Disposed

Gurlal Singh Grewal and Anr. v. M/S Upper India Steel Manufacturing & Engg. Co. Ltd. and Ors.

Punjab & Haryana HC9 May 2013CAPP/13/2013

Case brief

AI extract

What is this about?

The High Court disposed of a Company Appeal against an interim CLB order, refusing to adjudicate on merits. The court directed the CLB to prioritize the main petition's final disposal and advised that the company proceed with loan discussions while complying with statutory approvals.

What did the court decide?

The Company Appeal was disposed of without adjudication on merits; the CLB was directed to hear the main petition on the fixed date and consider loan transactions cautiously.

Gurlal Singh Grewal and Anr. Vs M/S Upper… — Company and Corporate | Punjab & Haryana HC (2013)

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CAPP-13-2013 (O&M) Date of Decision: 09.05.2013

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Gurlal Singh Grewal & Ors. . . . . Appellants

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VS.

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M/s Upper India Steel Manufacturing and Engineering Co.Ltd. & Ors.

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Present: Mr. AS Narang, Advocate for the appellants

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Mr. Anand Chhibber, Senior Advocate with

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Mr. Vaibhav Sahni, Advocate for the respondents

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(1). This Company Appeal is directed against the order dated 06.02.2013 statedly pronounced on 19.03.2013, passed by the Company Law Board (CLB) whereby interim order dated 08.05.2007 stands modified at the instance of respondent-company with the following directions:-

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“(1) The order dated 08.05.2007 is hereby modified to

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the extent of mortgaging the assets of R-1 Company as mentioned in the pleadings of the respondents in this CA.

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(2) R-1 Company shall strictly comply with the status quo order dated 08.05.2007, except to the extent mentioned in this order.

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(3) R-1 company, in addition to the status quo order dated 08.05.2007, shall not use the land bank that

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comes into existence, shall not raise any construction after relocation or for any purpose whatsoever pending disposal of the company petition.

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(4) The cost of the project shall be subject to the scrutiny of this Bench at the time of final hearing.

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(5) R-1 Company shall apprise the accounts of the project cost while setting up the project before this Bench on every fortnight to keep the transactions clean and transparent by supplying an advance copy to the petitioners.

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(6) The respondents shall not put the petitioners under obligation to provide any personal guarantee for obtaining the loan facility.

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(7) R-1 company shall abide by Section 293(1) of the Companies Act for getting the approval of the project.

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(8) The parties shall co-operate for the disposal of the main petition instead of filing application after application for one or other reason dragging the matter years together. If this Bench is of the opinion that any application is to be heard to decide the main petition, then such application will be heard along with main petition.”

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(2). The aggrieved appellants who are minority shareholders and are before the CLB in a petition under Sections 397, 398, 402 & 403 of the Companies Act, 1956 (in short, ‘the Act’) have preferred this appeal. (3). In the order under appeal, CLB has also expressed its anguish on the repeated adjournments sought by the parties who are apparently not keen to get the main case decided on merits. Taking notice of the fact that the parties are vicariously responsible for multiple litigation with no intent to argue the main case before the CLB, that this Court passed the following order on 02.05.2013:-

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“Let the respondent-Company file an

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affidavit detailing the steps it intends to take before 15.07.2013. They shall also undertake to argue the main case before the Company Law Board on the date fixed i.e. 15.07.2013 and no adjournment shall be sought in any circumstances.

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It is made clear that in the event of any request for adjournment, directly or indirectly, before the CLB, there shall be penal action against the parties. The question of interim direction in this appeal shall depend upon the contents of affidavit/undertaking to be filed by the respondents.

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List on 09.05.2013.”

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(4). In response thereto, the Managing Director & ViceChairman of the respondent-company has filed an affidavit dated 07.05.2013, paragraphs 3, 4 & 5 whereof are to the following effect:-

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“3. That pursuant to the order dated 06.02.2013 (28.03.2013) passed by the Ld. Company Law Board,

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New Delhi with regard to the expansion and modernation project of the Company, respondent No.1 company has taken several steps in procuring the much needed financial assistance for the expansion of the business and modernization of the plant and machinery of the respondent company. It is stated that the company has already initiated discussions with leading lending institutions including the Company’s main banker Canara Bank and based on the initial interest the company is already in the process of applying to them with formal proposals. After their assessment of the formal proposals; discussion & negotiations will take place and the terms and conditions of the loans will be finalized. Subsequently, the formal approvals along with the terms and conditions of the loans will be placed before the Board of Directors who will take decisions on the said proposals. The proposal would be placed on the record of the Ld.Company Law Board in case

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finalized before the final date of hearing i.e. 15.7.2013.

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4. That the Board of Directors of the respondent No.1 Company have already taken into consideration the requirements under Section 293(1) of the Companies Act, 1956 which is required to be complied with and in its meeting held on the 26^th of April, 2013 the Board has decided to call an Extraordinary General Meeting of its shareholders on the 31^st of May, 2013 on the matter.

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5. That the main matter in CP 49 of 2007 is listed before the Hon’ble Company Law Board on 15.07.2013 for final hearing. The respondent No.1 Company undertakes that they will proceed with the final hearing on 15.07.2013 and no adjournment will be taken on 15.07.2013 in the matter before Hon’ble Company Law Board. In case the counsel for the respondent Company is not available alternate arrangements would be made to argue the matter on the said date.”

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(5). Similarly one of the appellants has also placed his affidavit dated 06.05.2013 on record with the following averments:-

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“That the petition (CP No.49 of 2007) filed by the appellants under Sections 397 and 398 of the

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Companies Act, 1956 is pending before the learned Company Law Board and is fixed for final hearing on 15.07.2013. The deponent undertakes that the petitioners before the learned Company Law Board shall not seek any adjournment before the learned Company Law Board on 15.07.2013 and shall make every endeavour to ensure final disposal of CP No.49 of 2007.”

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(6). Since the final adjudication of the matter is the only effective modicum to put the controversy at rest and both the parties state on oath that they shall make necessary arrangements to argue the main case before the CLB on 15.07.2013, there is no necessity for this Court at this stage to go into the merits of the appeal except to request the CLB to take up the main petition for final disposal on the date fixed and if so required, to hear it on day to day basis.

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(7). Keeping in view the directions No.(2) to (7) issued by CLB in its order under appeal it does appear that during the interregnum, the interest of the appellants has been adequately safeguarded and nothing needs to be clarified except to say that if the respondents enter into any loan transaction which is detrimental to the interest of the Company or the appellants, they shall do so at their own risk and peril. Notwithstanding the permission granted by it vide order under appeal, the CLB shall issue appropriate directions while passing the final order in relation to any such transaction, if so required.

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(8). The CLB, however, shall not be influenced by the observations made in para 33 of it order while deciding the main petition. If the parties meanwhile move any application(s) before the CLB, the same need not be decided before taking up the main case. In other words, the CLB shall be well within its right to decide such application(s) along with the main petition.

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(9). Similarly, the apprehension expressed by the appellants that the observations made by the CLB in the interlocutory order will adversely affect their case are also misplaced as such like observations

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can have no bearing on the merits of the main petition.

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(10). With these observations, clarifications and directions, the appeal stands disposed of.

(11). Dasti .

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Gurlal Singh Grewal and Anr. v. M/S Upper India Steel Manufacturing & Engg. Co. Ltd. and Ors.

Case brief

What is this about?

What did the court decide?

Gurlal Singh Grewal and Anr. v. M/S Upper India Steel Manufacturing & Engg. Co. Ltd. and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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