Vrg Healthcare Pvt. Ltd. & Ors vs Ganesh Ramchandra Chakkarwar

[Arising out of Order dated 26.09.2018 passed by National Company Law Tribunal, Mumbai Division - II, Mumbai in C.P. 3612/241- 242/(MB/2018)]

IN THE MATTER OF: Before NCLT Before NCLAT

1. V.R.G. Healthcare Original Respondent No.1 Appellant No.1 Private Limited, Plot No.278, Central Bazar Road, Ramdaspeth, Nagpur - 440011

2. Dr. Sameer Narayan Original Respondent No.2 Appellant No.2 Paltewar, 502, Le Prestige, Besides Bisne Hospital, Ramdaspeth, Nagpur - 440011

3. Mrs. Sonali Paltewar Original Respondent No.3 Appellant No.3 502, Le Prestige, Besides Bisne Hospital Ramdaspeth, Nagpur - 440011

Versus

Mr. Ganesh Ramchandra Original Petitioner Respondent Chakkarwar Chakkarwar Court, Sitabuldi, Nagpur 2

For Appellant: Shri Rishabh Sancheti, Ms. Padma Priya, Shri Anchit Bhandari and Shri J.K.Gilda, Advocates

For Respondent: Shri P.K. Mittal, Shri Nitin Lalwani and Shri Amit Rajkotiya, Advocates

JUDGEMENT

(14th February, 2019)

A.I.S. Cheema, J. :

1. This Appeal has been field against Impugned Order dated

26.09.2018 passed by the National Company Law Tribunal, Mumbai

Division - II, Mumbai ('NCLT', in short) in C.P. 3612/241-242/(MB/2018)

which Order was passed at 4.30 p.m. on that day.

2. It appears that the Respondent - original Petitioner filed the

Company Petition before NCLT at Mumbai on 19.09.2018 making

grievances of oppression and mismanagement against the Appellants. It

appears that the Respondent also filed Writ Petition No.6154 of 2018 in

the High Court of Judicature at Bombay, at Nagpur Bench. Initially, the

Writ Petition came up before the High Court on 21.09.2018 (see Reply -

Diary No.8635 - Page 64). The High Court passed the following Order:-

"Heard Advocate Shri Dewani for the petitioner. It appears that National Law Company Tribunal is presently not in position to take up the controversy. The petitioner apprehends removal from Board of Directorship of respondent no.1 - company in meeting scheduled on 22-9-2018. Petitioner also has pleaded that after such removal, share holding pattern may itself be drastically changed to reduce the petitioner to minority.

Company Appeal (AT) No.385 of 2018 3

In this situation, notice, returnable on 26-9-2018.

Though the meeting may go on, outcome therein shall not be given effect to till next date."

It is stated that as the Bench of NCLT due to vacation was not

available, the Writ Petition was required to be filed and taken up before the

High Court.

3. The matter came up before NCLT on 26.09.2028 at 10.30 A.M.

This was at Mumbai and NCLT passed the following Order at 10.30 A.M.:-

"AT 10.30 a.m.

The professional appearing for the petitioner requested this bench for ad interim orders. As the judicial protocol demands, the matter cannot be taken up when the Hon'ble High Court is likely to hear the same today itself and concurrently hearing the same matter by two forums is not proper.

In view of the above, the professional may inform the Hon'ble High Court that the NCLT is taking up the matter for hearing on 03.10.2018 for passing appropriate orders.

The professional representing the petitioner may take up appropriate steps towards the same. List this matter on 03.10.2018 for further consideration."

4. Thus, the NCLT adjourned the matter to 3 rd October, 2018 for

further consideration. On the same date of 26.09.2018, the Writ Petition

came up before the High Court Bench at Nagpur and the Hon'ble High

Court passed the following Order:-

Company Appeal (AT) No.385 of 2018 4

"By way of present petition, the petitioner seeks a writ to the respondent no.1. The petitioner has sought a relief from this Court of directing the respondents to not to hold the General Meeting of the respondent no.1 Company, scheduled to be held on 22.09.2018.

The respondent no.1 is a Private Limited Company. The perusal of the cause title would reveal that all the three respondents are either Private Limited Company or private individuals.

By now it is settled principle of law that a writ under Article 226 of the Constitution of India would lie against the State or its instrumentality.

In view of the law laid down by the Hon'ble Supreme Court in the case of Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust .vs. V.R. Ruadni reported in (1989) 2 Supreme Court Cases 691, the writ would lie against an institution which is enjoined to perform certain public duties. Nothing of that sort is pointed out in the present writ petition.

Therefore, we do not wish to entertain the present writ petition in extra ordinary jurisdiction under Article 226 of the Constitution of India. The writ petition is, therefore, rejected."

5. The above Order shows that when the matter was taken up at

Nagpur, the Appellants - original Respondents were represented by an

Advocate. However, it appears that immediately, if not soon after such

Order was passed by the Hon'ble High Court Bench at Nagpur, the

Respondent - original Petitioner again moved NCLT at Mumbai and NCLT,

which had already adjourned the matter to 3rd October, 2018, appears to

Company Appeal (AT) No.385 of 2018 5

have taken up the matter again at 4.30 p.m. and proceeded to pass the

following Order:-

"At 4.30 p.m.

When the matter was taken up in the morning a direction was given to the petitioner to inform the Hon'ble High Court that this Tribunal would take up the matter on 03.10.2018. In view of the rejection of the Writ Petition by the Hon'ble High Court, this matter was heard in the afternoon on an urgent motion by the petitioner.

Heard Shree Mahesh A. Athavale, PCS. The contention of the petitioner is that the petitioner holds 33% shares in the company and apart from that he had advanced unsecured loans for the smooth functioning of the company. Further, the petitioner was the original signatory to the Memorandum along with the Respondent No. 2 and another person. The company was incorporated in the year 2006. Subsequent to the incorporation, the objectives, as mentioned in the Memorandum has been carried out, the construction of the hospital is completed and is functioning till this date. Sometime in the middle of 2017 the petitioner on the advice of the respondent No 2 and for the smooth functioning and betterment of the company and to facilitate bank finances, had transferred about 17% shares to the Respondent No.

2. It has come to light that the competent committee constituted by the Government had de-empanelled the Respondent No. 1 hospital from the MGPJAY scheme which was intended to serve the poor patients. As a result of de-empanelment, the petitioner submits, the company would lose lot of income and would incur bad name in the medical circles. The petitioner who invested his money in the company made efforts to find out the reasons as to why such de-empanelment had taken place and in the said process of enquiry he had come to know that several irregularities pertaining to the management had taken place. The Respondent No. 2 who is a Managing Director of the company, as submitted by the petitioner, could not have created such a

Company Appeal (AT) No.385 of 2018 6

situation warranting the interferences of the Government authorities for the de-empanelment. The petitioner was making his own efforts to safeguard the interest of the Company and his investments. While the matters stood thus, the Respondent No. 2 had issued notice on 6th September, 2018 for the inclusion of an Agenda item to the Annual General Meeting for the removal of petitioner as the Director of the Company.

Subsequently, notice was issued to the members by the Respondent No. 3 proposing a resolution for the removal of the petitioner as the Director. The explanatory statement attached to the said notice, evidently does not contain any reasons, let alone tenable reasons, for the removal of the petitioner as the director of the Company. In exercise of his rights as substantial shareholder of the company, the petitioner had approached this Forum for an appropriate relief on 19th September, 2018 and as the Tribunal was on vacation and on account of transfer of the Judicial Member who is supposed to hold the vacation court was transferred, the matter could not be taken up and appropriate relief could not be passed. However, the petitioner had approached the Hon'ble High Court, Nagpur Bench under Article 226 of the Constitution projection the reasons and the urgency involved in the matter. The Hon'ble High Court had passed an Interim Order on 21st September, 2018 stating that the Annual General Meeting may go on but the outcome therein shall not be given effect to till next date and posted the matter today for further consideration. It is submitted by the petitioner that the Hon'ble High Court had dismissed the said Writ Petition. The petitioner, left with no other choice had moved urgent motion before this Bench praying for ad-interim orders.

We have considered the contentions, statements made by the petitioner and we are convinced that there is a prima facie case in favour of the petitioner and balance of convenience is also in favour of the petitioner and if interim orders are not passed, the petitioner will suffer irreparable loss which cannot be compensated in terms of money for the reason that in the event the company which runs the hospital suffers bad name, being the director and substantial

Company Appeal (AT) No.385 of 2018 7

shareholder of the company, the petitioner has to bear the negative image apart from losing valuable investments made in to the company. Therefore, in 'A' this background of the matter, we hereby direct the respondent not to alter the shareholding pattern of the company and also not to give effect to resolution, if any, removing the petitioner as director of the company until further orders.

In the event, the respondent had uploaded the resolution removing the petitioner as a director of the company, respondents are directed to immediately remove/ delete the said resolution from the MCA 'B' postal, the DIR-12 must be cancelled and take appropriate steps to restore the name of the petitioner as a director of the company.

The respondents are directed to file their counter within four weeks by duly serving the copies to the petitioner and get ready to argue the matter on 15th November, 2018.

Hence this order."

[Emphasis supplied - Highlighted and marked portions - See para 12 infra]

Aggrieved by such Order passed at 4.30 p.m., the present Appeal

has been filed by the Appellants - original Respondents. The case Original

Petitioner put up before NCLT to seek the "ad-interim orders", we can see

in the Impugned Order itself. Although at the time of arguments before us,

the Counsel for Respondent - original Petitioner tried to say that he had

sent Notice by speed post and e-mail before Impugned Order was passed

by the learned NCLT, the Counsel accepted that the Impugned Order does

not show anywhere noting that Notice had been served either by the party

Company Appeal (AT) No.385 of 2018 8

or by the NCLT on the Appellants - original Respondents before passing

such Order at 4.30 p.m.

6. The Appellants in the Appeal are claiming and it has been argued

for the Appellants that the Appellant No.1 Company was Incorporated in

2007 and commenced operations in 2012. According to the Appellants, the

Respondent - original Petitioner was Chairman-cum-Managing Director of

the Company and it was the Respondent - original Petitioner who was

responsible for management of day-to-day affairs and finances of the

Company. The Respondent - Petitioner, a CA, having financial expertise

and knowhow was solely in-charge of the finances and statements of the

Company. In spite of specific understanding amongst the Directors, that

the Directors would not charge interest on unsecured loan advances by

them, the Respondent charged interest @ 18% on unsecured loan

advanced by him; Respondent, without authorization, advanced interest

free loan to private entities which included his relatives to the extent of

Rs.1,75,03,009/-; Respondent advanced interest free loans to his relatives;

Respondent referred 523 patients for treatment to the hospital on the

understanding that the expenditure would be offset against income of the

Respondent, but no such offset was done; and that the amounts were

waived off by Respondent. Resultantly, the Company suffered loss of

Rs.38,96,780/-. According to the Appellants, explanation was called for

from the Respondent - Petitioner but he did not respond and resigned from

the post of Chairman of the Company and the Appellant No.2 came to be

Company Appeal (AT) No.385 of 2018 9

nominated as Chairman/CMD on 24.11.2017. According to the

Appellants, various letters were sent to the Respondent - original Petitioner

for the amounts outstanding, but he did not respond. Ultimately, it was

decided that during the AGM scheduled on 22.09.2018, issue of removal

of Respondent from directorship should be discussed. Appellants claimed

that Respondent falsely alleged financial mismanagement by the Appellant

No.2 and moved NCLT with the Company Petition as well as filed Writ

Petition claiming that the General Meeting dated 22.09.2018 may not be

held. The Appellants claimed that the learned NCLT did not consider

maintainability of the Petition and by Order, which if it was to be passed,

should have been Interim Order, granted final relief to the Respondent

contrary to the law. Order in the nature of mandatory permanent

injunction has been passed without affording any opportunity to the

Appellants and is in complete violation of principles of natural justice.

According to the Appellants, the Respondent obtained the above Impugned

Order misleading the NCLT by keeping NCLT in dark regarding his own

financial misconduct because of which, he had already tendered his

resignation from the chairmanship of the Company on 24.11.2017.

According to the Appellants, the Respondent suppressed that he had been

issued letters dated 09.07.2018, 25.07.2018 and 27.08.2018 to pay back

amounts. At interim stage, no such orders in the nature of final orders

could have been passed without hearing both sides.

Company Appeal (AT) No.385 of 2018 10

7. The learned Counsel for the Respondent accepted that the

Respondent was Managing Director in the Company since before and till

November, 2017. According to the Counsel for Respondent, the

Respondent had invested about 12 Crores of rupees in the Company

against hardly one Crore on the part of the Appellant No.2. The Counsel

stated that the Respondent earlier had 50% shareholding and Appellant

No.2 had 50% shareholding. The Appellant No.3 is the wife of Appellant

No.2. The Counsel stated that out of the 50% shareholding of the

Respondent - original Petitioner, due to certain representations made by

the Appellant No.2, the Respondent transferred 17% of his shares to the

Appellant No.2 because of the relations and understanding between them.

The Counsel claimed that the Respondent - original Petitioner had

resigned in November, 2017 on his own as he could not bear bungling

being done by the Appellants. The Counsel for Respondent - Petitioner

referred to Notice, which was sent by original Respondent No.2 (Appellant

No.2) for removal of the Respondent - Petitioner as Director, copy of which

has been filed at Page 401 (Diary No.8869) and the subsequent Notice

issued by original Respondent No.3 - Appellant No.3, copy of which is at

Page - 402. Reference was made to the statement under Section 102 of the

Companies Act, 2013 ('new Act', in short), which is at Page 404, to say that

the statement did not contain any reasons, let alone tenable reasons, as

has been observed in the Impugned Order.

Company Appeal (AT) No.385 of 2018 11

8. The learned Counsel for the Respondent was unable to convince

us at the time of arguments that there could be any justification to

suddenly take up the matter at 4.30 p.m. by NCLT when it had already

adjourned the matter to 3rd October, 2018 at 10.30 a.m., without serving

the original Respondents/Appellants with any Notice.

9. The learned Counsel for the Respondent - original Petitioner

submitted that mandatory directions passed in the Impugned Order are

not material as they are not effective as no DIR 12 has actually been

submitted although the Respondent - original Petitioner has been removed

by Resolution dated 22.09.2018.

10. We have gone through the Company Petition and its Annexures

which have been filed with Diary No.8869. We have also gone through the

Appeal and grievances being raised by the Appellants - original

Respondents in the Appeal as well as Rejoinder.

11. Going through the material, on one hand, the Company Petition

filed by the Respondent - original Petitioner is showing various acts on the

part of Appellants 2 and 3, who are husband and wife and on the other

hand, the Appellants in their Appeal and Rejoinder are pointing out various

acts on the part of Respondent - original Petitioner as grievances of both

sides against each other. Keeping the fact in mind that the learned NCLT

is yet to consider and analyse the cases of both sides, we refrain from

referring to the allegations and counter allegations in details. Brief

Company Appeal (AT) No.385 of 2018 12

reference to the rival cases is already reflected in the Impugned Order and

arguments of the parties against each other. We are not making detailed

references to the rival cases because on the face of the Impugned Order,

we are convinced that it was improper on the part of NCLT to pass the

Impugned Order, in the manner in which it has been passed foreclosing

further considerations on the Impugned Order, as the Impugned Order

does not say that it is Interim Order subject to conformation after hearing

the other side. When a Company Petition is filed, the Petitioner may show

the NCLT that circumstances exist for passing immediate Interim Orders.

In such circumstances, NCLT would be justified in passing Interim Orders,

if the case of extreme urgency is made out. Such Orders would and should

be subject to confirmation on hearing the other side for which opportunity

should be left open. In the present matter, NCLT has noted that the

Petitioner moved NCLT for "Ad Interim Orders" but the Orders as have been

passed, do not purport to say that they are Interim Orders and the original

Respondents (Appellants) are to be heard. When the Hon'ble High Court

itself in its wisdom had on 21.09.2018, preferred to issue Notice and in the

meanwhile, directed that the meeting may go on but the outcome therein

shall not be given effect till next date, the NCLT could have itself adopted

similar recourse and the Order could have stated that the Resolution as

may have been adopted would remain stayed till the next date. Instead of

that, NCLT simply pronounced magic words that there was a prima facie

case in favour of the Petitioner and balance of convenience is also in favour

Company Appeal (AT) No.385 of 2018 13

of Petitioner and that if Interim Orders are not passed, Petitioner will suffer

irreparable loss on the basis that if the Company which runs the hospital

suffers bad name, the Petitioner will bear the negative image apart from

losing valuable investments. The question of Company suffering bad name

appeared to be based on de-empanelment of the hospital. Record shows

(Annexure P8 of the company Petition - Diary No.8869 - Page 118) that the

hospital had already been de-empanelled from the Mahatma Jyotiba Phule

Jan Arogya Yojna on 28th February, 2018 itself. Thus, whatever harm had

to take place on that count had already taken place. NCLT not only

restrained the Respondents - Appellants from altering shareholding and

from giving effect to the Resolution removing the Respondent - Petitioner

as Director until further Orders, but also went ahead to pass Orders which

are in the nature of mandatory Orders to cancel DIR 12 etc. which were

not necessary.

12. We are not setting aside the Impugned Order as a whole as, going

through the rival cases, it appears to us that both sides would require

explaining to be done as interest of Company as a whole is to be protected.

We pass the following Orders:-

ORDER

A) For the above reasons, we set aside the portions

of Impugned Order (highlighted and marked 'B' in

para 5 - supra) where it is directed that if the (original)

Respondents have uploaded the Resolution, they

Company Appeal (AT) No.385 of 2018 14

should remove/delete the same from MCA portal and

that DIR 12 must be cancelled.

B) As regards the other directions (highlighted and

marked 'A' in para 5 - supra) where NCLT has

directed the (original) Respondents not to alter the

shareholding pattern of the Company and also not to

give effect to the Resolution, if any, removing the

original Petitioner as Director of the Company, we set

aside the words suffixed "until further orders". We

direct that rest of this direction of NCLT (highlighted

and marked 'A' in para 5 - supra) shall be treated as

Ad-Interim Orders which shall remain in force till

Appellants - original Respondents are heard giving

opportunity as to why the Ad-Interim Order should

not be confirmed pending decision of the Company

Petition.

14. The Impugned Order is modified accordingly and the Order passed

by NCLT shall be treated as Ad-Interim Order. The parties before us are

directed to appear before NCLT on 05.03.2019. The Appellants shall file

Reply to the Company Petition and Reply to the Ad-Interim Relief claimed

by the Respondent - Petitioner to be filed within time NCLT may specify.

NCLT is directed to hear both the parties and decide regarding the Interim

Company Appeal (AT) No.385 of 2018 15

Relief expeditiously. If any party protracts, NCLT may take any further

suitable decisions and pass appropriate orders.

[Justice A.I.S. Cheema] Member (Judicial)

[Balvinder Singh] Member (Technical) /rs/nn

Company Appeal (AT) No.385 of 2018