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Friday, October 9, 2015

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 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. 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 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. 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 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. 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.

                                                                (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



                       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.
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.
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 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.
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.  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.
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, Dr. Vijay Kumar Datla.
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.
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.
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 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 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 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 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 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 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  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 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 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.

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.

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.

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.

The Board shall  not  take  any  major  policy  decisions  unless  there  is
unanimity among all its members  and  without  the  prior  approval  of  the
Company Law Board.

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.

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  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.
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,   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
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 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 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:
V. S. Krishnan and Others  etc.  vs.  Westfort  Hi-tech  Hospital  Ltd.  and
Others etc.  (2008)3 SCC 363
Wander Ltd. and Another vs. Antox India P. Ltd. 1990 (suppl.) SCC 727,
Election Commission of India and  Another  vs.  Dr.  Subramaniam  Swamy  and
Another (1996) 4 SCC 104
The Commissioner of Income Tax, Bombay vs. The Scindia Steam Navigation  Co.
Ltd. 1962(1) SCR 788
Lalit Kumr Modi vs. Board  of  Control  For  Cricket  in  India  and  others
(2011)10 SCC 106
Banku Chandra Bose and another vs. Marium Begam and  another  AIR  1917  Cal
546
Gokaraju Rangaraju Vs. State of A.P. (1981)3SCC 132
State of Punjab and others vs. Krishan Niwas (1997) 9 SCC 31.
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  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 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  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:
Raj Kumar Shivhare vs. Assistant Director, Directorate  of  Enforcement  and
Another (2010)4SCC 772,
Waman Shriniwas Kini vs. Ratilal Bhagwandas & Co. (1959) Suppl. 2 SCR 217.
V. S. Krishnan and Others  etc.  vs.  Westfort  Hi-tech  Hospital  Ltd.  and
Others etc.  (2008)3 SCC 363
Dale & Carrington Invt. (P) Ltd. and Another vs. P.K. Prathapan  and  Others
(2005) 1 SCC 212.
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 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 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 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.
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, 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  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 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 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 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
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  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 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 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 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  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 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 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 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 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.

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