Pranab Kumar Pal Vs.
M/S. Liz Investments Pvt. Ltd. & Ors.  INSC 800 (20 April 2009)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2654 of 2009 (Arising
out of SLP (C) No. 6597 of 2006) Pranab Kumar Pal ....Appellant Versus M/s.
LTZ. Investment Pvt. Ltd. and Ors. ....Respondents
Dr. ARIJTI PASAYAT,
in this appeal is to the order passed by a learned Single Judge of the Delhi
High Court. By the impugned Judgment the High Court held as follows:
"1. In respect
of this contract awarded by Tui-Nordic to Across India, Across India shall file
its statement of account every month giving the income/receipts and expenditure
on the said project.
(2) It shall also
give every three months, statement indicating the progress in the said project
(3) Across-India and/or Mr. Pal shall jointly and severally furnish security of
Rs.2.85 crores with the CLB to its satisfaction, so that in the event the
petition succeeds and it is held that these appellants have made unlawful gains
at the cost of the company, the company is able to recover the said loss
without any further process. In such form such a security is to be given is to
be decided by the CLB.
(4) CLB would be
entitled to put the appellant to such other similar terms, as it thinks fit, in
order to protect the rights of the respondents herein."
order dated 23.1.2006 certain clarifications were made.
position as highlighted by the appellant is as follows:
The Respondent No. l
filed a Petition before the Company Law Board under Sections 398, 402, 403, 235
and 237 of the Companies Act, 1956 (in short the `Act') alleging inter alia,
diversion of corporate opportunity by the appellant herein. The Company Law
Board vide its Order dated 09.06.2005 held that it prima facie finds that a
possible corporate opportunity had been taken away from the Respondent No.l
company and thereafter directed that the Respondent No.l should nominate three
Directors on the Board of Respondent No. 10 company and that status quo be
maintained. The Company Law Board further directed that the Petitioner should
be restrained from resigning as a Director of the Respondent No.2 company.
The appellant being
aggrieved by the said Order filed an Appeal before the High Court being Co. A.
(SB) No. 12 of 2005 and Respondent No.10 company filed an Appeal being Co. A.
No.(SB) 13 of 2005. After hearing, the High Court vide it composite Order dated
05.12.2005 in Co. A. No. (SB) No. 12 of 2005 and Co. A. No.(SB) 13 of 2005 set
aside the Order dated 09.06.2005 passed by the Company Law Board. The High
Court has further held that the appellant has a right to resign as a Director
of the Respondent No.2 company. However, several conditions have been imposed
by the High Court. Pursuant to the said Order, the appellant resigned on
Respondent No.1 filed a Clarification Application which was disposed of by the
High Court vide the impugned Order dated 23.01.2006, by holding that "it
is also informed that he has already resigned as a Director. It is made clear
that his resignation would come into force on the date security is accepted by
the CLB. This CA is disposed of "
appellant's stand is that he is gravely prejudiced by the impugned orders dated
05.12.2005 and 23.01.2006 which is completely antithetical to the freedom of
employment of an individual enshrined in Section 27 of the Indian Contract Act,
1872 (in short `Contract Act') read with Section 14 and Section 41 of the
Specific Relief Act, 1963 (in short `Specific Relief Act') in that it purports
to fetter the same by the imposition of conditions such as the provision of
hearing learned counsel for the parties we dispose of the appeal with the
(1) CLB shall decide
the matters afresh within a period of three months from today.
(2) All issues placed
before the parties shall be decided by the CLB.
(3) The directions to
deposit as given by the High Court will be subject to the decision of CLB.
(4) The contempt
proceedings shall remain in abeyance till the decision is given by CLB.
make it clear that we have not expressed any opinion on merits because of the
protection given by this Court.
appeal is accordingly disposed of.
(Dr. ARIJIT PASAYAT)