide its order dated 23.07.20219 (already annexed above as Annexure A-22 of the Appeal). xxiv) It is in the background of above facts, orders passed and liberty specifically granted by the Hon'ble Supreme Court vide its order dated 09.07.2019, that on 18.09.2019, the Appellant No. 1 filed the CA 785 of 2019 before the Hon'ble NCLT, Chandigarh placing on record the new material and subsequent events to demonstrate that there was no longer any rationale in law or necessity in fact for the continued direction of appointment of Government Directors under Section 408 of the Companies Act, 1956 and such basis no longer existed. Thus, through the CA 785 of 2019, it was prayed that in light of the subsequent facts and financial turn-around negating the need for appointment of Government Company Appeal (AT) Nos. 04 and 05 of 2022 24 Directors, the Hon'ble CLB order dated 01.07.2009 be accordingly modified. It is relevant to note that not only did the Appellant No. 1 make out a specific case that there was longer any rationale/ necessity to have the Government Directors appointed but even as far as the repayment of monies to the erstwhile FD holders were concerned, even this has been completed by the Appellant No. 1. The Appellant No. 1 specifically placed on record its statutory auditor's report dated 14.07.2018 reflecting its updated (zero) debt status as on date of filing of the CA 785/2019. On 30.07.2019 the Respondent issued communication furnishing the names of two persons to be appointed as Government Directors on the board of the Appellant No. 1. This was duly responded to by the Appellant No. 1 vide its letter dated 09.08.2019 explaining that the Appellant No. 1 intended to place on record subsequent events before the Hon'ble NCLT, Chandigarh in terms of the liberty granted by the Hon'ble Supreme Court vide order dated 09.07.2019. xxv) In light of the above facts the dispute between the parties pertains to direction of the Hon'ble CLB in its order dated 01.07.2005 and whether such order can be said to be necessary view of the subsequent developments/ changed circumstances as they enure on date and whether such order having merged with the final order dated 09.07.2019 passed by the Hon'ble Supreme Court, the CA 1207/2019 was even maintainable before the Hon'ble NCLT. It is the specific case of the Appellants that the Respondent also appealed the order dated 01.07.2005 passed by the Hon'ble CLB right uptill the final proceedings before the Hon'ble Supreme Court. Thus, the original order dated 01.07.20005 merged with the final order dated 09.07.2019 passed by the Hon'ble Supreme Court and thus, the contention of the Respondent that the Appellants willfully disobeyed Company Appeal (AT) Nos. 04 and 05 of 2022 25 the order dated 01.07.2005 is without merit and legal force and especially given that order dated 09.07.219 granted liberty to the Appellant to agitate the subsequent events before the concerned forum i.e., the Hon'ble NCLT Chandigarh. On the other hand, the Respondent herein Union of India contends that the Hon'ble CLB Order dated 01.07.2005 has attained finality and ought to be complied with by the Appellants by appointing the two Government Directors nominated by it and by filing CA 785/2019 the Appellants willfully disobeyed the order dated 01.07.2005 by not complying with it.

5. The Ld. Sr. Counsel for the Appellant has taken grounds of challenge the impugned order, the NCLT has issued notice of contempt to the Appellants in CA 1207 of 2019 filed by the Respondent and has committed the following errors for which the impugned order is the subject matter of challenge in the present appeal i.e. Company Appeal (AT) No. 4 of 2022 on the following grounds:

i) The CA 1207 of 2019 filed by the Respondent was not maintainable before it, as this had merged into the order of the Hon'ble Supreme Court order dated 09.07.2019. This is because the order dated 01.07.2005 was upheld by the Hon'ble High Court of Himachal Pradesh Shimla vide common order and judgment dated 17.05.2007 which dismissed the appeals filed by the Petitioner

- Union (Company Appeal No. 6 of 2005) as well as the appeal filed by the Respondent-company (Company Appeal 3 of 2005). Subsequently, Special Leave Petitions preferred by both parties (i.e. SLP 15494/2007 filed by the Petitioner-

Union of India and SLP 11189/2007 by the Respondent-company). On these, the Hon'ble Supreme Court passed a status quo order dated 16.07.2007 which was Company Appeal (AT) Nos. 04 and 05 of 2022 26 reiterated on 07.09.2007. These Special Leave Petitions were converted into Civil Appeals after grant of leave vide order dated 09.04.2010 [CA 3166/2010 filed by the Petitioner - Union of India and CA 3166/2019 filed by the Respondent - company] and again the status quo order came to be continued. These proceedings came to be finally disposed off by the Hon'ble Supreme Court vide order dated 09.07.2019 and applying the doctrine of merger, the erstwhile order dated 01.07.2005 passed by the Hon'ble CL.B stood fully merged with the final order dated 09.07.2019 passed by the Hon'ble Supreme Court. Hence (assuming while denying that there is any contempt of court by the Appellants) contempt, if any, is that of the final order dated 09.07.2019 passed by the Hon'ble Supreme Court and not of the NCLT thereby denuding the NCLT from any jurisdiction in the matter. It is settled law that the power to punish for its own contempt is exclusive to the Supreme Court under Article 129 read with Article 142 of the Constitution of India [Supreme Court Bar Association v. Union of India (1998) 4 SCC 409 Para 21, 38// R.P. Vaghela v. State of Gujarat & Ors (Full Bench) 2002 SCC Online Guj. 34- Para 38,40,41,61// Vitusah Oberoi v. Court of Its Own Motion (2017) 2 SCC 314- Para 10,12].

ii) The NCLT failed to appreciate that while relying on doctrine of merger, the Appellant No.1 herein had made out a specific case of lack of inherent jurisdiction of the NCLT to issue notice regarding initiation of contempt proceedings, which has been legally settled in the judgments cited by the Appellant No.1. To make matters worse the NCLT has noticed this settled position of law and submissions of the Appellant No.1 in this regard yet proceeded to digress from it without giving reasons and/or stating as to how the Company Appeal (AT) Nos. 04 and 05 of 2022 27 present facts would warrant application of a different law/judgment. [Para 22, 23, Pg. 15, 16 of the Impugned Order].

iii) The NCLT while noticing that the status quo order dated 16.07.2007/07.09.2007 was passed by the Hon'ble Supreme Court has ignored the fact that this status quo order was extended even when the SLP stood converted into Civil Appeal vide order dated 09.04.2010 which directed status quo order dated 16.07.2007 and 07.09.2007 to continue during the pendency of the appeals. Thus, there is/was no scope of either the Appellant No.1 or its officers i.e. Appellant No. 2, Appellant No.3, Appellant No.4 and Appellant No.5 being in contempt of the CLB Order as upheld by Hon'ble High Court and/or direction to appoint Government Director given the extension of the status quo by the Hon'ble Supreme Court during the pendency of the appeals, which appeals were decided only on 09.07.2019. The Respondent's mere assertion that the Appellants have been willfully disobeying the order dated 01.07.2005 is insufficient to attract punishment for civil contempt under the Contempt of Courts Act 1971. The Hon'ble Supreme Court has held that the key ingredient of civil contempt as defined under Section 2(b) of the Contempt of Courts Act, 1971 is deliberate flouting of orders of the Court i.e. "wilful" disobedience. It has been held by the Hon'ble Supreme Court in "Indian Airports Employees' Union v. Ranjan Chatterjee, (1999) 2 SCC 537" held as follows:

"7. It is well settled that disobedience of orders of the court, in order to amount to "civil contempt" under Section 2(b) of the Contempt of Courts Act, 1971 must be "wilful" and proof of mere disobedience is not sufficient (S.S. Roy v. State of Orissa). Company Appeal (AT) Nos. 04 and 05 of 2022 28 Where there is no deliberate flouting of the orders of the court but a mere misinterpretation of the executive instructions, it would not be a case of civil contempt (Ashok Kumar Singh v. State of Bihar)."

iv) It is settled that even if there is a misinterpretation of executive instructions it would not be a civil contempt. The Hon'ble Supreme Court in Indian Airports (supra) held that action based on an interpretation of its own order cannot be said to amount to "wilful disobedience" of the orders of this Court. The relevant paragraph is reproduced below:

"11. In our view, these rival contentions involve an interpretation of the order of this Court, the notification and other relevant documents. We are not deciding in this contempt case whether the interpretation put forward by the respondents or the petitioners is correct. That question has to be decided in appropriate proceedings. For the purpose of this contempt case, it is sufficient to say that the non- absorption of these six sweepers was bona fide and was based on an interpretation of the above orders and the notification etc. and cannot be said to amount to "wilful disobedience" of the orders of this Court."

v) The NCLT also failed to appreciate that Respondent Union of India in Para 6 of CA 1207/2019 alleged and contended that because the Respondents have misinterpreted the order dated 09.07.2019 passed by the Hon'ble Supreme Court to mean that liberty has been granted to the Respondents to agitate the subsequent events before the appropriate, they have rendered themselves liable Company Appeal (AT) Nos. 04 and 05 of 2022 29 to be punished for contempt for willful disobedience of order dated 01.07.2005 which attained finality vide the very same order dated 09.07.2019. It is submitted in light of Indian Airports (supra) that when a particular interpretation of the Hon'ble Supreme Court's order is possible, acting in furtherance of such an interpretation would not constitute "wilful disobedience" of such order, rather such an act would be bonafide.

vi) The NCLT has not given any reason for holding that submissions of the Appellants in the contempt petition being CA 1207/2019 are unsustainable and thus the order dated 06.10.2021 is non-speaking when notice of initiation of contempt proceedings is issued to the officers of Appellant No.1 i.e. Appellant No.2, Appellant No.3, Appellant No.4 and Appellant No.5. Without admitting that the Appellants are in contempt of the Hon'ble CLB order dated 01.07.2005, then on a co-joint reading of Section 425 of The Companies Act read with the provisions of The Contempt of Courts Act, 1971, the Respondent's application was barred by limitation as the very provisions of the Contempt of Courts Act 1971 provides for a limitation of one year from the date of the alleged contempt. If the Respondent is extending the time frame of such alleged contempt to cover the period of subsequent litigation, then the Respondent by itself is applying the doctrine of merger in which case, the Hon'ble NCLT has no jurisdiction in law to test the allegation of alleged contempt, as set out above.

vii) The NCLT while issuing notice to the Appellant No.1, Appellant No.2, Appellant No.3, Appellant No.4 and Appellant No.5, far from identifying and describing, each of their role in alleged willful disobedience of the CLB Order dated 01.07.2005 lost sight of the fact that such initiation of contempt Company Appeal (AT) Nos. 04 and 05 of 2022 30 proceedings was time-barred and hit by the limitation period prescribed under Section 20 of the Contempt of Courts Act, 1971. Resultantly the Impugned Order has been passed in derogation of the provisions of the Contempt of Courts Act, 1971 and the Contempt of Courts (CAT) Rules, 1992.

6. The Ld. Sr. Counsel for the Appellant has taken grounds of challenge the impugned order, the NCLT has dismissed CA 785 of 2019 filed by the Appellant and has committed the following errors for which the impugned order is the subject matter of challenge in the present appeal i.e. Company Appeal (AT) No. 5 of 2022 on the following grounds:

i) The Impugned Order is incorrect in law and on facts. It completely ignores the law attendant to Section 408 of the Old Act, its own role as a custodian of the companies, the subsequent events placed on record before it by the Appellant, and how the aforesaid aspects cumulatively lead to a clear conclusion that no purpose will be served by implementation of the Hon'ble CLB's order dated 1.7.2005.

ii) The Impugned Judgment is passed without any application of mind and based on incorrect premises, equivalences, and conjectures. The NCLT wholly fails to address the issues raised, diverts itself with issues never raised, and leaps to unfounded conclusions that are completely unwarranted and to the prejudice of the Appellant which is a well-run and notable public listed pharmaceutical company. The NCLT has while noticing the fact that the CLB order dated 01.07.2005 was passed because "the state of affairs of a company on the date of the presentation of the petition" were found prejudicial to the interest of the Company and also noticing that the Government directors were ordered to Company Appeal (AT) Nos. 04 and 05 of 2022 31 be appointed "with the view to build a public confidence in a company due to its unsatisfactory financial position is unable to meet" has wrongly chosen to ignore, disregard and not give due weightage to the facts that such "state of affairs" now longer exists and that the company is no longer in need of a public confidence building exercise, which was the very essence of the liberty granted by the Hon'ble Supreme Court order and the very lis and material which has been placed before the NCLT by the Appellant for its consideration.

iii) The NCLT has erroneously not appreciated that the Hon'ble CLB appointed Government directors also for the reason "the acts of directors/company have brought the affairs of a company to a slage wherein its existence is under threat due to financial difficulties", whereas such stage /affairs of the company/ ground/reason does not exist today given the financial turn-around of the Appellant under the existing management. Moreover, such financial turnaround of the Appellant was not even disputed by the Respondent and hence had to be taken the fact situation as of today. [Impugned Order-Para 5, Page 90 and Para 11, Page 96 of the Appeal Paper Book].

iv) The NCLT has noticed that while dismissing the application for approval of scheme of arrangement (U/s. 391-394) the NCLT in its order dated 12.03.2018 specifically ordered that such dismissal "will not affect the allotment of the shares to the FD Holders who have traded the shares to the third parties or transferred the allotted shares" and "company shall be bound to pay the outstanding amount as per scheme approved by the Company Law Board, to the original FD holder (except to those who have since traded/transferred)" but has chosen to ignore this relevant fact while coming to the erroneous conclusion that the original debt Company Appeal (AT) Nos. 04 and 05 of 2022 32 of the company was INR 156 crores (which was the figure of debt in 2003) whereas only Rs. 18 crores have been repaid to shareholders. Not only did this ignore the fact that the Appellant could only make payment to those persons who offered to surrender their shares but such finding also ignores the fact that the shares which had been traded could not be included for calculating outstanding payments as apart from such shares having been specifically kept out of the ambit of re-payment by judicial order, a FD Holder who has since traded its share (at a higher market price than issue price) is no longer the shareholder, his share(s) cannot be surrendered and repayment made by the Appellant and above all, such shareholder has been able to recover its deposit amount if not more. [Impugned Order-Para 8 @Page 95, Para 12 @Page 96 of the Appeal].

v) The NCLT failed to notice that on account of the exclusion of traded shares from the scope of re- payments, and resultantly the amount of debt on account of such shares, such quantum is/had to be excluded from the total debt that the Appellant was to discharge. The NCLT has committed this fundamental error despite the Appellant especially explaining in detail that the actual eligible Fixed Deposit Holders in terms of the judgment of this Hon'ble Tribunal's order dated 23.7.2019 (which affirmed the following judgment of the Hon'ble NCLT dated 12.3.2018) were only those who had not traded or dealt with their shares.

vi) Despite the above, the NCLT has only noticed that the debt owed by the Appellant was Rs. INR 156 crores as on 30.09.2003 and has failed to appreciate that this amount reduced from time to time given that payments made to the FD Holders from 2003 onwards and would also exclude the amount of debt on Company Appeal (AT) Nos. 04 and 05 of 2022 33 account of shares that already stood traded. While accepting the plea of the Respondent that the debt owed by the Appellant was INR 156 crores., which was unsupported by evidence/financial data, the NCLT completely lost sight of the fact that the Appellant has been paying all those FD Holders who came forward to claim to surrender the shares held by them.

vii) The NCLT also ignored the fact that Morepen could not have unilaterally cancelled shares allotted to FD Holders without there being an application from such FD Holders for surrender/cancellation of their shares, such shares being the valuable property/ issued security in the hands of such FD holder/shareholder.

viii) There was no malice or deliberate default or wrongdoing on the part of the Appellant and it would only be natural that any shareholder who is holding shares which are trading at a higher/ favorable price would not come forth to surrender such shares at a lower price/ value. As stated in Para 43 of the present appeal the market price of the shares held by the FD Holders is much higher (BSE Weighted Average Price being Rs. 53.95 for October 2021 and NSE Weighted Average Price being Rs. 53.06 for October 2021) than the original issue price of Rs. 11.32 (Para 118 of the Hon'ble NCLT Order dated 12.03.2018).

ix) The NCLT completely ignored the fact that the allegations made and contentions raised by the Respondent Union of India were unsupported by any evidence. Further, in absence of any dispute / disagreement re the financial turnaround of the company much less any evidence countering the financial turn-around of the Appellant, the Respondent's bald assertion that "the company is still being run in a manner prejudicial to public interest" has no force/value in Company Appeal (AT) Nos. 04 and 05 of 2022 34 law and ought to have been outrightly dismissed as being such. [Impugned Order-Para 15, @Page 98 of the Appeal].

x) The NCLT Chandigarh failed to appreciate that the Union of India raised no dispute as regards the validity and veracity of the subsequent events placed on record via the Modification Application by the Appellant before the Hon'ble NCLT. In response to the CA 785 of 2019 moved by the Appellant to which the Union of India filed reply only contending maintainability/lack of jurisdiction and presence of circumstances warranting exercise of powers under Section 408 of the Companies Act, 1956 [Old Act] as on 1.7.2005 without a whisper about present day circumstances.

xi) The Respondent never contested the details of financial turn-around, it would thus have to be treated as an admitted position that the Appellant was/is a profit-making company in that it is debt free, has a cash surplus, is profitable, and has its current and future growth status are highly optimistic. Furthermore, the promoters have infused funds, payouts have been made to lenders, and cases pending before the Ld. DRT have been withdrawn; new patents have been approved and the Appellant has entered the growing nutraceuticals business; and the Appellant has broad-based its board of directors with 55% directors being independent directors having a rich experience under whose leadership the turnaround has been completed (See Para 61 of the present Appeal).

xii) The Appellant in a bona fide manner supplied the details of payments made to its FD Holders by way of affidavits filed from time to time. However, at no stage did the Hon'ble NCLT call upon/ direct that the Appellant provide details of FD Holders who have not claimed their deposits back. Yet in the impugned Company Appeal (AT) Nos. 04 and 05 of 2022 35 order dated 06.10.2010, non- supplying of such information has been held against the Appellant to dismiss the application (Impugned Order-Para 15, @Page 98 of the Appeal). In absence of asking/requiring the Appellant to "furnish the details of the fixed deposit receipts which were converted into equity shares and those equity shareholders who approached the company for refund of the fixed deposits and those equity shareholders who have not approached the company for refund of their original fixed deposits is unacceptable", as betrayed from various orders passed by the Hon'ble NCLT in the matter from time to time, the Hon'ble NCLT has held this fact against the Appellant without giving it an opportunity of hearing in this regard which is against the principles of natural justice. [Impugned Order-Para 16, @Page 98 of the Appeal].

xiii) The NCLT Chandigarh completely ignored the fact that the Hon'ble CLB Order dated 01.07.2005 was passed for a specific purpose and in light of the subsequent events, the substratum of the Hon'ble CLB's order stands completely extinguished. Thus, the order dated 1.7.2005 passed by the CLB directing appointment of Government Directors was for a specified purpose, which considering the positive developments had elapsed. It must be noted that the Respondent herein had sought appointment of six (6) directors (i.e. a majority on the board). However, the CLB granted the prayer qua only two (2). Thus, the role of the government appointed directors was always to monitor and assist the Appellant. It may be noted that even the Hon'ble Supreme Court of India had granted a status quo order on 16.7.2007 in Morepen Laboratories Limited v. Union of India, S.L.P. (C) No. 11189/2007 (which continued till 9.7.2019, i.e. for almost 12 years) when no government directors had been inducted on Company Appeal (AT) Nos. 04 and 05 of 2022 36 account of the fact that there were two (2) nominees of Life Insurance Corporation of India and the Industrial Development Bank of India on the board of the Appellant and thus two (2) more government directors' value was not visible. Today when the Appellant has turned around after undergoing corporate debt restructuring and is debt free, has a cash surplus, and is profitable, no need for such monitoring and assistance exists. The entire gamut of subsequent events was placed before the NCLT; however, the NCLT chose to ignore it despite the Respondent not even responding to the subsequent events.

xiv) The Impugned Order failed to observe that the order dated 1.7.2005 passed by the CLB was premised on facts, which ceased to exist as on the date of passing of the order dated 9.7.2019 by the Hon'ble Supreme Court of India in Morepen Laboratories Limited v. Union of India, S.L.P. (C) No. 11189/2007 (converted to C.A. No. 3165/2010) and Union of India v. Morepen Laboratories Limited, S.L.P.C) No. 15493/2007 (converted to C.A. No. 3166/2010) and/or filing of the Modification Application before the Hon'ble NCLT. While noticing that order passed by the CLB appointing two directors by the Central Government was on account of the fact that the public confidence in the Appellant-Company was on low ebb and that Government Directors were being appointing to restore such public confidence (Para 5/Impugned Order) the Hon'ble NCLT has completely ignored the fact that today the public confidence in the Appellant- Company is high. Today the public confidence stands fully restored inasmuch as on the day the CLB passed the order, the share price of the Appellant closed at Rs. 7.79/- (Rupees Seven and Seventy-Nine Paise Only) on the exchanges. As of filing of the present Appeal, a share of the Appellant is valued at Rs. 54.70/- Company Appeal (AT) Nos. 04 and 05 of 2022 37 (Rupees Fifty- Four Only and Seventy Paise). The same is a 7x growth in share price and increase in public confidence while also repaying debts, expanding businesses, applying for, and receiving new patents, and growing as a pharmaceutical company.

xv) The Impugned Order fails to appreciate that considering the financial growth of the Appellant, the Appellant was in a position to and was ready and willing to repay all its depositors who came forth with the shares. It is relevant t state in this regard that the Appellant had filed an application under Section 391 of the Old Act. In terms of the order dated 23.7.2019 passed by this Hon'ble Tribunal, the Appellant was directed to cancel the shares that had been issued to the fixed deposit holders and in lieu of the cancellation repay the monies with a period of three months. An exception in this regard had been carved out for those shares that already had been traded. The Appellant, thus, made multiple advertisements including on 15.8.2019 and 27.7.2020 with their details and sought repayment of fixed deposit dues in lieu of cancellation of their shares. Post the stipulated three-month period till date, 4953 deposit holders have come forward with requisite particulars due to the sustained effort of the Appellant. The Appellant has paid entire fixed deposit dues to all eligible fixed deposit holders who approached the Company and submitted requisite documentation. However, in its bonafide and on the directions of the board of directors who are acting in the utmost good faith, the Appellant continued to receive and entertain applications even post the time period stipulated by the Hon'ble NCLT and affirmed by the Hon'ble NCLAT. Now, the Hon'ble NCLT has turned around and faulted the Appellant for not ensuring all fixed deposit holders approached it an Company Appeal (AT) Nos. 04 and 05 of 2022 38 impossibility as far as the Appellant is concerned since it can only advertise and request the eligible fixed deposit holders to come forth and cannot coerce them to do so.

xvi) The Impugned Order fails to consider that this Tribunal had granted three months' time vide its judgment dated 23.7.2019 for refund of monies to eligible fixed deposit holders in lieu of cancellation of shares. Since the fixed deposit holders have not come forth, the scheme so to speak has been kept open much to the chagrin of the stock exchanges. Accordingly, on 28.7.2021 a final advertisement was also issued for fixed deposit holders to come and take refunds of their monies in lieu of shares. However, on 28.7.2021, the share of the Appellant closed at Rs. 66.60/-. Thus, no fixed deposit holder had any reason to return shares that were more valuable than their fixed deposit dues. xvii) The Impugned Order does not appreciate the fact that the Appellant had sent individual communication to each fixed deposit holder requesting them to come forth. Failure of fixed deposit holder to come forth cannot fasten an obligation on the Appellant of non-repayment. In any event, the Appellant undertakes that in case any fixed deposit holder comes forth it is ready and willing to repay the sums due to them and to that end the Appellant has made a proposal herewith to show its utmost bonafide and be wholly transparent with this Tribunal as well as the Respondent.

xviii) The NCLT has ignored the fact that the application was filed invoking its inherent powers under Rule 11 which given the specific liberty granted by the Hon'ble Supreme Court cloaked the Hon'ble NCLT with sufficient power to modify and correct the CLB Order which in today's time given the financial turn-around Company Appeal (AT) Nos. 04 and 05 of 2022 39 of the Appellant would be incorrect. [Impugned Order-Para 17, @Page 99 of the Appeal].

7. The Ld. Sr. Counsel for the Appellant during the course of argument and in the memo of appeals along with combined written submissions submitted that vide order dated 01.07.2005 passed in the matte of Union of India v. M/s Morepen Laboratories Limited & Ors (CP No. 4 of 2005) had directed the appointment of two government nominee directors on the board of the Appellant- Company for a period of 3 years to monitor and assist the Appellant-Company. The primary reason for such appointment was the Appellant's (then) non- compliance with order of the Ld. CLB dated 19.08.2003 [i.e. for the payment of FD dues] and to protect the interests of the investors. The more important consideration for the appointment of government directors back in 2005 was that the Appellant-Company was then suffering heavy financial losses, under debt re- structuring and the appointment of government directors was needed to instil public confidence.

8. It is further submitted that the Ld. CLB's order dated 01.07.2005 was confirmed by the Hon'ble High Court of Himachal Pradesh vide order dated 17.05.2007 which was challenged by the Appellant before the Hon'ble Supreme Court in SLP (C) No. 11189/2007. After passing of a status- quo order dated 16.07.2007 the Hon'ble Supreme Court vide order dated 09.04.2010 granted leave, admitted the SLP converting it into C.A. No.3165/2010. These reasons/ considerations based on which the above orders were passed do not exist any longer since the Appellant-Company has recovered financially and recorded significant growth in the last 16 years. This was duly brought to the attention of Company Appeal (AT) Nos. 04 and 05 of 2022 40 the Hon'ble Supreme Court vide an application to bring on record subsequent events via I.A. No.97153/2018 in C.A. No.3165/2010.

9. It is further submitted that the Hon'ble Supreme Court vide its order dated 09.07.2019 while dismissing the SLP, however specifically granted liberty to the Appellant to agitate these subsequent events before the concerned forum. Pursuant to this liberty granted by the Hon'ble Supreme Court, the Appellant preferred C.A. No. 785/2019 in C.P. No. 4/2005 (Disposed of) before the NCLT, Chandigarh. However, the said application preferred by the Appellant was dismissed/ rejected by the NCLT vide its order dated 06.10.2021 without considering the merits or the 'subsequent events' in terms of the directions of the Hon'ble Supreme Court. Hence, the present appeals were preferred before this Tribunal.

10. It is further submitted that the Appellant in terms of the arrangement (under section 391 of the Companies Act, 1956) sanctioned by the Hon'ble High Court of Himachal Pradesh vide order dated 04.08.2009 passed in C.P. No.5 of 2004, allotted equity shares as per the SEBI Regulations, worth Rs. 104.70 crores in the listed company (constituting 20% of the company) thereby extinguishing the liability on account of dues to Fixed Deposit holders [FD holders] as per the CLB order dated 19.08.2003. These shares were well received by the FD holders which were converted into their DEMAT accounts and more than 50% of shareholders have sold their shares, hence, realising their dues. Thereafter, the Respondent preferred an appeal with the NCLT, Chandigarh, which passed directions vide order dated 12.03.2018 to cancel the balance shares (shares not traded/ sold by the FD holders) and pay cash in exchange as Company Appeal (AT) Nos. 04 and 05 of 2022 41 per the CLB order dated 19.08.2003. In compliance with the said directions of the NCLT, the Appellant approached and communicated the scheme/ offer to its balance shareholders to surrender their allotted equity shares and get refund of FD dues. Subsequently, 4953 shareholders approached the Appellant- Company for their cash dues amounting to a total of Rs. 18.84 crores.

11. It is further submitted that the remaining shareholders were not willing to surrender their shares to the Appellant-Company as per the scheme of the CLB, since at the time the market value of the shares had increased significantly, to 50-60% more than the value they would receive as per the scheme [i.e. Rs. 36 per share vs. Rs. 54 per share]. Therefore, FD holders have exercised their right to such choice/ option and cannot be compelled to incur loss by returning the shares at a lower price to the Appellant as per the scheme. Similarly, the Appellant had issued 75 lakh equity shares in the year 2008 to more than 20 banks as part of debt settlement as per CDR at Rs. 20 per share (more than 75% premium compared to issue price for FD holders which was Rs. 11.32). The Banks readily accepted the shares and have sold them in the market recovering their money at market price which was higher than the issue price. Furthermore, the balance portion of debt outstanding as Preference Capital to the tune of Rs. 96 crores for which more than 75% of the Banks have provided written consent for conversion (of the outstanding dues) to equity capital at the market rate of Rs. 53.72/- per share (as per the SEBI Formula) which is nearly five times the price at which the shares were issued to the FD holders.

12. It is further submitted that the financial recovery and growth of the Appellant-company from financial year 2005 [FY 2005] till financial year 2021 Company Appeal (AT) Nos. 04 and 05 of 2022 42 [FY 2021] placed on record has not been disputed by the Union of India. A debt of Rs. 750 crores were settled and paid by the Appellant [Rs. 114 crores of outstanding debt i.e. Preference Capital is being converted to Equity]. The revenue of the Appellant-Company had risen from Rs.132 crores in FY 2005 to Rs. 1200 crores in FY 2021 and it recorded a profit of Rs.97 crores in FY 2021 as against the loss of Rs.41 crores in FY 2005. The exports of the Appellant- Company have increased from Rs.75 crores in FY 2005 to Rs.476 crores in FY 2021 and the number of direct employees employed by the Appellant-Company have increased from 750 employees in FY 2005 to 2500 employees in FY 2021. The share price of the Appellant-Company was Rs.7 in FY 2005 and in FY 2021 it reached a high of Rs.75 while the net-worth of the Appellant-Company has risen from Rs.236 crores in FY 2005 to Rs.445 crores in FY 2021. The Appellant- Company has added new products and new businesses. including medical devices and OTC brand, Dr. Morepen. The manufacturing plant of the Appellant- Company acquired 3 more USFDA approvals and ISO-13485 certifications.

13. It is further submitted that in the last 17 years, the Appellant has settled and paid all its debt and is a zero-debt company since the last 5 years with no outstanding term loan or working capital loan from any bank (zero-debt certificate dated 22.10.2021 at page 2478 of the Appeal). All liabilities or outstanding dues of the Appellant-Company have been paid off from internal cash accruals over the past years. The value of shares allotted to the FD holders have increased 5 to 6 times from Rs.11.32 to Rs.75. Therefore, there exist no cogent reasons for appointing of government directors to assist or manage the appellant-company and the considerations for directing the same by the CLB Company Appeal (AT) Nos. 04 and 05 of 2022 43 vide its order dated 01.07.2005 including debt-restructuring, financial losses or interests of FD holders do not find any ground today. The Union of India has not disputed the above position. Further it is settled law that the power under Section 408 of the Companies Act, 1956, is a power that must be used sparingly in extraordinary circumstances:

• M/s Sterling Holidays Resorts (India) Ltd. v. Central Government Secretary to Govt. of India, 2013-1-LW 596 / Para 11,15,19,20,21,23. • Kedar Nath Agarwal (dead) & Anr. v. Dhanraji Devi (dead) & Anr., (2004) 8 SCC 76/ Para 19 to 26.

• Peerless General Finance & Investment Co. Ltd. v. Union of India, 1988 SCC OnLine Cal 285/ Para 27 to 30.

• South India Viscose Ltd. & Anr. v. Union of India & Ors., 1981 SCC OnLine Del 144 / Para 20 & 22.

14. Further, the Ld. CLB's order dated 01.07.2005 had directed the appointment of two government directors on the Board of the Appellant- Company for a period of 3 years. Thereafter, 17 years have lapsed and now there exist no grounds which would warrant the appointment of government directors as per section 408 of the Companies Act, 1956.

15. As stated above these 'subsequent events' were placed before the Hon'ble Supreme Court vide I.A. No.97153/2018 in C.A. No.3165/2010 and hence the Hon'ble Supreme Court vide its order dated 09.07.2019 had directed that the Appellant agitate the subsequent events before the concerned forum. Subsequently, the Appellant placed on record the 'subsequent events' before the Company Appeal (AT) Nos. 04 and 05 of 2022 44 NCLT, Chandigarh vide C.A. No.785/2019, C.A. No.467/2020 and C.A. No.104/2021 which it failed to consider.

16. It is further submitted that there is no contempt of the Ld. CLB's order dated 01.07.2005 as alleged. Applying the doctrine of merger of orders/ judgements the Ld. CLB's order dated 01.07.2005 stood merged with the final order dated 09.07.2019 passed by the Hon'ble Supreme Court [Babloo Singh & Ors. v. State of Uttar Pradesh & Ors., (2019) 12 SCC 403 / Para 9 // Omprakash Verma & Ors. v. State of Andhra Pradesh & Ors., (2010) 13 SCC 158 / Para 47 to 49]. Therefore, assuming (for the sake of argument) contempt, if any, would be that of the final order dated 09.07.2019 passed by the Hon'ble Supreme Court and not of the Hon'ble CLB or NCLT. It is settled law that the power to punish for its own contempt is exclusive to the Hon'ble Supreme Court under Article 129 read with Article 142 of the constitution and such power cannot be exercised by any other court of law [Supreme Court Bar Association v. Union of India, (1998) 4 SCC 409 / Para 21 & 38 // R.P. Vaghela v. State of Gujarat & Ors., (2002 SCC OnLine Guj 34 Para 38, 40, 41, 61 // Vitusah Oberoi v. Court of its own motion, (2017) 2 SCC 314 / Para 10 & 12]. Hence, the contempt proceedings initiated against the Appellant are not maintainable in the eyes of the law.

17. It is further submitted that there is in fact no contempt of court by the Appellant since the Hon'ble Supreme Court vide its order dated 09.07.2019 granted liberty to the Appellant to effectively seek modification of the order dated 01.07.2005 passed by the Ld. CLB especially since the said order would not hold ground given the subsequent events. The Appellant conveyed the same stand/ Company Appeal (AT) Nos. 04 and 05 of 2022 45 position to the Respondent vide letter dated 09.08.2019. The key ingredient to establish wilful disobedience, consequently resulting in civil contempt is "deliberate flouting of orders" and not mere "misinterpretation" or "possible" interpretation of an order. An action based on a plausible interpretation of an order cannot be said to amount to 'wilful disobedience' of the orders of this court [Indian Airports Employees' Union v. Ranjan Chatterjee, (1999) 2 SCC 537, Para 7 & 11].

18. The Ld. Counsel for the Respondent in both these appeals during the course of argument and in his Reply Affidavit submitted that the Respondent herein had initiated Contempt proceedings against the Appellant before the NCLT vide CA No. 1207 of 2019 wherein the NCLT vide the common impugned order was pleased to issue notice and the matter is now pending adjudication and was listed for hearing on 31.05.2022, thereafter subsequent dates. The Appellant is trying to take shelter of the order passed by the Hon'ble Supreme Court of India by misinterpreting it to its advantage that it has granted liberty to get the order dated 01.07.2005 recalled. In fact, the Hon'ble Supreme Court of India has in clear terms declined to interfere with the findings of facts recorded by the Hon'ble Himachal Pradesh High Court and did not comment on the subsequent events in the matter. The only liberty granted was and which reads as under is:

"... it would be open for the appellant to agitate the subsequent events before the concerned forum."

Company Appeal (AT) Nos. 04 and 05 of 2022 46 Meaning thereby that the Appellant herein can seek relief in regard to the subsequent events after the passing of the order dated 01.07.2005 before the right forum and not "seek modification of the said order".

19. It is further submitted that the Hon'ble Supreme Court had directed that the proceedings be completed as far as possible within one year of the order. This makes it clear that the Hon'ble Supreme Court has left no scope of modification/rectification of the said order and has only granted the Appellant liberty to agitate subsequent events. The Appellant has approached this Appellate Tribunal with malicious intents to keep the reins of the management of the Company in his hands and continue to do as he has been doing for the last 15 years.

20. It is further submitted that in view of the above, the NCLT, Chandigarh bench has observed and adjudicated on all necessary facts and circumstances relevant to the Company Petition filed by the Appellant herein and thereafter, has rightly passed the impugned order dated 06.10.2021. It is reiterated that the order dated 01.07.2005 has been upheld by the Hon'ble Supreme Court and has attained the finality. It is submitted that Appellant has misused the process of law and has tried his best to circumvent the order passed by the CLB more than 14 years ago and now after dismissal of the SLP by the Hon'ble supreme Court has devised a novel method to further disobey the dicta of the Court. The subsequent event cannot be a ground in any eventuality for non-compliance of the orders passed by the court of competent jurisdiction therefore the present appeal is devoid of any merits and deserve to be dismissed with exemplary cost. Company Appeal (AT) Nos. 04 and 05 of 2022 47

21. It is further noteworthy that criminal cases filed against the company and its officers in default under provisions of section 58A and related provisions of the Company Act, 1956 for failure to repay deposit from public are still pending before concerned court. The appointment of government nominated directors is extremely relevant in view of the fact that promoters of the company siphoned company funds which resulted in deterioration financial position of the company and now liability needs to be fixed for such criminal acts of the management of the company.

22. It is further submitted that the contemnors/appellants have committed contempt of the Ld. NCLT Court by refusing to comply with the order dated 01.07.2005 passed by the Ld. CLB by refusing the appointment of the Government nominated directors on the Board of the Appellant No. 1 Company. It is pertinent to mention that the erstwhile CLB had directed appointment of two Government nominated directors on the board of the Appellant No. 1 Company which was upheld by the Hon'ble Supreme Court vide order dated 09.07.2019. Accordingly, the Answering Respondent had, time and again passed various orders for appointment of Government Directors and the Company would simply refuse to comply with the same. Pursuant to order dated 09.07.2019 passed by the Supreme Court, the Answering Respondent, vide order dated 30.07.2019, nominated two directors on the board of Directors of the Company. However, the Company again refused to comply with the order passed by the Answering Respondent vide its letter dated 09.08.2019, thereby committing contempt of the Ld. NCLT. The net effect of the above clearly demonstrate that the Appellant contemnors have willfully disobeyed the directions passed by the Company Appeal (AT) Nos. 04 and 05 of 2022 48 CLB, vide order dated 01.07.2005, which was subsequently upheld by the High Court of Himachal Pradesh and thereafter by the Hon'ble Supreme Court of India.

23. Further, even after dismissal of the SLP by the Hon'ble Supreme Court of India, the Contemnors haven't taken any positive steps to comply with the order. The above act of the Appellants itself clarifies that the disobedience was completely wilful and intentional in the name of litigation. The Appellants are trying to blow hot and cold in the same breath. On one hand, they are denying compliance of the order passed by the erstwhile CLB and further upheld by the Supreme Court but on the other hand are trying to justify the jurisdiction and powers of this Tribunal in modifying the said order by using excerpts of the said order and misinterpreting it in their favour.

24. Without prejudice to the above, it is submitted that the company was due and payable of a total amount of Rs. 156 crores to various fixed deposits holders as on 30.09.2003, even now the company is claiming that it has (aid a total amount just a little more than 18 crores only as against the claims of Rs. 156 crores. It is further submitted that nothing has been placed on record before the NCLT as well as this Appellate Tribunal regarding the balance fixed deposits holder and whether the said fixed deposits were genuine or fake. It cannot be said that either the original fixed deposit holders or any of their legal heir or successors will sit quietly without claiming their fixed deposits irrespective of issuance of any advertisement for this purpose.

25. Further, it was also observed by the High Court in its order dated 17.05.2007 that the no stay order was granted in the appeal filed by the Company Appeal (AT) Nos. 04 and 05 of 2022 49 Company even then, the Company had failed to accept two Directors appointed by the Government. It was further held that since the Company has failed to comply with the order of the CLB, the Company was directed to hold a meeting of the board of Directors within two months from the date of the order in which it shall associate the two Directors appointed by the Answering Respondent and that the term of 3 years for the said Directors shall start from the day the first meeting is held (at page 97 of appeal). Therefore, in lieu of section 10 read with Section 12 of the Contempt of Courts Act, 1971 and Section 425 of the Companies Act, 2013, the Answering Respondent has rightly approached the Ld. for seeking contempt proceedings against the Appellants. For the aforesaid reasons, the instant Appeals be dismissed.

26. We have perused the pleadings made on behalf of the parties and considered the submissions of the parties.

27. We observe that the Company Law Board vide order dated 01.07.2005 disposed of the Company Petition No. 4 of 2005 directing the Central Government to appoint two Directors on the board of the Company for a period of three years which relevant part of the order reads as hereunder:

"9. The Central Government has sought for appointment of 6 directors with the view to have the majority on the Board. It is on record that the company has already two nominees of the financial institutions and therefore, I am of the view that appointment of 2 government directors would suffice to monitor and assist the company. Accordingly, I direct the Central Company Appeal (AT) Nos. 04 and 05 of 2022 50 Government to appoint two directors on the board of the company for a period of 3 years."

28. The Appellant-M/s. Morepen Laboratories Ltd. as well as Union of India are aggrieved with the order of the Company Law Board dated 01.07.2005, filed separate company appeals before the Hon'ble High Court of Himachal Pradesh at Shimla. The Hon'ble High Court vide its common order dated 17.05.2007 dismissed both the appeals. Thereafter, the Appellant-M/s Morepen Laboratories Ltd. as well as Union of India again challenged the order of the Hon'ble High Court before the Hon'ble Supreme Court of India by filing two separate Special Leave Petitions and the Hon'ble Supreme Court of India directed to maintain status quo by orders dated 16.07.2007 and 07.09.2007 respectively and the said status quo order continued till the disposal of the said SLPs. Further, the SLPs were converted into Civil Appeal No. 3165 of 2010 and Civil Appeal No. 3166 of 2010, the Hon'ble Supreme Court vide its order dated 09.07.2019 dismissed the said appeals and the said order reads as under:-

"Civil Appeal No(s) 3165/2010 We are not inclined to interfere with the finding of facts recorded by the High Court in the impugned judgment with respect to siphoning off the amount and the loss etc. It was submitted by the learned counsel for the appellant that there are subsequent events and liabilities have been cleared. We are not commenting on the subsequent events in this matter. We have examined the propriety of the decision of the High Court. We are satisfied that no interference is called for. It would be Company Appeal (AT) Nos. 04 and 05 of 2022 51 open for the appellant to agitate the subsequent events before the concerned forum. Let the proceedings be concluded as far as possible within one year.

The appeal is dismissed.

C.A. No. 3166/2010 Since there are two directors, we are not inclined to appoint six directors as prayed.

The appeal stands dismissed."

29. The NCLT has rightly considered the facts and circumstances of the case that the order in CP No. 4 of 2005 dated 01.07.2005 was upheld upto the Hon'ble Supreme Court of India and hence the NCLT cannot modify or cancel the same. The observation of the Hon'ble Supreme Court of India while dismissing the civil appeals to the extent that "it would be open for the appellant to agitate the subsequent events before the concerned forum" cannot empower to the Tribunal to modify the order which was upheld by the Hon'ble Supreme Court of India. On the other hand, the observation "let the proceedings be concluded as far as possible within one year" amounts to a direction for proper compliance of the order dated 01.07.2005 passed in CP No. 4 of 2005.

30. Keeping in view the aforenoted discussion, we do not find any merit in both these Appeals to interfere with the common order impugned dated 06.10.2021 passed by the National Company Law Tribunal, Chandigarh Bench, Chandigarh. The impugned order dated 06.10.2021 passed by the National Company Law Tribunal, Chandigarh Bench, Chandigarh in CA Nos. 785/2019 & 1207/2019 Company Appeal (AT) Nos. 04 and 05 of 2022 52 in CP No. 4/2005 (Disposed of) is hereby affirmed. The instant Appeals are hereby dismissed. I.A., if any, stands disposed off. No order as to costs.

31. The Appellants in Company Appeal (AT) No. 04 of 2022 may appear before the NCLT, Chandigarh and file their reply affidavit to the Contempt Application and in light of the Hon'ble Supreme Court order passed in Civil Appeal No. 3165 of 2010 bringing in notice all the subsequent developments and events. The NCLT, Chandigarh may consider and pass appropriate orders in accordance with law.

32. Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the National Company Law Tribunal, (Chandigarh Bench, Chandigarh), forthwith.

[Justice Anant Bijay Singh] Member (Judicial) [Barun Mitra] Member (Technical) New Delhi 25th April, 2023 R. Nath.

Company Appeal (AT) Nos. 04 and 05 of 2022