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Companies Law - Case Laws
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2022 (3) TMI 1527
Continuance of criminal proceedings against the present appellant/accused - Section 482 Cr.P.C - whether continuance of the criminal proceedings would be a total abuse of the process of the court and the continuance of the criminal proceedings against the appellants is in no way an abuse of the process of the court?
HELD THAT:- This Court in the widely celebrated judgment of State of Haryana & Ors. Vs. Bhajan Lal & Ors. [1990 (11) TMI 386 - SUPREME COURT] considered in detail the scope of the High Court powers under Section 482 Cr.P.C. and/or Article 226 of the Constitution of India to quash the FIR and referred to several judicial precedents and held that the High Court should not embark upon an inquiry into the merits and demerits of the allegations and quash the proceedings without allowing the investigating agency to complete its task.
This Court in G. Sagar Suri & Anr. Vs. State of UP & Ors. [2000 (1) TMI 934 - SUPREME COURT] observed that it is the duty and obligation of the criminal court to exercise a great deal of caution in issuing the process, particularly when matters are essentially of civil nature.
At the outset, Respondent No. 2/Complainant alleged that the Appellants were responsible for the offence punishable under Section 420, 405, 406, 120B IPC. Therefore, it is also imperative to examine the ingredients of the said offences and whether the allegations made in the complaint, read on their face, attract those offences under the Penal Code.
Having gone through the complaint/FIR and even the chargesheet, it cannot be said that the averments in the FIR and the allegations in the complaint against the appellant constitute an offence under Section 405 & 420 IPC, 1860. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making promise being absent, no offence under Section 420 IPC can be said to have been made out. In the instant case, there is no material to indicate that Appellants had any malafide intention against the Respondent which is clearly deductible from the MOU dated 20.08.2009 arrived between the parties - The entire origin of the dispute emanates from an investment made by Respondent No. 2, amounting to Rs. 2.5 crores in lieu of which 2,50,000/- equity shares were issued in the year 25.03.2008, finally culminating into the MOU dated 20.08.2009. That based on this MOU respondent No. 2 filed three complaints, two at Delhi and one at Kolkata. Thus, two simultaneous proceedings, arising from the same cause of action i.e. MOU dated 20.08.2009 were initiated by Respondent No. 2 amounting to an abuse of the process of the law which is barred.
The order of the High Court is seriously flawed due to the fact that in its interim order dated 24.03.2017, it was observed that the contentions put forth by the Appellant vis-à-vis two complaints being filed on the same cause of action at different places but the impugned order overlooks the said aspect and there was no finding on that issue. At the same time, in order to attract the ingredients of Section of 406 and 420 IPC it is imperative on the part of the complainant to prima facie establish that there was an intention on part of the petitioner and/or others to cheat and/or to defraud the complainant right from the inception. Furthermore it has to be prima facie established that due to such alleged act of cheating the complainant (Respondent No. 2 herein) had suffered a wrongful loss and the same had resulted in wrongful gain for the accused(appellant herein).
In absence of these elements, no proceeding is permissible in the eyes of law with regard to the commission of the offence punishable u/s 420 IPC. It is apparent that the complaint was lodged at a very belated stage (as the entire transaction took place from January 2008 to August 2009, yet the complaint has been filed in March 2013 i.e., after a delay of almost 4 years) with the objective of causing harassment to the petitioner and is bereft of any truth whatsoever.
Appeal allowed.
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2022 (3) TMI 1526
Sanction of Scheme of Arrangement - Sections 230 to 232 of the Companies Act, 2013 and other relevant provisions of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition is made absolute in terms of the prayer clauses of the said Company Scheme Petition.
The Petitioner Company No 1 be dissolved without winding up - The Appointed Date is 1st April, 2021.
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2022 (3) TMI 1411
Oppression and Mismanagement - stance of the Petitioner is that there was a gross and deliberate undervaluation of the pledged shares - Sections 241 and 242 of the Companies Act, 2013 - HELD THAT:- It.is seen that AAPICO came in as a Joint Venture partner at SGAH level and has contributed both in equity and loan and that as already stated supra, 49.99% equity in SGAH was given to AAPICO, and ABT UK held 50.01% and ABT continued to hold the controlling interest. Hence, ABT continued to be the ultimate holding company of the automotive group. However, in respect of loan funds given by AAPICO, ABT UK's 50.01% shareholding in SGAH was pledged to AAPICO - there are force in the arguments advanced by the Learned Counsel for the Petitioner that the fact whether AAPICO is entitled to control of SGAH itself is in issue in UK pending adjudication.
Pending the UK proceedings, AAPICO has secured an award from Singapore Arbitration Tribunal holding that AAPICO is entitled to 3/4" representation in the Board of SACL on the basis that AAPICO currently has majority in SGAH even though the same is disputed in UK Court - Also, as per Section 48 of the Arbitration and Conciliation Act, 1996 a Foreign Award cannot be enforced until the Hon'ble High Court of Madras pass an order to that effect. It was also brought to our knowledge that AOP No. 296 of 2021 is pending adjudication before the Hon'ble High Court of Madras.
The Petitioner has made out a prima facie case for this Tribunal to pass an order of interim relief and also the balance of convenience lies in favour of the Petitioner.
In view of the fact that the proceedings before the UK is pending as to whether the AAPICO was right in invoking the pledge and claim control of SGAH and also that the Arbitral Award is yet to be enforced by the Hon'ble High Court of Madras, the respondents are permitted to file counter in the main Company Petition within a period of 3 weeks from the date of this order and the Petitioner is also permitted to file rejoinder if any, within a period of 2 weeks thereafter.
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2022 (3) TMI 1267
Appointment of directors from the Petitioner families on the Board of Company - appointment of Alternate Director - Section 161 of the Companies Act, 2013 - HELD THAT:- In this case, the Articles of Association contain specific provision for appointing an alternate Director. Before approaching this Tribunal, the applicants could have taken up this issue in the Board Meetings of the Company. This Bench has not been informed about any such effort being made by the applicants and the results, if any, of the same. Furthermore, Section 161 of the Act lays down that an Alternate Director can be appointed if there is the absence of a director for a period not less than three months from India. In the case in hand, Shri Manmohan Singh Kalsi is in India and his possible absence is still in the realm of the future.
This Tribunal is conscious of the decisions in the case of Union of India & Ors. v. Modiluft Ltd., [2003 (5) TMI 530 - SUPREME COURT] & Raja Khan v. Uttar Pradesh Sunni Central Waqf Board & Anr., [2010 (11) TMI 201 - SUPREME COURT] wherein it has been held that if interim relief is same as that of permanent relief, then it is not permissible because no case would be left for adjudication at the time of final hearing. It was further held that in such a situation, the Court shall not grant any interim relief unless the case is fully heard.
This Bench is of the considered view that the prayers made by the applicants cannot be acceded to - Application disposed off.
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2022 (3) TMI 1175
Restraint on shareholders of Zee Entertainment Enterprises Limited from calling for and holding an Extra Ordinary General Meeting - alleged illegalities in the resolutions proposed - Section 100(2)(a) of the Companies Act, 2013 - HELD THAT:- On a literal and plain reading of Sections 98 and 100, there are no discretion / power vested with the Board of a Company to sit in judgment over “any matter” for consideration of which the meeting is requisitioned. On a plain reading, the Board of a Company is mandatorily obliged to requisition a meeting if the requirements specified in sub-sections (2) and (3) of Section 100 are satisfied. Needless to state, whether or not the proposed requisition should be given effect to, is to be decided by the shareholders at the general meeting - the language used in the aforesaid Sections aid corporate democracy and protect the rights of shareholders. Section 100(4) in fact provides shareholders with an additional right to proceed to call for and hold an EGM despite an unwilling Board. This intent and object of the legislature cannot be ignored whilst construing the relevant provisions of the Act.
The decision in Cricket Club of India vs. Madhav L. Apte [1974 (8) TMI 75 - HIGH COURT OF BOMBAY] applies squarely to the facts of this present case, where it was held that this Court has opined is that the word “valid” is restricted only to the satisfaction of the numerical and procedural requirements. Further, and more importantly, that the word or the adjective “valid” in Section 169 has no reference to the object of the requisition but rather to the requirements in that Section itself. Lastly and most importantly, that even if the requisition was illegal or invalid, the Board was still obliged to call for the meeting.
Whether or not an Injunction could be passed against a shareholder restraining the holding of an EGM? - HELD THAT:- The Ld. Single Judge has restrained a shareholder of a Company from calling or holding an EGM. Such an injunction is in the teeth of the decision of the Supreme Court in LIC vs. Escorts [1985 (12) TMI 289 - SUPREME COURT] - the Ld. Single Judge could not have deviated from the law laid down by the Supreme Court in LIC vs. Escorts and proceeded to restrain a shareholder by way of an injunction from calling or holding an EGM.
Consequences of interfering with Corporate Democracy - HELD THAT:- In the present case itself, the Appellants, being shareholders of Zee, have been unable to call for and hold an EGM despite the Requisition being addressed as early as on 11th September, 2021, i.e., over 6 months ago. For the past 6 months, the contesting parties have been arguing the alleged illegalities contained in the Requisition, whilst shareholders of Zee suffer an injunction - there are no precedent resulting in such drastic consequences derailing the democratic functioning of Companies across India owing to the non-cooperative and obstructive conduct of the Board of Directors.
Jurisdiction - HELD THAT:- In the face of the absolute bar contained in Section 430, we cannot appreciate how the Ld. Single Judge could have granted the present injunction. The scheme of Sections 96 to 100 makes it clear that the subject of calling of a meeting of a Company has exhaustively been treated under them. So far as meetings of Companies other than Annual General Meetings are concerned, the law is governed by Section 98, which kicks in if it is for any reason “impracticable” to call such meeting. Section 100 gives a right to the requisitionists of an EGM to themselves call a meeting for consideration of the matter of their requisition, if the Board does not, within twentyone days, proceed to call a meeting. In the case on hand, as the facts have transpired, it is now clearly a case of the Appellants in the face of the Board’s stand vis-à-vis their Requisition, though they would be within their rights to call and hold the requisitioned EGM, it is impracticable for them to hold such meeting and accordingly, they pray for an order of the NCLT to do so under Section 98 - We do not see how such a matter would not fall within the purview of the NCLT and if it does, how a Civil Court could interfere by passing an order of injunction, which would have the effect of preventing the NCLT from considering the Appellants’ prayer. We find no credence on the reasoning based on the NCLT Rules or Schedule of Fees.
Considering that the Impugned Judgment has in effect restrained a shareholder of a Company from calling for and holding an EGM, which injunction is in the teeth of the decision of the Supreme Court in LIC vs. Escorts, the appeal is allowed.
Alleged illegalities in the proposed Resolutions - HELD THAT:- The law as prevalent in India does not entitle the Board of a Company to refuse a requisition calling for an EGM if such requisition satisfies the numerical and procedural requirements set-out under Section 100 of the Act - Zee takes advantage of its own wrong and argues that in the absence of such permission, the proposed resolutions are illegal and therefore, an injunction must be granted. This is another illustration as to why Courts must uphold corporate democracy and not indulge incumbent Boards in restricting the democratic functioning of Companies.
The procedure for appointment of Independent Directors - HELD THAT:- The Requisition proposes the appointment of 6 persons as Independent Directors. To this, Mr. Chinoy objects by submitting that the provisions of the Act make detailed provisions which are mandatorily required to be followed for appointment of an Independent Director and these provisions make it clear that a member cannot propose himself or someone else for appointment as an Independent Director, merely by giving notice in writing of his candidature, or of his intent to propose another member as candidate for election as an Independent Director at the general meeting - In the present case, the proposed resolutions under the Requisition are to appoint ordinary Directors and not additional or alternate Directors. Therefore, from a reading of Sections 150(2) and 152(2), even in case of an Independent Director of a listed Company, the appointment will be made at the general meeting and not by the Board of Directors.
The power given to shareholders of a Company by Section 160 and more importantly, the proviso thereto, cannot go unnoticed. In the teeth of the aforesaid provision, we cannot appreciate how the Ld. Single Judge agreed “on all counts” with Zee’s submission that “In the scheme of the Companies Act, shareholders do not get to choose individual independent directors.” - Section 160 does not make any distinction whatsoever between an Independent Director or otherwise. On a plain reading of Section 160, a shareholder of a Company clearly has the right to propose the appointment of an Independent Director.
Zee’s submission cannot be accepeted by defeating corporate democracy and ignoring the safeguards provided to shareholders under Section 160 and 169 of the Act.
Regulation 17 of the SEBI LODR - HELD THAT:- The expression “optimum combination” means the presence of one woman director and at least fifty percent of the Board of Directors shall comprise of non-executive Directors. Regulation 17 does not prescribe the maximum number of non-executive Directors but only the maximum number of executive Directors. Likewise, Section 149 of the Act provides that a listed company must have at least one-third of its Board comprising of Independent Directors. No other Regulation of the SEBI LODR or Section of the Act has been brought to our notice that prescribes a maximum number of Independent Directors.
Thus, the proposed resolutions contained in the Requisition are neither illegal nor incapable of being lawfully implemented and consequently, set-aside all of the Ld. Single Judge’s findings in this regard on all counts.
Appeal disposed off.
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2022 (3) TMI 1174
Seeking approval for Scheme of Arrangement - Section 230 to 232 of the Companies Act, 2013 - HELD THAT:- Considering the entire facts and circumstances of the case and on perusal of the Scheme, reports of the Regional Director, Official Liquidator, and reply/undertakings of the Petitioner Companies thereon and the documents produced on record, the Scheme of Arrangement appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under Section 230 to 232 of the Companies Act, 2013.
The Scheme of Arrangement is hereby sanctioned - Application allowed.
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2022 (3) TMI 1000
Oppression and mismanagement - Diversion of business purchase orders to the 2nd respondent and their personal enterprise - grant of injunction restraining the Respondent Nos.3 and 4 from making transfer of funds and confirmed orders of the respondent - seeking restoration of rightful position and the authority of the Petitioner to direct and control the operations of the Respondent No.1 Company - investigation and assessment of sums of money of Respondent No.1 Company misappropriated by the 3rd and 4th respondent - direction to 1st Respondent Company to pay the salary of the Petitioners promptly each month.
Whether the acts of Respondents as alleged by the Petitioner would indeed constitute an act of oppression, mismanagement or misappropriation in the company which will affect the public interests at large, warranting intervention of this Tribunal? - HELD THAT:- In the present case, the petitioner has not proved the act of oppression and mismanagement, as no documents have been attached with the petition to show that Respondents 3 and 4 are routing the funds of the 1st Respondent Company to Respondent No.2 Company. The copies attached with the counter shall be presumed as true, that all the 3 signatories of the Memorandum of Association are the authorized signatories in the Axis Bank Limited, Mulanthuruthy Branch. But in such a case, the petitioner has not prayed for any forensic investigation of his signature. In the absence of any prayers being sought by the petitioner, no such relief can be granted by this Tribunal. No documents were produced to show that the Company has not conducted its statutory meetings from time to time. Neither Financial Statements nor Annual Returns were produced to substantiate any mismanagement by these Respondents. It is also noted that Respondent No. 1 Company did not conduct any meetings since its incorporation.
A perusal of Section 241(1) of the Act would show that a petition field may be based on a complaint that the affairs of the Company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member of members including any one or more of themselves. Thus it will be clear that the foundation of a petition under Section 241 (1) will be the allegation or complaint that the affairs of the Company were being conducted in a manner prejudicial to public interest which will necessarily and naturally involve giving particulars as to how it was prejudicial to public interest. Similarly, an averment or allegation as to the affairs of the Company being conducted in a manner oppressive to any member must necessarily involve giving particulars as to what constituted ‘oppressive manner’ - Mere allegation as to the affairs of this Company being conducted in a manner oppressive to any member must necessarily involve giving particulars as to what constituted oppressive and prejudicial; to the interest of the Company. Normally, the petitions are filed invoking provisions of Section 241/242 of the Act and in such petitions the Court may see the distinction between the two provisions and examine the position, i.e., to see as to whether a particular allegation is an oppression or of the mismanagement under Section 241.
In the instant case, the Respondents have stated that they have no intention to push the petitioner out of the company or dissolve the company. Moreover, since the petitioner has failed to prove the continuing oppressive acts conclusively producing the relevant required documents, this Tribunal cannot rely upon a single act of the Respondents as oppressive. In view of the above, this Tribunal do not find any reason to entertain this Company Petition.
Petition dismissed.
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2022 (3) TMI 824
Validity of Termination Notice issued by National Highways Authority of India - HELD THAT:- In the Application, direction was sought to IL&FS as well as NHAI not to terminate the ‘Concession Agreement’ between NHAI and Fagne Songadh Expressway Limited, which have been noticed in the first paragraph of the order. However, in the interim passed on 23rd October, 2019, no such direction was issued as prayed for, that is, not to terminate the Concession Agreement between NHAI and Fagne Songadh Expressway Limited. What was observed by this Tribunal was that liberty was given to the Appellant to bring the facts to the notice of the Board of Directors of the IL&FS and Committee if constituted that it has already filed its Resolution Plan, which is viable and feasible and for the said purpose, it was desirable to continue with the Concession Agreement. Interim direction was “If the matter is brought to the notice of the Board of Directors, it will consider the same in accordance with law and the order dated 8th April, 2019 passed by this Appellate Tribunal.
In this Application, we are not required to adjudicate the factual dispute between the parties or return any finding as to whether Termination Notice was issued on sufficient ground or not. The remedy of the Applicant lies elsewhere. The Applicant is entitled to seek remedy against actions of the NHAI as per the Concession Agreement dated 22nd March, 2005. We thus are not inclined to entertain the challenge to Notice dated 21st December, 2021 on merits in the present proceedings. It is, however, relevant to notice that as per the affidavit filed on behalf of Union of India and directions issued in this Appeal by this Tribunal from time to time, it is clear that Resolution Process of IL&FS Group Company is at the final stage and as submitted by learned Counsel for the Applicant, it is likely to be completed before 31st March, 2021.
Application dismissed.
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2022 (3) TMI 823
Jurisdiction - Seeking review and modification of the order - affiliation with the Divine Trust or not - mismanagement of affairs of the 1st Respondent Company or not - whether this Tribunal has jurisdiction to entertain an application for review? - 154 of the National Company Law Tribunal Rules, 2016 and Section 420(2) of the Companies Act, 2016 - HELD THAT:- As per Rule 154 of NCLT Rules, 2016, the Tribunal can only rectify the clerical or arithmetical mistakes or error arising from accidental slip or omission. As per Section 420(2) of the Companies Act, 2013 the Tribunal can rectify any mistake apparent from the record, amend any order passed by it.
In the present application the applicants sought to review the order passed by this Tribunal. In view of Rule 154 of the NCLT Rules, 2016 and Section 420(2) of the Companies Act, 2013, the Tribunal can exercise this power for correction of a mistake and not to substitute a view which was made while deciding a matter. However, we could not find any error apparent on the face of record, warranting any correction in the order.
Thus, it is the well laid down proposition of law that ‘in the absence of any power of ‘Review’ or ‘Recall’ vested with the ‘Adjudicating Authority’, an order/judgment passed by it cannot be either reviewed or recalled. Therefore, it is crystal clear that the order passed by the Tribunal in Company Petition between the parties inter se has become ‘conclusive’, ‘final’ and ‘binding’.
Review application dismissed.
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2022 (3) TMI 822
Approval of the Scheme of Amalgamation - Section 230 to 232 of Companies Act, 2013 read with the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the Members and Creditors of all Companies to the proposed Scheme and no sustainable objections having been raised by the Office of the Regional Director, Income Tax Department or any other interested party, there does not appear to be any impediment in granting sanction to the Scheme.
In sequel to the facts and circumstances, sanction is hereby granted to the Scheme of Amalgamation proposed by the Applicant Companies under Section 230 to 232 of the Companies Act, 2013 - application allowed.
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2022 (3) TMI 513
Maintainability of instant suit - abatement - restraint from carrying out the valuation and sale of the concerned goods - HELD THAT:- Upon a plain reading of Order 22 Rule 8 it is patently clear that in case of a company that goes into liquidation, the suit shall not abate unless the liquidator declines to pursue the said suit. The other conditions prescribed in Rule 1 with regard to security for costs and the procedure enumerated in Rule 8 Clause 2 are in my view not relevant for the present lis. What is to be noted in the present case is that the liquidator was appearing before the Receiver with regard to the sale of ten thousand metric tons of Met Coke and had also appeared before the Court, that is, the Single Bench & Division Bench of Hon’ble Calcutta High Court, with regard to the sale of the coke. Undoubtedly, the liquidator even after having assured the High Court that steps would be taken for impleading himself into the litigation failed to do so. Such failure may amount to a lackadaisical approach of the liquidator but cannot under any circumstances be seen as a positive assertion to decline to continue the suit.
Rule 9 under Order 22, clearly allows the liquidator and/or the company to apply for setting aside of the abatement or the dismissal of the suit under conditions provided in the said rule.
In the present case there has been no order of the Court seeking an explanation from the liquidator or any order of Court seeking a security for the costs incurred by the defendants. Furthermore, it is very apparent that the liquidator has been acting in the suit with reference to the movable suit property in question and has taken all necessary steps therein - it is crystal clear that the liquidator is fighting tooth and nail with regard to this litigation and a mere delay in making an application for substituting his name in the records of the suit would not in any manner lead to an abatement of the suit.
Application seeking abatement of the suit is dismissed.
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2022 (3) TMI 366
Maintainability of petition - time limitation - false and frivolous complaint or not - appointing the persons as Directors of the company by submitting a forged document - Section 241 to 246 of Companies Act, 2013 - HELD THAT:- It is settled principal of law that the power under Section 482 Cr.P.C. is to be exercised sparingly not to smother the legitimate prosecution. The power has to be exercised with circumspection in the rarest of rare cases. The power of the police to investigate into a cognizable offence is ordinarily not to be interfered by the judiciary. The High Court should be extremely cautious and slow to interfere with the investigation/trial of criminal cases and should not stall the investigation or prosecution except when it is convinced beyond doubt that the FIR or charge sheet does not disclose commission of offence or prosecution is barred by law or it is necessary to interfere to prevent the abuse of process of the Court.
The charge sheet would disclose that the police collected the evidence as per the record of Registrar of Companies, which was a statutory record. They also collected the e-mail given by A3 to the complainant wherein he admitted that he acted upon the instructions of A1. Thus, there was prima facie evidence collected by the investigating officer to prove the offences against the petitioners under Sections 406 and 420 IPC. The statements of the witnesses recorded also would prima facie prove the other offences. The truth or otherwise of these allegations can be decided only after a full-fledged trial. This Court ordinarily would not embark upon an enquiry whether the evidence in question is reliable or not or whether the accusations would be sustained or not. It was the function of the trial court. The inherent power under Section 482 Cr.P.C. should not be exercised to stifle a legitimate prosecution. Hence, it is considered not fit to quash the charge sheet against the petitioners.
The petition is dismissed.
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2022 (3) TMI 365
Sanction of Composite Scheme of Arrangement - section 230-232 of Companies Act - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued.
The scheme is approved - application allowed.
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2022 (3) TMI 333
Transfer of applications - Sanction of a scheme of compromise - Is it either obligatory or even appropriate, in exercise of discretion, for this Court to transfer the applications, as per Analog's request, to the NCLT? - principles of res-judicata - HELD THAT:- Both Section 434 of CA 2013 and the Transfer Rules throw light on this issue. At the outset, it should be noticed that Section 434(1)(c) of CA 2013 deals with all proceedings under CA 1956, collectively, including proceedings for winding up or schemes of arrangement. To put it differently, only the provisos deal separately with winding up proceedings and other proceedings, and not the principal clause. Secondly, it should be noticed that the above provision deals with proceedings and not applications or even petitions - From Rule 3 of the Transfer Rules, it is evident that except proceedings reserved for orders, all other proceedings pending before the Companies Court are liable to be transferred. On the basis of this Rule, both Mr.Goklaney and Mr.Subramanian contended that since none of the pending applications are reserved for orders, they are liable to be transferred.
Pursuant to the amendment to Section 434 by the introduction of the last proviso thereto, a party to the proceedings is entitled to file an application for transfer in retained matters. Applications for transfer were filed in those cases by resorting to such proviso. In contrast, in the present case, as indicated above, the Scheme was sanctioned by this Court and several applications were dealt with thereafter under Section 392 of CA 1956. Indeed, it bears repetition that the cut-off, as regards schemes of arrangement, is fixed at the advanced stage of reserving orders in the proceedings. Consequently, there is no provision analogous to the last proviso to Section 434(1) of CA 2013 to seek transfer of retained matters. In fine, these applications are completely misconceived and premised on the mistaken notion that CA 2013 provides for transfer of applications.
The order dated 05.01.2017 does qualify as res judicata and is not erroneous in any respect - Application disposed off.
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2022 (3) TMI 285
Sanction of Scheme of Arrangement by way of Amalgamation - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with rule 3 & 5 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with respect to calling, convening and holding of the meetings of the shareholders, Secured and Unsecured Creditors or dispensing with the same are issued - directions with regard to issuance of notices also issued.
The scheme is approved - application allowed.
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2022 (3) TMI 284
Sanction of Scheme of arrangement in the nature of Merger - Sections 230-232 and other relevant provisions of the Companies Act, 2013 read with Rule 3 of the Companies (Compromise, Arrangement and Amalgamation) Rules, 2016 - HELD THAT:- Various directions with regard t holding, convening and dispensing with various notices issued - directions with regard to issuance of notices also issued.
The scheme is approved - application allowed.
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2022 (3) TMI 237
Sanction of Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 (for brevity "The Act") read with Companies (Compromises, Arrangements and Amalgamation) Rule, 2016 - HELD THAT:- The Tribunal, in view of the settled law, is empowered to dispense with the meeting of shareholders if they have given their consent. Further, in view of Section 230(9) of the Companies Act, 2013, the Tribunal is empowered to dispense with calling of a meeting of creditors or class of creditors where such creditors or class of creditors, having at least ninety per cent value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement.
Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of notices also issued - the scheme is approved - application allowed.
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2022 (3) TMI 201
Transfer of shares - seeking validation of the purchase of 7,000,100 shares of Brainhunter, which were held by Zylog, upon enforcement of the pledge by ICICI Bank Limited, India - whether a secured creditor requires leave under Section 537 of CA 1956? - HELD THAT:- Upon perusal of Section 537, it is evident that it deals with attachment, distress, execution and sale of the estate, properties and effects of a company after commencement of winding up. It further prescribes that any of the above, if undertaken without the leave of the court, after the commencement of winding up, is void. On a textual reading, Section 537 does not exclude secured creditors from its ambit - By Act 35 of 1985, the proviso to Section 529(1) was inserted and a pari passu charge was created in favour of the workmen of a company to the extent of the workmen's portion in every secured asset of the company in liquidation. Indeed, by virtue of Clauses (a) and (b) of such proviso, the official liquidator concerned was conferred the statutory right of representing the workmen for purposes of asserting and enforcing the rights of the pari passu charge holder. Besides, Section 529A was introduced in the statute and workmen's dues became entitled to priority over all other debts.
On the facts of this case, the Official Liquidator was restrained from taking steps to close the company, but all administrative decisions were required to be taken with his concurrence and he was directed to take over all money transactions and the accounts pertaining thereto. The consequence of appointing the Official Liquidator as the provisional liquidator is that he takes charge of the assets and affairs of the company concerned. When all the above factors are concerned, the only reasonable conclusion is that the legal fiction also gets triggered upon the appointment of the Official Liquidator as provisional liquidator.
Although there is no documentary evidence to establish the direct knowledge of the Purchaser, the Purchaser was clearly under an obligation to undertake due diligence before acquiring 100% of the paid up share capital of Brainhunter especially when such transaction involved enforcement of a pledge. Indeed, the documents on record include communications from the Purchaser to the Reserve Bank of India (the RBI) and to the Bombay Stock Exchange (BSE) and the National Stock Exchange (the NSE) - It should also be borne in mind that the Purchaser is a company incorporated in and carrying on business in India. When these facts and circumstances are considered holistically, the only reasonable inference is that the Purchaser was probably aware that the pledgor was a company in liquidation and, without doubt, had the means to discover the same on exercise of reasonable due diligence. Therefore, either the pledgee or the Purchaser should have requested for leave before enforcing the pledge.
The Purchaser says that it invested considerable sums to revive Brainhunter after the acquisition by relying upon the financial statement for the financial year ended 31.03.2021 in contradistinction to the financial statement for the financial year ended 31.03.2014 when the acquisition took place. While the accumulated losses have reduced and the share capital has increased, no definitive conclusions may be drawn since too many variables are at play - the disposition is deserving of contingent validation subject to conditions precedent. Ordinarily, a private sale without following a sealed tender or public auction process would not be validated, but in the unique circumstances of this case involving a private sale by a pledgee, in terms of and pursuant to the Pledge Agreement.
The valuation of the shares of Brainhunter shall be arrived at as on the date of acquisition by the Purchaser. As regards the pledgee, ICICI Bank India, it was satisfied with the price realised on the basis of the earlier valuation. Therefore, it is just and necessary that ICICI Bank India should not be entitled to any additional consideration even if the shares are found to be of higher value on revaluation. Instead, the entire additional consideration, if any, should accrue to the benefit of Zylog. For purposes of carrying out such valuation, the Purchaser should obtain the concurrence of the learned Administrator and the Official Liquidator and appoint two renowned chartered accountants as valuers - The disposition in favour of the Purchaser is validated subject to and contingent on the fulfillment of the above requirements. If the above requirements are not fulfilled, the disposition stands declared ipso facto void. In such event, it is open to the Administrator and the Official Liquidator to file any consequential applications. In order to verify whether the conditions precedent have been fulfilled, upon receipt of the two valuation reports and after arranging for the differential consideration in terms thereof, the Purchaser shall file an application before this Court seeking permission to proceed to conclude the transaction in terms of this order.
Application disposed off.
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2022 (3) TMI 200
Secured creditor of the Company in liquidation, filed a suit Salem for recovery of a sum with interest at the rate of 19.5% per annum at quarterly rest - first and paramount charge on the property that was sold by the Official Liquidator - HELD THAT:- When the matter came up for hearing on 07.09.2020, this Court directed the Official Liquidator to file a complete and comprehensive additional report and the the Official Liquidator also filed a detailed report on 15.10.2020, for which, the appellant/Bank also filed their objection. Finally, when the matter came up for hearing on 19.03.2021, this Court directed the the Official Liquidator to file the details of the re-adjudication of workmen claims with break ups on the next hearing. Accordingly, the Official Liquidator also filed a report dated 25.06.2021 with break-up details of workmen. Later, the Official Liquidator submitted that the re-adjudication work has not been completed for the reason that the disbursement work of interest amount at 4% was going on during that time.
It was mentioned in the report dated 25.06.2021 that the re-adjudication work was made, instead of stating that, the calculation of arrears of wages for the years 1990 to 1993 were partially made - this Court, by the order dated 13.12.2019 in C.A.No.447 of 2019, permitted the Official Liquidator to publish notice in block letters/bold letters to contributories to prove the claim/extent of interest held by them in the subject Company in liquidation, in the “The New Indian Express” and “Malai Malar”. In compliance of the said order, the Official Liquidator issued notice. Subsequently, in response, one contributory has come forward with his claim and the same is pending for adjudication to proceed further in the matter - also, it is seen that the additional payment of dividend was already made to the appellant/Bank.
Since the learned Official Liquidator has paid the amounts to the appellant/Bank, as per the earlier orders of this Court, nothing survives for consideration in this appeal - appeal dismissed.
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2022 (3) TMI 199
Approval of Scheme of Arrangement by way of Amalgamation - Sections 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013, read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with respect to convening/holding or dispensing with the meetings of the Equity Shareholders, Secured and Unsecured Creditors issued - directions with regard to issuance of various notices also issued.
The scheme is approved - application allowed.
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