MANU/WB/0560/2013

IN THE HIGH COURT OF CALCUTTA

A.C.O. No. 136 of 2013, A.P.O. No. 216 of 2013 and C.P. No. 1 of 2010
Decided On: 16.09.2013
Appellants: Birla Education Trust & Ors.
Vs.
Respondent: Birla Corporation Limited & Ors.
Hon'ble Judges/Coram:
J. Bhattacharya, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Partha Sarathi Sengupta, Mr. Ravi Kapur and Mr.
Amit Agarwalla, Advocates
For Respondents/Defendant: Mr. Anindya Kumar Mitra, Mr. Pratap Chatterjee, Senior
Advocates, Mr. Debangsu Basak, Ms. Manju Bhuteria, Mr. Jishnu Chowdhury, Mr.
Paritosh Sinha, Advocates for the Respondent Nos. 1,5 to 10, 37 and 42, Mr. Kalyan
Kumar Bandapadhyay, Senior Advocate, Mr. Rajesh Upadhyay, Advocate for the
Respondent Nos. 38 to 40, Mr. Abhrajit Mitra, Mr. Satadip Bhattacharya, Advocates for
the Respondent No. 29, Mr. Sarvapriya Mukherjee, Advocate for the Respondent Nos.
15, 16, and 19, Mr. Sakti Nath Mukherjee, Senior Advocate, Mr. Soumya Ray
Chowdhury, Mr. Dabanjan Mondal, Mr. Sanjiv Kumar Trivedi and Mr. Sandip
Dasgupta, Advocates for the Respondent No. 2
Case Note:
Company - Determination of hearing of case - Company Law Board passed
an order by directing Petitioner to argue main case first and thereafter to
argue interlocutory Applications filed by Petitioner seeking interim
injunction - Hence, this Appeal - Whether Company Law Board was justified
in exercising its wisdom in changing order of hearing main Company
Petition and interlocutory Application - Held, on bare perusal of pleadings
of parties in connection with interlocutory Application as well as main
Company Petition, an impression might be developed that valuable time of
Company Law Board might be saved if main Company Petition was
considered along with said interlocutory Application as identical issue
relating to siphoning of Company's fund by way of donation through
particular group of trust was involved in both main Company Petition and
interlocutory Application filed by Petitioners seeking interim injunction -
However this apparent view could not be maintained ultimately as very
object of filing said interlocutory Application would be ultimately frustrated
if said Application was taken up for hearing with main proceeding - Further
even though common issue was raised in parent proceeding as well as in
interlocutory proceeding, said issue could not be decided by consolidating
hearing of parent proceeding with interlocutory proceeding as principles on
which said issue was required to be decided at different stages of parent
proceeding was different from each other - Very object of seeking
interlocutory relief by way of injunction would be frustrated if such
interlocutory Application was taken up for hearing after conclusion of
argument of main proceeding as suggested by Company Law Board in

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 impugned order - Thus Company Law Board was not justified in exercising
its wisdom in changing order of hearing of interlocutory Applications and
main matter - So justice would be subserved if interlocutory Application
filed by Petitioner for interim injunction and Application filed by
Respondent for dismissal thereof were considered in isolation of main
proceeding and prior to its disposal - Appeal disposed of.
JUDGMENT
J. Bhattacharya, J.
1 . The propriety of an order passed by the Company Law Board, New Delhi Bench
(CLB) on 15th July, 2013 in C.P. No. 01 of 2010 is under challenge in this appeal at
the instance of the appellants/petitioners. By the said order the appellants/petitioners
were directed to argue the main case namely C.P. No. 01 of 2010 first and thereafter
to argue interlocutory applications being C.A. No. 332 of 2011 and C.A. No. 338 of
2011. Such direction was given by the Company Law Board (CLB) by taking into
consideration the earlier two orders of this Hon'ble court passed in two different
appeals. One of such orders was passed by a Learned Single Judge of this Court on
26th September, 2011 in A.P.O. No. 267 of 2011 (Birla Corporation Ltd.-Vs-Birla
Education Trust and Ors.) which was heard analogously with A.P.O. No. 268 of 2011
(Madhav Prasad Priyamvada Birla Apex Charitable Trust and Anr.-Vs-Birla Education
Trust and Ors.). By the said order, an order passed by the Company Law Board (CLB)
on 11th July, 2011 in an interlocutory application (C.A. No. 332 of 2011) filed by the
petitioner, seeking interim injunction was set aside and the Company Law Board
(CLB) was directed to re-hear the petitioners' said interlocutory application being
C.A. No. 332 of 2011, along with the other interlocutory application being C.A. No.
338 of 2011 filed by the respondent herein for rejection of the petitioners' said
application for interim injunction, afresh for considering the petitioners' prayer for
final relief as well as interim relief. While disposing of another appeal being A.P.O.
No. 154 of 2011 (Birla Education Trust and Ors.-Vs-Birla corporation Ltd. and Ors)
the Learned single Judge of this court passed another order on 10th May, 2013
wherein though His Lordship, refused to interfere with the orders of the Company
Law Board (CLB) which were impugned in the said appeal but directed the CLB to
consider the dispute involved in the main case being C.P. No. 01 of 2010 on its own
merit. His Lordship observed that His Lordship was not directing the Company Law
Board (CLB) to re-examine the prayer for interim order as the main petition had
reached the final stage of hearing before the said forum.
2. The Company Law Board (CLB) after considering those two orders passed by this
court in the aforesaid appeals, ultimately formed an opinion that the effect of earlier
order which was passed by this court on 26th September, 2011 in A.P.O. No. 267 of
2011 and A.P.O. No. 268 of 2011 directing the CLB to reconsider these two
interlocutory applications relating to interim injunction matter lost its force in view of
the subsequent order passed by this court on 10th May, 2013 in subsequent appeal
being A.P.O. No. 154 of 2011 whereby the main case was directed to be considered
on merit and thus by following the subsequent directions passed by this court in the
said appeal, the Company Law Board (CLB) passed an order on 15th July 2013, by
directing the petitioner to argue the main case first and thereafter to argue the
aforesaid interlocutory applications. The legality of the said order is under challenge
in this appeal.
3. Let me now consider as to how far the Company Law Board (CLB) was justified in

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 passing the aforesaid direction in the facts of the instant case. The
appellants/petitioners herein filed a company petition being C.P. No. 01 of 2010
claiming various reliefs therein by alleging oppression and mismanagement of the
company concerned viz., Birla Corporation Ltd. Amongst various allegations on which
the said company petition was found, siphoning of the fund of the said company by
way of donation through Madhav Prasad Priyamvada Birla Apex Charitable Trust, is
the major allegation against the respondents herein. Though initially no relief by way
of permanent injunction restraining the respondents herein from siphoning the fund
of the said company by way of donation through Madhav Prasad Priyamvada Birla
Apex Charitable Trust was prayed for in the main company petition, but subsequently
such relief was introduced in the main petition by way of amendment. Identical relief
by way of interim injunction during the pendency of the main proceeding being C.P.
No. 01 of 2010 was also prayed for by the petitioner in their interlocutory application
which was registered as C.A. No. 332 of 2011. The case made out by the
appellants/petitioners in their main company petition were mostly reiterated by them
in their interlocutory application. The defence which the respondents made out
against the petitioners' said interlocutory application is almost identical to the
defence which they made out in the objection to the main petition being C.P. No. 01
of 2011. Considering the fact that a common issue was involved in both the main
case and the interlocutory proceedings, the Company Law Board might have thought
that for speedy and expeditious disposal of the main proceeding, both the main case
and the interlocutory applications should be heard analogously. In fact, parties also
thought that justice would be sub-served if the main proceeding being C.P. No. 01 of
2010 was heard along with the aforesaid two interlocutory applications. Accordingly,
with the consent of the parties, the company petition No. 01 of 2010 was listed along
with those two interlocutory applications for hearing on 19th, 20th & 21st March,
2012. In fact, on 2nd May, 2013 the petitioners' interlocutory application being C.A.
No. 332 of 2011 was taken up for hearing and the petitioners' counsel was heard-in-
part on that date. However, subsequently, the said part-heard matter was released
from the Bench on the personal ground of the Judicial member of the Company Law
Board. Thereafter when the petitioners' said interlocutory application was placed for
hearing before the other Judicial Member of the Company Law Board on 15.07.2013
the said Bench of the Company Law Board, decided to change the order of hearing of
the interlocutory applications and main company petition by taking note of the
direction passed by this High Court on 10th May, 2013 in A.P.O. No. 154 of 2011 and
directed the petitioner to argue the main case first and thereafter the interlocutory
applications.
4 . Mr. Mukherjee, Learned Senior Counsel appearing for the Respondent No. 2
supported such decision of Company Law Board in changing the order of hearing of
the main company petition and the interlocutory applications by relying upon the
following decisions of the Hon'ble Supreme court, wherein it was held by the Apex
court that when no specific direction is given in the remand order for hearing the
interlocutory applications first before the main matter is taken up for hearing, it is
within the wisdom of the Trial Court to decide as to the matter which should be heard
first:-
(i) In the case of Kanchusthabam Satyanarayana-Vs-Namudari
Atchutaramayya reported in MANU/SC/0155/2005 : AIR 2005 SC 2010
(ii) In the case of Reserve Bank of India & Anr.-Vs-Ramkrishna Govind Morey
reported in MANU/SC/0448/1976 : AIR 1976 SC 830

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 5. Let me consider as to how far the Company Law Board was justified in exercising
its wisdom in changing the order of hearing the main company petition and the
interlocutory application, with reference to the above decisions of the Hon'ble
Supreme Court.
6 . No doubt, on bare perusal of the pleadings of the parties in connection with the
interlocutory application as well as the main company petition at a glance, an
impression may be developed that the valuable time of the Company Law Board may
be saved, if the main company petition is considered along with the said interlocutory
application as identical issue relating to siphoning of the company's fund by way of
donation through a particular group of trust managed by the Lodha Family is involved
in both the main company petition and the interlocutory application filed by the
petitioners, seeking interim injunction but this, apparent view cannot be maintained
ultimately as the very object of filing the said interlocutory application will be
ultimately frustrated if the said application is taken up for hearing with the main
proceeding. The said interlocutory application was filed, seeking interim injunction
for restraining the respondents from siphoning the Birla Company's fund by way of
gift through a particular trust managed by Lodha group during the pendency of the
main proceeding. Thus if this interlocutory application is considered after the
disposal of the main matter or along with the main matter, then the interim
protection which the petitioners are seeking in aid of their ultimate relief and/or for
protecting the status quo of the subject matter of dispute, pending disposal of the
main matter cannot be achieved by them even if it is ultimately found that it was a fit
case where such protection ought to have been granted at the interim stage for
preventing siphoning of the company's fund pending hearing of main matter.
7. That apart interlocutory application for injunction is considered by applying three
well-established principles of law i.e., (1) Prima facie case, (2) Balance of
convenience and inconvenience and (3) Irreparable loss and injury which cannot be
compensated in terms of money value. Whereas the relief by way of permanent
injunction claimed in the main proceeding is considered on the basis of the pleadings
and evidence of the respective parties with reference to their conflicting claims over
their full-proof legal rights relating to the subject matter of dispute in the main
proceeding. As such even though a common issue is raised in the parent proceeding
as well as in the interlocutory proceeding, the said issue cannot be decided by
consolidating the hearing of the parent proceeding with the interlocutory proceeding
as the principles on which the said issue is required to be decided at different stages
of the parent proceeding is different from each other. In my view the very object of
seeking interlocutory relief by way of injunction will be frustrated if such
interlocutory application is taken up for hearing after conclusion of the argument of
the main proceeding as suggested by the Company Law Board in the impugned order.
8. Thus I cannot agree with the submission of Mr. Mukherjee that the Company Law
Board was justified in exercising its wisdom in changing the order of hearing of the
interlocutory applications and the main matter. After hearing the Learned Advocate of
the parties and after considering the materials on record this court feels that justice
would be sub-served if the interlocutory application filed by the petitioner for interim
injunction and the application filed by the respondent for dismissal thereof are
considered in isolation of the main proceeding and prior to its disposal. However,
since the hearing of the main case was consolidated with the hearing of these two
interlocutory application, with consent of parties, this court, by giving effect to such
agreement arrived at between the parties, disposes of this appeal by directing the
Company Law Board to hear out those two interlocutory applications along with the

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 parent proceeding being C.P. No. 01 of 2011 and dispose of all at a time by passing a
common judgment and/or order as early as possible but positively within one month
form the date of communication of this order with this rider that in the event the
Company Law Board finds that the main proceeding being C.P. No. 01 of 2010 cannot
be disposed of within the time limit as fixed above, the Company Law Board will have
to decide and dispose of those two interlocutory applications filed by the respective
parties within the time as fixed above and thereafter will proceed to dispose of the
main proceeding as expeditiously as possible so that main proceeding can also be
disposed of by the end of December, 2013.
9 . This direction is given by this court by keeping in mind the direction passed by
this court on 26th September, 2011 in A.P.O. No. 267 of 2011 and A.P.O. No. 268 of
2011, whereby the Company Law Board was directed to re-hear these interlocutory
applications, as in my view the effect of such decision passed in these two appeals
was not lost by the subsequent direction passed by this court on 10th May, 2013 in
A.P.O. No. 154 of 2011 as this Hon'ble Court while directing the Company Law Board
to decide the main matter on merit, with an observation that His Lordship was not
directing the Company Law Board to re-examine the prayer for interim order, as the
main petition had reached the final hearing stage, also granted leave to the appellant
to make appropriate application before Company Law Board, seeking restrain order
on further release of donation through the said trust with a rider that if such
application is made, the Company Law Board would pass appropriate order in that
regard, upon considering the competing claims of the parties on that point. Despite
no such separate application was filed by the petitioners in pursuance of the leave
granted to them, the Company Law Board, in my view, cannot avoid to consider the
pending interlocutory application being C.A. No. 332 of 2011 wherein identical
restraint order was claimed by the petitioners and the said application is yet to be
decided on merit by the Company Law Board.
10. The company appeal is thus, disposed of with the above directions.
1 1 . The impugned order is thus modified. In case those two interlocutory
applications cannot be disposed of within the time limit fixed above for any reason
whatsoever, the parties are at liberty to mention this matter for suitable direction.
Urgent xerox certified copy of this order, if applied for, be given to the parties as
expeditiously as possible.
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