Case: Dr. Bais Surgical and Medical Institute Private Limited &amp; Others Vs. Dhananjay Pande &amp; Others

such protection shall be possible only if interim order is set aside.SUBMISSIONS OF APPELLANTS 11.Mr. Thakur placed reliance on citation namely(1) 2005 CL 123 Page 110, Sangramsinh P. Gaekwad and ors. vs. Shantadevi P. Gaekwad (Dead) thr. Lrs. and ors. (2) AIR (37) 1950 SC 172, Nanalal Zaver and another vs. The Bombay Life Assurance Col, Ltd. and others.Mr. Thakur has relied upon these Judgment in order to bring home his plea that the Petition by respondent No.1 before CLB was not bona fide action. And rather was vexatious. According to Mr. Thakur, action taken by Directors was for protecting the interest of Company, with best judgment they had. Their actions according to Mr.Thakur did neither amount to mis-management or prejudicing Companys interest nor did it have any semblance of oppression.According to Mr. Thakur it has already come on record that half of the net worth of the Company was eroded way back prior to 2002 and sales had come to stand still and Company was adding to losses by incurring trading losses.These facts also can be seen from CLBs Judgment dated 2-12-2004.According to Mr. Thakur, the Company was saved from difficulties due to additional investment done by Dr. Bais Group to repay Bank loans of one of the Bank and by bringing additional. funds from the respondent No.2 under the management agreement in the offing and that due to these actions future losses can be avoided and drastic action by Bank can also be prevented.12.Learned Advocate Mr. Bhangde on the other hand asserted and supported his clients plea as taken in the petition under section 397 and pleaded that it was a clear case of actions to undermine the holding and control of the respondent No.1.Mr. Bhangde disputed that the notice under section 17 of Securitization Act by SBI did really pose any threat. He did not very seriously dispute the eroded net worth of the Company, or the fact that the activity has restarted due to the help of the respondent No.2. Mr. Bhangde has also filed written notes of his submissions. All that he emphasis is that the order of CLB under appeal is of short lived transitional nature and passed awaiting hearing of said interlocutory application on merits. He, therefore, urged that C.L. Board was about to hear the question of interim relief and there were no grounds for entertaining the appeal.13.Questions to be decided in this appeal are as follows :(1) Does the order under appeal suffers from any legal or error of jurisdiction.(2) Is the order impugned unsustainable and call for interference(3) What order14.As it is seen what the Company was likely to get, in turn, of allotment of additional share capital to Dr. Bais Group is, in fact, acquisition of assets i.e. land and building in which the hospital is being run which is uptil now exclusively owned by Dr. Bais. The CLB has recorded that status quo in regard to property and shares is to be maintained as can be seen from the underlined portion of the order quoted hereinabove. The parties are common on the ground that the execution of the sale deed in favour of the Company is still not completed. There is no other property owned by the Company which is either to be alienated or any apprehension in regard thereto is capable of being expressed and noticed. The order impugned reveals that the act of the Company of increasing the share capital and its allotment is also complete and what is to be done if order impugned is to be obeyed to maintain status quo in that regard. According to the parties, there is no act of further increasing share capital or allotment of further shares in the offing. In this background, order of status quo as to the shares and property viewed from any angle is innocuous inasmuch as it does not serve the purpose of the respondent No.1 whatsoever, nor could it be said to be causing any prejudice to the appellants herein. The observation of the CLB that the management agreement sought to be entered into with respondent No.2 is not so far entered is simply recording of the statement of fact and not in the nature of recording of an undertaking. Even an injunction in that regard cannot be read to have been passed or in operate against the appellant.15.If the Court would like to examine as to what are the grounds and reasons which led the CLB to pass an order of interim arrangement. It is seen from whatever points urged before the CLB apart from what could be seen from the contents of the application under sections 397 and 398 of Company Act, the application for interim relief and other documents relating to earlier litigation, it would turn out to be an act of fishing expedition. However, in order to meet the apprehensions expressed, CLB seems to have passed impugned transitory arrangement.16.Ordinarily in a challenge of present nature where an order serving the nature of a short lived and almost ex parte and ad hoc arrangement, the challenge ought to be based on such grounds that the order could be seen to be such that by no stretch of interpretation of pleadings, such order could be wholly sustained. A challenge answering such an acid test does not crystallise from pleadings and submissions made on the part of the appellant. The appellants have, therefore, failed in making out a case for entertaining such appeal.17.In this fact background, it would amount to pre-judging of the issue if the present appeal is entertained and this Court enters into the arena by examining the illegality and proprierty of the order.18.Looking to the nature that no prejudice whatsoever is seen to have been caused to the appellants due to the impugned order to the parties, it would be proper to leave the parties to avail option of approaching the CLB and on completing their pleadings to move the CLB for disposal of the application for interim relief.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]14.As it is seen what the Company was likely to get, in turn, of allotment of additional share capital to Dr. Bais Group is, in fact, acquisition of assets i.e. land and building in which the hospital is being run which is uptil now exclusively owned by Dr. Bais. The CLB has recorded that status quo in regard to property and shares is to be maintained as can be seen from the underlined portion of the order quoted hereinabove. The parties are common on the ground that the execution of the sale deed in favour of the Company is still not completed. There is no other property owned by the Company which is either to be alienated or any apprehension in regard thereto is capable of being expressed and noticed. The order impugned reveals that the act of the Company of increasing the share capital and its allotment is also complete and what is to be done if order impugned is to be obeyed to maintain status quo in that regard. According to the parties, there is no act of further increasing share capital or allotment of further shares in the offing. In this background, order of status quo as to the shares and property viewed from any angle is innocuous inasmuch as it does not serve the purpose of the respondent No.1 whatsoever, nor could it be said to be causing any prejudice to the appellants herein. The observation of the CLB that the management agreement sought to be entered into with respondent No.2 is not so far entered is simply recording of the statement of fact and not in the nature of recording of an undertaking. Even an injunction in that regard cannot be read to have been passed or in operate against the appellant.15.If the Court would like to examine as to what are the grounds and reasons which led the CLB to pass an order of interim arrangement. It is seen from whatever points urged before the CLB apart from what could be seen from the contents of the application under sections 397 and 398 of Company Act, the application for interim relief and other documents relating to earlier litigation, it would turn out to be an act of fishing expedition. However, in order to meet the apprehensions expressed, CLB seems to have passed impugned transitory arrangement.16.Ordinarily in a challenge of present nature where an order serving the nature of a short lived and almost ex parte and ad hoc arrangement, the challenge ought to be based on such grounds that the order could be seen to be such that by no stretch of interpretation of pleadings, such order could be wholly sustained. A challenge answering such an acid test does not crystallise from pleadings and submissions made on the part of the appellant. The appellants have, therefore, failed in making out a case for entertaining such appeal.17.In this fact background, it would amount toof the issue if the present appeal is entertained and this Court enters into the arena by examining the illegality and proprierty of the order.18.Looking to the nature that no prejudice whatsoever is seen to have been caused to the appellants due to the impugned order to the parties, it would be proper to leave the parties to avail option of approaching the CLB and on completing their pleadings to move the CLB for disposal of the application for interim relief.