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Companies Law - Case Laws
Showing 21 to 40 of 47 Records
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2021 (2) TMI 656
Jurisdiction - Whether civil courts have jurisdiction to decide over the affairs of a company arise out of memo and articles of association of a company in terms of various provisions of Companies Act, 2013? - oppression and mismanagement - waiver of requisite condition - sections 241 and 242 of the Companies Act, 2013.
Jurisdiction of civil court vis-a-vis this Tribunal - HELD THAT:- There cannot be any doubt that the issues raised in the suit mentioned supra, and in the instant main company petition, fell under the jurisdiction of this Tribunal, as those issues are admittedly affairs of the company - Therefore, undoubtedly, the Tribunal is empowered to deal with the issue raised in the main company petition, as same is filed under sections 241 and 242 of the Companies Act, 2013 by alleging various acts of oppression and mismanagement. Moreover, the issue raised in the said suit is only relating to acceptance of the resignation. It is nothing to do with the acts of oppression and mismanagement, which is subject-matter of the main company petition.
Eligibility to maintain an application/petition - section 241 of Companies Act, 2013 - HELD THAT:- The Tribunal is empowered to waive all or any requirements specified under section 242(1), on an application made to the Tribunal in the matter. Accordingly, the applicant/petitioner has filed the instant application under section 244(1) read with sections 241 and 242 of the Companies Act, 2013, read with rules 11 and 34 of the National Company Law Tribunal Rules, 2016, seeking to waive requisite conditions to file the main company petition. Therefore, the instant application is maintainable.
The main company petition is filed by the petitioner by questioning various acts of oppression and mismanagement, which are found to be prima facie meritorious so as to consider those allegations at the time of final hearing of the case, after waiving the requisite condition as sought for. A meritorious/disputed litigation cannot be thrown at threshold without looking into merits of the case by the Tribunal/court by depriving aggrieved party remediless. The contention of the respondent that civil court has already decided the issues and thus the present application and main company petition are not maintainable, are baseless on facts and on law, as detailed supra. Moreover, the civil court has decided only in respect of the alleged acceptance of resignation, and civil court do not have any jurisdiction to decide the acts of oppression and mismanagement of the Companies Act, 2013.
It is clearly established that the applicant/petitioner has made out a prima facie case to entertain the main company petition for its final adjudication. Moreover, it is a settled position of law that a meritorious litigation cannot be thrown at threshold without examining the merits of the case. It is not in dispute that the applicant is admittedly, a shareholder of the company by holding 09 per cent. of its total shares. Therefore, the applicant/petitioner is entitled for waiver as prescribed, under section 244(1) of the Companies Act - petition allowed.
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2021 (2) TMI 607
Approval of scheme of amalgamation - Section 230-233 of the Companies Act, 2013 - HELD THAT:- Various directions regarding holding and convening of various meetings issued - various directions regarding issuance of notices with regard to the meeting also issued.
Application allowed.
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2021 (2) TMI 521
Violation of principles of natural justice - main grievance of the ‘Appellant’ is that the ‘Devas’ Company was grossly deprived of ‘Principles of Natural Justice’ and in fact, more than 2400 pages were filed on the side of the First Respondent/Petitioner before the ‘Tribunal’ in petition on the earlier date and on the next date, the Petition was numbered and listed before the ‘Tribunal’ - HELD THAT:- As per Section 273(1c) of the Companies Act, the ‘Tribunal’ has the requisite powers to pass interim orders, even against a stranger to the proceedings, with a view to preserve the property of the company Furthermore, the ‘Tribunal’ has necessary powers to appoint ‘Provisional Liquidator’ which will also necessarily affects the ‘rights’ and interests of numerous parties which may not be parties to the winding up proceedings - In this connection it is pertinent to make a mention that the ‘Tribunal’ has an inherent power to pass an ‘interim order(s)’, which is just and necessary to prevent an abuse of process of the ‘Tribunal’ or to advance the cause of Justice or to pass orders, which are vital to meet the ends of justice. In fact, the words, ‘occurring’ in Section 273(1)(e) of the Companies Act, 2013, ‘any other order as it thinks fit means that the ‘Tribunal’ in ‘winding up petition’ has wide powers to pass necessary orders.
In so far as the ‘Principles of Natural Justice’ are concerned, it cannot be imprisoned in a strait-jacket form. It cannot be lost sight of that a necessary party is an individual who should have been arrayed as a ‘party’ and in whose absence, no effective order can be passed by a ‘Court of Law’/’Tribunal’, as the case may be - It is to be remembered that a ‘proper party’ is a ‘party’ who although not a necessary party, is a ‘Person’ whose presence will enable the ‘Tribunal’ to completely, effectively, efficaciously and adequately to determine all the issues/questions encircling around a particular case.
Although the ‘Appellant’ claims that it is ‘Shareholder’ of Third Respondent/Devas Multi Media Pvt.Ltd.(Company) presently holding 3.48% of Issued Equity Share Capital therein and in as much as the impugned order dated 19.1.2021 passed by the National Company Law Tribunal according to the Appellant, affects its right to participate in the ‘Affairs’ and ‘Management’ of Third Respondent, this ‘Tribunal’ taking note of the entire facts and Circumstances of the instant case, in a Conspectus Fashion at this stage, simpliciter without traversing / and not delving deep into the controversies centering around the pending main C.P.No.06/BB/2021 pending on the file of National Company Law Tribunal, Bengaluru Bench, deems it fit and proper in ‘Directing’ the ‘Appellant’ to file necessary ‘Interlocutory Application’ before the ‘Tribunal’ seeking permission to implead itself in the main pending Company Petition setting out necessary facts/reasons for the same and if such an ‘Application’ is filed by the ‘Appellant’ for redressal of its grievances before the ‘Tribunal’, then the ‘Tribunal’ can take it on file (if it is otherwise in order) and after numbering of the same it shall provide ‘reasonable opportunity of being heard’ to the respective sides by adhering to the ‘Principles of Justice’, and to pass an order ascribing reasons on merits, of course, in the manner known to ‘Law’ and in accordance with ‘Law’.
The instant Company Appeal shall stand disposed of, but without costs.
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2021 (2) TMI 520
Seeking an order of injunction directing the Respondents to restore the board of the Directors of SIIL to its composition as it stood as on 7 November 2019 and more particularly in respect of Applicant No. 1 as a Director on the Board of Directors of SIIL - temporary order of injunction restraining the respondents from any further alteration to the composition of the Board of Directors of SIIL - seeking an order of injunction directing SIIL to send to Applicant No. 1, all notices and communications with respect to affairs of SIIL and its board of directors including but not limited to notices and agenda for all Board Meetings of SIIL - seeking an order of injunction directing the respondents to restore the board of directors of EEL to its composition as it stood as on 30 July 2020 and more particularly in respect of Applicant No. 3 being reinstated as a Director on the board of directors at EEL - seeking temporary order of injunction restraining the respondents from any further alteration to the composition of the board of directors of EEL - seeking an order of injunction directing EEL by to send to Applicant No. 3, all notices and communications with respect of affairs of EEL and its board of directors, including but not limited to notices and agenda for all Board meetings of EEL - seeking restraint on Respondents from interfering the in the day to day management of the trade division of SIIL and EEL and to maintain status quo in relation to the functions, operations and present location of the trade division headed by the applicants - seeking Injunct on Respondent No. 3 to Respondent No. 6 from commencing any venture / partnership / management / agreement directly or indirectly competing with the business of SIIL and/or EEL; and/or using the brand name, trade-name, mark or any other intellectual property right relating to “SOLAR” - seeking Injunct on Respondents from acting through and/or constituting any committee (in any manner – especially comprising of directors on the board) from investigating into the allegations as raised by Applicants with respect to SIIL and EEL.
HELD THAT:- Following observations are made:
i. In the case on hand R1 was founded jointly by father of A1 & R3, wherein the family of the father, family of R3 and family of A1 were made as members who were subscriber to the Memorandum of Association and were allotted 400 shares each at the time of incorporation of the Company.
ii. We have noticed that there is family settlement entered into between the Applicants and R3 to R6. The family settlement envisages not only the way and manner in which the assets of the family had to be partitioned but there also is an agreement that even in future businesses to be started there shall be a discussion among the family members and the shareholding will be devised in a particular manner. Further, the Family Settlement Agreement was signed by Mr. Nandlal Nuwal & Mrs. Sohandevi Nandlalji Nuwal (as Party No. 1); R3 & R6 (as Party No. 2); A1, A2 & A3 (as Party No. 3); and R4 & R5 (as Party No. 4).
iii. We are of the view that it would not be proper at the interim application stage to decide anything on merit to find out whether R1 is a quasi partnership or not. This can only be considered while deciding the Company Petition.
iv. Even though A1 has become Director of the Company after few years of incorporation it is to be noted that he was the Director in the Company for the past 15 years and also functioning as the Vice Chairman of R1. It cannot be said that he is the Director of the company because of some professional qualifications. He has been a Director of this Company only by virtue of shareholding like R3 and R4. So, denying a directorship to K C Nuwal Group will definitely prejudice the interest of the Group and would amount to change in management of R1.
v. It is to be noted that the Applicants’ Group hold 29% of R1 and the Respondents’ Group cannot muster support for a Special Resolution even if it is assumed that all the public shareholders may support the Respondents’ Group.
vi. It is not the case of the Respondents that A1 has not disclosed his interest in AGT. The interest in AGT was informed to the Company Secretary in writing, though A1 has not filed the required Form MBP 1 at the initial point of reporting.
vii. It is not the case of the Respondents that A1 has participated in the Board Meeting wherein the agreement to be entered with AGT was discussed. Further the pleadings of the Respondents themselves are clear that there were informal discussions between A1 & R3 with regard to the shifting of the Administrative Office of R1 in Mumbai.
viii. The argument of the counsel for the Applicants that Section 184(1) of the Act requires disclosure of the Director’s interest inter alia in a company or companies including shareholding in a prescribed format but it does not speak about any contract or arrangement in which a Director is directly or indirectly interested, which is the subject matter of Section 167(1) (c) & (d) and therefore Section 184(1) has no link at all to Section 167(1) (c) & (d), cannot prima facie be brushed aside lightly. The matter would require deeper consideration during the hearing of the Company petition.
ix. As far as Section 184(2) is concerned it requires a director to disclose the nature of his concern or interests, at the Board Meeting in which the contract or arrangement is discussed and such director has to refrain from participating in such discussion. In this case, A1 has not attended the Board Meeting where the contract with AGT was discussed and approved. Since A1 has not participated in the Board Meeting there is no question of A1 refraining from participation in such meeting.
x. Section 167(1)(c) provides that the office of the Director shall become vacant in case, he acts in contravention of provision of Section 184 relating to entering into contract or arrangement in which he is directly or indirectly interested.
xi. Section 167(1)(d) provides that the office of the Director shall become vacant in case, he fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested in contravention of provisions of Section 184.
xii. Whether there is contravention of provision of Section 184 can be decided only after the final hearing of the Petition.
xiii. Even though the Respondents submitted that A1 is not in the active management of R1 and he was not attending the Board Meetings for the past one year, their own statement reveals that even for change of the administrative office of the Company there was an informal discussion between A1 & R3 which means that A1 is participating in the management decision making process of R1. Not only this, this stand of the Respondents leads to an irrefutable conclusion that the company’s decision was essentially taken not only in the Board Meeting but also in the informal discussion between A1 & R3.
xiv. R14, the Company Secretary of R1 has received the information as to the shareholding of the Applicants in AGT and in view of this as a professional, R14, was expected to guide and advise the Director in filing proper form in consonance with the Rules and Regulations.
xv. In the above said circumstances we are of the view that there is prima facie case made out by the Applicants and the balance of convenience is also in their favour and if the interim prayers are not granted, they would suffer irreparable loss.
xvi. Accordingly, the amended prayers at para 2 (a) & (b) above are allowed on contest. The remaining prayers are rejected as not pressed. Their rejection however, shall not come in the way of agitating them afresh, in accordance with law. There would however be no order as to costs.
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2021 (2) TMI 468
Seeking approval of the proposal for settlement of the claims of Fagne Sonagarh Expressway Limited (FSEL) against the National Highways Authority of India (NHAI) and permit Fagne Sonagarh Expressway Limited and National Highways Authority Limited to execute a Settlement Agreement to record the proposal for termination and settlement of claims by Fagne Sonagarh Expressway Limited against National Highways Authority of India - HELD THAT:- The Applicant in CA No. 1166 of 2020 was a subcontractor of the FSEL. The FSEL or its holding company ITNL owes certain amount to the Applicant for the civil works it had executed in the Project which has been classified as financial dues in the proposed Settlement Agreement. Therefore, the Applicant deserves to be admitted as intervenor in CA No. 1156 of 2020. Since the claim of the Applicant is admitted by FSEL the other prayers regarding implementation of Settlement Agreement and claim of dues would merge with the relevant prayers made in CA No. 1156 of 2020 concerning the Applicant-Intervenor. Besides, Hon’ble Justice Mr. D. K. Jain (Retd.) has approved the claim and the proposed Settlement Agreement between the NHAI and FSEL. Provision in the proposed Settlement Agreement has also been made for payment of financial dues to FSEL subcontractors.
The proposal for settlement of the claims of FSEL against NHAI and for implementation of Settlement Agreement and other consequential terms as approved by Hon’ble Justice Mr. D. K. Jain (Retd.) needs to be ratified and recorded.
Application allowed.
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2021 (2) TMI 460
Seeking sanction of Scheme of Amalgamation - Section 230-232 of Companies Act - HELD THAT:- On going through the report of the Registrar of Companies, it is seen that both companies have violated the provisions of the Companies Act and the petitioners could not successfully controvert the objections raised by the Regional Director. They have not followed most of the provisions of the Companies Act, which are mandatory for continuance of a company honestly. They must be humble and serious enough to abide the law and any proposition of business must be planned in such a manner that no law, logic and rights of any person are violated. Hence this Tribunal is of the opinion that this is not a fit case to sanction the Scheme of Amalgamation.
Application dismissed.
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2021 (2) TMI 453
Mismanagement and oppression - submissions of the Petitioners are that there is mismanagement and huge discrepancies in the Financial Statements submitted by the Respondent No.1 Company with the Registrar of Companies - whether the acts of Respondents as alleged by the Petitioners would indeed constitute an act of oppression against the minority shareholders or mismanagement or misappropriation of the company will affect the public interest at large, which calls for the intervention of this Tribunal? - HELD THAT:- It is profitable to refer the decision rendered by the Hon’ble Supreme Court in NEEDLE INDUSTRIES (INDIA) LTD. VERSUS NEEDLE INDUSTRIES NEWEY (INDIA) HOLDING LTD. [1981 (5) TMI 89 - SUPREME COURT], wherein the court laid down the yardstick as to when an act of the majority can be considered as oppressive under the provisions of Section 397 of the Companies Act, 1956.
This Tribunal came to the conclusion that averments made by the Petitioners regarding oppression and mismanagement against the Respondents is considered to be an isolated one and not a continuous one for which this Tribunal cannot hold that there is Oppression and Mismanagement in the Company.
In the instant case, the petitioner failed to prove the continuing oppressive acts conclusively and we cannot rely upon an act of the Directors as an oppressive act. Hence, this Tribunal came to the conclusions that whatever done by the Respondents is in the best interest of the Company which cannot be stated to be unfair which would prejudice the Petitioner’s interest in the Company or prejudicial to the public interest. Hence the Petitioners have no locus standi to approach this Tribunal under Section 241 praying the reliefs - this Tribunal is of the opinion that the petitioners could not make out a case for interference of this Tribunal invoking Section 241-242 of the Companies Act,2013.
Petition dismissed.
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2021 (2) TMI 441
Seeking order for execution of Consent Term No. 12 of the Consent Terms of the recorded order dated 14.11.2014 by the Company Law Board, New Delhi while dealing with the matter which was deputed from the Company Law board, Chennai - seeking directions to Respondent Nos. 1, 3 & 4 (R3 Group) to move an application in OS No. 3329 of 2011 pending before the Hon'ble Delhi High Court to the effect that R2 Group & R3 Group along with their companies can use/advertise in Google and Just Dial - HELD THAT:- This Tribunal has noted that there are two separate vakalat filed by two different counsels for representing R2 herein before this Tribunal and this Tribunal has heard both the parties at length. That one vakalat dated 17.01.2020 is filed by Mr. T. Sujan Kumar and the other vakalat dated 11.02.2020 is filed by Mr. Saurabha Kalia. Both the vakalat are supported by two different Resolutions dated 25.09.2008 & 24.09.2007 respectively. That this Tribunal at this juncture cannot take an exercise of verification of the authencity of the Board Resolutions and the respective vakalat. However, if this Tribunal comes to a finding at any time in future that either of the vakalt is not genuine, an appropriate action will be taken against the concern party.
It is a fact, not in dispute that all the terms of the consent terms dated 14.11.2014 were adhered to by the parties concerned except consent term No. 12 in terms of which in the suit No. 3329 of 2011 (Renumbered as CS (COMM) No. 1 of 2017, before Hon'ble High Court of Delhi, the R3 group ought to have moved an application before the court to the effect that the R2 group and R3 group along with their companies can use/advertise in Google and just dial and the said suit can be continued in future. During the course of hearing in the instant company petition, it was brought to the notice of this Tribunal during hearings held on 11.02.2020 and 24.02.2020 that an Application has already been moved by Respondent No. 3 before Hon'ble High Court of Delhi for taking on record Consent terms dated 14.11.2014, more particularly with respect to para 12 of the said Consent terms. It was also submitted that the Hon'ble Delhi High Court was pleased to issue notice in the said Application and the same is pending before Hon'ble Delhi High Court.
It is seen from the record placed before this Tribunal that R3 group consist not only R3 (Mr. Rajender Agarwal) herein but also R1 (Mr. Ramesh Agarwal) and R4 (Mr. Dinesh Agarwal). In these circumstances, this Tribunal deems it proper to direct for the execution of consent term No. 12 of order dated 18.11.2014. Accordingly, this Tribunal hereby directs R3 group (i.e., R1, R3 & R4) herein to move an appropriate Application in CS NO. 1 of 2017 before Hon'ble High Court of Delhi to the effect that R2 Group & R3 Group along with their companies can use/advertise in Google and Just Dial. This Tribunal is conscious of the fact that the authority and jurisdiction conferred on this Tribunal is sub-ordinate to the Hon'ble High Court and hence it is made clear that this Tribunal is confining its jurisdiction and authority to the limited extend of issuing the aforesaid directions keeping in view the consent terms recorded before the CLB (presently NCLT) and is not dwelling into the merits of the case pending before a higher judicial forum i.e., the Hon'ble High Court of Delhi. Further, the direction issued herein should not be deemed or viewed as expression of any opinion by this Tribunal with respect to the matter pending before the Hon'ble High Court of Delhi.
Petition disposed off.
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2021 (2) TMI 402
De-activation of the Director Identification Number - Section 164(2) of the Companies Act, 2013 - HELD THAT:- Similar controversy was raised in other High Courts and after considering the issue at length, the Gujarat High Court decided batch of petitions led by Special Civil Application No. 22435 of 2017 by its order dated 18.12.2018 [2019 (1) TMI 27 - GUJARAT HIGH COURT] where it was held that
The writ petition for challenge to the de-activation of the Director Identification Number are allowed. It was de-activated on account of dis-qualification in one company effecting Director Identification Number for the other companies. The opposite parties are directed to activate the Director Identification Number for use for other company.
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2021 (2) TMI 309
Approval of scheme of Amalgamation - section 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 - HELD THAT:- Various directions regarding holding and convening of various meetings issued - various directions regarding issuance of notice for the meetings also issued.
Application disposed off.
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2021 (2) TMI 308
Seeking a direction to the Respondents to maintain 'STATUS QUO' with regard to the constitution of the 3rd Respondent Company, its Directions and Bankers, in the interest of justice and equity - Rule 11 of NCLT Rules, 2016 - HELD THAT:- The Tribunal, after considering the issue has already passed exparte Interim Orders on 26.06.2020 in I.A. Nos. 197 & 200/2020 by directing the Respondents to issue prior notice, if any proposal is there to remove the Applicant/Petitioner, as Directress, and to follow the extant provisions of the Companies Act, 2013 etc. However, none appears for the Respondents so far. Since the Applicant/Petitioner is stated to be holding 38% of the shares of the Company apart from position of Directorship, she is entitled to participate in the affairs of the Company and she is also entitled to receive perks on par with other Directors. Since the Tribunal is not in a position to hear the Respondents till now, we cannot pass further exparte interim orders, at present as prayed for. However, the Respondent No. 3, in the meanwhile, cannot force the Applicant to subscribe to Rights issue as offered to her, vide letter dated 07th July, 2020 until further orders.
Application is hereby disposed of by directing the Respondents not to force the Applicant/Petitioner to accept on the Right Issue offered vide letter dated 07th July, 2020 until further orders.
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2021 (2) TMI 257
Investigation of affairs of the petitioner/ CSITA by the SFIO - opinion not formed as envisaged under Section 210 of Companies Act - section 212 of Companies Act, 2013 - HELD THAT:- The said order is on the basis of the report of the Registrar of Companies dated 13.12.2017 filed under section 208, which was filed, without conducting any inspection or enquiry as provided under Section 206 / 207 and hence, the said report cannot be construed as a report under Section 208 of the Act, 2013. That apart, an opportunity of being heard as contemplated under Section 206(4) was not provided to the petitioner / CSITA, before filing the report dated 13.12.2017. It is also contended that the petitioner / CSITA has not been served with a copy of the report dated 13.12.2017, which is in violation of the principles of natural justice. Hence, it is prayed to allow the writ petitions by setting aside the report of the Registrar of Companies and the order passed by the Central Government and the consequential summons.
Various complaints were received raising allegations against the petitioner / CSITA, which prompted the Central Government to order inspection of the Books of Accounts of the company on 08.08.2011 under Section 209A of the Companies Act, 1956 and the said inspection was conducted and a report pointing out various violations of the provisions of the 1956 Act, was submitted on 29.08.2012 to the Central Government, which inturn, instructed to launch prosecutions against the petitioner and its officers before the Economic Offences Court, Chennai. Subsequently, an inquiry under section 206(4) of the Companies Act, 2013 was conducted on 05.10.2015 and the Registrar of Companies, after completion of the inquiry, filed a report dated 12.01.2016 under Section 208 of the Act, 2013. Based on the same, the Central Government ordered investigation into the affairs of the petitioner by Serious Fraud Investigation Office (SFIO) under Section 212 of the Act, 2013, on 10.06.2016. The said order was challenged in W.P.No.38841/2016 before the High Court of Hyderabad.
The High Court of Hyderabad, after detailed analysis, set aside the said order and remanded the matter to the Central Government for fresh consideration to exercise its power under Section 212, basing on the report dated 10.06.2016 of the Registrar of Companies, within three weeks from the date of receipt of a copy of the order.
Whether the report dated 13.12.2017 submitted by the Registrar of Companies under Section 208 of the Act, 2013, is valid in law? - HELD THAT:- The principle of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing; and secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself. Applying the same to the facts of the present case, the report filed by the Registrar of Companies on 13.12.2017, without complying with the provisions of section 206, sans merit. However, considering the nature of the allegations raised against the petitioner / CSITA, this Court is not inclined to quash the same, but, in the interest of justice, is inclined to treat the said report as notice under Section 206(4), to which, the petitioner / CSITA shall file its detailed explanation / objections along with documentary evidence, within a given time. Upon receipt of the same, the Registrar of Companies shall also file a consolidated report under section 208 to the Central Government in a time bound manner.
Whether the order dated 07.05.2018 passed by the Central Government assigning the investigation of the petitioner / CSITA to the SFIO, is in consonance with the provisions of Section 212 of the Act, 2013? - HELD THAT:- Though it is contended on the side of the respondents that the Central Government has formed the requisite opinion before passing the order under section 212(1)(a) and (c) of the Act, 2013, the perusal of the noting proceedings circulated by the respondent officials, would not whisper anything about the opinion as contemplated under section 210 of the Act, 2013. It contains only the communications between the Central Government and the Registrar of Companies through Regional Director (SR), Chennai. Though the minutes of the Oversight Committee meeting held on 17.04.2018 reveal that upon considering the report of the Registrar of Companies and the direction of the High Court of Hyderabad, in view of the provisions of Section 212(1)(a) and (c) of the Act, 2013, a recommendation was made to investigate the affairs of the company by the SFIO, the mandate of the law under section 210, to form an opinion for ordering such investigation, was not complied with by the Central Government, before passing the impugned order dated 07.05.2018. Though it was argued on the side of the respondents that the report dated 13.12.2017 is in continuance of the earlier report dated 12.01.2016, which holds the field and no inspection / enquiry as per the provisions of law, is required, it was clearly stated in paragraph no.2 of the impugned order that the issues highlighted in the report of the Registrar of Companies, Chennai dated 13.12.2017 necessitated the Central Government to consider the order of investigation in public interest. That apart, the impugned order contains the mere extracts of the allegations referred to in the report of the Registrar of Companies and the same cannot be treated as sufficient compliance by the Central Government for exercising its drastic power.
It is noteworthy to mentioning that already, the High Court of Hyderabad vide order dated 16.11.2017 in WP.No.38841 of 2016, set aside the order dated 10.06.2016 and remanded the matter to the Central Government for fresh consideration to exercise of its jurisdiction under Section 212 of the Act, 2013, on the ground that the order does not reflect forming opinion on the necessity for investigation by SFIO under Section 210. Despite the same, the Central Government passed the order dated 07.05.2018 without forming an opinion as envisaged under section 210, but merely relying upon the report dated 13.12.2017. Such attitude on the part of the respondents cannot be countenanced. According to Merriam Webster’s Dictionary of Law, the word 'opinion' means – a belief stronger than impression and less strong than positive knowledge - he words 'is of the opinion' 'that it is necessary to investigate' impose a jurisdictional duty on Central Government to form opinion on the necessity of investigation by SFIO. Therefore, in the considered view of this Court, the Central Government is required to form an opinion, as prescribed in the provisions of Section 210 for exercising the power under section 212, as observed by the High Court of Hyderabad.
The allegation against the evangelical department is that they are not doing worship for the well being of the company and its beneficiaries and stakeholders. Instead, it is doing misappropriation and illegalities by selling most of the properties belonging to the Association. It is also placed on record that due to non-submission of accounts, the beneficiaries / donars to the CSITA could not get IT exemption. Such activities cannot be permitted to be sustained, having due regard to the object of the institution, which is to preach and propagate the religion of Christianity to the world and uplift the members of the CSI. Mere preaching from the church pulpits about “Christian holiness and Stewardship” does not work, when it comes to managing the finance and properties of the church in the most ethical way. The corporate morality and the biblical ethics reflected in the character of God are to be combined to form a base for maintaining the CSITA’s corporat
Be it noted, the files circulated by the official respondents would reveal that the proceedings was initiated against the petitioner/ CSITA for the alleged misappropriation, mismanagement, fraud etc., in the year 2011. Since then, the respondent authorities have been simply exchanging the communications from one office to another, without complying with the statutory provisions, within a reasonable time - Taking note of the serious nature of the allegations raised, the inordinate and undue delay caused by the respondent authorities, cannot be simply wished away. Hence, this Court directs the respondent authorities to take action against the erring officials, departmentally.
The petitioner / CSITA shall submit its detailed explanation/ objections along with documentary evidence to the report of the Registrar of Companies dated 13.12.2017, which is impugned in WP.No.32587 of 2019, treating it as a show cause notice under Section 206(4) of the Act, 2013, within a period of two weeks from the date of receipt of a copy of this order and thereafter, appear for enquiry between 17.02.2021 - 22.02.2021 - Petition disposed off.
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2021 (2) TMI 256
Freezing of Bank Account - applicability of the RBI Circulars of March 27 and May 23, 2020 - Counsel argues that the opinion of the RBI, as expressed in the present writ petition, cannot be a determinant of the independent assessment of the effect of the Circulars by the court - Whether there was a concluded OTS scheme between the parties? - HELD THAT:- The materials on record, as referred to by the parties, clearly indicate that there was a concluded OTS scheme between petitioner no.1 and the respondent no.2-Bank as on August 19, 2019. The Bank’s letter dated August 19, 2019 assumes particular importance in this context.
However, admittedly, the petitioners failed to honour such scheme. Instead, petitioner no. 1 alleged deviation from the original proposal on the bank’s part, vide letter dated August 26, 2019. Interestingly, petitioner no. 1, by its letter dated November 5, 2019, allegedly “accepted” the “compromise proposal of UCO Bank”. There could not arise any proposal being issued by the Respondent No.2-Bank, since the proposal was initiated by petitioner no. 1 itself. The bank, at best, modified the proposal and accepted it on the Bank’s terms. Hence, the petitioner no. 1 cannot claim that November 5, 2019 was the date of acceptance of any proposal. The letter dated November 5, 2019 at best reopened the discussions on settlement, thereby rendering irrelevant the concluded OTS scheme already reached on August 19, 2019. Thereafter, further correspondences were exchanged between the Bank and the petitioners, each of which sought to offer new modifications to the already-concluded OTS scheme, but there was no consensus ad idem between the parties at any other juncture, fit to crystallise into a further concluded OTS scheme. As such, the several correspondences between the parties could not justify the petitioners’ arguments that there was an existing OTS scheme at the juncture when the RBI Circulars came in.
If the petitioners take the stand that the OTS scheme was concluded on November 5, 2019, such contention has to be turned down in view of the subsequent replies of the Bank. Vide the communication dated February 13, 2020, for example, the Respondent No. 2-Bank categorically iterated that the date of acceptance of OTS would be from the issuance of sanction letter by the branch to the company, that is, August 19, 2019 - the only concluded OTS, if any, was reached on August 19, 2019 by the Bank’s acceptance and sanction of the previous offer of petitioner no. 1. In the event the petitioners argue that OTS was not finalized on August 19, 2019, there is no other concluded OTS scheme that the petitioners can rely on.
Since the petitioner no.1 failed to honour its commitments under the concluded OTS scheme of August 19, 2019, as mentioned above, no further extension of time on the basis of the OTS could be claimed validly by the petitioners. The Respondent no. 2-Bank, by its letter dated August 10, 2020, made it clear that, in view of the failure of petitioner no. 1 to honour payment of OTS amount as per sanction terms, the OTS was treated as failed and, as a consequence, requested petitioner no. 1 to pay up the entire outstanding due of ₹ 16.01, as on that date, with interest - The petitioners have consistently defaulted in repayment, having only paid a meagre part of the dues, let alone interest, and having subsequently defaulted on the OTS scheme as well. Thus, there is no handle in favour of the petitioners to extend the benefits of the RBI Circulars to them.
In the present case, not only was there no existing OTS in place when the RBI Circulars were issued, in view of the previous OTS scheme having been revoked due to default of the petitioners, there was no scope to argue that the benefits of the RBI Circulars were applicable to the petitioners, since an incomplete OTS, in any event, cannot be a trigger for extending the benefits of the RBI Circulars - Petitioner no. 1 clearly admitted, inter alia in its letter dated December 10, 2019 (Annexure P-57 at page 180 of the writ petition), that its account had become NPA in October, 2017 (as per the Bank’s version, though, it stood NPA since the year 2015). Subsequent talks of settlement, which never reached fruition, cannot afford leverage to the petitioners to claim benefits under the 2020 RBI Circulars, as those extend only to ‘standard’ accounts, which character was lost by the account of petitioner no. 1 the moment it was classified as NPA long prior to the onset of the pandemic. As on February 29, 2020, the cut-off date provided in the Circulars, the account of petitioner no. 1 was already marked ‘NPA’ and was not a ‘standard’ account to which the benefits of the Circulars could be extended.
Petition dismissed.
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2021 (2) TMI 165
Oppression and Mismanagement - Seeking declaration that the applicant is not a necessary party and to remove him from the array of parties - contention of the applicant is that the Applicant being the statutory auditor of the 1st Respondent Company has not in any manner failed to discharge his statutory as well as fiduciary duties - HELD THAT:- Impleadment of parties' is only a matter of fact and not a matter of law. Addition of parties/ striking out parties, of course, is a matter of discretion to be exercised by a Tribunal/ Court based on sound judicial principles. The said discretion can be exercised either on the application of a Petitioner/ Respondent or suo-motu or on the application of a person who is not a party to any pending proceedings. However, the said discretion cannot be exercised in a cavalier and whimsical fashion. On 28.09.2020, an order has been passed in I.A/ 107/ KOB/2020 directing that Mr. Paul Sebastian (M.No.037057), Paul & Joseph Chartered Accounts, New Kalavath Road, Palarivattom, Cochin-682025 be impleaded as Respondent No.5 in the above Company Petition.
Whether a party is a proper/ necessary party for an effective and efficacious adjudication of the controversy involved in a given case, although it is for the concerned Tribunal/ Court/ Authority to subjectively consider the same based on facts and circumstances of a case, which will be evident from C.P/12/KOB/2020 only. In this regard, with an utmost care and caution a finding has to be rendered by passing necessary orders in an objective and dispassionate manner for not removing R5 from party array and to take part in the main arena of proceedings. Undoubtedly, a just, fair and final order in main Company Petition can only be passed after hearing the Objections/ Reply of the said party along with the other Respondents - Once a party has been impleaded in a petition/application, after considering his contentions and hearing him, that party cannot subsequently come forward and say that the order is not correct and he may be removed from the party array. Judicial propriety has to be given the utmost importance in such matters. Hence, this Tribunal do not find any reason to pass an order to remove the applicant/ 5th respondent applicant from the party array.
Application dismissed.
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2021 (2) TMI 164
Approval of Scheme of Amalgamation of wholly owned subsidiary - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- Various directions regarding holding and convening of various meetings issued - directions regarding issuance of notices for the meetings also issued.
Application allowed.
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2021 (2) TMI 163
Seeking to restore the name of the Company in the Register of Companies, maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- Considering the report of the learned counsel for the appellant, this Tribunal is of the opinion that it would be just and equitable to order restoration of the name of the Company in the Register of Companies.
The Registrar of Companies, the respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions like change of company’s status from ‘Strike off’ to ‘Active’ (for e-filing) and to intimate the bankers about restoration of the name of the company so as to defreeze its accounts - The Appellant Company is directed to file all the statutory document(s) along with prescribed fees/additional fee/fine as decided by Registrar of Companies within 30 days from the date on which its name is restored on the Register of Companies by the Registrar of Companies.
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2021 (2) TMI 123
Seeking to refrain the act of the Respondent Company to initiate the corporate restructuring by way of incorporating a Holding Company - seeking to bring three of the group companies under it thereby establishing a holding-subsidiary relationship and to require the maintenance of status quo as regards to shareholding pattern of the Company - seeking not to resort to alienation, transfer, lien, lease etc of the movable/immovable properties of the R-1 Company - Power to punish for contempt - Section 425 of the Companies Act - HELD THAT:- As rightly pointed out by the learned counsel for the respondents 1, 4, 15, 24, 25, if the respondents have violated the interim orders passed by this Tribunal on 4.11.2019 and 6.1.2020, the only remedy available to the applicants is to initiate contempt proceedings against the erring respondents. The application is not maintainable.
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2021 (2) TMI 122
Rectification of error - error apparent on the face of record or not - seeking to rectify the error in the cause title to the Impugned order dated 29th November, 2019 herein Tap World & Anr. has shown as the Applicant - HELD THAT:- On verification of the records and the order, it is noticed that there is a typographical error while preparing the order dated 29.11.2019. IA 66/KOB/2019 has been filed by Mr.Shibu Prabhakaran who is the Respondent No.13 in the TCP/22/KOB/2019. However, while preparing the order, it is stated that the applicant is M/s Tap World. Hence, the first prayer may be allowed and the cause title of the order dated 29.11.2019 to be corrected as Mr.Shibu Prabhakaran-Applicant/Respondent No.13 Vs M/s Tap World and others– Respondents/Petitioner &Respondents in place of M/s Tap World as applicant.
Seeking to rectify the error that in Paragraph 2 of the impugned order wherein it has been mentioned that the IA No.66/KOB/2019 was filed in pale of IA No.6/KOB/2019 - HELD THAT:- On a verification of the daily order dated 25.11.2019, it is seen stated that the “Respondent/Petitioner in IA submitted that IA/6/KOB/2019 is not maintainable under Section 97(1) as the IA was filed by R1. Counsel for Respondent/Petitioner in IA has not pressed for this IA and informed that for this purpose another IA is being filed with the same contents by a Member. Hence IA 6/KOB/2019 stands dismissed. The applicant in that IA was Kerala Chamber of Commerce & Industry. Thereafter, the applicant herein (Kerala Chamber of Commerce & Industry) filed IA/66/KOB/2019 taking the contentions raised in IA 6/KOB/2019. Hence the words used “in place of IA/6/KOB/2019” is correctly used based upon the records. Hence no rectification is necessary in Para 2 of the order in IA/66/KOB/2019.
Seeking to recall the appointment of Justice K.Narayana Kurup as the Chairman to the AGM of the Applicant Chamber - HELD THAT:- Since there was no consensus among the petitioners and respondents with regard to the name of the Chairman to be appointed, for conducting the AGM, a request has been made by both the parties before this Tribunal to decide the name of an independent person by this Tribunal, for appointment as Chairman, and taking into consideration the orders of the Hon’ble High Court of Kerala dated 2.9.2018 as also there is an urgency to conduct the AGM under the supervision of an impartial competent person, and after hearing the learned counsel for the applicant herein also, this Tribunal decided to appoint Mr. Justice K. Narayana Kurup, former Acting Chief Justice of the Madras High Court as the Chairman of the respondent company- M/s Kerala Chamber of Commerce and Industry for conducting the AGMs - It is also brought to my notice that the son-in-law of Mr.Justice Narayana Kurup has already sent his resignation letter resigning in the year 2011. The learned counsel for applicant stated that this letter will be placed before the next meeting of the Board of Directors. It is also seen that due to non-cooperation and violation of the directions of the NCLT by the Respondent No.1 Company with the appointed Chairman Shri P.S.Antony, Retd.District Judge, he expressed his inability to continue as Chairman. This fact was also taken into consideration while appointing Mr.Justice K. Narayana Kurup as the Chairman.
Seeking to rectify the error in Para 11 of the Impugned Order wherein Mr.A.J.Rajan has been erroneously referred to as the Secretary and has been asked to assist the NCLT appointed Chairman - HELD THAT:- On perusal of the minutes of the urgent meeting of the Director Board of M/s Kerala Chamber of Commerce vide No.18/2017-18 held on 20.9.2018, as Item No.5 it is stated that “as a follow up of the suggestions made in the previous meeting regarding the appointment of Mr.A.J.Rajan, IAS (Retd) as Secretary, the Chairman informed the Board that considering all the aspects of the matter, he has taken the decision to re-appoint Mr.A.J.Rajan, IAS (Retd) as Secretary.” In view of the above, there is nothing wrong in Para 11 of the impugned order wherein it was stated that the Chairman will be at liberty to utilize the facilities of Respondent No.1 Company including the services of the Secretary Mr.A.J. Rajan and other staff for conducting the AGMs smoothly.
Seeking to direct that the Applicant Chamber may be permitted to hold its AGM following the order of the Hon’ble High Court of Kerala dated 2 September, 2019 as may be conducted following its by-laws - HELD THAT:- There is nothing wrong in the appointment of Mr. Justice K.Narayana Kurup as NCLT appointed Chairman to conduct the AGMs of M/s Kerala Chamber of Commerce and Industry, and that he has taken charge as the Chairman, there is no question of permitting the applicant Chamber of Commerce & Industry to hold its AGMs following the judgment of the Hon’ble High Court of Kerala dated 2.9.2019 that the AGM shall be convened and conducted in accordance with Rules and Ext.B2 by-laws, with an outer limit of three months agreed to by both sides. This fact was taken into consideration while passing the orders in IA.66/KOB/2019. In para 16 of the order, it is stated that the NCLT appointed Chairman may approach the Hon’ble High Court of Kerala for extension of time limit, if it is necessary, to enable him to complete the task entrusted to him. Hence a direction to the Chamber of Commerce to hold the AGM cannot be allowed. All the parties are directed to co-operate with the Chairman for conducting the meeting of the AGMs.
Application allowed in part.
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2021 (2) TMI 92
Validity of convened Board Meeting - validity of proposed interim dividend - seeking restraint on Respondent No. 4 and 5 from entering into the premises of the company - eligibility of Respondents 4 and 5 to be appointed as Chief Executive Officer and Executive Director - restraint on Respondent Nos 2 and 3 not to remove the petitioner from the post of Managing Director - appointment of independent Chartered Accountant to conduct special audit on the affairs of the company - seeking direction to Respondent No. 4 to hand over the property of the company including documents and keys of bungalows with immediate effect.
Whether the Board of Directors Meeting of the 1st Respondent company dated 14.10.2019 is validly held complying with the clauses of the Articles of Association and provisions of the Companies Act and whether the proceedings of the meeting and the resolutions passed therein are valid in the eyes of law? - HELD THAT:- This Tribunal came to a conclusion that as per Section 241 and 242 of the Companies Act, every member who comes before the court must have a grievance, either that he has been oppressed or that the company is being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company. This grievance must be a personal grievance of member who comes before the court. It cannot be a vicarious grievance, a grievance of his beneficiary. In the present case, it has not been proved that the appointment of R4 as CEO can be attributed as an act oppressive against the petitioner or prejudicial to public interest but for the flourishment of the Company and the same is to be equivalent with the objects that has been set out in the Memorandum of Association, which has been followed by the management of R4 for past three decades.
Regarding the resolution passed in regard to the signatory powers to R4 over the company’s bank accounts, dematerialized account and applicable mutual fund accounts as also the signatory power to R5 over the Company’s Bank account, this Tribunal finds that as both R4 and R5 were ceased to be Directors of the Company, they are not eligible to be appointed as sole signatories of bank accounts/ demat accounts. It is found that thereafter, Respondent No.2 convened another Board of Directors Meeting on 18.10.2019 and passed another resolution to bypass the action taken by them. The legality of the Board Meeting held on 14.10.2019 can be decided - By concluding the first issue, this Tribunal is of the view that the meeting held on 14.10.2019 has been conducted with due notice, quorum and therefore, the said meeting is a valid meeting.
Whether the Board of Directors Meetings of the R1 Company held on 18.10.2019, 01.11.2019, 04.02.2020, 21.08.2020 are valid? Whether the proceedings of that meetings and resolutions passed therein are aimed to oppress and abuse the other shareholders including the petitioner and consequently to effect a change in the control and management of Respondent No.1 Company? - HELD THAT:- This Tribunal is of the view that the Respondent Nos. 2 & 3 have conducted an alleged meeting of the Board on 18.10.2019 under the guise of the request of the petitioner. It is evident from the email dated 11.10.2019 and 12.10.2019 that the meeting which was proposed by the petitioner on 18.10.2019 was advanced to 14.10.2019. That being the position, it is clear from admission of R2 & R3 that the meeting was held without proper notice. Therefore, the alleged meeting held on 18.10.2019 by Respondent Nos. 2 & 3 is declared as illegal. Hence, the resolutions passed in the said meeting is not having any relevance and no legs to stand.
This Tribunal is of the view that Directors present through video conferencing or other audio-visual means would suffice for the quorum requirement as their presence shall be counted for the purpose of quorum. Section 173 of the Companies Act, 2013 does not restrict a company from holding any meeting of its Board of Directors at some other place within or outside India. Further, as per Rule 3(6) of the Companies (Meetings of Board and its powers) Rules, 2014, with respect to meetings conducted through video conferencing or other audio-visual means - This Tribunal is of the view that in case the Chairman of the Meeting is participating through video conferencing, he/she should, while transacting any restricted items of business, vacate the Chair and entrust the conduct of the proceedings in respect of such items to any other Non-interested Director attending the Meeting physically and should not participate in the meeting in respect of such items and not for other matters.
The meeting was conducted on 01.11.2019 and 04.02.2020 complying the basic provisions for conducting a meeting and the same is valid. But the resolutions passed in the said meetings are similar to that which were taken in the Board of Directors Meeting held on 14.10.2019. Therefore, the resolutions passed are considered to be invalid - With regard to the Board of Directors Meeting held on 21.08.2020, since no evidence has been produced to show that notice was given and, it is considered to be void ab initio and all the resolutions passed in that meeting are invalid.
Whether the petitioner in CP/117/KOB/2019, who acted in his capacity as Director of the Company has failed to comply with the fiduciary duty towards the shareholders? - HELD THAT:- It is a well settled principle that if the Directors exercise their powers for the purposes other than those for which they were conferred, it may be said that they have exceeded their authority. It is evident that the malafide intention of the petitioner to remove R4 and R5 from the Company has been done with undue haste for the purpose of grabbing power in the Respondent No.1 Company. This clearly depicts that petitioner’s son was hand-in-glove and supporting the actions of the petitioner and gives credence to the allegations of the Respondents. Therefore, we are of the view that the petitioner is acting against the interest of Respondent Company and other shareholders, for making material changes in the management of the Respondent company - During the pendency of the case before this Tribunal, it has been observed that unilateral action being taken by the petitioner, without reference to the Board as per the prevailing mandate. These matters as well clearly demonstrate that the Petitioner has not approached this Tribunal with clean hands and he has filed this petition to assume total control over R 1 Company trying to oust the other Respondents.
Whether the issue of oppression and/ or mis-management on the part of the Respondents herein in running the affairs of the Company towards the Petitioners No. 1 had been proved or not? - HELD THAT:- The record shows that the Petitioner in CP/117/KOB/2019 has diverted the funds of the company to his son and he has purchased motor-car in his personal name from the funds of the company for his own use, where General Body approval through special resolution is required to approve additional compensation to Director, and also done acts in breach of his fiduciary duty vice versa, the Respondents were also acting without complying the provisions of the Act or without applying the mind. Even if certain Board Meetings were conducted complying with the provisions of the Act, each of them depicts the same agenda mainly for ratification.
Regarding the prayer of the petitioner to order and direct Respondent No 4 to hand over property of the Company including documents and keys of bungalows with immediate effect, the learned counsel for the respondents submitted that the Respondent No 2 is willing to return the property papers, even though advance notice was given to the petitioner. Two cars along with the keys and documents have already been handed over to the Respondent No 1 Company in November 2019.
Thus, both the petitioners in CP/117/KOB/2019 and CP/19/KOB/2020 failed to prove oppression and mismanagement on the part of the respondents therein in carrying on the affairs of the company for the full satisfaction of the directors/ shareholders of the Company. Object and purpose of Sections 241 and 242 of the Act is two-fold. Firstly, to set right the wrongs and secondly, take remedial action to prevent the occurrence of wrongs in future. Since we found that there is no oppression or mismanagement for the reasons stated in the above paragraphs, it is not necessary for this Tribunal to consider any other points raised by the parties.
Petition disposed off.
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2021 (2) TMI 59
De-activation of the Director Identification Number - Section 164(2) of the Companies Act, 2013 - HELD THAT:- Similar controversy was raised in other High Courts and after considering the issue at length, the Gujarat High Court decided batch of petitions in [2019 (1) TMI 27 - GUJARAT HIGH COURT] where it was held that the Court is of the opinion that the action of the respondents in deactivating the DINs of the petitioners- Directors along with the publication of the impugned list of Directors of "struck off" companies under Section 248, also was not legally tenable. Of course, as per Rule 12 of the said Rules, the individual who has been allotted the DIN, in the event of any change in his particulars stated in Form DIR-3 has to intimate such change to the Central Government within the prescribed time in Form DIR-6, however, if that is not done, the DIN could not be cancelled or deactivated. The cancellation or deactivation of the DIN could be resorted to by the concerned respondents only as per the provisions contained in the said Rules.
The writ petition for challenge to the de-activation of the Director Identification Number are allowed. It was de-activated on account of dis-qualification in one company effecting Director Identification Number for the other companies. The opposite parties are directed to activate the Director Identification Number for use for other company.
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