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Companies Law - Case Laws
Showing 21 to 40 of 15082 Records
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2025 (5) TMI 1925
Sanction of scheme of demerger u/s 230-232 of the Companies Act, 1956 - HELD THAT:- Considering the conspectus of facts in this case, that the appellant companies are closely held family concerns, the valuation and share swap ratio is worked out by expert IBBI registered Valuers, the shareholders of both the companies have given their unequivocal consent to the Scheme, it is held that Ld. NCLT has erred in dismissing the application for first motion seeking demerger of one unit of Appellant No. 1 company and its merger in the resulting company, Appellant No. 2. The impugned order is set aside with the directions to the Ld. NCLT to issue consequential order regarding convening/dispensation of meetings within three days of receipt of this order
Appeal allowed.
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2025 (5) TMI 1924
Calculation of the quorum for the meetings of the Equity Shareholders - Appellant argues the learned NCLT has no jurisdiction to fix the number of shareholders to form a quorum - HELD THAT:- The Appellant has already given an undertaking to the learned NCLT to convene the meeting as per Section 103 of the Companies Act.
In the circumstances, the direction contained in sub-para (i) of para 17 of the impugned Order needs to the set aside and the quorum for the aforesaid meeting of shareholders shall be as prescribed under Section 103 of the Companies Act and will include the shareholders present through video conferencing and other audio video means. In case the required quorum as stated above is not present, the meeting shall be adjourned per Section 103 of the Act. The voters shall also be kept guided by MCA General Circular No.14/2020 dated 8th April, 2020.
The directions contained in sub-para (i) of Para 17 of the impugned order is set aside. Appeal is disposed of.
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2025 (5) TMI 1846
Oppression and mismanagement - Section 241-242 of the Companies Act, 2013 - seeking leave to amend the prayers in Company Petition - the procedure prescribed under Rule 155 of the NCLT Rules, 2016 and the principles of natural justice were complied with in allowing the amendment of the petition without leave of the Tribunal or opportunity to the appellants to object or not - HELD THAT:- Rule 155 of the NCLT Rules, 2016 empowers the Tribunal to permit to amend necessary amendment for the purpose of determining the real question or issue raised in the proceeding. Section 424 of the Companies Act, 2013 deals with procedure before Tribunal and Appellate Tribunal.
Section 424 of the Companies Act, 2013 makes it clear that the NCLT is not bound by the procedure laid down in the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice. Even though provisions of the Code of Civil Procedure are not strictly applicable, however, the principles contained therein are always the guiding factor for the procedure for proceeding before the Tribunal. Statutory provision of Order VI, Rule 17 of the Civil Procedure Code, 1908 are not applicable to the proceedings before the NCLT. When the petition is filed under Companies Act, 2013 under Section 241-242, pleadings which are submitted are record of the Court and no amendment or tinkering in pleadings filed by the parties can be allowed without leave of the Court. The first principle which is to be noticed is the fact that any amendment in the pleadings which is filed by a party under Section 241 and 242 of the Companies Act requires leave of the Court.
The submission of Union of India that without filing application it was entitled to suo moto add prayers in the Company Petition has to be rejected. No party is entitled to add /amend its pleadings/ reliefs in a Company Petition filed under Section 241-242 without making an application. Present is a case where neither any application has been made nor any leave has been taken from the Court or the NCLT at any point of time permitted the Union of India to add further prayers in the original Company Petition as amended on 25.11.2019.
Conclusion - i) The facts of the present case clearly indicate that neither there was any application filed for amendment nor any leave was granted by the NCLT for amendment. ii) The pleadings, once filed, form part of court record and cannot be amended without leave of the court, ensuring procedural fairness and opportunity to the opposite party.
The impuned order set aside - appeals allowed.
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2025 (5) TMI 1764
Validity of the suspension and termination letter - Seeking interim injunction and stay of operation of the notice - principles of natural justice - It is the appellants’ case that the benefit has been granted by the Committee of Respondent No. 1 in consonance with Articles 13 (3b) & 13 (3c) of the AoA of Respondent No. 1 - HELD THAT:- The Articles merely provide that the dependents of regular members must apply to become a full members should they wish to continue using the facilities. The words “should he continue to use the Club” in Article 13(3c) of the AoA, merely informs the members that their dependents will have to apply to become full members in order to continue using the facilities. The same, prima facie, cannot be read to mean that dependents, even after attaining the age of 21, can continue using the same facilities as they were enjoying as dependents, despite not being full members.
A plain reading of Articles 13(3a) & 13 (3b) of the AoA, prima facie, reveals that the said Articles have been incorporated for a limited purpose – to allow dependents to use the facilities until they attain the age of 21, on payment of certain monthly subscription. The provisions serve as information to members that their dependants, on turning 21 and wishing to continue using the Club, must apply for full membership. These Articles are in the nature of benefits / courtesies extended to the members. However, the same do not confer an independent right on the dependent children to continue using the facilities despite not being full members of Respondent No. 1.
It is evident that this privilege is inherently temporary, ceasing once the dependent turns 21. It neither establishes a right to permanent access nor confers any expectation of preferential treatment or entitlement to continued use - The absence of any vested rights for dependents underscores the transient nature of their entitlement, highlighting that it does not translate into an automatic or enduring claim to Club privileges.
The right to use the facilities cannot be disputed to be available only to the members of Respondent No. 1 Club. The AoA are binding on the company and any deviation from the same can only be through formal amendments and not through the informal practices adopted by the Committees. This fact was also specifically noted in the Naidu Committee’s Report and also by the learned NCLAT, which found the said practice to be inconsistence with the AoA - As rightly observed by the learned Single Judge, by adopting such a practice, a new category of members has been created without there being any express provision in the AoA.
Once it is, prima facie, evident that the appellants were granted the right to use the Club facility in contravention of the AoA, no grievance can be raised against the Administrator suspending the same.
In regard to principles of natural justice not followed on the appellants not given a hearing, it cannot be ignored that the appellants were only given a right to use the facilities which prima facie was dehors the AoA. It is not denied by the appellants that they were not the members of Respondent No. 1 company. The act of Respondent No. 1 Company to suspend and thereafter terminate the privilege granted to the appellants finds its root in the Naidu Committee Inquiry Report which highlighted the procedural lapses. These lapses were also noted by the learned NCLT, which led to the appointment of the Administrator for the purpose of restructuring and ensuring compliance with the provisions. The action, therefore, was corrective in nature.
Conclusion - The view taken by the learned Single Judge is a plausible one and the discretion has not been exercised arbitrarily or perversely or by ignoring the settled principles of law regarding the grant or refusal of interlocutory injunctions.
There are no reason to interfere with the impugned judgment - appeal dismissed.
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2025 (5) TMI 1763
Limitation period for filing an appeal under Section 421(3) of the Companies Act, 1956 - permissibility of condoning delay beyond the prescribed statutory period - sufficient cause for delay or not - HELD THAT:- The maximum period of limitation for preferring of an Appeal under Section 421 of the Companies Act, including the extension which has been contemplated under the proviso to Sub-Section (3) of Section 421 of the Companies Act would be for a maximum period of 90 days. In the Condone Application which has been thus preferred by the Appellant, few very remarkable features are required to be considered for the purposes of dealing with an aspect of seeking Condonation of Delay in filing the Appeal. The facts which could be apparently borne out from the pleadings raised in the Appeal are that, when the Company Petition was instituted, the Appellant herein had already put an appearance and was contesting the proceedings before the Tribunal, till the same was dismissed in default on 31.08.2016. One of the arguments of the Learned Counsel for the Appellant is that, the order of 31.08.2016, dismissing the Company Petition for want of prosecution, was restored behind his back on 17.10.2016, in an exparte manner without the knowledge of the Appellant and the second limb of the argument is that despite there being a direction issued by an order of 17.10.2016 while restoring the petition to supply the copy of the restoration order to the Appellant, the same was not complied with by the Respondent. The issue would be whether this factor could at all have any bearing in the instant Appeal at this stage, particularly when it is under altogether a different complexion, when the Delay Condonation Application is being considered. On a simpliciter determination of the period of limitation the same would be expiring on 26.12.2017, but however admittedly no appeal was preferred within the aforesaid period.
Under the given legal precedents, at least the application for procuring the Certified Copy of the order was required to be preferred within the principal period of limitation prescribed under law for preference of an Appeal. Admittedly, that was not done in the instant case; the application for procuring the Certified Copy was filed only on 25.10.2024 i.e., after 80 days from the date of knowledge, which is well beyond the limitation period.
A diligence in participating in the proceedings was expected from him and it was rather his responsibility to ascertain as to up to what stage the proceedings of Company Petition has reached, which was absolutely lacking on part of the Appellant as he was appearing in the proceedings, in the Company Petition, even prior to its dismissal in default on 31.08.2016 - the alleged prayer that, there happens to be a delay of 25 days as prayed for by the Appellant in his Application being IA No.604/2025, is not acceptable by us because the limitation cannot be permitted to be calculated from date of receipt of Certified Copy and it has to be determined from 27.09.2017, because the Certified Copy of the Order itself was not applied within the period of limitation. Hence, the delay would be of 2659 days and not 25 days as pleaded by the Appellant.
The Condone Delay Application being IA No.604/2025, is not borne out to be justifiable from the facts, which have been placed on record, and the delay being inordinate, falling outside the scope of the proviso of Sub-Section (3) of Section 421 of the Companies Act, 1956, the same cannot be condoned - Appeal dismissed.
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2025 (5) TMI 943
Non compliance of section 143 of the Companies Act - violation of Accounting Standard resulting - name of transacting related party and description of relationship between the parties is not mentioned in Annual / Audit Report - partner or partners of the audit firm has or have acted in fraudulent manner or abetted or colluded in any fraud by or in relation to or by the company or its directions or officers - HELD THAT:- According to prosecution not naming relationship between relative attracts offence. Noticably, definition of relative is given in Accounting Standard 18. It defines related party and related party transaction as above. When degree of relative is specifically defined in clause 10.9, in column of relative, there is no requirement of mentioning degree of relative separately or to say relationship of Priyavratra Mafatlal individual having significant influence separately.
Thus, prosecution against petitioner is found to be malicious and deserves to be quashed.
While examining the questioned complaint in light of aforesaid law, this Court is of the opinion that petitioner who has been joined in individual capacity without joining M/s. Deloitte Haskins as accused, is not needed to be send for facing trial.
Thus, the petitions are allowed. The Criminal Complaint dated 14.02.2018 bearing Criminal Enquiry No.147 of 2018 in Criminal Case No.25079 of 2018 and Criminal Complaint dated 14.02.2018 bearing Criminal Enquiry No.162 of 2018 in Criminal Case No.25087 of 2018 pending before the learned Additional Chief Metropolitan Magistrate, Ahmedabad as well as all consequential proceedings initiated in pursuance thereof are hereby quashed and set aside qua the applicant.
Direct service is permitted.
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2025 (5) TMI 942
Oppression and mismanagement - Entitlement to an investigation under Section 213 of the Companies Act, 2013 into the affairs of the Respondent No. 1 Company based on alleged fraudulent, oppressive, or unlawful conduct - HELD THAT:- Section 213 of the Companies Act, 2013 empowers this Tribunal to order an investigation into the affairs of the company if, inter-alia, the business of the company is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to any of its members or that the company was formed for any fraudulent or unlawful purpose.
Remuneration and its accounting in the books - HELD THAT:- This issue has been disputed by the Respondent No. 8 by placing on record a bank certificate evidencing payment of Rs. 1,42,70,000/- to the Petitioner in his Bank Account No. 520101257897859 with Corporate Bank, Pune during February 2019 to April 2019. This revelation is contrary to the assertion of the Petitioner in his petition that “the Petitioner has never received the said amounts, classified by the Respondent No 1 Company as the Petitioner's remuneration as a Director, which fact is evident from the Bank Statements of the Petitioner's bank account”. The remaining amount out of Rs. 1,80,00,000/- is stated to be payable in the books of the Respondent No. 1 Company, accordingly, no case of fudging the books is made out in this regard.
It is relevant to note here that none of the Respondents other than Respondent No. 1 Company holds share in Dishti Vishal Private Limited, and any benefit flown to such company indirectly accrues to the Respondent No. 1 Company in terms of accretion to its share value.
Unathorised buy-back of shares was completed by the Respondent No. 1 Company - HELD THAT:- It is relevant to note that such buy-back was carried out by the Respondent No. 1 Company at face value, while the intrinsic value of its shares was much higher than the face value. Accordingly, the buy-back had resulted into reduction of outstanding shares, but the pro-rata share of outstanding shareholders in the reserves of the Respondent No. 1 Company had gone up resulting into increase in the intrinsic value thereof. Accordingly, such buy-back cannot be said to be an act of oppression prejudicial to the interest of its members (remaining) or of the Respondent No. 1 Company.
Allegation of personal benefits taken by Respondents is in relation to usage of a car owned by Respondent No. 1 Company by the ex- wife of the Respondent No. 2 and mother of Petitioner and provision of a corporate credit card for her expenses - HELD THAT:- The Respondent No. 2 has clarified that she is employed with the Respondent No. 1 Company in marketing department and said car and credit card has been allotted to her in course of her employment. It is customary to grant perquisites/benefits to the employees by an employer and no adverse inference can be drawn from it - the allegation is arising as the Petitioner has not been granted similar benefits. It is relevant to note that the Petitioner is not in employment of the Respondent No. 1 Company, hence cannot be allowed such benefits.
Irregular appointment of Respondent No. 4,5, and 6 as additional directors of the Respondent No. 1 Company on 02.03.2015 and thereafter non-confirmation of their appointment in the AGM - HELD THAT:- It is relevant to note that the Petitioner was a Director when the AGM is claimed to have been held on 30.09.2015 and has also signed the Financial Statement for the FY 2014-15 laid before the AGM for the shareholder’s approval. Accordingly, the Petitioner cannot raise this issue in this Petition after a lapse of about 8 years and the said contention is ex facie barred by limitation.
Proceeds of Key Man Insurance Policy in the name of the Petitioner purchased by the Respondent No. 1 Company - HELD THAT:- The Respondent No.1 Company has clarified that the benefits of the policy are already being credited to the personal accounts of the Petitioner maintained with the Respondent No. 1 Company till 2021, and from 2022, the receipts of insurance policies are directly being credited to the savings account of the Petitioner by the Insurance Company - The mere non-payment of the money lying to the credit of the Petitioners in the books of the Respondent No. 1 Company cannot be held to be an act of oppression and the Petitioner has remedies available under the civil law in relation to recovery of those amounts.
Benami property creation - Respondent No. 1 Company’s funds were paid to Dishti Vishal Private Limited as advances, which were in turn utilised by Dishti Vishal Private Limited for funding the purchase of large land parcels in the name of Mr. Suryakant Shantaram Dhamne, who was working as a land labourer in the farm and later on appointed as a director of Dishti Vishal Private Limited - HELD THAT:- The allegation that money given in advances by the Respondent No. 1 Company to Dishti Vishal Private Limited has been utilised for the funding of acquisition of land in the name of Mr. Suryakant Shantaram Dhamne is not corroborated from the facts placed on record. Hence, there are no substance in the unfounded allegation of the Respondent No. 1 Company entering into benami transactions.
It is settled law that the shareholders cannot claim the dividend payment as a matter of right and the declaration of dividend is within the powers of the management of the company. Accordingly, non- payment of dividend to shareholders does not constitute an act of oppression.
Conclusion - The Petitioner has failed to make out a case of oppression as alleged in the Petition.
Petition dismissed.
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2025 (5) TMI 777
Proper basis for levy of stamp duty on a Scheme of Arrangement - demerger of Consumer Mobile Business of TTML/transferor company into Petitioner/transferee company as a going concern - stamp duty under Article 25 (da) of the Maharashtra Stamp Act, 1958, should be computed on the enterprise value or net worth of the demerged undertaking, or on the market value of shares issued and allotted in exchange plus any consideration paid - HELD THAT:- The Collector of Stamps has thus proceeded to determine the stamp duty payable on the Scheme of Arrangement on the net worth of demerged undertaking of consumer mobile business unit of TTML. While doing so, it has relied upon joint valuation report of M/s. S. R. Baltiboy & Co. LLP and Walker Chandiok & Co. LLP dated 19 December 2017. It appears that Petitioner had appointed Walker Chandiok & Co. LLP as its valuer and TTML has appointed M/s. S.R. Baltiboy & Co. LLP as its valuer. Both the valuers have submitted joint valuation report for the purpose of determining the Share Entitlement Ratio to be placed before the Board of Directors of both the Companies. Both the valuers apparently worked independently. They calculated valuation of Consumer Mobile Business of TTML by using Comparable Companies’ Market/Transaction Multiple (CCM) method whereas the method of Market Price (MP) was adopted for valuing the Petitioner since its shares were well traded.
Considering the provisions of Article-25 (da) (ii) of the Stamp Act, the Collector ought to have determined the market value of shares issued and allotted in exchange by the Petitioner. However, the order passed by the Collector of Stamp does not indicate that any attempt is made for computing the stamp duty on the basis of the market value of shares of Petitioner issued and allotted in exchange to the equity shareholders of TTML. Instead, the Collector of Stamps seems to have erroneously concentrated on ‘enterprise value’ or ‘net worth’ of consumer mobile business unit of TTML while computing the stamp duty chargeable on Scheme of Arrangement. Perusal of Article-25 (da) (ii) would indicate that the same does not recognise the concept of computation of stamp duty on the basis of enterprise value or net worth of the demerged undertaking - In the present case, it appears that no separate consideration is paid under the Scheme of Arrangement and the value of shares of the Petitioner issued and allotted to TTML actually forms consideration paid under the Scheme. The Collector of Stamps appears to have erroneously computed 0.7% stamp duty on ‘enterprise value’ or ‘net worth’ of consumer mobile business unit of TTML.
The Collector of Stamps has grossly erred in adjudicating the stamp duty payable on Scheme of Arrangement by taking into consideration net worth of demerged undertaking of consumer mobile business unit of TTML. Article 25 (da) (ii) does not contemplate levy of stamp duty on net worth of the demerged undertaking. In that view of the matter, the Collector of Stamps could not have assumed that market value of shares issued/allotted within the meaning of Article 25 (da) (ii) would be net worth of the demerged undertaking - the Collector of Stamps has grossly erred in computing the stamp duty leviable on the Scheme of Arrangement by taking into consideration ‘net worth’ of consumer mobile business unit of TTML. The Collector ought to have computed stamp duty payable on aggregate market value of shares issued and allotted in exchange plus consideration paid for the transaction. Since no separate consideration is paid under the Scheme, the value of shares allotted by the Petitioner to the equity shareholders of TTML would alone form the entire consideration for the Scheme.
Conclusion - For calculation of stamp duty on Schemes of Arrangement involving demerger, the statutory formula prescribed in Article 25 (da) must be strictly followed. The market value of shares issued and allotted plus any consideration paid is the proper basis, and enterprise value or net worth of the demerged undertaking cannot be substituted.
Petition allowed.
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2025 (5) TMI 776
Seeking damages and compensation - gross breach of contract and trust, culpable negligence, and malicious and tortious action at the hands of the Technology Development Board - jurisdiction of civil court to entertain suits or proceedings challenging orders passed by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016 (IBC), particularly when Section 63 of the IBC bars such jurisdiction - HELD THAT:- The learned Single Judge refused to entertain the Appellant and rejected the interim applications seeking ad-interim relief in the wake of Section 63 of the IBC, which prevented in a suit or proceedings being entertained, in respect of any matter on which the National Company Law Tribunal or National Company Law Appellate Tribunal had jurisdiction. As a result, since the challenge was raised to the order passed by the National Company Law Tribunal in proceedings under IBC in a Company Petition, the request for grant of interim relief or maintaining the status quo was rejected on the ground that Court lacked jurisdiction to entertain the request.
Since the position of law under the IBC clearly prevents the institution of a suit but definitely remedies are available to the appellant and this includes the remedy to be availed in terms of the order of the Apex Court, when it set aside the order dated 19.03.2024 passed by the Division Bench, seeking review of the order passed on 11.01.2024, in any case, it is not a case of no remedy, the Appellant shall act in accordance with law.
As far as the present commercial appeal is concerned, the challenge is raised to the Order passed by the Single Judge on 19.11.2024 in the Commercial Suit and hence it is not required to decide the issue raised as regards the applicability of Circular issued by RBI dated 15.09.2024 to the MSME and in turn to the appellant. As in the suit filed before the learned Single Judge has adopted a view in the wake of Section 63 of the IBC, the suit may not be entertained against the order passed by the Company Law Tribunal and therefore, ad-interim relief was refused.
Conclusion - The statutory remedy is available to the Appellant to approach NCLT under Section 21, and the Civil Court lacks jurisdiction to entertain any suit or proceedings in respect of any matter on which the NCLT or NCLAT has jurisdiction.
There are no reason to interfere in the impugned order which has refused ad-interim relief in favour of the Appellant. As a result, the Commercial Appeal is dismissed.
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2025 (5) TMI 584
Transfer of winding up petition from the High Court to the National Company Law Tribunal (NCLT) under Section 434(1)(c) of the Companies Act - HELD THAT:- As would appear from the substituted sub section 434(1)(c), the original sub section has undergone several changes between 7th December, 2016 and 17th August, 2018. The first proviso to Section 434(1)(c) after the substitution in 2016 clarified transfer of pending proceedings by the phrase “only such proceedings relating to winding up the companies” as may be prescribed by the Central Government - The stage at which such pending proceeding relating to the winding up of companies needs to be transferred has been prescribed and laid down by the Companies (Transfer of Pending Proceedings) Rules, 2016.
The facts in Action Ispat and Power Pvt. Ltd. [2020 (12) TMI 535 - SUPREME COURT] were that winding up application was filed under Section 433(e) and (f), 434 and 439 of the Companies Act against the company seeking winding up and it was alleged that for the goods supply Action Ispat had failed to pay a sum of Rs. 4.55 crores. The Company Judge in Delhi High Court passed an order on 27th August, 2018 admitting the winding up petition and appointed the official liquidator attached to the Supreme Court as the liquidator of the Company with further direction to take over all the assets, books of accounts and records of the Company forthwith. An application was then filed before the Company Judge by SBI being the secured creditor of Action Ispat seeking transfer of the winding up petition to the NCLT in view of the fact that the SBI had filed an application under Section 7 of the IBC Code 2016 which was pending before NCLT. The issue before the Hon’ble Supreme Court was whether the discretion exercised by the Company Court in transferring the winding up proceeding to NCLT was liable to be set aside - The Hon’ble Supreme Court observed that prime focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting it from its own management and from a corporate death by liquidation. The IBC Code was held to be a beneficial piece of legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors.
Adverting to the facts in the present case, there is nothing that can be said to have irretrievable in the instant case in the sense mentioned in para 25 of the Action Ispat Judgment, wherein it was clarified that So long as no actual sales of the immovable or movable properties had taken place, nothing irreversible is done which would warrant a Company Court staying its hands on a transfer application made to it by a creditor or any party to the proceedings - only where a company is winding up or near corporate death and no transfer or winding up proceedings would then take place to the NCLT to be tried as a proceedings under IBC. Short of an irresistible conclusion that corporate death is inevitable, every effort should be made to resuscitate the corporate debtor in the larger public interest, which includes not only the workmen of the corporate debtor, but also its creditors and the goods it produces in the larger interest of the economy of the country.
Conclusion - The Court is convinced that the companies to suffer inevitable corporate death, the first choice would be to make an all out attempts to revive the company and this procedure has been elaborately laid in the IBC. The Companies Act, 2013 is clearly not suited for such situation and this is clearly reflected in amended and substituted Section 434 of the Act read with Sections 7 and 8 of the IBC and objects and reasons of both the statutes. Moreover there is no conflict between the two proceedings.
Appeal dismissed.
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2025 (5) TMI 491
Non-existence of the companies at the given address where notices were issued by the bank - HELD THAT:- When the adjudicating authority had called for the report from the RoC to investigate and verify the existence of the companies at the address mentioned authority ought to have awaited the report for proceeding further in the matter and it was not necessary for the adjudicating authority to ask the director to submit a explanation or be physically present before the adjudicating authority on the next date.
The directions of the adjudicating authority for directing the director to physically present is not called for at this stage and in the facts of the present case no order was required for imposing cost of Rs. 25000/- each upon the Respondents for submitting the reply within a week.
Appeal allowed in part.
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2025 (5) TMI 269
Oppression and mismanagement - Section 397 & 398 of the Companies Act, 1956 - Illegal appointment of Respondents 2 & 3 as Directors - Misappropriation of amounts invested/ deposited by the petitioners and other investors - Non-convening of the General meetings - Irregular allotment of further shares - HELD THAT:- The Respondents No. 5 has placed on record certain handwritten documents which were drawn on 23.08.1987 and 05.10.1987. These documents clearly evidence that the three groups had agreed to form a company with a paid-up capital of Rupees 60,000/- owned equally by each group, which thereafter came to be formed as Respondent No. 1, wherein Shri Y J Barrara and Shri N S Gandhi were agreed as First directors and the Petitioners was to take up the registration job. The Petitioner and N S Gandhi jointly were forming a group and each of them was to collect 4.5 lakhs to be utilised to acquire the land for development thereof.
The facts stated in the petition are in corroboration with these noting duly signed by the Petitioner, i.e. the Petitioner was part of NS group, whose share was 1/3rd in the company’s capital for all group members taken together. The Petitioner was allotted 60 shares of Rs. 1000 each and was liable to contribute Rs. 3,00,000/- to the company towards the land, and another Rs. 1,50,000/- towards 50% of N B Avadh share which came in the ownership of the Petitioner. Accordingly, the petitioner paid 4.50 lakhs rupees towards cost of land to the company as loan. The petitioner nominated some persons to hold his shares in the plot of land and such nominated person of each group were given loan by the company for acquisition of land in their name - It is relevant to note here that the Petitioner has not disowned these notes, yet has questioned the relevance of these to the petition and has also asserted in his pleadings relying on these writings itself that the said writings records about the rights in respect of the lands proposed to be purchased shall not be saleable and transferable.
The petitioner has suppressed the actual understanding amongst the parties and has tried to take advantage of demise of original directors i.e. his brother N. S. Gandhi and Mr. Y. J. Barara for challenging the sale of plots of land owned by various persons in their name or in name of their nominees. The Respondent Company was merely a facilitator in whole of exercise and the Petitioners have been paid, to their own admission as evidenced from documents placed on record by the Respondent No. 5, the sale proceeds due from sale of their share of plots - The allegations are vague and are merely conjectures.
The jurisdiction of this Tribunal under Section 241/242 of the Companies Act, 2013 is an equitable jurisdiction. It was held in case of Jiwan Mehta v. Emmbros Metals P. Ltd. [2007 (11) TMI 716 - COMPANY LAW BOARD PRINCIPAL BENCH, NEW DELHI] that 'It is a settled proposition of law that the conduct of the parties is a very relevant factor to be considered in the equitable proceedings under Sections 397/398 of Companies Act, 2013.'
Conclusion - The Petitioner had not come with clean hands and had failed to provide sufficient evidence to support his claims of oppression and mismanagement.
Petition dismissed.
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2025 (5) TMI 168
Dismissal of application seeking admission of the claim filed by the Appellant in the insolvency process of IL&FS-Respondent No.2 - claim was filed belatedly - exercise of due diligence by debenture holder represented by a debenture trustee or not - sufficient reasons/grounds exist to admit the belated claim at this stage or not - HELD THAT:- The public announcement of 22.05.2019 made by Respondent No.1-CMA inviting claims clearly stipulated that in case of those Debenture Holders having an appointed trustee, the claims were to be filed only through such a trustee. It is also an undisputed fact that the Appellant did not file their claim qua Respondent No.2 within the extended time so allowed either directly by themselves or through the Respondent No.3-DT. Their claim was eventually filed on 05.06.2023 by the DT which was much beyond the sixth extension of time-line allowed until 18.08.2022. It is therefore abundantly clear that substantial time had elapsed since the date of issue of public announcement inviting claim and the actual date of filing of claim on behalf of the Appellant by the DT qua the obligations of Respondent No.2-ILFS.
While claim had been filed in respect of group entities of ILFS, no claim forms were submitted in so far as ILFS-Respondent No.2 was concerned. It has been admitted by the Appellant that there were several exchanges of communication as late as from March 2023 onwards between the Appellant and Respondent No.3 regarding filing of claims of the Appellant in relation to insolvency resolution process of Respondent No.2-ILFS following which on 05.06.2023 the Respondent No.3 filed Form-C with the CMA with request to admit the claim of the Appellant. It therefore becomes clear that no claim had been filed in respect of the Appellant qua the Respondent No.3 though the time-line had lapsed - The Appellant should have been more vigilant in taking timely steps to file their claim. The Appellant has been clearly found wanting in this regard as due diligence was not shown towards satisfying the prescriptive requirement of filing their claims even within the extended time period. It is not required of the Adjudicating Authority to determine as to whether the Appellant or the DT was responsible for the delay in filing the claims but has to be merely satisfied whether any inordinate and unjustified delay occurred in the filing of claims. The Adjudicating Authority has therefore not committed any mistake in concluding that claims qua the obligations to be discharged by Respondent No.2 not having been filed within the extended time period allowed for filing of claims for any genuine reason, the conduct of the Appellant was clearly remiss.
While it is agreed with the Appellant that merely because the claim of the Appellant was admitted in the insolvency process of ITNL by the CMA, it could not be a fetter on the right of the Appellant to seek admission of their claims in the insolvency resolution process of ILFS since their guarantee obligation to pay the Appellant was co-extensive and co-terminus with ITNL, however, it cannot be countenanced that the lethargic and lackadaisical approach of the Appellant in pursuing their claims qua ILFS. The Appellant had clearly failed to discharge their obligation to lodge claims within prescribed time period. In these circumstances, it is inclined to agree with the Respondents that allowing belated claim of the Appellant will open flood gates of the multiple such claims. If belated claims are allowed for any specific party, there is all likelihood from other similarly placed claimants to seek reopening of the claim window leading to the need of remapping of the creditors and pro-rata revision revision/adjustment of the of the proceeds already distributed or proposed to be distributed thereby rendering the resolution process endless.
The first round of interim distribution of funds to creditors had already been carried out in the interest of successful implementation of the Resolution Framework and revival of the ILFS and its group entities following approval of the interim distribution mechanism by this Tribunal on 31.05.2022 as is placed at page 189 of reply of Respondent No.2.
Coming to the reliance placed by the Appellant on the judgement of this Tribunal in Puneet Kaur judgement [2022 (6) TMI 108 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI], it is noticed that the facts of the present case are distinguishable. While in Puneet Kaur matter, the resolution plan had not yet been approved by the Adjudicating Authority, in the present case, at the time of filing belated claims by the Appellant, distribution of proceeds in terms of interim resolution framework had already commenced.
In the instant case, the Appellant has failed to provide any plausible justification for delay in filing their claims. The Appellant for no justifiable reasons had clearly dropped the guard of being vigilant in pursuing their claims within the time-lines and now seeks to stall the resolution process disregarding the larger interest of other stakeholders. The Appellant because of their inaction cannot prejudice the creditors who had filed their claims in a timely manner to their detriment. In the absence of credible and genuine grounds extending the delay, it does not commend us to overturn the findings of Adjudicating Authority for any indulgence shown by way of belated admittance of claim at this stage is also likely to jeopardise the ongoing resolution process of ILFS and its group entities. The Adjudicating Authority has not committed any error in the given facts and circumstances in not acceding to the request of the Appellant for admission of their belated claims.
Conclusion - The Appellant had clearly failed to discharge their obligation to lodge claims within the prescribed time period. Allowing belated claims will open flood gates of multiple such claims and render the resolution process endless.
Appeal dismissed.
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2025 (4) TMI 1413
Investigation into the affairs of the respondent company - eligibility to file an application under Section 213 of the Companies Act, 2013 - Illegal allotments of convertible debentures at a discount - illegal increase in authorized share capital of company - conversion of Respondent No. 1 Company from a private to a public entity - Illegal borrowing of funds based on fraudulent documentation - HELD THAT:- Admittedly the appellant is not a member of the Respondent No.1 company, hence cannot allege the business of Respondent No.1 company is being conducted in a manner oppressive to its members; or the company is guilty of fraud, misfeasance or other misconduct towards its members; or members of the company have not been given due information etc. The only argument of appellant is the business of the respondent company is being conducted with an intent to defraud its creditors, though the appellant was unable to substantiate his allegations the creditors of the company are being defrauded. Admittedly the appellant and the Respondent are in money dispute and arbitration proceedings are pending between two. It appears to circumvent such proceedings and to create pressure upon Respondent company, the appellant had filed the present Company Petition seeking investigation into its affairs.
The Ld. NCLT has held the petition is not maintainable under sub-section (a) of Section 213 of Companies Act, 2013 - petition disposed off.
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2025 (4) TMI 1293
Rejection of the plaint filed by the appellant - decree of permanent injunction from transferring any tenancy right in favour of any new tenant in respect of the property described in Schedule- “A” of the plaint - Company and its Directors have been mismanaging the assets of the Company - locus standi and a cause of action to seek a declaration of shareholding and related rights without having the transfer of shares recorded under Section 56 of the Companies Act, 2013 - misjoinder of causes of action - HELD THAT:- As rightly enumerated in the impugned judgment and deemed decree, the plaintiff does not disclose clearly in the plaint as to how he became such partial owner of the property - Thus, there is a palpable non-disclosure of the right of the plaintiff to the suit property, which forms an essential component of the bundle of facts which comprise of the cause of action for the suit.
For a plaintiff to claim a remedy in a suit, the plaintiff has to essentially disclose a legal right to the subject property as well as an infringement of such right, both of which ingredients are absent from the plaint inasmuch as the immovable property is concerned, which is the only subject-matter of the suit as mentioned in the plaint schedule - the learned trial Judge also proceeded on the premise that if the plaintiff has an axe to grind regarding the alleged mismanagement of the affairs of the Company by inducting third party-tenants, the appropriate remedy would be under Section 241 of the 2013 Act.
The reliance of the plaintiff/appellant on the Division Bench judgment of this Court in the matter of Eastern Indian Motion Picture Association [2024 (2) TMI 775 - CALCUTTA HIGH COURT] by the appellant is also misplaced, since in paragraph no.21 thereof, the coordinate Bench categorically observed that it did not find it necessary to go into the issue whether the dispute therein was covered by Section 241 of the 2013 Act. Thus, the said judgment cannot be said to be a binding precedent on the applicability of Section 241 in the facts of the present case - That apart, the said judgment was rendered in the particular factual matrix of the said case, which are not applicable to the present case.
There are no reason to interfere with the impugned judgment and deemed decree, both on the basis of the observations arrived at by the learned trial Judge and the additional reasons supplied - it is not inclined to interfere in the present appeal.
Conclusion - The suit is not maintainable due to lack of cause of action, misjoinder of causes of action, and bar under the Companies Act and procedural law.
Appeal dismissed.
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2025 (4) TMI 1120
Rejection of prayer for discharge of the petitioner - rejection on the ground that prayer for discharge by the petitioner cannot be entertained because Law is apposite that if any officer or employee of a company having validly obtained possession of a property of a company, wrongfully retains the same, as appears to be the case in this proceeding, it would constitute an offence contemplated in Section 452 of the Companies Act, 2013 - HELD THAT:- In the present case, the Learned Magistrate only issued summons upon the petitioner. The Learned Trial Court shall have to decide the case on its own merits on the basis of the evidence led by the parties for final decision. It is beyond the jurisdiction of this Court to embark upon final conclusion at this stage without leading evidences by the parties that the petitioner wrongfully withheld the articles of Company or not.
In the case of Hooghly Mills Company Limited Vs. State of West Bengal and Another [2019 (12) TMI 397 - SUPREME COURT], the Hon’ble Supreme Court held that 'In the present case, the order of the Magistrate under Section 630(2) was an interlocutory relief based on a prima facie assessment of facts and did not conclusively decide the ongoing trial under Section 630(1). If the Magistrate finds that the appellant company has been unable to prove that the 2nd Respondent was wrongfully withholding possession of the property, such interlocutory relief shall stand vacated. In light of the above discussion, it is clear that there was no exceptional case of illegality or lack of jurisdiction in the interlocutory order of the lower court calling for the exercise of the inherent powers of the High Court under Section 482, Cr.P.C.'
In the light of above discussion and judgments passed by the Hon’ble Supreme Court in the aforesaid referred case, this Court is of the opinion that the Criminal Revisional application has devoid of merits.
Conclusion - Order of rejection of discharge from the case is found correct, legal and well within the jurisdiction as such same is not required to be interfered.
Revision dismissed.
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2025 (4) TMI 1019
Oppression and mismamangement - Maintainability of suit - wrongfully continuing as members of the Executive Committee and are illegally occupying management positions - whether this Court has the jurisdiction to entertain the suit, in light of provisions of Section 430 of the 2013 Act? - whether the plaint can be rejected at the threshold in the absence of a formal application under Order VII Rule 11 CPC? - HELD THAT:- There is merit in the contention of Defendant No. 1 that under Order VII Rule 11 (d) of CPC, a plaint shall be rejected where the suit appears from the statement in the plaint to be barred by law and Court need not wait for the Defendant to appear on issuing summons and/or on appearance of the Defendant to file a formal application for rejection of plaint. In Sopan Sukhdeo Sable [2004 (1) TMI 726 - SUPREME COURT], the Supreme Court held that Rule 11 of Order VII CPC lays down an independent remedy made available to the Defendant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The law ostensibly does not contemplate any stage when the objection can be raised and also does not say in express terms about the filing of a written statement.
In Patil Automation Private Limited [2022 (8) TMI 1494 - SUPREME COURT], the Supreme Court held that Order VII Rule 11 CPC does not provide that the Court is to discharge its duty of rejecting the plaint only on an application. The Rule is in fact silent about any such requirement. Since summon is to be issued in a duly instituted suit, in a case where plaint is barred under Rule 11 (d), the stage begins at that time when Court can reject the plaint.
Thus, there can be no debate that at the threshold itself, the Court can reject a plaint where it is barred on account of any infirmity or disability under Rule 11 of Order VII CPC and as observed by the Supreme Court, it is in fact that the duty and obligation of the Court to examine if the plaint has any infirmity based on the averments in the plaint, before issuing summons and therefore, there is no requirement of waiting for a formal application under Order VII Rule 11 CPC in that event and contention of the Plaintiffs to this extent merits rejection.
The inevitable conclusion is that Section 430 of the 2013 Act bars the jurisdiction of the Civil Court in matters falling in the domain of NCLT, which it is empowered to adjudicate under different provisions of the Act and these powers are wider and broader than the powers of the Civil Court under Section 9 CPC, being a specialised Tribunal created for the purpose of regulating adjudication of the affairs of the companies expeditiously.
Conclusion - i) The Civil Court lacks jurisdiction to entertain the suit due to the bar under Section 430 of the Companies Act, 2013. ii) The plaint is liable to be rejected at the threshold under Order VII Rule 11(d) CPC as the suit is barred by law.
The suit is not maintainable as the remedy of the Plaintiffs lies in approaching NCLT. Accordingly, the plaint is rejected leaving the Plaintiffs to avail their remedies in accordance with law before the NCLT, making it clear that this Court has neither entered into nor expressed any opinion on the merits of the case.
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2025 (4) TMI 1018
Rectification of order - Exercise of suo motu powers under Rule 154 of the NCLT Rules, 2016, to rectify a docket order, particularly when the principal detailed order was uploaded after the rectification order was passed - vice of audi alterem partem - principles of natural justice - HELD THAT:- The provision of Rule 154 of the NCLT Rules, provides power with the Tribunal of ‘rectification’. The rectification herein would mean only making any clerical or arithmetical mistakes in the order within the scope contemplated under it, arising out of an accidental slip or omission, which could only be corrected by the Tribunal, “on its own motion” or on an application preferred under Sub-rule (2) of Rule 154, which prescribes the format i.e., NCLT-9, under which the application contemplated under Sub-rule (1) of Rule 154, is to be preferred. Exercising the aforesaid powers, the Ld. Tribunal is shown to have passed an order on 10.03.2025, whereby certain rectifications were permitted to be carried in the light of the observations made in Para 11 of the order dated 10.03.2025.
The basic parameters for putting a challenge to the said order dated 25.03.2025, as agitated by the Ld. Senior Counsel for the Appellant, is that the order dated 10.03.2025, involving rectification of order under Rule 154 of the NCLT Rules, and the order passed on 25.03.2025, on a memorandum filed by the Administrator, ordering rectification of orders of both 07.03.2025 & 10.03.2025 it is in utter derogation to the principle of natural justice, as the Appellants were not served with its copy nor were heard, and the order was permitted to be modified on the basis of a memorandum preferred by the Administrator above. Thus, they contend that the order happens to be bad in the eyes of law as it suffers from vices of audi alteram partem.
How could there be a rectification of a docket order dated 07.03.2025, by an order passed on 10.03.2025 when the order of 07.03.2025 effecting substantive rights, itself was uploaded for the first time on 11.03.2025? - HELD THAT:- It is an admitted case that at the stage of passing of the order on 10.03.2025, or even prior to it no notice of any nature whatsoever was ever issued to any of the parties to the proceedings. Hence, even if the orders of 10.03.2025, is taken as to be an order passed in the exercise of suo motu powers, it would be bad, suffering from derogation of the principles of natural justice, as prior to passing of an order, on much less substantial changes such as arithmetical corrections, the parties are required to be heard, which apparently was not done nor does it reflect that the said power was exercised by the Tribunal in the exercise of suo motu powers.
he docket order of 07.03.2025 itself attaches finality to it, upon being uploaded on 07.03.2025. Finality is more particularly attached when, by the docket order of 07.03.2025, itself was directed not to be enforced for the time specified there. The question would be whether the said order at all subsequently without notice to the other party could be suo motu rectified by the Ld. Adjudicating Authority. What effect such rectification would have to the final order, is altogether a different question which can be answered, only when such rectification, if any is passed after hearing the parties to the proceedings.
As far as the order, dated 10.03.2025 as rendered in CP No. 44/241/HDB/2023, is concerned, being in violation of the uploading of the docket order of 07.03.2025, coupled with the fact, that, as per available records, no prior notice was issued by the Tribunal even while taking a suo motu cognizance, while passing the order of 10.03.2025, the order would be bad in the eyes of law. Hence, the order of 10.03.2025 deserves to be quashed, and is hereby quashed.
Conclusion - The provision of Rule 154 of the NCLT Rules, provides power with the Tribunal of 'rectification'. The rectification herein would mean only making any clerical or arithmetical mistakes in the order within the scope contemplated under it, arising out of an accidental slip or omission, which could only be corrected by the Tribunal, 'on its own motion' or on an application preferred under Sub-rule (2) of Rule 154.
Appeal allowed.
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2025 (4) TMI 891
Rightful shareholder of 100 equity shares in the respondent company or not - rectification of register of members to reflect the appellant as a shareholder holding 100 shares - time limitation - HELD THAT:- It is observed that Section 59 of the Companies Act, 2013, does not specify a limitation period. However, Section 433 makes the Limitation Act, 1963, applicable. Therefore, Article 137 prescribes a three-year period from the date of knowledge of the cause of action. In the present case the share transfer was recorded in 2016. The Appellant’s failure to act until 2020, when he issued a notice, and subsequently filing the appeal in 2021, is beyond the three-year limitation period.
The Appellant’s argument of fraud lacks corroborative evidence. Shareholding details in the Annual Return for 2016 were publicly available, and no objections were raised within a reasonable time.
The challenge to the share transfer through this Appeal filed by the Appellant is barred by the limitation in view of the orders of the of the Hon’ble Supreme Court and the order of the Hon’ble NCLAT as referred above the shares were transferred in the name of the Respondent on the basis of the share transfer deed dated 02.05.2009 on 20.02.1016. Any Appeal was to be filed for the Share Transfer under section 59 of the Companies Act, 2013 within the 3 years as per the Article 137 of the Limitation Act, 1963. Whereas the present Appeal is filed on 29.01.2021 which is beyond the period of 3 years of Limitation.
Conclusion - The present Appeal is time barred as it was filed beyond the three-year limitation period prescribed under Article 137 of the Limitation Act, 1963.
Appeal dismissed.
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2025 (4) TMI 700
Violation of principles of natural justice - opportunity of hearing of impleadment application - impleadment application was never heard before it being reserved alongwith the main Company Petition for the purposes of it to be disposed of in a single combined order - HELD THAT:- The argument of the learned senior counsel for the appellant is not convincing that as the appellant claims a right to receive shares in Respondent No.1 company hence he should be impleaded in main Company Petition filed by Respondent No.1 against Respondent No.2. Admittedly the Company Petition is not a lis between two brothers viz. Mr. Suresh Kumar Khosla and Mr. Ashok Kumar Khosla. The argument which the appellant is trying to develop is in case he succeeds to get shares in Respondent No.1 company and then if not impleaded in this Company Petition 137/2019 then it could be decided without giving him an opportunity of being heard.
This Company Petition is not a lis between the two brothers. Further without adverting to the merits of the impleadment application, suffice is to say the impugned order dated 08.01.2025 does not in any manner dilute any right of the appellant and is only a procedural order. Admittedly the main Company Petition was filed in the year 2015 by Respondent No.1 against Respondent No.2 on the ground Respondent No.1 company had invested Rs.144 crore in Respondent No.2’s business and it holds 47% shares in Respondent No.2 and that Respondent No.2 has engaged in oppression and mismanagement.
The impugned order none of the rights of any of the parties were decided and it was merely a procedural order recording filing of notes of submission. The procedural order are not appealable orders per Central Bank of India Vs Gokal Chand [1966 (9) TMI 142 - SUPREME COURT].
The appellant had failed to challenge the main order dated 18.12.2024 which records conclusion of hearing of arguments and fixing the matter for 08.01.2025 for procedural compliances viz. filing of notes of submission. Rather the appellant had complied with order dated 18.12.2024 by filing her notes of submission. Hence after compliance the appellant has no right to challenge the impugned order.
Conclusion - The impugned order is nothing but a consequential order and in the absence of challenge to the main order dated 18.12.2024, the challenge to procedural order is not maintainable.
Appeal dismissed.
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