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(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

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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

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as  “the Act”)  assailing the order dated 6.8.2014 passed by  

the  Company  Law  Board,  Chennai  Bench  (for  short,  

hereinafter to be referred to as “CLB”) in Company Petition  

No. 36 of 2014 filed by them.

3. While entertaining the instant appeals, this Court  

by  order  dated  12.5.2015,  having  regard  to  the  

considerations  referred  to  therein  and  as  accepted  by  the  

learned counsel for the parties,  did make an endeavour to  

effect  an  amicable  settlement  through  mediation  which,  

however,  did  not  fructify.   The  learned  counsel  for  the  

parties,  as  is  recorded  in  the  order  dated  21.7.2015,  on  

instructions, vouched that the day-to-day functioning of the  

company,  however  would  be  allowed  to  continue.   The  

appeals, in this backdrop have, thus, been analogously heard  

on merits  for disposal.

4. We  have  heard  Mr.  P.S.  Raman,  learned  senior  

counsel  for  the  appellants  in   Civil  Appeal  arising  out  of  

S.L.P. (C)  No. 12831 of 2015  (who are also respondent Nos.  

4 & 5 in SLP (C) No. 12835 of 2015  and 5 & 6 in SLP (C) No.  

20338 of 2015),  Mr. Shyam Divan, learned senior counsel  

for the appellant in Civil Appeal arising out of S.L.P. (C)  No.  

12835 of 2015 (who is also respondent No. 5  and 4 in SLP

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(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

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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.

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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.

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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.     

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12. 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,

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Dr. Vijay Kumar Datla.

13. 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.

14. 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.

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15. 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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

2. 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.

3. 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.

4. 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.

5. The  Board  shall  not  take  any  major  policy   

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decisions unless there is unanimity among all its  members  and  without  the  prior  approval  of  the  Company Law Board.

6. 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.

7. 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

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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.

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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,

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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

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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

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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

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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:

1. V. S. Krishnan and Others  etc. vs. Westfort Hi-tech   

Hospital Ltd. and Others etc.  (2008)3 SCC 363

2. Wander  Ltd.  and  Another  vs.  Antox  India  P.  Ltd.  

1990 (suppl.) SCC 727,

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27

3. Election Commission of  India  and Another  vs.  Dr.   

Subramaniam Swamy and Another (1996) 4 SCC 104

4. The  Commissioner  of  Income  Tax,  Bombay  vs.  The  

Scindia Steam Navigation Co. Ltd. 1962(1) SCR 788

5. Lalit  Kumr Modi  vs.  Board of  Control  For  Cricket  in   

India and others (2011)10 SCC 106

6. Banku Chandra Bose and another vs. Marium Begam  

and another AIR 1917 Cal 546

7. Gokaraju Rangaraju Vs. State of A.P. (1981)3SCC 132

8. State of Punjab and others vs. Krishan Niwas (1997)  

9 SCC 31.

9. 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

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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

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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

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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:

1. Raj  Kumar  Shivhare  vs.  Assistant  Director,   

Directorate of Enforcement and Another (2010)4SCC 772,

2. Waman Shriniwas Kini vs. Ratilal Bhagwandas & Co.  

(1959) Suppl. 2 SCR 217.  

3. V. S. Krishnan and Others etc. vs. Westfort Hi-tech  

Hospital Ltd. and Others etc.  (2008)3 SCC 363  

4. Dale & Carrington Invt. (P) Ltd. and Another vs. P.K.   

Prathapan and Others (2005) 1 SCC 212.

5. 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

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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

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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

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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.  

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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,

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.