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2017 (5) TMI 1791 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, BANGLORE
Condonation of delay of more than 45 days in filing appeal - inherent power under Rule 11 of the NCLAT Rules 2016, to condone the delay - grievance of the appellant is that Registrar of the NCLAT has not made any endeavour to decline to register the appeal on failure to remove the defects within 7 days as prescribed under sub-clause (4) of Rule 26 - HELD THAT:- As per the provisions of the NCLAT Rules 2016 read with Section 422 of the Companies Act 2013, if defects are not removed within 7 days and the defects are removed after 7 days i.e. beyond the period prescribed under the rules, the appeal is treated to be a fresh appeal. Such procedure is followed so that the appellants may get advantage of 'court fee' prescribed under the NCLAT Rules and may use the same 'paper book' which are generally voluminous. If the Registrar General would have refused to register the appeal after 7 days, as per clause (4) of Rule 26, the appellant would have filed a fresh appeal with fresh court fee with separate sets of paper book, separate affidavit, separate vakalatnama which would be disadvantageous to the appellants.
Appeal was filed on 31st March 2017, and the defect was to be removed within 7 days i.e. by 7th April 2017. Therefore, no extension of time could have been granted even by the Registrar to remove the defects particularly when the Appellate court has no power to condone delay after 90 days of receipt of judgment which expired on 7th April 2017 in the present case.
In the present case, curiously the applicant has not explained the delay and laches on his part. It has not explained that why the appeal was not filed within 45 days of receipt of the certified copy of the judgment i.e. by 21st February 2017. They have also not explained the delay for preferring the appeal for another 38 days i.e. till 31st March 2017 when it was filed - Though it was open to the applicant to file a petition before Appellate Tribunal with prayer to ignore the minor defects, no such application was filed by appellant. The appeal was taken back on 3rd April 2017 and they re-filed on 1st May 2017 i.e. beyond the period of 90 days from the date of receipt of judgment passed by Tribunal, when Appellate Tribunal had no jurisdiction to entertain the appeal.
The unexplained delay on the part of the applicant and laches on his part show that applicant does not deserve exercise of inherent power - application dismissed.
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2017 (5) TMI 1775 - DELHI HIGH COURT
Seeking a direction to the respondents to complete the inquiry on the complaint made by the petitioner of professional misconduct within a maximum period of four weeks - HELD THAT:- The petitioner has filed the complaint in September - October 2016, which the respondent states, is under active consideration.
The matter is under active consideration. There is no justification shown by the petitioner for issuance of a direction to the respondents to expedite hearing of the complaints of the petitioner. The petitioner has to wait for its turn, as several matters are pending before the Director (Discipline). No ground for urgency has been pleaded or shown.
Petition dismissed.
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2017 (5) TMI 1764 - THE NATIONAL COMPANY LAW TRIBUNAL KOLKATA BENCH
Scheme of compromise or arrangement - Jurisdiction - power of Tribunal to grant dispensation of the shareholders' meeting regarding the proposed scheme of amalgamation where all the shareholders have given consent - scope of Companies Act - Companies Act, 2013 has authorized only for the dispensation of the meeting of creditors where creditors having at least 90% value agreed and confirmed by way of an affidavit scheme - the matter was heard before the Bench - both the member differ on certain points and gave separate judgements and on that basis the matter was referred to the Hon'ble President under the provisions of Section 419(5) of the Companies Act, 2013 for constituting larger Bench - matter was then referred to the 3rd Member, Ms. Manorama Kumari, Member (Judicial).
HELD THAT:- Hon'ble President, NCLT referred the matter to the 3rd Member, Ms. Manorama Kumari, Member (Judicial) who has given a separate judgement and has passed order, which is annexed herewith as Annexure C.
As per Ms. Manorama Kumari, Member (Judicial),
There is imperative need to examine Section 230 and Section 232 of the Companies Act, 2013 and Rules made thereunder including the NCLT Rules, 2016 in the context of the objectives of the new Act and the legislative history behind this subject - Section 230(3) Companies Act, 2013 and Section 232(2) of the said Act and Rule 6 of the Companies (Compromises, Arrangements and Amalgamations Rules 2016, both start with the word "Where" and this has to be read with the word "may" as mentioned hereinabove. Now a question arises, that what was the legislative intent and the ratio decidendi behind using the word "may" and it is important to understand as to why the High Courts have exercised discretion under Section 391(1) of the Companies Act, 1956. It has to be accepted that the word "may" introduces an element or an essence of discretion and whenever the question of discretion comes in, authority follows and perhaps that is the reason why the authority and the inherent powers are granted so that in the interest of justice the same can be exercised in appropriate situations.
It cannot be ignored that almost all the High Courts have exercised this discretion since long and dispensed with the calling of the meetings in appropriate situations. The precedents created by the High Courts to dispense with the requirement of convening the meetings are worth and continuation of such precedents are virtue in the era of ease of doing businesses as well as future course of corporate actions. A settled issue should not be unsettled without proper reasons. Thus the notion that calling of meetings is mandatory does not stand.
In this case, number shareholders of both the applicant companies are very small (including majority common shareholders) and all of them have given their consents for the scheme in writing and the financial position of applicant/ amalgamated company shall have positive net worth post effectiveness of the Scheme and there has been no compromise with the creditors and that the respective creditors would, in no way, be affected by the scheme and that all the liabilities of the Amalgamating Company shall stand transferred to the Amalgamated Company. Scheme does not contemplate any corporate debt restructuring exercise.
Section 232 of the Companies Act, 2013 is a specific provision carved out by the legislature when both the conditions mentioned in clauses (a) and (b) of sub-section (1) of Section 232 of the said Act are satisfied - The Tribunal is empowered to take appropriate steps in the interest of justice under Rule 11 of National Company Law Tribunal Rules, 2016 read with Rule 24(2) of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
Various directions regarding holding, convening as well as dispensing of various meetings issued.
Application allowed.
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2017 (5) TMI 1762 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Validity of 'the fake Board Resolutions uploaded with the Form No.MGT-14 transferring 500 shares by the 2nd Respondent to 3rd Respondent' - validity of allotment of 90,000 shares solely to the 2d Respondent at the purported Board meeting dated 3rd September, 2014 - HELD THAT:- From reading of the impugned order dated 1st March, 2017, it is found that submissions made by all the parties was not discussed. Ld. Tribunal without going into the merits of the case passed certain orders and directions.
It is a settled that when a Court of law or a Tribunal do not decide a case on merit has no jurisdiction to pass any specific order and directions including interim order, though it is always open to the Court/Tribunal to ask the parties to move before an appropriate forum. As it is held that the Tribunal had no jurisdiction to pass any specific order where it has not decided case on merit, we have no other option but to set aside impugned order dated 01.03.2017 passed by NCLT. The said order is set aside, accordingly. The case stands remitted to the Tribunal.
Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1744 - NATIONAL COMPANY LAW TRIBUNAL
Restoration of name of Company in the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- n the basis of the report of the Registrar of Companies it appears that the name of the company was struck off on account of non-filing of statutory documents w.e.f 2008-2009. The appellant has again filed the application for revival of the company. Permission for revival of the company can only be granted on the condition of compliance with the requisite formalities which the Registrar of Companies has pointed out in his report.
The petitioner is directed to file the documents including the Balance Sheets and Annual Returns upto the year 2016 and deposit the fees of ₹ 1,04,000/- as mentioned out in the report of the Registrar of Companies within four weeks from the date of the order. If all the requisite formalities are complied with within the prescribed time, then applicant company may be revived - petition disposed off.
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2017 (5) TMI 1740 - NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD
Oppression and Mismanagement - appointment of Director - It is the case of the petitioner that he was away from the management and affairs of the 1st respondent company from 2012, of course, according to the petitioner, on account of non-cooperation from respondents. According to the respondents, on 08.10.2013, in the meeting of Board of Directors of the 1st respondent company, respondent 3 was appointed as Director.
Whether appointment of respondent 3 as Director of the company as per resolution passed in the Board of Directors meeting held on 8th October, 2013 is valid?
HELD THAT:- From the material available on record it is clear that petitioner himself stayed away from affairs of the company from 2012. Admittedly petitioner changed his residence which is recorded in the register of company - It is only on 20.10.2016 petitioner informed 1st respondent company about change of his address from 4A, Anupam Bungalows, New City Light Road, Surat to B/202, Dreamworld Residency, Canal Road, Near G.D. Goenka School, Surat. It is the duty of the petitioner to inform the change in his address and it is not for the company or other shareholders to find out the change in address of the petitioner. Therefore, petitioner has no right to say that he was not served with notice.
Without placing any material on record by merely filing form MGT-7 it cannot be concluded that petitioner attended five Board meetings. Therefore, from the facts and the material available on record it appears that the petitioner was not involved in the management affairs of the company from 2012 to 2016.
Considering the powers of this Tribunal under section 242(2) of the Companies Act, 2013 in order to do substantial justice to the parties and smooth conducting of business and affairs of the company, this Tribunal under section 242(2) of the Companies Act, 2013 can pass an order even in absence of finding of oppression. Petitioner being one of the promoters of the company and being a technical person would certainly have rights and expectation, which would submerge in corporate structure. Legitimate expectations of the petitioner in the business of the company shall also be safeguarded and at the same time the interest of the company and inputs given by the respondents shall also be taken into consideration.
The appointment of respondent 3 as director is set aside. Allotment of shares as per resolution dated 26.12.2016 is set aside. Petitioner is not entitled for any other reliefs in this petition.
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2017 (5) TMI 1729 - THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI
Cancellation of shares of 1st Respondent - Respondents not only wants to get rid of Section 100 to 104 of the Companies Act, 1956 but also in the other provisions made under the SEBI Act - HELD THAT:- The present case is not that of statute incorporated into another statute, while enacting or amending or by repeal.
It is true that SEBI Act is a special law, complete code in itself containing elaborate provisions to protect interest of investors. The Companies Act, 1956 or Companies Act, 2013 is not in conflict with the SEBI Act. Therefore, the SEBI Act is required to be followed by all parties, including 1st and 2nd Respondents. Regulation 37 of LODR merely reiterates and adopts Section 101 of the Companies Act, 1956 and Section 66 of Companies Act, 2013 apart from other provisions such as Section 391 to 394 of the Companies Act, 1956 and Section 230 to 234 of the Companies Act, 2013.
Admittedly, the Company Petition is pending before the Tribunal and no deliberation or finding has been given about 'oppression and mismanagement' by one or other respondents to the Company Petition. After final hearing the Company Petition may be allowed or may be dismissed or disposed off with certain observations. In such a situation whether the Tribunal was competent to pass the orders dated 24th August 2016 or not is to be doubted. The order passed on 24th August, 2016 in true sense may not be called to be an interim order for regulating the conduct of the affairs of the company. The said order has nothing to do with the affairs of the company - However, as the order dated 24th August 2016 is not under challenge, expressing some doubt about the order, we do not intend to interfere with the said order as the order dated 24th August 2016 has reached finality.
Thus, No case was made out by Respondents asking for interim order under sub section (4) of Section 242 of the Companies Act, 2013. Such interim order can be passed only for regulating the conduct of the affairs of the company if so necessary.
Whether compliance of Section 100 to 104 of Companies Act, 1956 is to be followed? - HELD THAT:- The Central Government issued notification w.e.f. 1st June 2016 transferring all cases from the Company Law Board to Tribunal. By another notification dated 7th December 2016, the cases pending before the Hon'ble High Courts have been transferred to the Tribunal, except the cases where certain order (s) have been passed by the Hon'ble High Courts. Since 7th December, 2016, the Hon'ble High Courts have no jurisdiction to entertain any petition under Section 100 of the Companies Act, 1956. Therefore now onward, the question of confirmation by the Hon/ble High Court of a special resolution for reduction of the share capital, as stipulated under Section 100 of the Companies Act, 1956 does not arise. The provision of Section 100 has become redundant.
The question of order of High Court confirming the reduction of share capital of the company as mentioned in clause (a) or delivering to him a certified copy of the order or a minute approved by the High Court, as mentioned in clause (b) of sub-Section (1) of Section 103 of the Companies Act, 1956 does not arise - As SEBI Act is a special law, a complete code which is to be read in harmony with the provisions of Companies Act is required to be complied with by companies, including the Respondents. Similarly, the Regulations and circulars issued by SEBI are also required to be followed as they not in conflict with the Companies Act, 1956 or Companies Act, 2013 but are supplementary. Therefore, the Respondents are bound to follow all the Rules, Regulations and Circulars, except to the extent of Section 100, 101 and 102 of Companies Act, 1956 which are not feasible to comply, the power of the High Court having been divested.
The Respondents are directed to follow the mandatory provisions of SEBI Act, Regulations and directions, except Section 100 to 102 of Companies Act, 1956 for giving effect to Tribunal's order dated 24th August, 2016 - appeal allowed.
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2017 (5) TMI 1689 - CALCUTTA HIGH COURT
Dismissal of a company petition applying the principles of Order 7 Rule 11 of the Code - concept of demurrer interchangeably with an application for rejection of plaint under Order 7 Rule 11 of the Code - HELD THAT:- The expression demurrer, when used in connection with an application seeking dismissal of a petition on a preliminary or maintainability point shall not imply automatic admission of facts contained in the plaint or petition whose dismissal is sought for by opposing party. The principles of Order 7 Rule 11 would apply in relation to such petitions, and if it is found that adjudication of such motion involves mixed questions of fact and law, then adjudication of that question would stand deferred, and those points would be left to be determined on trial. Though there does not appear to be a clear Indian authority on this point as yet, from the decisions to which I have referred to earlier, it is apparent that the practise followed in England and the US had never been accepted as a part of Indian jurisprudence. The term "demurrer" in the Indian context has been construed to have connotation wider than the dictionary meaning, and motions for dismissal of a proceeding on a preliminary point has been commonly referred to as applications "in demurrer". Otherwise, no statutory reference to this term has been brought to my notice. The U.S. and English principle on demurrer does not apply in the Indian context. Law in India proceeds on a different trajectory on this point, and I do not find any reason to adopt a different course though such a course would be compatible with the US and the English principles.
It is not possible for me to conclude at this stage that the consent decree was obtained by playing fraud upon Court. BCCL must have opportunity to meet HIT's challenge to the decree on such allegations through a proper adjudicatory process. A recall petition, which is usually decided following summary procedure for such purpose is inadequate instrument - For the same reason, initiation of contempt action or a proceeding under Section 340 of the 1973 would not be proper course in the facts of this case at this stage.
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2017 (5) TMI 1661 - NATIONAL COMPANY LAW TRIBUNAL, HYDERABAD
Oppression and mismanagement - HELD THAT:- It is not in dispute that in order to file a petition under sections 397/398 of Companies Act, 1956, one of prerequisites is that party is supposed to hold either not less than one hundred members of company or not less than one-tenth of total number of its members as prescribed under section 399.
As stated it is settled position of law that one has to satisfy requirement(s) of statute at the time of filing petition/application. The contention that shares totalling 4,23,250 as held by Smt. D. Umavathi (16th petitioner) should not be counted for the purpose of constituting minimum percentage , due to her death, is not at all tenable. Moreover, her legal heirs are admittedly petitioners in the Company petition. As stated supra, the Company is a closely held Company, and no issue of shares to public had ever taken place. Respondent Nos. 3 to 5 are neither shareholders nor directors as held supra. The petitioners are admittedly holding sufficient number of shares as per documents filed, and it was also examined by CLB at the initial stage itself. We are satisfied that powers of Attorney in question have been duly executed in accordance with law and the petition is properly instituted and it is maintainable.
Acts of oppression and mismanagement are not specifically defined in the Companies Act, and it should be inferred from facts of each case. In the instant case, the following acts constitute acts of oppression and mismanagement on the part of respondent Nos. 3 to 5 apart from others:
a. Acts of respondent No. 3 by promising several things for beneficial interest of Company and thereby forcing the second respondent deceitfully to enter into agreement dated 9.10.2003 and then did not comply with those terms, which ultimately ended in its termination, even though second respondent has no authority to enter into such an agreement;
b. Taking management of Company by Respondent No. 3 in an illegal manner by making nominal investments in it;
c. Filing of several civil and criminal cases on false allegations and applying illegal methods to run the Company, contrary to directions CLB , BIFR and Civil Courts ;
d. Taking so many decisions including increase of share capital of ₹ 11.30 crores basing on unenforceable agreement dated 09.10.2003, and fabricating fake balance sheets and allotment of shares out of such alleged increased share capital without receiving any consideration ;
e. Acts of oppression and mismanagement still being continued even though respondent suffered two decrees as mentioned above and not willing to. leave the Company to the duly elected Board of Directors by shareholders of the Company;
f. Several reports including report of Advocate commissioner appointed by this Tribunal, pointed out several illegal acts on the part of respondent No. 3 to 5.
g. It is serious acts of oppression and mismanagement on the respondent Nos. 3 to 5 to continue the management and filing several petitions, raising frivolous contents/allegations especially after the respondent Nos 3 to 5 suffered two decrees as stated supra thereby depriving duly elected Board of Directors to manage the affairs of Company as per wishes of shareholders of Company on the pretext present Company petition is pending disposal.
The Respondents No.3 to 5 by raising several frivolous litigations before various Courts/Authorities, have caused so much hardship to the Petitioners as well as to the Company. They are bent upon to abuse the process of law and thereby got so much financial advantage out of the running of the affairs of the Company. As explained above, the Respondents No.3 to 5 have not stopped in interfering with the affairs of the Company, even when, they have suffered two decree and also CLB Order dated 16.07.2008. They were also removed from the Board of Directors as per the EGM conducted on 02.01.2008 and the agreement dated 03.10.2003 was also terminated. Hence it is a fit case to award costs against Respondents No.3 to 5.
The order dated 22.11.2011 passed by BIFR by directing '3(1) Reddy Group to continue to manage affairs of the Company and to submit fully tied up DRS to IDBI(OA) within six weeks on behalf of the Company and (ii) IDBI(OA) to examine the DRS and convene the joint meeting of all concerned, and submit fully tied up DRS, if emerges to the Board within next six weeks” was subsequently stayed by AAIFR vide order dated 09.02.2012/21.02.2012 and also granted stay of all further proceedings of BIFR till the main appeal was finally disposed of. It is to be mentioned herein that by virtue of promulgation of new Companies Act, 2013, all proceedings pending before BIFR/AAIFR stands abated. After suffering two decrees as stated above and also in view of interim order dated 16.7.2008, the respondent Nos. 3 to 5 do not have any locus standi to continues as MD/Directors and to interfere in the affairs of Company. And the alleged allotees out of shares of alleged increased share capital would not get any rights and when Respondent Nos. 3 to 5 themselves have no right to pass any resolution to increase the same. So the impugned increased share capital and subsequent allotment of those shares would not bestow any rights on those allottees. Hence, there is no necessity to implead those alleged allottees of shares and the Tribunal is fully empowered to interfere with this issue. It is relevant to point out general principle of law which says 'Nobody can convey a better title that what one has'. In the instant case, the Respondent Nos. 3 to 5 themselves have.lost all rights in the Company and thus they convey nothing to anybody else including so-called allotees out of alleged increased share capital. Moreover, as stated supra, in the plaint filed by respondents have clearly stated that capital of Company remains same without any enhancement as contended now.
The acts respondent Nos. 3 to 5 are conducting affairs of the Company in illegal manner causing irreparable damage and loss in a manner prejudicial to shareholders of the Company and also against public law disobeying all orders of various judicial forms as stated supra. The facts and circumstances as mentioned above would indicate that ordering winding up of Company would be just and equitable but it would unfairly prejudice and burdensome to shareholders of the Company and it is also against public interest. Hence, it is necessary to put an end the illegal interference of Respondent Nos. 3 to 5 in the affairs of Company so as to see that its affairs are being conducted by legally constituted Board of Directors as stated. Therefore, it is a fit case for this Tribunal to exercise its jurisdiction and powers conferred on it, u/s 397, 398 and 402 and other applicable provisions of Companies Act, 1956, read with relevant comparable provisions under new Companies Act, 2013.
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2017 (5) TMI 1657 - PUNJAB AND HARYANA HIGH COURT
Quashing of clause 9.5.1.2 of the excise policy and to set aside the notice dated 17.03.2017 inviting tenders - Validity of appointment of respondent No.3 as an exclusive L-1BF licensee - Haryana Liquor License (Amendment) Rules, 2017 - Held that:- The Financial Commissioner had the power to make rules regulating the number of wholesale licences in the State of Haryana as a composite whole. It did so by making rule 24(i-eeee), which prescribes that there would be only one wholesale licence for the State of Haryana.
The Financial Commissioner has by the impugned provisions in the policy and the rules protected the revenue by providing for a single wholesale licence. He cannot be faulted for that. The total revenue including licence fees and the levies under the Act in the previous Excise Year 2016-17 was only about ₹ 22 crores, whereas, under the present policy, the revenue already generated is over ₹ 62 crores - This brings us to the petitioners’ apprehension. It was submitted on behalf of the petitioners that the amended rule and the stipulation in the policy that there would be only one wholesale licence in the entire State of Haryana adversely affects the rights of the petitioners and those similarly situated. The prejudice, according to them, is that that the sole wholesaler can pick and choose and dictate commercial terms at will. If there were more licensees the competition would safeguard the sellers and buyers interests as well.
The State, we will presume, even in the trade and business of liquor must act fairly and impartially and not arbitrarily. We will presume that in granting liquor licences and permits the State cannot adopt a pick and choose policy and must throw the field open to all those who are otherwise eligible. In the present excise policy, the State has permitted every eligible party to bid. It has not discriminated against or in favour of any party. The essential criteria for the appointment of the wholesaler is the value of the bid - The challenge to the policy and to the rule on the ground that the appointment of a sole wholesaler in respect of an L-1BF Licence would adversely affect the commercial interests of those who he deals with or those who must deal with him, such as, the petitioners is not well founded. As we noted earlier, theoretically it is possible that the commercial interests of certain dealers and manufacturers will be affected, in as much as, the sole wholesaler will have the choice of who it would deal with. The sole wholesaler would also be entitled to grant better facilities to some of the dealers. That, however, would not render the policy illegal - The contractor is not bound to consider the application of every party for the supply of material required for the construction of the buildings. The contractor is entitled to obtain the material from such parties as it desires and on such terms and conditions that the contractor desires. The suppliers of the material would not be entitled to compel the contractor to afford them an opportunity of supplying the material. The rules of the game that apply to a State or an instrumentality of the State do not apply to such contractors.
The State is entitled to deal in liquor to the exclusion of all others. We will presume that when it parts with its privilege it is bound to consider the claims of all the parties who are eligible to acquire this privilege. Once the State parts with this privilege and vests it in a private party, the rules of the game that apply to the State cease to operate. The licensees are thereafter entitled to operate the licences as they please so long as they do not violate any provision of law and so long as they abide by all the terms and conditions of the licences. The State Government may impose conditions upon the licensees. However, so long as the State does not place any such restriction, the licensee is entitled to procure the stock from and sell it to any party and on any terms and conditions, save those stipulated in the policy or the licence.
Petition dismissed.
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2017 (5) TMI 1635 - NATIONAL COMPANY LAW TRIBUNAL, KOLKATA
Corporate insolvency process - permission to withdraw the Petition - Held that:- Application filed under Section 9 of the IBC 2016, for initiating Corporate Insolvency Resolution Process, has been admitted on 20/04/2017 and in compliance of the order dated 20/04/2017 publication of notice was made in Newspapers for inviting claim from other creditors and for declaration of Moratorium.
It appears from the provisions of Section 9(5)(ii)(b) that if repayment of the debt amount is made by the Operational Debtor, then adjudicating authority has power to reject the Petition, before admission of the Petition. After the admission, the Petition acquires the character of Representative suit and through publication of Notice in Newspapers, applications have been invited from all the creditors of the company to file their claim before IRP. After admission of the Petition under IBC 2016, the Petition cannot be dismissed on the basis of compromise between Operational Creditor and Operational Debtor, because other creditors of the company have also right to file their claim.
After admission of Petition under IBC 2016, the nature of petition changes to representative suit and the lis does not remain only between Operational Creditor and Operational Debtor. Therefore, Operational Creditor and Operational Debtor alone have no right to withdraw the Petition after admission. On the above basis it is clear that the Application regarding permission to withdraw the Petition is not maintainable at this stage and therefore, the IA deserves to be dismissed.
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2017 (5) TMI 1602 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI
Whether insolvency process can be triggered in a matter where the default had occurred beyond a period of 3 years and the claim has become time barred on account of period of limitation prescribed by the Limitation Act, 1963 or by virtue of rule of prudence developed by the Courts.
Held that:- When the period of limitation was absent for filing of a writ petition, Hon'ble the Supreme Court has taken the view that the period of limitation as prescribed in the Limitation Act would be the maximum. Constitution is supreme and fundamental law of/and all laws take guidance from the Constitution. Therefore, it is binding on all including this Tribunal.
Then we ask learned Counsel for the Applicant whether an application under IBC would be maintainable to recover the amount which fell due 50 years ago. Mr. Mehta, learned Counsel for the Applicant lowered his eyes and was not able to propose any straight answer. We are thus of the considered view that this Tribunal cannot be a flowering pot for claims which have become dead and are wholly time barred.
Petition fails and dismissed.
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2017 (5) TMI 1573 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Initiation of Corporate Insolvency Resolution process - no notice issued - Held that:- Giving a prior notice under Section 8 of I&B Code is mandatory before initiation of interim resolution process, such notice having not been issued in this case, the adjudicating authority rightly rejected the application.
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2017 (5) TMI 1537 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI
Corporate Insolvency Resolution Process - Held that:- It could never have been the intention of the legislature to consider a matter as serious as placing the Company in the hands of a Resolution professional in a mechanical way without due application of mind of the Adjudicative Authority. Should this have been the case, then every corporate entity, who has no assets in hand and has incurred great liabilities be it acquisition of cars or assets acquired and to personal use of Directors, would resort to a simple way of filing such an application to escape any recovery proceeding or even civil imprisonment on being declared Insolvent.
Taking a hyper technical view of the provisions would open the flood gates of people forming Companies, incurring expenses in the name of the company and then filing for Insolvency Resolution Process under the Code for enjoying a Moratorium. The object of the Code is not to provide for an escape route to a Company or its Directors who have incurred great debts and are unable to liquidate the liabilities after availing services and goods (stock in trade) from various suppliers, loans from banks, friends and family.
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2017 (5) TMI 1527 - NATIONAL COMPANY LAW TRIBUNAL, DELHI
Since the matter is part heard in the Principal Bench, it may be listed for further hearing in the said Bench. Accordingly, the matter be posted for hearing on Tuesday, the 30lh May, 2017.
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2017 (5) TMI 1526 - BOMBAY HIGH COURT
Non prosecution - Held that:- Called out for final hearing. None appears for the Appellant. When the Appeal was called out for final hearing on 25th April 2017, none appeared for the Appellant.
Hence, we dismiss the Appeal for nonprosecution.
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2017 (5) TMI 1481 - SECURITIES APPELLATE TRIBUNAL, MUMBAI
Holiday schemes launched - club membership - SEBI directed the appellant to refund the money - Held that:- A perusal of the brochure made available to investors brings out the true nature of the scheme in question. Clause 16 of the said document categorically states that the Appellant reserves the right to modify/alter/amend/revoke the benefits/privileges and or the terms and conditions contained in whole or in part at its sole discretion or according to the prevailing market conditions/cost factors. It is, therefore, clearly borne out that the Company has complete control over activities pertaining to the scheme as is rightly brought forth by the Respondent in its submission with reference to clause 16 of the brochure/offer document of the scheme. The underlying philosophy of the fourth ingredient is that the day to day management of the money pooled under the scheme and the scheme’s working in general is at the company’s discretion, and not the investors. The investors, in this case, have no say in the day to day control of the scheme or over their investments. Once the contributions are made to the Company, those contributions are completely under the Appellant’s control and management. In our considered opinion, clause 16 proves beyond any doubt that complete control is conferred over the day to day management and operation of the scheme on the Appellant-Company and not the investors.
From an analysis of the facts and circumstances of the instant matter and the provisions of Section 11AA of the SEBI Act, we find that the holiday schemes launched by the Appellants fall squarely within the definition of a CIS as set out in Section 11AA(2) of the SEBI Act. We, therefore, have no hesitation in upholding the said finding of the Respondent in the Impugned Order.
An “existing” CIS means a CIS which is in operation as on January 25, 1995. In the case of the Appellants in the instant matter the company was incorporated only in 1997 and the ‘schemes’ under question were started around 2001-2002. As such the appellant is clearly not an “existing” CIS and cannot derive any benefits from the same. Therefore, in the facts and circumstances of the present matter wherein the CIS, in violation of the Regulations, collected a rather enormous amount of approx 7000 crores, we find that the investors’ interest will not be served by making Regulation 73 applicable. The Impugned Order, therefore, deserves to be upheld.
The Appellant has disposed of its assets to repay investors disregarding several conditions that were to be complied with as put forth by SEBI before such disposal. Our attention is also drawn towards the fact that the appellants transferred these investments to other schemes but have given a false affidavit that investors have voluntarily switched over to the non refundable schemes. This seems to be an afterthought manoeuvring by the appellants with a view to deprive the investors of benefits which were originally promised by the appellants under the earlier schemes which in fact govern the relationships/obligations and entitlements.
The Interveners through their misc. applications have brought on record, though belatedly before this Tribunal, instances where the original receipts and the other documents of the investors were collected by the appellant company leaving the investors high and dry even without the documents. Shri Hazari has shown us many documents to bring home his points. The additional documents which the interveners wanted to bring on record were not produced before SEBI while the proceedings were going on for many years. However, Shri Hazari has fairly submitted that he would fully support the SEBI order so that the interest of all investors in the appellants’ various schemes could be protected effectively and since we are going to dismiss the appeals by upholding the order of SEBI, all these intervention applications shall, accordingly, stand disposed of.
The Impugned Order is, accordingly, upheld and the appeals are hereby dismissed.
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2017 (5) TMI 1433 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI
Conversion from public to private company - Alternation of articles by special resolution subject to the approval by the tribunal - Held that:- Petitioner has complied with provisions of Section 14 to be read with Rule 68 of NCLT Rules, 2016. Therefore, having regard to all the circumstances, the conversion from public to private is in the interest of the Company which is being made with a view to comply efficiently with the provisions of Companies Act, 2013 causing no prejudice either to the members or to the creditors of the Petitioner. Therefore, the conversion is hereby allowed. The Petitioner is hereby directed to give effect of the conversion by requisite alteration in its Articles which is hereby addressed and communicate the altered Articles within a period of 15 days to the Registrar.
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2017 (5) TMI 1321 - KARNATAKA HIGH COURT
Petition for winding up - Held that:- There are serious disputes between the parties with regard to their rights and liabilities, as mentioned above, the parties have already taken recourse to the arbitration proceedings, therefore, the parties should settle their disputes before the Arbitral Tribunal. The winding up petition is not the right remedy for settling the dispute between the parties. For, a winding up proceeding is a summary proceeding, wherein this court is not expected to hold a mini-trial.
Therefore, for the reasons stated above, this winding up petition is devoid of any merit. It is, hereby, dismissed.
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2017 (5) TMI 1275 - MADRAS HIGH COURT
Refund of sale consideration deposited with the Bank with interest - auction purchaser in vacant possession of the property - sale of secured asset under the SARFAESI Act - Held that:- The representation that the property is free from encumbrance and that he would get vacant possession soon made the petitioner to take part in the auction and to submit his bid. Even according to the Bank, details of litigations were not disclosed in the auction notification in spite of clear knowledge. The petitioner with a fond hope that he would be in a position to enjoy the property made his offer which was accepted by the bank. The petitioner deposited the amount way back on 24.07.2008. The bank was expected to put the petitioner in vacant possession of the property within a reasonable time. Even after a period of nine years, the bank is not in a position to deliver vacant possession. The secured asset is now in the midst of civil litigations. There is also a criminal case in respect of the mortgage relating to the secured asset. The petitioner waited all these years. It was only when he was convinced that the chances of culmination of litigation is very remote, the petitioner made a request to the bank to refund the amount. The bank instead of admitting its mistake in not disclosing the encumbrances, and litigations, dragged the petitioner from pillar to post and finally prompted him to approach this court. In view of the background facts, the bank is liable to refund the sale consideration to the petitioner.
The petitioner is entitled to interest which we fix at 12% per annum. We direct the bank to refund the sale consideration viz. ₹ 62,00,000/- (Rupees Sixty Two Lakhs only) to the petitioner with interest at the rate of 12 % per annum, calculated from 24.7.2008 within a period of four weeks from the date of receipt or production of a copy of this order. The bank is given liberty to cancel the sale certificate.
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