THE HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY COMPANY APPEAL No.9 of 2014 Dated: 16.07.2014 Between:
T. Vinayak Ravi Reddi and others .. Appellants and M/s. Deccan Chronicle Holdings Ltd. Having its Registered Office at 36, Sarojini Devi Road, Secunderabad-500003 and others.
.. Respondents Counsel for the appellants: Mr. C.V. Mohan Reddy for Mr. P. Vikram Counsel for Respondent No.2: Mr. S. Niranjan Reddy For Mr. P. Sri Harsha Reddy Counsel for Respondent No.3: Mr. V.S. Raju The Court made the following:
JUDGMENT:
This appeal is filed by the petitioners in CP/4/111/CB/2014 before the Company Law Board, Chennai Bench, at Chennai, feeling aggrieved by order dated 19.06.2014 of the Member, Company Law Board, Chennai Bench.
I have heard Mr. C.V. Mohan Reddy, learned Senior Counsel for the appellants, Mr. S. Niranjan Reddy, learned counsel appearing for respondent No.2, the only contesting respondent, and Mr. V. S. Raju, learned counsel for respondent No.3.
The appellants have filed Company Petition No.4/111/CB/2014 before the Company Law Board, Chennai Bench, under Sections 58 and 59 of the Companies Act, 1956, read with Regulation 44 of the Company Law Board Regulations, 1991, for multiple reliefs which read as under:
a) Direct Respondent No.1 Company, through its Board of Directors, to refrain from registering the transfer of alleged 1,80,00,000 equity shares of Rs.2/- each (40,00,000 equity shares of Rs.2/- each, Petitioner No.1, 40,00,000 equity shares of Rs.2/- each, Petitioner No.2, 1,00,00,000 shares of Rs.2/- each, Petitioner No.3) in the name of ICICI Bank Ltd., Respondent No.2 herein;
b) Direct the Respondent No.1 Company, through its Board of Directors to continue maintaining the name of the Petitioners herein in the register and record as the shareholders of 1,80,00,000 equity shares of Rs.2/- each (40,00,000 equity shares of Rs.2/- each, Petitioner No.1, 40,00,000 equity shares of Rs.2/- each, Petitioner No.2, 1,00,00,000 shares of Rs.2/- each, Petitioner No.3);
c) Direct the Respondent No.1 Company, through its Board of Directors to refrain from issuing any fresh/new share certificates for 1,80,00,000 equity shares of Rs.2/- each (40,00,000 equity shares of Rs.2/- each, Petitioner No.1, 40,00,000 equity shares of Rs.2/- each, Petitioner No.2, 1,00,00,000 shares of Rs.2/- each, Petitioner No.3) in favour of Respondent No.2 till the adjudication of present Company Petition;
d) Direct the Respondent No.1 Company, through its Board of Directors to continue the payment of dividends and bonus to the Petitioners herein quo 1,80,00,000 equity shares of Rs.2/- each (40,00,000 equity shares of Rs.2/- each, Petitioner No.1, 40,00,000 equity shares of Rs.2/- each, Petitioner No.2, 1,00,00,000/- shares of Rs.2/- each, Petitioner No.3);
e) Direct the Respondent Nos.2 and 3 herein from selling, alienating and transferring and creating any third party rights upon these 1,80,00,000 equity shares of Rs.2/- each (40,00,000 equity shares of Rs.2/- each, Petitioner No.1, 40,00,000 equity shares of Rs.2/- each, Petitioner No.2, 1,00,00,000 shares of Rs.2/- each, Petitioner No.3) till the adjudication of the present Company Petition.
f) Direct the Respondent No.1 Company to suspend and cancel voting rights in respect to 1,80,00,000 equity shares of Rs.2/- each (40,00,000 equity shares of Rs.2/- each, Petitioner No.1, 40,00,000 equity shares of Rs.2/- each, Petitioner No.2, 1,00,00,000 shares of Rs.2/- each, Petitioner No.3).”
On 10.04.2014, the Company Law Board considered passing an interim order in the presence of the counsel for respondents 1 and 2 and passed an order, which reads as under:
“Shri TK Seshadri, learned senior counsel appeared for the respondent No.2 requested the Bench to grant short time to file counter to the interim reliefs. He submitted that prima facie the petition is not maintainable and no interim reliefs should be granted. The senior counsel appeared for the petitioners contended that the respondents got transferred the shares of the petitioners and the said transfer was on the basis of pledge. On the other hand the learned senior counsel for the respondents submitted that the respondents have issued notice to the petitioners regarding invocation of pledge. The petitioners have knowledge of the said invocation. Heard the learned counsel appeared for the parties. The issue of maintainability is left open. Pending consideration of all the issues I hereby direct the respondents 2 & 3 to maintain status quo in respect of 1,80,00,000 equity shares of R1 Company until 24.04.2014. The matter is posted on 23.04.2014 at 10.30 AM.”
By the order impugned in this appeal, the Company Law Board has vacated the aforesaid order. It (the impugned order) reads as under:
“Interim order of this Bench dated 10.04.2014 stands vacated. The Bench will pass orders in the application on merits.”
Mr. C. V. Mohan Reddy, learned Senior Counsel appearing for the appellants, laments and justifiably so in my opinion that the Company Law Board has failed to follow the basic principle of giving reasons for vacating the interim order.
Mr. S. Niranjan Reddy, learned counsel for respondent No.2, fairly agreed with the submission of the learned Senior Counsel that the Company Law Board ought to have given reasons in order to support its decision to vacate the interim order.
When a Court or a quasi judicial body passes orders, which are likely to affect the rights of the parties, they are bound to assign reasons in support of such orders. This basic tenet of jurisprudence is not kept in mind by the Member of the Company Law Board while vacating the interim order. This Court is unable to desist from expressing its extreme unhappiness at the approach of the Member of the Company Law Board in passing the impugned order vacating the interim order without the aid and support of reasons. The functioning of the Member has come to the adverse notice of this Court in more than one case. It is time that the Government of India, Ministry of Corporate Affairs, and also the Hon’ble Chairman of the Company Law Board bestow their attention to the functioning of the Bench of the Company Law Board at Chennai.
As the impugned order is bereft of any reasons, the same is set aside on this short ground, without adjudicating on the merits of the case. The Company Law Board, Chennai Bench, is directed to pass a speaking order, after hearing all the parties to the company petition, within one month from the date of receipt of this order.
Subject to the above direction, the company appeal is allowed.
As a sequel to disposal of the company appeal, Company Application Nos.794, 795, 796 and 797 of 2014 shall stand disposed of as infructuous.
16th July, 2014 C.V.NAGARJUNA REDDY, J Note:-
1) Copies be communicated to the Ministry of Corporate Affairs, Government of India, and the Hon’ble Chairman, Company Law Board, New Delhi.
2) Issue C.C. by 21.07.2014.
B/o IBL