Case Note & Summary
The appeal arose from a Company Law Board order allowing Respondent No. 2, Rajinder Kumar Malhotra (RKM), access to Plant No. 2 of Vidyut Metallics Pvt. Ltd. (VMPL), which the Appellant, Supermax Personal Care Pvt. Ltd. (SPCPL), claimed to possess under a Business Transfer Agreement dated 30 December 2010 and a Supplementary Agreement dated 18 March 2011. The dispute is rooted in a family feud between RKM (father) and his son Rakesh Malhotra, who controlled SPCPL. RKM had filed a company petition under Sections 397‑398 of the Companies Act, 1956, alleging oppression and mismanagement by the then directors of VMPL. The CLB passed interim orders restraining the ex‑directors and Rakesh from disposing of VMPL’s assets and directing status quo. Despite these orders, SPCPL later claimed possession of Plant No. 2, which was directly contradicted by earlier affidavits sworn by its own officers—Sanjay Jagtap and Subhash Chaudhari—who had deposed on behalf of VMPL that SPCPL was not in possession. When confronted, SPCPL argued that those statements were made on VMPL’s behalf and did not bind it, effectively admitting that false statements were made under oath depending on the party represented. Additionally, Rakesh Malhotra had filed an affidavit in UK proceedings listing VMPL’s Plant No. 2 as a VMPL asset, further undermining SPCPL’s claim. The court observed that these contradictory stands demonstrate scant respect for the judicial process. The judgment was reserved on multiple dates and pronounced on 30 November 2015, but the final decision is not recorded in the provided text.
Headnote
A) Company Law – Oppression and Mismanagement – Sections 397, 398 Companies Act, 1956 – Interim Relief – The Company Law Board passed orders restraining ex‑directors and Rakesh Malhotra from disposing of assets and directing maintenance of status quo over immovable properties of Vidyut Metallics Pvt. Ltd. (Paras 4).
B) Civil Procedure – Contradictory Affidavits – Abuse of Process – Statements on Oath – Parties taking contradictory stands on oath in different proceedings without legitimate explanation evince scant respect for the court and the rule of law. (Paras 2).
C) Company Law – Lifting Corporate Veil – Control and Management – Family Dispute – Though SPCPL claimed to be professionally managed and denied Rakesh Malhotra’s involvement, Rakesh admitted in overseas proceedings to being in control; the court observed that SPCPL’s denial was preposterous. (Paras 3, 4.3).
Issue of Consideration
Whether the Company Law Board order dated 2 February 2015 granting ingress to Respondent No. 2 into Plant No. 2 of Respondent No. 1, without the Appellant being a party and despite its claim of possession under a Business Transfer Agreement, is valid.
Case Details
2015 LawText (BOM) (11) 10
Company Appeal (L) No. 10 of 2015 in CLB Company Application No. 296 of 2014 in CLB Company Petition No. 13 of 2012
Mr. Ravi Kadam, Mr. A. Bookwala, Mr. Ashish Kamat, Mr. Ankit Lohia, Mr. Ranjit Shetty, Mr. Rohan Agrawal, Mr. Aspi Chinoy, Mr. Mustafa Doctor, Mr. Rohaan Cama, Mr. Rohan Dakshini, Ms. Shweta Jaydev, Mr. Prakhar Parekh, Mr. Ashwin Bhadang, Mr. Prashant Chawan, Mr. Navdeep Vora
Supermax Personal Care Pvt. Ltd.
Vidyut Metallics Pvt. Ltd. and Others
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Nature of Litigation
Appeal against Company Law Board order allowing respondent entry into plant premises despite appellant’s claim of possession under a business transfer agreement.
Remedy Sought
Setting aside of CLB order dated 2 February 2015 and protection of appellant’s possession and business operations at Plant No. 2.
Filing Reason
CLB granted ingress to Respondent No. 2 without the appellant being a party and while an arbitration petition concerning the same Business Transfer Agreement was pending before the High Court.
Previous Decisions
CLB order dated 2 February 2015; earlier CLB orders dated 2 February 2012 and 7 November 2012 restraining ex‑directors and maintaining status quo.
Issues
Whether the CLB order granting ingress to Respondent No. 2 into Plant No. 2 is valid in light of SPCPL’s claim of possession under the BTA and the pending arbitration
Whether SPCPL’s contradictory stands in affidavits constitute an abuse of the judicial process
Submissions/Arguments
SPCPL argued it was in lawful possession of Plant No. 2 under the BTA and Supplementary BTA since December 2010/March 2011, and that the CLB order improperly interfered with its rights without it being a party.
RKM argued that SPCPL’s claim of possession was false and collusive, orchestrated by Rakesh Malhotra after the ex‑directors could no longer retain control, and that SPCPL’s officials had previously sworn under oath that SPCPL was not in possession.
Judgment Excerpts
The Appellants' case is of possession of Plant 2 by virtue of the BTA dated 30th December, 2010 and the Supplementary BTA dated 18th March, 2011.
I deny that SPCPL has been put in possession of the suit property (i.e. Plant No. 2) or that they are now carrying on the business from the suit property.
This clearly demonstrates that these days, litigants show scant respect for Courts and the rule of law.
the Appellant is a professionally led and managed Company and none of the members of the Rakesh Malhotra family are on the Board of Directors of the Appellant.
Procedural History
RKM filed Company Petition No. 13 of 2012 before the CLB under Sections 397‑398 of the Companies Act, 1956, alleging oppression and mismanagement by then directors. CLB passed interim orders on 2 February 2012 and 7 November 2012 restraining disposal of assets and directing status quo. On 2 February 2015, the CLB passed the impugned order allowing RKM ingress into Plant No. 2. SPCPL filed the present appeal on 3 February 2015. The High Court heard arguments, reserved judgment on multiple dates, and pronounced it on 30 November 2015.
Acts & Sections
- Companies Act, 1956: 397, 398
