1 IN THE HIGH COURT OF BOMBAY AT GOA COMPANY APPEAL NO. 1 OF 2009 Blue Coast Hotels and Resorts Ltd. ... Appellant versus Morgan Ventures Ltd. and others. ... Respondents Mr. S. G. Desai, Senior Advocate with Mr. Rahul Srivastava, P.Talaulikar and Ms. S. Rodrigues, Advocates for the Appellant. Mr. A. N. S. Nadkarni, Senior Advocate with Mr. Shukla, Mr. M. S. Sonak, Mr. P. Rao and Mr. H. D. Naik, Advocates for Respondent No..1. CORAM : N. A. BRITTO, J. DATE : 14TH JANUARY, 2009. P.C.:- Challenge in this appeal is to the interim Order dated 18-12-2008 of the learned CLB-Company Law Board, Mumbai. 2. Heard the learned Senior Counsel on behalf of both the parties. The Appellant-Company at its extraordinary meeting held on 18-8-2008 issued certain shares in favour of Respondent Nos.2 and 3, whose names have since 2 been deleted, inspite of the objection taken by the Respondent who is one of the share-holders of the said company. 3. By a petition dated 8-1-2008 purported to have been filed under Section 111A of the Companies Act, 1956 the Respondent challenged the said allotment of the shares as null and void and further prayed that the register of members be rectified so as to reflect the shareholding pattern existing prior to the said allotment. In fact, 7,50,000 equity shares were allotted to Respondent No.2 and 11,62,162 equity shares were allotted to Respondent No.3. The interim Order, impugned in this appeal, has been passed in terms of prayer clause (c) of para (viii) of the said petition and which now prohibits the Appellant-Company from altering its shareholding patterns and/or increasing or decreasing its share capital. 4. A number of points have been canvassed by Mr. Desai, learned Senior Counsel on behalf of the Appellant-Company. Mr. Desai has submitted that the impugned Order is not a speaking order in that it gives no reasons in support thereof and as such deserves to be set aside. Learned Senior Counsel next submits that the Appellant-Company had raised a preliminary point of the maintainability of the petition and as such without considering that said aspect the learned CLB could not have passed the impugned Order. It is further submitted by Mr. Desai, learned Senior Counsel, that the impugned Order is beyond the scope of sub-section(3) of Section 111A of the Act and all that the CLB could 3 have done in terms thereof is to suspend the voting rights before making or completing the inquiry. 5. On the other hand, Mr. A. N. S. Nadkarni, learned Senior Counsel on behalf of Respondent No.1has vehemently contended that the impugned Order is an ad interim Order and the learned CLB has fixed the hearing of the petition on 16th instant when all points can be raised before it and the impugned Order can be accordingly modified and set aside. Learned Senior Counsel on behalf of Respondent has further submitted that a working order could also be passed in this appeal as it was passed in Company Appeal No. 3 of 2008(Morgan Ventures Limited v. Blue Coast Hotels and Resorts Limited and ors.) and the learned CLB could be directed to dispose of the matter expeditiously. Mr. Nadkarni, learned Senior Counsel has referred to the provisions of Section 111 of the Act to contend that the petition was maintainable before the learned CLB. Both the learned Senior Counsel have placed reliance on various decisions. 6. In view of the short Order which I propose to pass, it is not necessary for me to go in detail into the merits of the respective cases since the merits of the case are required to be gone into, at the first instance, by the learned CLB but three things emerge very clearly in this appeal. I am unable to accept the Respondent's contention that the impugned Order is an ad interim Order. Admittedly, it was passed after extensive hearing given to both the parties and the order itself reflects that it is an interim Order and being so, it was necessary for the 4 learned CLB to have given some reasons, however brief, in support of the same. Moreover, it was also necessary for the learned CLB to have prima facie concluded that the petition was maintainable once the point of non maintainability of the petition filed was taken up on behalf of the Respondent. As regards the second aspect, reasons in support of a quasi judicial or judicial order are said to be its very heart beats without which it becomes lifeless. The Apex Court in Notified Area Committee v. Additional Director, Consolidation and others((2002) 10 SCC 87), has stated that “time and again this Court has pointed out that reasons are the flesh and blood of judicial adjudication and such reasons must be shown in the orders which are liable to be challenged in the superior Court”. The Hon'ble Supreme Court therefore proceeded to set aside the impugned Order and remand the matter back for disposal afresh in accordance with law. On the same aspect, this Court in Criminal Writ Petition No.44 of 2004 by Order dated 27-8-2004 stated thus:- “Reasons are the links between the materials on which certain conclusions are based and actual conclusions. They disclose how the mind is applied to a subject matter for a decision. They should reveal a rational nexus between the facts considered and the conclusions reached”. 7. On the third aspect, the Apex Court, has again, very clearly stated that once the plea of non maintainability of the order was taken up, the 5 Tribunal was required to dispose of the issue of maintainability first, before passing any further order and this is what has been held by the Apex Court in Securities & Exchange Board of India v. Mangalore Stock Exchange ((2005) 10 SCC 274). 8. In fact, it is difficult even to fathom as to why the impugned Order was made by imposing a blanket ban against the Appellant-Company from issuing any shares when such a relief was not ancillary or incidental to the main reliefs sought in the petition. 9. On both the counts enumerated herein above, the appeal deserves to succeed, and with costs. The impugned Order is therefore hereby set aside. Costs of this appeal are fixed at Rs.10,000/- to be paid by the Respondent. N. A. BRITTO, J. RD