Muralidharan M.S vs Technology Frontiers India Private ...

(Under Section 421 of the Companies Act, 2013) (Arising out of the `Order' dated 10.02.2021 in CP/794/2020, passed by the `National Company Law Tribunal', Division Bench - II, Chennai)

In the matter of: M.S. Muralidharan Old No. 49, New No. 109, Satyadev Avenue, MRC Nagar, Chennai - 600 028 ..... 1st Appellant

Hrisha Consulting Private Ltd. Old No. 49, New No. 109, Satyadev Avenue, MRC Nagar, Chennai - 600 028 ..... 2nd Appellant v. M/s. Technology Frontiers (India) Private Limited Registered Office Address: Plot No. 38, Developed Plot Industrial Estate, Perungudi, Chennai - 600 096 Tamil Nadu, India ..... 1st Respondent

Ms. Mangalam Srinivasan Office Address: Plot No. 38, Developed Plot Industrial Estate, Perungudi, Chennai - 600 096 Tamil Nadu, India ..... 2nd Respondent

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 1 of 47 Mr. Rajesh Kamat Office Address: Plot No. 38, Developed Plot Industrial Estate, Perungudi, Chennai - 600 096 Tamil Nadu, India ..... 3rd Respondent Mr. Vivek Raicha Office Address: Plot No. 38, Developed Plot Industrial Estate, Perungudi, Chennai - 600 096 Tamil Nadu, India ..... 4th Respondent

Mr. Paul Aiello Office Address: Plot No. 38, Developed Plot Industrial Estate, Perungudi, Chennai - 600 096 Tamil Nadu, India ..... 5th Respondent

Mr. Suresh Prabhala Office Address: Plot No. 38, Developed Plot Industrial Estate, Perungudi, Chennai - 600 096 Tamil Nadu, India ..... 6th Respondent

Mr. Mayank Agarwal Office Address: Plot No. 38, Developed Plot Industrial Estate, Perungudi, Chennai - 600 096 Tamil Nadu, India ..... 7th Respondent

Mr. Balamurugan, IAS Office Address: Plot No. 38, Developed Plot Industrial Estate, Perungudi, Chennai - 600 096 Tamil Nadu, India ..... 8th Respondent

Mr. Chee Chong Tam Interim Judicial Manager Global Sports Commerce Pte. Ltd. Address: No. 20, Cecil Street, 09-05 Plus, Singapore 049-075 ..... 9th Respondent

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 2 of 47 Crest Investment Holding Pte. Ltd. Address: No.1, Kim Seng Promenande, No. 13-11, West Tower, Great World City, Singapore 237994 ..... 10th Respondent Em Holdco I Pte. Ltd. Office Address: No. 10, Changi Business Park, Central 2, No.05-01, Hansapoint at CBP, Singapore 486030 ..... 11th Respondent

Present: For Appellant : Mr. K. Gaurav Kumar, Practising Company Secretary For Respondent No.1 : Mr. S. Sriram, Practising Company Secretary For Respondent Nos. : Mr. P. Giridharan, Advocate 3, 4, 5 and 11 For Respondent Nos. : Mr. P.H. Arvindh Pandian, Senior Advocate 6, 7 and 10 For Ms. Gauri Rasgotra, Advocate For Respondent No. 8 : Ms. Dhanisha Giri, Advocate For Respondent No. 9 : Mr. Kumarpal Chopra, Advocate

JUDGMENT

(Virtual Mode)

Justice M. Venugopal, Member (Judicial):

Comp. App (AT) (CH) No. 10 of 2021:

Background:

The `Appellants', have preferred the instant `Comp. App (AT)

(CH) No. 10 of 2021', as being `Aggrieved', with the `impugned order'

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 3 of 47 dated 10.02.2021 in CP/794/2020, passed by the `National Company

Law Tribunal', Division Bench - II, Chennai), whereby and whereunder,

the main `CP/794/2020', came to be `Admitted', and the `Interim

Relief(s)', prayed for, by the `Appellants / Petitioners', were not granted,

etc.

2. The `National Company Law Tribunal', Division Bench - II,

Chennai, while passing the `impugned order' dated 10.02.2021 in

CP/794/2020, had observed the following:

``Learned Senior Counsel Mr. P.S. Raman for the Petitioner is present.

Learned Counsel Mr. Nikhil Sakhardande and Learned Counsel Mr. P. Giridharan for R3 to R5 and R11 are present. Learned Senior Counsel Mr. P.H. Arvindh Pandian for R6, R7 and R10 is present.

CP/794/2020 is admitted. Interim reliefs sought by the Petitioner is not granted.

Meanwhile, it has been brought to the notice that R1 company is not running by the Petitioner. Salaries and other day-to-day operations of the company is stuck due to various reasons. R3 to R11 shall consider creating an Interim Committee to run the day-to-day affairs of the R1 company.''

and directed the matter to be listed on 11.03.2021, for `Counter' and

hearing.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 4 of 47 Appellants Pleas:

3. The Learned Practising Company Secretary for the Appellants

submits that the `impugned order' dated 10.02.2021, passed by the

`National Company Law Tribunal', Division Bench - II, Chennai, in

CP/794/2020, is liable to be set aside, since the same is `opposed' to

`Law', against the `Principles of Natural Justice', and further that the

`Tribunal', had committed an `Error', in `not granting Stay', on such

`void Circular Resolutions', as per the `Interim Prayers' of the

`Appellants', in the `Petition'.

4. The contention of the Appellants is that the `1st Appellant' /

`Executive' and `Promoter Director' of the `1st Respondent / Company',

has equal rights in the `Management' of the `Company', and he ought to

be a part of any type of communications and decisions, taken by the

`Company', and in fact, the direction issued by the `Tribunal', on

10.02.2021 that `R3 to R11', shall consider, creating an `Interim

Committee', to run the day-to-day affairs of the `1st Respondent

Company', without the `1st Appellant', is an `incorrect' one and also

`opposed' to the `1st Appellant's Rights'.

5. According to the Appellants, the `Tribunal', was wrong in

`allowing' the `IJM', to be a part of the `Interim Committee', wherein the

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 5 of 47 `IJM', is appointed by a `Foreign Court', for a `Foreign Holding

Company', and as such, the `Foreign Decree', does not provide its

`Application', on `Indian Subsidiaries'.

6. The stand of the Appellants is that, the `Non-Executive Directors',

have no role in the `Day-to-Day Affairs' of the `Company', thereby,

`removing' or `curtailing', the powers of `Executive Director', and not

placing the `1st Appellant' in the `Company', was detrimental to the

interest of the `1st Respondent'.

7. The Learned PCS for the Appellants point out that the

`Resolutions', passed by the `Circulation are void', as no due process of

the `Companies Act, 2013 `Articles of Association' of the `Company' and

`Secretarial Standard-1', were followed. Also that, the `void Circular

Resolutions', were not circulated to the `1st Appellant', as per the

`Secretarial Standard-1' clause 6.2, the `Law', mandates that it should be

sent to all the `Directors', on the same day and in fact, Section 118 (10) of

the Companies Act, 2013, the `Secretarial Standards', are `mandatory'

one, to be adhered by the `Company'.

8. On behalf of the Appellants, a reference is made to the clause 6.2 of

the `Secretarial Standards' on `Meetings' of `Board of Directors', which

runs as below:

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 6 of 47 `` 6. Passing of Resolution by Circulation

...

6.2. Procedure

6.2.1 A Resolution proposed to be passed by circulation shall be sent in draft, together with the necessary papers, to all the Directors including Interested Directors on the same day.''

Further the secretarial standards for the board meeting are mandatory to be followed the relevant section mandating the same is mentioned below:

Section 118 (10) of the companies act, 2013:

(10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.''

9. On behalf of the Appellants, it is contended that before this

`Tribunal', that the `void Circular Resolutions', cannot be said to have

been duly passed because of the fact that the `Clause 22.4' of the `Articles

of Association' of the `Company', reads as under:

`A circular resolution shall be deemed to have been duly passed by the Board, if it has been approved in writing (which would include confirmation via electronic or other means) by a majority of directors constituting the Board for the time being'.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 7 of 47

10. Furthermore, on behalf of the Appellants Clause 21.3 of the

Articles of Association is referred to, and the same runs as under:

``No matter which has not been detailed in the notice, shall be transacted at any meeting of the Board, provided however that with the consent of the majority of the directors of the company (which majority shall include at least 1 (one) MSM Nominee Director (to the extent he / she has not been removed in accordance with these Articles), 1 (one) EM Nominee Director and 1 (one) ADV Nominee Director) a matter not included in the notice may be transacted at the meeting.''

11. The Learned PCS for the Appellants points Clause 6 of the

Secretarial Standards-1, which enjoins `passing of Resolution by

circulation and the same is as follows:

``The Act requires certain business to be approved only at Meetings of the Board. However, other business that requires urgent decisions can be approved by means of Resolutions passed by circulation. Resolutions passed by the circulation are deemed to be passed at a duly convened Meeting of the Board and have equal authority.''

12. According to the Appellants, the Respondents, have taken over the

control of the `1st Respondent / Company', through `IJM' and also the

mails attached with the pleadings and further that the `10th Respondent',

had appointed `IJM / JM', in the `Singapore GSC Company', and the `7th

Respondent', is the person nominated on the `Board' by the `10th

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 8 of 47 Respondent', who in turn has sent the `void Circular Resolutions', in

order to take the control of the `1st Respondent' / `Company'. As a matter

of fact, the `Circular Resolutions', gave all the powers of the `Board' of

the `1st Respondent Company' to `IJM' / `JM', and hence the

`Oppression' of the `Appellants Rights', is made out'.

13. It is the version of the Appellants that the 1st Appellant, had `paid

the Salaries of Staff' of the `1st Respondent Company', when the same

was shirked away by the Respondent on the garb of being non-executive

Directors'. Further, the `Income Tax' and `GST', were paid and that the

conduct of the `Respondent', can be questioned on account of the fact that

they are creating road-blocks in the `1st Respondent / Company'.

14. According to the Appellants, that the Respondents action in

informing the `Registrar of Companies', `Overseas Subsidiaries' and

`Clients', about the removal of the `1st Appellant', from the `Board' of

`Overseas Subsidiaries', is not only an `Oppressive' one, but also, not a

responsible act of the `Board', along with not following the `Fiduciary

Duty' of the `Director', as per Section 166 of the Companies Act, 2013.

15. The Plea of the Appellants is that, the `9th Respondent', even after

the `Order of Interim Stay', granted by this `Tribunal', for the `Circular

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 9 of 47 Resolutions Nos. 1 to 6', has brazenly endeavoured to sell the

`Shareholding' of the `1st Respondent / Company', even after knowing

that the matter is `subjudice', and further that, any action of `Sale of

Shares' of `Indian Entity', is automatically stayed, because of the fact that

all the `Circular Resolutions', were stayed by the `Order' of `Interim

Stay', granted by this `Tribunal'.

16. According to the Appellants, the `1st Appellant' / `one of the

Directors of the 1st Respondent Company', had never received the

`Circular Resolutions', and in fact, the `impugned Circular Resolutions'

(mentioned in Paragraph (f) of the Volume I of the Appeal Paper Book -

Diary No. 108 dated 03.03.2021), Viz. ``By virtue of these circular

resolutions, R9 was given unfretted powers to do the following acts: (i)

Curtailing the powers of present board which can only be exercised by

approval of IJM (ii) Super imposition of IJM in controlling the Bank

accounts of R1 (iii) To appoint service providers to assist IJM (iv) IJM

authorised to update company staff and provide assurances (v) To replace

the manager of UAE subsidiary with IJM (vi) Amending boards of direct

and indirect subsidiaries and associates'', were not duly circulated to all

the `Directors', in terms of Section 175 of the Companies Act, 2013, read

with clause 6.2 of the Secretarial Standards on Meetings of Board of

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 10 of 47 Directors (SS-1) read with Clause 22.4 of the `Articles of Association'

(`AoA').''

17. As such, the contention that the `Resolutions', were circulated to

the Appellant's Advocate on 31.10.2020, is not a justifiable one, as the

same would be a predated `Circular Resolution' not in sync with the date

mentioned in the document circulated by Respondent 9 for passing of

resolution and hence in the violation of the Companies Act.

18. On behalf of the Appellants, it is pointed out that a glance of the

`Resolutions' clearly suggests that not a `Single Resolution', was signed

or approved by the 1st Appellant and by means of `Clause 21.3' of the

`Articles of Association', `Majority', shall include at least on `MSM

Nominee Director', the `approval' of the `1st Appellant' becomes a

necessity to complete the aspect of `approval' of `Majority Directors', as

provided by Section 175 of the Companies Act, 2013.

19. It is the version of the Appellants, that as per Article 5 of the Third

Schedule, dealing with `Cross-Border Insolvency', under the `Singapore

Insolvency, Restructuring and Dissolution, Act, 2018', `a Singapore

Insolvency Officeholder', is authorised to act in a foreign state ``as

permitted by the applicable foreign law''. Also that, according to the

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 11 of 47 Appellants, the applicable foreign law, to the instant factual scenario is

Section 44A of the Civil Procedure Code, since the I & B Code, 2016,

does not provide any provision, directions in regard to the taking control

over `Foreign Subsidiaries'.

20. It is represented on behalf of the Appellants that the 9th

Respondent, had intentionally failed to approach the `Competent Civil

Courts' or produce the `Certificate copy' of the `Impugned Decree' of

such `Courts', to execute the same in consonance with `Section 13 of the

Civil Procedure Code'.

21. The Learned PCS for the Appellants, refers to the Order dated

05.03.2014, in Marine Geotechnics LLC vs. Coastal Marine Construction

& Engineering Ltd., in Company Petition No. 69 of 2020, whereby it was

underlined that when a foreign decree is delivered by a reciprocating

company, it is implied that the same has to be executed as per `Section

44A of the Civil Procedure Code', and ultimately, satisfy the `Section 13

of the Civil Procedure Code'. In fact, the 9th Respondent took

unauthorised charge of the `1st Respondent / Company', long before

03.11.2020.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 12 of 47

22. The contention of the Appellants contend that nowhere does the

`impugned order' anything regarding `Foreign Subsidiaries'. Also that,

the `Company Secretary' of the `1st Respondent Company', was not

informed of the `Circular Resolutions', and such `modus operandi', was

conducted by the `9th Respondent' (`IJM') and `non-executive Directors'

of the `1st Respondent', on their own, instead of bringing the same to the

notice of the `Whole Time Company Secretary' of the `1st Respondent

Company'.

23. The stand of the Appellants is that the `void Circular Resolutions',

were already given effect to, by the `9th Respondent' and others, which

can be seen in email dated 06.11.2020, in and by which, `PKF was asked

to start audit work by `IJM', which again is an `Oppressive act', when

such `Circular Resolutions', were never circulated to the `Appellant'.

24. According to the Appellants, the 1st Appellant in the email dated

06.11.2020, had consciously assailed the Authority of the 9 th Respondent

to send email of the `void Circular Resolutions', in the `Board Meeting',

when the Company Secretary was not given any Notice of such Board

Meetings. Indeed, the 9th Respondent, had assumed the `Role of a

Company Secretary', without any `Valid Authorization' or `Permission'

from the real Company Secretary of the 1st Respondent / Company'.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 13 of 47

25. It is represented on behalf of the Appellants that the 8th Respondent

is a `Related Party' to the `1st Respondent / Company', and that the

`Respondent Nos. 9, 4 and 7', had colluded with Anicut to initiate a

malicious `Insolvency Proceedings'. Furthermore, the `Respondent Nos.

8, 4, 7 and 9', were hand in glove from the beginning, starting from the

moment this `Appellants', filed a `Petition', against them to bring to light

an `Oppression and Mismanagement', caused by them, to suffocate the

`Appellants'.

26. The Appellants rely upon the Judgment of the Hon'ble Supreme

Court in Tata Consultancy v. Cyrus Investments (vide Civil Appeal Nos.

440 - 441 of 2020), to emphasize and underline that the 8 th Respondent

(Nominee Director) is equally a part towards the said process, merely

shirking away in the garb of being a `Nominee Director', does not hold

one as `puritan'.

27. The Learned PCS for the Appellants point out that for all purposes,

the `7th Respondent', takes a stand that he is the `Non-Executive

Director', so when it comes to paying any Salaries to the employees, the

Respondent wears the hat of `Non-executive Director', but when it comes

to circulating a `void Resolution', to take the control of the Company

through the `IJM', they exercise all the unauthorised powers to do so. In

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 14 of 47 short, the `Appellants', were making endeavours, to run the `Company',

by paying all the `GST', `Income Tax' and other `Statutory Dues', though

not supported by any of the other `Directors'.

Gist of Counter of 1st Respondent / Company:

28. The Company Secretary of the `1st Respondent' / `Technology

Frontiers (India) Pvt Ltd.' and 10 Ors., had averred that, he is the

`Company Secretary' and `Compliance Officer' of the `1st Respondent /

Company' (in terms of the ingredients of Section 205(1) of the

Companies Act, 2013), and in regard to the `Circular Resolution Nos. 1 to

6' (subject matter of `Litigation', before the `Tribunal' and the `Appellate

Tribunal'), he was unaware of these `Circular Resolutions, purported to

have been passed during the end of October / early November 2020, by

the Respondent Nos. 3 to 8, and also that, he was not informed by the said

Respondents, despite the fact that he is the `Company Secretary,' which

fact, `Respondent Nos. 3 to 8', were quite aware of it.

29. Indeed, the `Company Secretary' of the `1st Respondent /

Company', received an email notification from the `Ministry of

Corporate Affairs', on 09.12.2020, to the effect that the `Circular

Resolutions', were passed in respect of the `1st Respondent / Company',

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 15 of 47 were taken on record and he was not only unaware of these `Resolutions'

passed, he understood from the `MCA' email that the `6th Respondent',

had utilised the `Services' of an `External Secretarial Agency', for

lodging these `Resolutions' with the `Ministry of Corporate Affairs',

although he was the `Company Secretary'.

Submissions of Respondent Nos. 3, 4, 5 and 11:

30. The Learned Counsel for the Respondent Nos. 3, 4, 5 and 11

contends that the `11th Respondent' / `Global Sports Commerce Pte. Ltd.',

is a company, for which, the `9th Respondent', was appointed as an

`Interim Judicial Manager' / `IJM', and later as `Liquidator'. As a matter

of fact, the `Global', was placed under `Judicial Management' /

`Restructuring', as per an `Order' of the `Hon'ble Singapore High Court'

dated 22.10.2020 and the `9th Respondent' (`Mr. Tam Chee Chong'), was

appointed as an `Interim Judicial Manager', and that the `9th Respondent',

was directed to take steps to secure the `Assets' of `Global'.

31. It is projected on the side of the Respondent Nos. 3, 4, 5, and 11

that one such `Asset' of `Global', is its `77.54% Shareholding', in the `1st

Respondent' (being a `Subsidiary of Global'). The `Hon'ble High Court

of Singapore' on 08.04.2022, had ordered `Global', to be `wound up',

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 16 of 47 since the `9th Respondent' (as `Former Judicial Manager of Global), was

of the opinion that there was `no prospect of Restructuring' of `Global',

and that the remaining purpose was to realise and distribute the `Assets of

Global', to best satisfy the `Claims', filed by the `Global's Creditors'.

32. It is brought to the fore that the `Liquidator' is taking steps,

pursuant to the `Winding Up Order', as per Singapore Law, to realise and

distribute the `Assets' of `Global', in order to satisfy the `Claims' of

`Global's Creditors'. Indeed, these `Assets', would include the `Global's

77.54%', in the `1st Respondent / Company'.

33. The Learned Counsel for the Respondent Nos. 3, 4, 5 and 11

submits that, as on date, there is no `IJM / JM', in regard to `Global' and

that the `Judicial Management Process' / `Restructuring Process' of

`Global', was overridden by the `Liquidation Proceedings', and the `IJM',

in relation to `Global', was replaced by the `Liquidator'.

34. The stand of the Respondent Nos. 3, 4, 5 and 11 is that, the

`Circular Resolutions', which were passed, no longer serve any purpose

and the `Relief', prayed for, by the `Appellants', to set aside the

`impugned order', on the basis that the `Tribunal', had not `stayed', the

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 17 of 47 implementation of the `Circular Resolutions', is a redundant and an

`infructuous' one.

35. According to the Respondent Nos. 3, 4, 5 and 11, the `Circular

Resolutions', among other things, had provided that `no individual

Director' or `Officer' of the `1st Respondent', could `act' / `instruct' /

`represent' the `1st Respondent', before the `Parties' / `Courts' /

`Subsidiaries' / `Operate Bank Accounts' / `Appoint' any `Accounting

Firm', without an `Express Prior Written Approval', from the `Board' of

the `1st Respondent / Company', and as long as there is an `IJM'. Since,

there is no `IJM' and that the `1st Appellant', is the only `Director',

presently on the `Board of Directors'. Hence, the `Circular Resolutions',

are not to be given effect to, as on date, and the `Reliefs', sought for', by

the `Appellants', seeking `Stay' of the same is an `infructuous' one.

36. The Learned Counsel for the Respondent Nos. 3, 4, 5 and 11 points

out that the Respondent Nos. 3 to 8 are no longer on the `Board of

Directors' of the `1st Respondent / Company', no `Interim Committee'

exists, as on date. Also that, as on date, none of the `Members' of the

earlier `Interim Committee', are part of the `Board of Directors' of the `1st

Respondent / Company', which now consists of only the `1st Appellant'.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 18 of 47

37. The Respondent Nos. 3 to 7 are resigned from the `1st Respondent'

/ `Company's Board of Directors', subsequent to the passing of the

`impugned order'. In fact, the `8th Respondent', is also ceased to be a

`Director' of the `1st Respondent / Company', with effect from

30.09.2020. Therefore, the `1st Appellant', presently is the `single

Director', on the `Board of Directors' of the `1st Respondent / Company'.

Also that, no such `Interim Committee', can even be appointed in the

future, by the `Respondent No. 3 to 11' (which were ordered to be

considered by the creation of such a `Committee', through the `impugned

order'). Besides this, the `4th Respondent' himself, had circulated a

`Circular Resolution No. 10 of 2020-2021' dated 08.03.2021, to among

other things `Srinivasan Mangalam' (`2nd Respondent'), who the `4th

Respondent', now alleges is no longer a `Director'.

38. The Learned Counsel for the Respondent Nos. 3, 4, 5 and 11 points

out that the 2nd Respondent after resigning as `Director of the 1st

Respondent / Company' in 2012, had not attended a `single Meeting' of

the 1st Respondent / Company for the last 10 years and that the 1 st

Respondent / Company, had failed to lodge the `Statutory Filings', before

the `Registrar of Companies' in (Form Dir-12), intimating the latter, the

resignation of `2nd Respondent' (`Mangalam'). Hence, the 2nd

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 19 of 47 Respondent's name continuous to reflect as a `Director' of the `1st

Respondent / Company', in the records of the `Ministry of Corporate

Affairs'.

39. The Learned Counsel for the Respondent Nos. 3, 4, 5 and 11

submits that because of the subsequent events, the filing of the `Appeal',

has become an `infructuous' one, and no basis is made out for the grant of

any `Interim Relief', and hence the main `Appeal', is liable to be

`dismissed'.

Pleas of Respondent Nos. 6, 7 and 10 :

40. According to the Respondent Nos. 6, 7 and 10, the `Circular

Resolutions' in Law Firm were shared by the `9th Respondent', with the

Advocates of the 1st Appellant, by email dated 31.10.2020, and that the 1 st

Appellant, had received the `Draft Circular Resolutions', from its

Advocates on 31.10.2020, itself, but had not provided any comments.

Even, when the 1st Appellant's Advocates, had replied to the 9th

Respondent, on 03.11.2020, they had not offered any comments, in regard

to the `Draft Circular Resolutions'. Also that, the `Circular Resolutions',

signed by the `Nominee Directors' of the `Respondent Nos. 10 and 11',

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 20 of 47 were shared by the `9th Respondent', with the `1st Appellant', for his

signature by an email dated 05.11.2020.

41. The Learned Senior Counsel for the Respondent Nos. 6, 7 and 10

contends that the `Circular Resolution Nos. 1 to 6', were validly passed

by the majority of the `Board of Directors', as per Article 22.4 of the

`Articles of Association' of the `1st Respondent / Company'. The 1st

Appellant, had objected to the `Circular Resolutions' for the first time, as

an afterthought on 06.11.2020 (vide email dated 06.11.2020).

42. It is represented on behalf of Respondent Nos. 6, 7 and 10, the

requirements of Articles 29 to 31 of the `Articles of Association' have

been met with, while passing the Circular Resolutions and the `Insight

Shareholders', as mentioned in Articles 29 to 31 are Respondent Nos.10

and 11, the `Financial Investors', in the parent company, Global Sports

Commerce Pte. Ltd. (`GSC'), which is the successor-in-interest of

`Insight'.

43. It is represented on behalf of the Respondent Nos. 6, 7 and 10, the

Circular Resolutions are governed by Article 22.4, read with Articles 29

to 31 and are not within the purview of Article 21.3. Indeed, Article 21.3

of the `Articles of Association', provides that in the event, any matter has

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 21 of 47 not been detailed in a `Notice', for `Board Meeting', the matter shall not

be transacted at the `Board Meeting', except with the consent of a

majority of `Directors' (including at least one `Nominee Director' of the

1st Appellant).

44. It is the stand of the Respondent Nos. 6, 7 and 10 that all the

`Nominee Directors' of the `10th and 11th Respondent', being `Respondent

Nos. 3 to 7', gave their written `Affirmative Consent', and approved the

`Circular Resolutions'. The requirements of `Articles of Association', in

respect of `reserved matters', were complied with.

45. On behalf of the Respondent Nos. 6, 7 and 10, it is pointed out that

mere `Defect', in `Circulation' of `Draft Resolutions', does not make it an

`Oppressive' one. Also that, the `1st Appellant', had failed to exhibit as to

how the `Circular Resolutions', had prejudiced him, in the exercise of his

`Legal' and `Propriety Rights' or show that he was constrained to submit

to a conduct, which lacks in `Probity', is `Unfair', `Harsh', `Burdensome'

and Wrongful'.

46. On behalf of the Respondent Nos. 6, 7 and 10, to lend support to

the aforesaid contentions, a reference is made to the decisions of the

Hon'ble Supreme Court of India, in (a) Needle Industries (India) Ltd. v.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 22 of 47 Needle Industries Newey (India) holding Ltd. 1981 3 SCC 333 (vide

Paragraph 49, 52). Added further, a reference is made to the following

decisions, (b) Brookfield Technologies Pvt. Ltd. v. Shylaja Iyer, 2020

SCC OnLine NCLAT 829 (vide Paragraphs 36 to 38). (c) JM Housing

Limited v. Surinder Kumar Gupta, 2020 SCC OnLine NCLAT 825 (vide

Paragraph 57) (d) Abraham Mathew and Another v. Sungkai Plantations

Pvt. Ltd. (2007) 135 Comp Cas 563 (CLB) (vide Paragraphs 5, 6 and 16)

(f) Ranjan Chandrakant Javeri v. Khetani Textile Industries Pvt. Ltd.,

2014 SCC Online CLB 175 (vide Paragraph 61).

47. On the side of the Respondent Nos. 6, 7 and 10, adverts to the

decision of the Hon'ble Supreme Court in Needle Industries (India) Ltd.

v. Needle Industries Newey (India) Holding Ltd. (1981) 3 SCC Page 333,

wherein at Paragraph 49, it is observed as under:

49. ``.....The true position is that an isolated act, which is contrary to law, may not necessarily and by itself support the inference that the law was violated with a mala fide intention or that such violation was burdensome, harsh and wrongful .......''

48. It is represented on behalf of the Respondent Nos. 6, 7 and 10 that

the `Tribunal', by virtue of the `impugned order' dated 10.02.2021, had

simply made a suggestion to the `Respondent Nos. 3 to 11', in

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 23 of 47 considering the `creation' of an `Interim Committee' to run the day-to-

day affairs of the `1st Respondent / Company'.

49. Further, the `Board of Directors' of the 1st Respondent / Company,

had constituted an `Interim Committee', to run the day-to-day affairs of

the 1st Respondent / Company and the 1st Appellant was part of the said

`Committee'. However, the 9th Respondent was not part of the said

`Committee'. As such, the `Reliefs', prayed for, by the `Appellants', are

not only `misleading' one, but became infructuous.

50. The Learned Counsel for the Respondent Nos. 6, 7 and 10 points

out that the `Tribunal', had recognised the creation of Interim Committee,

through an Order dated 11.03.2021, and further the 1st Appellant, had not

co-operated with the `Board' of the 1st Respondent / Company, and hence,

the `Interim Committee', so formed had not functioned thereafter. In fact,

the 1st Appellant is continuing to mismanage the affairs of the 1 st

Respondent / Company.

51. According to the Learned Counsel for the Respondent Nos. 6, 7 and

10, the `Investors', were always in `Majority' and hence, there was no

question of endeavouring to wrest control from the `Appellants' (vide

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 24 of 47 Article 11 of the Articles of Association - Page 91 of the Appeal Paper

Book).

52. Moreover, the 1st Appellant had expressed his intention to

voluntarily exit from the `GSC Company Group', on numerous occasions,

including before the `Tribunal', on 10.02.2021 (vide email dated

09.04.2020 and 14.04.2020 from the `1st Appellant / MSM'. Indeed, the

1st Appellant had resigned as `Managing Director' of the 1st Appellant

Company on 01.04.2018, and despite his resignation as Managing

Director, the 1st Appellant has continued and always been in the day-to-

day Management of the 1st Respondent / Company. Besides this, the

`Nominee Directors' of the `Financial Investors' (`Respondent Nos. 3 to

7') are deemed to be `non-executive Directors', and are not responsible

for the day-to-day `Management' of the `1st Respondent / Company'.

53. The Learned Counsel for the Respondent Nos. 6, 7 and 10, brings it

to the notice of this `Tribunal', that the `Company Secretary', had filed

two Affidavits on 22.07.2022 and 24.08.2022 in compliance of the `Order

dated 14.07.2022', passed by the `Tribunal (`NCLT'). The Company

Secretary in the said `Affidavit', had made the undermentioned

averments:

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 25 of 47 ``(a) That as per the records of the Company there are three directors on the board of Respondent No. 1 Company i.e. to Mr. M.S. Muralidharan (Appellant No.1), Ms. Mangalam Srinivasan (Respondent No.2) and Mr. IAS Balamurugan (Respondent No.8).

(b) That Ms. Mangalam Srinivasan has resigned as Director on December 23, 2012, vide her email dated December 2, 2012.

However, R-1 Company could not file the necessary form with RoC as R-1 Company did not receive her resignation letter.

(c) The last board meeting of Respondent No. 1 was conducted on July 20, 2020, and no board meeting has been conducted since then.

(d) The last audited consolidated annual accounts of Respondent No.1 Company were filed in December 2021 for the period from April 1, 2018 till March 31, 2019.''

54. According to the Respondent Nos. 6, 7 and 10, the 2nd Respondent

had never attended any `Board Meeting' from December 2012 and she

vacates the Office, as a Director, as per Section 283(1)(g) of the

Companies Act, 1956, that was in effect, during that period, in and by

which, if a `Director', absence himself, from three consecutive Meetings

of the `Board of Directors', or from all `Meetings' of the `Board', for a

continuous period of three months, whichever is longer, without obtaining

`Leave' of `Absence', from the `Board'. Even as per Section 167 (1) (b)

of the Companies Act, 2013 (came into effect on 01.04.2014). The 2 nd

Respondent vacates the Office, as she was absent in all the Meetings of

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 26 of 47 the Board of Directors, held, during the period of 12 months, with or

without seeking, `Leave of Absence' of the `Board'.

55. The Learned Counsel for the Respondent Nos. 6, 7 and 10 points

out that the `8th Respondent', was appointed by the Board at its Meeting,

held on 20.07.2020, subject to the approval of the `Shareholders' at the

next `Annual General Meeting' of the Company. Also that, for the

`Appointment of 8th Respondent', the `Shareholders' of the `1st

Respondent / Company', had not passed any `Resolution', and hence, he

ceased to be a `Director' from 30.09.2020. Also that, the `Company

Secretary', had failed to knowledge of the `Investors' and their

`Nominees' i.e. Respondent Nos. 3 to 7, as to the cessation of Mrs.

Mangalam Srinivasan (2nd Respondent) and Mr. Balamurugan , IAS. (8th

Respondent) as `Directors', and therefore the `Circular Resolutions', were

circulated to Respondent Nos. 2 & 8, who were not `Directors', as on date

of Circulation of the `Circulation Regulations'. In fact, excluding the

Signature of the 8th Respondent, the `Circular Resolutions', were validly

passed.

56. The Learned Counsel for the Respondent Nos. 6, 7 and 10 contends

that a `Notice', was issued by the `Registrar of Companies', Chennai on

08.11.2021, to the `1st Respondent / Company', informing them about the

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 27 of 47 numerous Defaults, committed in relation to the various Sections of the

Companies Act, 2013, which took place on account of the 1 st Appellant's

mis-management, in respect of the `Affairs' of the 1st Respondent /

Company. In fact, the 7th Respondent was forced to resign from the Board

of the 1st Respondent / Company, because of the `Appellant's failure to

file the Financial Statements of the 1st Respondent / Company for the

three Financial Years, before the `Registrar of Companies', within the

specified period.

57. It is brought to the notice of this Tribunal on behalf of the

Respondent Nos. 6, 7 and 10 that the `6th Respondent' / `Nominee

Director' of the `Investor' - `Respondent No. 10', had also resigned.

Likewise, the `Nominee Directors' of the `11th Respondent' / `EM Holdco

Pte. Ltd.', had also resigned from the Board of the 1st Respondent /

Company. After the `resignation of the Nominee Directors', in Nov'2021,

the `Board of Directors' of the `1st Respondent Company', consists of

only one `Director' Viz. the `1st Appellant', and hence the `7th

Respondent', had filed IA No. 64 of 2022 in the main Company Petition,

before the `Tribunal', seeking directions, to `reconstitute the Board', in

appointing eminent persons as `Independent Directors'.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 28 of 47

58. In summing up, the Learned Counsel for the Respondent Nos. 6, 7

and 10 points out that the instant `Appeal', has become an `Infructuous'

one, because of the subsequent facts and developments, from the date of

`Interim Order' dated 23.04.2021, passed by this `Tribunal', and hence,

the instant `Appeal', is liable to be `dismissed'.

Stance of the 8th Respondent:

59. The Learned Counsel for the 8th Respondent submits that the `8th

Respondent', was appointed as a `Nominee Director', to the `Board' of

the `1st Respondent / Company', with a primary object of protecting the

interests of the `Debenture Holders', and that the operations of the `1st

Respondent / Company', is conducted on day-to-day basis.

60. In the main CP/794/2020, on the File of `National Company Law

Tribunal', Chennai (`Oppression and Mismanagement Petition'), `no

prayer', is sought specifically against the `8th Respondent'. The `8th

Respondent', is not appointed in any of the `Key Committees', and

further does not have any `Voting Rights', and therefore, the `Circular

Resolutions', which are assailed, will have no bearing, even if the `8th

Respondent', `votes in favour or against the Resolutions'.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 29 of 47

61. The Learned Counsel for the 8th Respondent points out that the

`Debenture Trustee', filed a `Petition', before the `National Company

Law Tribunal', under Section 7 of the I & B Code, 2016, in respect of the

`Defaults in Repayment', continuing from Nov'2019 and later from April

2020, as on this date.

62. The averments made in Section 7 Application, before the

`Tribunal', is a different subject matter and no submissions are made by

the 8th Respondent, because of the fact that the matter is subjudice. The 8th

Respondent is a mere `Observer' / `Nominee Director' and in fact, the

`IJM' subject matter is between the `Appellants' and the other

`Respondents' and that the `8th Respondent', has no concern with the

same.

Contentions of the 9th Respondent:

63. The instant `Appeal', is `not maintainable' against the `JM', in his

individual capacity, since the `JM', is an `Officer', appointed by the

`Singapore High Court', to administer the affairs of `GSC' and `JM', has

no personal interest on the affairs of `GSC' or these `Proceedings'.

Further, any challenge or objection to the JM's functioning, can only be

raised before the `Court', which appointed the `JM'. In fact, the `JM', was

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 30 of 47 appointed, as `Officer of the Court', in `Singapore', as per `Section 89 (4)

of the Singapore Insolvency, Restructuring and Dissolution Act, 2018'.

64. The Advocates of the 1st Appellant were shared with the `Circular

Resolutions' in `Draft Form', as per email dated 30.10.2020. There is `no

violation' of `Section 175 of the Companies Act, 2013', read with `Clause

6.2 of SS-1', by the `9th Respondent'. The `1st Appellant's Lawyer', gave

a `Reply', through email on 03.11.2020, and offered no comments, for the

`Circular Resolutions' sent. The `Circular Resolutions', were approved

by the majority of the `Directors', on the `Board' of the `1st Respondent /

Company', as per `Section 175 of the Companies Act, 2013'.

65. There is no relation between the 9th Respondent and the Anaicut

Capital LLT and that `Anaicut Capital' / one of the major Creditors' of

the `1st Respondent / Company', has filed the `Insolvency Proceedings',

against the `1st Respondent', due to the happening of an event of

`Default', and when the `1st Respondent / Company', was unable to repay

its `Borrowed Debt'.

66. In fact, because of the violations committed by the 1 st Appellant, he

was terminated from his role as `Group CEO of GCS', through a

`Termination Letter', dated 30.04.2021.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 31 of 47 Evaluation:

67. At the outset, this `Tribunal', pertinently points out that in main

Comp. App. (AT) (CH) No. 10 of 2021, on 23.04.2021, an `Order' of

`Stay', in regard to the `implementation of Circular Resolutions dated

03.11.2020, till the next date of hearing i.e., 11.06.2021', was passed, and

till date, it is not `vacated'.

68. The `National Company Law Tribunal', Division Bench - II,

Chennai in CP No. 794 of 2020 (Filed by the `Appellants' / `Petitioners'),

on 10.02.2021, had admitted the main `Company Petition', and had not

granted the `interim relief', sought for, by the `Appellants / Petitioners'.

However, the `Respondent Nos. 3 to 11', was required to consider,

creating an `Interim Committee', to run the `Day-to-Day Affairs' of the

`1st Respondent / Company', and the matter was directed to be listed on

11.03.2021, for `Counter' and `Hearing'.

69. Before the `Tribunal', in the main CP/794/2020, the `Appellants /

Petitioners', have sought the following `Interim Reliefs':

`(i) In suspending the implementation of the Circular Resolutions No. 1 to 7 / 2020-2021 dated 3rd November 2020, passed in accordance to the proposals issued by the Board Dated October 2020, circulated to the Petitioner by the 9th Respondent on 5th October 2020.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 32 of 47

(ii) In ordering the `Interim Injunction', restraining the `Respondents', from in any manner, communicating to Banks, Financial Institutions, Clients of the 1st Respondent or any other Third Parties that the 1st Appellant / 1st Petitioner, can no longer represent the `1st Respondent / Company'.

70. The Appellants in the main CP/794/2020, had sought the

undermentioned `Final Reliefs':

(i) Declaring that the affairs of the Respondent Company, were carried on against the Interest of the `Shareholders', and in a manner `contrary to Law', by Respondent Nos. 2 to 11.

(ii) Declaring that the Circular Resolutions No. 1 to 6 / 2020-

2021 dated 3rd November 2020, passed in accordance to the proposals issued by the Board Dated October 2020circulated to the Petitioner by the 9th Respondent on 05.10.2020, is null and void and ultra vires the Articles of Association' of the 1st Respondent / Company'.

(iii) In passing an order of `Permanent Injunction' restraining the Respondents from in any manner through any resolution of through any other proceedings remove the `1st Petitioner' as `Executive Director', of the `1st Respondent Company'.

71. Before this `Tribunal', the main grievance of the Appellants /

Petitioners is that the `Circular Resolutions', are not duly circulated to all

the `Directors', as per Section 175 of the Companies Act, 2013, these

`Resolutions', were contrary to the clause 6.2 of the `Secretarial

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 33 of 47 Standard - 1, on the `Meetings' of the `Board of Directors', and in

`Violation' of the `Articles of Association' of the `Company'.

72. In reality, Section 175 of the Companies Act, 2013, provides that

`no Resolution', shall be deemed to have been duly passed by the

`Board', or by a `Committee', by `circulation', was circulated in `Draft',

all the `Directors' or `Members' of the `Committee', at their `addresses',

registered with the `Company' in `India', and was approved by a

`Majority'.

73. In this connection, this `Tribunal', points out Clause 22.4 of the

`Articles of Association' of the Company, clearly mentions that `A

Circular Resolution', shall be deemed to have been duly passed by the

Board, if it has been approved in writing (which would include

confirmation via electronic or other means) by a majority of directors

constituting the Board for the time being'.

74. Also that, Section 118 (10) of the Companies Act, 2013, enjoins

that `Every company shall observe secretarial standards with respect to

general and Board meetings specified by the Institute of Company

Secretaries of India constituted under Section 3 of the Company

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 34 of 47 Secretaries Act, 1980 (56 of 1980), and approved as such by the Central

Government'.

75. Although, on behalf of Respondent Nos. 6, 7 and 10, a plea is

raised that the `Circular Resolutions', in `Draft Form', were shared by the

`9th Respondent' with the `Advocates' of the `1st Appellant', through

email dated 31.10.2020 and the `1st Appellant', on receipt for the same,

had not provided any comments, etc., this `Tribunal', pertinently points

out that in the instant case, the `Circular Resolutions', were not circulated

to the `1st Appellant' in `Draft', and as such, there is a `Violation' of

`Section 175 (1) of the Companies Act, 2013, there is a negation of clause

6.2 of the Secretarial Standard-1, non-observance of the ingredients of

Section 118 (10) of the Companies Act, 2013, and non-compliance of the

clause 22.4 of the `Articles of Association' of the Company.

76. Furthermore, it is latently and patently quite clear that, as per

`Article 21.3 of the Articles of Association, the `Majority', includes the

consent of the `1st Appellant'. That apart, as per Secretarial Standards-1

clause 6, the `Circular Resolutions', have the same effect, as that of

passed in the `Board Meeting' and hence, the `Majority Vote', as

`applicable', for the `Board Meeting', equally `applies', to the

`Resolutions', passed by the `Circulation', as well. As such, the `contra

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 35 of 47 plea(s)', taken on behalf of the `Respondents', is not `acceded to', by this

`Tribunal'. Viewed in these perspectives, this `Tribunal', unhesitatingly,

holds that the `National Company Law Tribunal', Division Bench - II,

Chennai, was not `correct', in `granting' the `interim reliefs', as prayed

for, by the `Appellants' / `Petitioners', in main CP/794/2020, when the

`Defect' in `not circulating the `Draft Circular Resolutions', goes to the

root of the matter. In any event, the `Circular Resolutions', cannot be said

to have been duly `approved', by the `Majority Directors', and hence, this

`Tribunal', holds that the said `Resolutions', are `Void' in `Law'.

77. Coming to the aspect of the ground reality, that there is no `IJM' /

`JM', in respect of `Global', and further that the `Judicial Management

Process' / `Restructuring Process' of `Global', was `overridden', by the

`Liquidation Proceedings', the `IJM', pertaining to `Global', was replaced

by the `Liquidator', this `Tribunal', significantly, points out that the

`Circular Resolutions', which were purportedly passed, no longer serve

any purpose and they were rendered `Otiose', because of the fact that the

`Liquidator', pursuant to the `Winding Up Order', based on `Singapore

Law', is taking steps, in realising and distributing the `Assets' of

`Global', with a view to `fulfil the `Claims' of `Global's Creditors'.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 36 of 47

78. This `Tribunal', keeping in mind the prime fact that the `1 st

Appellant', is the only `Director', presently on the `Board of Directors' of

the `1st Respondent / Company' (As averred by the `Respondent Nos. 3,

4, 5 and 11), the `Circular Resolutions', cannot be pressed into service

(ofcourse, resting upon later developments), for any purpose, as on date,

all the more, when this `Tribunal', came to the categorical conclusion that

the `Circular Resolutions' are `Void' in `Law'.

79. In so far as the `Plea', to consider the aspect of formation of an

`Interim Committee', to run the day-to-day affairs of the `Company', by

R3 to R11, as per the `impugned order', it is pointed out by this

`Tribunal', the `1st Appellant', was part of the `Committee', and `IJM',

was not a `part' of the same, and further, the `Committee', being

constituted on 08.03.2021, vide `Circular Resolution No. 10 / 2020-2021',

comprising of the `1st Appellant' and `Respondent Nos. 8, 4 and 7'.

80. As a matter of fact, as on date, none of the `Members' of the

`Former Interim Committee', are an integral part of the `Board of

Directors' of the `1st Respondent / Company', and further that after

passing of the `impugned order', the `Respondent Nos. 3 to 7', had

resigned from the `Board of Directors' of the `1st Respondent / Company'.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 37 of 47 Moreover, the `8th Respondent', had ceased to be a `Director' with effect

from 30.09.2020 from the `1st Respondent / Company'.

81. Continuing further, according to the Respondent Nos. 3, 4, 5 and

11, even in the near future, no such `Interim Committee', could be

appointed and it cannot be lost sight off that, no such `Interim Committee'

exists, and in any event, the `Relief', regarding the `Interim Committee',

is an `Otiose' one, as held by this `Tribunal', in `unequivocal term'.

82. At this juncture, this `Tribunal', pertinently points out that even

though, on either side `Pleas', were raised, touching upon the `merits' of

the main CP/794/2020, pending on the File of the `Tribunal' (`NCLT')

and that the `Controversies' / `Claims' / `Disputes', arising out of `SHA',

are in connection with `SHA' / `Violation' / `Invalidity' / `Termination',

etc., this `Tribunal', is not delving into the same, as they are not

`germane', to the ambit of the instant `Appeal', and also for arriving at a

conclusion in the instant `Appeal', based on the facts and circumstances

of the instant case, which float on the surface. However, it is open to the

concerned `Parties', to raise their grievances on factual and legal pedestal,

before the `Competent Forum', in accordance with `Law', if they so

desire / advised.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 38 of 47

83. Be that as it may, in the light of the detailed foregoing discussions,

this `Tribunal', keeping in mind of the divergent contentions, raised on

either side and taking note of the facts and circumstances of the case, in a

conspectus fashion, without any `haziness', holds that the `Circular

Resolutions No. 1 to 6 dated 03.11.2020', are `Void' in `Law'.

84. Considering the fact that, as on date, there is no such `Interim

Committee', the `Relief', regarding the `Interim Committee', because of

the subsequent developments', that took place, has become a `Nugatory',

besides an `Otiose' one, as held by this `Tribunal'.

85. With the aforesaid observations and directions, the instant `Comp.

App (AT) (CH) No. 10 of 2021, stands `Disposed of'. No costs. The

`Interim Order' dated 23.04.2021, passed by this `Tribunal', comes to an

end with the `Disposal' of the instant `Appeal'.

86. Before, parting with the case, this `Tribunal', clearly points out

that, it is open to the respective `Parties', to file their `Counter(s)' in

CP/794/2020 (before the `National Company Law Tribunal', Division

Bench - II, Chennai), and after filing of `Counter(s)', the `Tribunal', shall

permit the `Appellants' / `Petitioners', to file their `Rejoinder(s)', and to

proceed further, in the manner known to `Law', and in accordance with

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 39 of 47 `Law', in dealing with the main `Company Petition', by providing

adequate opportunities to the respective `Parties' (to raise all factual and

legal pleas), and by adhering to the `Principles of Natural Justice'.

ORDER IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021:

87. According to the `Petitioners' / `Appellants', the instant `IA No.

195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021' (`Contempt

Petition'), is filed, by virtue of the `Interim Stay', of all the `Circular

Resolutions', passed by this `Tribunal', through its `Interim Order' dated

23.04.2021, in the present `Company Appeal'.

88. The grievance of the Petitioners /Appellants, projected in IA No.

195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 is that, inspite of

the `Interim Order' dated 23.04.2021 in Comp. App (AT) (CH) No. 10 of

2021, wherein and whereunder, an `Order' of `Interim Stay', was granted

by this `Tribunal', relating to all the `Circular Resolutions', the `9th

Respondent' (`Mr. Chee Chong Tam'), had chosen to conduct a

`Meeting' of the `Creditors' of `Global Sports Commerce Pte. Ltd.',

wherein the main `Agenda', was to ensure that there is a `Stake Sale' of

the `1st Respondent / Company', whereby more than 90% of the `Shares'

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 40 of 47 of the `1st Respondent / Company', is put up for `Sale', by the `9th

Respondent'.

89. Advancing his argument, the Learned Practising Company

Secretary for the Petitioners/Appellants submits that, by means of

`Circular Resolution No.1', the `9th Respondent' gave all powers of the

`Board' of the `1st Respondent / Company' to himself and when the

`Circular Resolutions', was stayed by this `Tribunal', through its Order

dated 23.04.2021, passed in Comp. App (AT) (CH) No. 10 of 2021, and

in fact, the 9th Respondent had proposed to `Sell' more than 90% of the

`Shares' of the Company, for which, again, the `Control' of the `Board'

will be entirely shifted to a new `person / party', which is against the

`Stay Order', passed by this `Tribunal' on 23.04.2021.

90. In effect, the `Plea', taken on behalf of the Petitioners / Appellants

is that, the 9th Respondent is endeavouring to flout the `Order' of this

`Tribunal' dated 23.04.2021, by circumventing and abusing the non-

existential position, to gain control of the 1 st Respondent / Company.

Further, despite the `Stay' of the `Circular Resolution-1, the `IJM' / `JM',

has tried to engage with various `Stakeholders', to `Sell' the `1st

Respondent / Company', as a whole, as evident from the document, the

`9th Respondent', had circulated, which, runs as under:

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 41 of 47 ``A Sale of the Company's assets 6.2 TFI was identified as a potentially significant realisable asset of the Company and the JM has undertaken various steps to try to maximise the value of TFI, which includes engaging with the Board of Directors of TFI to assess the viability of a potential sale. 6.3 The JM initiated the process of exploring the sale of the TFI shares by reaching out to key stakeholders of the Company. The JM has also engaged with the major creditors of the Company on the key terms to be included in the Sale Process Term Sheet.''

91. Hence, it is pointed by the Petitioners / Appellants that the 9 th Respondent has disregarded the `Interim Order of Stay' dated 23.04.2021, granted by this `Tribunal', and the activities of the 9 th Respondent, mentioned supra, amounts to contumacious act, for which, he is to be `penalised', with a maximum sentence of `Imprisonment' and `Fine', as prescribed under the `Contempt of Courts Act, 1971, read with Section 425 of the Companies Act, 2013'.

Function of Tribunal:

92. The `National Company Law Tribunal', is discharging its `Judicial Function' and an `Order' must be passed, resting upon `Consistency', `Credibility' and `Sanctity' of `Judicial' acts and proceedings, to be maintained.

93. It is to be remembered that an `Order' / `Judgment' of a `Tribunal' / an `Appellate Tribunal', is to be written in a `Positive Vein'. Also that, at the `cost of Justice', `Expeditious Resolution' of `Disputes', cannot be done.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 42 of 47 Contempt of Courts Act, 1971:

94. The prologue of The Contempt of Courts Act, 1971 (70 of 1971), is for the purpose of securing a feeling of confidence of people in general for `Due and Proper Administration of Justice', in the Country, as per decision in Prem Surana v. Addl. Munsif & Judicial Magistrate, AIR 2002 SC 2956.

Twin Purpose:

95. The `dual purpose' of `Contempt Proceedings', against a `Person', who has failed to `Comply' with the `Court' / `Tribunal's Order'

(a) Vindication of Public Interest, by punishment of Contemptuous Conduct and (b) A compulsion to coerce the Contemnor to do what the `Law', requires him to perform.

Ingredients of Contempt:

96. The `Onus' of proving the `Contempt', is on the `Person', who alleges the `Contempt'. It must be established that an `Order', was passed by a `Court of Law' / `Tribunal', which either directs `certain things', to be performed by a `Person' or to `Prohibit' such person(s) from doing `Particular / Certain' acts, and that the `Person', had knowledge of the said `Order'.

97. A mere disobedience of an `Order' of a `Court', may not be sufficient to amount to a `Civil Contempt'. The element of willingness is an indispensable requirement to bring home the charge within the act, as

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 43 of 47 per decision Anil Ratan Sarkar & Ors. v. Hirak Ghosh & Ors., AIR 2002 SC 1405.

98. It is to be proved that despite having knowledge of such an `Order', the person concerned had deliberately and wilfully breached, with an intention of lowering the dignity and image of the `Court', as per decision of the Hon'ble Supreme Court in Salauddin Ahmed v. Samta Andolan, reported in AIR 2012, SC 3891.

Not a Defence:

99. It must be remembered that an `Apology', is not a `Shield to wriggle out of the `Rigour of Law'. Further, an `Apology', is an act of `Contrition', in the considered opinion of this `Tribunal'. However, it is not meant to operate as an `Universal Panacea'.

100. No wonder, an `Apology', is not to be accepted, if there is `No Remorse', `No Regret', `No Repentance' or is `Hollow'.

Exercise of Power:

101. The `Power' to `Punish' for `Contempt', has to be exercised not `casually' or `lightly', but, must be done with great `Care' and `Circumspection', and only where it is necessary to `Punish' the `Contemner', to `Uphold', the `Majesty' of `Law', and the dignity of the `Courts', as per the decision in the matter Babu Ram vs. Sudhir Bhasin, AIR 1979, SC 1528. In this connection, it is not out of place for this `Tribunal', to make a relevant mention that `Imposing Punishment /

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 44 of 47 Imprisonment', is undoubtedly an `Exception' and saddling with `Fine', ordinarily and by and large, will be the `Rule'.

102. Considering the fact that this `Tribunal', by virtue of the `Interim Order' dated 23.04.2021, had stayed the implementation of the `Circular Resolutions' dated 03.11.2020, in respect of the `1st Respondent', and that be the fact situation, the `9th Respondent', cannot proceed any further in the `eye of Law', especially in negation to the `Interim Order of Stay', granted by this `Tribunal' dated 23.04.2021 in main Comp. App (AT) (CH) No. 10 of 2021. As a matter of fact, in view of the `Stay', granted by this `Tribunal' on 23.04.2021, was prevented from contacting any `Stakeholder', and should not have proceeded any further and instead he should not have endeavoured to engage with various `Stakeholders' to `Sell' the `1st Respondent / Company', as a whole, in regard to the `Sale of Company's Assets', in the considered opinion of this `Tribunal'.

103. In this connection, this Tribunal, relevantly points out that the `Law of Contempt', is ofcourse, to be strictly interpreted and the requirements of `Law', is to be strictly `complied with'. No wonder, while dealing with an `Application' for `Contempt', the `Court' cannot traverse beyond the `Order', passed by it. Also that, the `Court' / `Tribunal', cannot test the `correctness' or `otherwise' of the `Order' or give any added direction or delete any direction, as the case may be.

104. Before any `Person', can be committed for `Contempt', as per decision of the Hon'ble Supreme Court, in the matter of Roshan Sam Joyce v. S.R. Cotton Mills Ltd. AIR 1990 SC 1881. In reality, the

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 45 of 47 `Contempt Proceeding', is primarily between the `Court' and the `Contemnor', as per the decision in State v. Mahboob AIR 1996 SC 2131.

105. In view of the fact that the `Contempt Jurisdiction', should be sparingly exercised, with due care and caution, as per decision Mrityunjoy Das v. Sayed Hasibur Rahaman (vide Contempt Petition (Civil) No. 202 of 2000 - Order dated 16.03.2001), AIR 2001 SC 1293.

This Tribunal', keeping in mind of the fact that the `void Circular Resolutions', have no longer have any effect, cannot be given effect to, and further that, no such `Interim Committee' exists and also in the near future, no such `Interim Committee', could be appointed, this `Tribunal', taking into account all the surrounding circumstances, exercising its sound thinking `Judicial Discretion' and acting with utmost `Care', `Caution' and `Circumspection', as a mitigating circumstance and adopting a pragmatic approach, refrain from `imposing' any `Punishment' / `Fine' for the `9th Respondent', for `not adhering' to the `Interim Order' dated 23.04.2021, passed by this `Tribunal', in this `Appeal', but, as an `Eyeopener', ofcourse, keeping in mind of the fact that `Be you ever so High, the `Law' is above you', to `Uphold' the majesty and dignity of this `Tribunal', issues an `Advisory Direction' that the `9th Respondent', shall act with `Utmost Prudence and Diligence', not to remain `Indolent' or act with `Supine Indifference' or not to adopt a `Lackadaisical' / `Laissez- faire' approach, not to be negligent, and to act with `Homo-sapien's Consciousness', not to give any room for any such `lapse' / `inaction', and thereby, avoiding any `Real Contriteness', in future.

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 46 of 47 With the aforesaid observations and directions, IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021, stands `Disposed of'. No costs.

[Justice M. Venugopal] Member (Judicial)

[Naresh Salecha] Member Technical)

02/03/2023

SR / TM

Comp. App (AT) (CH) No. 10 of 2021 & IA No. 195 of 2021 in Comp. App (AT) (CH) No. 10 of 2021 Page 47 of 47