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2021 (11) TMI 616 - AT - Companies LawRights Issue - Seeking to raise additional share capital to enable the company to discharge the loans borrowed from the lenders - allegation of Right Issue is for a mala fide purpose and is the modus operandi to siphon further funds from the first Respondent Company - status-quo of shareholding pattern - It is the main contention of the Appellant that the loans/borrowings raised are not genuine and that they are ‘related party transactions’ - Section 62 (1) of the Companies Act, 2013 - HELD THAT:- The nature of relationship between the Corporate Lenders and the second Respondent has also not been explained or corroborated by any documentation and we observe that the said loans do not fall within the ambit of the definition of ‘Related Party Transactions’ as envisaged under Section 188 of the Companies Act, 2013. Be that as it may, keeping in view the Ledger Accounts, the Balance Sheets, the Respondents have sufficiently substantiated their contention that the money received from the two Corporate Lenders was a genuine loan. The material on record evidences that there is a ‘Status Quo’ Order passed by the III Additional Chief Judge, City Civil Court, Hyderabad in I.A. No.2371 of 2005 in OS No.328 of 2005, whereby and whereunder the City Civil Court restrained Company from alienating, transferring or encumbering the immovable property in any manner pending disposal of the Suit. The Company Law Board vide Order dated 14.07.2006 directed the Company to maintain ‘Status Quo’ in regard to the immovable properties held in the name of the Company, until further Orders. The inter-corporate loans were genuine and observe that if the debt due is not paid, there was a possibility that the Lenders could have taken coercive action for the recovery of their dues, the prayer sought for by the Respondents seeking Additional Capital by going for Rights Issue, is justified. When there is a need for funds and there is a ‘Status Quo’ Order restraining the Company from sale of any immovable property, the direction given by NCLT to allow the Respondent Company to raise Additional Capital by issuing Additional Shares for discharging the debt due to the Creditors is upheld. NCLT has noted in the concluding para that the person acquiring shares in pursuance of Rights Issue cannot exercise additional Voting Rights to the extent of shares accrued in the Rights Issue until further Orders or till disposal of the main Petition, whichever is earlier. Appeal dismissed.
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