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Companies Law - Case Laws
Showing 221 to 240 of 14643 Records
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2023 (4) TMI 1083
Seeking grant of anticipatory bail - fraudulent transfer of shares - forged and alleged share certificates and share transfer forms are fabricated documents - forged signatures - HELD THAT:- Parameters for grant of anticipatory bail in a serious offence are required to be satisfied and further while granting such relief, the court must record the reasons therefor. Anticipatory bail can be granted only in exceptional circumstances where the court is prima facie of the view that the applicant has falsely been enrobed in the crime and would not misuse his liberty.
The applicant no. 1 as per Status Reports did not provide the requisite original Share certificates and also gave evasive replies during investigation. It is also appearing as surfaced during investigation that the applicant no. 1 who is managing director of the accused no. 1 could not produce any proof regarding request of the applicant no. 2 made to the accused no. 1 for payment of Rs. 6,25,000/- to the complainant on her behalf and said amount was actually credited in the loan account of the complainant. The applicant no. 1 also could not produce Jumbo share certificates which were stated to be issued on 29.1.2018 in lieu of 62,500 shares of the complainant and stated to be bearing the signature of Gulshan Jhurani as Director of the accused no. 1. Gulshan Jhurani in his statement dated 30.07.2022 also stated that he did not sign the share certificate/Jumbo share certificate after 2012. It also came into investigation that original share transfer deed between the complainant and Roohi Reshi for transfer of share certificate no. 31269 for 300 shares was executed on 12.12.2017 whereas new certificate no. 31269 was issued on 13.12.2017.
The respondent/State prayed for custodial interrogation of the applicants on grounds that they have not provided requisite documents and gave evasive replies during investigation. It is also alleged that there are contradictions in replies given by the applicants as mentioned in Status Reports and also argued by the Additional Public Prosecutor and the learned Senior Counsel for the complainant. The issue which needs judicial assessment and consideration is that whether the applicants can be subjected to custodial interrogation merely the applicants as per investigating agency did not produce documents as sought by the investigating officer and gave evasive and contradictory replies during investigation. It was also surfaced during investigation that the complainant is having financial transactions with the accused no. 1 for the last 15-20 years.
The bail applications filed by the applicants were dismissed by the court of Additional Sessions Judge-02, Patiala House Courts, New Delhi, vide order dated 28.05.2022 wherein it was observed that none including the complainant has appeared before the court with truth and conduct of the applicants is also shrouded in suspicion and appears to be much more tainted and stained as compared to the complainant - It appears that the concerned court minutely examined material collected during investigation in manner as deciding case on merits after conclusion of trial which was not warranted at time of consideration of bail applications.
The Supreme Court in relation to power to grant anticipatory bail and power of investigating agency to investigate in P. Chidambaram also observed that the judicial discretion to be properly exercised after application of mind as to the nature and gravity of the accusation; possibility of applicant fleeing justice and other factors to decide whether it is a fit case for grant of anticipatory bail. The custodial interrogation of the applicants is not warranted under given facts and circumstances of the present case and after evaluation of the available material against the applicants and particularly only to recover certain documents pertaining to the share transfer and contradictions in the replies given by the applicants during investigation. There is no direct and apparent apprehension that the applicants may flee or avoid further investigation. The applicants cannot be remanded to custodial interrogation in the absence of convincing material which warrants that certain documents and evidence pertaining to present FIR cannot be recovered without custodial interrogation of the applicants.
After considering all facts, the bail applications bearing no. 1696/2022 and 1697/2022 filed by the applicants Naresh Garg and Nirmala Aggarwal respectively are allowed, subject to conditions imposed.
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2023 (4) TMI 1082
Opportunity to be heard to ICA Lenders not provided - requirement of hearing of ‘person concerned’ as is laid down in section 71(10) of the Companies Act, 2013 - Whether the ICA Lenders led by Bank of Baroda were entitled to be intervenor and be heard in the company petition filed by the Debenture Trustee and if they had a right to be heard, then whether the Impugned Order turning down the Intervention Application correct in law, and further Impugned Order-I which was passed without hearing the ICA Lenders liable to be set aside?
HELD THAT:- Section 71(10) of the Companies Act, 2013 uses the word ‘may’ in the context when the Tribunal has to pass order on the application of any or all of the debenture holders or debenture trustee. Further, sub-section 10 of section 71 also lays down that the Tribunal may pass orders ‘after hearing the parties concerned’ - the question of proceedings to be ‘in personam’ or ‘in rem’ is also made clear by the fact that in the Company that is facing financial stress and for which a resolution plan is under consideration, 23 debenture holders who are among those represented by the Debenture Trustee are also part of ICA Lenders, though a majority of the retail debenture holders are not signatories to the ICA.
The contention of the Respondent Debenture Trustee is that the requirement of sub-section 10 of Section 71 of the Companies Act, 2013 is that the Tribunal should pass an order only keeping in view its satisfaction and what is necessary to safeguard interest of the company or debenture holders. He has contended that the issue of public interest and financial condition of the company are not necessary factors to be look into by the Tribunal while passing the order - While considering the above argument of the Learned Counsel for the Respondent-Debenture Trustee, we note that the provision under section 71 (3) and section 71(10) of the Companies Act, 2013 stipulates that NCLT shall, before making any order, give a reasonable opportunity of being heard to the Company and ‘person concerned’ in the matter.
Rule 73(3) and Rule 73(4) of the NCLT Rules, 2016 which are applicable for an application under section 71(10) of the Companies, 2013 provide that Tribunal shall, before making any order under this rule, give an reasonable opportunity of being heard to Company or ‘any other person interested, in the matter. It is quite clear from a reading of sub-rule (3) and sub-rule (4) of Rule 73 that the company is an ‘important party’ because the company has to redeem the debentures and pay the interest on the principal amount. The Company’s financial condition and health would, therefore, also become relevant factors while hearing an application under section 71(10). The ICA Lenders, who have all signed the Inter Creditor Agreement, have also taken steps for financial rejuvenation and revitalization of the Company through a resolution plan - the ICA Lenders are also important parties insofar as financial resolution of the Company is concerned, and therefore they should be afforded an opportunity to be heard in the company petition as the redemption of NCDs shall have an impact on the financial condition of the Company and would deeply affect the implementation of the resolution plan, which is for resolution of the Company.
Thus, the NCLT has denied an opportunity to be heard to ICA Lenders on the ground that insofar as section 71(10) of the Companies Act, 2013 is concerned, they do not have a right to be heard - this is an incorrect reading of the requirement of hearing of ‘person concerned’ as is laid down in section 71(10) of the Companies Act, 2013 and ‘any other person interested in the matter’ as required in Rule 73(3) and 73(4) of the NCLT Rules, 2016 - in view of public interest as is stipulated in Rule 74(4) and the involvement of public money in the Company, though the public sector banks, public interest also demands that ICA Lenders be given opportunity of hearing - the Impugned Order-II dated 27.5.2021 is incorrect and is set aside.
The Impugned Order-I dated 21.6.2021 which was passed by the NCLT suffers from the infirmity that ICA Lenders were not afforded an opportunity to be heard while passing Impugned Order-I - the matter is remanded to the NCLT, Mumbai - Appeal allowed by way of remand.
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2023 (4) TMI 1030
Seeking grant of Regular Bail - Money Laundering - creation of fictitious proprietorship firm in the name of Kewal International by using the documents of the applicant - twin conditions and bar under Section 212(6) of Companies Act - HELD THAT:- As per Section 212(7), the limitation or bar to grant of bail under Section 212(6) is in addition to the limitations under the Code of Criminal Procedure, 1973 or any other law for grant of bail. The aforesaid principles were held to be mandatory in nature by the Hon’ble Apex Court in SERIOUS FRAUD INVESTIGATION OFFICE VERSUS NITTIN JOHARI & ANOTHER [2019 (9) TMI 570 - SUPREME COURT].
The issue at hand was also considered by a Co-ordinate Bench of this Court in Rana Kapoor v. Directorate of Enforcement [2022 (11) TMI 1232 - DELHI HIGH COURT], where under similar circumstances, the accused therein was never arrested during the period of investigation and at a later stage, after the concerned Court took cognizance, he was taken into custody in a case under Prevention of Money Laundering Act, 2002.
As held by the Hon’ble Apex Court in Satender Kumar Antil [2022 (8) TMI 152 - SUPREME COURT], when an accused, who has not been arrested during investigation, and investigating agency does not require his/her custody, and the accused appears pursuant to summoning order before Trial Court, there is no need to file any bail application since there is no need to arrest the said accused. It has also been clarified by the Hon’ble Apex Court that if the Court taking cognizance is of the opinion that remand of accused is necessary, an opportunity to be heard has to be given to the accused.
It is an admitted position, that even at the stage when the applicant appeared before the learned Trial Court upon being summoned, the Investigating Officer never sought his remand to judicial custody. It is not the case of prosecution that applicant did not join or did not co-operate in the investigation. The Director of accused company Komal Chadha has already been granted bail by this Court, and present applicant is allegedly an employee of accused company. There is no allegation that applicant can either intimidate any witnesses or tamper with the evidence - A perusal of complaint also shows that accused no. 2 i.e. Suman Chadha had created several entities in the name of his employees, including the present applicant. In fact, the driver of the said accused is named as proprietor in one such entity namely S.K. Enterprises.
Considering the fact that petitioner is in judicial custody since 25.05.2022, this Court is inclined to grant bail to accused/applicant on furnishing a personal bond in the sum of Rs.50,000/- with one surety of like amount to the satisfaction of Trial Court/ Successor Court/ Link M.M/ Duty M.M concerned on the terms and conditions imposed - bail application disposed off.
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2023 (4) TMI 1029
Seeking restoration of (struck off) name of company in the Register of Companies - section 252 of Companies Act - HELD THAT:- So far as striking off name of the company in question under the provisions of Section 248 of the Companies Act is concerned the appellant has not raised any dispute that procedure under the said provisions was not followed. In the written submission of the ROC also detail has been mentioned regarding following the procedure prescribed under Section 248 of the Companies Act which has not been disputed by the appellant otherwise the appellant would have preferred the appeal under Section 252(1) of the Companies Act. The appellant has filed application/appeal under Section 252(3) of the Companies Act which empowers the NCLT to pass an order of restoration of a striking off company if the NCLT is satisfied on the basis of plausible material that struck off company was carrying on business or in operation or even otherwise it was just that the company may be restored.
Considering the fact that the company was having two directors with 50% shareholding which has not been disputed and one of the director who is Respondent No.3 has come forward with a stand that the company in question was not either doing business or operating, in such situation there is no reason in passing an order for restoring the appellant company.
Another reason for not interfering with the impugned order is that out of two directors one director has taken a stand that the company is completely inoperative doing no business whereas the appellant who is also a director is taking the plea on the strength of balance sheet prepared by the CA that too without approval of the Board of Directors that company was in operation. If for the time being any direction is issued for restoration, certainly it will amount to generating further dispute/litigation.
The appellant was not in a position to satisfy the NCLT that the company in question was doing business or was operational during the period for which the name of the company was struck off - Appeal dismissed.
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2023 (4) TMI 879
Rejection of defendant/Petitioner’s application under order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC) - whether the court below had jurisdiction to entertain the suit since the said suit is barred under section 430 of the Companies Act, 2013? - HELD THAT:- It is quite clear, if the statements made in the plaint are treated to be true then the defendant no. 2 Manoj Sett is not the director of the plaintiff no. 1 company. If that be so prima facie it appears that the dispute is in-between director and a person who is not a director. Learned counsel on behalf of the petitioner in this context argued that the golden rule of statuary construction is that the phrases or sentences should be interpreted according to the intention of the legislature and section 241 and 242 should be read together and as such under the Act of 2013 the intention of the legislature is to vest the power of adjudication of the matter referred in section 242, to the Tribunal.
As averment made in the plaint which is considered to be true for the present purpose, discloses conflict of two individual alleging that the plaintiffs’ personal right got affected by a person whose membership in the company is not beyond doubt, suit under section 34 of the specific relief act is not barred in the present context specially when plaintiff averred in the plaint that they are not allowed to enter into the premises of the company and thereby they prayed for enforcement of their civil right rather than right as director. In view of settled proposition of law that ouster of civil court jurisdiction cannot be readily inferred and consolidating all previous judgment, apex court in CHURCH OF NORTH OF INDIA VERSUS LAVAJIBHAI RATANJIBHAI & ORS [2005 (5) TMI 636 - SUPREME COURT] has laid down the principles relating to the exclusion of jurisdiction of civil court stating that The Civil Court will have no jurisdiction in relation to a matter whereover the statutory authorities have the requisite jurisdiction. On the other hand, if a question arises, which is outside the purview of the Act or in relation to a matter, unconnected with the administration or possession of the trust property, the Civil Court may have jurisdiction. In this case, having regard to the nature of the lis, the jurisdiction of the Civil Court was clearly barred.
As the question about ouster of jurisdiction of a civil court must be constructed having regard to the schemes of the act, it can be said that the preamble of the act of 2013 have not taken away the jurisdiction of a civil court in each and every matter connected with company affairs. The preamble speaks that this is an act to consolidate and amend the law relating to companies. The normal civil remedies associated with action lies in civil courts. If not prescribed in the act, plea of bar to jurisdiction of a civil court may not be considered having regards to the contentions raised in the plaint and for this purpose reliefs sought in the plaint must be considered in their entirety on the basis of factual averment made in the plaint - it appears that the suit is apparently in between director and a person whose appointment is put on hold by the Company Law Bench, Kolkata and as relief relates to decree for declaration of right of plaintiffs as individual and for decree for account for non-payment of remuneration along with injunction, an appointment of accounts commissioner and receiver, it is found that the suit is not barred under section 430 of the companies act 2013.
Application dismissed.
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2023 (4) TMI 782
Oppression and Mismanagement - maintenance of status quo relating to remaining 227 units by not creating any third party interest and not to carry on work construction beyond 302 units till disposal of main CP - HELD THAT:- The learned counsel for the both the parties oblivitious of the fact that the present appeal was confined to an interim order, i.e. status quo order, even then learned senior counsel of both the sides had taken precious time of the Court on the issue which is secondary in the present context. In any event while we are examining correctness of the interim order, we are not expected to record any finding, which may affect either of the party in a proceeding which is pending before NCLT. Admittedly the company petition filed under Section 241 and 242 of the Companies Act is pending before NCLT. Accordingly, we are of the opinion that we may not record any finding either in favour of the sale deed executed in question or against the said transaction. If we record such finding it will amount to usurping the jurisdiction of the NCLT.
From the order impugned it is reflected that NCLT at least at the time of passing interim impugned order has not accepted the valuation report of the private valuer and recorded that the land was sold to the price fixed as per ready reckner rates fixed by the Govt of Gujarat properties situated in that area. Meaning thereby that the contention of the applicant before the NCLT regarding undervalued sale was not accepted by the NCLT for passing ad interim order. It is also not reflected as to any question was raised that the appellant had not purchased the land in good faith, rather the transaction appears to have been done in good faith by the appellant. It is also not disputed that the (i) sale deed was registered on 13.7.2020; (ii) the pleading that after registration permission was obtained from competent authority for construction of the building; (iii) approval of the plan and mortgaging of the land for obtaining loan; (iv) thereafter almost completion of the project by way of construction of above 302 units;(v) creation of third party right since 61 persons had already purchased the unit; and (vi) NOC for another 14 purchasers from the Bank was received. In such a situation it was not permissible for the NCLT to pass an order affecting the right of the appellant as well as affecting right of those persons who were neither arrayed as party in the petition before NCLT nor they were noticed.
On perusal of the language of the interim relief it is evident that the applicant was under impression as if some construction on land was going to be done by the appellant herein whereas facts noticed hereinabove makes it clear that construction over the land was almost complete and some of third party right was also created - learned NCLT by the impugned order i.e. direction to respondents particularly the appellant herein for maintaining status quo relating to remaining 227 units by not creating any third party interest or no construction beyond 302 units till disposal of the main CP has to go and as such the impugned order is hereby set aside.
Appeal allowed.
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2023 (4) TMI 668
Ineligibility to participate in the tender process since the “net worth” quoted by it was inclusive of the value of its preference shares - whether the value of preference shares can be included while computing “net worth”? - whether the Respondent erred in declaring the Petitioner ineligible to participate in the tender process in terms of the Request for Selection? - HELD THAT:- Section 43 of the Companies Act, 2013 provides that share capital can be of two kinds i.e., equity share capital and preference share capital. Explanation (ii) of Section 43 provides that preference share holders have a preferential right in respect of payment of dividend and in respect of repayment in case of winding up or repayment of capital. Explanation (iii) of Section 43 provides that the capital shall be deemed to be preference share capital notwithstanding that it is entitled to either rights in respect of dividends, in addition to the preferential rights to the amounts specified in sub-clause (a) of clause (ii), and in respect of capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in sub-clause (b) of clause (ii).
A perusal of Section 55, provides that preference shares cannot be redeemed within the share capital of the company. It, therefore, means that other than two sources i.e., out of profits and out of proceeds of fresh issue of shares, no other source can be used for redemption of preference shares. Clause 4.3.1 (c) of the NIT states that net-worth is to be considered in accordance with the Companies Act, 2013. In the NIT, the tenderer has not specifically excluded preference shares from the definition of net-worth.
The mode of calculation of net worth which has been adopted by the Respondents to exclude the Petitioner from further stages of the tendering process is contrary to the Sections of the Companies Act. Clause 4.3.1(c) of the NIT does not exclude preference shares from the definition of net-worth rather it states that net-worth is to be considered for this clause shall be the total net worth as calculated in accordance with the Companies Act, 2013, then the net-worth has to be calculated as per the Companies Act, 2013 and no other method can be permitted to be adopted. There is no reason as to why the tender must exclude preference shares while calculating the net-worth. Respondents cannot be permitted to adopt a method which runs contrary to the provisions - balance sheet is not an indicator of the true net worth of a company. Balance sheet reflects the share capital of a company and its treatment as an asset or liability to the company on the date of preparation of the balance sheet. It is not disputed that balance sheets are to be prepared in accordance with extant accounting standards.
In the facts of the present case, the tenderer has decided to exclude preference shares from the definition of net worth on a wrong notion that preference shares is a liability which is contrary to the Sections in Companies Act. Only when the preference shares are redeemable at the instance of the shareholders then only the preference shares can be called as a liability and not in all cases. Preference shares are redeemed out of profits or out of a fresh issue meant for the purpose and not from the existing share capital. Since the entire basis of calculating net worth by the Respondent is contrary to the provisions of the statute, this Court has no other option but to hold that the decision of the tenderer to exclude preference shares from the calculation of net worth is arbitrary and irrational.
The challenge of the Petitioner to its exclusion from the tendering process has to be accepted. The Respondent is directed to re-work the net-worth of the Petitioner herein by including the preference shares while calculating its net-worth and take a decision as to whether the Petitioner’s financial bid can be considered or not.
The writ petition is allowed.
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2023 (4) TMI 451
Impleadment to an oppression and mismanagement petition - allegation of misconduct against the Appellant - violation of principles of natural justice by not affording an opportunity of hearing to the Appellant - HELD THAT:- Corporate governance can be a complex matter, especially when it comes to the appointment of directors. Disputes can arise when a nominee director’s appointment is subsequently withdrawn by the nominating group. The issue at hand is whether a nominee director, who no longer has the support of the nominating group, should be allowed to join a petition seeking relief against oppression and mismanagement against other members/ shareholder groups of the company.
DKJ group's interests hold precedence - HELD THAT:- According to the AoA of Respondent No. 3, the DKJ Group is entitled to an equal number of directors on Respondent No. 3’s Board, as the SKG Group. The Appellant was a nominee of DKJ Group. Following Mr. D.K. Jain's demise, the Appellant began acting against the interests of her nominating group. Despite DKJ Group's request to SKG Group to not accept Appellant as their nominee director, she continued to act as a nominee director. Due to her lack of cooperation, the DKJ Group intimated CLB that her nomination had been withdrawn and in her place, a new director had been appointed - In such circumstances, when DKJ approached the CLB for interim directions, it was held that SKG Group was under obligation to uphold the interest of DKJ Group and thus, suspended Appellant’s directorship. This was only to ensure that DKJ Group’s interests are not jeopardised, pending final adjudication of the proceedings in the company petition.
Appellant has contrary interests to DKJ Group and past association with the group is of no consequence - HELD THAT:- The Court finds the Appellant’s past relationship with DKJ Group to be irrelevant to the matter at hand. Her assertion that she continues to be a nominee director is misconceived as the AoA stipulates that a nominee director can continue to serve on the Board of Directors only if they have the support of the nominating group. The pleadings on record show that the Appellant no longer has the backing of the DKJ Group, which is essential for a nominee director's continuation. Appellant was to further the interests of DKJ group, but since she was not acting in their interests, she risked losing their support and being removed from the board.
No sufficient cause u/s 405 of the Act - whether the presence of the Appellant is essential for adjudicating the issues arising in the company petition? - HELD THAT:- In the instant case, since the Appellant no longer has the support of the DKJ Group, she has no right to participate in the proceedings. The Court agrees with the CLB's decision that Appellant has failed to show sufficient cause under Section 405 of the Act to join the proceedings.
Appellant's shareholding stands conclusively transferred - HELD THAT:- Since Appellant has transferred her entire shareholding in Respondent No. 3 to Ms. Usha Jain, her plea premised on the basis of shareholding is of no consequence.
It is clear that the Appellant does not enjoy the support of DKJ Group. Appellant’s shareholding in Respondent No. 3 stands transferred which underscores DKJ Group’s right to make decisions which are in their best interests. There is no valid cause to implead the Appellant in a dispute that involves DKJ Group's pursuit to defend their representation rights in Respondent No. 3.
Application dismissed.
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2023 (4) TMI 450
Oppression and Mismanagement - Time Limitation - Transfer of shares - Petition was filed on 09.11.2018 which is beyond three years as per Article 113 of the Limitation Act, 1963 - locus standi to file application - HELD THAT:- First of all, the money has not been transferred by the Appellants in favour of the Respondents. Secondly, as admitted in the averments as well as recorded clearly in the impugned order that, Mr. Linganameni Ramesh gave Rs. 14,67,41,557/- and took back Rs. 9 Crores from the Respondents as such prima-facie this does not seem to be a clear transaction of payment of money towards acquisition of shares and consequently allotment of shares in favour of the Appellants is also not established.
Time Limitation - HELD THAT:- The Tribunal has held that alleged transfer of shares in favour of the Appellant herein was claimed to be on 18.04.2015, whereas, the Petition was filed before the Tribunal on 09.11.2018 which is beyond three years and as per Article 113 of the Limitation Act, 1963 the limitation period is only three years. This Appellate Tribunal do not find any error in the impugned order.
This Appellate Tribunal also do not find any material which can substantiate that all the procedures laid down in the companies Act, 2013 as well as the Article of Association were followed by the Appellants herein. The photocopies of the share capital as a form have already been denied to be true by the Respondents and the same has been held by the Tribunal as tannable averments from the Respondents herein. This Appellate Tribunal also observes that the Tribunal had discussed this aspect in detail in the ‘impugned order’ and recorded that no concrete evidence or documentary proof could be furnished by the Appellants herein to proof their claims of genuine certificates. In fact, the Tribunal held that the alleged Share Certificate submitted by the Appellants herein to be fabricated and fraudulent as there were lot of discrepancies, in the forms and substance, of the Shares Certificate vis-à-vis the original certificates held by the Respondents.
This Appellate Tribunal also observed that there is no communication between the Appellant herein and the Respondent herein during the relevant period of alleged dates of transfer of shares in the year 2015 and immediately thereafter and in absence of any concrete trail of suitable communications between the various parties involved, it is difficult to believe that indeed such transaction took place which establishes the right to claim said shares by the Appellants.
This Appellate Tribunal further finds it surprising that although the Appellants is claiming to hold 94.8% of Share Capital of the 1st Respondent Company, yet they did not bother to take over the management and control of the 1st Respondent Company. It is natural and established commercial prudence that person holding the majority of share will have dominating position in composition of Board of Directors of the Company - this Appellate Tribunal also does not find convincing that the Appellants did not get any notice of the meeting including that of AGM or have not received any documents/ minutes/circular/ agenda/ annual financial statement/ statutory audit report and yet did not seek any remedy thereafter in the entire period.
The case of Oppression and Mismanagement, claimed by the Appellants, under Section 241 r/w Section 242 of the Companies Act, 2013, the Appellants/ Claimants, has to cross the first hurdle of Locus. The Oppression and Mismanagement, is available only to a person who is aggrieved and who is also a Member / Shareholder, of the Company - the Appellants could not establish regarding their entitlement to receive Transfer Shares, from the Respondents, neither could prove that the payment, was indeed made by the Appellants to the Respondent for consideration of said shares. It is, therefore, establishes that the Appellants, did not have any share in their names and were therefore not members / shareholders, of the 1st Respondent Company and therefore, the Appellants, do not have any Locus, to file an application, under Section 241, r/w Section 242 of the Companies Act, 2013.
This Appellate Tribunal, do not find any error in the impugned order - Appeal is dismissed.
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2023 (4) TMI 173
Abuse of dominant position in contravention of the provisions of Section 4(2)(a)(i), Section 4(2)(b)(ii), Section 4(2)(c), Section 4(2)(d) and Section 4(2)(e) of the Competition Act, 2002 - pre-installation of entire GMS suite under MADA - amounts to imposition of unfair condition on the device manufacturers and thereby infract provisions of Section 4(2)(a)(i) and Section 4(2)(d) of the Act or not - Revenue Share Agreement (RSA) - Doctrine of proportionality.
Whether for proving abuse of dominant position under Section 4 of the Competition Act, 2002 any ‘effect analysis’ of anti-competitive conduct is required to be done? And if yes; what is the test to be employed? - HELD THAT:- For proving abuse of dominance under Section 4, effect analysis is required to be done and the test to be employed in the effect analysis is whether the abusive conduct is anti-competitive or not.
Whether the order of the Commission can be said to be replete with confirmation bias? - HELD THAT:- The Commission proceeded to consider the materials on the record and submissions of the parties with respect to each of the market and recorded findings and conclusions after considering the evidence on record. Hence, we are unable to accept the submission of the learned Senior Counsel for the Appellant that the order of the Commission is replete with confirmation bias.
Whether pre-installation of entire GMS Suite amounts to imposing of unfair condition on OEMs which is an abuse of dominant position by the Appellant resulting in breach of Section 4(2)(a)(i) and 4(2)(d)? - Whether the Commission, while returning its finding on breach of Section 4(2)(a)(i) and 4(2)(d), has not considered the evidence on record and has not returned any finding regarding the Appellants conduct being anti-competitive? - HELD THAT:- Pre-installation of entire GMS Suite amounts to imposing of unfair condition on OEMs which is an abuse of dominant position by the Appellants resulting in breach of Section 4(2)(a)(i) and 4(2)(d) - The Commission while returning its finding on breach of Section 4(2)(a)(i) and 4(2)(d) has considered the evidence on record and has returned finding that the conduct of the Appellant harms the competition.
Whether the Appellants by making pre-installation of GMS Suite conditioned upon signing of AFA/ACC for all Android Device Manufacturers (OEMs) has reduced the ability and incentive of the OEMs to develop and sell devices operating on alternative versions of Android i.e., Android Fork and thereby limited technical and scientific development which is breach of the provisions of Section 4(2)(b)(ii) of the Act? - Whether the Commission while returning its finding on breach of Section 4(2)(b)(ii) has not considered the evidence on record and has not returned any finding regarding the Appellants conduct being anti-competitive? - HELD THAT:- The Appellant by making pre-installation of GMS suite conditional to signing of AFA/ACC for all Android devices manufacturers, has reduced the ability and incentive of devices manufacturers to develop and sell self-device operating or alternative version of Android and Android Forks and thereby limited technical and scientific development, which is breach of provisions of Section 4(2)(b)(ii) of the Act - The Commission while returning its finding has considered the evidence on record in respect of Section 4(2)(b)(ii) and has also returned finding on anti-competitive conduct of the Appellant.
Whether Appellant has leveraged its dominant position in Play Store to protect its dominant position in Online General Search in breach of Section 4(2)(e) of the Act? - Whether the Commission while returning its finding on breach of Section 4(2)(e) in reference of above has not considered the evidence on record and has not returned any finding regarding the Appellants conduct being anti-competitive? - Whether Appellant has abused its dominant position by tying up of Google Chrome App with Play Store and thereby violated provisions of Section 4(2)(e) of the Act? - Whether the Commission while returning its finding on breach of Section 4(2)(e) in reference to tying of Google Chrome with Play Store has not considered the evidence on record and has not returned any finding regarding the Appellants conduct being anti-competitive? - Whether Appellant has abused its dominant position by tying up of YouTube App with Play Store and hereby violated provisions of Section 4(2)(e) of the Act? - Whether the Commission while returning its finding on breach of Section 4(2)(e) in reference to tying of YouTube with Play Store has not considered the evidence on record and has not returned any finding regarding the Appellants conduct being anti-competitive? - HELD THAT:- Appellant has leveraged its dominant position in Play Store to protect its dominant position in Online General Search in breach of Section 4(2)(e) of the Act. Commission while returning its finding on breach of Section 4(2)(e) in reference of above has considered the evidence on record and has also returned finding regarding the Appellants conduct being anti-competitive - Appellant has abused its dominant position by tying up of Google Chrome App with Play Store and thereby violated provisions of Section 4(2)(e) of the Act. Commission while returning its finding on breach of Section 4(2)(e) in reference of above has considered the evidence on record and has also returned finding regarding the Appellants conduct being anti-competitive - Appellant has abused its dominant position by tying up of YouTube App with Play Store and thereby violated provisions of Section 4(2)(e) of the Act. Commission while returning its finding on breach of Section 4(2)(e) in reference of above has considered the evidence on record and has also returned finding regarding the Appellants conduct being anti-competitive.
Whether the investigation conducted by the Director General was in violation of Principles of Natural Justice? - Whether the investigation conducted by the Director General is vitiated due to DG framing leading questions to elicit information? - HELD THAT:- Investigation conducted by the Director General did not violate the principle of natural justice - Investigation conducted by the Director General cannot be said to be vitiated due to the Director General framing leading questions to elicit information.
Whether order of Commission is vitiated since the Commission did not have any Judicial Member? - HELD THAT:- The impugned order by the Commission is not vitiated on the ground that the Commission did not consist of a Judicial Member.
Whether the order passed by the Commission in exercise of its power under Section 27(a) is beyond the findings recorded by the Commission and is not in accordance with law? - HELD THAT:- There is no dispute that preinstalled Apps can be disabled by the users in no time. The OEMs are also not obliged to install all 11 suite of Apps of Google, thus the OEMs are free to not preinstall any of the Apps. All the Apps, which are preinstalled can be disabled as per the users’ choice, disabling all the Apps by user serve the purpose of disappearing the Apps from the screen and not performing any functions. The Apps can be enabled, if user so decides. Uninstallation will preclude option of the user to disable and enable the particular App as per its choice - direction in paragraph 617.7 is uncalled for and deserve to be set aside.
Whether the penalty imposed on the Appellants by the Commission in exercise of its power under Section 27(b) was not based on relevant turnover of the Appellants, disproportionate and excessive? - HELD THAT:- Google has not provided the financial information as sought by the CCI vide its order dated 6.10.2021, and reiterated in its later order dated 17.10.2021. The inadequacy of the data supplied by Google has been mentioned in detail in paragraphs 630, 631, 632, 633 and 634, whereafter the CCI points out to significant inconsistencies and wide disclaimers in presentation of the requisite data by Google. In such a situation, CCI has carried out the “best estimation” on the basis of a financial statements and information submitted by Google - in a conservation approach, the CCI has taken the lower of these two figures as turnover for the FY 2020-221 and imposed a penalty @ 10% of its average of relevant turnover for the last three FYs 2018-19, 2019-20 and 2020-2021. We uphold the amount of penalty imposed by CCI on Google.
Regarding the issue of imposition of “provisional penalty” consider the argument of the Learned Senior Counsel of the Appellant that there is no provision in the Competition Act for imposing a provisional penalty, with the possibility of revising it on receipt of further information data. We are of the view that the section 27(b) of the Competition Act, 2002 provides for imposition of penalty, which shall not be more than 10% of the average turnover for the last three preceding years upon enterprises, which are parties to such agreements or abuse. Once the CCI has derived the “best estimate” of the relevant turnover for the last three preceding financial years, and imposed a penalty of 10% of the average of such turnover, we are of the opinion that further revision of this penalty on the basis of financial information or data that may come to light in future will not be in keeping with law.
Appeal is thus disposed off in following manner:
(i) The impugned order of the Commission dated 20th October, 2022 is upheld, except as indicated at direction (ii) below;
(ii) Direction issued in paragraphs 617.3, 617.9, 617.10 and 617.7 are set aside. Rest of the directions under paragraph 617 and fine imposed by paragraph 639 are upheld.
(iii) The Appellant is allowed to deposit the amount of penalty (after adjusting the 10% amount of penalty as deposited under order dated 04.01.2023) within a period of 30 days from today.
(iv) The Appellant is allowed 30 days’ time to implement the measures as directed in paragraph 617 (to the extent upheld by this order).
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2023 (4) TMI 82
Delay in filing of CHG-4 form - due to the death of the Founder-Director, there was a delay, in filing form - sufficient cause for delay present or not - Sections 82 of Companies Act read with Rule 8(1) of the Companies (Registration of Charges) Rules 2014 - HELD THAT:- Under Sections 82 of the Act read with Rule 8(1) of the Companies (Registration of Charges) Rules 2014, there exists an obligation on the Company to record satisfaction of charge within a period of 30 days from the date of such payment - A perusal of the order of the Hon’ble Supreme Court in In Re Suo Motu [2022 (1) TMI 385 - SC ORDER] clearly shows that the entire period between 15th March, 2020 till 28th February, 2022 was excluded from computation of limitation.
In the present case, the usual period of limitation is thirty days. Thus, a period of thirty days would be added from 28th February 2022, meaning thereby that the limitation would have expired only on 28th March 2022 - The filing of the Form in the present case has been made on 28th November, 2022 which would be a total delay of eight months.
The observations of the Madhya Pradesh High Court in M/S. SHALINI PLASTIC PRIVATE LIMITED THROUGH SHRI KAPIL ATLASIYA VERSUS UNION OF INDIA, REGISTRAR OF COMPANIES MADHYA PRADESH [2018 (7) TMI 2301 - MADHYA PRADESH HIGH COURT] are also relevant in the present case, wherein the Court observed that In the present case the petitioner has disclosed that delay had taken place because there was change in entire management of the company, therefore, the default had taken place for the bonafide reason.
Keeping in mind orders passed by the ld. Supreme Court as also the order of the ld. Single Judge of Madhya Pradesh, the delay cannot be held to be deliberate. The demise of the Founder-Director due to COVID-19 is a genuine cause for the delay. The costs are accordingly reduced to 25,000/- qua each of the charges. Thus, the total costs payable by the Petitioner would be Rs.50,000/-.
Petition allowed in part.
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2023 (4) TMI 56
Anti-Competition Act - Cartelization - Seeking grant of Lesser penalty under Section 46 of the Act r/w Regulation 5 of the Competition Commission of India (Lesser Penalty) Regulations, 2009 - Appellant argued that Geep Industries is a very small player in the dry batteries market having a minuscule share of about 1% whereas the three major players viz. Eveready, Nippo and Panasonic controlled about 98% of the said market - HELD THAT:- Sub-section (1) of section 3 of the Act prohibits an enterprise to enter into any agreement in respect of supply of goods or services which causes or is likely to cause an ‘appreciable adverse effect on competition’ within India and sub-section (2) of Section 3 of the Act lays down that any agreement entered into in contravention of provisions of sub-section (1) of Section 3 of the Act shall be void. Such an agreement, which directly or indirectly determined purchase or sale price of goods is also ‘presumed’ to have an appreciable adverse effect on competition as per sub-section 3 of section 3 - once an agreement has been entered into by parties which is in contravention of the provision of sub-section 1 of section 3, shall be ‘presumed’ to have an appreciable adverse effect on competition, and there such behaviour is anti-competitive that would invite penalty under section 27 of the Act.
Geep Industries is very clearly in a ‘bilateral ancillary cartel’ with the Panasonic, while Panasonic is found to be member of ‘primary cartel’ in the dry cell batteries market. Thus, even though Geep is an extremely small player in the dry cell batteries market which may not be capable of influencing the market in any appreciable manner, the fact that it agrees through the PSA to follow market prices as set by Panasonic makes it clear that such behavior is anti-competitive, and Geep Industries being in contravention of Section 3 (1), (2) and (3) is clearly established, as has been adjudicated by the CCI in the impugned order.
The Proviso to Section 27(B) empowers the CCI to impose upon a cartelizing company a penalty which can be upto three times of its profits for each year of the continuance of such agreement or 10% of its turnover for each year of the continuance of such agreement, whichever is higher. It is not disputed that the duration during which the ‘bilateral ancillary cartel’ was operating by virtue of the PSA was from 01.10.2010 to 30.04.2016 - the quantum of penalty which the Appellant has argued to be very high and disproportionate to its offensive behavior, and sought reduction in the penalty amount. We note that the impugned order, in paragraph 37, records that Geep Industries is a ‘very small player’ having insignificant market share in the market for dry cell batteries and was not in a bargaining/ negotiating position with PECIN. Thus, the Impugned Order recognizes that while Geep Industries is an offender of Section 3 of the Act, it was neither in a bargaining position vis-à-vis PECIN nor having a significant market share to be able to influence prices in the said market.
The market share of the Appellant in the relevant market was only about 1%, and it was barely able to function with meagre profit, an exorbitant fine would have been fatal for the business of the Appellant and may have thrown the Appellant out of the market. In the present case, it is noted that the Appellant has been imposed a penalty @4% amounting to Rs. 9,64,06,682/- which is certainly exorbitant looking to the annual turnover and profits of the Appellant from 2010-11 to 2016-17 as is evident from para 34 of the impugned order. In such a situation, it is felt that this would be a mitigating factor with respect to Geep Industries in the present case.
While the quantum of penalty should be such that it acts as a deterrent and regulate anti-competitive behaviour. Geep Industries business dynamics and situation in the market to be such that it was neither in a negotiating strength vis-à-vis PECIN nor having a market share that could actually influence the price in the said market. In view of such a situation, and fully conscious of the fact that Geep Industries has turned losses in the first three years under review by CCI of its anti-competitive behavior.
The penalties imposed on the respective directors, officers and employees as included in Table-6 in para 43 of the impugned order are commensurate with their offensive behavior as they were the persons responsible for entering into PSA and being knowledgeable persons were supposed to have knowledge and understanding of law in relation to behaviour of corporate entities in a market. Therefore, the penalties imposed on Ms. Pushpa M, Mr. Joeb Thanawala, and Mr. Jainuddin Thanawala by the Impugned Order need no modification.
Appeal allowed.
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2023 (4) TMI 14
Seeking restoration of name of the company in the Register of Companies (ROC) - Section 252 of Companies Act - HELD THAT:- Under Section 10A of the Companies Act 2013, before commencement of business, and after incorporation, a Company has to file a declaration through one of its directors within 180 days that the share capital has been duly contributed as agreed by the subscribers to the memorandum - Under section 10A(3) of the said Act, the ROC can initiate action for the removal of the name of the company in terms of Chapter XVIII i.e. under Section 248.
In the present case, the present writ petition has been premised on the ground that the notice itself was not issued, therefore, a writ petition would be liable to be entertained. It is stated that the striking off has taken place vide STK -7 issued on 13th December 2022 and published in the official gazette on 17th December 2022. For whatever reasons, the Petitioner has not approached the National Company Law Tribunal (NCLT) and has chosen to come before this Court - A perusal of Section 10A as also Section 252(3) of the said Act would show that the delay ultimately is condonable upon the payment of monetary penalty in terms of Section 10A. Even the standards that have been stipulated for restoration of the company by the NCLT is if the NCLT feels it is just that the name ought to be restored or if the company was carrying on business and was in operation.
Considering the fact that the bonafides of the Petitioners are not in doubt as the companies are running companies, and the striking off has already been prejudicial to them, this Court deems it appropriate not to relegate the Petitioners to the alternative remedy under Section 252.
The Petitioner shall deposit a sum of Rs.1 lakh each for each of the companies as a pro term deposit of penalty under Section 10A(2). The said deposit shall be made within one week, upon which the names of the companies shall be restored - Petition disposed off.
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2023 (3) TMI 1280
Oppression and Mismanagement - mismanagement on the part of the R-1 Company and R-2 in particular - reduction in shareholding - wrongful removal of R-5 and R-6 as directors of the R-1 Company - HELD THAT:- Even non-members could be transferred shares of the company if it is in the interest of the company. This provision is supported by the list of non-members produced by the Appellant who have been transferred shares of R-1 Company from the year 1987-88 onwards. Significantly, this averment has not been disputed by the Respondents.
The rights of a nominee are different from the actual holder of the shares and those of the guardian are not the same as that of the nominee of the shares, in the event that the owner of the shares is deceased. It is quite clear that the Appellant could not have claimed to be holder of the 3890 shares whose nominee was Ms Harsheika Doshi, more so when he does not show in the original company petition how the interests of the minor Ms. Harsheika are being prejudiced by the action of the Respondents. It would be a matter of adjudication though, as the Appellant was relying on the entry in the Register of Members to claim shareholding of 3890 shares by him. Yet it is a fact that he was holder of the 4160 shares till the time of their cancellation, which is also one of the acts of oppression alleged by the Appellant.
The ownership of 4160 shares, certainly vests with Mr. Yash Vardhan Mall and the allegation that the Company has not followed the due procedure in cancelling these shares is found to be correct. The plea taken by the R-2 that these shares were awarded on the mistaken notion that Mr. Yash Vardhan Mall is the holder of 3890 shares is also not found to be supported by facts since the transfer of 4160 shares to Yash Vardhan Mall has nowhere been shown to be done in consequence of his ‘holding’ 3890 shares and moreover Article 30 of the Articles of Associations allows transfer of shares to non-members if it is done in the interest of the company. Therefore, the unilateral cancellation of the 4160 shares, which is alleged to be an oppressive act, is a question open for adjudication. The section 241-242 petition preferred by the Appellant cannot be, therefore, decided at the threshold on the issue of maintainability on the basis of non-ownership of these shares as their illegal cancellation is itself the subject matter of the original company petition C.P. No. 189 of 2015.
The issue of maintainability which was raised in the demurrer application C.A. 1755 of 2015 should not have been adjudicated at the threshold to arrive at the main petition’s non-maintainability when the issue was itself claimed as an act of oppression - The NCLT, by allowing the demurrer application on the basis on non-ownership of these 4160 shares, and consequently dismissing CP No. 189 of 2015 in a cursory manner without looking at the merits of the various allegations made in the company petition has incorrectly adjudicated both the demurrer application and also C.P. 189 of 2015.
The Impugned Order, which allows the demurrer application, is set aside - issue of guardianship of 3890 shares and whether the Appellant was entitled to maintain the original company petition on the basis of these 3890 shares should also be looked at afresh - appeal allowed.
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2023 (3) TMI 1079
Application seeking winding up proceedings relating to Shree Shyam Cotspin Ltd. (the company) be transferred to the National Company Law Tribunal for further proceedings under the Insolvency and Bankruptcy Code, 2016 - whether the learned Company Court had erred in proceeding on the basis that irreversible steps have been taken? - HELD THAT:- The said question is required to be answered in the negative. It is clear from the record that several steps have been taken for winding up of the company; assets claims have been invited from creditors; parts of the company’s assets have been sold; all movable assets taken over by respondent no.4 SARFAESI Act have been sold; the immovable asset of the company is under acquisition; and the assets are insufficient to meet the company’s liabilities.
There are no error in the impugned order - appeal dismissed.
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2023 (3) TMI 1018
Seeking restoration of the name of the company in the Registrar of Companies, Chhattisgarh - Section 252 of the Companies Act, 2013 - HELD THAT:- The NCLT has recorded that in this case, Registrar of Companies, Chhattisgarh also did not have objection for restoration of the Company’s name in the Register. However, in view of the fact that the Audited Annual Accounts of the Company for the Financial Years 2012-2013, 2013-14, 2014-15, 2015-16, 2016-17 & 2017-18 and Income Tax Return of the Company for the Financial Years 2012-2013, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 & 2018-19 shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (Cuttack Bench, Cuttack) as well as Registrar of Companies, Chhattisgarh, is not sustainable in law.
The name of the Appellant Company be restored to the Register of Companies subject to the compliances imposed - application allowed.
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2023 (3) TMI 898
Recovery of electricity dues of the Company - personal liability of the Directors of the Defaulter Company/Corporate debtor which went into insolvency - Company under moratorium period (undergoing CIRP) - It was urged that once the Company went into insolvency, the outstanding electricity dues towards the defaulter company being Corporate debtor could not have been recovered from its Directors.
Whether the Director of the Company who is claimed to be the personal guarantor in the matter of payment of electricity dues of the Company would be able to sustain the challenge to the demand of dues of electricity from the personal assets of the Directors, in view of the Insolvency Proceedings concluded in relation to the defaulter company namely the Corporate debtor?
HELD THAT:- In STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [2018 (8) TMI 837 - SUPREME COURT], the controversy revolved around Section 14 of the Insolvency and Bankruptcy Code, 2016 which provides for moratorium for the limited period mentioned in the Code. The issue before the Apex Court was as to whether on admission of insolvency petition, the moratorium under Section 14 of the Code would apply to a personal guarantor of a Corporate debtor.
While answering the said question, the Apex Court had considered different provisions of the Code and the effect of enforcement of Section 2(e) w.e.f 23.11.2017 by the Amendment Act, 2018. It was noted that under Part II of the Code which deals with insolvency resolution and liquidation for Corporate persons, a financial creditor or a Corporate debtor may make an application to initiate the insolvency resolution process. Once initiated, the adjudicating authority, after admission of such application, shall by order declare a moratorium for the purposes referred to in Section 14 (as per Section 13 of the Code).
It was, thus, held therein that the object of the Code is not to allow personal guarantors such as Directors who are in management of the companies to escape from an independent and co-existent liability to pay off the entire outstanding debt. The decision in Sanjeev Shriya vs S.B.I [[2017 (9) TMI 1638 - ALLAHABAD HIGH COURT]] wherein moratorium was applied to enforcement of guarantee against personal guarantor to the debt, has been overruled.
Thus, it is clear that approval of a resolution plan does not ipso facto absolve the surety/guarantor of his or her liability, which arises out of an independent contract of guarantee. To what extent, the liability of a guarantor can be pressed into service would depend on the terms of the guarantee/contract, itself - the main contention of the learned counsel for the petitioner to challenge the recovery on the ground that approval of the resolution plan in the insolvency proceeding in relation to the defaulter company namely M/s Trimurti Concast Pvt ltd (Corporate debtor) would ipso facto discharge both the Directors of the defaulter Company, one of whom is the petitioner, is liable to be turned down.
As to the issue of applicability of Clause 4.3(f)(v) of the Electricity Supply Code, 2005, the arguments with regard to validity of the same or the said provision being ultra vires to the Electricity Act, 2003, made in rejoinder half-heartedly, cannot be entertained, in as much as, no foundation has been laid in that regard in the writ petition.
Thus, it is clarified that the legal issue with regard to the liability of the personal guarantor of the Corporate debtor whose liability is co-extensive with the principal debtor, i.e the Corporate debtor has been answered by us taking into consideration the law laid down by the Apex Court - the challenge to the demand notice for dues of electricity, issued jointly in the name of the Directors of the Corporate debtor, the defaulter company which went into insolvency cannot be sustained on the ground that in view of the acceptance of the resolution plan under Section 31 of the Code, all liabilities of the Directors, who may be the guarantor, stood automatically discharged/extinguished.
Petition dismissed.
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2023 (3) TMI 839
Validity of ICC Arbitral Award - The termination of the Devas Agreement by Antrix was disputed by Devas - Whether the ICC Award suffers from patent illegality, fraud and is in conflict with the public policy of India - binding nature of the the judgment in DEVAS MULTIMEDIA PRIVATE LTD. VERSUS ANTRIX CORPORATION LTD. & ANR. [2022 (1) TMI 774 - SUPREME COURT] - applicability of principles of res judicata - The petitioner contended that the the Judgment of the Apex Court are at best obiter dicta and do not constitute ratio decidendi
HELD THAT:- It is summarised as under:
a) The findings of the Apex Court in its Judgment in DEVAS MULTIMEDIA PRIVATE LTD. while upholding the findings of the NCLT and NCLAT, noted that Devas was incorporated for a fraudulent purpose and that its affairs were being conducted in a fraudulent manner. The Apex Court has given these findings after being aware of the fact that an arbitral award has been passed in favour of Devas and the same is under challenge in a petition under Section 34 of the Arbitration Act. The Apex Court has repelled the contention of Devas that the application for winding up was filed only to circumvent the enforcement of the arbitral award. Without the findings rendered by the Apex Court regarding fraud, the Apex Court could not have come to the conclusion that Devas had been incorporated for fraudulent purposes and that its affairs were being conducted in a fraudulent manner and, therefore, the order of winding up Devas under Section 271(c) of the Companies Act, 2013 was correct. These findings, therefore, become the ratio and not the obiter of the case and therefore, were binding on the learned Single Judge under Article 141 of the Constitution of India. It is settled law that even obiter of a judgment of the Hon’ble Supreme Court is binding on all Courts subordinate to it. The Apex Court in PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VERSUS RESERVE BANK OF INDIA [1992 (1) TMI 337 - SUPREME COURT] has reiterated that though the focus of the Apex Court may not be directly on a partiuclar point, yet, a pronouncement by the Apex Court, even if it cannot be called the ratio decidendi of the judgment, will still be binding on the High Courts.
b) The proceedings before the Apex Court in DEVAS MULTIMEDIA PRIVATE LTD. are formal proceedings between the same parties i.e., Antrix, Devas and DEMPL, arising out of the same factual matrix, and the issue of the effect of fraudulent actions of Devas was directly and substantially in issue before the Hon'ble Supreme Court. The issue of fraud was raised and agitated before the Apex Court in Civil Appeal No.5766/2021 and has been heard and finally decided by the Apex Court which was competent to render the findings on the issue before it. As a consequence, the findings of the Apex Court in its Judgment in Civil Appeal No.5766/2021, particularly Paragraphs No. 12 and 13, would be binding between the parties on the basis of the principle of res judicata.
c) Article 144 of the Constitution of India mandates every authority to aid in enforcing the orders and decrees of the Supreme Court. The Apex Court in DEVAS MULTIMEDIA PRIVATE LTD. has held that Devas was incorporated for fraudulent purposes and the affairs of the company were being conducted in a fraudulent manner, and therefore, the agreement, from which the present arbitration arises, was a product of fraud. After such a finding has been rendered by the Apex Court, it was not open for the learned Single Judge to come to the conclusion that the award, which has been held to be a product of fraud, would still be enforceable in the country. Such a finding by the learned Single Judge would be against the spirit of Article 144 of the Constitution of India.
d) The phrase “the Court finds that”, which finds mention in Section 34(2)(b) of the Arbitration Act, enables the Court to look into attendant circumstances to form its own opinion as to whether the award is in conflict with public policy of India or not. As a corollary, it follows that the Court would also have the power to discover on its own, whether the making of an award is induced or affected by fraud or corruption or is in violation of Section 75 or 81 of the Arbitration Act. This phrase has been interpreted by the Court, as an enabling provision, allowing the Court while deciding an application under Section 34 of the Arbitration Act to grant leave to amend an application under Section 34 of the Arbitration Act, if the peculiar circumstances of the case so warrant and it is so required in the interest of justice.
e) In view of the various Judgments of the Hon'ble Supreme Court interpreting Section 34 of the Arbitration Act, the amendments to Section 34 of the Arbitration Act and in view of the categorical findings of the Apex Court in its Judgment passed in DEVAS MULTIMEDIA PRIVATE LTD. , nothing prevented the learned Single Judge from relying on those findings and using them for the purpose of setting aside the ICC Award under Section 34 of the Arbitration Act on the ground that the agreement itself was a product of fraud and, therefore, the making of award is automatically induced by fraud and corruption. The findings by the Apex Court, which is the highest Court of the land, could not have been ignored by the learned Single Judge and those findings would automatically become the findings of the learned Single Judge while considering an application under Section 34 of the Arbitration Act for which there was no necessity of a specific pleading. From a comprehensive reading of the Impugned Judgment, it is evident that the learned Single Judge has applied his mind to the amendment applications and has taken it into consideration while deciding the petition under Section 34 of the Arbitration Act and the issue as to whether the making of award was vitiated by fraud or corruption.
f) The principle of “fraud vitiates all solemn acts” is applicable not only to the primary proceedings, but also to all collateral proceedings that arise out of the same facts and circumstances. The act of fraud is an anathema to all equitable principles and every transaction tainted with fraud must be viewed with disdain by Courts. In the instant case, the Supreme Court in DEVAS MULTIMEDIA PRIVATE LTD.has held that the commercial relationship between Devas and Antrix is a product of fraud, and as a consequence, the Devas Agreement, the ICC Award, and all other disputes arising out of the transaction would be tainted by fraud. Permitting Devas and its shareholders to reap the benefits of the ICC Award would amount to this Court perpetuating the fraud. Such a view would be against all principles of justice, equity and good conscience.
g) The learned Single Judge has not made an error in setting aside the ICC Award on the grounds of fraud and it being in conflict with the public policy of India. Accordingly, the challenge to the Impugned Judgment by the Appellant, on the ground that the Ld. Single Judge could not consider the grounds of public policy and fraud under Section 34 fails.
Appeal dismissed.
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2023 (3) TMI 838
Termination of proceedings pending, with immediate effect - rectification of the name of the company - premise of the challenge is that the proceedings are lacking in jurisdiction and ex-facie, barred by limitation - assumption of jurisdiction and the bar of limitation - HELD THAT:- The issue relating to assumption of jurisdiction and the bar of limitation hinges upon Section 16 of the Companies Act, 2016. Section 16 deals with rectification of name of company and states that if, through inadvertence or otherwise, a company on its first registration by a new name, is registered by a name which, in the opinion of the Central Government, or on an application by a registered proprietor of a trademark, is identical with, or too nearly resembles the trademark of a proprietor under the 1999 Trade Marks Act, such claim may be rectified, if such application were filed within 3 years of incorporation/registration/change of name of the company.
The right of the officer has come to an end on 31.03.1956 and as on that date, the proceedings lapse. There was no possibility for the dead proceedings to be revived thereafter merely because the amended Section gave vested authority in the power to issue notice. Thus, and since the right to issue notice under the earlier Act had come to an end before the new Act came into force, the notice was struck down - In the present case, it is not merely a provision that has been amended but an entirely new enactment, the 2013 Act that has replaced the 1956 Companies Act. There is simply no avenue for the timelines under the old Act to enure to the benefit of R2.
Thus, the limitation under Section 22 of the 1956 Act had long expired with the repeal of that Act and there is no question of any person being entitled to the benefit of the same thereafter. This argument is rejected.
Thus, the jurisdictional fact of bar of limitation is clearly attractive/established. The Court has observed that a Writ of Prohibition is not normally issued for a mere error of law unless the error makes the proceedings fall outside the jurisdiction of the authority.
Writ of Prohibition as sought for is issued and this Writ Petition is allowed.
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2023 (3) TMI 749
Oppression and Mismanagement - non-speaking order - misguided attempt to scuttle proceedings brought by the Respondent before the NCLT - HELD THAT:- Since this Tribunal in Company Appeal (AT) No. 99 of 2021 sets aside the impugned order dated 03.03.2021 passed by the NCLT, Ahmedabad Bench in C.P. No. 100 of 2018 whereby the NCLT allowed withdrawal of withdrawal pursis made in C.P. No. 100 of 2018, consequently, the C.P. No. 100 of 2018 and the withdrawal of withdrawal pursis has to be heard and decided by the NCLT afresh. Thereby this Tribunal is of the view that the C.P. No. 100 of 2018 and its continuum was suspended until the issue of withdrawal of withdrawal pursis is decided. That being so, the passing of interim order in such a situation may not be appropriate.
The order of NCLT set aside - appeal allowed.
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