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Companies Law - Case Laws
Showing 241 to 260 of 15043 Records
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2024 (2) TMI 1494
Time limitation on filing petition - Initiation of Corporate Insolvency Resolution Process against Personal Guarantor - service of demand notice - HELD THAT:- Clause 12 r/w Clause L of the recital of the Deed of Guarantee dt. 10.04.2014 makes it clear that this Guarantee was to come into force only upon implementation of CDR package in full and signed by all the lenders in terms of LOA issued. Ld. Counsel for the Personal Guarantor place on record a letter dt. 23.03.2016 having reference No BY.CDR(DAP)No. 749/2015-16, stating that the Company M/s Parekh Aluminex Limited stands exited from the CDR mechanism as failure.
Time limitation - HELD THAT:- It is found that the Financial Creditor invoked the Guarantee on 18.05.2016 by Notice u/s 13(2) of SARFAESI Act, 2002 and the Corporate Debtor came to be admitted into CIRP on 01.02.2019. Since, it is already returned the finding that this Guarantee had not become effective on account of failure in implementation of CDR Package, it is not required to deal with the issue of limitation any further.
Petition dismissed.
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2024 (2) TMI 1451
Wilful defaulter - resignation from a company per se - validity of an event of Wilful Default under Master Circular - as argued Petitioner resigned as the Executive Director of MBSL and Form-32 to that effect was filed with the Registrar of Companies (“RoC”) - Satisfaction to issue Show Cause Notice in the instant case - HELD THAT:- Under the Master Circular, to declare a person as a Wilful Defaulter, lender banks have to independently find that the “Wilful Default” is “intentional, deliberate and calculated” and the said conclusion must be based on “objective facts and circumstances of the case”. The Forensic Audit Report can act as a piece of corroboration for the said exercise, but not the sole basis. The lender banks must record their satisfaction of commission of Wilful Default which according to them are “intentional, deliberate and calculated”.
Under Clause 2.1.3 of the Master Circular, the lender banks have to keep in mind the track record of the borrower. The decision to declare an entity or person as Wilful Defaulter cannot be taken on the basis of isolated transactions/incidents. A similar obligation is cast on lender banks in Clause 2.5 of the Master Circular, which require the lender banks to put in place a transparent mechanism for the entire process so that the penal provisions are not misused and the scope of such discretionary powers are kept to the barest minimum. It is required to be ensured that solitary or isolated instances are not made the basis for imposing the penal action under the Master Circular.
In the present case, the satisfaction to issue Show Cause Notice, does not appear to have been recorded in accordance with the requirements of the Master Circular. Keeping the object of the Master Circular in mind and the consequences that it entails, both civil and penal, the lender banks have an obligation to comply with the inbuilt safeguards in the Master Circular. Lest, the line between persons who commit mere default in repayment of loan obligations and those who commit Wilful Default in terms of the Master Circular, would get obliterated.
Whether the Petitioner committed acts of Wilful Default? - Under the Master Circular, a lender bank has to record a finding of an act of Default to be Wilful if the same is “intentional, deliberate and calculated” on objective assessment of facts and circumstances. However, the said burden is not discharged by merely quoting the Forensic Audit Report, which itself has not drawn any conclusion of diversion of funds.
In the meeting held on 27.5.2014, the lender banks agreed to reduce the collateral security of Rs. 33 Crores to Rs. 25.53 Crores in lieu of the Petitioner’s personal guarantee. The Petitioner did not furnish his personal guarantee for the CDR package nor did he participate in any of the deliberations for the approval of the CDR package. The lender banks still approved the CDR package and acted upon it without the presence and personal guarantee of the Petitioner. The lender banks, therefore, tacitly acquiesced to the Petitioner’s exit from MBSL and approved the CDR package of MBSL without his presence in any capacity or personal guarantee. In this view of the matter, it is not open for the lender banks to contend that when MBSL was about to default in its repayment obligations, the Petitioner made an easy escape. In any case, resignation from a company per se is not an act of Wilful Default under the Master Circular.
Effect of Forensic Audit Report - The nature of Forensic Audit Report in respect of a company is discussed by the Calcutta High Court in Prashant Bothra & Anr. v. Bureau of Immigration & ORs [2023 (9) TMI 702 - CALCUTTA HIGH COURT] It was held that a Forensic Audit Report, at best, is a piece of evidence in liquidation proceedings and is in no manner a conclusive proof of any illegality committed under a law. The Forensic Audit Report is merely an opinion of the author, which is based on several disclaimers. The Forensic Audit Report cannot be conclusive proof of its observations.
Even under the Indian Evidence Act, 1872, the opinion of an expert witness under Section 45 is not a conclusive proof. It is subject to cross examination and the opinion and conclusions of an expert are subject to challenge.
The lender banks must follow the mandate of Clause 2.1.3 read with Clause 2.5 of the Master Circular and independently find acts of “Wilful Default” which are “intentional, deliberate and calculated” and the said conclusion should be based on “objective facts and circumstances of the case”. Any other view would lead to consequences where mere cases of default would be categorised as acts of Wilful Default under the Master Circular. The Master Circular is not to be invoked in every case of default but only when the default is Wilful Default as construed under the scheme of the Master Circular.
Identification of Wilful Default has to be made keeping in view the track record of the borrower and not on the basis of isolated transactions/incidents - In the Flash Report, it is noted that MBSL could service all its debts till 30.11.2011 and even repaid the principal sum of the term loans.
The aforesaid position, which is accepted by the lender banks in their own document i.e., the FRS, does not show a consistent negative track record of MBSL. MBSL was seen as a global player in photovoltaic cells. It had presence in several countries. It had serviced its debt and largely repaid the principal dues. The Respondent Bank, under Clause 2.1.3 read with Clause 2.5 of the Master Circular, was obligated to reflect upon the entire track record of MBSL and then conclude whether there existed events of Wilful Default and not on the basis of isolated transactions/incidents.
Consequences of admitting MBSL for CDR under the CDR Scheme - This Court is of the view that it is incumbent upon banks who are dealing with public funds and discharging a public duty to make appropriate enquiries as to whether a borrower is in genuine financial difficulty or whether there exists events of fraud and malfeasance. If the lender banks find fraud or malfeasance, the CDR-EG must either refuse CDR completely or impose such additional onerous conditions as provided in the CDR Scheme itself.
In the present case, the lender banks were fully aware of all the transactions, which are now alleged to be acts of Wilful Default. This fact is part of the documents leading to the finalization of the CDR scheme. Despite noting all transactions, financial statements, balance sheets, TEV Report and Stock Audit Report, the lender banks placed MBSL in Class-B of CDR Master Circular which cannot be assigned if there is diversion of funds. They found no occasion to order a forensic audit of MBIL before finalization of CDR scheme. The lender banks, therefore, never treated the alleged acts of Wilful Default as an act of diversion or siphoning either during finalization of CDR scheme or after its failure.
It may not be open for lender banks to classify known acts as events of Wilful Default merely because subsequently, in respect of the same known acts, the Forensic Audit Report has made certain observations. To declare a person as a Wilful Defaulter, lender banks have to independently find that the “Wilful Default” is “intentional, deliberate and calculated” and the said conclusion is based on “objective facts and circumstances of the case”, as required under the Master Circular. The Forensic Audit Report, at best, can act as a piece of corroboration for the said exercise, but not the sole basis.
To take any other view would entail the transfer of jurisdiction to determine acts of Wilful Default to Forensic Auditors, which by law under the Master Circular is vested in the Identification Committee and Review Committee of the Respondent Bank. When a law requires a particular act to be done in a particular manner, then it has to be done in that manner alone and no other. [See: Tata Chemicals Ltd. v. Commr. of Customs [2015 (5) TMI 557 - SUPREME COURT] and Krishna Rai v. Banaras Hindu University [2022 (6) TMI 1436 - SUPREME COURT]
Thus orde passed by the Review Committee, confirming the Petitioner as Wilful Defaulter under the Master Circular, are unsustainable and the impugned order is accordingly, quashed and set aside.
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2024 (2) TMI 1444
Sanction of the Scheme of Amalgamation - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the Rules framed thereunder - HELD THAT:- Upon considering the approval accorded by the members of the Petitioner Companies to the proposed Scheme, and the affidavits filed by the Regional Director, the rejoinder and undertakings of the Petitioner Companies and the report of the Official Liquidator and the reply of the Petitioner Companies thereto, there appears to be no impediment in sanctioning the present Scheme.
The sanction is hereby granted to the Scheme under Sections 230 to 232 of the Companies Act, 2013, subject to the compliance with the directions imposed - application disposed off.
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2024 (2) TMI 1294
Maintainability of complaint against the petitioner - Dishonour of Cheque - vicarious liability of Non-Executive Director - issuance of a legal demand notice to the accused company and its directors - HELD THAT:- It is trite that the Non-Executive Director is not involved in the day to day affairs of the company or in the running of its business. Further, when a complaint is filed against the Director of the company, who is not a signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contentions in the complaint that such Director was incharge of and responsible for conduct of the business of the company unless such Director is designated Managing Director or Joint Managing Director.
A bare reading of para 3 of the complaint shows that in the complaint it has not been substantiated that in what manner the petitioner/accused no. 4 was incharge of and responsible for conduct of the business of the accused company, which elaboration was mandatory since the petitioner is neither a signatory to the cheque nor was he the Managing Director or Joint Managing Director of the accused company. This being the position, the complaint is not maintainable against the petitioner.
In view of the undisputed status of the petitioner as a Non-Executive Director and further regard being had to the fact that the petitioner is neither signatory to the cheque nor Managing Director or Joint Managing Director of the accused company, making him stand the trial would be an abuse of process of Court.
Appeal disposed off.
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2024 (2) TMI 1261
Effect of resignation from Directorship - Removal of name of the Petitioner as a Director of Respondent No. 4-company - HELD THAT:- Although certain compliances on the part of the company were necessary, however, in the peculiar facts of the present case, it is clear that the company itself did not commence its business, as also the other director being a foreign director did not take any steps in that regard. Added to this was the Covid-19 pandemic period during which such compliances could not be made. All these circumstances ought not to weigh against the petitioner, for deletion of his name as a director from the record of the Registrar of Companies. This also for the reason that severance of the petitioner’s relationship as a director of the company took effect from 1 September 2021 as per the petitioner’s letter dated 24 August 2021 received by the company. This is the legal consequence as brought about by Section 168(2) of the Companies Act, 2013.
Except for certain forms not being filled by the company within the prescribed time, there does not appear to be any other gross default or illegality or any other justifiable reason for the Registrar of the Companies to give effect to the resignation of the petitioner, in the official records, as maintained by him. This is fortified from the contents of the reply affidavit of the official respondents which categorically state that even the explanations / comments and / or compliances as demanded by the Registrar of Companies from respondent No. 4/company were reported to be not answered by the company. This was a default on the part of a non-functional company. Thus, this is clearly a case where the company itself was stillborn.
Petition allowed.
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2024 (2) TMI 1188
Violation of principles of natural justice - Interim Demand Notice demanding stamp duty issued without adequately scrutinizing the case, and without going into the details along with all the supporting documents in the matter - HELD THAT:- The Petitioner had filed an Appeal challenging the Order dated 14th September 2021 on 2nd November 2021. A hearing was held in the said Appeal on 7th June 2023 and Petitioner filed its written submissions on 7th August 2023. Despite the same, and despite a period of more than 2 years having elapsed, Respondent No. 2 has not passed any order on the said Appeal. It is informed that the Presiding Officer of Respondent No. 2, who heard the said Appeal on 7th June 2023, has changed. In these circumstances, it would be in the interests of justice that Respondent No. 2 is directed to re-hear the Appeal and pass an order in the said Appeal filed by the Petitioner, in accordance with law, within a period of four months from the date of intimation of this Order.
Further, since, the said Demand Notice dated 16th March 2022 and the letter dated 23rd January 2024 had been issued by Respondent No. 3, pursuant to the said Order dated 14th September 2021, which is the subject matter of the aforesaid Appeal, it would also be in the interests of justice that, till the said Appeal is re-heard and an order is passed on the said Appeal, the said Demand Notice dated 16th March 2022 and the said letter dated 23rd January 2024 remains stayed.
Respondent No. 2 is directed to re-hear Appeal No. 227 of 2021 filed by the Petitioner and pass an Order, in accordance with law, expeditiously and, in any case, within a period of four months from the date of intimation of this Order - Till the said Order is passed by Respondent No. 2 on the said Appeal, the Demand Notice dated 16th March 2022 and the letter dated 23rd January 2024 issued by Respondent No. 3 shall remain stayed and the Petitioner shall be permitted to operate its ICICI Bank Account.
Writ petition disposed off.
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2024 (2) TMI 1095
Prayer for being excused of any criminal liability and relieved of the alleged defaults complained of by the respondent in the notice dated 6.10.2020 - prayer for an injunction restraining the respondent / Registrar of Companies (ROC), West Bengal from initiating criminal proceedings in respect of any of the matters referred to in the notice dated 6.10.2020 - section 463(2) of the Companies Act, 2013 - HELD THAT:- In the present case, the respondent did not pass any reasoned order pursuant to the reply given by the Company on 17.11.2020. This letter was a detailed reply to the impugned Notice dated 6.10.2020. Criminal proceedings were instituted in June, 2023 after almost 3 years from the date of issuance of the preliminary findings letter. In the present case, the respondent issued the Notice dated 9.11.2023 which is a supplementary Inspection Notice from the Office of the Regional Director after filing of the present writ petition. Thus, the petitioner’s apprehension was correct and ultimately came true by issuance of the Notice dated 9.11.2023.
The Departmental Circular dated 20th June, 2016 relied on by the respondent is an internal document. The contents of the circular are mostly illegible. In any event, the consent/sanction referred to in section 470(3) of The Code of Criminal Procedure would only be applicable where the prosecution has exceeded the limitation period due to the requirement for sanction from the concerned authority.
The reasons persuade the Court to allow the prayers in the writ petition and excuse the petitioners and each one of them of any criminal liability in respect of the alleged defaults complained of by the respondent in the impugned notice dated 6th October, 2020. The respondent is accordingly restrained from instituting or proceeding with any criminal proceedings in respect of the matter referred to in the notice dated 6th October, 2020 or take any further steps in respect thereto.
Petition allowed.
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2024 (2) TMI 977
Constitutional Validity of Rule 37(8) of the Companies (Incorporation) Third Amendment Rules, 2016 - rejection of conversion of the Petitioner's company from an “Unlimited Liability Company” to a “Limited Liability Company” - HELD THAT:- This Court is of the opinion that the lacuna in the Companies (Incorporation) Rules, 2014 is being sought to be cured by the 2016 Amendment. Since the purpose of the amendment is to cure the defects which existed in the law by giving discretion to the RoC to satisfy himself that there are sufficient means in the company to answer their debts even after conversion, it cannot be said that it would operate only to applications filed after the 2016 amendment. Merely filing an undertaking as mandated under Section 18(3) would not take care of the interests of the creditors which is now sought to be protected under the 2016 amendment.
The Division Bench of this Court in its [2020 (3) TMI 527 - DELHI HIGH COURT] had only directed the RoC to decide the application of the Petitioner afresh in accordance with law. As of today there is no challenge to the 2016 Regulations. This Court is of the opinion that since the 2016 Amendment was only curative in nature and only intended to protect the interests of the creditors, the amended rules, therefore, must apply to applications which are pending with the RoC, and the same must apply to the application of the petitioner/company. The right of the Petitioner for conversion from unlimited company to limited company has not been taken away. In fact, the petitioner/company had no vested right to be granted a certification of conversion to a limited liability company.
The reasons given by the RoC for rejecting the application of the Petitioner on the ground that various prosecutions have been filed by the Serious Fraud Investigation Organization against the Petitioner for offences under the Companies Act and the IPC and that the e-Form 27 which was to be filed with the Registrar of Companies was not in compliance with Rule 37 of the 2016 Rules cannot be said to be so perverse especially keeping in mind the interest of the shareholders and the interest of the creditors. The RoC has also observed that the petitioner/company has suffered substantial financial losses and has a net deficit in current liabilities over the assets in excess of Rs. 2100 Crores. The registrar was also not provided with an NOC or undertaking from all the shareholders to support the conversion application and the petitioner did not even issue a public advertisement inviting objections from various creditors/stakeholders on the issue of conversion.
The anxiety on the part of the Registrar of Companies that the creditors and stakeholder should not be left high and dry cannot be said to be completely unjustified.
Petition dismissed.
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2024 (2) TMI 976
Legality of SFIO Investigation - Alleged incorrect address mentioned in Form No.10 filed by the petitioner/Company with Registrar - Invocation of Section 12 of Companies Act, 2013 for the alleged non-maintenance of the registered office at the address mentioned in Form No.10 filed before the Registrar - HELD THAT:- Once investigation has commenced under Section 210, the statute does not render the Government of India powerless, to assign the investigation under Section 212 to the SFIO. It neither results in duplication of investigation, nor takes away any right of the petitioner. Sub-section (2) clearly mandates that once the SFIO is entrusted with investigation under Section 212, any other investigation already initiated shall not be proceeded further and further, those agencies who are/were conducting any investigation, shall transfer all the relevant documents and records in respect of those offences to the SFIO. The powers of SFIO is statutorily determined from sub-section (3) to sub-section (17) of Section 212 and for conduct of investigation there is procedure in place which need not require elaboration at this juncture.
The submission of the learned senior counsel for the petitioner is that when the proceedings under Section 210 are underway, assignment of investigation to the SFIO cannot take place. The strength on which the said submission is made is that there should a report under Section 210, as is directed, and only then the investigation can be handed over to the SFIO. The effect of such submission is that handing over of investigation to the SFIO, should precede a final report under Section 210. This submission is sans countenance as it travels on a slippery slope. Section 210 does speak of a report, the report can be either interim or final it need not be the final report only - It is entrusted to the SFIO which is created under the Act, i.e., in terms of Section 211 with elaborate functions under Section 212. The protection to any Company from duplication of proceedings is kept tight under sub-section (2) of Section 212 and above all, and after all, it is investigation.
A bleak attempt is made by the learned senior counsel to submit that the phrase ‘interim report’ is found only in sub-section 11 of Section 212, and nowhere in Section 210 suffers from want tenability, as observed hereinabove, the report under Section 210, can either be interim or final. The said report will not result in any penalty being imposed straight away against any Company. It is for the purpose of investigation. Investigation is for the purpose of unearthing the alleged unethical activities of any Company, in the case at hand, the petitioner/Company. The Apex Court, in plethora of cases, has observed that with the advancement of technology, economic offences have become a real threat to the functioning of the financial system of the country. Those offences become a great challenge for Investigating Agencies to detect and comprehend intricate nature of transactions, as also the role of persons involved therein.
No reasons provided to invoke Section 212 of the Act - non-application of mind - HELD THAT:- The statement of objections are, in defence of interim report necessitating assignment of investigation. If the Union of India has thought it fit to entrust the investigation to the SFIO, owing to certain factors which have emerged while conduct of investigation under Section 210 and in public interest, this Court in exercise of its jurisdiction under Article 226 of the Constitution of India would not by a stroke of pen, annul such opinion of the Union of India, unless it is contrary to the statute or the action is demonstrably arbitrary. Neither of the two is present in the case at hand, as the projection of the two, by the learned senior counsel for the petitioner is sans acceptance. Therefore, there is no warrant to interfere at this stage.
Insofar as the judgments relied on by the leaned senior counsel in support of his submissions in the case of MODERN DENTAL COLLEGE AND RESEARCH CENTRE v. STATE OF MADHYA PRADESH [2016 (5) TMI 1366 - SUPREME COURT] and in the case of UTTAM DAS CHELA SUNDER DAS v. SHIROMANI GURDWARA PRABANDHAK COMMITTEE [1996 (5) TMI 431 - SUPREME COURT] are inapplicable to the facts situation at this juncture. Reliance is placed on paragraph 60 of the judgment of the Apex Court in the case of MODERN DENTAL COLLEGE AND RESEARCH CENTRE which deals with doctrine of proportionality. It is the submission that the statute should be used only for the designated proper purpose. In the considered view of the Court, the statute is used for the designated proper purpose. Proportionality is not what can be considered at this stage of the proceedings. The stage, as observed in the course of the order, is conduct of investigation and the Apex Court is clear that investigation process should not be interdicted or annihilated unless the grounds projected are in support of such interdiction - the judgments relied on would not lend any support to the submissions of the learned senior counsel for the petitioner, in any manner. The action impugned does not suffer from any statutory aberration and therefore, the petition does not deserve any entertainment.
Petition dismissed.
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2024 (2) TMI 775
Manipulation of voters’ list for the tenure of office bearers of the association from 2021 to 2023 by the named appellant defendants - inclusion of members whose membership had expired but renewed illegally - Order 7 Rule 11 of the Civil Procedure Code - HELD THAT:- It is not necessary to go into the issue whether the dispute between the parties was covered by Section 241 of the said Act. The reason given by the learned judge that the remedy sought by the plaintiffs could not be availed of by them because of their lack in number is in my opinion a plausible one. I also agree with the learned judge that availing of this remedy was conditional upon grant of an application by the tribunal to waive the eligibility requirement which would result in unnecessary consumption of time.
It is added that if the plaintiffs approached the tribunal for dispensing with the eligibility criteria, there was no guarantee that the tribunal would allow the application. In the event the tribunal rejected the application the plaintiffs would have to approach the civil court. The plaintiffs were justified in availing of a certain remedy rather than one which did not exist but could come into existence on fulfillment of an uncertain condition.
The plaintiffs’ decision to directly approach this court to file the civil suit was a proper step. Hence there are no reason to interfere with the impugned judgment and order dated 8th February, 2023 - impugned judgement upheld.
Appointment of independent officer or court appointed officer to act as an Administrator of the Association - appointment of independent officer or court appointed officer for smooth running of the day to day work of the Association and also only to meet the expenses of the Association to the extent to pay the salary of the employees of the AssociationInjuncting the present executive committee from taking any decision related to any financial matter on behalf of the Association or to spend any money - HELD THAT:- The election procedure of the association conducted in the year 2021 for election of the elected executive committee of the association from 2021- 2023 was challenged in this suit. It was said that the electoral roll was manipulated and fabricated showing membership of members whose membership had expired or wrongfully renewed. With this untrue voters’ list, the election was conducted by the defendants so as to elect executive committee members who were not eligible to be elected.
During argument it was conceded by both learned counsel that even after extension by the Registrar of companies, the term of the executive committee had come to an end and could not be continued to run the association. The interest of the members of the association would be best subserved if an election of the executive members of the association was conducted under the aegis of the court through an administrator. The administrator would be first responsible for preparation of a true and correct voters’ list of eligible members and then convene and hold an Annual General Meeting of the appellant association.
The appeal is disposed of by holding that the suit is maintainable before this court.
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2024 (2) TMI 571
Condonation of delay of 18 days in preferring the instant Company Appeal - Section 421(3) of the Companies Act, 2013 - only ground pleaded for delay was the alleged indisposition of the 2nd Appellant - bonafide reasons for condoning the delay or not - HELD THAT:- Where the delay in preferring an Appeal/Restoration Application/Review etc. is not wanton or intentional, the Court would not be justified in rejecting the ‘delay condonation application’ on the basis that the Applicant had not produced a medical certificate, to show that he/she was ill and the Doctor had advised him/her to take rest, as per decision in Marry Susheela V. Shalee Kasturibai [2014 (4) TMI 1302 - MADRAS HIGH COURT].
When substantial justice and technical consideration are pitted against each other, cause of substantial justice deserves to be preferred, for the opposite party, cannot claim to have vested right in justice being denied to him / them, because of a non-deliberate delay. There cannot be any presumption or assumption that the delay as occasioned, wantonly, or on account of culpable negligence or on account of malafides - refusing to condone the delay can even result in a ‘meritorious matter’ being thrown out at the early stage and cause of justice being defeated. Also that, when the delay in question is condoned, the highest thing that can happen is that the case will be decided on merits after hearing the parties.
This ‘Tribunal’ on a careful consideration of respective contentions, on going through the facts and circumstances of the instant case comes to a ‘cocksure conclusion’ that the delay of 18 days in preferring the instant ‘Appeal’ has occurred on account of the indisposition of the 2nd Appellant, the authorised signatory of the 1st Appellant. Furthermore, on 01.05.2023, five days before the expiry of limitation period, the 2nd Appellant / MD and the authorised signatory of the 1st Appellant underwent tooth extraction, tooth implant etc. and the two weeks period came to an end of 14.05.2023 and the further delay of 10 days from 14.05.2023 to 24.05.2023 had occurred, according to the Appellants in the course of 2nd Appellant furnishing instructions in regard to the preferring of Appeal along with ancillary applications.
This ‘Tribunal’ by resorting to an elastic approach and the delay of 18 days that has occurred is covered within the further limitation period of 45 days prescribed in proviso to Section 421(3) of the Companies Act, 2013, condones the said delay of 18 days subject to a condition that the Petitioners/Appellants are hereby directed to pay a cost of Rs. 8000/- (Rupees eight thousand only) to the Prime Ministers’ Relief Fund to be paid within two weeks from today.
Appeal allowed.
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2024 (2) TMI 570
Prayer for reception of additional documents and to consider the revival of the Company - Respondent / ROC had not followed the procedure u/s 248(1) of the Companies Act, 2013 - ‘Notices’ u/s 248(1) were not sent - ingredients of Section 248(6) of the Companies Act, 2013 not taken note of - HELD THAT:- The power of a Tribunal, to permit additional evidence to produce/documents are within the jurisdiction of the Appellate Authority. A document not pertinent to decide the dispute/controversy in a given proceeding/suit, is not to be accepted as Additional Evidence. Besides this, if there is any lacuna or gap in evidence to be filled up, the discretionary power conferred upon the ‘Appellate Authority’ does not authorise the Appellate Authority to fill the gap in question.
This Tribunal on going through the impugned order [2023 (8) TMI 1429 - NATIONAL COMPANY LAW TRIBUNAL CUTTACK] passed by the Tribunal is of the considered view that additional evidence is not to be accepted by this Tribunal, just because the documents/evidence will tilt the decision in Petitioner/Appellant’s favour - In fact, the ‘Tribunal/Court of Law’ is to see whether the Petitioner/Appellant lacked due diligence to be seen and he cannot be allowed to fill up the ‘Lacuna’ at the belated stage. As a matter of fact, the production of Additional Evidence, is not to be allowed, when an individual does not satisfy the Court of Law / Tribunal that such evidence was not within the knowledge or could not be produced with ‘Due diligence’.
This Tribunal on going through the impugned order is of the earnest opinion that the Appellant had not preferred IA No. 19/CB/2023 in CP No. 70/CB/2020 within a two years period, as enjoined as per Section 420(2) of the Companies Act, 2013 and indeed, the IA No. 19/CB/2023 in CP No. 70/CB/2020 came to be filed before the Tribunal on 16.12.2022 after a lapse of two years period on 16.12.2022. Therefore, the Tribunal had rightly opined that IA No. 19/CB/2023 in CP No. 70/CB/2020 was not to be considered in regard to the reception of additional documents/additional evidence.
Appeal dismissed.
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2024 (2) TMI 510
Revival of the Appellant / Company - Removal the company for non-filing of Annual Return - Going Concern or not - Misinterpretation of meaning and ‘purport of Liberty’ granted to the Appellant - disregard by Tribunal of clear liberty granted to the Appellant by the Hon’ble High Court, by holding that since the Company petition was not pending, there was no question of receiving additional documents in a disposed of petition/proceeding - HELD THAT:- The power of a Tribunal to permit ‘Additional’ evidence to produce / documents is in the jurisdiction of the Appellate Authority. A document not relevant for deciding the question of controversy in a given proceeding / suit is not to be accepted as additional evidence. Also, if there is any gap or lacuna in evidence to be filled up, the discretionary power conferred upon the Appellate Authority does not authorise the ‘Appellate Authority’ to fill the gap in question.
The ‘Tribunal / Court of Law’ is to see whether the Petitioner/Appellant lacked due diligence to be seen, and he cannot be allowed to fill up the ‘lacuna’ at the belated stage. Moreover, the production of additional evidence is not to be permitted where a person does not satisfy the Tribunal / Court that such evidence was not within the knowledge or could not be produced with due diligence.
Even though in the present case, the Appellant has come out with a reason that the Petitioner/Appellant had engaged a Part Time Employee to file the Annual Return before the ‘Registrar of Companies’ and that because of the reason unknown to the Appellant, the said employee left and therefore, the Return could not be filed on time for the financial years 2016-2017 and 2017-18 and by the time it came to the knowledge of the Appellant/Petitioner Company, his name was already struck off from the register maintained by the ‘Registrar of Companies’, the Tribunal, in CP(Appeal) No.69/CTB/2020 on 21.08.2020, at para No.11 had clearly observed that ‘before striking off the name of the company from its register, ROC, had issued a show cause notice to the Company enquiring whether the said Company was carrying any business or was in operation’.
This ‘Tribunal’, on going through the impugned order dated 08.08.2023 in CA 15/CB/2023 in CP/69/CTB/2020 is of the considered view that the Appellant had not filed CA 15/CB/2023 in CP/69/CTB/2020 within the two years period as envisaged under Section 420 (2) of the Companies Act, 2013 and in fact had filed the CA 15/CB/2023 in CP/69/CTB/2020 before the ‘Tribunal’ 16.12.2022, after the lapse of two years’ period on 16.12.2022. Therefore, the ‘Tribunal’ had rightly opined that the CA 15/CB/2023 was not to be considered in regard to the receiving of additional documents / additional evidence.
Appeal dismissed.
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2024 (2) TMI 442
Seeking winding up of the respondent company - disobedience of the orders of the Court - Sections 433(e) & (f), 434 and 439 of the Companies Act, 1956, read with Rules 6 and 9 of the Companies (Court) Rules, 1959 - HELD THAT:- The proposition of law is established that disobedience of the orders of the Court have to be shown to be ‘wilful’, such that there lies a certain mental element, and that such inaction or disobedience is done knowingly, intentionally, consciously and in a calculated and deliberate manner, with full knowledge of the consequences that may be flowing therefrom.
Hence, it flows that even when there is disobedience of an order, in such cases where the disobedience is a result of compelling circumstances, outside the control of the contemnor, the contemnor cannot be punished. The plea canvassed on behalf of the respondent is sound in so far that it has been urged that the disobedience was not wilful or intentional and this court finds the same to be sustainable in law. There has never been any wilful disobedience to violate the directions of this Court. It is but evident that efforts have been made to repay the outstanding amount as also towards revival of the company through infusion of funds. The fact that winding up proceedings were underway and thereafter proceedings under the IBC have been initiated in the interim, affords a valid and sustainable defence to the contemnor in these proceedings.
The present contempt petition is dismissed.
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2024 (2) TMI 262
Seeking permission for withdrawal of appeal - HELD THAT:- In the instant TA (AT) No.113/2021 (Comp App (AT) No.200/2019), on the file of this ‘Tribunal’, the ‘Appellant’, is so far as the relief sought for `Set aside’ Order, dated 16.05.2019, passed by the ‘National Company Law Tribunal’, Hyderabad Bench in IA No.365/2018 in IA No.52/2018 in CA No.73/97/HYD/2016 and to punish the ‘Contemnor’ / ‘Respondent No.2’, in accordance with `Law’. The ‘Appellant’, comes out with a crystalline stand that she is not pressing the said relief.
Not resting to the above, in the said ‘Memo’, dated 30.10.2023, the ‘Appellant’, had also while seeking relief in the instant ‘Appeal’, for issuance of directions to the ‘Contemnor’ / ‘2nd Respondent’, to forthwith comply with the `Order’, dated 08.03.2018, passed by the ‘National Company Law Tribunal’, Hyderabad Bench in CA No.73/97/HYD/2016 and once again the ‘Appellant’, seeking to agitate the relief in CP No.385/2019, pending before the ‘Tribunal’, this ‘Tribunal’, is of the earnest view that according to the ‘2nd Respondent’, the instant ‘Appeal’, has become an ‘Infructuous one’ and furthermore, the ‘Appellant’ is not pressing for the relief sought for, in the instant ‘Appeal’, hence the ‘Appellant’, is not pressing the relief in the instant ‘Appeal’, seeking permission from this ‘Tribunal’ to ‘withdraw’ the same.
This ‘Tribunal’, taking into account of the Appellant’s contents of the ‘Memo’, dated 30.10.2023, filed before this ‘Tribunal’, in the instant ‘Appeal’, at this juncture, simpliciter, is of the considered view that the ‘Appeal’, has become an ‘Infructuous one’, especially the ‘Appellant’, is not pressing for the relief in the instant TA (AT) No.113/2021 (Comp App (AT) No.200/2019), and accordingly, the said `Appeal’, is ‘Dismissed’, as an ‘Infructuous one’.
Appeal dismissed.
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2024 (2) TMI 95
Seeking to restore the name of the Company in the Register of the Respondent / Registrar of Companies (RoC), Chennai - Failure to file returns - seeking a direction to be allowed to file the remaining Financial Returns without being saddled with additional Fees and also to be allowed to Scan and Upload all the physically filed Returns of the Company till 2017 - HELD THAT:- The CODS Scheme 2018 is meant for providing an opportunity for the disqualified Director who has defaulted by not filing the Annual Return or Financial Statement for a continuous period of three years. Therefore, this Tribunal is of the considered view the CODS Scheme 2018 is not applicable to the facts of this case, where due to the non-filing of Returns, the Company was `Struck Off’ from the Register of RoC. It is also interesting to note that the Hon’ble Madras High Court Order dated 26.03.2018, relied upon by the Learned Company Secretary is only an Interim Order whereunder, the Hon’ble Madras High Court has directed the matter to be posted after a period of 8 weeks.
There are force in the contention of the Learned Counsel for the Respondent that in AMALRAJ BARNABAS VERSUS UNION OF INDIA, REPRESENTED BY ITS MINISTRY OF CORPORATE AFFAIRS, NEW DELHI; THE REGISTRAR OF COMPANIES, CHENNAI [2019 (11) TMI 1813 - MADRAS HIGH COURT], it is held by the Hon’ble High Court, that a Director can be appointed in any other Company without hindrance, once the CODS Scheme has been complied with and therefore the direction given by the Hon’ble High Court in the Section 164 (2) (a) is distinctly different from any Notice / Direction issued under Section 248 of the Companies Act, 2013.
Having regard to the nature of the business of the Appellant Company which provides Mental Healthcare & Services to the Members of the Society apart from the fact that a bare perusal of the Financial Statements shows that the Company has Creditors and Loans and was in the process of setting up a Hospital, this Tribunal is of the considered view that the ratio of the Three Judge Bench Judgment in Shailendra Bafna Versus The Registrar of Companies, Bilaspur Chhattisgarh [2022 (12) TMI 919 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] can be made applicable to the facts of this case.
This Appeal is Allowed.
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2024 (1) TMI 1323
Leasehold rights of Corporate Debtor - whether it is unregistered Framework Agreement dated 29th March, 2007, or the Original Registered Lease Deed dated 31st March, 2007 that will determine the lease hold rights of the Corporate Debtor (SHPL), in regard to the inclusion of the 3.5 acres of land in question to be (subject property) in the Information Memorandum (IM)? - HELD THAT:- It is already noted that the said unregistered Framework Agreement has not been referred to in any of the subsequent registered instruments pertaining to the lease in question. Meaning there by that even if there existed an Agreement between the parties to enter into a lease Agreement subsequently, with a termination Clause which speaks of right to terminate upon lessee’s insolvency, the parties may have resiled from their stand later and entered into a Lease Agreement without such termination Clause, and further got it modified to include a termination Clause totally different from that of purported previous informal Agreement.
The original unregistered Framework Agreement with signatures of parties is perused. It is not required to be impounded for the sole reason that it is an unregistered document expressing an interest to execute a lease deed, which neither creates nor extinguishes any right, title or interest in the subject property.
The Framework Agreement cannot be looked into for the purpose of determining the lease or to ascertain whether the subject property can be made a part of CIRP Process of the Corporate Debtor, or to conclude that in terms thereof the lease stood terminated due to initiation of the CIRP against the Corporate Debtor - Applicaton dismissed.
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2024 (1) TMI 1253
Liquidation order - HELD THAT:- The concern of the applicants that the shares can be sold for around Rs. 45-50 crores whereas the Liquidator is putting up the shares at 9 crores which is the book value is not sustained. The book value of the 77500 shares are Rs. 54.85 lakhs. The average fair value as per IBBI Registered Valuers is Rs. 9.21 Crores and average liquidation value is Rs. 4.61 Crores. The shares have been put up for auction Rs. 9.21 Crores i.e., at the average fair value, hence valuation of shares and quoting of price cannot be faulted.
Regulation 21A of the Liquidation Regulation says that if the secured creditor has not discharged its obligations within 30 days from liquidation commencement date 06.04.2022, the shares will automatically form part of the Liquidation Estate - Alliance is directed to handover the certificates in original to the Liquidator within a week from the date of pronouncement of this order.
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2024 (1) TMI 1060
Transfer of pending application for winding up of the respondent company to the NCLT under IBC - non-payment of dues arising out of a contract for services entered into between the parties - Section 433(e) read with Sections 434 and 439(1)(b) of the Companies Act, 1956 - HELD THAT:- Reliance may be placed on the decision of the Supreme Court in the case titled ACTION ISPAT AND POWER PVT. LTD. VERSUS SHYAM METALICS AND ENERGY LTD. [2020 (12) TMI 535 - SUPREME COURT], whereby it was held that those winding up proceedings pending before High Courts, which have not progressed to an advanced stage, ought to be transferred to the NCLT.
It is the opinion of this Court, that since no substantive proceedings have been undertaken towards winding up of the company, the present petition does not deserve to be continued before this Court. The present company petition is at a very nascent stage and no effective orders as such have been passed towards the winding up of the company. Before parting with this matter, it would be suffice to state that the three decisions [WEST HILLS REALTY PRIVATE LTD. & RAVI GHAI AND ANOTHER VERSUS NEELKAMAL REALTORS TOWER PVT. LTD. [2016 (12) TMI 1253 - BOMBAY HIGH COURT], COMMISSIONER OF INCOME TAX-8, MUMBAI VERSUS REGISTRAR OF COMPANIES, MUMBAI, MR. KESAVAN VARADARAJAN DIRECTOR, MOTECH SOFTWARE PVT. LTD., MR KAUSHIK VRAJDAS VED [2017 (5) TMI 315 - BOMBAY HIGH COURT], THE JAYABHARAT CREDIT LIMITED VERSUS JALGAON RE-ROLLING INDUSTRIES LTD. [1996 (10) TMI 527 - BOMBAY HIGH COURT]] have no bearing on the matters in issue in view of categorical directions of the Supreme Court in the above noted case of Action Ispat and Power Limited.
The instant petitions are transferred to the NCLT. Parties to appear before the NCLT on 01.04.2024. The interim orders passed by this Court in these petitions, if any, shall continue till the said date.
Petition disposed off.
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2024 (1) TMI 833
Transmission of shares - transmission of the shares ordered without such necessary documentation - HELD THAT:- It is seen from Section 44 of the Companies Act, 2013 that shares are construed as movable property governed by the Articles of Association of the Company and Article 8.15 mandates that a Succession Certificate is required for the transmission of the shares. When Section 44 of the Act provides that shares of any member in a Company are required to be transferred in the mode and manner provided for under the Articles of Association of the Company, the sole Respondent is bound to meet the requirements of the said article 8.15.
This Tribunal in the matter of ‘M/s. Nalini Hari Vs. M/s. Mysore Stoneware Pipes and Potteries Limited’ in Company Appeal (AT) (CH) No. 55/2021 dated 05.12.2022 [2022 (12) TMI 367 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI] has recognised the importance of a valid Succession Certificate in a matter where the Applicant was seeking transmission of shares under Section 58 of the Act. In this matter this Tribunal upheld the refusal to direct transmission of shares even though a Succession certificate was issued, the same was under challenge. There are force in the contention of the Learned Counsel for the Appellant that considering the same ratio, the prayer of the first Respondent herein seeking transmission of Shares without even obtaining a Succession Certificate, cannot be sustained.
A Company cannot refuse `Transmission of Shares’, once the `legal heirs’ proves his/her entitlement to them, through a `Probate’, a `Succession Certificate’. It is to be pointed out that `transfer’ is an act of parties or law by which the title to the party is conveyed from one person to another. This would lapse by `Operation of Law’ or `Succession’. `Transmission of Shares’ on the basis of `will’ can raise complicated issues which require an `evidence’, to be read by the parties and need to be determined by a Court of Law.
The Succession Certificate, specifies the debts and securities entitles a legal heirs not only to receive the Interest or Dividends’ but also to negotiate or transfer them, as per decision in Themappa Chettiar Vs. Indian Oversees Bank [1943 (3) TMI 11 - HIGH COURT OF MADRAS]. In regard to disputes pertaining to `Will’, parties are expected to get that dispute settled from a `Competent Court of Law’ as per decision in `C. Rajesh Kapoor’ Vs. `Tirupati Balaji Hotels P. Ltd.’. If the `Probate Proceedings’ are pending in `Civil Court’ then the `Petitioner’ under the `Companies Act’ for `rectification of register’ will not be `maintainable’. In the facts of the attendant matter on hand, the Company can effect `transfer of shares’, on the basis of `Succession Certificate’, as per Section 370 of the `Indian Succession Act, 1925’.
The impugned order set aside - appeal allowed.
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