# PU RN I MA MANTHENAAND ANOTHER v. DR. RENUKA DATLA & OTHERS

- **Citation:** [2015] 11 S.C.R. 218
- **Court:** Supreme Court of India
- **Decided:** 2015-10-06
- **Case number:** Civil Appeal No. 8275 of 2015
- **Bench:** V. Go Pala Gowda, Amit Ava Roy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/pu-rn-i-ma-manthenaand-another-v-dr-renuka-datla-others-30285
- **Pages:** 38

## Headnote

Companies Act, 1956:
s.10F - Appeal under, against interim order - In the
instant case, promoter of a company died leaving behind
respondent no.1-wife and 3 daughters who were appointed
as directors of the company - Dispute arose behtieen them
0
regarding holding of certain board meetings and appointment
of daughters as Directors and continuance of respondent
no. 6 as directOr- Respondent no. 1 moved CLB and sought
interim relief which prayer was declined- On appeal uls. 1 OF,
High Court allowed the appeal elaborately delving into factual
E details bearing on all facets of disputes between parties -
Held: High Court being fully conscious that the proceeding
before the CLB was pending for final adjudication, proceeded
to undertake an in-depth exercise to analyse the facts and
the law involved and recorded its decision on merits in total
F substitution of the order of the CLB - This was in absence of
any pleadings by the appellants, the contesting Directors
before the CLB -
Having regard to the fact that the appeal
before thf! High Court uls. 1 OF of the Act was one from an
interim order passed in exercise of judicial discretion at the
G stage of mentioning, 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 - High Court, in any view of
the matter, was not dealing with a regular appeal uls. 1 OF
H on a question of law from a decision rendered by the CLB
218
PURNIMA MANTHENA v. DR. RENUKADATLA
219
on merits,
after a complete adjudication - No final A
determination on merits was warranted as it has the effect of
pre judging disputed questions pending before the CLB.
s. 1 OF - Role of appellate forum under - Held: While
the language applied ins. 1 OF evinces that all orders, whether B
final or interlocutory, can be.the subject-matter of appeal, ifit
occasions a que$tion of law, the Section per se defines the
perimeters of inquisition by the appellate forum conditioned
by the type of the order under scrutiny- Whereas an appeal
u/s. 1 OF from an order granting or refusing interim relief, C
essentially in the exercise of judicial discretion and based
on equity is one on principle and no interference is merited
unless the same suffers from the vice of perversity and
arbitrariness, such constrictions may not necessarily regulate
and/or restrict the domain of examination in a regular appeal D
on facts and law.
s.10-F- Scope.of- Held: s.10F of the· Act engrafts
the requirem.ent of the existence of a question of law.arising
from the decision of.the CLB as an essential pre-condition E
for the maintainability of an appeal thereunder.
Interlocutory order: Scope of - Held: 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 F
issues at that stage, thereby rendering the principal
determination otiose or redundant.
Allowing the appeals, the Court
H.ELD: 1. A question of law, as is comprehended in G
Section 1 OF of the Act, would arise, 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 H
220
SUPREME COURT REPORTS
(2015] 11 S.C.R.
A 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 logically persupposes an adjudication on the facets of the
controversy involved and mere deferment thereof to a
B 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
C issues involved in a given case, may be termed to be
one. In any view of the matter, the appellate forum
though exercising a jurisdiction which

## Text

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A
B
c
[2015] 11S.C.R.218
PU RN I MA MANTHENAAND ANOTHER
v.
DR. RENUKA DATLA & OTHERS
(Civil Appeal No. 8275 of 2015)
OCTOBER 06, 2015
[V. GO PALA GOWDA AND AMIT AVA ROY, JJ.]
Companies Act, 1956:
s.10F - Appeal under, against interim order - In the
instant case, promoter of a company died leaving behind
respondent no.1-wife and 3 daughters who were appointed
as directors of the company - Dispute arose behtieen them
0
regarding holding of certain board meetings and appointment
of daughters as Directors and continuance of respondent
no. 6 as directOr- Respondent no. 1 moved CLB and sought
interim relief which prayer was declined- On appeal uls. 1 OF,
High Court allowed the appeal elaborately delving into factual
E details bearing on all facets of disputes between parties -
Held: High Court being fully conscious that the proceeding
before the CLB was pending for final adjudication, proceeded
to undertake an in-depth exercise to analyse the facts and
the law involved and recorded its decision on merits in total
F substitution of the order of the CLB - This was in absence of
any pleadings by the appellants, the contesting Directors
before the CLB -
Having regard to the fact that the appeal
before thf! High Court uls. 1 OF of the Act was one from an
interim order passed in exercise of judicial discretion at the
G stage of mentioning, 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 - High Court, in any view of
the matter, was not dealing with a regular appeal uls. 1 OF
H on a question of law from a decision rendered by the CLB
218
PURNIMA MANTHENA v. DR. RENUKADATLA
219
on merits,
after a complete adjudication - No final A
determination on merits was warranted as it has the effect of
pre judging disputed questions pending before the CLB.
s. 1 OF - Role of appellate forum under - Held: While
the language applied ins. 1 OF evinces that all orders, whether B
final or interlocutory, can be.the subject-matter of appeal, ifit
occasions a que$tion of law, the Section per se defines the
perimeters of inquisition by the appellate forum conditioned
by the type of the order under scrutiny- Whereas an appeal
u/s. 1 OF from an order granting or refusing interim relief, C
essentially in the exercise of judicial discretion and based
on equity is one on principle and no interference is merited
unless the same suffers from the vice of perversity and
arbitrariness, such constrictions may not necessarily regulate
and/or restrict the domain of examination in a regular appeal D
on facts and law.
s.10-F- Scope.of- Held: s.10F of the· Act engrafts
the requirem.ent of the existence of a question of law.arising
from the decision of.the CLB as an essential pre-condition E
for the maintainability of an appeal thereunder.
Interlocutory order: Scope of - Held: 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 F
issues at that stage, thereby rendering the principal
determination otiose or redundant.
Allowing the appeals, the Court
H.ELD: 1. A question of law, as is comprehended in G
Section 1 OF of the Act, would arise, 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 H
220
SUPREME COURT REPORTS
(2015] 11 S.C.R.
A 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 logically persupposes an adjudication on the facets of the
controversy involved and mere deferment thereof to a
B 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
C issues involved in a given case, may be termed to be
one. 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
0 confine its judicial audit within the layput of the
adjudgment undertaken by the forum of lowe,r 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,
E otherwise awaiting final adjudication on merit-s 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
F determination otiose or redundant. This is more so, if
the pleadings of the parties are incomplete at the
threshold stage and the lower forum concerned seeks
only to ensure a working arrangement vis-a-vis the
dissension and postpone fuller and consummate
G appreciation of the rival assertions and the recorded
facts and the documents at a later stage. [Paras 45] [249D-H; 250-A-C]
2. While the language applied in Section 10F
H evinces that all orders, whether final or interlocutory,
PURNIMA MANTHENA v. DR. RENUKADATLA
·221
can be the subject-matter ·of appeal, if it occasions a A
question of law, 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. . B
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 C
-interference is merited unless the same suffers from the
vice of perversity and arbitrariness, such constrictions
•
may not necessarily regulate-and/or restrict the domain
. of examination in a regular appeal on facts and law. 0
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 E
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.
[Para 46] [250-0-H; 251-A]
F
'
3. Reverting to the present facts, noticeably the
parties are contentiously locked on several issues, legal
and factual. While seeking the intervention of the CLB
on the key accusation of oppression and misG
management as conceptualised in Sections 397 and 399
of the Act, respondent No. 1 had retraced the march of
events from 9.4.2013, the qate on which, according to
her, when the meeting of the Board of Directors, invalid
in law, was convened and conducted by respondent H
222
SUPREME COURT REPORTS
[2015] 11 S.C.R
A no.6, who allegedly had no authority to do so, he 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
B from time to time.
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 mismanagement and highlighting in that regard, the
C 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
0
contesting Directors have not only endc>rsed 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
E 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 15.4.2013 addressed by
respondent No.1 seemingly acknowledging the lawful
F induction of the appellant 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 VKD in
G 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
H before the High Court. [Para 47] [251-B-H; 252-A-C]
PURNIMA MANTHENA v. DR. RENUKADATLA
223
4. The High Court being fully conscious that the A
proceeding before the CLB was pending for final
adjudication, proceeded to undertake an in-depth
exercise to analyse the facts and the law involved and
has recorded its decision on merits in total substitution
of the order of the CLB. This is in absence of any B
pleadings by the appellants, the contesting Directors
before the CLB. This assum~s importance as the High
Court resorted 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 C
mentioning. Having regard to the fact that the appeal
before the High Court under Section 1 OF of the Act was
one from an interim order passed in exercise of judicial
discretion at the stage of mentioning, bearing in mind 0
the permissible parameters of exercise of appellate
jurisdiction in such matters, the elaborate pursuit so
undertaken by it, is neither . contemplated nor
permissible. Keeping in view the stage wise delineation
of the jurisdictional frontiers of the forums in the E
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, F
thereby rendering the petition before the CLB redundant
for all intents and purposes. (Paras 48-49] (252-D-G; 253D-E]
\/. S. Krishnan and Others etc. vs. Westfort Hi-tech
Hospital Ltd. and Others etc. 2008 (3) SCR 184:
(2008)3 SCC 363; Wander Ltd. and Another vs.
Antox India P. Ltd. 1990 (Suppl.) SCC 727;
Election Commission of India and Another vs. Dr.
Subramaniam Swamy and Another 1996 (1)
G
H
224
A
B
c
D
E
F
G
H
SUPREME COURT RE;PORTS '
(2015] 11 S.C.R.
Suppl. SCR 637: (1996) 4 sec 104; The
Commissioner of Income Tax, Bombay vs. The
Scindia Steam Navigation Co. Ltd. 1962 (1) SCR
788; La/it Kumr Modi vs. Board of Control For
Cricket in India and others 2011 (15) SCR 1004:
(2011)10 SCC 106; Banku Chandra Bose and
another vs. Marium Begam and another AIR 1917
Cal 546; Gokaraju Rangaraju Vs. State of A.P.
1981 (3) SCR 474: (1981) 3 sec 132; State of
Punjab and others vs. Krishan Niwas 1997 (2)
SCR 1135: (1997) 9 SCC 31; A.R. Antulay vs.
R.S. Nayak&Another(1988) Suppl.1SCR1; Raj
Kumar Shivhare vs. Assistant Director, Directorate
of Enforcement and Another2010 (4) SCR 608:
(2010) 4 SCC 772; Waman Shriniwas Kini vs.
Rafi/al Bhagwandas & Co. (1959) Suppl. 2 SCR
217; V. S. Krishnan and Others etc. vs. Westfort
Hi-tech Hospital Ltd. and Others etc. 2008 (3)
SCR184: (2008) 3 SCC 363; Dale & Carrington
lnvt. (P) Ltd. and Another vs. P.K. Prathapan and
Others 2004 (4) Suppl. SCR 334: (2005) 1 sec
212; Pankaj Bhargava and Another Vs. Mohinder
Nath and Another 1990 (3) Suppl. SCR 508:
(1991) 1sec556- referred to.
Case Law Reference
2008 (3) SCR 184
referred to.
Para 32
1990 (Suppl.) sec 727
referred to.
Para 32
1996 (1) Suppl. SCR 637 referred to.
Para 32
1962 (1) SCR 788
referred to.
Para 32
2011 (15) SCR 1004
referred to.
Para 32
AIR 1917 Cal 546
referred to.
Para 32
1981 (3) SCR 474
referred to.
Para 32
1997 (2) SCR 1135
referred to.
Para 32
PU RN I MA MANTHENA v. DR RENUKA DATLA
225
(1988) Suppl. 1 SCR1
referred to.
Para 32
A
2010 (4) SCR 608
referred to.
Para 33
(1959) Suppl. 2 SCR 217 referred to.
Para 33
2008 (3) SCR 184
referred to.
Para 33
2004 (4) Suppl. SCR 334 referred to.
Para 33
B
1990 (3) Suppl. SCR 508 referred to.
Para 33
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8275 of 2015.
From the Judgment and Order dated 15.04.2015 of the c
High Court of Judicature at Hyderabad for the State of
Telangana and the State of Andhra Pradesh in Company
Appeal No. 17 of 2014
WITH
D
C.A. Nos. 8276 and 8277 of 2015
P. S. Raman, Shyam Divan, Yogesh Raavi, Tatini Basu,
Ritu Bhalla; Kumar Shashank, Yajur Mittal, S. S. Shroff,Archana E
Sahadeva for the Appellants.
,.
·- .
Parag P. Tripathi, Sajan Poovaiah, P. P. Rao,Anil Kumar
Tandale,A. V. S. Raju,AnkurChawla, J. Balaji, Rangadas, D.
Pochaiah, M.A. Chinnasamy, V. K. Sidharthan, S. Jain, Ashok
F
Aggarwal, FirasatAli, Adil Sharfuddin, Ujjal Banerjee, Amish
Tandon, A. Sridhar, S. Madhusudhan Babu, Archana
Sahadeva, Swarnendu Chatterjee for the Respondents.
The Judgment of the Court was delivered by
G
AMITAVA ROY, J. 1. 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
H
226
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A 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
B 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
C 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
D short hereinafter to be referred to 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
E order dated 12.5.2015, having regard to the considerations
referred to therein and as aceepted by the learned counsel for
the parties, did make an endeavour to effect an amicable
settlement through mediation which, however, did not fructify.
F The learned counsel forthe parties, as is recorded in the order
dated 21. 7 .2015, on instructions, vouched thatthe 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.
G
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 of2015 (whoarealsorespondentNos.4&5
in SLP (C) No. 12835 of 2015 and 5 & 6 in SLP (C) No.
H 20338 of 2015), Mr. Shyam Divan, learned senior counsel for
PURNIMA MANTHENA v. DR. RENUKADATLA
227
[AMITAVAROY, J.)
the appellant in CivilAppeal arising out of S.L.P. (C) No. 12835 A
of 2015 (who is also respondent No. 5 and 4 in SLP (C) No.
12831 of2015 and SLP (C) No. 20338 of2015 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 of2015 and
B
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 C
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, D
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.
E
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
F
nourished it from strength to strength. The 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 Dalla, who continued as the Chairman-cum-Managing G
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. NoticeablyDr. Vijay Kumar Datla, in his individual
capacity, then did hold 81% of the shares thereof.
H
228
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A
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
B 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
C his resignation letter dated 6.4.2013.
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,
D 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 Dalla (appellant). The
respondent No. 1 did not attend the meeting and as the minutes
of the proceedings would record, leave of absence was granted
E 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
Dalla. Mr. G.V Rao (respondent No. 6), was authorised, inter
F 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.
G 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.
H 5), Mrs. Purnima Manthena (respondent No. 4) and Ms.
PURNIMA MANTHENA v. DR. RENUKA DATLA
229
[AMITAVAROY, J.]
Mahima Datla (appellant), amongst others, were present. The A
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
B
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 C
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 D
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 batla (appellant) as Managing
E
Director of the company.
12. Though the pleaded assertion of respondent No. 1
is tliat she was neither noticed nor informed of the meetings
held on 9.4.2013, 10.4.2013 and 11.4.2013 and that the
F
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 furtherthatthe meeting dated 9.4.2013 was
sans the prescribed quorum, the progression of events attest G
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
H
230
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A
(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 tlie "blessings and guidance" of all
concerned for enabling her to discharge her new responsibility.
B 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, Dr.
Vijay Kumar Datla.
c
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
D 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
E 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
F 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.
G Mahima Datla (appellant), 4594 equity shares held by Dr. Vijay
Kumar Datla (HUF) were transmitted in their favour in equal
shares.
15. A meeting of the Board of Directors was thereafter
H convened on 22.8.2013 of which a notice was served on the
PURNIMA MANTHENA v. DR. RENUKADATLA
231
[AMITAVAROY, J.]
respondent No. 1. She did attend the meeting albeit with A
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 ad_opted 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
B
as Company Petition No. 1 of 2013, seeking principally a C
declaration that the appointments of her three daughters
namely; Ms. Pumima 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 D
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 have any authority
to convene the aforesaid meet\ngs and transact the business E
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 F
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 G
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 H
considering the rival pleadings and the documents laid before
232
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A
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
Dalla (appellant) to be the Managing Director of the company.
B
It was of the view that, though she received 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
C 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
D 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
E and that Mahima Dalla (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
F continuing as the Executive Director of the company and that
Mahima Dalla (appellant herein) being associated with its
affairs was well acquainted therewith and that in tile 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
G 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
H the Act. The respondent No. 1 was left at liberty to participate
PURNIMA MANTHENA v. DR. RENUKADATLA
233
[AMITAVAROY, J.)
in the said Annual General Meeting and the company was A
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 1 OF of the Act being
Company Appeal No. 1 of2014, she participated in the Annual
General Meeting held on 18.12.2013 in which, resolutions on
B
the appointment of the appellants as Directors/Managing C
Director and amongst others, the enhanced remuneration of
respondent No. 1 were adopted. Eventually on 24.2.2014,
the appeal stood disposed of as infructuous on the concurrence
of the parties to join for the necessary endeavours for early
disposal of the Company Petition No. 1 of 2013.
· D
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 of2014 in the Court of Chief Judge,
City Civil Court, Hyderabad substantially traversing the above E
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
F
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.
· G
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 manner known
H
234
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A
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
B 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 oftheAct, 1956 and Sections 58
and 59 of the CompaniesAct, 2013. As the pleaded assertions
made therein would attest, those were in substantial reiteration
C of the facts narrated hereinabove, with the added imputation
that the respondents therein were contemplating to transfer
and consign the undertakings of the company ~o other
companies incorporated and managed by the appell~nt herein
and other Directors so as to enable them, to dispose of the
D 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
E under Sections 391to394 of the Act before the High Court of
Andhra Pradesh for demerger of the 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
F 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
G 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
H administrator and/or Special Officer for the management and
PURNIMA MANTHENA v. DR. RENUKA DATLA
235
[AMITAVAROY, J.]
control of its affairs. She reiterated her prayer for (i) declaring A
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 Dalla (since deceased) to the B
appellant (Ms. Mahima Dalla) as illegal, null and void. A
declaration to adjudge the resolutions passed in 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 C
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 corn prising of her representative D
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, un,derstandably,it
being the date of first hearing, the pr[[naryfacts, as adverted
E
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
demergerwas scheduled to be held on 7.8.2014, as directed
F
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 G
appropriate to restrain the appellant (Ms. Mahima Dalla) 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,
H
236
SUPREME COURT REPORTS
[2015) 11 S.C.R.
A the CLB recorded the submission on behalf of the
respondents therein that there was no intention to do so vis-avis 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
B 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
C 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
D be the next date.
E
23. The respondent No. 1 herein, being aggrieved,
preferred an appeal being Company Appeal No. 17 of 2014
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
F of the discord and eventually granted the following reliefs.
G
H
"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. 1companv. 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.
PURNIMA MANTHENA v. DR. RENUKADATLA
237
[AMITAVAROY, J.]
3. All the decisions sha!I be taken by the Board based A
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.
B
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.184of2014.
5.
The Board shall not take any major policy decisions
unless there is unanimity among all its members and
without the prior approval of the Company Law Board.
c
6. The ad hoc Board shall continue to function till O.S.
No. 184 of 2014 is disposed of and appropriate orders D
in C.P. No. 36 of2014 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
E
25. The appeal was allowed and the accompanylng
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
F
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 G
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 9.4.201 ~. H
238
SUPREME COURT REPORTS
(2015] 11 S.C.R.
A
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
B 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
C 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
D 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,
E without the induction of an outsider as an administrator/
receiver, issued the above-mentioned directions to ensure
the same.
27. As would be evident from the steps enumerated in
F 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
G 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
H till the suit was finally disposed of.
PURNIMA MANTHENA v. DR. RENUKA DATLA
239
[AMITAVA ROY, J ]
28. To put it differently, by the impugned verdict, the A
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
B
from proceeding with Company Petition No. 36 of 2014 till
the suit was decided, understanqably was to postpone the
adjudication therein, till after the final determination of the
issues in the suit.