Aveek Kumar Sarkar & Ors vs Abp Private Limited & Ors

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, Principal Bench, New Delhi Comp. App. (AT) No. 176 of 2022 IN THE MATTER OF: 1. Aveek Kumar Sarkar 12/4, Ballygunge Park Road, Kolkata-700019. ...Appellant No.1 2. Rakhi Sarkar, residing at 12/4, Ballygunge Park Road, Kolkata-700019. ...Appellant No.2

3. Asani Sarkar, 120E, 90th Street, New York-10128, United States of America. ...Appellant No.3

Vs. 1. ABP Pvt. Ltd. ...Respondent No.1 a Company within the meaning of the Companies Act, 2013 and having its registered office at 6, Prafulla Sarkar Street, Kolkata - 700001

2. Arup Kumar Sarkar, ...Respondent No.2 20, Madanmohan Tala Street, Kolkata-700005.

3. Shithi Sarkar, 20, Madanmohan Tala Street, ...Respondent No.3 Kolkata-700005.

4. Atideb Sarkar, ...Respondent No.4 20, Madanmohan Tala Street, Kolkata-700005.

5. Aritra Kumar Sarkar, 20, Madanmohan Tala Street, ...Respondent No.5 Kolkata-700005.

6. ABP Holdings Private Limited, a Company within the meaning of the Companies Act, 2013 and having its registered office at ...Respondent No.6 6, Prafulla Sarkar Street, Kolkata-700001.

1 Company Appeal (AT) No. 176 of 2022 7. Dipankar Das Purkayastha, 6, Prafulla Sarkar Street, Kolkata - 700001 .Respondent No.7

8. Ranjit Vasant Pandit, 6, Prafulla Sarkar Street, Kolkata - 700001. .Respondent No.8

9. Chandan Majumdar, 6, Prafulla Sarkar Street, Kolkata - 700001. .Respondent No.9

10. Sarbani Sarkar, 15B Gangaram Hospital Marg, New Delhi 110 060 .Respondent No.10

Present: For Appellant: Mr. Kapil Sibal, Mr. Neeraj Kishan Kaul, Mr. Amit Sibal and Mr. Jayant Mehta, Sr. Advocates, Mr. Padam Khaitan, Ms. Nandini Khaitan, Mr. Pratik Shanu and Ms. Raveena Rai, Advocates.

For Respondent: Mr. Abhishek Manu Singhvi, Sr. Advocate, Mr. Arijit Majumdar, Mr. Soumabho Ghose, Mr. Deepan Kumar Sarkar, Advocates for R1. Mr. Ramji Srinivasan, Sr. Advocate, Ms. Kinjal Sheth, Advocates for R2. Mr. Mukul Rohatgi, Sr. Advocate, Mr. Abhijit Sinha, Mr. Raghav Shankar, Mr. Arunabha Deb, Ms. Akansha Kaushik, Advocates for R4. Mr. Krishnendu Dutta, Sr. Advocate for R7, Ms. Ashika Baga, Advocate for R10.

(30TH September, 2022)

(Per Hon'ble Mr. Justice M. Satyanarayana Murthy)

Aggrieved by the order dated September, 20, 2022 passed by the 'National

Company Law Tribunal, Kolkata' (hereinafter will be referred as NCLT) in I.A. No.

86/KB/2022 in CP No. 895/KB/2019, the Respondent is in Interlocutory

Application and Petitioner in main Company Petition, filed an appeal under

Section 421 of the Companies Act, 2013 (hereinafter will be referred as 'Act'). For

2 Company Appeal (AT) No. 176 of 2022 convenience, the parties to this appeal will be hereinafter be referred as

Appellants and Respondents.

2. The Appellants filed 'Company Application' in the month of June 2019,

challenging various acts of oppression committed by the Respondent, which are

in brief are as follows:

i. Board Resolution dated 24th April, 2019 by which the

Respondent had attempted to illegally and unjustly sideline

Appellant No.1 from his role as 'Head' of the 'Digital Division';

ii. Illegal transfer of 20% shares by the Respondent No.10 to the

Respondent No.2 without offering the same to the Appellants,

contrary to 'Family Settlement Agreement' dated 12th April,

2017 thereby created new majority in favour of the Respondent

No.2.

iii. The Board resolution dated 24th April 2019 is passed in

violation of procedure prescribed under the Act and the rules

framed thereunder. The Appellants claimed various reliefs in

the main petition along with main reliefs, the Appellants also

claimed various interim reliefs. One such interim urgent relief

is that, stay of the resolution purported to have been passed on

April 24th, 2019 against the interest of the Appellant No.1. After

receipt of notice in the main petition, there was an attempt to

amicably settle the disputes and differences that have arisen.

In the course of settlement, it was mutually agreed that the

3 Company Appeal (AT) No. 176 of 2022 resolution dated April 24th, 2019 would not be given effect to

and would be kept in abeyance. In view of mutual agreement

on June 26, 2019, a proposal was submitted on behalf of the

parties and an undertaking was furnished by the Respondents

to the effect that on April 24, 2019 Board Resolution would not

be given effect to. Accordingly, recording the submission, the

NCLT has passed an order dated 28th June, 2019 and later the

order was extended from time to time i.e. on August 26, 2019,

November 25, 2019 and February 26, 2020.

iv. While so, the settlement was failed allegedly due to non-

cooperation of the Respondents, in and around February, 2021;

the same is brought on record by 'Supplementary Affidavit'

dated 17th March, 2021. Even thereafter, the impugned order

was extended on April 7, 2021. Later the order was not

extended in the month of August, 2022, the 1st Respondent filed

an application to recall the undertaking given on June, 26th,

2019 based on subsequent developments.

v. The Application to recall the undertaking was allowed on

September 20, 2022 by impugned order, vacated interim order

/ direction, on the sole ground that the settlement failed. The

Tribunal did not afford an opportunity much less reasonable to

submit reply to the Petition and thereby denied opportunity to

4 Company Appeal (AT) No. 176 of 2022 rebut the allegation made in the petition; reserved the

interlocutory application for order on the same day.

vi. The main grounds urged in the appeal are that the

Interlocutory application is frivolous and filed abusing process

of law. The NCLT did not appreciate the factual basis and the

findings that there is no impediment from the Respondent to

implement the purported resolution regarding digital division

and business, passed in the Board Meeting held on 24th

April,2019 on the sole ground that in Settlement talks failed is

erroneous.

vii. It is also further contended that no relief was sought for

vacating the interim order passed by the Tribunal, but passed

impugned order without taking into consideration of

subsequent developments etc;

viii. Turning to the application filed by Respondent, the

Respondent claimed the following reliefs:

I. The Impugned Order dated September 20, 2022

passed by the National Company Tribunal, Kolkata

Bench in I.A. No. 86/KB/2022 in connection with

C.P. No. 895/KB/2019, be set aside;

II. The notice issued by the CEO of the Company on

September 21, 2022 changing the whole hierarchy

5 Company Appeal (AT) No. 176 of 2022 of the Digital Division, being Annexure "10" herein,

be set aside;

III. Stay of operation of the Impugned Order till

disposal of the Company Petition being CP No.

895/KB/2019;

IV. Stay of operation of the notice issued by the CEO of

the Company on September 21, 2022 changing the

whole hierarchy of the Digital Division, (Annexure -

10 herein) till disposal of the Company Petition

being CP No. 895/KB/2019;

V. Stay of operation of all the consequent actions

taken by the Respondents pursuant to the

Impugned Order dated September 20, 2022 f) Ad-

interim orders in terms of prayer (c), (d) and (e)

above;

3. The allegations made by the Respondents in brief as follows:

a. "3. The application is for recall of an order dated 26 June,

2019 which is tantamount to discharging of an undertaking

given by the applicants under section 241- 242 pending matter,

i.e. the main Company Petition, recorded in the impugned order,

wherein the intention to settle the matters amicably was

6 Company Appeal (AT) No. 176 of 2022 recorded and pending which a certain resolution taken by the

board of the company was not to be implemented.

It is submitted that since the undertaking has become

infructuous due to a number of steps taken by the other side to

precipitate the matters which were contrary to the

understanding under which the impugned undertaking was

given and which now after certain events has caused a grave

prejudice to the applicants in day to day working as well as in

overall reputation of the company.

5. This being a matter of urgency needed an expeditious

intervention by this Tribunal. It has been alleged that the

petitioner No. 1 that is Mr. Aveek Sarkar has been trying to

assume unbridled powers and has been disregarding the

authority of Board of Directors, the Managing Director, Chief

Editor of the Company and the Management in general and is

in fact running the digital division as it were rival business to

the other print publications of respondent No. 1. Another event

that has been cited in the petition is that when the petitioner

No. 1 Mr. Aveek Sarkar has directly questioned the authority of

the management of the company pertaining to recruitment of

the staff. In one such instance the petitioner No. 1 had sought

to hire one Ms. Debashree Chadda against the policy of the

company and when the HR Department questioned the

7 Company Appeal (AT) No. 176 of 2022 recruitment, this was taken as an encroachment in the domain

of digital division, which, as per the petitioner was supposed to

be run by him independently, thus seeking to portray that the

Digital Division considered itself independent of the company

and its Board of Directors. This position is also starkly brought

out by the petitioner No. 1 wherein it is even denied that affairs

of digital division are subject to the control of Board of Directors

of the Company. In this regard, certain mails exchanged

between the petitioner No. 1 i.e. Mr. Aveek Sarkar and the

Managing Director Ms. DD Purkayasth have also been annexed

in the petition which bring out a corporate feud between

petitioner No. 1 and the Management of ABP represented by its

Managing Director in the said mails. The Petitioner no. 1 has

pleaded that since the settlement talks had failed and still the

interim order which meant that the undertaking still held the

ground, there was nothing that could prompt an annulment of

the joint undertaking."

No reply was filed to the Interlocutory application.

4. During hearing both Ld Sr. counsel supported the contentions in

detail:

a) The impugned order is now challenged on various grounds as

referred above. The main grounds urged during argument by Mr.

Kapil Sibal, Ld Sr. counsel for the Appellant are that:

8 Company Appeal (AT) No. 176 of 2022 i. No opportunity was afforded to rebut the allegation made in

the Interlocutory Application by filing reply/counter, when the

Respondents sought vacation of earlier order dated 26th June,

2019.

ii. The order is bereft of any reason on the other hand, the

Tribunal decided the plea without going into merit of the

interlocutory application -IA No. 86/KB/2022 also the main

petition.

iii. When the Appellant sought interim order in main petition and

an order was passed on 28th June, 2019 as an interim

measure based on undertaking, the Tribunal ought to have

decided the interim reliefs claimed by the Appellant, while

passing the impugned order, since one of the reliefs claimed

is to vacate the order dated 28th June, 2019. Without

recording any finding as to the disentitlement of the

Appellants to claim any interim relief/vacating the order dated

20th September, 2019 on the mere ground of failure of

settlement is erroneous.

iv. The Ld Sr. Counsel also drawn our attention to the allegation

of oppression etc, while pointing out that the acts of

Respondents to oppression of the Appellants. He also

demonstrated as to how the Appellants were denuded to

9 Company Appeal (AT) No. 176 of 2022 participate in the affairs of the Company and requested to

allow the appeal.

5. Whereas Mr. Abhishek Manu Singhvi, Ld. Sr. Counsel for Respondent,

contended that the 1st Appellant was not removed as Director and shareholder,

continued as Vice-Chairman of the Board of Directors of the Company, so also

continuing as emeritus but stepped down voluntarily, in the year 2015. The

Respondents are having shareholding of 60%, whereas the Appellants are

having shareholding of 40%, acting against the welfare of the Company.

6. The Ld Sr. Counsel has also drawn the attention of this Tribunal to the

undertaking while demonstrating as to how the Appellant acted prejudicial to

the interest of company by publishing a news item which attracts an offence

punishable under Section 228-A of the IPC for which Chief Editor is being

prosecuted.

7. It is further contended that the Respondents in detail explained the

circumstances which lead to filing of the interlocutory application

No.86/KB/2022. Finally, the Ld Sr. Counsel contended that the Appellant

suppressed material papers thereby not entitled to claim any relief. Moreover,

this tribunal while sitting over an appeal cannot reverse order, unless the order

is totally against law and perverse placed reliance on five orders passed by the

Co-ordinate Bench of this Tribunal and requested to affirm the order under

challenge.

10 Company Appeal (AT) No. 176 of 2022

8. Mr. Ramji Srinivasan, ld Sr. Counsel for the R2 made a strenuous attempt

to support the order under challenge, drawing attention of this Tribunal to

Section 241 and 242 of the Act, to contend that neither there is any oppression

nor mismanagement proved. On the other hand, the act of the Appellant No.1

is prejudicial to the interest of the company.

9. Whereas appearing for R4, Mr.Mukul Rohatgi, learned Sr. Counsel and Mr.

Abhijeet Sinha, learned counsel demonstrated that the acts of Appellant No.1

i.e. Publication of name of victim in a rape case in news, resulted in registration

of crime against the Chief Editor counsel also adopted the argument of Mr.

A.M.Singhvi, ld Sr. counsel.

10. Mr. Krishnendu Datta, ld sr. Counsel for the Respondent No.7 argued the

same lines of other senior counsel, but drawn the attention of this Tribunal to

Section 166 of the Act to contend that the Appellants did not discharge the

duties prescribed therein.

11. Considering rival contentions, perusing the impugned order, the

points need to be answered are as follows:

1) Whether failure to afford an opportunity to Appellant to file counter or reply to IA No. 86/KB/2022 is an legality which vitiates the impugned order?

2) Whether the order impugned in the Appeal is in consonance with the requirements of an order? if not whether the order be sustained, legally?

3) Whether the Appellant No.1 acted prejudicial to the interest of the Company?

11 Company Appeal (AT) No. 176 of 2022

4) Whether the Appellants suppressed any material and whether this Tribunal while exercising Appellate jurisdiction is entitled to interfere with interim order of NCLT?

Point No:1

12. The first and foremost contention of the Appellant is that no

opportunity was given for filing counter or reply to IA No. 86/KB/2022

to rebut the contentions raised in the application but heard the Appellant

and reserved the order on the same day, in violation of principles of

natural justice. Whereas the Ld Sr. Counsel submitted that the order

passed by NCLT is only a consequence of the order dated 28th June,

2019, since liberty is given to parties to intimate about the result of

settlement talks to vacate the order dated 20th September, 2022.

13. Indisputably the Appellant filed company petition claiming both

main and interim reliefs. The interim reliefs claimed by the appellant are

extracted hereunder:

Para VII. Interim reliefs:

a. A scheme be framed for management and administration of the Company;

b. The Article of Association of the company be altered by incorporating the terms of the Family settlement dated April 12, 2017.

c. The Respondents be directed to forthwith transfer 1,00,000 shares in favour of the Petitioners;

d. Injunction restraining the Respondent No.2 from exercising any rights in respect of the share received by him from Respondent No.10.

e. Injunction restraining the Respondents form giving any effect or further effect to the purported decision taken at the Board

12 Company Appeal (AT) No. 176 of 2022 Meeting of April 24, 2019 regarding the reporting structure of the digital content team and digital business team of the Company;

f. Injunction restraining the Company from incurring any expenses for the purpose of instant litigation. g. The Respondent nos. 7, 8 and 9 be restrained from involving themselves in the affairs or business of the Company; h. Directions be passed to ensure that the digital division of the Respondent no.1 be allowed to function independently under the aegis of the Petitioner no.l, without interference from the Respondents;

i. Restore the cut made in the budget of digital division for FY 2018-19;

j. this Tribunal be pleased to restrain the Respondents from in any manner whatsoever, directly or indirectly, alienating or disposing of or encumbering or creating any third party right(s) in the property, assets and investments of the company as well of any of its subsidiaries;

k. This Tribunal be pleased to direct company to ensure that it remains a neutral party and provides all assistance of this Tribunal to meet the ends of justice.

l. Injunction restraining the Respondents from interfering with the Petitioner no. l's role in managing and conducting the affairs of the digital division of the Respondent no. 1 Company;

m. Appointment of a Special Officer for taking inventory of all the statutory books of the Company and who shall affix his signature on all the pages of all such books; n. Appropriate reliefs be passed in accordance with Sections 241 and 242 of the Companies Act, 2013;

o. Appropriate directions be given so that there is equal representation in the board of directors of the Company to Petitioner no. 1 and his group comprising the Petitioners and to Respondent No. 2's group comprising of Respondent Nos. 2 to 5;

p. The increase in the remuneration of the Respondent no.2 be deposited in an interest bearing account as the Hon'ble Tribunal may deem fit till the pendency of this petition. q. Injunction restraining the Respondent no.2 from drawing remuneration in excess of Rs. 7.92 crore annually. r. Injunction restraining change in remuneration of any of the present director's/Key Managerial personnel of the Company. s. Appropriate direction be given for appointment of directors who are not members of Sarkar Family as this Tribunal may deem fit;

t. Costs of and incidental to this application be paid by the respondents;

u. Such further orders be passed and/or directions be given as this Hon'ble Tribunal may deem fit and proper."

13 Company Appeal (AT) No. 176 of 2022

14. The Appellants claimed an injunction restraining the Respondents from

giving any effect or further effect to the purported decision taken at the Board

meeting dated April, 24, 2019 regarding the reporting structure of digital content

team and digital barrier for the company vide clause 'e' of para VII of the company

petition as part of interim relief. Based on such claim, on concession passed the

following order dated 28th June, 2019:

"42. Before proceeding further, the order dated 28th June 2019

is reproduced hereinafter;

"Ld. Sr. Counsel for the P-1, P-2 and P-3 appears. Ld. Sr. Counsel for the R-1, R-2 and R-4 appears. Ld. Counsel for R-3 and R-5 appears. Ld. Counsel for R-6 appears, Ld. Counsel for R-7, R-8 and R9 appears. Ld. Sr. Counsel for R-10 appears. This is an application filed by the petitioners u/s. 241-242 of the Companies Act, 2013, which comes up for consideration today alleging oppression and mismanagement of R-1 Company by the respondents. Both sides jointly submit that an order be passed with consent that they may be permitted to continue with talks of settlement for arriving at a settlement. On the joint statement of the parties it is recorded that "The Parties have submitted that they are in talks for settlement, the stands adjourned to 26 August 2019. In view of the settlement discussions, Counsel for the Respondents states that they shall not implement the purported resolution regarding the digital division and business passed in the board meeting of respondent no. 1 held on 24 April, 2019 till such settlement talks are on and in any event till the next date of hearing, i.e. till 26 August, 2019. In the event settlement cannot be reached, the parties shall inform the Tribunal of the same on the next date of hearing, i.e. 26 August 2019 whereupon the Petitioners shall be at liberty to pray for interim reliefs, which will then be considered."

List the matter on 26/08/2019, for recording settlement or for hearing, as the case may be."

14 Company Appeal (AT) No. 176 of 2022 The above order was extended from time to time, i.e., on 17th March,

2021, 07th April, 2021 though it was brought to the notice of the Tribunal

by filing supplementary affidavit in the month of February 2021.

15. While so, the Respondents took a serendipitous decision to get the

interim order dated 20th September, 2022 vacated and raised the following

grounds.

i. Failure of settlement talks ii. Misuse and Misrepresentation of said undertaking by the Petitioner No. 1 i.e. 1st Appellant. iii. Prejudice caused to the Company on account of Petitioner No. 1's misuse of the said undertaking.

Based on the grounds 'a' to 'h' in I.A. No. 86/KB/2022 the

Respondents claimed relief to discharge the Respondent No. 1 from

the said undertaking as recorded in the order passed by the

Tribunal dated 28th June, 2019 vide clause 'a' the Respondents

also sought the relief to modify the order dated 28th June 2019 and

the subsequent order in relation to the said undertaking.

16. The grievance of the appellant is that no opportunity was given to

Appellant to file counter/reply to rebut those allegations. Admittedly the

Application was filed heard and reserved for order the same day without

affording any opportunity to file the counter. Failure of settlement talks is

not disputed on the other hand informed to the Tribunal by supplementary

affidavit filed in the month of Feb, 2021, but so far as other allegations of

15 Company Appeal (AT) No. 176 of 2022 misuse of undertaking by 1st Appellant and prejudice caused to the

Respondent No. 1 by the acts of the appellant No. 1 are subsequent events

which form part of grounds to vacate or modify the order dated 28th June

2019 but no opportunity was given to deny or admit any of the allegations;

such denial of opportunity to file counter, is violation of principal of

natural justice.

17. The Ld. Counsel for Appellants relied on the decision in Ultratech

Cement Ltd. Vs. Union of India and Ors.1 dated 16.11.2021 in support

of his contention. Facts of above Judgment are identical to present facts

of the case, in Para 3 recorded the specific contention, concluded in para

13 that denial to file counter/reply, amount to violation of principle of

natural justice. In Para 9 of the Judgment noted various contentions

including filing of vacate stay petition, in Para 10, 11 & 12 noted the law

laid down by the Apex Court the effect of pleadings in Writ Petition, finally

in Para 23 concluded that denial of an opportunity to file counter to vacate

petition opposing the plea amounts to depriving in the party from its

valuable right to file counter. It would be better to reproduce the relevant

paras of the above mentioned judgments. Para 3, 9 to 12 & 13 is extracted

below:

"3. Replying to the preliminary submission, Dr. Abhishek Manu Singhvi, learned Senior Counsel appearing for the writ appellant, would submit that the interim order dated 26-7-2021 was passed in presence of learned counsels for respondents No.1 to 5 and thereafter, when the matter came-up for hearing on 28-9-2021, copy of rejoinder was

1 Writ Appeal No. 342 of 2021 16 Company Appeal (AT) No. 176 of 2022 served to learned counsels for the respondents and time was sought to file reply to the application for vacating stay which was filed along with return by respondent No.5, but the application for vacating stay was taken-up for hearing, though notices were not issued on that application for stay and no time was granted to file reply to the said application by which the writ petitioner / writ appellant herein has been deprived of filing reply to the said application, as right to file reply to the application for vacating stay was important right of the writ appellant. He would further submit that further more, finding on merits of the case has been recorded by the learned Single Judge affecting the writ appellant's right in the writ petition having finality attached to it and thus the impugned order cannot be held to be a purely interlocutory order and as such, writ appeal would be maintainable in view of the decision rendered by the Supreme Court in the matter of Shah Babulal Khimji v. Jayaben D. Kania and another 3. He invited our attention towards paragraph 113 of the said report to buttress his 1 AIR 2017 Chh 45 2 2020 SCC OnLine Chh 2110 3 (1981) 4 SCC 8 W.A.No.342/2021 appeal, wherein the meaning of a final judgment, a preliminary judgment and intermediary or interlocutory judgment has been delineated and their distinction have been brought out by their Lordships of the Supreme Court.

9. Thus, on perusal of records, following facts would emerge on the face of records: -

1. In the writ petition filed by the writ appellant questioning the IPA dated 8-4-2021, interim order was passed in presence of all the W.A.No.342/2021 parties including respondent No.5 on 26-7-2021 at the admission stage.

2. Return was filed by the official respondents No.2 to 4 on 19-8- 2021 and they did not seek vacation of interim order dated 26-7- 2021, though reply to interim application was filed.

3. Return was also filed by the private respondent No.5 on 26-8- 2021 along with application for vacating the interim order dated 26-7-2021.

17 Company Appeal (AT) No. 176 of 2022

4. The writ appellant served a copy of rejoinder to the return filed by respondents No.2 to 4 to the counsel for respondents No.2 to 4 and to the counsel for respondent No.5 on 28-9-2021 and filed it on 29-9-2021.

5. The writ petitioner also filed rejoinder to the return filed by respondent No.5 on 29-9-2021 after serving copy to the counsel for the respondents.

6. Application for vacating stay filed by respondent No.5 came-up for hearing for the first time along with admission of the writ petition and grant of stay only on 28-9-2021.

7. Application for vacating stay was considered and decided on 28-9-2021.

10. It is well settled law that the whole object of pleading is to give fair notice to each party of what the opponent's case is, and to ascertain, with precision, the points on which the parties agree and those on which they differ, and thus to bring the parties to a definite issue. The purpose of pleading is also to eradicate irrelevancy. In order to have a fair trial it is imperative that the party should state the essential facts W.A.No.342/2021 so that other party may not be taken by surprise (see Ram Sarup Gupta v. Bishun Narain Inter College4).

11. Right to make pleading in a writ petition is more important than right to make pleading in a civil suit. Distinction between a pleading under the Code of Civil Procedure and a writ petition or a counter affidavit filed in a writ petition has been brought-out by their Lordships of the Supreme Court in the matter of Bharat Singh and others v. State of Haryana and others5 in following words: -

"While in a pleading, that is, a plaint or a written statement, the facts and not evidence are required to be pleaded, in a writ petition or in the counter-affidavit not only the facts but also the evidence in proof of such facts have to be pleaded and annexed to it."

12. In the aforesaid judgment, their Lordships of the Supreme Court have clearly held that while in a pleading that is a plaint or a written statement, the facts and not

18 Company Appeal (AT) No. 176 of 2022 evidence are required to be pleaded, in a writ petition or as in the counter-affidavit not only the facts but also the evidence in proof of such facts have to be pleaded and annexed to it. As such, right to file counter-affidavit in a writ petition is an extremely valuable right of the parties and reasonable opportunity to file counter- affidavit has to be afforded to the parties before considering the writ petition / interlocutory application.

13. In the instant case, it is quite apparent that the application for vacating stay was taken-up for hearing for the first time on 28-9-2021, but it is the case of the writ petitioner that he has been deprived of an opportunity to file reply to that application and interim order granted on 26-7-2021 came to be vacated by granting that application and the 4 AIR 1987 SC 1242 5 AIR 1988 SC 2181 W.A.No.342/2021 official respondents have been granted liberty to go ahead with the project and to finalise the project of putting up a freight terminal at the risk and cost of respondent No.5 which has not been claimed by the official respondents by making application for vacating stay or even by filing reply to the application for interim relief filed by the writ appellant."

"23. Having heard learned Senior Counsels and learned counsel for respondents No.2 to 4 / Railways and in view of the fact that the writ appellant has been deprived of his valuable right to file counter- affidavit opposing the application for vacating stay (I.A.No.2) in the writ petition and respondents No.1 to 4 have been allowed to finalise the project of putting up a freight terminal by respondent No.5, we deem it appropriate to direct that part of the impugned order dated 28- 9-2021 directing and granting liberty to respondents No.1 to 4 to proceed to finalise the project of putting up a freight terminal, shall remain stayed till the next date of hearing. It is ordered accordingly. 6 1990 Supp SCC 727 7 (2005) 9 SCC 733 W.A.No.342/2021".

In view of the principle laid down in the above judgment denial

of an opportunity to file counter to vacate stay petition amount to

depriving the Appellant of their valuable right to file counter to

19 Company Appeal (AT) No. 176 of 2022 rebut the allegation of serious in nature and it is also amount to

violation of principle of natural justice. Hence, the order under

challenge passed in I.A No. 86/KB/2022 is liable to be set aside

on the ground alone.

Point No. 2

18. One of the contentions of Appellants is that the order is

bereft of any reasons and the I.A 86/KB/2022 is not decided on

merits whereas the Ld. Sr. Counsel appearing on behalf of the

Respondents contended that the order is a consequence of failure

of settlement talks, since, liberty was given to intimate about

settlement, impugned order does not require elaborate

consideration of facts and law, consequently it is not a ground to

set aside the order under challenge.

19. In view of the contentions of both parties, we shall now

advert to relevant rules which deals with order of NCLT. Para XIX

of NCLT rules deals with disposal of cases and pronouncement of

order. According to Rule147 all orders or directions of the Bench

shall be stated in clean and prescribe terms in the last paragraph

of the order. In the absence of any specification as to contend the

order, the Tribunals may fall back on the contents of general orders

passed by Courts or Tribunals.

20 Company Appeal (AT) No. 176 of 2022

20. It is settled law that the Court or Tribunal shall record

reasons for its conclusion on the basis of merits. What an order

should contain normally is not specified anywhere but the order

must be reasoned one since the judgment or order in its final shape

usually contains in additional to formal parts (a) A preliminary or

introductory part, showing the form of the application upon which

it was made, the manner in which and the place at which, the writ

or other originating process was served, the parties appearing any

consent, waivers, undertakings or admissions given or made, so

placed as to indicate whether they relate to the whole judgment or

order or only part of it, and a reference to the evidence upon which

the judgment or order is based and (b) A substantive or mandatory

part, containing the order made by the Court as has been said in

Halsbury's Laws of England (4th Edition, Volume 26 P. 260).

Thus, in view of the requirements of an order or judgment referred

above, an order pronounced on the bench shall contain the

reasoning since the judge speaks with authority by his judgment.

The strength of a judgment lies in its reasoning and it should

therefore be convincing. Clarity of exposition is always essential.

Dignity, convincingness are exacting requirements but they are

subservient to what, after all, is the main object of a judgment,

which is not only to do but to seem to do justice. In addition to

those cardinal qualities of a good judgment, there are the

21 Company Appeal (AT) No. 176 of 2022 attributes of style, elegance and happy phrasing which are its

embellishments. The requirement of a good judgment is reason.

Judgment is of value on the strength of its reasons. The weight of

a judgment, its binding character or its persuasive character

depends on the presentation and articulation of reasons. Reason,

therefore, is the soul and spirit of a good judgment or order. Equity,

justice and good conscience are the hallmarks of judging. One who

seeks to rely only on principles of law, and looks only for the

decided cases to support the reasons to be given in a case or acts

with bias or emotions, loses rationality in deciding the cases. The

blind or strict adherence to the principles of law sometimes carries

away a judge and deviates from the objectivity of judging issues

brought before him. Justice M.M.Corbett, Former Chief Justice of

the Supreme Court of South Africa, recommended a basic

structural form for judgment or order writing, which is as follows:

"(i) Introduction section;

(ii) Setting out of the facts;

(iii) The law and the issues;

(iv) Applying the law to the facts;

(v) Determining the relief; including costs; and

(vi) Finally, the order of the Court."

Keeping in view various principles and observations, the 'Apex

Court' laid down certain guidelines for writing judgments and

22 Company Appeal (AT) No. 176 of 2022 orders in 'Joint Commissioner of Income Tax, Surat, Vs.

Saheli Leasing and Industries Limited' (Civil Appeal No. 4278

of 2010) in para No. 7 of the judgment and they are extracted

hereunder:

"7. These guidelines are only illustrative in nature, not

exhaustive and can further be elaborated looking to the

need and requirement of a given case:-

a) It should always be kept in mind that nothing should

be written in the judgment/order, which may not be

germane to the facts of the case; It should have a co-

relation with the applicable law and facts. The ratio

decidendi should be clearly spelt out from the

judgment/order.

b) After preparing the draft, it is necessary to go through

the same to find out, if anything, essential to be

mentioned, has escaped discussion."

c) The ultimate finished judgment/order should have

sustained chronology, regard being had to the concept

that it has readable, continued interest and one does not

feel like parting or leaving it in the midway. To elaborate,

it should have flow and perfect sequence of events, which

would continue to generate interest in the reader.

23 Company Appeal (AT) No. 176 of 2022

d) Appropriate care should be taken not to load it with all

legal knowledge on the subject as citation of too many

judgments creates more confusion rather than clarity.

The foremost requirement is that leading judgments

should be mentioned and the evolution that has taken

place ever since the same were pronounced and

thereafter, latest judgment, in which all previous

judgments have been considered, should be mentioned.

While writing judgment, psychology of the reader has

also to be borne in mind, for the perception on that score

is imperative.

e) Language should not be rhetoric and should not reflect

a contrived effort on the part of the author.

f) After arguments are concluded, an endeavour should

be made to pronounce the judgment at the earliest and in

any case not beyond a period of three months. Keeping it

pending for long time, sends a wrong signal to the

litigants and the society.

g) It should be avoided to give instances, which are likely

to cause public agitation or to a particular society.

Nothing should be reflected in the same which may hurt

the feelings or emotions of any individual or society."

24 Company Appeal (AT) No. 176 of 2022 When judgment is pronounced without reasoning, it is

not a judgment in the eye of law for the reason that the

requirement of reasoning either by 'Original Court or

Appellate Authority is to convey the mind of the judge

while deciding such an issue before the Tribunal. The

object of the Rule in making it incumbent upon the

Tribunals to record reasons is only to afford an

opportunity in understanding the ground upon which

the decision is founded with a view to enabling them to

know the basis of the judgment or order and if so

considered appropriate and so advised, to avail the

remedy of appeal.

From a bare reading of the principle laid down in the

above judgment, the requirement of recording of

reasons is only to show that the Court has focused

concentration on rival contentions and to provide

litigant parties an opportunity of understanding the

ground upon which the decision is founded. Even if it is

an order under the provisions of the Act, still these basic

requirements cannot be ignored by Courts and

Tribunals. In such case, a judge is required to apply his

mind and give focused consideration to rival

contentions raised by both parties. Courts/Tribunals

25 Company Appeal (AT) No. 176 of 2022 ought to be cautious and only on being satisfied that

there is no fact which needs to be proved despite being

in admission, should proceed to pass judgments (vide

Balraj Taneja and another Vs. Sunil Madan and

another2. The need for recording of reasons is greater in

a case where the order is passed at the original stage, a

decision without reasons is like grass without root, the

requirement to record reasons is one of the principles of

natural justice as well and where a statute required

recording of reasons in support of the order, it must be

done by the authorities concerned as held by the Apex

Court in S.M.Mukerji Vs. Union of India3.

21. In the present case, the judgment is only repetition of, the

pleadings, contentions of the parties and the analysis by the Judge is

only two or three paras consisting of four or five lines. Therefore, the

reason only recorded by the Tribunal in the impugned order is that the

settlement was failed and in pursuance of the order dated 28th June

2019, the parties are given liberty to inform to the Tribunal to pass

appropriate order but no reasons have recorded by the Tribunal. The

Impugned order passed by the NCLT is nothing but a slipshod

2 AIR 1999 SC 3381 3 1990 Crl.L.J.2148

26 Company Appeal (AT) No. 176 of 2022 consideration with utmost haste. Therefore, the unreasoned,

nonchalant order passed by the Tribunal cannot be sustained, as it is

not inconsonance with the requirement an order in general.

22. Mr. Krishnendu Dutta, Ld Sr. Counsel for the Respondent No.7

would submit that no order was passed it is only a concession, recorded

by the Tribunal and therefore, the Tribunal is not required to advert to

the various contentions on record its reasons but we are unable to agree

with this contention for the simple reasons that the Respondents

themselves sought to modify the order in the relief claimed in the

petition in IA. No. 86/KB/2022. The order which was passed by

concession still it is an order which is in the nature of a direction.

Therefore, the order under challenge did not satisfy the requirement of

an order.

23. It is the contention of the Respondents that when a direction was

given by the Tribunal to inform the Tribunal, when settlement is failed

because of failure of settlement, the order is modified but this

mechanically approach in setting aside the order which was already

passed based on inter belief claimed in the main company petition is

nothing but haste excise of jurisdiction to set aside the order. In view

of the interim relief claimed in the main company petition which we

extracted in the earlier paras and petition is filed to modify the order,

the Tribunal is supposed to decide both the claims for grant of interim

relief, claimed by the Appellant in the main company petition so also

27 Company Appeal (AT) No. 176 of 2022 the IA No. 86/KB/2022 filed for varying or modifying the order passed

earlier. In case, two claims are decided independently, there is every

likelihood of conflicting orders. Therefore, the order passed by the

Tribunal without deciding the entitlement or disentitlement of inter

model by the Appellants as claimed in the main company petition.

Setting aside the order dated 28th June, 2019 is a matter of serious

illegality.

24. In view of law referred above, it is the duty of the Tribunal to

record reasons for its conclusion but in para 46 of the impugned order,

the Tribunal specifically recorded as follows:

"Nothing herein above shall be construed in any manner any expression of opinion on merits or allegations raised in this application or in the main petition"

25. Though, the Tribunal is under obligation to decide the petition

on merits without leaving any stone unturned, the Tribunal specifically

held that the order was not passed on merits. This itself sufficient to

conclude that the order was passed by the Tribunal not on merits.

26. The counsel for the Respondents contended that the order

cannot be reversed unless the order is totally against the law are

perversed, merely because the Tribunal did not record reason, the order

cannot be set aside. Therefore, we hold that the order under challenge

is unreasoned and without focused consideration of various

contentions raised by both Appellants and Respondents before the

28 Company Appeal (AT) No. 176 of 2022 Tribunal. Consequently, the order is bad and liable to be set aside.

Accordingly, the point is answered against the Respondents and in

favour of the Appellants.

27. In view of the above discussion, we find no substance in the

contention, the same is hereby rejected. Accordingly, the point is

answered.

Point No.3

28. One of the contentions urged by the learned counsels for the

Respondent is that the acts of the Appellants No.1 are prejudicial to

the interest of the company. No doubt, the act complained against the

1st Appellant if really committed either by act or omission, it is

prejudicial to the interest of the Company but the Tribunal did not

advert to those contentions and on the other hand, the Appellant was

not afforded an opportunity to file counter to rebut the allegations

made in the IA No. 86/KB/2022 which is based on a subsequent event,

as discussed in point No.1. When the Tribunal did not record any

finding on this alleged prejudiced or if any finding is recorded without

affording an opportunity, such finding is illegal and violates of

principle of natural justice. Since, the Appellant was deprived of

valuable right to file his pleadings and thereby denuded to raise any

plea with regard to the grounds urged in the IA No. 86/KB/2022 in

future also. Therefore, such findings even if recorded, cannot be

sustained in law. Accordingly, the point is answered.

29 Company Appeal (AT) No. 176 of 2022 Point No.4.

29. The Learned counsel for the Respondent contended that the Appellant

suppressed certain facts without bringing to the notice of the court by filing

documents, further this Tribunal cannot interfere with the discretionary

order passed by the Tribunal and the Appellants failed to prove the

oppression or mismanagement of the company to claim any relief in the main

petition. To support his contention, the Learned Sr. Counsels has relied on

the Judgment of Wander Ltd. and Anr. Vs. Antox India Pvt. Ltd.4 and finally

prayed for dismissal of the appeal. Learned Sr. Counsel for the Respondent

No.4 has also contended that when the Petition was filed under Section 241

of the Act, it is for the Appellant herein to establish the ingredients of Section

241 & 242 of the Act and the jurisdiction of the Tribunal is limited, has

drawn the attention of this Tribunal to para 8, 9, 13 and 14 of the judgment

to contend that the Appellate Tribunal shall not re-assess the material to

reach a conclusion different from one reached by the court below, if the

finding reached by the Court was reasonably plausible on the material. The

Appellate Tribunal would normally not to be justified in interfering with the

exercise of discretion under Appeal, solely on the ground that if it had

considered, the matter as the trial stage, it would have come to a contrary

conclusion. As the discretion has been exercised by the trial court reasonably

and in a judicious manner, the fact that the Appellate Tribunal would have

4 1990 (Supp) SCC

30 Company Appeal (AT) No. 176 of 2022 taken a different view may not have justified to interfere with the trial court

exercise of discretion after referring to those principles in the Printers

(Mysore) Pvt. Ltd. Vs. Pothan Joseph5 has held at para 14:

"Where the discretion vested in the court under s. 34 has been exercised by the trial court the appellate court should be slow to interfere with the exercise of the said discretion. In dealing with the matter raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. As is often said, it is ordinarily not open to the appellate court to substitute its own exercise of discretion for that of the trial judge; but if it appears to the appellate court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts and has adopted an unjudicial approach then it would certainly be open to the appellate court-and in many cases it may be its duty-to interfere with the trial court's exercise of discretion. In cases falling under this class the exercise of discretion by the trial court is in law wrongful and improper and that would certainly justify and call for interference from the appellate court. These principles are well established; but, as has been observed by Viscount Simon, L. C., in Charles Osenton & Co. v. Johnston (1) " the law as to the reversal by a court of appeal of an order made by a, judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case".

30. No doubt, the law laid down in the judgment is not in quarrel, but

the Appellants were denied of their rights to file counter and Tribunal did not

decide the interim prayer, claimed by the Appellants in main Company

Petition but decided the interlocutory application independently without

deciding as to the entitlement or disentitlement to claim interim relief by the

Appellants, whereby did not excise its discretion in accordance with law but

passed slipshod order with utmost haste which cannot be sustained.

5 1960 AIR 1156, 1960 SCR (3)

31 Company Appeal (AT) No. 176 of 2022

31. He also relied on another judgment of Apex Court in Tata

Consultancy Services Limited Vs. Cyrus Investments Pvt. Ltd. and Ors.6

Wherein it was held at para No.118:

"An important aspect to be noticed is that in a petition under Section 241, the Tribunal cannot ask the question whether the removal of a Director was legally valid and/or justified or not. The question to be asked is whether such a removal tantamount to a conduct oppressive or prejudicial to some members. Even in cases where the Tribunal finds that the removal of a Director was not in accordance with law or was not justified on facts, the Tribunal cannot grant a relief under Section 242 unless the removal was oppressive or prejudicial."

32. In the instant order, the Tribunal did not record any prima

facie finding as to allegation of oppression or mismanagement of the

company that apart the Tribunal did not record any findings as to

prerequisite for grant of an interim order. The Tribunal did not advert

to the basic principles, passed the order in nonchalant manner which

will not stand to the legal scrutiny by this Appellate Tribunal. Therefore,

the findings recorded by the Tribunal for vacating the interim order on

the ground that the settlement was failed, without deciding the claim

of the appellant for interim relief is an erroneous approach. Where the

Tribunal did not record such findings, this Appellate Tribunal cannot

undertake the exercise of recording any reason or findings as to the

oppression of minority shareholders or mismanagement of the

Company which are mandatory to claim relief under Section 241 & 242

of the Act. Therefore, the contention of the Respondent No.4 needs no

6 (2021) 9 SCC 449

32 Company Appeal (AT) No. 176 of 2022 further consideration by this Appellate Tribunal and such contentions

has to be considered by the Tribunal itself.

33. One of the contention of Mr. Abhishek Manu Singhvi, Ld Sr.

Counsel for the Respondent No.1 is that, in the matters like the instant

case, the court shall not interfere with the order passed by the Tribunal

except to direct the Tribunal to dispose the main petition by sustaining

the order. In support of his contention, he placed reliance on five

judgment of this Tribunal passed by Coordinate Bench:

 Pradeep Kumar Aggarwal Vs. Spark Engineering Pvt. Ltd. & Ors.

CA(AT) No. 66 of 2022  Payaash Capital Singapore (PTE) Ltd. Vs. Trinity Alternative Investment Managers & Ors. CA(AT) No. 117 of 2022  Sandeep Gupta & Anr. Vs. Asian Hotel West Limited & Anr.

CA(AT) No. 106of 2021  Srei Infrastructure Finance Limited Vs. Trinity Alternative Investment Managers Limited CA(AT) No. 13 of 2022  Balwant Singh Kanda Vs. Kanda Auto Pvt. Ltd. & Ors. CA(AT) No. 172 of 2020.

34. All judgments are of the same bench, did not lay down any law

except issuing a direction to Tribunal to disposed of main petition. This

Tribunal never held, specifically, that this Tribunal cannot interfere with

such orders. Therefore, those judgments are not binding, as they are casual

direction issued without laying any law. Hence, we are afraid to uphold

such contentions thereby rejected the contentions of the Respondents.

35. In view of our foregoing discussion, we find no merit in the contention

of learned counsel of the Respondents. Consequently, the point is held in

favour of the Appellant and against the Respondents.

33 Company Appeal (AT) No. 176 of 2022

36. In the result, the Appeal is allowed, setting aside the order dated 20th

September, 2022 passed by NCLT, Kolkata Bench in IA No. 86/KB/2022

in CP No.895 of 2019 while remanding the Application to the NCLT with a

direction to restore the same to its original number, afford an opportunity

to the Appellants to file counter, hear and decide the interim relief claimed

by the Appellant along with petition IA No. 86/KB/2022, in accordance

with law.

[Justice M.Satyanarayana Murthy] Member (Judicial)

[Dr. Ashok Kumar Mishra] Member (Technical) Raushan

34 Company Appeal (AT) No. 176 of 2022