On an appeal arising from an order passed by the Division Bench of the High Court of Delhi, wherein it had allowed a company appeal against an order passed by the learned Single Judge of the High Court vacating its own interim order of status quo restraining the transfer, selling or alienating of properties purchased six land-owning companies; the Hon’ble Supreme Court set aside the order of the blanket restraint.
Commercial investors of a company had filed a winding-up petition before the High Court of Delhi, against the Company, alleging therein that the Respondent Company had siphoned off the monies of investors to six land-owning companies, which were allegedly related party Companies of Respondent Company. During the course of the winding-up proceedings, the learned Single Judge of the High Court directed the Respondent Company to deposit a sum of Rs 1.5 crore with the Registrar of the High Court. However, failing to comply with said direction, vide an order of the High Court, the Respondent Company went into liquidation. The single Judge had further, vide an interim order, restrained the six land-owning companies from transferring, selling or alienating the properties till further orders.
Aggrieved by the same, the appellant preferred application for vacation of the aforesaid interim orders which was allowed by the Single Judge. Aggrieved by the vacation of the interim order, the investors preferred a company appeal. The Division Bench of the Delhi High Court vide the impugned judgment and order allowed the appeal, and thereby once again, restrained the transfer, selling or alienation of the properties purchased by the consortium of six companies.
The appellants before the Supreme Court contended that since the liquidation proceedings are only in respect of Respondent Company; under Section 337 & 339 of the Companies Act, 2013, Company Court could have passed an order only in respect of Respondent Company. The appellants had further submitted before the court that the claim of investors, the company petitioners, is hardly a few crores, and for a paltry amount claimed by them, the entire project admeasuring 115 acres has been entirely stalled, thereby blocking the entire investment of the present appellant.
The Hon’ble Supreme Court did not enter into the legal issue of the scope under section 339 of the Companies Act, 2013. However, the Hon’ble Court noted that while passing an order of injunction, the courts are required to be guided by the principles of prima facie case, balance of convenience and irreparable injury. The Hon’ble Apex Court further stated that assuming for a moment that the investors, company petitioners, along with the other claimants have a claim of around Rs 31 crores, the entire project in an area of 115 acres cannot be stalled.
The Hon’ble Supreme Court held that a blanket order directing maintenance of status quo in respect of all the 11 properties admeasuring 115 acres is not justified. If such an order is allowed to continue, it will cause irreparable injury to the appellant inasmuch as the entire development would be stalled. Insofar as the interests of the investors are concerned, the same can be protected by directing the appellant to file an undertaking before this Court.
The Hon’ble Supreme Court, thus, set aside the judgment and order passed by the Division Bench of the High Court and directed the appellants to file an undertaking before itself, that they shall not create any third-party rights in respect of the said properties.
Developer Group India (P) Ltd. v. Surinder Singh Marwah
(2023) 7 SCC 814
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