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

2.The background of the case, in brief, can be seen from page 91 of Paper Book, is that the dispute pertains to share holding, the control and management of the Company who is appellant No.1 as was pleaded in the earlier litigation, respondent No.1 claimed to have been holding 49% shares, while other group referred as Dr. Bais Group claimed 51% shares. In the earlier round before it, the CLB found that respondent No.1 herein was shown to have applied for shares and paid a sum of Rs.14,95,998/as share application money and was also appointed as Director of the Company and then as Managing Director, and the CLB in its order datedin said Company Petition inter alia passed an order directing allotment of shares to the respondent No.1 herein.3.The appellant claimed that in a special general meeting of the Company, for which notice was issued onauthorised share capital of the Company was increased and for enabling the Company to be in a position to acquire land and the building in which the Hospital has been housed, additional share capital of 6 lacs shares having face value of Rs.6 crores was allotted to Dr. Bais Group, while shares as ordered by the CLB were allotted to the respondent No.1 without prejudice to his rights and subject to decision of Company Appeal No.7 of 2004 filed by Dr.Bais Group and the Company against the CLBs Judgment and order datedto the Company, the information in Form 5 and Form No.23 was duly and punctually furnished to the Registrar Companies, Maharashtra at Mumbai, relating to increase in share capital and issue of additional share capital etc.4.The subject Company Petition in which the impugned interlocutory order has been passed is filed by the present respondent No.1 representing mainly that the increase in authorised capital and consequent issue of additional share capital has been done on illegal foundation, by disputing illegality of the meeting etc. in which said business was transacted. It is alleged that all these actions have been taken in order to circumvent the Judgment of the CLB delivered onwhich is also violative of the memorandum of understanding reached between the two groups, that this has been done in order to undermine the holding and voting power of the present respondent No.1. According to the respondent No.1, the agreement sought to be entered into by the appellant Company with the respondent No.2 amounted to an act gravely prejudicial to the interest of the Company and prejudicial to the interest of the respondent No.1, herein and amounts to an act of mismanagement and of oppression of the respondent No.1 and therefore, respondent No.1 was entitled to maintain the petition under sections 397 and 398 of Companies Act read with section 402 thereof.5.It is seen that at the first hearing, the matter was moved with a short notice, and was taken up for passing urgent orders till the parties file their pleadings etc., and CLB passed an order to operate during the intervening period.6.It is this order datedwhich is challenged in this appeal.

Court's reasoning:
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.