Mr Siddarth Bhandari & Ors vs Electrotherm (India) Limited & Ors

Electrotherm (India) Ltd (hereinafter referred to as the 'company')

from holding a Board Meeting of its Directors. Before proceeding

further it would be appropriate to reproduce the impugned order:

1. This application has been filed by the Petitioner in CP No.5 of

2022 purportedly under Section 242(4) of the Companies Act, 2013.

The original Company Petition has been filed under Section 241- 242 of the Companies Act, 2013. By this application, the applicant

requested us to restrain the Respondent no.1 company from holding

a meeting of the Board of Directors as per order dated 24.05.2021

passed by Hon'ble NCLAT in Company Appeal No.57 of 2021.

2. The Respondents were called upon to make submissions on this

point. Accordingly, we heard the Learned Counsel Mr. Pavan

Godiawala for the applicant, Learned Senior Counsel Mr. Navin

Pahwa for the Respondent No.-1, Learned Senior Counsel Mr.

Saurabh Soparkar for the Respondent No.-2. We have gone through

the various orders passed by this Tribunal, orders passed by

Hon'ble NCLAT and the order passed by Hon'ble Supreme Court.

3. Company Appeal No.57 of 2021 before Hon'ble NCLAT arose out

of the order dated 04.05.2021 passed by this Tribunal. The order

sought to be challenge before Hon'ble NCLAT reads as under:

Company Appeal (AT) NO.199/2022 3

"... tribunal directed to appoint Mr. Siddharth Bhandari as

joint signatory of all bank accounts of Respondent no.1

company with immediate effect. The accounts shall be

operated under joint signatory of Mr. Shailesh Bhandari and

Mr. Siddharth Bhandari." 4. Mr. Shailesh Bhandari - M.D. of the

Respondent No.1 Company assailed above order before Hon'ble

NCLAT (Company Appeal No.57 of 2021). It was the contention of

Mr. Shailesh Bhandari that as per the order of NCLT (referred

above), the meeting of Board of Directors dated 27.05.2021 was

called to consider the order. He requested the appellate tribunal to

stay that meeting. While considering his prayer, Hon'ble NCLAT

passed an order dated 24.05.2021 as follows:

"12. List these Appeals on 07.06.2021 till then no further

meeting of Board of Directors of the Appellant company

shall be convened and held."

5. Learned Counsel Mr. Pavan Godiawala, appearing for the

applicant, submitted that the order dated 24.05.2021 passed by

Hon'ble NCLAT was continued till disposal of that appeal. Hon'ble

NCLAT pleased to dismiss the appeal confirming the order of this

tribunal whereby and where under, it was directed that all bank

accounts of the company shall be operated under the joint

signatures of Mr. Shailesh Bhandari and Mr. Siddharth Bhandari.

Hon'ble NCLAT had also stayed the meeting of the Board of

Directors. Mr. Siddharth Bhandari filed a second appeal in Hon'ble

Company Appeal (AT) NO.199/2022 4

Supreme Court bearing Civil Appeal No. 2329- 2330 of 2022. On

25.02.2022, Hon'ble Supreme Court passed order as under:

"until further orders, the interim order, granted by the

National Company Law Appellate Tribunal, Principal Bench,

New Delhi (in short 'the NCLAT') in Company Appeal (AT) Nos.

54 of 2021 etc. on 17.06.2021 is continued."

6. Learned Counsel Mr. Pavan Godiawala submitted that since the

interim order not to hold board meetings is still continuing, the

Respondents cannot hold meetings of the Board of Directors. They

may be restrained from holding such meetings.

7. Learned Senior Counsel Mr. Navin Pahwa for the Respondent

No.-1 brought to our notice that the meeting of the Board of Directors

is arranged to nominate some persons as additional directors, as

the tenure of some directors is getting over. As per Section 161(1) of

the Companies Act, 2013, such persons shall be director to only up

to the AGM. In the Annual General Meeting, shareholders may

approve such appointment. He further submitted that the issue was

pending before the Hon'ble NCLAT and now before the Hon'ble

Supreme Court is, not to implement order of this tribunal

dated 04.05.2021 whereby this tribunal directed to appoint

Mr. Siddharth Bhandari as joint signatory to operate all

bank accounts of the R-1 Company. He would further submit

that there was no stay to hold the meetings of the board of

directors. The stay was related to the consideration of the order of

this tribunal in the meeting. According to him, if the company is not

Company Appeal (AT) NO.199/2022 5

allowed to hold a meeting of the Board of Directors, then it would

be difficult to run the company itself.

8. Learned Senior Counsel, Mr. Soparkar for the Respondent No.-2

submitted that there is no stay to hold meeting of Board of

Directors. Moreover, if at all, such a meeting is held, then the

applicant will not suffer any irreparable loss. The facts as stand

today would show that the prima-facie case is not in the favor of

applicants. According to Learned Senior Counsel, this application is

not maintainable on above broad principles also. 9. We perused the

order dated 25.02.2022, passed by Hon'ble Supreme Court.

Hon'ble Supreme Court directed that the interim order dated

17.06.2021 passed by NCLAT to continue. But order reads as

follows:

"the direction contained in the Interim Order of NCLT

Ahmedabad Bench, Court-I in MA 08 of 2021 in CP No.93 of

2018 & Comp. App. 27 of 2021 in CP 38 of 2019 dated

04.05.2021 as it contains in Para 2 sub-clause (i) which

reads as under:

"Respondent No.1 Company as well as Respondent No.5 in

MA 08 of 2021 are directed to appoint Mr. Siddharth

Bhandari as joint Signatory of all bank accounts of the

Respondent No.1 Company with immediate effect. The

accounts shall be operated under joint signature of Mr.

Shailesh Bhandari and Mr. Siddharth Bhandari." Shall

remain stayed till next date of hearing of the appeal."

Company Appeal (AT) NO.199/2022 6

10. By perusal of above order, it is crystal clear that firstly Hon'ble

NCLAT and now Hon'ble Supreme Court has stayed the order

passed by this Tribunal, whereby, this Tribunal directed to operate

bank accounts of R1 Company under joint signatory of Mr.

Siddharth Bhandari and Mr. Shailesh Bhandari and nothing else.

11. There is no order in existence as on today, restraining the

Respondent No.1 company from holding a meeting of the Board of

Directors. This application appears misconceived and hence is not

maintainable, it stands rejected.

12. When we reserved this application for order on 02.08.2022, we

have observed that any resolution passed in the meeting dated

03.08.2022 shall be subjected to the order passed on this

application. Since, we reject this application by this order, the above

observation becomes infructuous and hence, set aside.

13. Accordingly, the I.A. No.55 of 2022 stands dispose of."

On perusal of the impugned order we are of the considered

opinion that there was no reason for filing the appeal against such

order. However, the appellants to the reasons best known to them

has filed the present appeal.

Mr. Rudreshwar Singh, learned counsel appearing on behalf

of the appellants tried to persuade this Appellate Tribunal that the

proposal of company for holding a Board Meeting of its Directors

Company Appeal (AT) NO.199/2022 7

was in the teeth of an interim order passed by the Hon'ble Supreme

Court dated 25.02.2022 passed in Civil Appeals No.1329-

1330/2022. A plea was taken that earlier against an order dated

4th May, 2021 passed by the NCLT the appeals were preferred

before this Appellate Tribunal vide Company Appeal (AT) No.54 of

2021 and other three connected appeals. The relevant portion of

the order dated 4th May, 2021 passed by NCLT is quoted

hereinbelow:

"2.In the back ground of these submissions and considering the fact

that main applications need detailed arguments, however, due to

impending summer vacations and pandemic situation prevailing in

the country, we consider it appropriate to pass interim order so that

the functioning of the company is not affected adversely till the final

disposal of all matters. In this regard, we express our displeasure

as to how both groups are acting because in such matter involvement

of police as such is not desirable things and both groups should act

responsibly so that interests of the shareholders at large as well as

of the company are not adversely affected. Be that as it may, We

need to provide some interim solutions. Accordingly, we order as

under:

i) Respondent No.1 company as well as Respondent No.5 in MA

08 of 2021 are directed to appoint Mr. Siddarth Bhandari as

joint signatory of all bank accounts of the Respondent No.1

Company Appeal (AT) NO.199/2022 8

company with immediate effect. The accounts shall be

operated under joint signature of Mr. Shailesh Bhandari and

Mr. Siddarth Bhandari.

ii) Mr. Siddarth Bhandari shall also be a special invitee to all

board meetings of the company which are held henceforth.

iii) All policy decisions which may affect smooth running of the

Respondent No.1 company as a going concern or otherwise to

protect interests of other stake holders such as financial

lenders shall be taken with consent of Mr. Mukesh Bhandari

and Siddarth Bhandari. Without expression of any opinion on

merits of their appointment, all independent directors would

exercise their rights in terms of the provisions of Companies

Act, 2013 r.w. Schedule IV thereto.

iv) The Petitioner in Comp. Appl.27 of 29018 shall have

unfettered right to run day to day affairs as Managing Director

of Respondent No.1 company and he shall not be

restricted/prevented from access to the company premises or

in properties owned by the Respondent No.1 company so as

to run business affairs subject to directions given hereinabove.

v) Interim order given earlier also to continue till further orders."

After filing of the appeal against order of NCLT firstly on

24.05.2021 this Appellate Tribunal while granting liberty to the

Respondents to file reply passed an interim orders as follows:-

Company Appeal (AT) NO.199/2022 9

"List these Appeals on 07.06.2021 till then no further meeting of

Board of Directors of the Appellant company shall be convened and

held."

This Tribunal while passing interim order directed to list

appeals on 07.06.2021. Subsequently on 07.06.2021 again this

Tribunal directed to continue interim order till the next date of

hearing and date was fixed to 17.06.2021. On date fixed i.e.

17.06.2021 this Tribunal modified earlier order i.e. 24.5.2021 and

07.06.2021 in following manner:-

("Respondent No.1 company as well as Respondent No.5 in MA 08

of 2021 are directed to appoint Mr. Siddarth Bhandari as joint

signatory of all bank accounts of the Respondent No.1 company with

immediate effect. The accounts shall be operated under joint

signature of Mr. Shailesh Bhandari and Mr. Siddarth Bhandari."

Shall remain stayed till next date of hearing of the Appeal.)

Finally those appeals were disposed off by a detailed

judgement passed by this Tribunal dated 28.1.2022. The relevant

portion of the judgement mentioned in paras 23, 24 and 26 are

quoted hereinhelow:-

23. Be that as it may, having regard to the multiple Applications

filed; the factual matrix of the family dispute read together with the

reliefs sought for in I.A. 08 of 2021, the direction to appoint Mr.

Company Appeal (AT) NO.199/2022 10

Siddarth Bhandari as a joint signatory of all the Bank Accounts of

the Company was given by NCLT in the interest of justice and to

ensure that no prejudice shall be caused to the Company during the

pendency of the main Company Petitions. Having regard to the fact

that NCLT has taken into consideration the involvement of both

parties/both sides in the operation and function of the Company, we

are of the view that no prejudice would be caused to the Appellants

by such a direction of NCLT. 24. We are of the view that as long as

the power is present, non-quoting or misquoting of the Section is not

fatal. A harmonious construction thus requires that the direction

should cover two different situations. If a particular action is valid

under one Section, it cannot be rendered invalid, or that the Tribunal

is not empowered to pass such a direction, if the wrong Section is

quoted. The statute empowers the Tribunal from passing any Interim

Order, it deems fit and in such a situation, keeping the affairs of the

Company in mind, the Tribunal has rightly moulded the reliefs.

Cases are known in which Courts have moulded the reliefs to meet

a situation such as this. Quoting a wrong Section/sub-Section does

not estop a Court from taking note of events, circumstances which

happen during that time frame. Hence, the intent of the law maker

and the nature and scope of the Legislation is to be kept in mind, as

any departure from the same could result in fatal consequences.

26. All the Appeals and IAs are disposed of with the aforenoted

directions."

Company Appeal (AT) NO.199/2022 11

In the present Memo of Appeal the appellant has also brought

on record an interim order passed by Hon'ble the Supreme Court

in Civil Appeal No.1329-1330 of 2022. The interim order passed

by the Hon'ble Supreme Court dated 25.02.2022 is quoted

hereinbelow:-

"Issue Notice.

Until further orders, the Interim order, granted by the National

Company Law Appellate Tribunal Principal Bench, New Delhi (in

short 'the NCLAT') in Company Appeal (AT) No.54 of 2021 etc on

17.6.2021 is continued."

Finally the appeal which was preferred before the Hon'ble

Supreme Court was dismissed on 11.10.2022. The said order has

been brought on record through additional affidavit filed by the

appellant which was filed on the date of hearing of this appeal i.e.

on 18.11.2022. The order dated 18.11.2022 passed by Hon'ble

Supreme Court is reproduced below:-

"Upon hearing the counsel the Court made the following

ORDER

The appeals are dismissed in terms of the signed order.

Pending applications, if any, also stand disposed of."

Company Appeal (AT) NO.199/2022 12

Despite appeals in which interim order was passed was

finally disposed off by this Appellate Tribunal by detailed judgemnt

dated 28.01.2022, the appellants herein before NCLT in CP

No.5/AHM/2022 filed an I.A. No.55/2022 requesting the NCLT to

restrain the Respondent No.1 company from holding a Meeting of

their Board of Directors as per interim order dated 24.5.2021

passed by this Appellate Tribunal in Company Appeal (AT)

No.57/2021. It is clarified that Company Appeal (AT) No.57 of

2021 was heard alongwith Company Appeal No.54/2021, 55/2021

and 56/2021 and interim order dated 24.05.2021 was common

order in all the four appeals. It is settled that in a case if final

order is passed without reintroducing an interim order passed

therein the said interim order may not be taken note of after final

disposal of the case. Moreover, while passing detailed judgement

this Tribunal has already disposed off the appeals with certain

directions and also a direction to the NCLT to expeditiously dispose

off Company Petitions No.93, 94 of 2018. Mr. Rudreshwar Singh,

learned counsel repeatedly argued that once in Appeal filed before

the Hon'ble Supreme Court, Hon'ble Supreme Court has passed

interim order to the effect that order dated 17.6.2021 passed in

Company Appeal (AT) No.54/2021 by the NCLAT shall continue,

Company Appeal (AT) NO.199/2022 13

the learned NCLT ignoring the interim order permitted the

Respondent Company to proceed with the holding of a Meeting of

the Board of Directors. He tried to persuade this Tribunal that the

interim order dated 24.5.2021 passed by this Appellate Tribunal

in Company Appeal (AT) No.57 of 2021 in the light of interim order

passed by Hon'ble Supreme Court shall continue, the NCLT was

not having any authority to permit the company to proceed with

the holding of Meeting of Board of Directors. According to him the

impugned order is liable to be set aside on the ground that it is in

violation of earlier interim order dated 24.5.2021 passed by this

Appellate Tribunal in Company Appeal (AT) No.57/2021 and also

approved by Hon'ble Supreme Court in its interim order dated

25.2.2022.

Ms Geetika Shrama, learned counsel for the Respondent No.1

to 3 opposing the appeals has argued that the present appeal

appears to be frivolous appeal due to the reason that order dated

24.5.2021 passed by this Appellate Tribunal in Company Appeal

(AT) No.57/2021 and other connected appeals was already

modified by this Appellate Tribunal by its order dated 17.6.2021.

According to the learned counsel for the Respondent on 17.6.2021

this Appellate Tribunal while modifying earlier order clarified that

Company Appeal (AT) NO.199/2022 14

order of the NCLT to the extent that "Respondent No.1 company

as well as Respondent No.5 in MA No.8/2021 are directed to

appoint Mr. Siddarth Bhandari as joint signatory of all banks

accounts of Respondent No.1 company with immediate effect. The

accounts shall be operated under joint signature of Mr Shailesh

Bhandari and Mr. Siddarth Bhandari" was directed to be stayed

till next date of hearing. She submits that after modification of the

order there was no reason for the appellant to contend that earlier

order regarding stay of further meeting of Board of Directors of the

appellant company was still in continuance and as such objections

raised by the appellant is not sustainable and appeal is fit to be

rejected.

Besides hearing learned counsel for the parties we have

minutely examined materials available on record. For deciding the

appeal there is no reason to delve into the merit of the case. It is

only interpretation of the order passed by this Appellate Tribunal

and also by the Hon'ble Supreme Court. In view of final disposal

of the appeals by this Appellate Tribunal by its judgement dated

20.01.2022 in which there was no indication for restraining

holding of the Boards Meeting, such point was not required to be

raised before the NCLT for restraining board Meeting of the

Company Appeal (AT) NO.199/2022 15

Company. Besides this even for the time being if it is considered

that this Appellate Tribunal by its order dated 24.5.2021 had

directed not to hold further meetings of Board of Directors, the said

interim order was only to the next date of hearing i.e. 7.6.2021.

Again by order dated 7.6.2021 the interim order was directed to

continue till next date but on the next date i.e. on 17.6.2021 this

Appellate Tribunal modified the earlier order and only stayed the

order in respect of appointment of Siddarth Bhandari as joint

signatory of bank account with Shailesh Bhandari. The order

dated 17.6.2021 is a specific and unambiguous. Of course, even

after final judgment passed by this Appellate Tribunal on

28.1.2022 the appeals were filed before the Hon'ble Supreme Court

and Hon'ble Supreme Court on 25.2.2022 passed an interim order

to continue with the order dated 17.6.2021 in Company Appeal

(AT) No.54 of 21 and other connected case by the Appellate

Tribunal, by no stretch of imagination it can be considered that

there was any order of stay of holding Boards Meeting of the

Company. In such view of the matter we are of the opinion that

the present appeal is nothing but simply an abuse of process of

Court. In normal course had we recorded this judgement in open

court we would have imposed exemplary cost on the appellant but

Company Appeal (AT) NO.199/2022 16

after hearing and due to paucity of time we did not deliver the

judgement on 18.11.2022. Accordingly, it would not be

appropriate to impose cost.

The appeal stands dismissed without cost.

(Justice Rakesh Kumar) Member (Judicial)

(Dr. Ashok Kumar Mishra) Member (Techncial) bm

Company Appeal (AT) NO.199/2022