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(REPORTABLE)

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8275 OF 2015

[ARISING OUT OF S.L.P. (C) NO. 12831 OF 2015]

PURNIMA MANTHENA AND ANOTHER …..APPELLANTS

VERSUS

DR. RENUKA DATLA & OTHERS …..RESPONDENTS

WITH

CIVIL APPEAL NO. 8276 OF 2015

[ARISING OUT OF S.L.P. (C) NO. 12835 OF 2015

MAHIMA DATLA …..APPELLANT

VERSUS

DR. RENUKA DATLA & OTHERS …..RESPONDENTS

WITH

CIVIL APPEAL NO. 8277 OF 2015

[ARISING OUT OF S.L.P. (C) NO. 20338 OF 2015

G.V. RAO …..APPELLANT

VERSUS

DR. RENUKA DATLA & OTHERS …..RESPONDENTS

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JUDGMENT

AMITAVA ROY,J.

Leave granted.

2. The steeled stand off encased in the decision

impugned, projects the members of a family, daughters

against their mother in particular, in a combative formation

in their bid to wrest the reins of a company, Biological E.

Limited (for short, hereinafter to be referred to as “the

company”) engaged in the business of pharmaceutical

products and vaccines. The differences that had surfaced

soon after the demise of Dr. Vijay Kumar Datla, the

predecessor-in-interest of the contending family members,

who at his death, was the Managing Director of the company,

have grown in acrimonious content with time, stoked by the

intervening events accompanied by a host of litigation. The

present appeals stem from the judgment and order dated

15.4.2015 rendered by the High Court of Judicature at

Hyderabad, for the State of Telangana and State of Andhra

Pradesh, in Company Appeal No. 17 of 2014 preferred by the

respondent Nos. 1, 2 and 3 herein, under Section 10F of the

Companies Act, 1956 (for short hereinafter to be referred to

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as “the Act”) assailing the order dated 6.8.2014 passed by

the Company Law Board, Chennai Bench (for short,

hereinafter to be referred to as “CLB”) in Company Petition

No. 36 of 2014 filed by them.

3. While entertaining the instant appeals, this Court

by order dated 12.5.2015, having regard to the

considerations referred to therein and as accepted by the

learned counsel for the parties, did make an endeavour to

effect an amicable settlement through mediation which,

however, did not fructify. The learned counsel for the

parties, as is recorded in the order dated 21.7.2015, on

instructions, vouched that the day-to-day functioning of the

company, however would be allowed to continue. The

appeals, in this backdrop have, thus, been analogously heard

on merits for disposal.

4. We have heard Mr. P.S. Raman, learned senior

counsel for the appellants in Civil Appeal arising out of

S.L.P. (C) No. 12831 of 2015 (who are also respondent Nos.

4 & 5 in SLP (C) No. 12835 of 2015 and 5 & 6 in SLP (C) No.

20338 of 2015), Mr. Shyam Divan, learned senior counsel

for the appellant in Civil Appeal arising out of S.L.P. (C) No.

12835 of 2015 (who is also respondent No. 5 and 4 in SLP

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(C) No. 12831 of 2015 and SLP (C) No. 20338 of 2015

respectively), Mr. P.P. Rao, learned senior counsel for the

appellant in Civil Appeal arising out of S.L.P. (C) No. 20338

of 2015 (who is also respondent No. 6 in S.L.P. (C) Nos.

12831 of 2015 and 12835 of 2015) and M/s. Parag P.

Tripathi and Sajan Poovaiah, learned senior counsel for Dr.

Renuka Datla ( respondent No. 1 in all the three Appeals).

5. Since the judgment under challenge is same in all

the appeals, for the sake of convenience, the facts are

being taken from Civil Appeal arising out of S.L.P. (C) No.

12835 of 2015.

6. A skeletal account of the facts in the bare

minimum, as available presently on the record, would

outline the contours of the respective assertions.

7. The company, which was initially promoted by the

father of respondent No. 1, with time took in its fold, Mr.

Venkata Krishnam Raju Datla, the father of Dr. Vijay Kumar

Datla (since deceased and husband of respondent No.1).

After the demise of the father of respondent No. 1, Dr. Vijay

Kumar Datla, who was inducted as the Chairman and

Managing Director of the company on 1.5.1972 stewarded,

nurtured and nourished it from strength to strength. The

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respondent No. 1, his wife, joined him initially as a Medical

Director, as she is a qualified medical professional and

w.e.f. 29.8.1991, was drafted in as the Executive Director of

the company. Dr. Vijay Kumar Datla, who continued as the

Chairman-cum-Managing Director of the company over the

years, expired on 20.3.2013 and at his death, he,

respondent No. 1 and Mr. G.V. Rao (respondent No. 6) did

constitute the Board of Directors of the company. Noticeably

Dr. Vijay Kumar Datla, in his individual capacity, then did

hold 81% of the shares thereof.

8 As the facts evince, Mr. G.V. Rao (respondent No. 6)

offered his resignation as a director vide his letter dated

6.4.2013 with immediate effect. It has been pleaded,

however, on behalf of the appellant that Mr. G.V. Rao

(respondent No. 6), on being requested by the family not to

abandon the company at its hour of crisis, its guardian and

mentor Dr. Vijay Kumar Datla having departed, did

reconsider his decision and addressed another letter dated

9.4.2013 to the Board of Directors expressing his inclination

to continue as the Director of the Board, intimating as well

that thereby he was withdrawing his resignation letter dated

6.4.2013.

Page 6 6

9. On the same day i.e. 9.4.2013, a meeting of the

Board of Directors was convened by Mr. G.V. Rao, in the

capacity of a Director of the company, which was attended

amongst others, by the three daughters of the respondent

No.1 i.e. Ms. Purnima Manthena (respondent No. 4), Ms.

Indira Pusapati (respondent no. 5) and Ms. Mahima Datla

(appellant). The respondent No. 1 did not attend the

meeting and as the minutes of the proceedings would record,

leave of absence was granted to her. In the same meeting,

Mrs. Indira Pusapati (respondent No. 5) was inducted as the

Director of the company to fill up the casual vacancy caused

by the death of Dr. Vijay Kumar Datla. Mr. G.V Rao

(respondent No. 6), was authorised, inter alia, to verify all

acts and deeds as would be necessary, expedient and

desirable to give effect to the resolutions adopted.

10 Thereafter, on 10.4.2013 and 11.4.2013 as well,

meetings of the Board of Directors of the company were held.

In these meetings also, respondent No. 1 did not attend and

leave of absence was granted. In the meeting dated

10.4.2013, along with two directors namely; Mr. G.V. Rao

(respondent No. 6) and Ms. Indira Pusapati (respondent No.

5), Mrs. Purnima Manthena (respondent No. 4) and Ms.

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Mahima Datla (appellant), amongst others, were present.

The meeting took note of a will dated 14.2.2005, said to be

executed by Dr. Vijay Kumar Datla in favour of Ms. Mahima

Datla (appellant) and resolved to transmit the equity shares

held by him and as referred to in the aforesaid will, in favour

of Ms. Mahima Datla (appellant). In the same meeting, it

was further resolved to appoint Ms. Mahima Datla (appellant)

and Ms. Purnima Manthena (respondent No. 4) as the

Additional Directors of the company, to hold the said office

up to the conclusion of next annual general meeting. Mr.

G.V. Rao (respondent No. 6), Director of the company was

authorised to verify all acts, deeds as would be necessary,

expedient and desirable to give effect to the resolutions

adopted.

11 In its next meeting held on 11.4.2013, in which

respondent No. 1 was absent and leave of absence was

granted to her, Ms. Mahima Datla (appellant) was appointed

as the Managing Director of the company for a period of

three years w.e.f. 11.4.2013. It was resolved as well to

request the Chairman to advise respondent No. 1 to officially

communicate the appointment of Ms. Mahima Datla

(appellant) as Managing Director of the company.

Page 8 8

12. Though the pleaded assertion of respondent No. 1 is

that she was neither noticed nor informed of the meetings

held on 9.4.2013, 10.4.2013 and 11.4.2013 and that the

proceedings thereof were a nullity, as the meeting dated

9.4.2013 could not have been validly convened by Mr. G.V.

Rao (respondent No. 6), who had, prior thereto, resigned from

the company and further that the meeting dated 9.4.2013

was sans the prescribed quorum, the progression of events

attest that on 15.4.2013, a letter had been addressed by her

(respondent No. 1) to the constituent fraternity of the

company, conveying the news of appointment of her

daughters i.e. Mrs. Purnima Manthena (respondent No. 4),

Mrs. Indira Pusapati (respondent No. 5) and Ms. Mahima

Datla (appellant) as the Directors of the Board thereof, with

particular reference to the appointment of Ms. Mahima Datla

(appellant) as the Managing Director, thereby seeking the

“blessings and guidance” of all concerned for enabling her to

discharge her new responsibility. Respondent No. 1,

however, at a later point of time, did allege exertion of

pressure and undue influence by the other Directors to

which she wilted, being in an anguished and forsaken state

of mind, still mourning the sudden demise of her husband,

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Dr. Vijay Kumar Datla.

13. While the matter rested at that, the respondent No.

1, Mrs. Purnima Manthena (respondent No. 4), Mrs. Indira

Pusapati (respondent No. 5) and Ms. Mahima Datla

(appellant) addressed a letter dated 24.5.2013 to the Board

of Directors conveying the decision of the members of the

HUF on consensus to divide 4594 shares thereof (HUF) held

by Dr. Vijay Kumar Datla, in equal shares. They also

appended to the letter, a Memorandum Of Undertaking to

this effect and requested the company to effect transmission

of shares in their favour, on the said basis.

14. Incidentally on the same day i.e. 24.5.2013, a

meeting of the Board of Directors was convened in which,

as respondent No. 1 was absent, leave of absence was

granted to her. In the said meeting, amongst other, taking

note of the Memorandum Of Understanding referred to in

the aforementioned letter dated 24.5.2013 signed by the

respondent No. 1 and Mrs. Purnima Manthena (respondent

No. 4), Mrs. Indira Pusapati (respondent No. 5) and Ms.

Mahima Datla (appellant), 4594 equity shares held by Dr.

Vijay Kumar Datla (HUF) were transmitted in their favour

in equal shares.

Page 10 10

15. A meeting of the Board of Directors was thereafter

convened on 22.8.2013 of which a notice was served on the

respondent No. 1. She did attend the meeting albeit with

reservations, whereafter through a host of letters, addressed

to the Board of Directors, she highlighted her objections,

inter alia, to the validity of the meetings held on 9.4.2013,

10.4.2013 and 11.4.2013 in particular and the resolutions

adopted therein.

16. On the receipt of notice of the Annual General

Meeting of the company, which was scheduled to be held on

28.11.2013, respondent No. 1 filed an application under

Section 409 of the Act before the CLB, which was registered

as Company Petition No. 1 of 2013, seeking principally a

declaration that the appointments of her three daughters

namely; Ms. Purnima Manthena (respondent No. 4), Mrs.

Indira Pusapati (respondent No. 5) and Ms. Mahima Datla

(appellant) as Directors of the company by virtue of the

meetings held on 9.4.2013, 10.4.2013 and 11.4.2013 to be a

nullity. While seeking a further declaration that Mr. G.V.

Rao (respondent No. 6) having resigned from the Board of

Directors of the company on 6.4.2013 with immediate effect,

he was neither entitled to continue as the Director nor did he

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have any authority to convene the aforesaid meetings and

transact the business therein, she also prayed that all acts,

deeds and decisions taken in and pursuant to the resolutions

in the said meetings be adjudged to be void and not binding

on the company. Apart from seeking a permanent

injunction restraining her three daughters namely; Ms.

Purnima Manthena (respondent No. 4), Ms. Indira Pusapati

(respondent No. 5), Ms. Mahima Datla (appellant) and Mr.

G.V. Rao (respondent No. 6) from functioning as Directors of

the company, by way of interim relief, she prayed for a

restraint on the ensuing Annual General Meeting fixed on

28.11.2013 and to appoint two ad hoc Directors for

administering the day-to-day affairs of the company along

with her.

17. By its ruling dated 17.12.2013, the CLB, after

considering the rival pleadings and the documents laid before

it, observed on a prima facie evaluation of the facts

portrayed, that the respondent No. 1 had recognised her

three daughters Ms. Purnima Manthena (respondent No. 4),

Mrs. Indira Pusapati (respondent No. 5) as the Directors and

Ms. Mahima Datla (appellant) to be the Managing Director of

the company. It was of the view that, though she received

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the letter of withdrawal of resignation of Mr G.V. Rao-

respondent No. 6, she had not responded thereto either

accepting or rejecting the same. On an appraisal of the

pleaded facts and the documents on record, the CLB

returned a finding that there was neither any change in the

Board of Directors nor in the management of the company

nor there was any likelihood of change in the ownership of

the company nor any likelihood of the new management

taking over the company nor any change in the shareholding

pattern of the company and concluded in the context of

Section 409 of the Act that respondent No. 1 had not made

out any ground for grant of any interim relief, as prayed.

Noting the assertion of the respondents therein that the

company had the necessary reserves to meets its debts and

that Mahima Datla (appellant herein) had stood as a

guarantor for the loans obtained from the banks, the CLB

was, thus, of the view that the apprehension of the

respondent No. 1, as expressed, was not substantiated by

any documentary evidence. Having recorded that the

respondent No. 1 was continuing as the Executive Director

of the company and that Mahima Datla (appellant herein)

being associated with its affairs was well acquainted

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therewith and that in the proposed Annual General Meeting

to be held on 18.12.2013 (which got deferred to this date

from 28.11.2013), the company was going to transact the

business, as notified, which did not disclose any proposed

change in the management or the ownership or taking over

by external agency, the CLB declined to grant stay of the said

meeting. This was more so, in view of the statutory mandate

qua Annual General Meeting of a company under the Act.

The respondent No. 1 was left at liberty to participate in the

said Annual General Meeting and the company was

permitted to conduct the same and take resolutions as per

the notice. The resolutions to be passed in the Annual

General Meeting were, however, made subject to the outcome

of the Company Petition No.1 of 2013.

18. Though the respondent No.1, being aggrieved by

this order, did prefer an appeal under Section 10F of the Act

being Company Appeal No. 1 of 2014, she participated in the

Annual General Meeting held on 18.12.2013 in which,

resolutions on the appointment of the appellants as

Directors/Managing Director and amongst others, the

enhanced remuneration of respondent No. 1 were adopted.

Eventually on 24.2.2014, the appeal stood disposed of as

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infructuous on the concurrence of the parties to join for the

necessary endeavours for early disposal of the Company

Petition No. 1 of 2013.

19 Close on the heels of the disposal of aforesaid

Company Appeal No. 1 of 2014, the respondent No. 1

instituted a suit being O.S. No. 184 of 2014 in the Court of

Chief Judge, City Civil Court, Hyderabad substantially

traversing the above facts and seeking a decree for a

declaration to be the absolute owner of the shares of the

company as enumerated in Schedule A to the plaint, on the

strength of a will claimed to have been executed in her

favour by Dr. Vijay Kumar Datla (since deceased) and a

direction to the defendants therein to transfer the same by

recording her name in relation thereto and to hand over the

possession of the share certificates to her. Her alternative

prayer, without prejudice to this relief, was for delineating

her extent of claim to the shares in the capacity of a working

spouse/widow of late Dr. Vijay Kumar Datla.

20 As the flow of the developments thereafter would

demonstrate, the respondent No. 1 withdrew the Company

Petition No. 1 of 2013 in July, 2014 with a liberty to

approach the appropriate forum for appropriate reliefs in a

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manner known to law. The Company Petition No.1 of 2013,

was, accordingly closed.

21 The respondent No. 1, in her renewed pursuit for

redressal of her grievances as perceived by her, next

instituted another petition before the CLB, which was

registered as Company Petition No. 36 of 2014 under

Sections 111A, 237, 397,398,402,403,404,406 of the Act,

1956 and Sections 58 and 59 of the Companies Act, 2013.

As the pleaded assertions made therein would attest, those

were in substantial reiteration of the facts narrated

hereinabove, with the added imputation that the respondents

therein were contemplating to transfer and consign the

undertakings of the company to other companies

incorporated and managed by the appellant herein and other

Directors so as to enable them, to dispose of the said assets

through their companies and appropriate the proceeds to

their benefits to the irreparable loss and detriment to the

company i.e. Biological E. Limited and its genuine

shareholders. She, however admitted, that the concerned

Directors in the meanwhile, had filed a scheme of

arrangement under Sections 391 to 394 of the Act before

the High Court of Andhra Pradesh for demerger of the

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undertakings of the company as listed out in the said

petition. A copy of the scheme of arrangement was also

appended to the petition alleging over all mis-management

and oppression by the Directors therein in particular,

consciously driving the company and its shareholders to a

state of ruination chiefly through the process of demerger.

The respondent No.1 prayed for a declaration of the acts of

the said Directors to be oppressive and prejudicial to the

interest of the company and to appoint an administrator

and/or Special Officer to manage the affairs thereof by

superseding the existing Board of Directors. In the

alternative, she also prayed for constitution of a committee

comprising of her representative to function as the

administrator and/or Special Officer for the management and

control of its affairs. She reiterated her prayer for (i)

declaring the Board meetings held on 9.4.2013, 10.4.2013

and 11.4.2013 as void ab-initio, (ii) removal of the appellant

herein and the other Directors from the office of the Directors

of the company and (iii) adjudging the transmission of

400951 equity shares held by Dr. Vijay Kumar Datla (since

deceased) to the appellant (Ms. Mahima Datla) as illegal, null

and void. A declaration to adjudge the resolutions passed in

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the Board meetings held on or after 20.03.2013 and also the

Annual General Meeting held on 18.12.2013 as non est was

also sought for. By way of interim relief, she prayed for

supersession of the Board of Directors and appointment of

interim administrator and/or Special Officer to assume the

charge of the affairs of the company and in the alternative,

prayed for constitution of a committee comprising of her

representative to discharge the said role.

22 The petition was taken up on 6.8.2014, on being

mentioned. In course of the arguments, though the

contesting respondents could not file their pleadings,

understandably it being the date of first hearing, the primary

facts, as adverted to hereinabove, having a bearing on the

dissensions were addressed and the CLB, after taking note

of the fact that the meeting of the company for considering

the scheme of demerger was scheduled to be held on

7.8.2014, as directed by the High Court, construed it to be

inexpedient to intervene in that regard. It observed as well,

that meanwhile a suit had been filed by the respondent

No.1 on the basis of a will said to have been executed in her

favour and that the same was pending adjudication and

concluded that it would not be appropriate to restrain the

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appellant (Ms. Mahima Datla) from exercising her voting

right in respect of 400961 equity shares. Noticeably, in

course of the submissions, it was pleaded on behalf of the

respondent No. 1 that the suit would be withdrawn. Qua

the alienation of immovable properties of the company, the

CLB recorded the submission on behalf of the respondents

therein that there was no intention to do so vis-a-vis the

movable and immovable properties of the company except

that may arise under the scheme of demerger. In response

to the submissions made on behalf of the respondent No. 1

that she ought not to be removed from the post of Executive

Director, it was submitted on behalf of the respondents

therein that no step would be taken to dislodge her without

the leave of the CLB. Taking note of these

submissions/undertakings, the CLB ruled that the

respondent No. 1 had not been able to make out any case for

grant of interim relief “at the time of mentioning of the

Company Petition” and permitted the respondents therein to

file their counter within a period of six weeks and fixed

9.10.2014 to be the next date.

23. The respondent No. 1 herein, being aggrieved,

preferred an appeal being Company Appeal No. 17 of 2014

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which has since been allowed by the judgment and order

dated 15.4.2015 impugned in the instant batch of appeals.

24 The High Court, as the decision assailed would

reveal, traversed the entire gamut of the facts involved as

available from the company petition and the documents

appended thereto and recorded its findings on all the

aspects of the discord and eventually granted the following

reliefs.

“1. An ad hoc Board of Directors constituted with

appellant No. 1 as the Executive Director and

respondent Nos. 2 to 4 as the Directors of

respondent No. 1-company. Appellant No. 1 shall

discharge the functions of the Managing Director of

the company.

2.The ad hoc Board is responsible for the day-to-

day functioning of the company and shall carry out

the statutory obligations under the Act.

3.All the decisions shall be taken by the Board

based on unanimity and consensus. If consensus

on any aspect relating to the day-to-day affairs of

the company is eluded among the Board members,

appellant No. 1, as the Managing Director, shall

approach the Company Law Board for appropriate

directions.

4.The Board shall not transfer or deal with 81%

shares held by late Dr. Vijay Kumar Datla in any

manner till the dispute on the issue of succession

is adjudicated in O.S. No. 184 of 2014.

5.The Board shall not take any major policy

Page 20 20

decisions unless there is unanimity among all its

members and without the prior approval of the

Company Law Board.

6.The ad hoc Board shall continue to function

till O.S. No. 184 of 2014 is disposed of and

appropriate orders in C.P. No. 36 of 2014 are

passed thereafter.

7.The Company Law Board shall keep C.P. No.

36 of 2014 pending till O.S. No. 184 of 2014 is

finally disposed of.”

25 The appeal was allowed and the accompanying

applications were disposed of as infructuous. In arriving at

its penultimate conclusions, leading to the arrangement

configured by the operative directions, as extracted

hereinabove, the High Court elaborately delved into the

factual details bearing on all facets of the surging disputes

between the parties, tracing from the issue of validity or

otherwise of the continuance of Mr. G.V. Rao as the Director

of the company, to the imputation of mis-management and

oppression, allegedly indulged in by the appellants and other

Directors including the perceived imminent possibility of

slicing off the assets of the establishment through a process

of demerger.

26 En route to the final deductions, the High Court did

dwell upon the validity of the Board meetings held on

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9.4.2013, 10.4.2013 and 11.4.2013 in particular and also

of the Annual General Meeting conducted on 18.12.2013, the

claim made by the respondent No. 1 in her suit based on a

will claimed to be executed in her favour by Dr. Vijay Kumar

Datla (since deceased), the letter dated 15.4.2013 written by

the respondent No. 1 as well as the accusation of

manipulation of the transfer of the majority of the shares of

the company in favour of Ms. Mahima Datla (appellant). It

held in no uncertain terms, that in fact there was no Board

of Directors legally in existence, thus necessitating a

workable arrangement for regulating the conduct of the

affairs of the company. Having regard to the contesting

claims to the shares on the basis of two wills and the

pendency of the suit instituted by the respondent No. 1, the

High Court construed it to be appropriate to proceed on the

premise that the appellant, her sisters and the respondent

No. 1 had more or less equal shares. In the backdrop of this

determination, the High Court, being of the view, that it

would be preferable to make an interim arrangement to

conduct the administration of the company, without the

induction of an outsider as an administrator/receiver, issued

the above-mentioned directions to ensure the same.

Page 22 22

27 As would be evident from the steps enumerated in

the impugned judgment and order in this regard, an ad hoc

Board of Directors was directed to be constituted with

respondent No. 1 as the Executive Director and her three

daughters as the Directors with the rider that the respondent

No. 1 would discharge the functions of the Managing

Director of the company. Thereby, the ad hoc Board was

allowed to continue to function till the suit i.e. O.S. No. 284

of 2014 was disposed of and appropriate orders in the

pending Company Petition No. 36 of 2014 were passed. It

was ordered that the CLB would keep the Company Petition

No. 36 of 2014 pending till the suit was finally disposed of.

28 To put it differently, by the impugned verdict, the

existing Board of Directors was substituted by an ad hoc

body adverted to hereinabove and the respondent No. 1 was

entrusted with the charge of office of the Managing Director

of the company. Further the arrangement, as directed, was

to continue till the disposal of the suit. The restraint on the

CLB from proceeding with Company Petition No. 36 of 2014

till the suit was decided, understandably was to postpone

the adjudication therein, till after the final determination of

the issues in the suit. For all essential purposes, therefore,

Page 23 23

the adjudication of Company Petition No. 36 of 2014 was

made conditional on the disposal of the suit.

29. Sustainability of the extent, propriety and

correctness of the scrutiny undertaken by the High Court

on the aspects of the lis between the parties pending the

examination thereof by the statutorily prescribed forum of

original jurisdiction i.e. the CLB in an appeal under Section

10F of the Act and the decisive bearing thereof, is the focal

point of impeachment in the instant proceedings.

30. Learned senior counsel for the appellants in all the

appeals have, at the threshold, urged that as the order dated

6.8.2014 of the CLB did not generate any question of law, as

enjoined by Section 10F of the Act, the High Court ought to

have summarily dismissed the appeal. According to the

learned senior counsel, none of the issues involved had been

considered and decided by the CLB and rightly, in absence

of the pleadings of the appellants and, thus, no appeal under

Section 10F of the Act was contemplated. The CLB vide its

order dated 6.8.2014, having plainly deferred the scrutiny of

the issues, taking note of the undertaking offered on behalf of

the appellants regarding the alienation of the properties of

the company and the assurance of the office of the Executive

Page 24 24

Director of the respondent No. 1, there was no finding based

on any adjudication and thus no question of law did emanate

to permit an appeal therefrom under Section 10F of the Act.

31. Without prejudice to these demur, the learned

senior counsel for the appellants emphatically argued that

not only in the attendant facts and circumstances, Mr. G.V.

Rao did lawfully continue as the Director of the company, he

having withdrawn his resignation prior to the date of the

meeting on 9.4.2013, they urged as well that all the

meetings of the Board held on or from 9.4.2013 including the

Annual General Meeting were to the full knowledge of

respondent No. 1 and the contentions to the contrary, are

factually untenable. Referring to the letter dated 15.4.2013 of

the respondent No. 1, whereby she acknowledged the

induction of the Mahima Datla (appellant) as the Managing

Director of the company and her two other daughters as the

Directors of the company, wishing them success on the new

venture, they maintained that her complaint qua this letter,

after a lapse of one year, being an after thought, was thus of

no relevance or significance. According to the learned senior

counsel, even assuming without admitting that the meetings

of the Board of Directors held on 9.4.2013, 10.4.2013 and

Page 25 25

11.4.2013 and thereafter were invalid as imputed by

respondent No. 1, the same got sanctified in the Annual

General Meeting held on 18.12.2013, in which she

participated without any cavil. The learned senior counsel

urged, that having regard to the situation eventuated by the

sudden demise of Dr. Vijay Kumar Datla and the urgent need

to attend to the day-to-day affairs of the company, a duly

constituted Board of Directors, was an imperative necessity,

and thus the steps taken by Mr. G.V. Rao to convene the

meetings dated 9.4.2013,10.4.2013 and 11.4.2013, to that

effect is even otherwise saved by the doctrine of necessity.

Further the issues raised by her in Company Petition No. 36

of 2014 being substantially the same in Company Petition

No. 1 of 2014, in which the CLB declined to grant

injunction to the conduct of the annual General Meeting

which was to be held on 18.12.2013, the High Court ought

not to have on an extensive evaluation of the same facts

afresh, overhauled the set-up of the company in the manner

done at the preliminary stage and that too in absence of any

tangible and legally cognizable evidence of oppression and/or

mis-management of the affairs thereof. They argued as well,

that as the suit filed by the respondent No. 1 was pending

Page 26 26

adjudication and the scheme of demerger involving the

company was also subjudice before the High Court in a

separate proceeding being Petition Nos. 721-722 of 2014,

the apprehension expressed on behalf of the respondent No.

1 of imminent alienation of the properties of the company at

their whims to irreparably wreck the existence thereof, was

grossly belied, and thus, could not have been a

consideration for superseding the existing Board of Directors

and replacing it by an ad hoc body with the respondent No. 1

as the Managing Director. They urged that the interim

arrangement modelled by the High Court making it co-

terminus with the suit tantamounts to grant of reliefs

claimed in the Company Petition No. 36 of 2014 finally,

pending disposal of the proceeding before the Board and on

this count alone, the impugned decision is liable to be

interfered with.

32. To endorse the above pleas, the following decisions

were pressed into service:

1.V. S. Krishnan and Others etc. vs. Westfort Hi-tech

Hospital Ltd. and Others etc. (2008)3 SCC 363

2.Wander Ltd. and Another vs. Antox India P. Ltd.

1990 (suppl.) SCC 727,

Page 27 27

3.Election Commission of India and Another vs. Dr.

Subramaniam Swamy and Another (1996) 4 SCC 104

4.The Commissioner of Income Tax, Bombay vs. The

Scindia Steam Navigation Co. Ltd. 1962(1) SCR 788

5.Lalit Kumr Modi vs. Board of Control For Cricket in

India and others (2011)10 SCC 106

6.Banku Chandra Bose and another vs. Marium Begam

and another AIR 1917 Cal 546

7.Gokaraju Rangaraju Vs. State of A.P. (1981)3SCC 132

8.State of Punjab and others vs. Krishan Niwas (1997)

9 SCC 31.

9.A.R. Antulay vs. R.S. Nayak & Another (1988) Suppl.

1 SCR1

33. In emphatic repudiation, the learned senior counsel

for Mrs. Renuka Datla (respondent No. 1) assiduously

insisted in favour of the maintainability of the appeal before

the High Court under Section 10F of the Act. They urged,

that the denial of interim relief by the CLB in the attendant

factual conspectus, was not only in disregard to the relevant

provisions of the Act and the Articles of Association of the

Company but also did adversely impact upon the legal right

Page 28 28

of the respondent No. 1 justifying the intervention of the

High Court under Section 10F of the Act. While questioning

the locus and competence of Mr. G.V. Rao as the Director of

the company, consequent upon his resignation and

reiterating the invalidity of the meetings of 9.4.2013,

10.4.2013 and 11.4.2013, they urged that not only the

respondent No. 1 was unaware thereof, but also there was no

such pressing urgency to rush through such steps for her

exclusion and that too while she was in the state of

mourning, having lost her husband. They repudiated as

well, the validity of the said meetings for want of quorum

and due notice and assailed also the Annual General

Meeting to be a nullity as the same could not have been

convened by or on behalf of the Board of Directors which was

non est in law for all intents and purposes. According to the

learned senior counsel, in any view of the matter, if such

meetings were in fact necessitated by the prevailing

exigencies, resort ought to have been taken of the relevant

provisions of the Act as well as Articles of Association. In

this context, they assertively dismissed the plea based on

the doctrine of necessity. They maintained that these

meetings, having regard to the manner in which the same

Page 29 29

were convened and conducted, smacked of the intention to

deprive the respondent No. 1 of her legitimate dues. They

assertively pleaded that the letter dated 15.4.2013 of the

respondent No. 1, purportedly accepting the induction of her

daughters in the Board of Directors, was not issued on her

volition, and thus was wholly inconsequential. As the

progression of events from 9.4.2013 did irrefutably

demonstrate, the endeavours of the appellant and the other

Directors of the Board to cast aside the respondent No. 1

and assume the absolute charge of the company to its

detriment and prejudice of its constituents, resulting in

oppression and mis-management of its affairs, the High

Court was eminently justified for its remedial intervention in

the overall well-being of the company, they pleaded. The

learned senior counsel argued that the rejection by the CLB

of the interim reliefs sought for by the respondent No. 1 did

give rise to a question of law, and thus the appeal under

Section 10F of the Act was unquestionably maintainable.

According to the learned senior counsel, the contemplation of

the demerger of the company did signal imminent cleavage of

its vital assets to reduce it to a carcass for the unlawful gain

of a selected few though unauthorisedly at the helm of

Page 30 30

affairs, warranting the substitution of Board of Directors by

the ad hoc body as effected by the impugned order. The

following decisions were cited in buttressal:

1.Raj Kumar Shivhare vs. Assistant Director,

Directorate of Enforcement and Another (2010)4SCC 772,

2.Waman Shriniwas Kini vs. Ratilal Bhagwandas & Co.

(1959) Suppl. 2 SCR 217.

3.V. S. Krishnan and Others etc. vs. Westfort Hi-tech

Hospital Ltd. and Others etc. (2008)3 SCC 363

4.Dale & Carrington Invt. (P) Ltd. and Another vs. P.K.

Prathapan and Others (2005 ) 1 SCC 212.

5.Pankaj Bhargava and Another Vs. Mohinder Nath

and Another (1991) 1 SCC 556.

34. In their short reply, the learned senior counsel for

the appellants maintained that not only the issue of

demerger is subjudice in a different proceeding before the

High Court under the Act, and thus could not have been

taken note of qua the allegation of oppression and mis-

management, there being neither any prayer for cancellation

of the appointment of Mr. G.V. Rao nor any necessity for the

replacement of the Board of Directors, the impugned

judgment warrants interference, pending disposal of the

Page 31 31

proceeding before the CLB on merits. The learned senior

counsel for the respondent No. 1 has not controverted the

pendeny of the demerger proceeding independently before the

High Court.

35. We have extended our anxious consideration to the

weighty and dialectical assertions exhaustively touching

upon the aspects of the debate, both legal and factual.

Understandably, as the impugned judgment stems from an

appeal under Section 10F of the Act, great emphasis has

been laid, both in favour and against the maintainability

thereof as well as the manner and extent of scrutiny of the

materials available on record, judged from the point of view

of the nascent stage of the proceedings before the CLB, at

which the appeal had been carried to the High Court.

Admittedly, the appeal preferred by the respondent No. 1

under Section 10F of the Act has been against an order dated

6.8.2014 of the CLB, declining to grant the interim relief in

entirety while securing the office of the respondent No. 1 as

the Executive Director of the company and noting the

pendency of the demerger proceeding as well as the

undertaking on behalf of the contesting Board of Directors

that the properties of the company except as would be

Page 32 32

required by way of demerger, would not be alienated. To

reiterate, by order dated 6.8.2014, the CLB deferred the

consideration of the prayer for further interim relief and

granted time to the contesting respondents therein to file

their pleadings. It is a matter of record that till the stage of

filing of the appeal under Section 10F of the Act before the

High Court, the contesting Board of Directors in the

proceeding before the CLB had not filed their pleadings.

36. In the above prefatory, yet presiding backdrop and

having regard to the decisive bearing of a finding on the

maintainability or otherwise of the appeal before the High

Court or the permissibility of the ambit of scrutiny

undertaken by it, expedient it would be to assay at the

threshold, these cardinal aspects in the proper legal

perspective.

37. Section 10F of the Act, which provides for appeal

against the order of the Company Law Board, for ready

reference is extracted hereunder:

“10F:

Appeals against the order of the Company

Law Board. Any person aggrieved by any

decision or order of the Company Law Board

[made before the commencement of the

companies (Second Amendment) Act, 2002] may

file an appeal to the High Court within sixty days

from the date of communication of the decision

Page 33 33

or order of the Company Law Board to him on

any question of law arising out of such order:

Provided that the High Court may, if it is

satisfied that the appellant was prevented by

sufficient cause from filing the appeal within the

said period, allow it to be filed within a further

period not exceeding sixty days.”

38. As the quoted provision would reveal, a person

aggrieved by a decision or order of the CLB, may file an

appeal before the High Court within 60 days from the date of

communication of the decision or order to him on any

question of law arising out of such order. The period of

limitation prescribed, however, is extendable by the High

Court by another 60 days on its satisfaction that the

appellant had been prevented by sufficient cause in doing so.

39. The expression “decision or order” and “any

question of law arising out of such order” persuasively

command for an inquest, to appropriately address the issue

in hand. The right to appeal under Section 10F of the Act

unambiguously being one conferred by a statute, the aspect

of circumscription, if any, of the contours of the enquiry by

the appellate forum, would be of formidable

significance. The precedential guidelines available offer the

direction.

Page 34 34

40. In Scindia Steam Navigation Co. Ltd. (supra), a

Constitution Bench of this Court while dilating on the

contingencies on which a question of law would arise out of

an order of the Appellate Tribunal, as envisaged in Section

66(1) of the Income Tax Act, 1922 had ruled that when a

question of law is neither raised nor considered by it, it

would not be a question arising out of its order

notwithstanding that it may arise on the findings given by it.

It was propounded that it was only a question that had been

raised before or decided by the Tribunal that could be held to

arise out of its order.

41. In Dale & Carrington Invt. (P) Ltd. (supra), this

Court had an occasion to dwell upon the scope of Section

10F of the Act qua an appeal preferred against the decision of

the Company Law Board after a full-fledged adjudication

before the High Court. While negating the argument, that

the High Court could not have disturbed the findings arrived

at by the Company Law Board and record its own findings on

certain issues which it could not go into, this Court held that

if a finding of fact is perverse and is based on no evidence, it

can be set-aside in an appeal even though the appeal is

permissible only on the question of law. It was clarified that,

Page 35 35

perversity of a finding itself, becomes a question of law.

Reverting to the facts of that case, this Court observed that

the CLB had rendered its decision in a very cursory and

cavalier manner without going into the real issues which

were germane for the determination of the controversy

involved, and thus approved the exercise of the High Court

in elaborately dealing with the matter.

42. While reiterating in V.S. Krishnan and others

(supra), that the CLB is the final authority on facts and that

no question of law arises unless its findings are perverse,

based on no evidence or are otherwise arbitrary, this Court

reiterated that in an appeal under Section 10F “on a

question of law”, the jurisdiction of the appellate court is

restricted to the question as to whether on the facts as

noticed by the Company Law Board and as placed before it,

its conclusion was against law or was founded on a

consideration of irrelevant material or was as a result of

omission to consider the relevant material.

43. Adverting to the right of appeal, as a creature of

statute, as provided by Section 35 of the Foreign Exchange

Management Act, 1999, this Court in Raj Kumar Shivhare

(supra) held that the expression “any decision or order” did

Page 36 36

mean “all decision or order”. While extending this

interpretation to the expression “any decision or order”

applied in Section 35 as above, to dismiss the plea that such

an appeal is contemplated only from a final order, this Court

distinguished a right of appeal as a creature of statute from

an inherent right of filing a suit, unless barred by law. It was

underlined that while conferring such a right of appeal, a

statute may impose restriction or condition in law, limiting

the area of appeal, to question of law or sometime to a

substantial question of law and ruled that whenever such

limitations are imposed, those are to be strictly adhered to.

44. This Court in Wander Ltd. (supra), while dealing

with appeals against orders granting or refusing a prayer for

interlocutory injunction, did reiterate that the same, being in

exercise of judicial discretion, the appellate court ought not

interfere therewith and substitute its own discretion except

where such discretion is shown to have been exercised

arbitrarily or capriciously or perversely or where the Court

whose order has been appealed from, had ignored the settled

principles of law, regulating grant or refusal of interlocutory

injunctions. It was enunciated, that appeal against exercise

of discretion is an appeal on principle and the appellate

Page 37 37

court would not reassess the materials and seek to reach a

conclusion different from the one reached by the court below,

if it was reasonably possible on the materials available. It

was held as well, that the appellate Court in such a situation

would normally not be justified in interfering with the

exercise of discretion of the Court below, if made reasonably

and in a judicial manner, solely on the ground that if it had

considered the matter at the trial stage, it would have come

to a contrary conclusion. It was proclaimed that an

interlocutory remedy is intended to preserve in status quo,

the rights of the parties which may appear on a prima facie

examination of a case. It was held that the prayer for grant

of interlocutory injunction, being at a stage when the

existence of the legal right asserted by the plaintiff and its

alleged violation are both contested and uncertain and

remain uncertain till they are established at the trial on

evidence, it is required to act on certain well-settled

principles of administration of such interlocutory remedy

which is both temporary and discretionary. Referring to the

fundamental object of interlocutory injunction, this Court

noted with approval that the need for such protection of the

plaintiff against injury by violation of his rights must be

Page 38 38

weighed against the corresponding need of the defendant to

be protected against any injury resulting from the restraint

on the exercise of his rights, as sought for, which he could

not be adequately compensated. The need of one, thus was

required to be compared against the other, to determine the

balance of convenience to ensure an appropriate exercise of

discretion for an interim remedy as suited to a particular fact

situation.

45. The unequivocal legal propositions as judicially

ordained, to ascertain the emergence and existence of a

question of law, the scope of examination thereof by a court

of appellate jurisdiction and the balancing of the competing

factors in the grant of interlocutory remedy, hallowed by

time, indeed are well settled. A question of law, as is

comprehended in Section 10F of the Act, would arise

indubitably, if a decision which is the foundation thereof,

suffers from perversity, following a patent error on a

fundamental principle of law or disregard to relevant

materials or cognizance of irrelevant or non-germane

determinants. A decision however, on the issues raised, is a

sine qua non for a question of law to exist. A decision

Page 39 39

logically per-supposes an adjudication on the facets of the

controversy involved and mere deferment thereof to a future

point of time till the completion of the essential legal

formalities would not ipso facto fructify into a verdict to

generate a question of law to be appealed from. However, an

omission to record a finding even on a conscious scrutiny of

the materials bearing on the issues involved in a given case,

may be termed to be one. Be that as it may, in any view of

the matter, the appellate forum though exercising a

jurisdiction which otherwise may be co-ordinate with that of

the lower forum, ought to confine its judicial audit within the

layout of the adjudgment undertaken by the forum of lower

tier. This is imperative, more particularly in the exercise of

the appellate jurisdiction qua a decision on discretion

rendered at an introductory stage of any proceeding,

otherwise awaiting final adjudication on merits following a

full contest. It is settled that no adjudication at the

preliminary stage of a proceeding in a court of law ought to

have the attributes of a final verdict so as to prejudge the

issues at that stage, thereby rendering the principal

determination otiose or redundant. This is more so, if the

pleadings of the parties are incomplete at the threshold

Page 40 40

stage and the lower forum concerned seeks only to ensure a

working arrangement vis-a-vis the dissension and postpone

fuller and consummate appreciation of the rival assertions

and the recorded facts and the documents at a later stage.

46. Section 10F of the Act engrafts the requirement of

the existence of a question of law arising from the decision of

the CLB as an essential pre-condition for the maintainability

of an appeal thereunder. While the language applied therein

evinces that all orders, whether final or interlocutory, can be

the subject-matter of appeal, if it occasions a question of

law, in our comprehension, the Section per se defines the

perimeters of inquisition by the appellate forum conditioned

by the type of the order under scrutiny. The nature and

purport of the order i.e., interlocutory or final, would thus

logically present varying canvases to traverse and analyse.

These too would define the limits of adjudication qua the

appellate forum. Whereas in an appeal under Section 10F

from an order granting or refusing interim relief, being

essentially in the exercise of judicial discretion and based on

equity is an appeal on principle and no interference is

merited unless the same suffers from the vice of perversity

Page 41 41

and arbitrariness, such constrictions may not necessarily

regulate and/or restrict the domain of examination in a

regular appeal on facts and law. Section 10F, thus,

statutorily demarcates the contours of the jurisdictional

exercise by an appellate forum depending on the nature of

the order impugned i.e. interlocutory or final and both

cannot be equated, lest the pending proceeding before the

lower forum, if the order impugned is purely of interlocutory

nature, and does not decide any issue on a consideration of

the rival assertions on merits, stands aborted and is

rendered superfluous for all intents and purposes.

47. Reverting to the present facts, noticeably the parties

are contentiously locked on several issues, legal and factual,

a brief outline whereof has been set-out hereinabove. While

seeking the intervention of the CLB on the key accusation of

oppression and mis-management as conceptualised in

Sections 397 and 399 of the Act, the respondent No. 1 had

retraced the march of events from 9.4.2013, the date on

which, according to her, when the meeting of the Board of

Directors, invalid in law, was convened and conducted by

Mr. G.V. Rao , who allegedly had no authority to do so, he

Page 42 42

having resigned from the company. She had asserted her

express and implicit reservation in this regard and her

disapproval not only of the constitution of the Board of

Directors since then but also of the decisions taken from time

to time. Without recapitulating the stream of developments

that had occurred, suffice it to mention, that after a series of

intervening legal proceedings, she finally did submit a

petition before the CLB amongst other under Sections 397,

398,402/403/404 and 406 of the Act alleging oppression

and mis-management and highlighting in that regard, the

imminent possibility of alienation of the vital assets of the

company through a purported scheme of demerger to the

undue benefit of other Directors of the Board of the

company. In contradiction, the appellants and the

contesting Directors have not only endorsed the validity of

the meetings on or from 9.4.2013 contending that

respondent No. 1 though intimated thereof, had opted out

therefrom and on the basis of the record, have sought to

demonstrate her participation in the meetings, amongst

others on 24.5.2013, 22.8.2013 and the Annual General

Meeting held on 18.12.2013 as permitted by the CLB, they

have also emphatically adverted to the letter dated

Page 43 43

15.4.2013 addressed by the respondent No. 1 seemingly

acknowledging the lawful induction of the appellant (Ms.

Mahima Datla) as the Managing Director and her two sisters

as the Directors in the Board. The appellants and other

contesting respondents have also endeavoured to underline

that the respondent No. 1 has accepted the distribution of

the shares held by Dr. Vijay Kumar Datla in the HUF as

decided in the meeting dated 24.5.2013 and also the

enhancement in her remuneration as the Executive Director

as minuted in the Annual General Meeting dated

18.12.2013. There is no denial by her as well as of the

pendency of the demerger proceeding before the High Court.

48. In the above overwhelming factual premise, the

High Court, as the impugned decision would demonstrate,

being fully conscious that the proceeding before the CLB was

pending for final adjudication, proceeded to undertake an

in-depth exercise to fathom and analyse the facts and the

law involved and has recorded its decision on merits in total

substitution of the order of the CLB. This to reiterate, is in

absence of any pleadings by the appellants, the contesting

Directors before the CLB. This assumes importance as the

Page 44 44

High Court did resort to a full-fledged scrutiny of the factual

and legal aspects, to test the legality and/or validity of the

order dated 6.8.2014 of the CLB at the stage of mentioning.

Having regard to the fact that the appeal before the High

Court under Section 10F of the Act was one from an interim

order passed in exercise of judicial discretion at the stage of

mentioning, in our view, bearing in mind the permissible

parameters of exercise of appellate jurisdiction in such

matters, the elaborate pursuit so undertaken by it, is neither

contemplated nor permissible. The High Court, in any view of

the matter, was not dealing with a regular appeal under

Section 10F of the Act on a question of law from a decision

rendered by the CLB on merits, after a complete

adjudication. The appeal before it, being one on principle

and from an order rendered by the CLB in the exercise of its

discretion at the preliminary stage awaiting the pleadings of

the respondents therein, we are of unhesitant opinion that

the scrutiny in the appeal ought to have been essentially

confined to the aspects of which the CLB had taken

cognizance, to pass its order at that stage, and not beyond.

49. As it is, though a colossus of facts with the

Page 45 45

accompanying contentious issues are involved, having

regard to the stage at which the order of the CLB had been

passed, no exhaustive examination of the factual and legal

aspects ought to have been undertaken by the High Court to

record its conclusive deductions on the basis thereof.

Keeping in view the stage wise delineation of the

jurisdictional frontiers of the forums in the institutional

hierarchy as codified by law, the High Court's quest to

unravel the entire gamut of law and facts involved at the

preliminary stage of the proceeding before the CLB and to

record its findings on all issues involved on merits did

amount to prejudging those, thereby rendering the petition

before the CLB redundant for all intents and purposes.

50. In the instant case, though the CLB, as a matter of

fact, did not record any view on the merits of the case while

deferring the consideration of the interim relief , being

satisfied with the undertakings offered on behalf of the

appellants and other contesting Directors, the High Court

has, by the impugned decision, decisively furnished its views

and conclusions on all vital issues, as a consequence,

leaving little or none for the CLB to decide. This is not the

Page 46 46

role of the appellate forum as is contemplated under Section

10F of the Act qua the stage from which the appeal had

been preferred from the order of the CLB.

51. Noticeably in the face of the undertaking given by

the appellants and the pendency of the demerger proceeding

separately before the High Court, in our view, there did not

exist any searing urgency to substitute the existing Board of

Directors as done and to continue with it till the disposal of

the suit and at the same time to keep the proceeding of the

CLB pending till then. This is more so, as can be culled from

the order dated 6.8.2014 of the CLB, the status of the

respondent No.1 as Executive Director of the Company has

been secured and further alienation of the assets of the

company, otherwise has been restrained. Assuredly, these

are based on undertakings before the CLB as given by the

appellants, the contesting Directors and the CLB having

taken note thereof, the same are as good as binding

directions on the parties. The aspect of demerger as adverted

to hereinabove, is the subject matter of adjudication in a

separate proceeding on which, at this stage, no observation is

called for. Suffice it to state however, that the aspect of

Page 47 47

demerger for the present cannot ipso facto be an impelling

factor to conclude in favour of allegation of oppression and

mis-management as made by the respondent No. 1.

52. In the wake up of above, we feel persuaded to

interfere with the impugned decision of the High Court,

without observing any final opinion on the merit of the

contrasting assertions. In our comprehension, having

regard to the relief provided by the CLB by its order dated

6.8.2014 to the parties, it ought to be left to decide the

petition on merits after affording them a reasonable

opportunity of furnishing their pleadings. As in the course of

hearing, some grievance was expressed on behalf of

respondent No. 1 that her status as the Executive Director of

the company, stands undermined due to uncalled for

surveillance imposed at the instance of the existing Board of

Directors, we make it clear, as has been assured before us,

that she ought to be allowed to function in the aforesaid

capacity being provided with all facilities and privileges

attached to the office as permissible in law, so much so that

she does not have any occasion to complain in this regard.

This indeed ought to be in accord with the letter and spirit

Page 48 48

of the undertaking offered by the Board of Directors to the

CLB. The respondent No. 1 too would cooperate in the day

to day management of the affairs of the company in her said

capacity. The existing Board of Directors would also abide by

the undertaking as recorded in the order dated 6.8.2014 of

the CLB qua the alienation of the assets of the company. The

set-up of the Board of Directors and the arrangement vis-a-

vis the administration of the affairs of the company, as was

existing on the date on which the order dated 6.8.2014 was

passed by the CLB, would continue until further orders by

it. The CLB is, however, directed to dispose of the proceeding

before it as expeditiously as possible. As the suit filed by the

respondent No. 1, as noted hereinabove, is also pending, we

hereby direct the Civil Court before which it is pending, to

deal with the same with expedition as well, so as to provide

a quietus to the lingering family discord in the overall well-

being of the company and its constituents.

53. Before parting, we need to take note of the

submission of Mr. P.P. Rao, learned senior counsel

appearing for Mr. G.V. Rao that the averments made in sub-

paragraph 2 of the counter-affidavit filed by the respondent

Page 49 49

No. 1 at page 720 thereof besides being utterly incorrect

and defamatory are liable to be effaced from the records. We

are of the considered view that this assertion needs to be

sustained. We thus, expunge these averments being wholly

inessential for deciding the issues involved.

54. The appeals are, thus, allowed in the above terms.

The CLB and the Civil Court would decide the proceedings

before them on their own merits, without being in any way

influenced by any observation made herein. No costs.

….....…....................................J.

(V. GOPALA GOWDA)

…............................................J.

(AMITAVA ROY)

NEW DELHI;

OCTOBER 6, 2015.