National Company Law Appellate Tribunal
Electrotherm (India) Limited vs Mukesh B. Bhandari on 28 January, 2022
National Company Law Appellate Tribunal
Principal Bench, New Delhi
COMPANY APPEAL (AT) No. 54 of 2021
&
I.A. No. 978 of 2021
(Arising out of Order dated 04th May, 2021 passed by National Company Law
Tribunal, Ahmedabad Bench, Court-I, in MA 08 of 2021 in CP No. 93 of
2018 & Comp. Appl. 27 of 2021 in CP 38 of 2019).
IN THE MATTER OF:
Electrotherm (India) Limited
CIN: L29249GJ1986PLC009126
A Company incorporated under the
provisions of the Companies Act, 1956.
Office at: A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Appellant
Versus
1. Mr. Mukesh B. Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 1
2. Mr. Siddharth Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 2
3. Mr. Rakesh Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 3
-2-
4. Mr. Shailesh B Bhandari
(Promoter and Managing Director of
Respondent No. 1)
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 4
5. Mr. Jagdishkumar Amrutal Akhani
A-502, Sarthak Towers,
Nr. Iscon Cross Roads,
Satellite Road, Satellite,
Email Id: [email protected] ...Respondent No. 5
6. Mr. Nagesh Bhandari
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 6
7. Western India Specialty Hospitals Ltd.
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 7
8. Kirtan Corporation Services Pvt. Ltd.
H-201, Everest Empire, Near Astha Home,
Sola Ahmedabad, Gujarat - 380060.
Email Id: [email protected] ...Respondent No. 8
9. Indus Elec Trans Pvt. Ltd.
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 9
10. Logix Infosoft Pvt. Ltd.
E-9, Panchsheel Park,
New Delhi - 110017.
Email Id: [email protected] ...Respondent No. 10
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-3-
11. Ashok R. Bhandari
Abhipushpa Bunglow,
Jaindrapark Co-operative Housing Society,
Thaltej, Ahmedabad.
Email Id: [email protected] ...Respondent No. 11
12. Castleshine Pte Limited
7005A, Beach Road, 08-313, The Plaza
Singapore - 199591.
Email Id: [email protected] ...Respondent No. 12
13. Leadheaven Pte Limited
05-06, Kentish Green, 20 Oxford Road,
Singapore - 218815.
Email Id: [email protected] ...Respondent No. 13
14. Fagesh Kumar Soni
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 14
15. E - Motion Power Pvt. Ltd.
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 15
16. Jayshree Petro - Yarn Pvt. Ltd.
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 16
17. Registrar of Companies
RoC Bhawan, Opp. Rupal Park,
Near Ankur Bus Stand, Naranpura,
Ahmedabad - 380013.
Email Id: [email protected] ...Respondent No. 17
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-4-
18. Securities and Exchange Board of India
Ground Floor, Sakar I,
Near Gandhi Gram Station,
Opp. Nehru Bridge, Ashram Road,
Ahmedabad, Gujarat.
Email Id: [email protected]
[email protected] Respondent No. 18
Appellant: Mr. Satvik Verma, Sr. Advocate along with
Mr. Chandrashekhar Yadav, Mr. Pratyush Kumar
Yadav, Ms. Gitanshi Arora, Mr. Ayandeb Mishra, Mr.
Saransh Kothari, Ms. Drishti Harpalani, Mr. Varun
Chopra & Ms. Simran Kumari, Advocates.
Respondent: Mr. R.J. Goswami, Mr. S.R. Keshkani, Mr. Rahul
Sahasrabudde (CS), Mr. Shailesh Bhandari, Mr.
Mukesh Bhandari, Mr. Ashok R Bhandari, Advocates.
Respondent No. Mr. Rudreshwar Singh, Mr. LCN Shahdeo &
1 to 3: Mr. Saurabh Jain, Advocates for R-1 to R-3.
Respondent No. Mr. Abhishek Baid, for R-18/SEBI.
18:
With
COMPANY APPEAL (AT) No. 55 of 2021
&
I.A. No. 979 of 2021
(Arising out of Order dated 04th May, 2021 passed by National Company Law
Tribunal, Ahmedabad Bench, Court-I, in MA 08 of 2021 in CP No. 93 of
2018 & Comp. Appl. 27 of 2021 in CP 38 of 2019).
IN THE MATTER OF:
Electrotherm (India) Limited
CIN: L29249GJ1986PLC009126
A Company incorporated under the
provisions of the Companies Act, 1956.
Office at: A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Appellant
Versus
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-5-
1. Mr. Mukesh B. Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 1
2. Mr. Siddharth Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 2
3. Mr. Rakesh Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 3
4. Mr. Shailesh B Bhandari
(Promoter and Managing Director of
Respondent No. 1)
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 4
5. Mr. Dinesh Mukati
101-A, Paramount Residency,
168 Sunrise Park,
Vastrapur,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 5
6. Mr. Pratap Mohan,
C-30 Samatva,
07, Club Road, Shela,
Taluka Sanand,
Ahmedabad - 380058.
Email Id: [email protected] ...Respondent No. 6
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-6-
7. Nivedita Sarda,
B-34, Nulite Colony,
Tonk Road,
Jaipur - 302018.
Email Id: [email protected] ...Respondent No. 7
8. Mr. Fagesh Soni,
Company Secretary Electrotherm (India)
Limited
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 8
Appellant: Mr. Satvik Verma, Sr. Advocate along with
Mr. Chandrashekhar Yadav, Mr. Pratyush Kumar
Yadav, Ms. Gitanshi Arora, Mr. Ayandeb Mitra, Mr.
Saransh Kothari, Ms. Drishti Harpalani, Mr. Varun
Chopra & Ms. Simran Kumari, Advocates.
Respondent: Mr. R.J. Goswami, Mr. S.R. Keshkani, Mr. Rahul
Sahasrabudde (CS), Mr. Shailesh B Bhandari & Mr.
Mukesh Bhandari, Advocates.
Respondent No. Mr. Rudreshwar Singh, Mr. LCN Shahdeo &
1 to 3: Mr. Saurabh Jain, Advocates for R-1 to R-3.
With
COMPANY APPEAL (AT) No. 56 of 2021
(Arising out of Order dated 04th May, 2021 passed by National Company Law
Tribunal, Ahmedabad Bench, Court-I, in MA 08 of 2021 in CP No. 93 of
2018 & Comp. Appl. 27 of 2021 in CP 38 of 2019).
IN THE MATTER OF:
Mr. Shailesh B Bhandari
(Promoter and Managing Director of
Respondent No. 1)
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Appellant
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-7-
Versus
1. Electrotherm (India) Limited
CIN: L29249GJ1986PLC009126
A Company incorporated under the
provisions of the Companies Act, 1956.
Office at: A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 1
2. Mr. Mukesh B. Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 2
3. Mr. Siddharth Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 3
4. Mr. Rakesh Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected]
...Respondent No. 4
5. Mr. Jagdishkumar Amrutal Akhani
A-502, Sarthak Towers,
Nr. Iscon Cross Roads,
Satellite Road, Satellite,
Email Id: [email protected] ...Respondent No. 5
6. Mr. Nagesh Bhandari
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 6
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-8-
7. Western India Specialty Hospitals Ltd.
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 7
8. Kirtan Corporation Services Pvt. Ltd.
H-201, Everest Empire, Near Astha Home,
Sola Ahmedabad, Gujarat - 380060.
Email Id: [email protected] ...Respondent No. 8
9. Indus Elec Trans Pvt. Ltd.
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 9
10. Logix Infosoft Pvt. Ltd.
E-9, Panchsheel Park,
New Delhi - 110017.
Email Id: [email protected] ...Respondent No. 10
11. Ashok R. Bhandari
Abhipushpa Bunglow,
Jaindrapark Co-operative Housing Society,
Thaltej, Ahmedabad.
Email Id: [email protected] ...Respondent No. 11
12. Castleshine Pte Limited
7005A, Beach Road, 08-313, The Plaza
Singapore - 199591.
Email Id: [email protected] ...Respondent No. 12
13. Leadheaven Pte Limited
05-06, Kentish Green, 20 Oxford Road,
Singapore - 218815.
Email Id: [email protected] ...Respondent No. 13
14. Fagesh Kumar Soni
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-9-
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 14
15. E - Motion Power Pvt. Ltd.
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 15
16. Jayshree Petro - Yarn Pvt. Ltd.
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 16
17. Registrar of Companies
RoC Bhawan, Opp. Rupal Park,
Near Ankur Bus Stand, Naranpura,
Ahmedabad - 380013.
Email Id: [email protected] ...Respondent No. 17
18. Securities and Exchange Board of India
Ground Floor, Sakar I,
Near Gandhi Gram Station,
Opp. Nehru Bridge, Ashram Road,
Ahmedabad, Gujarat.
Email Id: [email protected]
[email protected] Respondent No. 18
Appellant: Mr. Satvik Verma, Sr. Advocate along with
Mr. Chandrashekhar Yadav, Mr. Pratyush Kumar
Yadav, Ms. Gitanshi Arora, Mr. Ayandeb Mitra, Mr.
Saransh Kothari, Ms. Drishti Harpalani, Mr. Varun
Chopra & Ms. Simran Kumari, Advocates.
Respondent: Mr. R.J. Goswami, Mr. S.R. Keshkani, Mr. Rahul
Sahasrabudde (CS), Raki Bhandari, Mr. Mukesh
Bhandari & Mr. Ashok R Bhandari, Advocates.
Respondent No. Mr. Shailesh B Bhandari, Advocate for R-1.
1:
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-10-
Respondent No. Mr. Rudreshwar Singh, Mr. LCN Shahdeo &
2 to 4: Mr. Saurabh Jain, Advocates for R-2 to R-4.
Respondent No. Mr. Abhishek Baid, Advocate for SEBI/R-18.
18:
With
COMPANY APPEAL (AT) No. 57 of 2021
(Arising out of Order dated 04th May, 2021 passed by National Company Law
Tribunal, Ahmedabad Bench, Court-I, in MA 08 of 2021 in CP No. 93 of
2018 & Comp. Appl. 27 of 2021 in CP 38 of 2019).
IN THE MATTER OF:
Mr. Shailesh B Bhandari
(Promoter and Managing Director of
Respondent No. 1)
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Appellant
Versus
1. Electrotherm (India) Limited
CIN: L29249GJ1986PLC009126
A Company incorporated under the
provisions of the Companies Act, 1956.
Office at: A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 1
2. Mr. Mukesh B. Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 2
3. Mr. Siddharth Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-11-
Email Id: [email protected] ...Respondent No. 3
4. Mr. Rakesh Bhandari
Office at: Bhandari Farmhouse,
Bhopal Ambali Road,
Village: Dascroi,
Ahmedabad - 380058
Email Id: [email protected] ...Respondent No. 4
5. Mr. Dinesh Mukati
101-A, Paramount Residency,
168 Sunrise Park,
Vastrapur,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 5
6. Mr. Pratap Mohan,
C-30 Samatva,
07, Club Road, Shela,
Taluka Sanand,
Ahmedabad - 380058.
Email Id: [email protected] ...Respondent No. 6
7. Nivedita Sarda,
B-34, Nulite Colony,
Tonk Road,
Jaipur - 302018.
Email Id: [email protected] ...Respondent No. 7
8. Mr. Fagesh Soni,
Company Secretary Electrotherm (India)
Limited
A-1, Skylark Apartment,
Satellite Road, Satellite,
Ahmedabad - 380015.
Email Id: [email protected] ...Respondent No. 8
Appellant: Mr. Satvik Verma, Sr. Advocate along with
Mr. Chandrashekhar Yadav, Mr. Pratyush Kumar
Yadav, Ms. Gitanshi Arora, Mr. Ayandeb Mitra, Mr.
Saransh Kothari, Ms. Drishti Harpalani, Mr. Varun
Chopra & Ms. Simran Kumari, Advocates.
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 &
I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of
2021.
-12-
Respondents: Mr. R.J. Goswami, Mr. S.R. Keshkani, Mr. Rahul
Sahasrabudde (CS), Raki Bhandari, Mr. Mukesh
Bhandari & Mr. Ashok R Bhandari, Advocates.
Respondent No. Mr. Shailesh B Bhandari, Advocate for R-1.
1:
Respondent No. Mr. Rudreshwar Singh, Mr. LCN Shahdeo &
2 to 4: Mr. Saurabh Jain, Advocates for R-2 to R-4.
JUDGEMENT
[Per; Shreesha Merla, Member (T)]
1. Aggrieved by the Impugned Order dated 04.05.2021 passed by the National Company Law Tribunal, Ahmedabad Bench ('NCLT') in Company Application No. 27 of 2021 in Company Petition No. 38 of 2019 and MA No. 08 of 2021 in CP No. 93 of 2018 & CP No. 94 of 2018, 'M/s. Electrotherm (India) Ltd.'/the Appellant preferred Company Appeal (AT) No. 54 of 2021 & Company Appeal (AT) No. 55 of 2021 respectively, under provisions of Section 421 of the Companies Act, 2013, (hereinafter referred to as the 'Act').
2. The Common Impugned Order dated 04.05.2021, has also been challenged by Mr. Sailash B Bhandari/the Appellant in Company Appeal (AT) No. 56 of 2021 & Company Appeal (AT) No. 57 of 2021 aggrieved by the Common Order passed in CA 27 of 2021 in CP 38 of 2019.
3. Since, all the Appeals arise out of a Common Impugned Order and deal with common facts, they are being disposed of by this Common Order.
4. By the Impugned Order, the NCLT has given interim relief observing as follows:
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-13-
"MA 08 of 2021 has been filed by Mr. Mukesh Bhandari and others wherein the removal of Mr. Mukesh Bhandari as authorized signatory of bank accounts of Respondent no.1 company vide board resolution Dated 05.04.2021 has been challenged and relief has been sought that such resolution should not be allowed to be implemented. Comp. Appl. 27 of 2021 has been filed wherein it has been challenged by the Petitioner who is Respondent no.2 in CP 38 of 2019 and also Respondent in CP 93 of 2018 and CP 94 of 2018 that Petitioner being promoter and Managing Director of the company was prevented from functioning and running day to day affairs of the Respondent no.1 company. In this regard, Learned Senior Counsel Mr. Saurabh Soparkar argued the matter at length and drew our attention to the fact that in spite of being Managing Director for three decades, respondents were illegally preventing him to function in the interests of the company. It was also claimed that even police proceedings were initiated so that the Petitioner could get access to factory premises and run affairs. In the earlier hearing on 27.04.2021, this Tribunal had directed both the groups to file evidence as regard to the correct factual situation and matter was adjourned for hearing on 03.05.2021. Both parties filed their additional affidavits. Learned Senior Counsel Mr. Soparkar drew our attention to specific paragraphs of the affidavit filed by the Respondent in Comp. Appl. 27 of 2021 to show that even as per averments made in said affidavit, Petitioner was entitled to function as Managing Director of the company. It was further pointed out that respondents also claimed that they were not creating any hurdles. He further stated that in spite of this being legal position, the Petitioner was not being allowed to function. On the other side, Learned Counsel Mr. Gaurav Dhama and Mr. R.J. Goswami submitted that validity of appointment of independent directors was under challenge. It was further claimed that Mr. Mukesh Bhandari had been illegally removed as authorized signatory of bank operations. Learned Senior Counsel Mr. Rashesh Sanjanwala appeared for two independent directors and submitted that independent directors were appointed in 2017 and the application challenging the validity of their appointment had been filed in 2018 after one year. Hence, this fact could not be ignored and such independent directors should be allowed to function as such in terms of the provisions of law. Learned Senior Counsel Mr. Navin Pahwa appeared on behalf of Respondent no.1 company and submitted that there were 6000 shareholders of the company and the interests of the company had to be protected.
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-14-
2. In the back ground of these submissions and considering the fact that main applications need detailed arguments, however, due to impending summer vacations and pandemic situation prevailing in the country, we consider it appropriate to pass interim order so that the functioning of the company is not affected adversely till the final disposal of all matters. In this regard, we express our displeasure as to how both groups are acting because in such matter involvement of police as such is not desirable thing and both groups should act responsibly so that interests of the shareholders at large as well as of the company are not adversely affected. Be that as it may. We need to provide some interim solution. Accordingly, we order as under:
(i) Respondent no.1 company as well as Respondent no.5 in MA 08 of 2021 are directed to appoint Mr. Siddarth Bhandari as joint Signatory of all bank accounts of the Respondent no.1 company with immediate effect. The accounts shall be operated under joint signature of Mr. Shailesh Bhandari and Mr. Siddarth Bhandari.
(ii) Mr. Siddarth Bhandari shall also be a special invitee to all board meetings of the company which are held henceforth.
(iii) All policy decisions which may affect smooth running of the Respondent no.1 company as a going concern or otherwise to protect interest of other stake holders such as financial lenders shall be taken with consent of Mr. Mukesh Bhandari and Siddarth Bhandari. Without expression of any opinion on merits of their appointment, all independent directors would exercise their rights in terms of the provisions of Companies Act, 2013 r.w. Schedule-IV thereto.
(iv) The Petitioner in Comp. Appl.27 of 29018 shall have unfettered right to run day to day affairs as Managing Director of Respondent no.1 Company and he shall not be restricted/ prevented from access to the company premises or in properties owned by the Respondent no.1 company so as to run business affairs subject to directions given hereinabove.
(v) Interim order given earlier also to continue till further orders.
3. Urgent certified copy of this order, if applied for, be issued upon compliance with all requisite formalities."
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-15-
5. As the facts have been addressed to by all the parties, for the sake of brevity the same is not being repeated.
Company Appeal (AT) No. 54 & 55 of 2021
6. Submissions of the Learned Senior Counsel appearing on behalf of the Appellant:
• It is submitted that the Learned Senior Counsel for the Appellant is a Public Limited Company with approximately 7000 Equity Shareholders, equity shareholding pattern of the promoter group is as here under:
S. Name Status in %age of Status as
No. the Appeal Share Director
(54/2021) Holding
1. Mukesh B. R1 6.35% Non-Executive
Bhandari Director (former
Chairman & MD)
2. Siddarth R2 0.51% Former Whole Time
Bhandari Director (Ceased to
be Director w.e.f.
30.09.2019)
3. Rakesh R3 4.02% NA
Bhandari
4. Shailesh B. R4 6.66% Managing Director
Bhandari
5. Nagesh R6 1.83% NA
Bhandari
6. Anurag NA 0.60% NA
Bhandari
7. Suraj NA 0.64% Whole Time Director
Bhandari w.e.f. 13.11.2019
Mr. Mukesh Bhandari, Mr. Rakesh Bhandari, Mr. Shailesh B. Bhandari & Mr. Nagesh Bhandari are brothers. Mr. Siddarth Bhandari and Mr. Anurag Bhandari are sons of Mr. Mukesh Bhandari. Mr. Suraj Bhandari is the son of Mr. Shailesh B. Bhandari. Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-16-
• It is submitted that Mr. Siddharth Bhandari/R-2 filed CP No. 93 of 2018 under Sections 149, 150, 152, 159 and 176 of the Act challenging the appointment of the Independent Directors appointed on the Board of the Appellant Company.
• Learned Counsel drew our attention to the reliefs sought for in Company Petition No. 93 of 2018 which are detailed as hereunder:
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-17-
• Learned Counsel contended that the NCLT does not have jurisdiction to grant declaratory reliefs sought for in this Petition. • The third Respondent/Mr. Rakesh Bhandari filed identical CP No. 94 of 2018 under the same provisions seeking the same reliefs. • Respondents 1 to 3 Mr. Siddarth Bhandari, Mr. Rakesh Bhandari & Mr. Mukesh Bhandari filed CP No. 38 of 2019 under Sections 241 and 242 of the Act alleging Oppression and Mismanagement. The Appellant herein raised preliminary objections with respect to eligibility of the Respondents herein to maintain a Petition in view of the provisions of sub-Section 244 of the Companies Act 2013, as they did not hold 10% shares of the total Share Capital of the Appellant Company. Respondents 1 to 3 filed I.A. 499 of 2019 in July 2019, seeking waiver of the eligibility criteria laid down under Section 244 of the Act and this I.A. was dismissed vide Order dated 08.04.2021.
• In August 2019, the second Respondent filed I.A. 522 of 2019 in CP 93 of 2018 seeking injunction against convening of the Board Meeting dated 31.08.2019 where in one of the agenda items was to reappoint Mr. Siddarth Bhandari as a Director who retires by rotation, in the forthcoming 33rd AGM. It was inter alia contended that the second Respondent will not be reappointed since majority of the Board of Directors, including the Independent Director, is supporting Mr. Shailesh Bhandari the Appellant herein. As Maintainability of the Petition itself was a question, NCLT vide Order dated 31.08.2019 refused to grant interim relief and interfere in the corporate Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-18-governance. This Order has attained finality as it was never challenged.
• Subsequently in the 33rd AGM Meeting dated 30.09.2019, it was resolved by a majority of 73.95% vote, that the second Respondent/Mr. Siddharth Bhandari shall not be reappointed as a director and hence he ceased to be a Director in the Company. It is contended that this Respondent merely holds 65,100 shares comprising 0.5% of the total shareholding.
• On 02.03.2021, the first Respondent along with others filed MA No. 03 of 2021 in CP 93 of 2018 challenging the Meeting of the Board of Directors to appoint one Mr. Sanjay Bhandari as a whole time Director. Learned NCLT directed the Appellant Company to keep on hold, the agenda, with respect to appointment of the whole time Director.
• It is contended that Mr. Mukesh Bhandari had diverted the funds and therefore the Appellant had written to the Bankers to honour the cheques only when the same is jointly signed by Mr. Shailesh Bhandari (MD) or Mr. Suraj Bhandari (whole time director) along with other authorised signatories (Mr. Mukesh Bhandari and other employees of the Company). While so Respondents 1 to 3, who were Petitioners in CP 38 of 2019 filed MA 7 of 2021 praying for nullifying the effect of letters dated 10.03.2021. But no Interim Order was passed in the IA and the same stood adjourned. The Board Meeting was held on 05.04.2021 wherein a Resolution was passed for Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-19-operations of the Bank Accounts by joint signatories of Mr. Shailesh Bhandari (MD) or Suraj Bhandari (whole time director along with the other authorise signatory). Another Resolution was passed for 05.04.2021 Board Meeting, debarring the entry of Mr. Mukesh Bhandari, Mr. Siddarth Bhandari and Mr. Anurag Bhandari into the premises of Company and information of the same was sent to BSE and NSE on 05.04.2021 itself, Respondents 1 & 2 filed I.A. 21 of 2021 in CP No. 38 of 2019 seeking a direction to stay the Board Resolution dated 05.04.2021 and also to nullify the effect of the letter dated 10.03.2021. No urgent hearing was granted and the IA was adjourned. • It was strenuously contended by the Learned Senior Counsel that NCLT dismissed IA 49 of 2019 filed under Section 244 vide Order dated 08.04.2021 on the ground that the first Respondent himself was a Chairman and the Managing Director of the Appellant Company and being a party to all the decisions in the Company, it is not open to him to allege 'Oppression and Mismanagement' and CP 38 of 2019 was declared as non-maintainable. But no specific Order was passed dismissing the CP. This Order was challenged but the Appeal was subsequently withdrawn and hence the Order dated 08.04.2021 has attained finality.
• Respondents 1 to 3 filed I.A. 08 of 2021 in CP No. 93 of 2018 and CP No. 94 of 2018 under Section 242(4) of the Act, praying for stay of the operation of the Board Resolution dated 05.04.2021 and to nullify the effect of the letter dated 10.03.2021. This Application was jointly filed Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-20-by Respondents 1 to 3 herein, but is signed by Respondent 1/Mr. Mukesh Bhandari.
• It is vehemently contended by the Learned Senior Counsel that CP No. 93 of 2018 and CP No. 94 of 2018 were filed under Sections 149, 150, 152, 159 and 176 of the Act and their scope is limited to challenge to appointment of Independent Directors and Board of the Appellant Company. The maintainability of such a Petition itself is under challenge. It is further submitted that the Prayers in I.A. 21 of 2021 and I.A. 08 of 2021 are identical. Despite the fact that I.A. 21 of 2021 was adjourned and no Orders were passed, I.A.08 of 2021 containing an identical Prayer was entertained by NCLT and the Impugned Order was passed.
• The Learned Senior Counsel submitted that the Impugned Order has been passed without jurisdiction and is a nullity in law and travelled beyond the scope of the Company Petitions and IAs for the following reasons:
o The Impugned Order dated 04.05.2021 has been passed by Ld. NCLT in IA No. 08/2021 in CP No. 93/2018 & 94/2018 and Company Application No. 27/2021 in CP No. 38/2019. CP No. 93/2018 and 94/2018 were filed by respondent Mr. Siddharth Bhandari and Mr. Rakesh Bhandari respectively under Sections 149, 150, 152, 159 & 176 of the Companies Act, 2013. CP No. 38/2019 has been jointly filed by Respondent Mr. Siddharth Bhandari, Mr. Rakesh Bhandari and Mr. Mukesh B Bhandari Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-21-
under Sections 241, 242 of Companies Act, 2013. IA No. 08/2021 was filed jointly by Mr. Siddharth Bhandari, Mr. Rakesh Bhandari" and Mr. Mukesh B Bhandari under Section 242(4) of Companies Act, 2013 despite the fact that the subject Company Petition nos. 93/2018 & 94/2018 were filed under Sections 149, 150, 152, 159 & 176 of the Companies Act, 2013. o Further, IA No. 08/2021 in CP No. 93/2018 & 94/2018 was filed under Section 242(4) of the Companies Act, 2013, whereas the jurisdiction under Section 242(4) is available only in the proceedings under Section 241 and not for the proceedings under Sections 149, 150, 152, 159 & 176 of the Act. Moreover, even the Company Petition 38/2019 was held to be not maintainable by NCLT vide order dated 08.04.2021 passed in IA No. 499/2019 by which, the NCLT has dismissed the Application under Section 244 of the Act seeking waiver of eligibility criteria to file the Petition under Section 241/242 of the Act and held that the Petitioners in that Petition constitute only 5.61% of the total shareholding of the Company and are not entitled for waiver under Section 244 of the Act. o The Learned Senior Counsel submitted that a plain reading of Section 242(1) amply clarifies that the powers of Tribunal are available only for proceedings under Section 241. Further Section 242(4) states that Tribunal may pass any Interim Order for regulating conduct of Affairs of the Company on the Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-22-
Application of any party to the proceedings. It is contended that 'Proceedings' essentially mean proceedings under Section 241 and not otherwise.
o There was no prayer in IA/8/2021 for making Mr. Siddharth Bhandari as a signatory in the bank accounts. The reliefs (i), (ii) & (iii) granted by NCLT were never prayed for by the Petitioners/Applicants in IA 08/2021 or in the main Company Petition. Further such prayers were not within the scope of CP/93 & 94/2018 as the challenge in these Petitions was the appointment of the Independent Directors and the reliefs granted do not fall within the purview of Sections 149, 150, 152, 159 and 176 of the Act.
o Additionally, NCLT failed to take into consideration the Order dated 29.08.2019 passed in Interlocutory Application No. 522 of 2019 in Company Petition No. 93 of 2018 (Annexure-5) whereby NCLT has rejected Mr. Siddarth Bhandari's Application for Interim relief and he had to discontinue as director of the Appellant Company (as the AGM dated 30.09.2019 resolved so by a majority of 73.95% votes of shareholders [Annexure-6]). The Impugned Order amounts to granting a back door entry to Respondent No. 2 into the affairs of the Appellant Company which is against the principles of Corporate democracy and Ld. NCLT has travelled beyond the pleadings and granted such reliefs which were not even prayed for.
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-23-o That Mr. Siddharth Bhandari merely holds 65,100 shares i.e., 0.51% of the total shareholding; he is no longer a director of the Company, has no locus to be appointed as Authorised signatory in the Bank Accounts and to attend the Board Meetings and to give his consent in the policy matters of the Company. Mr. Mukesh Bhandari is merely a non-executive Director and ceased to be the Chairman & Managing Director w.e.f. 01.02.2020. • In support of his contentions that the Court cannot travel beyond the scope of the suit and cannot grant a relief not prayed for the Learned Senior Counsel relied on the following Judgements:
o 'St. Aleysius Angle Indian Higher Secondary School' Vs. 'Association for Protection of Education' (1990) 2 MLJ 404. o 'Tata Consultancy Services Ltd.' Vs. 'Cyrus Investments Pvt. Ltd. & Ors.' Civil Appeal No. 440-441 of 2020.
o 'Cryus Investments Private Limited Anr.' Vs. 'Tata Sons Limited & Ors.' 2017 SCC OnLine NCLAT 261.
• The Learned Senior Counsel placed reliance on 'Jagmittar Sain Bhagat' Vs. 'Health Services, Haryana', (2013) 10 SCC 136 in support of his case that 'if a Court passes decree having no jurisdiction over the matter, it would amount to nullity'......
7. Submissions of the Learned Senior Counsel representing Respondents No. 1 to 3:
• It is contended that without giving any opportunity of being heard, with a malafide intention to control the Board of the Appellant Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-24-
Company, Mr. Shailesh Bhandari wrongly utilised the power of simple majority in the Board Meeting dated 04.07.2018 and removed Mr. Mukesh Bhandari from the post of Managing Director of the Appellant Company. Further, the Board has wrongly accounted the name of Mr. Siddharth Bhandari for retirement instead of Mr. Shailesh Bhandari as both had the same tenure in the office. Mr. Siddharth Bhandari has been removed from the post of Director in the AGM dated 30.09.2019 and simultaneously Mr. Shailesh Bhandari has started appointing Independent Directors without the approval of the Board. None of the Independent Directors are acting independently and working towards the interest of the Company.
• It is submitted that numerous FIRs have been filed against Mr. Shailesh Bhandari, the Managing Director of the Appellant Company under various criminal non-bailable and bailable offences namely forged signatures, wrongful confinement etc. The Managing Director of the Appellant Company is responsible for running the day-to-day affairs and Mr. Shailesh Bhandari in connivance with the existing Board of Directors of the Appellant Company is acting against the interest of the Respondents and the Shareholders at large and therefore Mr. Shailesh Bhandari is not a suitable candidate for the post of Managing Director of the Company.
• Mr. Shailesh Bhandari is largely involved in siphoning of funds and has written a letter dated 10.03.2021 instructing the Bank not to approve/clear any cheques of the first Respondent Company unless Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-25-
countersigned by himself or his son, which is oppressive to the business of the Company. Moreover, Mr. Shailesh Bhandari wrongly utilised the powers in the Board Meeting dated 05.04.2021 and debarred Mr. Mukesh Bhandari and his son from entering into premises of the Company and also removed his name from 'being the authorised signatory of the Company'.
• An Interim Order dated 04.05.2021 directing the Appellant Company and Mr. Shailesh Bhandari to appoint Mr Siddharth Bhandari as joint signatory of all Bank Accounts of the Company with immediate effect, was passed with the consent given by both the parties. The Order was virtually a consent Order. The Appellant has not made any objection towards this fact. Further, in order to comply with the direction of NCLT, Mr. Shailesh Bhandari, wrote a letter dated 06.05.2021 to the Bank to appoint Mr. Siddharth Bhandari as joint signatory in all Bank Accounts of the Company which also evident in the consent Order. The same has been stated in an Affidavit to the Reply in Company Appeal (AT) No. 54 & 55 of 2021.
• The Learned Senior Counsel strenuously contended that after having given consent to the Bank on 06.05.2021, for the inclusion of name of Mr. Siddharth Bhandari as joint signatory in all the Bank Accounts of the Company, Mr Shailesh Bhandari has gone ahead and filed the Appeal against the Interim Order dated 04.05.2021 before this Tribunal. The Respondents in the current Appeal are the original Petitioners in CP 93 of 2018 and CP 94 of 2018 filed in September Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-26-
2018 in which the pleadings were completed by 20.10.2018 itself and since then the matters have been listed for final hearing before NCLT, but the original Petitioners in the interregnum period had preferred an Application for impleadment of the first Respondent which was allowed, vide Order dated 30.01.2019. Original Appeal Nos. 54 & 55 as well as the present I.As under original Appeal No. 54 & 55 are not supported by any authority letter or Board Resolutions as directed in Rule 30 of NCLAT Rules 2016. Despite direction by this Tribunal vide Order dated 26.05.2021, the Applicant Company did not comply with the same and therefore all the I.As and Appeals are not maintainable. • The Learned Senior Counsel highlighted the portion of the Order dated 04.05.2021, whereby NCLT has directed 'both Respondent-1 Company as well as Respondent-5 Mr. Shailesh Bhandari to appoint Mr. Siddharth Bhandari as joint signatory of all Bank Accounts of the Company with immediate effect'. And with consent, Mr. Shailesh obeyed the said Order by writing the letter dated 06.05.2021 to the Banks. Therefore, no question can be raised regarding Board Resolution or requirement of internal process followed by the Board on Company, as Board Meeting is not required to implement the Court Order and hence there is no scope for interference in this Appeal.
Assessment:
8. One of the main issues apart from other issues raised in this Appeal is that I.A. 499 of 2019 filed by Respondents 1 to 3 seeking waiver of the eligibility criteria laid down under Section 244 of the Act was dismissed by Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-27-
NCLT vide order dated 08.04.2021 and therefore CP 38 of 2019 fails. This order has attained finality and hence filing I.A.08 of 21 in CP 93 of 2018 & 94 of 2018 under Section 242(4) of the Act is erroneous as jurisdiction under 242(4) is only to the proceedings under Sections 241/242 and not for proceedings under Sections 149, 150, 152, 159 and 176 of the Act, whereunder CP 93 & 94 of 2018 were filed. Further, the reliefs prayed for in CP 93 & 98 of 2018 have no nexus with the reliefs sought for in the Interim Application.
9. At this juncture, we find it relevant to reproduce Section 242(4) of the Act which reads as follows:
"The Tribunal may, on the Application of the any party to the proceeding, make any Interim Order which it thinks fit for regulating the conduct of the Companies affairs upon such terms and conditions as appear to it to be just and equitable."
10. Section 149 of the Act deals with 'Company to have board of directors'; Section 150 is regarding 'manner of selection of Independent Directors and maintenance of databank of Independent Directors'; Section 152 is regarding 'appointment of Directors'; Section 159 refers to 'penalty for default of certain provisions'; Section 176 deals with 'the provisions of defects in appointment of Directors not to invalidate actions taken'. Therefore, the Learned Sr. Counsel for the Appellant strenuously contended that the Application itself is not maintainable as it was filed under the wrong Section and further that the Company Petition filed under Section 241 & 242 stood dismissed as non- maintainable. As against this argument, the Learned Respondent Counsel submitted that the I.A. 08 of 2021 was filed under Section 242(2) for Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-28-appropriate relief in CP No. 93 & 94 of 2018 as the Independent Directors were acting against the interest of the Applicants herein in connivance with the Managing Director of the Company. Learned Appellant Counsel relied on the ratio laid down in the Hon'ble Supreme Court in 'Jagmittar Sain Bhagat' (Supra) in which Hon'ble Apex Court has observed that conferment of jurisdiction is a legislative function and it cannot be conferred with the consent of the parties or by superior Court and if the Court passes a decree having no jurisdiction, it would amount to nullity as the matter goes to the root of the cause.
11. Company Appeals (AT) No. 56 of 2021 & 57 of 2021 are preferred by Mr. Shailesh Bhandari on the following grounds:
12. It is the case of Mr. Shailesh Bhandari, the Appellant in Company Appeal (AT) No. 56 and 57 of 2021, that he holds 8,48,275 equity shares of M/s. Electrotherm (India) Ltd. and preferred Company Application No. 27 of 2021, filed on 16.04.2021 in CP 38 of 2019 stating that this Company Petition was pending adjudication before the NCLT. It is submitted by the Learned Counsel appearing for the Appellant/Mr. Shailesh Bhandari that pending the adjudication of CP 93 & 94 of 2018 unwarranted circumstances arose and the Appellant was not in a position to attend to the office of the first Respondent Company. Under such circumstances on 23.02.2021, the non-executive Independent Chairman addressed an email to all the Board Members to appoint one Mr. Sanjay Bhandari as whole time Director as the Appellant was implicated in some criminal cases and awaiting outcome of the anticipatory bails from the Hon'ble High Court. The non-executive Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-29-Chairman vide email dated 27.02.2021 instructed the Company Secretary to circulate a detailed agenda for a Board Meeting scheduled to be held on 02.03.2021, wherein the names of both Mr. Sanjay Bhandari and Mr. Mukesh Bhandari were proposed as whole time Directors. In the meantime, Respondent No. 2 supported Respondent No. 3 who is merely a Shareholder of the Company and restricted entry of the Independent Directors and others to the factory premises and offices. It is the case of the Appellant/Mr. Santosh Bhandari that Respondent No. 2 and Respondent No. 3 had taken illegal control over the Company and were involved in several activities which were against the interests of the first Respondent Company. Subsequently, the second Respondent filed MA 03 of 2021 on 02.03.2021 and requested for circulation on 02.03.2021 itself. NCLT was pleased to circulate the matter at 02:30PM and after hearing all the parties directed the Company to keep on hold the agenda with respect to appointment of whole time Director of Mr. Sanjay Bhandari and the second Respondent inter alia on the ground that the profile of Mr. Sanjay Bhandari was not on record. Be that as it may, in compliance with the Order dated 02.03.2021, the Company postponed the Board Meeting.
13. We were conscious of the fact that NCLT has passed this Interim Order exercising its power under section 242(4) of the Act when the Petitions were filed under other Sections. However, it is to be seen that this MA 08 of 2021 in CP 93 of 2018 has been disposed of together with Company Application 27 of 2021 in CP 38 of 2019 vide Common Impugned Order. It is relevant to mention that Company Application 27 of 2021 had been filed in CP Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-30-38 of 2019 under Section 242 by Mr. Shailesh Bhandari who is arrayed as the fourth Respondent herein and the Appellant in Company Appeal (AT) No. 56 & 57 of 2021, seeking the following reliefs:
a. to vacate the interim relief granted vide order dated 02.03.2021 passed in MA 03 of 2021 in CP 38 of 2019.
b. to direct the Respondent-2 to Respondent-4 to abide by the Board Resolution dated 05.04.2021 passed by Respondent-1 Company and further directed Respondent-2 to Respondent-3 not to intervene in the day-to-day affairs of the Respondent-1 Company and further debarred Respondent 2 to Respondent 4 from entering the premises of the Respondent 1 Company.
c. to set aside or to terminate the Agreement entered into between Respondent 1 Company and Security Agencies at the behest of Respondent 2 to 4.
d. to terminate to all the illegal appointment made by Respondent 2 to Respondent 4 and to award cost.
14. The Counsel for the Respondents 2 to 4 relied on the letter dated 06.08.2021 addressed by Mr. Shailesh B. Bhandari to the Bank to include the name of Mr. Siddharth Bhandari as joint signatory of all Bank Accounts of the Company. A similar letter dated 10.05.2021 addressed to the Branch Manager Axis Bank and signed by Mr. Shailesh Bhandari is reproduced as hereunder:
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-31-
The aforenoted letter shows that Mr. Shailesh Bhandari has informed the concerned Banks regarding the direction by the Tribunal to appoint Mr. Siddharth Bhandari as a joint signatory of all Bank Accounts.
15. Both parties have raised allegations against one another with respect to illegal transactions and siphoning of funds. The second and third Respondents filed Company Application No. 21 of 2021 in CP No. 38 of 2021 and sought for Prayer for nullifying the effect of letter dated 10.03.2021 issued by the Appellant. The second and third Respondents also filed MA 07 Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.-32-
of 2021 in CP 38 of 2019 on 06.04.2021 challenging the Resolution passed in Board Meeting dated 05.04.2021. NCLT did not pass any Interim Order in these Applications as the maintainability of the main Petition 38 of 2019 itself was under consideration.
16. The Hon'ble Apex Court in 'Muncipal Corporation of the City of Ahmedabad' Vs. 'Ben Manilal', (1983) 2 SCC 422, held that wrong reference to the power under which an action was taken by the Government would not per se vitiate the action, if the same could be justified under some other power whereby the Government could lawfully do that act. The Court held as under:
"5. ....It is well settled that the exercise of a power, if there is indeed a power, will be referable to a jurisdiction, when the validity of the exercise of that power is in issue, which confers validity upon it and not to a jurisdiction under which it would be nugatory, though the section was not referred, and a different or a wrong section of different provisions was mentioned. See in this connection the observations in Pitamber Vajirshet v. Dhondu Navlapa [ILR (1888) 12 Bom 486, 489]. See in this connection also the observations of this Court in the case of L. Hazari Mal Kuthiala v. ITO, Special Circle, Ambala Cantt. [AIR 1961 SC 200 : (1961) 1 SCR 892 : (1961) 41 ITR 12, 16 : (1961) 1 SCJ 617] This point has again been reiterated by this Court in the case of Hukumchand Mills Ltd. v. State of M.P. [AIR 1964 SC 1329 : (1964) 6 SCR 857 : (1964) 52 ITR 583 : (1964) 1 SCJ 561] where it was observed that it was well settled that a wrong reference to the power under which action was taken by the Government would not per se vitiate that action if it could be justified under some other power under which Government could lawfully do that act. See also the observations of the Supreme Court in the case of Nani Gopal Biswas v. Municipality of Howrah [AIR 1958 SC 141 : 1958 SCR 774, 779 : 1958 SCJ 297 : 1958 Cri LJ 271]."
Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-33-
22. Later, in Pepsi Foods Ltd., this Court held that nomenclature under which the petition is filed is not quite relevant and it does not debar the Court from exercising its jurisdiction which otherwise it possesses............."
17. Section 420(1) of the Companies Act, 2013 provides for 'the Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit.'
18. Rule 11 of the NCLT Rules, 2016 is observed as hereunder:
"Inherent Powers.-Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal."
19. Even in the absence of Rule 11 this Appellate Tribunal, being essentially a judicial forum determining and deciding rights of parties concerned and granting appropriate relief, can, in exercise of its powers to meet ends of justice, or prevent abuse of its process, pass any such Interim Directions. Such Powers being inherent in the constitution of the Appellate Tribunal, Rule 11 can merely be said to be declaring the same to avoid ambiguity.
20. NCLT is empowered under Section 420(1) read with Rule 11of the NCLT Rules, 2016 to grant in the interest of justice, an Interim Direction and therefore we are of the view that the ratio of the Hon'ble Supreme Court in 'Kiran Devi' Vs. 'The Bihar State Sunni Wakf Board & Ors.' Civil Appeal No. 6149 of 2015 wherein the Hon'ble Apex Court has discussed the aforementioned Judgements in para 16, is applicable to this case. Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-34-
21. The Judgements relied upon by the Learned Sr. Counsel for the Appellant i.e., 'St. Aleysius Angle India Higher Secondary School' (Supra) and 'Tata Consultancy Services Limited' (Supra) are not applicable to the facts of the attendant case as we are conscious of the fact that the interim reliefs granted by NCLT, till the disposal of the main Company Petitions, would not, in any manner amount to granting of the reliefs sought for in the main Petition. Further, in the matter of 'Tata Consultancy Services Limited' (Supra) it was held by the Hon'ble Apex Court that there was no Prayer challenging Article 75 in the main Company Petitions. In the instant case, we are concerned with the reliefs prayed for in the Interim Application and at the cost of repetition, the main Company Petitions are still pending before NCLT for adjudication.
22. It is significant to mention that I.A. 499 of 2019 was dismissed on 08.04.2021 the effect being that the eligibility criteria waiver sought for by the second, third and fourth Respondent was refused by NCLT. At this juncture, we observe that CA 27 of 2021 was filed on 16.04.2021 in the same Company Petition 38 of 2019. The Interim Direction was given under Section 242(4) of the Act. We observe, at the cost of repetition, that Company Appeal 27 of 2021 is filed on 16.04.2021 in CP 38 of 2019 when the IA 499 of 2019 was dismissed way back on 08.04.2021. In the light of this factual matrix, effectively, even the reliefs prayed for by Mr. Shailesh Bhandari in CA 27/2021 are not maintainable, in the light of the argument of the Appellant.
23. Be that as it may, having regard to the multiple Applications filed; the factual matrix of the family dispute read together with the reliefs sought for Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-35-in I.A. 08 of 2021, the direction to appoint Mr. Siddarth Bhandari as a joint signatory of all the Bank Accounts of the Company was given by NCLT in the interest of justice and to ensure that no prejudice shall be caused to the Company during the pendency of the main Company Petitions. Having regard to the fact that NCLT has taken into consideration the involvement of both parties/both sides in the operation and function of the Company, we are of the view that no prejudice would be caused to the Appellants by such a direction of NCLT.
24. We are of the view that as long as the power is present, non-quoting or misquoting of the Section is not fatal. A harmonious construction thus requires that the direction should cover two different situations. If a particular action is valid under one Section, it cannot be rendered invalid, or that the Tribunal is not empowered to pass such a direction, if the wrong Section is quoted. The statute empowers the Tribunal from passing any Interim Order, it deems fit and in such a situation, keeping the affairs of the Company in mind, the Tribunal has rightly moulded the reliefs. Cases are known in which Courts have moulded the reliefs to meet a situation such as this. Quoting a wrong Section/sub-Section does not estop a Court from taking note of events, circumstances which happen during that time frame. Hence, the intent of the law maker and the nature and scope of the Legislation is to be kept in mind, as any departure from the same could result in fatal consequences.
25. Having regard to the fact that the Order impugned is an Interim Order passed by NCLT; the balance of equities and the factual matrix on hand; this Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.
-36-Tribunal arrives at a resultant conclusion, without delving deep into the merits of the case, as the reliefs prayed for in the main Company Petition are yet to be decided by NCLT, without expressing any opinion on the merits of the matter, we are of the considered view that both the Company Petitions 93 & 94 of 2018 be decided by NCLT as expeditiously as practicable, but not later than three months from the date of receipt of a copy of this Order.
26. All the Appeals and IAs are disposed of with the aforenoted directions.
27. The Registry is directed to upload the Judgement on the website of this Tribunal and send the copy of this Judgement to NCLT (National Company Law Tribunal, Kolkata) forthwith.
[Justice Anant Bijay Singh] Member (Judicial) [Ms. Shreesha Merla] Member (Technical) NEW DELHI 28th January, 2022 ha Company Appeal (AT) No. 54 of 2021 & I.A. No. 978 of 2021. With Company Appeal (AT) No. 55 of 2021 & I.A. No. 979 of 2021. With Company Appeal (AT) No. 56 of 2021. With Company Appeal (AT) No. 57 of 2021.