Meidensha Corporation vs Prime Meiden Ltd. & Ors

Meidensha Corporation ...Applicant/ 2nd Respondent

Vs.

Prime Meiden Ltd. & Ors. ...Respondents

Present: For Appellants: - Mr. Ramji Srinivasan, Senior Advocate with Mr. Lalit Bhasin, Mr. Abhijeet Sinha, Mr. Lakshya Khanna, Mr. Avichal Prasad, Ms. Anuradha Sharma, Mr. Inder Raj Gill, Mr. Nikhil Ramdev, Ms. Sylona Mohapatra and Mr. R.P. Singh, Advocates.

For Respondents: - Mr. Rajiv Ranjan, Senior Advocate with Mr. Krishnendu Datta, Mr. Ramanjit Singh, Mr. Robin Dubey, Mr. Sagar Chawla, Advocates.

SUDHANSU JYOTI MUKHOPADHAYA, J.

The brief facts of the case can be noticed from the earlier decision

of this Appellate Tribunal passed on 29th November, 2018 in Company

Appeal (AT) Nos. 397-399 of 2017 etc., as extracted below: 2

"These appeals have been preferred by the Appellants-

'Surinder Mehta and Ors.' against three different

orders passed by the National Company Law Tribunal

('Tribunal' for short), New Delhi Bench, in Company

Petition No. 394(ND)/2017 dated 10th November, 2017

and 17th November, 2017 filed by 'M/s. PCI Limited &

Ors.' and in Company Petition No. 369(ND)/2017

dated 23rd November, 2017 filed by 'Meidensha

Corporation'.

2. By virtue of the order dated 10th November, 2017,

passed in Company Petition No. 394/ND/2017,

Tribunal, New Delhi, declined to interfere with the

decision of the Board of Directors and observed that

such decision ultimately to be approved by the

shareholders, shall be given effect to.

3. Thereafter, CA No. 306 of 2017 in Company Petition

No. 394/ND/2017 was filed by 'M/s. PCI Limited &

Ors.' (Company)/ 'Petitioner' seeking directions that

the Respondents be restrained from giving any effect

to the resolution passed by the Board of Directors on

12th November, 2017. As regards another CA No. 307

of 2017, the Respondents of the said petition sought

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 3

modification of the order dated 10th November, 2017.

The Tribunal instead of passing any further order

directed to list the matter on 1st December, 2017.

4. On 23rd November, 2017, the first order was passed

by the Tribunal on an urgent application before the

Bench for immediate directions to make payments

towards Custom Duty and payments to other third

parties. Keeping in view the urgency, the Tribunal kept

the matter for hearing on interim relief at 4.00 p.m.

5. At 4.00 p.m., the Tribunal in its subsequent order on

23rd November, 2017, discussed the relevant facts and

passed the following directions:

"8. Resultantly, we direct that there should

be proper adherence to the resolution

passed by the Board in respect of

disbursing payments and/ or procuring

material and despatching finished goods to

their vendees, till the 1st of December, 2017,

when final arguments shall be heard in

both the Company Petitions. Should for any

reason the aforesaid named officials of the

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 4

Respondent Company be unavailable, the

Chairman/ Executive Vice Chairman shall

nominate any other official to represent

them in signing cheques/ documents. It is

also being made abundantly clear that

should the Respondent's employees/

nominee fail to cooperate in countersigning

the required documents, it shall be viewed

as a deliberate attempt by the Respondents

to thwart the working of the Company."

6. When the appeal was taken up, taking into

consideration that petition under Sections 241 & 242

of the Companies Act, 2013 has been preferred by the

Company ('Meidensha Corporation') alleging

oppression and mismanagement against it and its

members and the Tribunal passed one or other interim

orders, this Appellate Tribunal with a view to regulate

the conduct of the company affairs in a proper manner,

on hearing the parties passed following interim order

on 1st December, 2017:

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 5

"01.12.2017- Let notice be issued on

Respondents. Ms. Anuradha Sharma,

Advocate accepts notice on behalf of 2nd

Respondent. Mr. Anuraag Dayal, Advocate

accepts notice on behalf of Respondents Nos.

3 to 8. Mr. Ramanjit Singh, Advocate accepts

notice on behalf of Proforma Respondents

nos.10 and 11. No further notice need be

issued to them. Let notice be issued on the

rest of the Respondents by Speed Post.

Requisite along with process fee, if not filed,

be filed by 4th December, 2017. If the

Appellant provides the e-mail address of

Respondent, let notice be also issued

through e-mail.

Post these appeals on 21st December,

2017.

In the meantime, the National

Company Law Tribunal shall not extend the

interim order dated 23rd November, 2017

passed at 4.00 p.m. in Company Petition No.

369/ND/2017.However, it may proceed

with the hearing of the main petition under

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 6 Section 241 of the Companies Act, 2013. It is

also made clear that for day-to-day

functioning of the Company, the Company

may release money, including payment, if

any, to be made towards supply of

materials, electricity, water, salaries, of

officers, wages of the employees/workmen

and statutory dues etc. payable. Both the

parties will also ensure that the Company

remains on-going without any hindrance of

its work, including the work as required to be

taken from companies officers, employees,

workmen, experts etc. It is also made clear

that for any purpose if any Form is to be filled

up or signed, it should be in the Format as

was existing as on the date of the filing of the

petition under Section 241 of the Companies

Act, 2013 and will be signed by the persons,

who were authorised to sign on such format

as on the date of filing. In case, any of the

signatory, belonging to any of group

(Appellants or Respondents) refuse to sign or

do not co-operate with the Company, it will

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 7

be open to the parties to bring such fact to the

notice of this Appellate Tribunal and may

request to modify the present order."

7. The appeal was kept pending with a view to find out

whether pursuant to the interim order the affairs of the

company are being run in a proper manner. However,

time to time applications were preferred by the

Respondents alleging non-cooperation on the part of

the Appellants, who are authorised to sign within the

stipulated period. It was alleged that such non-

cooperation on the part of the authorised

representative of the Appellant is affecting the proper

functioning of the Company.

8. In view of such allegation, on 26th September, 2018,

we passed the following order:

"26.09.2018─ We have heard the parties

with regard to the clarification of the interim

order passed on 1st December, 2017.

Having heard the parties, we make

it clear that for the purpose of getting

signature of the Appellants and its

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 8

representative for day to day functioning if

any requisition is made in the old format by

the Respondents or any of the Officers, the

Appellant or the authority competent to

counter sign, it will clear the matter within 48

Hrs. In case of non-clearance, reason should

be recorded and should be communicated to

the parties who has made the requisition.

The rejection of any requisition does not mean

that the Appellants have power to audit the

requisition made in the interest of the

Company. Entry of any material in the

premises of the factory for utilisation or

commercial production of the company cannot

be rejected.

The parties including the

Appellants and the Respondents are directed

not to create such situation which will be

detrimental to the functioning of the Company.

This order we have passed in addition to the

earlier interim order passed by this Appellate

Tribunal.

I.A. No. 1510 of 2018 stands disposed of.

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 9

Post the matter on 3rd October, 2018 for

compliance."

9. After the aforesaid clarification of the interim order

dated 1st December, 2017, the Company continues to

function properly but in some cases, again allegations

were levelled by the Respondents against one of the

authorised signatories on the part of the Appellants. A

Contempt Petition was also filed against Mr. Rohan

Mehta & Ors. ('Appellants').

10. On 12th November, 2018, Mr. Rohan Mehta,

one of the Appellants who is also authorised to sign

pursuant to interim order of this Appellate Tribunal,

appeared in person and informed that more than 27

bills have been cleared. Further informed that there is

a difficulty in passing a number of bills etc. within short

period of 48 Hrs. He prayed for four clear working days

for clearing the bills and if so required after negotiation

with the parties. The aforesaid statement was

recorded by this Appellate Tribunal on 12th November,

2018, as quoted below:

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 10

"12.11.2018─ Mr. Rohan Mehta, one of the

Appellants who is also authorised to sign

pursuant to interim order of this Appellate

Tribunal, appeared in person and informed

the difficulty in passing a number of bills etc.

within short period of 48 Hrs. He prays for

four clear working days for clearing the bills

and if so required after negotiation with the

parties.

2. Mr. Rajeev Ranjan, Senior Counsel

appearing on behalf of the Appellants submits

that if any information is asked from the

Respondents they should clarify it within 24

Hrs.

3. According to Mr. Ramji Srinivasan,

Learned Senior Counsel, information, if any, is

sought for, it should be made at least before

the third day so that they may get 24 Hrs for

clearance, otherwise it may exceed four

working days.

We have heard the parties. Order

reserved."

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 11

11. In view of the stand taken by the parties, the

interim order passed on 1st December, 2017, as

clarified by order dated 26th September, 2018, are

made absolute which is to continue till the final

disposal of the Company Petition pending before the

Tribunal. However, in place of 48 Hrs, we allow Mr.

Rohan Mehta and the other signatory Appellant(s) four

clear working days for clearing the bills as may be

submitted and in case of any defect they may negotiate

with the Directors and other authorised officer. If any

clarification is sought for, it should be informed at least

before the third day from the date of production of the

bill(s) and other requisites so that the other group

(Respondents) may get clear 24 hours to explain their

stand to ensure that the total period do not exceed four

working days.

In case bills or other requisition are not cleared by

the representatives of the Appellants within four

working days without giving valid reason and

intimation to the other group (Respondents), the bills or

other requisition, as may be submitted by the

management will be deemed to have been cleared by

the other group (Appellants).

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 12

12. As ordered, aforesaid arrangement will

continue till final decision of the Company Petition No.

394 (ND)/2017. In view of the aforesaid arrangement,

the interim orders passed by the Tribunal stand

superseded.

13. Appeals and Interlocutory Applications stand

disposed of with aforesaid observations and

directions.

Contempt Case (AT) Nos. 11 of 2017; 01 of 2018 and 16 of 2018

14. Having heard learned counsel for the

Appellants and taking into consideration the final order

passed in Company Appeal (AT) Nos. 397-399 of 2017,

we are not inclined to proceed in the contempt

proceedings. They are closed."

2. This Review Application has been filed by Applicant- 'Meidensha

Corporation Japan' (2nd Respondent to the appeal) (hereinafter referred

to as "Applicant") in Company Appeal (AT) No. 397-399 of 2017 for

exercising power under Rule 11 of the National Company Law Appellate

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 13

Tribunal Rules, 2016, wherein following facts have been brought to our

notice.

3. In view of the incessant impediments being created by and at the behest of Mr.

Surinder Mehta and Mr. Rohan Mehta - (1st and 2nd Appellants in the appeal) (hereinafter

referred to as "Contesting Respondents") in the smooth functioning of the Company inter-alia

by preventing the handover of the corporate and statutory records of 1st Respondent-

'Prime Meiden Limited' to the Company Secretary, HR-Head and Manager --IT duly

appointed by the board of the Company, thereby preventing them from discharging

their duties towards the Company, the Applicant prays for review of the order dated 29th

November, 2018 passed by this Appellate Tribunal while disposing of Company Appeal

(AT) Nos.397-399 of 2017 and issue directions for reinstatement of the simplified

procedures/new formats adopted by the Company pursuant to the resolution dated

12th November, 2017 passed by the Board of Directors of the Company.

4. It was submitted by the Applicant that at present it holds 76% equity

shares and 100% preference shares issued by the Company. For acquiring the

aforesaid shareholding in the Company, the Applicant has expended a sum of Rs. 525

Crores (Approx.). In addition, the Contesting Respondents have served upon the

Applicant notice dated 18th February, 2019 offering to sell another 8% equity interest

in the Company pursuant to which the Appellant's equity shareholding will increase to

84%. Till date the Applicant has also secured debt facilities amounting to Rs.410 Crores

availed by the Company. Having committed a sum of Rs. 935 Crores (Approx.) in the

Company, the Applicant still finds itself unable to smoothly manage the affairs

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 14

of the Company owing to the repeated and incessant impediments being perpetrated

by and at the behest of Contesting Respondents.

5. Learned counsel for the Applicant submitted that this Appellate

Tribunal while passing the order dated 29th November, 2018 had protected the

Appellants (i.e. minority shareholders in the Company) by allowing 2nd Appellant (Mr.

Rohan Mehta) four days to sign the approval formats required to be signed for the day

to day functioning of the Company. This Appellate Tribunal had vide the

aforementioned order apart from prescribing a timeline for the Contesting Respondents

to sign formats, also made absolute its earlier interim order dated 1st December, 2017

in terms whereof the Parties were directed to ensure that the operations of the Company

remain on-going and unhindered. However, the Respondents and more particularly

Contesting Respondents deliberately overreaching in disregard of the unequivocal directions

passed by this Appellate Tribunal have caused and continue to cause grave

impediments in the smooth functioning of the Company.

6. It was also alleged that even after passage of the order dated 29th November,

2018, the Respondents by utilising their muscle power prevented the duly appointed

employees of the Company (including the HR-Head and Company Secretary) from

entering into the corporate office of the Company. Such deliberate overreach of the

orders passed by this Appellate Tribunal compelled the Applicant to file Contempt

Petition No. 21/2018 in Company Appeal (AT) Nos.397-399/2017 which petition is

presently pending adjudicating by this Appellate Tribunal. It was only pursuant

to the stern warning issued to the Respondents by this Appellate Tribunal that

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 15

the duly appointed company employees were allowed to enter into the corporate

office, which is presently located in a building owned by the Respondents and

ingress and egress thereto is controlled exclusively by the Respondents. However,

despite warnings and in clear abuse of the indulgence accorded by this Appellate

Tribunal to the Respondents, they have prevented the corporate and statutory

records of the Company to be handed over to such duly appointed employees, thereby

hindering the Company's operations.

7. The specific instances of impediments in the operations of the Company which

justify and necessitate review of the order dated 29 th November, 2018 have been

highlighted as under:

Preventing the duly appointed HR Head of the Company from assuming

charge and discharging his responsibilities: -

(i) Mr. Abhijeet Prakash (erstwhile HR Consultant for the Company) had

been deputed as the HR Consultant for the Company vide an HR

Services arrangement dated August 19, 2016 executed between the

Company and PPIL (Planet PCI Infotech Limited; a company owned and

controlled by the Respondents).

(ii) The said HR arrangement has been terminated by the Company as far

back as November 1, 2017 and the said termination has not been stayed

by any judicial forum.

(iii) The Company vide board resolution passed during the Board

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 16

meeting of November 12, 2017 resolved to appoint Mr. Mazhar

Hussain as the new HR Head of the Company and took on record

termination of the aforementioned HR services arrangement.

(iv) However, in clear overreach of the resolutions passed by the Board of the

Company, Mr. Abhijeet Prakash continues to usurp the role as HR

Head of PML. Despite numerous requests from the Managing Director

and the duly appointed HR - Head of the Company (Mr. Mazhar

Hussain), Mr. Abhijeet Prakash has failed to hand over the corporate

HR records of the Company.

(v) The failure to hand over the corporate HR Records of the Company to

Mr. Mazhar Hussain has resulted in grave difficulty as the HR Head of

the Company cannot function without records. He is prevented from

providing inputs relating to annual salary appraisal of the Company's

employees or oversee the legal compliances to be undertaken by

the Company.

Preventing the duly appointed Company Secretary from

assuming charge and discharging his responsibilities: -

(i) The Company vide resolution passed during the Board meeting dated

November 12, 2017 had resolved to terminate the services of the erstwhile

Company Secretary & CFO of the Company i.e. Mr. Ashok Jain as he failed to

discharge his responsibilities and the board of the Company had lost

confidence in him. Accordingly, the Company issued a termination letter

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 17

dated November 13, 2017

(ii) Mr. Rajnish Kumar was appointed as the Company Secretary of PML vide

resolution passed during the Board meeting dated November 12, 2017.

(iii) However, till date, Mr. Ashok Jain continues to represent himself as the

Company Secretary and CEO of the Company. Despite repeated

requests from the Managing Director and the duly appointed Company

Secretary (Mr. Rajnish Kumar) to hand over the statutory records of the

Company, Mr. Ashok Jain has obstinately refused to oblige.

(iv) On the contrary, Mr. Ashok Jain continues to abuse the liberty granted

to him by this Appellate Tribunal vide order dated January 30, 2019 to jointly

sign requisite statutory documents.

(v) Mr. Ashok Jain circulated a purported notice dated February 20, 2019 for a

board meeting of the Company to be held on February 21, 2019 despite

such notice having been dispatched to all directors of the Company by the

Company Secretary Mr. Rajnish Kumar. This illegal notice was circulated to

the erstwhile independent directors of the Company even though they were

validly removed during the EGM of the Company held on December 13,

2017 and which removal has also been duly notified to the Registrar of

Companies. It is relevant to mention that the order of this Appellate

Tribunal dated 2nd August, 2018 specifically mentions that the

existing Board of Directors excludes those who had already been

removed as there is no order of stay passed by any court. Further, Mr.

Ashok Jain deliberately omitted to circulate the said notice to

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 18

validly appointed directors of the Company namely Mr. Haruo Hirakawa

and Mr. Lalit Bhasin. In addition, Mr. Ashok Jain also carried out

changes to the minutes of the board meeting held on 21st February,

2019 as circulated by the Company Secretary Mr. Rajnish Kumar and

vide e-mail dated 28th February, 2019, he also circulated the revised

minutes which not only inaccurately reflect the proceedings of the

said meeting but also reflect him as the Company Secretary of the

Company in violation of this Appellate Tribunal's order dated 30th

January, 2019. Further, Contesting Respondents unabashedly

continue to assert that Mr. Ashok Jain is a joint company secretary.

(vi) Mr. Ashok Jain's obstinate conduct and deliberate overreach of the

liberty granted to him by this Appellate Tribunal vide order dated 30th

January, 2019 is also exemplified by his refusal to sign the board meeting

notice dated 7th May, 2019 for convening meeting of the Board of Directors

of the Company on 29th May, 2019. After having failed to sign the said

notice, Mr. Ashok Jain raised baseless and unreasonable objections on

the validity of the notice for board meeting.

Refusing to acknowledge Mr. Ramesh Chandra as the plant head of

the Company and Denying his salary increment:

(i) Mr. Rohan Mehta has refused to acknowledge the promotion of Mr.

Ramesh Chandra (in place of Mr. Krishna Iyer who had tendered his

resignation on 14th September, 2018) to the position of Plant Head

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 19

which is detrimental to the smooth and efficient functioning of the

plant. Initially Mr. Rohan Mehta delayed signing the proforma note

dated 28th September, 2018 for promotion of Mr. Ramesh Chandra on

the excuse that he would like to meet Mr. Ramesh Chandra

personally before signing. However, Mr. Rohan Mehta deliberately

did not schedule any meeting with Mr. Chandra for about eighteen days

(i.e. from September 28, 2018 till October 17, 2018) and finally met with

Mr. Ramesh Chandra on 17th October, 2018 at the manufacturing

plant of the Company.

(ii) Despite having met with Mr. Ramesh Chandra, the Mr. Rohan Mehta

did not sign the said proforma note, thereby indefinitely delaying his

appointment as the Plant Head of the Company. It was only on November

30, 2018 (i.e. 62 days after the proforma note was circulated on

September 28, 2018) that the Mr. Rohan Mehta mischievously

raised certain purported reservations on the promotion of Mr.

Ramesh Chandra. The Managing Director of the Company vide email of

December 05, 2018 responded to the issues raised by Mr. Rohan Mehta

and also informed him that since much more than four working days

had elapsed post circulation of the proforma note, the "promotion of

Mr. Ramesh Chandra to the position of plant head is deemed to

be approved in accordance with the directions/ orders passed by this

Appellant Tribunal on 29th November, 2018.

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 20

(iii)Further, the Managing Director vide a separate email dated 5th

December, 2018 also circulated to Mr. Rohan Mehta for his signature,

a proforma note relating to the increment in the salary of Mr. Ramesh

Chandra on account of his promotion to the position of plant head.

Once again, the Mr. Rohan Mehta vide email dated 6th December,

2018 addressed to the Managing Director cast baseless aspersions of

mismanagement against him and even returned the requisition for salary

increment " as premature and pre-emptory".

(iv) Mr. Rohan Mehta's mischievous refusal to sign the aforesaid

Proforma Note dated 5th December, 2018 coupled with the fact that the

corporate HR Records of the Company remain in the custody of Mr.

Abhijeet Prakash (erstwhile HR Consultant of the Company) has resulted

in a situation wherein Mr. Ramesh Chandra despite being promoted to

the position of the Plant Head has been denied increment in his salary.

8. Learned counsel appearing on behalf of the Contesting

Respondents, who are minority shareholders, submitted that the Review

Application cannot be treated like an appeal in disguise. Whether the

Judgment is correct or valid in law cannot form the subject matter of the

Review Application, so long as the Judgment has not been set aside or

declared void by the competent authority. The Review Application is

therefore not maintainable in the eyes of law and should be dismissed outright.

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 21

9. According to learned counsel for the Contesting Respondents, it is

settled law that the power to review is not an inherent power of the Court.

It must be conferred by law specifically or by necessary implication which in

the instant case, has neither been provided under the Companies Act, 2013

nor in the NCLAT Rules, 2016. In fact, the Appellate Tribunal in a similar

matter in Review Application No. 2 of 2018 in Company Appeal (AT) No.

12 of 2018 titled as "Dr.M.A.S Subramanian & Ors Vs. Mr. TS.

Sivakumar & Ors", while dismissing the Review application has stated that

the inherent powers cannot be invoked so as to confer on this Appellate

Tribunal powers of review which have not been conferred by the Legislature.

The Review Application must therefore fail in light of the settled judicial

precedent of this Appellate Tribunal.

10. Learned counsel for the Contesting Respondents also challenged

the power of review referring the decision of the Hon'ble Supreme Court

in "Lily Thomas vs. Union of India, AIR 2000 SC 1650" .

11. It was submitted that Section 420 (2) of the Companies Act, 2013,

clearly states that the Tribunal, with a view to rectify any mistake apparent from

the record, may amend any order passed by it and shall make such

amendment if the apparent mistake is brought to its notice. The Hon'ble

Supreme Court of India in "Syed Yakoob Vs K.S. Radhakrishnan" has

discussed at length that an error apparent on the face of record means an error

which strikes on mere looking and does not need long drawn out process of

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 22

reasonings on points where there may conceivably be two opinions, as to what

would be an error of law which is apparent on the face of record and which

can be corrected, but not an error of fact.

12. Without prejudice to the foregoing grounds of maintainability, it was

submitted that while considering an application for review, the Tribunal must

confine its adjudication with reference to material which was available at the

time of initial decision. The happening of some subsequent event or

development cannot be taken note of for declaring the initial order/decision

as vitiated by an error apparent which is laid down by the Hon'ble Supreme

Court in "State of West Bengal & Ors. Vs. Kamal Sengupta & Anr.

(Civil Appeal No. 1694 of 2006)".

13. Further, according to Contesting Respondents, so-called facts and

circumstances relied on by the Applicant in the Review Application were never

part of the record before this Hon'ble Appellate Tribunal and therefore it

cannot be said that this Appellate Tribunal has made any mistake

apparent from the record.

14. Learned counsel for the Contesting Respondents highlighted

compliance of the Judgment and brought following facts:

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 23

MORE THAN 800 PROFORMA NOTES/FORMATS SIGNED

(i) The Contesting Respondents have complied with the directions

issued by this Appellate Tribunal in its entirety. Since the Judgment,

they have signed more than 800 notes/formats including HR

approvals, approvals for purchase of raw materials/ machinery from

different vendors, approvals concerning Letter of Credit and

approvals concerning extension of performance bank guarantees.

They have not created any hindrances as alleged in the review

application.

(ii) On 14th September, 2018. Mr. Krishna Iyer resigned as Plant Head

of the Company due to constant threats from the 3rd and 4th

Respondents and disallowing him from discharging his functions.

Accordingly, Mr. Abhijeet Prakash circulated a proforma note to Mr.

Kazumi Ikarashi, seeking his signature to officially discharge Mr.

Iyer from service. Mr. Ikarashi signed the note on 16th November,

2018, after repeated reminders and requests for almost two months.

Simultaneously, Mr. Ikarashi circulated a proforma note for

appointment of Mr. Ramesh Chandra to the position of Plant Head.

In compliance of Judgment, the Contesting Respondents exercised

their right to seek information on the requisition and also raised

certain objections to the promotion of Mr. Ramesh Kumar as Plant

Head and accordingly sought clarifications in this regard. However,

in complete disregard to the directions issued by the Hon'ble

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 24

Appellate Tribunal, on 05th December, 2018, Mr. Ikarasih

unilaterally declared Mr. Ramesh Kumar as the new Plant Head of

the Company. The decision of unilaterally claiming the appointment

of Plant Head without addressing the objections and providing

necessary information to the Contesting Respondents is a clear

violation of the Judgment. Instead of complying the directions issued

by the Appellate Tribunal, the Applicant is now seeking a review of

the Judgment by falsely alleging that the Contesting Respondents

have not complied with the mandate of the Appellate Tribunal,

whereas the Applicant is itself guilty of wilful disobedience of such

orders.

(iii) Allegation of the Applicant is that the Contesting Respondents are

refusing to sign the Proforma Note dated 09th April, 2019 for shifting

of corporate office. Vide email communications dated 12th April,

2019 and 15th April, 2019, Mr. Rohan Mehta has repeatedly asked

the other Contesting Respondents to provide all necessary

documentation and information, to him to make an informed

decision on the issue. The Contesting Respondents were to provide

such information before the third day from the date of production of

the note in compliance of the Judgment passed by this Appellate

Tribunal, so that the Contesting Respondents may get clear 24

hours to explain their stand. The Contesting Respondents in blatant

disregard of the final judgment passed by this Appellate Tribunal

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 25

have failed to furnish the requisite information sought by the

Contesting Respondents and are therefore deliberately violating the

directions issued by this Appellate Tribunal.

HR AND CS ARE OPERATING SMOOTHLY AND IN TANDEM WITH EACH-OTHER FROM THE PREMISES OF THE COMPANY

(iv) That, in compliance of the Judgment, Mr. Rajnish Kumar and Mr.

Mazar Hussain have been duly permitted and are operating from the

premises of the Company since February, 2019, without any

obstruction or complaint whatsoever, even though Mr. Mazar

Hussain has filed criminal complaints against the owners of the

building, the Chairman and Executive Vice Chairman of the

Company. The allegation that the Contesting Respondents are

physically restraining these people from entering the premises of the

Company is completely and utterly false and such allegations are

being tendered by the Applicant without any evidence whatsoever so

mislead this Appellate Tribunal.

(v) It is being repeatedly alleged that Mr. Abhijeet Prakash and Mr.

Ashok Jain are refusing to handover all company and original

statutory records to Mr. Mazar Hussain and Rajnish Kumar

respectively. It is submitted that neither he nor the Contesting

Respondents are in possession of any records as is being alleged by

the Respondents. On the contrary, it is very hard to believe that Mr.

Mazhar Hussain has been regularly signing HR approvals without

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 26

having any access to the HR records, as is being alleged by the

Applicant. Similarly, the allegation that Mr. Ashok Jain is not

handing over original statutory records and registers to Mr. Rajnish

Kumar falls flat on its face. It is submitted that Mr. Ashok Jain vide

emails dated 08th February, 2019, 14th February, 2019; February

15, 2019; has provided Mr. Rajnish Kumar with all the information

that he has sought. Mr. Ashok Jain is not in possession of original

statutory records of the Company, which information is anyways in

electronic form.

STALLING THE MEDIATION/ SETTLEMENT DISCUSSIONS DESPITE THE APPELLANT'S OFFER TO SELL 100% SHAREHOLDING IN THE COMPANY

(vi) Pursuant the directions of this Appellate Tribunal both Parties have

exchanged their respective proposals for settling all disputes

pending before the Hon'ble Tribunal and Appellate Tribunal. The

Contesting Respondents proposal, to transfer their entire residual

shareholding in the Company to the Applicant, which makes them

100% owner of the Company, fully and absolutely meets the

Applicant's sole prayer in its Company Petition No. 369 (ND) of 2017

to its complete satisfaction. It is inconceivable that upon declining

the Contesting Respondents offer of sale of 100% shareholding at

pre-determined value, the Applicant is able to maintain its petition

before the Hon'ble Tribunal. The Applicant has raised several

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 27

traverse issues in its counter proposal, which would all become

academic if the Contesting Respondents shares are acquired by the

Applicant. On the one hand the Applicant is refusing to acquire and

arrive at a settlement of purchasing the entire shareholding of the

Contesting Respondents, which would completely meet all their

requirements and on the other hand they are attempting to file such

frivolous applications on misconceived and unsubstantiated

notions. The Review Application is nothing else but regretful attempt

to alter the equities against the Contesting Respondents and force

the Contesting Respondents to agree to unreasonable and oblique

settlement terms.

DISPUTES RAISED BY RESPONDENT NO. 2 IN COMPANY PETITION NO. 369 (ND) OF 2017 ARE SUBJECT MATTER DIRECTLY COVERED BY THE ARBITRATION AGREEMENT DEFINED UNDER CLAUSE 17 OF SPSHA

(vii) It would further be relevant to state here that the disputes raised by

Applicant in Company Petition No. 369 (ND) of 2017 are subject

matter directly covered by the Arbitration Agreement contained in

clause 17 of SPSHA. Indeed, the entire object of the Company

Petition No. 369 (ND) of 2017 is to circumvent the Arbitration

Agreement and is merely dressed up to evade Arbitration and confer

jurisdiction on the Hon'ble Tribunal even when the disputes are

subject matters of SPSHA and the Arbitration Agreement. It is

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 28

submitted that the Arbitration Tribunal has been formally

constituted on 16.05.2018 which has been seized of the disputes

under the SPSHA and the proceedings are continuing. In fact, on

01.06.2018 the Respondent No. 2 itself invoked arbitration bearing

SIAC Arbitration No. 130/18 under the Arbitration Agreement and

referred matters to arbitration in relation to disputes under the

SPSHA which disputes were also the subject matter of Company

Petition No. 369 (ND) of 2017. In the meanwhile, on 30.11.2018,

both the parties have also filed their Statement of Claims before the

Arbitral Tribunal constituted under SPSHA and foreign arbitration

proceedings are continuing. The parties have further filed their

witness statements on 30th May, 2019. The further and final

hearings of in the Arbitration proceedings are already scheduled for

September and October, 2019.

15. In a petition under Sections 241-242 of the Companies Act, 2013,

the Tribunal is empowered to pass interim order in terms of Section 242

(4), which reads as follows:

"242. Powers of Tribunal.─ (4) The Tribunal may, on

the application of any party to the proceeding, make

any interim order which it thinks fit for regulating the

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 29

conduct of the company's affairs upon such terms and

conditions as appear to it to be just and equitable."

16. Therefore, an interim order can be passed in the interest of the

Company.

17. Earlier, when the appeal was taken up on 1st December, 2017, this

Appellate Tribunal passed following interim order:

"In the meantime, the National Company Law Tribunal shall not extend the interim order dated 23rd November, 2017 passed at 4.00 p.m. in Company Petition No. 369/ND/2017.However, it may proceed with the hearing of the main petition under Section 241 of the Companies Act, 2013. It is also made clear that for day-to-day functioning of the Company, the Company may release money, including payment, if any, to be made towards supply of materials, electricity, water, salaries, of officers, wages of the employees/workmen and statutory dues etc. payable. Both the parties will also ensure that the Company remains on-going without any hindrance of its work, including the work as required to be taken from companies officers, employees, workmen, experts etc. It is also made clear that for any purpose if any Form is to be filled up or signed, it should be in the Format as was existing as on the date of the filing of the petition under Section 241 of the Companies Act, 2013 and will be signed by the persons, who were

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 30

authorised to sign on such format as on the date of filing. In case, any of the signatory, belonging to any of group (Appellants or Respondents) refuse to sign or do not co-operate with the Company, it will be open to the parties to bring such fact to the notice of this Appellate Tribunal and may request to modify the present order."

18. Subsequently, on 26th September, 2018, the parties including the

Appellants and the Respondents were directed not to create such

situation which will be detrimental to the functioning of the Company.

19. From the record, we find that number of times, complaints were

made by the Applicant that Mr. Rohan Mehta, his father and persons

nominated by them (Respondents), who are minority members are

creating hindrance and therefore, number of times one or other interim

orders were passed and finally matter was disposed of.

20. In a petition under Sections 241-242 of the Companies Act, 2013,

interim order can be passed under Section 242(4) for regulating the

conduct of affairs of the Company which is just and equitable and in the

interests of members of the Company. It was in this background, the

interim order was finally passed on 29th November, 2018.

21. Rule 11 of the National Company Law Appellate Tribunal Rules,

2016 empowers this Appellate Tribunal to exercise inherent powers as

follows:

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 31

"11. Inherent powers.- Noting in these rules shall be

deemed to limit or otherwise affect the inherent

powers of the Appellate Tribunal to make such orders

or give such directions as may be necessary for

meeting the ends of justice or to prevent abuse of the

process of the Appellate Tribunal."

22. In "Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.─

Writ Petition (Civil) No. 99 of 2018", the Hon'ble Supreme Court held

that the Tribunal can exercise its inherent powers under Rule 11 of the

NCLAT Rules, 2016 which is pari materia same.

23. In the present case, as number of times allegations and counter

allegations and Contempt Petitions were filed and matter was taken up

more than ten days, in the interest of members and proper running of

the Company, we in exercise of powers conferred under Rule 11 of the

NCLAT Rules, 2016 modify the order dated 29th November, 2018 and

allow the Company to follow the simplified procedures/ new formats

adopted by the Board of the Company vide resolution dated 12th

November, 2017 for all matters including processing payments;

procurement of materials; mobilization of personnel for training and/ or

visits to offices of vendors customer and other third parties; appraisal,

promotion and transfer of employees of the company; and ingress into

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017 32

and egress from the company's corporate office and manufacturing plant

of the employees and customers of the company as well as the technical

experts and office bearers deputed by the Applicant/2nd Respondent.

However, the members and the Board of Directors are also directed

not to misuse the interim order as modified by this order to grant any

benefit to one or other member (group) and parties including the

Respondents to the appeal/ Petitioners.

Review Application is allowed.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member(Judicial)

NEW DELHI

23rd January, 2020

/AR/

Review Application No. 04 of 2019 IN Company Appeal (AT) Nos. 397-399 of 2017