IMPORTANT POINTS
Right of appeal u/s 10F is available against any “decision or order” and “any question of law arising out of such order”.
A question of law neither raised before nor considered by a court, would not be a question arising out of its order.
Although an appeal is permissible only on question of law, a finding of fact which is perverse and based on no evidence can be set aside in an appeal because perversity of a finding itself becomes a question of law.
Decision or order includes all decisions and orders, not only final orders.
Mere deferment of decision till completion of the essential legal formalities does not give rise to a question of law to be appealed from.

Headnote:(a) Companies Act, 1956 – Section 10F – Appeal available against any “decision or order” and “any question of law arising out of such order” – A question of law neither raised before nor considered by a court, would not be a question arising out of its order – Appeal permissible only on question of law – However, a finding of fact which is perverse and based on no evidence can be set-aside in an appeal because perversity of a finding itself becomes a question of law – Decision or order includes all decisions and orders, not only final orders – Mere deferment of decision till completion of the essential legal formalities – Does not give rise to a question of law to be appealed from – Adjudication at the preliminary stage ought not to have the attributes of a final verdict. (Para 40, 41, 43, 45, 46)
       (1962) 1 SCR 788; (2005) 1 SCC 212; (2008)3 SCC 363; (2010) 4 SCC 772; 1990 (Suppl.) SCC 727 – Relied upon
       (1996) 4 SCC 104; (2011)10 SCC 106; AIR 1917 Cal 546; (1981)3SCC 132; (1997) 9 SCC 31; (1988) Suppl. 1 SCR 1; (1959) Suppl. 2 SCR 217; (1991) 1 SCC 556 – Referred
       (b) Companies Act, 1956 – Section 10F – Proceedings pending before CLB for final adjudication – Jurisdiction of High Court confined to aspects of which CLB had taken cognizance to pass its order at that stage, and not beyond – High Court analysing the facts and law in depth on merits and substituting its decision for that of CLB – Rendering petition before CLB redundant – Neither contemplated by section 10F nor permissible. (Para 48, 49, 50, 51)

       Facts of the case:
       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 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.
       Dr. Vijay Kumar Datla, in his individual capacity, then did hold 81% of the shares of the company.
       Mr. G.V. Rao (respondent No. 6) offered his resignation as a director vide his letter dated 6.4.2013 with immediate effect. However, on being requested by the family not to abandon the company at its hour of crisis, 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.
       In the meeting of the Board of Directors on 9.4.2013 Ms. Purnima Manthena (respondent No. 4), Ms. Indira Pusapati (respondent no. 5) and Ms. Mahima Datla (appellant) were inducted as Directors. Mrs. Indira Pusapati (respondent No. 5) was also inducted as the Director of the company to fill up the casual vacancy caused by the death of Dr. Vijay Kumar Datla.
       The meeting dated 10.4.2013 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.
       In the next meeting held on 11.4.2013 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.
       On 15.4.2013, a letter had been addressed by 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.
       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.
       On the same day i.e. 24.5.2013, a meeting of the Board of Directors 4594 equity shares held by Dr. Vijay Kumar Datla (HUF) were transmitted in favour of the respondents in equal shares.
       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 etc. 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.
       The CLB observed 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 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.
       The CLB declined to grant stay of the said AGM. 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.
       The respondent No. 1 instituted a suit in the Court of Chief Judge, City Civil Court, Hyderabad 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.
       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 manner known to law.
       The respondent No. 1 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. 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.
       The respondent No. 1 herein, being aggrieved, preferred an appeal being Company Appeal No. 17 of 2014 which has since been allowed.
       Finding of the Court:
       Exercise undertaken by the High Court was neither contemplated nor permissible.
       Result: Appeals allowed.

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 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 (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 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 evi

Click Here to Read the rest of this document

2015 Supreme(SC) 925

Cases Referred (12)