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Ashok Agarwal & Others v/s Amar Ujala Publications Ltd. & Others

    C.A. No. 405 of 2011 in C.P. No 104 (ND) of 2009

    Decided On, 05 October 2012

    At, Company Law Board Principal Bench New Delhi

    By, THE HONOURABLE MR. D.R. DESHMUKH
    By, CHAIRMAN

    For the Petitioners: Anu Jain, Hitesh Sachar, Abhishek Singh, Advocates. For the Respondents: Vibhu Bakhru, Senior Advocate, Arun Kathpalia, P.R. Rajhans, Neeraj Kapoor, Advocates.



Judgment Text

D.R. Deshmukh, Chairman

1. This order governs C.A. No. 405 of 2011 filed by the petitioner under regulation 44 of the Company Law Board Regulations, 1991, read with Order 6, Rule 17 of the Code of Civil Procedure, 1908 read with section 151 of the Code of Civil Procedure, 1908, for amendment of Company Petition No. 104(ND) of 2009.

2. In sum and substance the voluminous amendment running into 64 pages introduces the historical background, the shareholding and participation of the petitioners in the company, the position of the petitioners on the board and certain subsequent events. It also gives details of the change in the shareholding pattern in the company. It prays for incorporation of the following interim reliefs in paragraph 22 :

"That the following paragraph be inserted after clause (viii) of the interim relief :

(ix) Reappointment of petitioner No. 2 as a whole-time director ; Restoration of power and functions of petitioner No. 1 ;

(x) Pending reappointment of petitioner No. 2 as a director of the company, the subsequent board meetings consequent upon his removal on September 25, 2010, be declared as null and void on the ground of lack of proper quorum."

3. I have considered the written submission filed by the parties and have perused the record. For the reasons given below, I am of the considered opinion that the amendment application deserves to be dismissed :

(i) By order dated August 24, 2009, it was held that the term of Mr.Ashok Agarwal as a director of the company not having expired the passing of a resolution for his removal as director of respondent No. 1 company would prima facie constitute an oppressive act. Therefore, the respondents were restrained from considering the resolution for the removal of Mr. Ashok Agarwal as a member of the board of the company in the annual general meeting scheduled to be held on September 25, 2010. The term of Mr. Ashok Agarwal as the whole-time director expired on October 17, 2011. By order dated October 13, 2011, I had declined to grant the prayer of the petitioner to maintain status quo on Mr. Ashok Agarwal's position as the whole-time director. I had also held that in a quasi partnership the principles of legitimate expectation cannot be invoked and the contractual appointment of Mr. Ashok Agarwal as the whole-time director must come to an end on October 17, 2011. I had further stated that Mr. Ashok Agarwal shall continue to be a director in respondent No. 1. This finds further support from the interim arrangement provided by the order dated April 9, 2012, by the High Court of Delhi in C.A. (SB). No. 3 of 2011 whereby Mr. Ashok Agarwal was to continue as director of the company till final hearing of the petition by the Company Law Board. The respondent-company and Maheshwari faction were directed to give all relevant notices, papers and documents to Mr. Ashok Agarwal in his capacity as a director. On July 3, 2012, a consensus was arrived between the parties that in addition to sending notice of board meeting/annual general meeting/extraordinary general meeting through speedpost, notice of the board meeting shall also be sent through e-mail to Mr. Ashok Agarwal, at least before the scheduled date and time of the meeting and in a situation requiring a board meeting to be convened urgently, at least 48 hours prior to the time and date of such meeting. Breach of such undertaking or direction contained in the order dated April 9, 2012, by the High Court of Delhi has not been reported till date. Thus, the position of Mr. Ashok Agrawal as the whole-time director of the company has come to an end and cannot be allowed to be reagitated by introducing an amendment to the petition.

As regards Mr. Manu Anand, it was held that his term as director had already expired and he would offer himself for reappointment as director on re-employment. It was, therefore, necessary that the shareholders in respondent No. 1 company should be left to exercise their control over the directorate in a democratic manner. Injunction to restrain the respondents from passing any resolution for removing Mr. Manu Anand as a director of the company was, therefore, not granted. An Appeal No. Co. A. (SB). 3 of 2011 was preferred by the petitioners before the High Court of Delhi. The said appeal was disposed of with an interim arrangement vide order dated April 9, 2012, whereby Mr. Ashok Agarwal was directed not to be removed as a director of the respondent-company till final hearing of the petition. Order declining to grant injunction as prayed for at Sl. Nos. 2 and 3 of the prayer clause mentioned in the order dated September 24, 2010, was not set aside. In view of this, the interim reliefs sought to be amended by the petitioners in paragraph 22 of the application for reappointment of Mr. Manu Anand as a whole-time director and restoration of power and functions of petitioner No. 1 Mr. Ashok Agarwal are de hors the order dated September 24, 2010 and October 13, 2011 and therefore, cannot be allowed to be incorporated as an amendment to the petition. The interim prayer for declaring the board meeting and the resolutions passed by the board in the meetings subsequent thereto as null and void can also not be allowed to be incorporated as being contrary to the order dated September 24, 2010 and October 13, 2011. Therefore, once the interim relief sought to be amended cannot be granted in view of the earlier order passed by me the incorporation of the factual basis for such relief also loses the necessity for its incorporation in the pleadings.

(ii) The petition was filed on November 28, 2009 and the facts mentioned in the application C.A. No. 405 of 2011 were in the knowledge of the petitioner from its very inception. There is no explanation for the delay in making the prayer for incorporating the facts mentioned in the amendment application in the petition.

(iii) The amendment is riddled with repetition of the averments in this petition as also in C.P. No. 126 of 2010 filed by petitioner No. 2. In view of the relief sought by the petitioner having been declined by the order dated September 24, 2010, the tenor of the order dated October 13, 2011 and April 20, 2010 and the interim arrangement provided by the order dated April 9, 2012, in Co. A. (SB). No. 3 of 2011 by the High Court of Delhi, no useful purpose would be served by permitting the historical background of the hierarchy of the company and the orders passed on the interlocutory applications to be incorporated by amendment for reagitating the grant of interim reliefs sought to be incorporated by the amendment.

(iv) The major chunk of the amendment sought to be introduced being already available in the petition are for all intent and purposes repetitive and thus not necessary to determine the real controversy.

(v) The proposed amendment relating to the affairs of respondent No.7 not being the subject-matter of the present petition and a separate C.P. No. 126 of 2010 having already been filed are not necessary.

(vi) The contention of the petitioner in the application at paragraph 4 that by the High Court order dated April 1, 2011, the amendment sought in the petition had been allowed is wholly misconceived as the order dated April 1, 2011, which is a consent order only permits the applicants to move an application for amendment of the company petition before the Com pany Law Board. Thus, the entire premise of the application for amend ment is incorrect.

(vii) So far as C.A. No. 385 of 2010 and C.A. No. 553 of 2011 filed by the petitioners are concerned on September 24, 2012, it was conceded by counsel for the petitioner that in view of the order dated April 9, 2012, passed by the High Court of Delhi in Co. A. (SB). Nos. 3 and 65 of 2011, C.A. No. 385 of 2010 does not survive for adjudication and in view of the continuance of the interim order dated April 18, 2012, C.A. No. 538 of 2011 also does not require adjudication.

(viii) By an order dated October 13, 2011, passed by me in C.A. No.490 of 2011 the contention of the petitioner that respondent No. 1 is in the nature of a quasi partnership has been rejected. By order dated April 20, 2010, in C.A. No. 191 of 2010 I have further declined to grant status quo to Mr. Manu Anand as a whole-time director of the company appeal against the said order was dismissed. These facts were mentioned in paragraph 6A of my order dated October 13, 2011. It is thus my considered opinion that the amendment seeking interim prayers on factual averments is contrary to the tenor of the interim orders passed by me and therefore ought not to be allowed.

(ix) The petitioners have relied upon the decision of the High Court of Delhi in Charanjit Khanna v. Khanna Paper Mills Ltd. (since reported in Company Appeal No. 9 (SB). of 2011, on April 20, 2011) (2011) 164 Comp Cas 315. However, in the present case the amendments seek to reagitate and nullify the effect of the interim orders passed by me which have stood the test of appeal. Moreover in Charanjit Khanna v. Khanna Paper Mills Ltd. (2011) 164 Comp Cas 315 (Delhi) certain new facts which were not within the knowledge of the petitioner were sought to be introduced. No such situation prevai

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ls here. The law laid down by the Supreme Court of India in Pankaja v. Yellappa [2004] 6 SCC 415, is well-settled. However, in the present case for the reasons given above, the discretion to allow the amendments on a judicious evaluation thereof does not deserve to be exercised. (x) The rule of amendment being essentially a rule of justice, equity and good conscience, considering the intention of the amendment sought being to scuttle the interim orders passed by this Board and to reagitate the issues therein, I am of the considered opinion that the prayer for amendment deserves to be rejected. (xi) As regards the amendment sought in paragraphs 8A to 11B and 49A, it does not satisfy the real controversy test between the parties and are otherwise also irrelevant to the controversy raised in the petition as originally filed. 4. In the result, application C.A. No. 405 of 2011 is dismissed. The matter is now listed on November 5, 2012 at 4 p.m. for further directions as to hearing the petition.
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