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IN THE HIGH COURT AT CALCUTTA
KRISHNA RAO, J.
The Punjab Produce and Trading Co. Private Limited and Others – Plaintiffs
Versus
Harsh Vardhan Lodha and Others – Defendants
G.A. No. 5 of 2024, C.S. No. 306 of 2022
Decided On : 21-06-2024
Interim Relief - Corporate Governance - Companies Act, 2013 - Sections 152, 160, 241, 242, 244, 430; Commercial Courts Act, 2015 - Sections 2(1)(c)(xi), 12A - The court analyzed the powers of the Administrator Pendente Lite (APL) in relation to corporate governance and the rights of shareholders, concluding that the APL cannot interfere with internal company affairs beyond the rights directly associated with share ownership.
Fact of the Case:
The plaintiffs sought interim relief to prevent the respondent company from accepting certain director nominations and to ensure that only valid representatives of their society could vote at the upcoming AGM, citing disputes over the management and governance of the company following the death of a key trustee.
Finding of the Court:
The court found that the plaintiffs failed to establish a prima facie case for interim relief, as the APL's powers were limited to rights directly associated with share ownership, and the plaintiffs could raise their concerns at the AGM.
Issues: Whether the plaintiffs are entitled to interim relief to prevent the AGM from proceeding with disputed director nominations and whether the APL can interfere in the internal affairs of the company.
Ratio Decidendi: The court held that the APL cannot exercise powers beyond those directly related to share ownership and cannot interfere with the internal governance of the company, as established by the appellate court's prior ruling.
Result: The application for interim relief is refused.
ORDER :
1. The plaintiff has filed the present application being G.A. No. 5 of 2024 praying for following reliefs:
(b) An appropriate order be passed restraining respondent no. 2 company and its men, agents and assigns from placing agenda Nos.6 and 7 of the notice pf the AGM dated May 28,2024 of the respondent no. 2 company due to be convened and held on June 24, 2024 at the Registered address of the respondent no. 2 company;
(c) The respondent no. 2 company be directed not to act on any communication of the respondent no. 1and /or his nominee or representatives in the name of the petitioner no. 4 society.
(d) Ad-interim order in terms of prayers above.
(e) Such further or other order or orders be passed and/or direction or direction be given as this Hon’ble Court may deem fit and proper.
2. Learned Counsel for the plaintiffs have filed several documents containing four volumes. The Counsel for the defendants has raised objections with respect to the said documents. Learned Counsel for the plaintiffs submits that though they have filed documents but they will only rely upon the judgments passed by different courts in connection with the present case from the said documents and they will not refer any other documents.
3. The petitioner nos. 1, 2 and 3 are the key investment of companies of M.P. Biral Group and are the principal promoters of all the companies of M.P. Birla Group. The petitioner no. 4 is a charitable society and is governed by the Memorandum of Association and Rules and Regulations of the society. The petitioner no. 4 was set up under the directions of M.P. Birla and Priyamvada Devi Birla in the year 1984 for educational purposes solely as Philanthropic activity. Priyamvada Devi Birla herself was a Trustee and Member of the Managing Committee since long time until her death.
4. The respondent no. 2 is a joint venture of M.P. Birla Group wherein petitioner no. 1 to 4 collectively represent M.P. Birla Group (the Indian Partner) and the respondent no. 3 is the other partner being the foreign Partner both holding 50% share in the respondent no. 2. The present shareholding pattern of the respondent no. 2 is as follows:
5. Priyamvada Devi Birla died on 3rd July, 2004 and after her demise disputes pertaining to succession of estate left behind by Priyamvada Devi Birla arose. Priyamvada Devi Birla left behind a Will and an application for grant of probate being PLA No. 242 of 2004 was filed. As there was an objection with respect of the said probate proceeding and the same was converted into a Testamentary Suit being T.S. No. 6 of 2004. After the death of the executor of the said Will, the suit is further converted for grant of Letters of Administration. In the said suit, an Administrator Pendente Lite Committee (herein after referred to as APL Committee) has been appointed for the purpose of protection and administration of the estate left behind by Priyamvada Devi Birla till the disposal of the testamentary suit.
6. In the testamentary suit on 18th September, 2020, the following order was passed:
(b) Plaintiffs are also restrained from interfering with the
The APL's authority is limited to rights directly associated with share ownership, and it cannot interfere with the internal affairs of companies.
Appeal against NCLT interim order permitting directors to represent company becomes infructuous upon subsequent final order under Section 242 creating comprehensive supervisory framework with forensi....
The court ruled that a plaintiff’s limited interest in property, dictated by the will, cannot be construed as absolute ownership; undue influence invalidates share transfers.
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