Manila Resorts Pvt. Ltd vs Bahl Paper Mills Ltd. & Ors

M/s. Manila Resorts Pvt. Ltd. ...Appellant

Versus BAHL Paper Mills Ltd. & Ors. ...Respondents Present: For Appellant : Mr. Peeyoosh Kalra and Mr. L.S. Aimol, Advocates

For 1st & 16th Respondents: Mr. Virender Ganda, Senior Advocate assisted by Mr. Rakesh Kumar, Mr. Sahil Gupta and Mr. Aashish Khanna, Advocates

For 3rd Respondent : Mr. Munawwar Naseem, Advocate

ORDER

22.02.2019 A petition under Section 397, 398 r/w Section 402 & 403 of

the Companies Act, 1956 (now Section 241 and 242 of the Companies Act, 2013)

was filed by 'Bahl Paper Mills Ltd.' - petitioner (1st Respondent herein) alleging

'oppression and mismanagement' on the part of the respondent (Appellant

herein). In the said case, the erstwhile Company Law Board passed the interim

order on 19th May, 2016, which reads as follows:

"Petition mentioned.

I have heard the Ld. Counsel for the parties at some length.

Ld. Counsel for the respondent requests for some time to file

reply. Let the reply be filed within two weeks with a copy

in advance to the counsel for the petitioner. Rejoinder, if 2

any, be filed within two weeks thereafter with a copy in

advance to the counsel opposite.

On behalf of the Respondent No.1 ld. Counsel has stated in

categorical terms that the petitioner may participate in the

affairs of Respondent No. 1 Company, and he may have

access to the records by visiting the Registered Office and

any other sites. It is further stated that status quo with

regard to the shareholding of the petitioner which is 50.7%

(51 %?) shall be maintained till the next date of hearing. It

has also been stated that the petitioner shall be furnished

fortnightly statement of accounts by the Respondent No. 1

Company.

The prayer for maintaining Status quo on the fixed assets

has been opposed by the ld. Counsel for the Respondent

No.1 Keeping in view the facts and circumstances of the

case and the fact that the petitioner has about 51% of the

shareholding its interests need to be protected. Accordingly,

status quo with regard to the fixed assets of respondent No.

1 company shall be maintained. If any transaction with

regard to fixed Assets takes place, the same shall be done

with the prior permission of the Board.

List on 28.07.2016 at 2:00 Pm."

2. Later on, the case was transferred before the National Company Law

Tribunal, Principal Bench, New Delhi (hereinafter referred to as 'Tribunal'), the

Company Appeal (AT) No. 421 of 2018 3

petitioner 'BAHL Paper Mills Limited & Ors.' filed an application under Section

425 of the Companies Act, 2013 read with Section 10, 11 and 12 of the Contempt

of Courts Act, 1971 for initiating the contempt proceedings against the

contesting respondents (appellant herein). In the said contempt petition filed

under Section 425 of the Companies Act, the Tribunal by the impugned order

dated 26th October, 2018 issued notice for initiation of contempt proceedings

and observed :

"24. The defence pleaded by the respondents is wholly

unwarranted. The import of order dated 19.05.2016 in

clear terms show that the status quo was to be

maintained in respect of fixed assets belonging to

respondent 1 company and if any, transaction was to

take place in respect of fixed assets then prior permission

of this Tribunal was required. Admittedly, no permission

was taken. The expression fixed assets has not been

defined in (Ind AS) 18. The matter was contested. The

'fixed assets' as understood by all and sundry is land,

property and capital assets. The argument that the

property is goods was not raised when interim directions

were issued. Therefore, the property should have been

sold after obtaining permission from NCLT. The definition

of expression goods in the Accounting Standard would not

advance the case of respondent as the expression goods

has not been used in the order dated 19.05.2016.

Company Appeal (AT) No. 421 of 2018 4

24. Therefore, we find that there is a prima facie case

of intentional violation of order dated 19.05.2016 and we

take cognizance of the fact that sale deeds have been

admittedly executed on 09.06.2016, 27.03.2017,

19.06.2017, 29.06.2017, 18.07.2017, as is shown in the

table under para 3 of this order. Accordingly notices be

issued for framing of charges to Mr. Amar Pal Singh son

of Mr. Kuldeep Singh, R/o House No. 042, Katoratal, Ram

Nagar, Kashipur, Udhamsingh Nagar, Uttrakhand -

244713 and Mr. Sanjeev Kapoor son of Sh. P.P. Kapoor,

Director of M/s. Manila Resorts Private Limited registered

S-401, School Block, Shakarpur, Opposite Prachin Shiv

Mandir, New Delhi -110 092."

3. Mr. Peeyoosh Kalra, learned counsel for the appellant submits that the

appellant company has no grievance against the impugned order dated 26th

October, 2018 insofar it relates to initiation of contempt proceedings against the

Directors of the Company. It is submitted that the interim order of status quo

with regard to fixed assets, as was passed by the erstwhile Company Law Board,

has now been wrongly explained in paragraph 24 of the impugned order, as

quoted above. The company being a real estate company, if flats, lands and villas

are not allowed to be sold, in such case the Company will suffer and the interim

order will not be consistent with Section 242(4) of the Companies Act, 2013.

4. Mr. Virender Ganda, learned Senior Counsel appearing on behalf of the

petitioners (Respondents herein) submitted that the members against whom the

Company Appeal (AT) No. 421 of 2018 5

contempt proceedings have been initiated, earlier preferred the appeal(s) against

the impugned order and this Appellate Tribunal had not entertained the

appeal(s) at their instance and asked them to take all the plea before the

Tribunal. Therefore, according to him no specific finding should be given by this

Appellate Tribunal as the appellant has the right to bring all the facts to the

notice of the Tribunal.

5. In the present case we find that the company is not aggrieved with the

order of initiation of contempt proceedings against the Directors; the only

grievance is against observation made in paragraph 24 of the impugned order.

6. It is true that the order of status quo is with regard to fixed assets of the

company should not be confused with the performance of the company while

doing its business and the company being a 'real estate company'. The company

requires to sell its flats, lands or villas in normal course of business which has

not been stayed by the Tribunal or by the interim order.

7. While making it clear and in view of the pendency of the petition, we are

not inclined to interfere with the impugned order dated 26th October, 2018 (at

paragraph 24) quoted above. We also make it clear that we have not given any

finding with regard to shareholding for one or other member company and other

assets of the company which are not meant for real estate business. Further,

we make it clear that we have not made any finding on merit, which is to be

looked into by the Tribunal while deciding the question of contempt proceedings

against the contemnor (members).

8. The appeal stands disposed of with aforesaid observations.

[Justice S.J. Mukhopadhaya] Chairperson /ns/uk/

Company Appeal (AT) No. 421 of 2018