ANIRUDDHA BOSE, J. - (1.) IN these two appeals, under challenge is an order of the Company Law Board, Principal Bench dated 11 July 2011. This order was passed in an interlocutory proceeding registered as C.A. no. 332 of 2011 arising out of a company petition, being C.P. No. 01 of 2010. Another application, registered as C.A. No.338 of 2011, taken out by the Birla Corporation Limited and the appellants in ACO No.82 of 2011 (the company), seeking dismissal of the said interlocutory application was also considered in the said order and direction for affidavits has been given in that application. The company petition was filed by the respondent no. 1 to 6 representing more than 10% shareholders of the company alleging mismanagement and oppression in the respondent company. This petition was filed under the provisions of Sections 235, 237, 247, 250, 397, 398 and 402 of the Companies Act. Earlier, two other orders were passed by the Company Law Board (CLB) in different interlocutory proceedings arising out of the same company petition on 9 February 2011 and 17 June 2011 and these two orders are also under challenge before this Court in two different appeals. IN the application registered as C.A. No 332 of 2011, the applicants (respondent nos. 1 to 6 in these two appeals) have raised grievances on different counts over running of the said company by the existing management. So far as the impugned order is concerned, the controversy relates to donation of significant sums of money to Madhav Prasad Priyamvada Birla Apex Charitable Trust, who are the appellants before me in ACO No 83 of 2011. Allegations of the applicants in the main company petition is that one Harsh Vardhan Lodha (HVL), who is the Chairman of the Board of Directors of the said Company is seeking to control the promoter groups" share in the said company without the authority of law. IN C.A.No.332 of 2011, the complain of the applicants is that HVL and his family/associates control the said trust and such donations in substance constitute siphoning of funds of the company to the HVL controlled trust. One of the prayers of the applicants in C.A. 332 of 2011 is to prevent further flow of funds to the said trust. Altogether, a sum of rupees 23.5 crores approximately has been donated to the trust by the company.
(2.) IN the order appealed against, it has been held;- "Considering the Respondents" reply arguments so far to the allegations in this C.A., looking at the Directors" Reports of the R-1 Company for the years 2006-2007 to 2009-2010 which do not mention that the funds are for setting up of a hospital or for what purpose, looking at an undated project report which mentions the date as 25th January 2010 (written in hand) without disclosing as to who prepared the Report, for whom and when, at whose"s instance and what the project really is, the Applicants have succeeded in making out a prima facie case that the project Report is a sham, and is an afterthought, no details are forthcoming from the respondents in this regard, in the facts and circumstances of this case, the Applicants having succeeded in making out a prima facie case of continuing of mismanagement and oppression by siphoning off of R-1"s funds to an apparently a moribund Trust since 2001, a trust the main trustee of which happens to be the Chairman of the R-1 Company and another trustee being his wife and the third trustee being nobody else but his alter ego, in the facts and circumstances of this case the R-1 Company is hereby required to produce three certified copies of each document/detail/records as mentioned from (a) to (e) in para 28 of this Company Application at pages 16 and 17 to the Bench officer of the Principal Bench (Shri Saud Ahmad) in a sealed cover on or before 20th July 2011. On receipt of the documents, the Bench officer shall forward one copy each to the Auditors of the R-1 Company as well as to Ernst and young, already appointed in this matter in CA 302/11, for giving their detailed comments within four weeks and placing the same before the Principal Bench before hearing and disposing of CP No. 1/2010 on merits. Looking at the details and the manner of payments of huge amounts from the A/Cs of the R-1 company as given specifically in paras 24, 25, 35, the Bench officer is also required to issue Notice alongwith a copy of this order to the trust and its trustees to furnish their justification of receipts of such huge amounts enclosing documents to support their case, if any, on or before 20th July 2011 to the CLB and to all the parties in this matter failing which the Applicants" prayer of their impleadment in this matter shall stand allowed. Adjourned to 30.09.2011 at 2.30 P.M. for arguments on C.P. No. 1/2010 and CAs therein." The impugned order has been challenged both on procedural grounds and on merit. In ACO No. 83, the appellants are Madhav Prasad Priyamvada Birla Apex Charitable Trust (the trust) and in ACO No. 82 of 2011, the appellants are the company. So far as assailing the judgment on procedural ground is concerned, it has been submitted on behalf of both the appellants that the impugned order was passed before effective conclusion of hearing at the ad interim stage. It is their contention that the interlocutory application 332 of 2011 was heard on 7 July 2011 and hearing was adjourned till 11 July 2011. On that date i.e. 11 July 2011, learned Counsel for the company had not completed the submissions and the company also had filed a fresh application for dismissal of C.A. No. 332 of 2011, which was registered as C.A. No. 338 of 2011. Prayer was made for adjournment of hearing on that date on behalf of the trust on the ground of personal bereavement of their learned Senior Counsel. The hearing of the proceedings on that date went on till recess. The Bench did not sit after recess and no indication was given as regards the next date on which the order would be passed. The Advocates-on-record of the appellants were intimated on the next date over the telephone that an interim order had been passed. It is this interim order which is under challenge before me. As regards the manner in which the proceeding was conducted on those two days, it has been pleaded in the stay petition of the trust in ACO No 83 of 2011;- "24. Upon receiving notice for mentioning on 7th July, 2011, the petitioners instructed Mr. Ashish Dholakia, Advocate to appear in the matter and Vakalatnama, in favour of Mr. Dholakia, Advocate was executed in his favour. Senior Advocate practicing in this Hon"ble Court was also engaged to appear on behalf of the Trust before the Company Law Board. Conference was also held with the Senior Advocate on the evening of 9th July, 2011. 25. Unfortunately, on 10th July, 2011, the Ld. Senior Advocate"s mother breathed her last while he was travelling to New Delhi from Kolkata. Upon receiving such information, he immediately rushed back to Kolkata from New Delhi Airport itself. 26. The petitioners thereafter requested Mr. Ashish Dholakia, Advocate to seek adjournment on their behalf before the Company Law Board on 11th July 2011. 27. On 11th July, 2011, Mr. Dholakia circulated a letter and prayed for adjournment of the matter. A copy of the said letter dated 11th July, 2011 is annexed hereto and marked with the letter "F". 28. When the matter was called on for hearing, Mr. Dholakia, Advocate sought an adjournment of the hearing of the matter. Mr. Dholakia had also handed over the adjournment letter circulated by him to the Bench Officer of the Company Law Board. On the said prayer for adjournment being made, the Senior Counsel appearing on behalf of the respondent Nos. 1 to 6, Mr. Bimal Chatterjee submitted that no relief would be sought against the petitioners on 11th July, 2011 and therefore there should be no impediment to the hearing being continued. 29. In view of such submission, the Company Law Board directed the adjournment notice circulated by Mr. Dholakia to be kept on record. The Company Law Board thereafter proceeded to hear Counsel appearing for the respondent No. 7. The hearing continued till 1.00 p.m. At 1.00 p.m., the Company Law Board observed that it would not be possible to continue the hearing of the matter after recess and further dates of hearing of C.A. No. 332 of 2011 and an application filed by the respondent No. 7 for its dismissal would be fixed afterwards. 30. No submission was made by Counsel appearing on behalf of the respondent Nos. 1 to 6 concerning the petitioners herein. No prayer was also made against or concerning the petitioners. In fact the Counsel on behalf of the respondent Nos. 1 to 6 did not make any submission and whatever submissions were made on behalf of the respondent No. 7." The main complaint of the company on merit is that the same issues were examined by the CLB earlier in its order dated 9 February 2011 and prima facie finding of the CLB was that the company petition itself was motivated and prayer for interim relief was declined in the earlier proceeding. In this perspective, the appellants" case is that the CLB ought not to have passed this order on grounds akin to the principles of res judicata. On merit, it has been contended that there was no irregularity committed by the company in making donation. Such donation was given for legitimate reason, being construction of a hospital.
(3.) THE grievance of the trust is that they did not get adequate opportunity to represent their case and the impugned order ought not to have been passed before impleading them as a party respondent. Further submission on behalf of the trust is that the learned member of the bench ought not to have marked the matter heard-in-part on the first day of hearing itself and this was a fit case for adjournment of hearing having regard to the ground on which such adjournment was prayed for on that date. The impugned order, according to the appellants ought to be quashed on the ground of violation of the principles of natural justice. It has also been contended that no order could have been passed against the trust who were not parties to the proceeding, and the CLB ought not to have interfered with the affairs of the trust in any event while deciding an application for oppression and mismanagement of the company.;