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2011 Supreme(Mad) 4775
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE D. MURUGESAN & THE HONOURABLE MR. JUSTICE K.K. SASIDHARAN
New Bridge Holdings B.V., through its Authorised Signatory Rajesh Kumar Jha
Versus
TTK-LIG Limited through its Managing Director T.R. Venkatesh & Others
Contempt Petition No.1140 of 2011
Decided On :Decided on : 16-12-2011
For the Petitioner - Dr. Abhishek Manu Singhvi, Senior Advocate for R. Jawaharlal, R. Saravanakumar, Advocates.
For the Respondents - R1 & R9 - A.L. Somayaji, Senior Advocate for R. Sankaranarayanan, R6 - S. Rajesh, R2 to R5, R7 & R8 - H. Karthick Seshadri for M/s Iyer & Thomas, Advocates.
The power of the contempt of Court cannot be exercised in the event the alleged contempt requires an enquiry to determine as to whether there has been any wilful disobedience or not and in the said circumstance, the Court must refrain from doing so and consequently should not entertain a contempt petition.
Headnote:
Contempt of Court - Disobedience of Order - Company Law Board Regulations - Companies Act - [CONTEMPT OF COURT] - [DISOBEDIENCE OF ORDER] - [S.10, R.47, S.634A of the Companies Act] - The Court considered the jurisdiction of the High Court to entertain a contempt petition and the power of the Company Law Board to prosecute and punish a person who wilfully disobeys any direction or order of such Bench. The Court held that the Company Law Board is a Court judicially subordinate to the High Court and the High Court has jurisdiction to enquire into the alleged contempt and, if found to be true, has jurisdiction to punish the violators. The Court also rejected the contention that the power of the Company Law Board to enforce its order in terms of Section 634A of the Companies Act instead of filing a contempt petition is no longer available. The Court further held that the power conferred on the Company Law Board under Regulation 47 would not take away the jurisdiction of the High Court to entertain a contempt petition. The Court dismissed the contempt petition as devoid of merits, concluding that the respondents were not guilty of contempt.
Fact of the Case:
The petitioner sought a direction to punish the respondents for disobeying an order of the Company Law Board. The respondents, however, denied the allegations and opposed the contempt petition on various grounds, including the lack of wilful disobedience and the petitioner's lack of locus standi.
Finding of the Court:
The Court dismissed the contempt petition as devoid of merits, concluding that the respondents were not guilty of contempt.
Issues: The main issue was whether the respondents were guilty of wilful disobedience of the order of the Company Law Board.
Ratio Decidendi: The Court held that the power of the contempt of Court cannot be exercised in the event the alleged contempt requires an enquiry to determine as to whether there has been any wilful disobedience or not and in the said circumstance, the Court must refrain from doing so and consequently should not entertain a contempt petition.
Final Decision: The Court dismissed the contempt petition as devoid of merits, concluding that the respondents were not guilty of contempt.
D.MURUGESAN, J.
1. The petitioner, New Bridge Holdings B.V., through its Authorised Signatory seeks for a direction to punish the respondents for their act of disobeying and defying the order dated 1.6.2011 made in C.A.No.113 of 2011 in C.P.No.41 of 2011 on the file of Company Law Board, Chennai Bench, Chennai.
2. In support of the petition, the petitioner has averred as follows. The first respondent, M/s TTK-LIG Limited is a joint venture company incorporated in 1963 with the petitioner/its parent company. The petitioner and TTK group hold 49.87 per cent shares each and the balance percentage is held by 40 individuals. The first respondent, inter alia, manufactures contraceptives including condoms under the trademarks "Durex" and "Kohinoor". The group/parent company of the petitioner had provided the technology, machinery, processes, etc., in 1963 and continue to provide the same to the first respondent. The group company had also permitted the use of its world renowned trademarks "Durex" and "Kohinoor" to the first respondent and in addition 80 per cent of the turnover and profit of the first respondent comes from exports to the petitioner and its group companies.
3. Both the petitioner and the first respondent are under the joint and equal management right from the year 1963 and their inter-se rights are governed by the Articles of Association and the agreements executed between them. The ninth respondent by name T.R.Venkatesh is the Managing Director of the first respondent company. Though he is supposed to be independent, he started acting in collusion with TTK group. In the meeting of the Board of Directors of the first respondent company held on 2.5.2011, resolutions were passed reducing the petitioner to minority from the position of equal and joint management of joint venture company. A further resolution was passed to suspend the export, unless the group companies of the petitioner agree for the sale price of total costs plus profit of 50 per cent instead of the profit of 15 per cent and agree to purchase 80 crore pieces per year for five years. It was also resolved to appoint a distributor in India from amongst the TTK group companies for five years. According to the petitioner, all the resolutions were contrary to the Articles of Association of joint venture company and therefore ultra vires and illegal. Though the condition in regard to the sale price and increase of profit from 15 per cent to 50 per cent was onerous, the foreign buyer agreed under duress and coercion only in order to get the supplies. The foreign buyer agreed to the terms only on condition that the first respondent company should resume the exports by 10.5.2011. As the first respondent did not resume the export and forced the petitioner to give its consent to the resolutions as a pre-condition for resumption of export, the petitioner had to withdrew its offer.
4. On the above factual background, the petitioner filed a company petition before the Company Law Board for oppression of its rights and mismangement of the first respondent company. The petitioner also prayed for stay of the resolutions passed by the Board of Directors of the company in its meeting held on 2.5.2011 and to restrain the respondents from implementing the same. The Company Law Board took up the petition for hearing on 20.5.2011 and, after hearing both sides and perusing the records, passed the following interim order:
"Till the matter is heard I think it is just and proper to direct the respondents to restore the supply of goods as per the terms detailed in the letter dated 06.05.2011 i.e., at 50%, as against 15%. The above order is made without prejudice to the contentions on both sides. The supply made by the respondents on the basis of this order shall be subject to the final outcome of the CP."
5. According to the petitioner, in spite of the above directions of the Company Law Board, the respondents deliberately and wilfully disobeyed the order. The Managing
