REPORTABLE

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

J U D G M E N T

Dr. ARIJTI PASAYAT, J.

1. Leave granted.

2. Challenge 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.”

3. By order dated 23.1.2006 certain clarifications were made.

4. Factual 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

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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  12.1.2006.

Thereafter the 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 "

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5. The 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 security.

6. After hearing learned counsel for the parties we dispose of the appeal

with the following directions:

(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.

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7. We make it clear that we have not expressed any opinion on merits

because of the protection given by this Court.

8. The appeal is accordingly disposed of.

.............................................J. (Dr. ARIJIT PASAYAT)

..............................................J. (V.S. SIRPURKAR)

..............................................J. (ASOK KUMAR GANGULY)

New Delhi, April 20, 2009

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