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Companies Law - Supreme Court - Case Laws
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- 2020 (11) TMI 587 - SUPREME COURT
Liquidation proceedings - Scope of the term "Party" - Transfer the winding up petition pending to the National Company Law Tribunal - circumstances under which a winding up proceeding pending on the file of a High court could be transferred to the NCLT - at whose instance, such transfer could be ordered? - HELD THAT:- The transferability of a winding up proceeding, both under Rule 5 as well as under Rule 6, is directly linked to the service of the winding up petition on the respondent under Rule 26 of the Companies (Court) Rules, 1959. If the winding up petition has already been served on the respondent in terms of Rule 26 of the 1959 Rules, the proceedings are not liable to be transferred. But if service of the winding up petition on the respondent in terms of Rule 26 had not been completed, such winding up proceedings, whether....... + More
- 2020 (9) TMI 713 - SUPREME COURT
Condonation of delay in filing appeal - power to condone the delay beyond a period of 45 days - appellants admittedly received the certified copy of the order on 19.12.2019, they chose to file the statutory appeal before NCLAT on 20.07.2020 - Winding up of Company - contentions raised by the learned counsel for the appellants are twofold namely (i) that the Appellate Tribunal erred in computing the period of limitation from the date of the order of the NCLT, contrary to Section 421(3) of the Companies Act, 2013, and (ii) that the Appellate Tribunal failed to take note of the lockdown as well as the order passed by this Court on 23.03.2020, extending the period of limitation for filing any proceeding with effect from 15.03.2020 until further orders - Section 420(3) of the Companies Act, 2013. Computation of period of limitation from the da....... + More
- 2020 (7) TMI 168 - SUPREME COURT
Maintainability of application - sections 241 and 242 of the Companies Act, 2013 - Oppression and Mismanagement - transfer of shares - nomination of shares - HELD THAT:- A bare reading of the provisions of section 72(1), every holder of securities has a right to nominate any person to whom his securities shall “vest” in the event of his death. In the case of jointholders also, they have a right to nominate any person to whom “all the rights in the securities shall vest” in the event of death of all joint holders. Subsection (3) of section 72 contains a nonobstante clause in respect of anything contained in any other law for the time being in force or any disposition, whether testamentary or otherwise, where a nomination is validly made in the prescribed manner, it purports to confer on any person &ld....... + More
- 2020 (2) TMI 1081 - SUPREME COURT
Fraud/misconduct/conspiracy - oppression and mismanagement - injunction from disposing movable and immovable properties/assets which belong to them and whose assets were frozen - HELD THAT:- Under Section 241(2), the Central Government, if it is of the opinion that the affairs of the Company are being conducted in a manner prejudicial to public interest, may apply itself to the Tribunal for orders under this Chapter, which is headed “prevention of oppression and mismanagement”. Apart from the vast powers that are given to the Tribunal under Section 242, powers under Section 337 and 339 are also given in aid of this power, which will apply mutatis mutandis - Section 337 refers to penalty for frauds by an officer of the company in which mis-management has taken place. Likewise, Section 339 refers to any business of the company w....... + More
- 2019 (12) TMI 397 - SUPREME COURT
Temporary injunction in respect of the disputed property - Corporate Debtor - whether an application under Section 630(2) of the 1956 Act was maintainable, in spite of pendency of the civil suit and issue of temporary injunction in respect of the disputed property? - HELD THAT:- The mere issuance of a temporary injunction by the civil court directing maintenance of status quo in respect of the disputed property does not make the dispute bona fide or bar the company’s right to recover the disputed property from the accused employee under Section 630 of the 1956 Act. At best, such an injunction would only bar the company from creating any rights in favour of third parties pending disposal of the civil suit. This is because the cause of action in the civil suit is completely different from the question of whether the employee is wrongf....... + More
- 2019 (10) TMI 967 - SUPREME COURT
Execution of a sale deed in favour of the Petitioner - revival of winding up proceedings initiated against KOFL - whether a winding up petition can be dismissed solely on the ground of lack of a prosecuting creditor under Rule 101, or whether the Company Court has the power to direct the publication of an advertisement by the Liquidator of the company, especially in cases where other unsatisfied creditors still remain? HELD THAT:- It is important to bear in mind that winding up proceedings are proceedings in rem and have an impact on the rights of people, in general. Thus, it is mandatory to advertise such proceedings, so as to ensure that they receive the widest possible publicity and all relevant stakeholders have adequate notice. This implies that in a situation where the petitioning creditor fails to advertise the petition and no othe....... + More
- 2019 (8) TMI 1448 - SUPREME COURT
Non-appearance of Official Liquidator of Shree Ram Urban Infrastructure Ltd. - HELD THAT:- We give the appellant a chance to serve the Official Liquidator, dasti as well as by electronic means, so that he puts in appearance in this matter which is going on before us, by 10.30a.m. tomorrow i.e. 22.08.2019. List tomorrow i.e. Thursday, the 22nd August, 2019 as Item No.1at 10.30 a.m.
- 2019 (7) TMI 1469 - SUPREME COURT
Reference to Arbitration - Compromise decree - Case of appellant is that the respondents refused to honour the terms and conditions of the compromise decree therefore, the appellant had filed Title Execution case No.4 of 2002 for execution of the compromise decree dated 24.12.2001 - diversion of stock by appellant's employee - it was also alleged that compromise decree was obtained by appellant by false inducement and misrepresentation and the same is vitiated on account of fraud. Whether the High Court was right in referring the parties to arbitration by observing that the appellant- Company admits the existence of arbitration clause in the agreement dated 01.05.1997? Whether the appellant is right in contending that the dispute raised in the Money Suit No.73 of 2003 is not covered by the arbitration clause and cannot be referred to ....... + More
- 2019 (6) TMI 332 - SUPREME COURT
Recasting and re opening of the accounts of IL&FS - suspension of Board of Directors of IL&FS - Whether in the facts and circumstances of the case, can it be said that the order passed by the learned Tribunal is illegal and/or contrary to Section 130 of the Companies Act? HELD THAT:- In the present case, the Central Government has already constituted SFIO and has also ordered investigation into the affairs of IL&FS and other group of companies and the investigation by the SFIO is under progress. It is also required to be noted that SFIO had also submitted its preliminary report. In the preliminary SFIO report, there are specific findings with respect to mismanagement of the affairs of the aforesaid companies, and also with respect to preparing fraudulent accounts. At this stage, it is also required to be noted that I....... + More
- 2019 (5) TMI 763 - SUPREME COURT
Oppression and mismanagement - allotment of shares - Declaration, cancellation and mandatory injunction against the requisition under section 169 of the Companies Act - allotment/transfer of shares - Sections 397/398 of the Act - voting rights - sections 286, 300 and 108 of the Companies Act - financial mismanagement or not - HELD THAT:- The Company Law Board as well as the High Court have found that the provision of notice under Section 286 of the Companies Act was not complied with. The High Court has observed that the interested Directors have participated in the meeting. Mr. R.P. Mittal and Mrs. Sarla Mittal were in a fiduciary capacity they could not participate in the decision where shares were transferred to their own group/company. Even if HQRL were a private limited company, the compliance with the provisions of section 300 of th....... + More
- 2019 (5) TMI 730 - SUPREME COURT
Offence of theft - oppression and mismanagement - Theft of documents - immovable property - respondents herein are alleged to have used the documents of appellant-Corporation without calling upon them to produce the documents in accordance with law - cognizance of the offence u/s 380 IPC - quashing of FIR u/s 482 Cr.P.C. HELD THAT:- The High Court, in our view, was not right in holding that the replication of the documents or use of information in the documents No.1 to 28 and the contents thereon are not corporeal property and would not amount to theft qua documents No.1 to 28. The documents and the replication of the documents and the contents thereon have physical presence and therefore, are certainly “corporeal property” and the same can be the subject matter of theft. In the present case, the documents are used in good fai....... + More
- 2019 (5) TMI 522 - SUPREME COURT
Applicability and construction of Section 396 of the Companies Act, 1956 - compulsory amalgamation of companies by a Central Government order - HELD THAT:- The Central Government’s satisfaction must be as to the conditions precedent mentioned in the Section as correctly understood in law, and must be based on facts that have been gathered by the Central Government to show that the conditions precedent exist when the order of the Central Government is made. There must be facts on which a reasonable body of persons properly instructed in law may hold that it is essential in public interest to amalgamate two or more companies. The formation of satisfaction cannot be on irrelevant or imaginary grounds, as that would vitiate the exercise of power. In the context of compulsory amalgamation of two or more companies, the expression “p....... + More
- 2019 (3) TMI 591 - SUPREME COURT
Principles of natural justice - case of appellant is that appellant’s right to be heard, audi alteram partem, one of the principles of natural justice, has been violated in as much as the appellant has neither been served with notice of appeal before the NCLAT nor been given a hearing before it - Held that:- In the instant case, the NCLAT, vide order dated 02.01.2019, issued notice both on the question of limitation as well as on the merit of the appeal. Subsequently, judgment was reserved vide order dated 08.01.2019 - It is to be noted that in the rejoinder affidavit before us the appellant has submitted that, pursuant to issuance of notice vide order dated 02.01.2019, neither did respondent no. 1 file process fee for issuance of summons in terms of the said order, nor was the same served upon the appellant. Thus the judgment which was r....... + More
- 2019 (2) TMI 971 - SUPREME COURT
Transfer of shares - Exercise of power under Section 111-A of the Companies Act, 1956 (as amended in 1988) and the Depositories Related Laws (Amendment) Act, 1997 - whether issued raised rightly or wrongly, has to be adjudicated by some forum – whether it be a civil suit or the exercise of jurisdiction by the then Company Law Board? Held that:- The effect of section 430 of Companies Act is that in matters in respect of which power has been conferred on the NCLT, the jurisdiction of the civil court is completely barred - It is not in dispute that were a dispute to arise today, the civil suit remedy would be completely barred and the power would be vested with the National Company Law Tribunal (NCLT) under Section 59 of the said Act. We are conscious of the fact that in the present case, the cause of action has arisen at a stage prior to th....... + More
- 2019 (1) TMI 1443 - SUPREME COURT
Right of a secured creditor to file a winding up petition after such secured creditor has obtained a decree from the Debts Recovery Tribunal [“DRT”] and a recovery certificate based thereon - Held that:- One of three instances in which a company shall be deemed to be unable to pay its debts. If the fact situation fits sub-clause (b) of Section 434(1), then a company may be said to be deemed to be unable to pay its debts. However, this does not mean that each one of the sub-clauses of Section 434(1) are mutually exclusive in the sense that once Section 434(1)(b) applies, Section 434(1)(a) ceases to be applicable. Also, on the facts of this case, we may state that the company petition was filed only on 03.07.2015, pursuant to a notice under Section 433 of the Companies Act, 1956 dated 15.04.2015. This petition was filed under Section 433(e)....... + More
- 2019 (1) TMI 1442 - SUPREME COURT
Winding up petition - financial creditor's application which has been admitted by the Tribunal - Held that:- Section 11 of the Code specifies which persons are not eligible to initiate proceedings under it. This Section is of limited application and only bars a corporate debtor from initiating a petition under Section 10 of the Code in respect of whom a liquidation order has been made. From a reading of this Section, it does not follow that until a liquidation order has been made against the corporate debtor, an Insolvency Petition may be filed under Section 7 or Section 9 as the case may be, as has been held by the Appellate Tribunal. Hence, any reference to Section 11 in the context of the problem before us is wholly irrelevant. We decline to interfere with the ultimate order passed by the Appellate Tribunal because it is clear that the....... + More
- 2018 (12) TMI 674 - SUPREME COURT
Transfer winding up proceedings pending before HC to the National Company Law Tribunal (“NCLT”) refused - Held that:- If there is any inconsistency between Section 434 as substituted and the provisions of the Code, the latter must prevail. We are of the view that the NCLT was absolutely correct in applying Section 238 of the Code to an independent proceeding instituted by a secured financial creditor, namely, the Alchemist Asset Reconstruction Company Ltd. This being the case, it is difficult to comprehend how the High Court could have held that the proceedings before the NCLT were without jurisdiction. On this score, therefore, the High Court judgment has to be set aside. The NCLT proceedings will now continue from the stage at which they have been left off. Obviously, the company petition pending before the High Court cannot....... + More
- 2018 (12) TMI 178 - SUPREME COURT
Arbitration proceedings - parties to the Arbitration agreement, being a body corporate, incorporated in Malaysia - why “an association” cannot be read with “body of individuals” - no “international commercial arbitration” as defined under Section 2(1)(f) of the Act for the petitioner to come to this Court - Held that:- Prior to the deletion of the expression “a company or”, there were three sets of persons referred to in Section 2(1)(f)(iii) as separate and distinct persons who would fall within the said sub-clause. This does not change due to the deletion of the phrase “a company or” for the reason given by the Law Commission. This is another reason as to why “an association” cannot be read with “body of individuals” which follows it but is a separate and distinct category by itself, as is understood from the definition of “person” as de....... + More
- 2018 (11) TMI 1408 - SUPREME COURT
Territorial jurisdiction - whether High Court of Madras has the territorial jurisdiction to entertain the suit filed by the appellants herein? - correctness of the order granting leave to the plaintiffs permitting them to institute the suit in Chennai, under Clause 12 of the Letters Patent - Held that:- Grant of leave is discretionary and for granting leave the Court is governed by the principle of forum conveniens. In the instant case, having regard to the fact that the holding company (defendant No.11) as well as the company on whose behalf the suit was filed (defendant No.2) were situated in Dubai and the shareholders of defendant No.2 were having disputes inter se, who were also residents of Dubai, the Courts in Dubai were better equipped to deal with such a dispute. It is the dispute between the plaintiffs and Defendant nos. 3 to 7 w....... + More
- 2018 (11) TMI 937 - SUPREME COURT
Offences involving serious financial frauds or economic misdemeano - offences punishable under the Companies Act, 2013 - Constitutional validity of the provisions of the Companies Act, 2013 - Held that:- The observations made in the impugned order may have far reaching consequences and deprive the Competent Authority or the Statutory Authority to proceed in the matter in accordance with the provisions of the Companies Act, 2013 in respect of investigations and including filing of complaint/police report concerning the offences involving serious financial frauds or economic misdemeanor, the impugned order, therefore, deserves to be stayed. We order accordingly. The operation of the impugned order of the High Court is stayed but the interim relief granted to Respondent No.1/Neeraj Singal limited to his release on personal bond shall remain ....... + More
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