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Companies Law - Case Laws
Showing 321 to 340 of 14686 Records
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2023 (1) TMI 196 - KARNATAKA HIGH COURT
Anti-Competitive Acts - whether the warranty policy has (i) potentially resulted in denial of market access to parallel importers & resellers of Boxed Micro-Processors for Desktop and Laptop PCs & (ii) the risk of higher pricing for the said articles in India? - powers under Section 26(1) of the Competition Act, 2002 - HELD THAT:- The argument of learned Senior Advocate Dr. A.M.Singhvi that the investigation now ordered under section 26(1) of the 2002 Act may have a ‘detrimental effect’ on the business reputation of the petitioners, may be arguably true, to some extent. He also contended that the investigation to be undertaken by the Director General in terms of order under section 26(1) of the 2002 Act, (which he termed ‘draconian law’) involves an intrusive and free ranging inquiry into every aspect of his clients’ business.
Hon’ble Delhi High Court in GOOGLE vs. COMPETITION COMMISSION OF INDIA [2015 (4) TMI 1234 - DELHI HIGH COURT] although did not use the word ‘draconian’ observed that the powers of Director General to investigate under section 26(2) are far wider than the powers of the police under the Code of Criminal Procedure, 1973, is also true. However, similar contentions taken up by the very same counsel in FLIPKART INTERNET PVT. LTD., AMAZON SELLER SERVICES PRIVATE LIMITED VERSUS COMPETITION COMMISSION OF INDIA AND ORS. [2021 (7) TMI 1398 - KARNATAKA HIGH COURT] were repelled by the Division Bench of this Court and the same has attained finality - It would once again be fruitful to advert to the foundational philosophy of competition law. The central concern…is that firm or firms can harm competition and inflict harm on customers and ultimately end consumers where they possess some degree of market power.
Even otherwise, there are several checks & balances against the abuse of power vested in the Commission which comprises of experts and qualified persons as its constituent members. Commission’s stature and track record as can be ascertained from several rulings of the Apex Court and various High Courts, is also a fair assurance against the abuse of power. An opportunity of hearing is also provided to the stakeholders at the stage of investigation and thereafter whilst punitive or corrective action are being considered. This apart, a right of appeal is provided under section 53 A of the Act, as amended in 2007, once the report of investigation is submitted by the Director General. The adverse consequences of proceedings taken in accordance with law ordinarily fall under the maxim, ‘damnum sine injuria’.
It is not that in no case in which Commission directs investigation under section 26(1) of the Act arbitrarily and unreasonably, the aggrieved cannot invoke writ jurisdiction. Such cases warranting indulgence of Court ordinarily involve ‘manifest arbitrariness’ as discussed in SHAYARA BANO vs. UNION OF INDIA [2017 (9) TMI 1302 - SUPREME COURT] and therefore, even in respect of proceedings at the preliminary stage, remedy can be had by the aggrieved. However, in this petition no such case is made out, despite lengthy arguments and bulky pleadings of the petitioners that justified indulgence of this Court. The petitioners hastily rushed to this Court and unjustifiably secured an interim order that interdicted an inquiry of preliminary nature, for all these years, to the enormous prejudice of public interest. This Writ Petition, besides being premature and absolutely devoid of merits, is an abortive attempt by the petitioners to scuttle the innocuous statutory proceedings of the Commission. Therefore, this is a fit case for dismissal with exemplary costs.
This petition is liable to be dismissed and accordingly it is, with a cost of Rs.10,00,000/- only, payable to the 1st respondent – Competition Commission of India within six weeks.
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2023 (1) TMI 154 - MADHYA PRADESH HIGH COURT
Vicarious liability of Additional Director - Non-executive Independent Directors or not - Officer in default - non repayment of deposits by the Company to the depositors - alleged violation of section 74 of Companies Act - HELD THAT:- This is a case where raison d' etre of petitioner's submissions is his status in the Company as Non-executive Independent Director. According to the petitioner, he was appointed as Non-executive Independent Director in the Company since 29/11/2006 and worked till 31/3/2015 in same capacity, therefore, submission advanced on behalf of petitioner was that the petitioner was neither Key Managerial Personnel as per Section 2 (51) nor he was Officer in Default as per Section 2 (60) of the Companies Act, 2013.
The petitioner was Director in the Company and even if any doubt exists in respect of his status in the Company whether as Additional Director, Independent Director or Director then it can only be decided on the anvil of evidence to be led by the parties before the trial Court and not invoking the extra ordinary jurisdiction under Section 482 of Cr.P.C. Even otherwise, Section 2(51) of the Companies Act, 2013 defines Key Ministerial Personnel in relation to Company and it provides an exhaustive list of Officers - Section 2 (60)(v) provides a broad mechanism under which any person related to the Company's affairs can be included. Here it is to be noted that in sub-section (iv) and (v) of Section 2 (60) word person has been used, ergo, it expands the spectrum / scope of “Officer who is in default”. Sub-section (iv) and (v) defines exhaustive list of participants in different manner. Therefore, on this count also, case of petitioner lacks merits.
In the cumulative analysis, no error of law has been made by Court below while passing the impugned order and rightly taken cognizance against the petitioner.
Petition dismissed.
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2023 (1) TMI 153 - MADHYA PRADESH HIGH COURT
Non-compliance of Section 220 of the Act, 1956 for period in year 2008-2009 and 2009-2010 - non-submission of balance sheet and profit and loss account - case of petitioner is that he retired form post of Director prior to the alleged period and no liability can be fastened on him - HELD THAT:- This is a case where admittedly petitioner worked as Director of the Company between the period 30th September, 1992 till 13th March, 1995 and then resigned. In 2011, under the mistaken belief, complaint was filed against present petitioner also for alleged non-compliance of Section 220 of Act, 1956 for which penalty is provided under Section 162 of the Act, 1956.
Admittedly, alleged non-compliance is for the period 2008-2009 and year 2009-2010 where some defaults on the part of the Company are made. Admittedly, petitioner resigned w.e.f. 13th March, 1995. Much thereafter, alleged defaults have been committed.
From the facts, it appears that S.E.B.I. has already considered this aspect twice and exonerated the petitioner from the teeth of Section 162 of the Act and other related provisions. This stands true for all other cases also, particulars of which are given in table above. All provisions and respective penalty, if looked into, then it is clear that no case is made out against the petitioner.
The petitioner made out his case for interference. Once, he resigned in the year 1995, then he cannot be fastened with any liability for a period of 2008-2009 and 2009-2010 - petition allowed.
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2023 (1) TMI 58 - GUJARAT HIGH COURT
Anti-competitive acts - bid rigging - use of dominion position - it is alleged that the impugned order of CCI does not comply with the requirements of Section 26(1) of the Competition Act, 2002 and the same is arbitrary, perverse and illegal - formal agreement exists between the parties or not - HELD THAT:- On plain reading of Section 2(b), it clearly reveals that an agreement includes any arrangement or understanding or action in concert, whether it is formal or in writing or whether it is intended to be enforceable by legal proceedings. Thus, for an agreement, under this Act , need not be in writing. On the facts and circumstances of each case, the conduct of the parties to agreement can be inferred. At the same time, under Section 2(c) Cartel would include association of producers, sellers, distributors, traders or service providers, who, by agreement amongst themselves, limit control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services. Thus, even an action which may form itself, may be agreement of creating Cartel. It is obvious that there may not be patent evidence as to forming Cartel or creating an agreement in writing. The facts and circumstances of the case may reflect, primafacie, that there is agreement and/ or Cartel.
Now, it is well settled that under Section 26(1) of the Act, the Commission is only required to see whether a primafacie opinion exist or not. The order under Section 26(1) of the Act can be passed when there is prima-facie material to direct an inquiry and elaborate reasons are not required, as Commission is required to express only a tentative view. It is also settled that in case elaborate reasons are provided in the order passed under Section 26(1), it will certainly prejudice the person against whom the complaint has been made, and therefore, the Statute provided a safeguard for holding an inquiry after an order is passed under Section 26(1) and the Director General is certainly required to grant an opportunity of hearing by holding inquiry in the matter - considering the provision of Section 53A, admittedly, the order of inquiry passed by the Commission, by virtue of power under Section 26(1) of the Act, no appeal is permissible. Therefore, the Constitutional power under Article 226 is available to the concerned person to challenge the order of the inquiry issued by the Commission under Section 26(1) of the Act. But, the action under Section 26(1) being an administrative in nature, there would be a judicial restrain on the High Court to interfere with such administrative order unless and until it is shown that the order was contrary to law, or relevant factors were not considered or relevant factors were considered or the decision was one which no reasonable person could have taken.
Considering the material placed on record, it reveals that the Commission has initiated proceedings in accordance with Section 26 of the Act, pursuant to it, forming an opinion under Section 26(1) of the Act as to the existence of a prima-facie case. This exercise has been undertakne on the basis of the information received by the Commission from Respondent No.3 regarding the Cartel in the form of anti-competitive agreement. No Statutory right is availabe to the person concerned against whom any inquiry is ordered to be initiated by the Commission on the exercise of its administrative power available to it under the Act. Further, it is well settled that in an order of Inquiry under Section 26, which is only prima-facie opinion and does not affect the rights of any person, it cannot be reviewed by the High Court unless and until it is shown that it is contrary to any provisions of the Act or irrelevant material has been considered or relevant material has not been considered - it is the prerogative of the Commission to invite any person or sought information from any person for forming primafacie opinion as to whether any inquiry contemplated under Section 26(1) of the Act is necessary or not. Such action of the Commission cannot be said to be bias one or giving any right to other person against whom any order of inquiry is passed.
The Commission has considered material placed on record by the respondent No.3 as well as GCEE for forming its primafacie opinion as to initiate inquiry under Section 26(1). It clearly reveals that while passing order for initiation of inquiry, the Commission has also considered that the allegation of the informant regarding provision of restriction on Standard terms and conditions have not been accepted by the Commission. Thus, the Commission has considered every material placed before it before arriving at the prima-facie opinion as to inquiry.
Now, the main grievance of the petitioner is the interpretation of L1 price and negotiation price in each packet and has submitted that the Commission has misinterpreted the information provided to it. However, it needs to be observed that it is for the Commission to interprete and consider the information provided to it by the person concerned relating to material, which may be in the form of business transactions, information relating to Accounts or such statistical data, etc. The Court has no such expertise in evaluating or interpreting the business data or statistical data pertaining to a particular commercial activity. Any such information which is in the form of statistical data relating to any business or commercial transaction and accounting procedure may be interpreted in a different manner by different person having such expertise, knowledge in such fields. The angle of interpretation of such data may be different by different person and, therefore, the submission of the petitioner that information relating to the statistical datea including the interpretation of effect of L1 price in each packet and the negotiated price thereof, etc., is misunderstood by the Commission, cannot be accpeted at this stage, as it is prerogative of the Commission to form prima-facie opinion as to initiation of inquiry.
In the considered opinion of this Court, unless and until a detailed inquiry is conducted by the Director General, the question of dealing a finding in respect of violation of the statutory provision does not arise. Therefore, the petitioner should not have hesitated in participating in the inquiry which is yet to be commenced by the Director General and all the grounds raised by the Petitioners will be available before the Director General as well as before the Commission. The impugned order passed under Section 26(1) is only a starting point of the process and the petitioners want to stop process at the threshold and the Commission is not being permitted by the petitioner to proceed ahead in the matter - Further, it is well settled that when questions of fact are involved in any matter, the High Court may not exercise its constitutional power under Article 226 of the Constitution. Admittedly, in this case, as discussed hereinabove, the disputed question of facts relating to interpreation of information in the form of data is agitated. Therefore, on this ground also, this court deems it fit not to exercise its discretionary power under Article 226 of the Constitution of India, especially when the impugned order is administrative in nature.
This Court is of the considered opinion that the Writ-Petitions are devoid of merit and deserved to be dismissed. However, it is pertinent to note that during the pendency of the petitions, the Director General has also issued certain notices to initiate penalty proceedings under Section 43 of the Act, as there was no stay in operation against the impugned order of the Commission - since all the petitions are devoid of merits and deserve to be dismissed, all are hereby dismissed.
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2022 (12) TMI 1513 - DELHI HIGH COURT
Seeking stay of the operation of the Look Out Circular (LOC) - seeking permission to travel outside India to U.K. for medical reasons - petitioner did not cooperate - HELD THAT:- As per the facts of this matter as also the statements made by the Petitioner to the authorities, it is clear that there is non-cooperation by the Petitioner. Under these circumstances, at this stage, the Court is not inclined to let the Petitioner travel abroad. However, over the next two months, if the Petitioner fully cooperates with the SFIO, the Court is willing to reconsider the issue.
Accordingly, list this matter on 20th March, 2023.
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2022 (12) TMI 1442 - DELHI HIGH COURT
Ineligibility for participation in the procurement of 1000 M.W of Round-the-Clock (RTC) Power from Grid Connected Renewable Energy (RE) Power Projects by the respondent under the request for selection document (RFS) - petitioner has been excluded from the bidding process without intimating any reasons for the same and without providing any opportunity for hearing - principles of natural justice - HELD THAT:- Issue notice.
The learned counsel appearing on behalf of the respondent accepts notice.
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2022 (12) TMI 1337 - DELHI HIGH COURT
Jurisdiction of civil court - Rejection of plaint of appellant under Order VII Rule 11(d) of Code of Civil Procedure, 1908 - rejection on the ground that the civil suit was barred by virtue of Section 430 of the Companies Act, 2013 as the appropriate forum for the adjudication of the disputes involved is the National Company Law Tribunal - applicability of Companies Act, 1956 or the Companies Act, 2013? - reliability on decisions of on Jai Mahal Hotels Pvt. Ltd. [2015 (10) TMI 265 - SUPREME COURT] and Standard Chartered Bank [2006 (5) TMI 185 - SUPREME COURT] - bar on the jurisdiction of civil courts - applicability of bar under Section 430 - liquidation of TCL have an impact on the outcome of the instant appeal?
Whether the instant suit is governed by the Companies Act, 1956 or the Companies Act, 2013? - Can the Appellants in the facts and circumstance of the present case rely on Jai Mahal Hotels Pvt. Ltd. and Standard Chartered Bank? - HELD THAT:- I am in agreement that with the findings recorded by the learned trial Court inasmuch as the bulk of the provisions of the Companies Act, 2013 relevant to the present controversy was notified on 30th August 2018 and with Section 46 dealing with ‘Certificate of Shares’ was notified on 1st April 2014. The ratio of Jai Mahal Hotels Pvt. Ltd. and Standard Chartered Bank is of no help to the plaintiff companies as the same were decided in the context of the Companies Act, 1956 and hence, are not applicable to the facts and circumstances of the present case.
Even otherwise, this Court is afraid that such a plea taken by the learned senior counsel cannot be sustained particularly in view of Section 465 of the Act, 2013 which deals with ‘Repeal of certain enactments and savings’ as well as the judgment of the Hon’ble Supreme Court in Shashi Prakash Khemkha (D) Through LRs vs. NEPC Micon, [2019 (2) TMI 971 - SUPREME COURT] wherein the Hon’ble Supreme Court being confronted with an identical plea, held that We are conscious of the fact that in the present case, the cause of action has arisen at a stage prior to this enactment. However, we are of the view that relegating the parties to civil suit now would not be the appropriate remedy, especially considering the manner in which Section 430 of the Act is widely worded.
There are no merit in the contentions of the learned senior counsel and hence, the present case will be governed by the provisions of the Companies Act, 2013 and not Companies Act, 1956. The instant issue is answered accordingly.
How is a bar on the jurisdiction of civil courts to be inferred? - Whether in the facts and circumstances of the present case bar under Section 430 is attracted? - Does liquidation of TCL have an impact on the outcome of the instant appeal? - HELD THAT:- On bare perusal of section 9 of the code, it is found that there are two types of exceptions which are canvassed in Section 9, first, exceptions under the Code of Civil Procedure itself which is apparent from the use of ‘subject to the provisions herein contained’ and secondly, exceptions which are not covered under the Code of Civil Procedure which is apparent from the use of ‘excepting suits of which their cognizance is either expressly or impliedly barred’. In the present case we are concerned with the latter exception which can further be divided into two types, first, jurisdiction expressly barred and secondly, jurisdiction impliedly barred. Considering the language of Section 430 of the Act, 2013, the analysis in the present judgment pertains to jurisdiction expressly barred.
A suit is said to be expressly barred when it is barred by any enactment for the time being in force. Indisputably, it is open for a competent legislature to bar the jurisdiction of civil Courts in respect of a particular class of suits of a civil nature, provided that in doing so it acts within the four corners of the legislative powers conferred upon it and does not violate the letter and spirit of the Constitutional provisions. It is a settled proposition that every presumption should be made in favour of the jurisdiction of a civil Court and the provisions of exclusion of jurisdiction of a Court must be strictly construed - The NCLT is a specialised agency created for the purpose of a speedier and efficient regulation of the management of a company. Its powers are much broader than what are vested in the civil courts by virtue of Section 9 of the Code.
The bulk of the dispute between the parties pertain to the ownership of the 50.21% shareholding in TCL and the validity of the meeting of the board of directors which is alleged to have taken place on 27th August 2013. Having perused the scheme of the Act, 2013, on the first sight though it appears that the disputes at hand between the parties can be adjudicated by the NCLT but in my opinion, such a decision would render the Appellants herein remediless as TCL has been dissolved and is no more in existence. The fundamental principle behind the bar on the jurisdiction of the civil court is that the there must adequacy of remedy being available to the parties who are relegated out of the civil Courts and they must not be rendered remediless.
This Court does not find any merit in the objection of the Respondents that the subsequent liquidation of TCL will have no bearing on the present case. No corporate entity now exists in the form of TCL which may be governed by the provisions of the Companies Act, 2013. Hence, it cannot be said that the suit filed by the plaintiff companies was barred under Section 430 of the Companies Act, 2013.
There is an inherent right in every person as per Section 9 of the Code to bring a civil suit setting forth as to how the plaintiff’s legal rights have been violated for which he/she is seeking the indulgence of the Court and every interpretation must be made by which the jurisdiction of the civil Court is not readily ousted. Further, in case of suspicion, an interpretation should be made which leans in favour of the jurisdiction of the civil Court - this Court is of the considered opinion that the trial court has erred in rejecting the plaint as being barred by Order VII Rule 11(d) of the Code inasmuch as the suit was not barred under Section 430 of the Act, 2013.
Appeal allowed.
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2022 (12) TMI 1248 - CALCUTTA HIGH COURT
Maintainability of suit - exclusive jurisdiction of the National Company Law Tribunal - fraudulent transactions - seeking declaration that the recordings of the names of the defendant as holders of shares of and in the defendant no. 4 respectively in the books and the register of the defendant no. 4 are illegal - decree for delivery up and cancellation of the share certificates issued in favour of the defendant - perpetual injunction restraining the defendant and each one of them by themselves or through their respective servants, agents or assigns from exercising any ownership right in respect of the said shares - perpetual injunction restraining the defendant and each one of them either by themselves or through their respective servants, agents or assigns from exercising any voting right in respect of the said shares.
HELD THAT:- The plaintiff has categorically pointed out the fraudulent act of the defendants in paragraph 28 of the plaint and the said fraudulent act is not committed while initiating proceeding before the NCLT. The plaintiff has also prayed for other relief with regard to perpetual injunction relates to the title of share of the plaintiff. Section 58 and 59 of the companies Act, 2013 deals with refusal by company to transfer of shares but in this case before transfer of share it is to be declared that the recording of share in the name of the defendants have been made fraudulently. The specific case of the plaintiff is fraud and the said fraud is to be adjudicated upon adducing evidence by both the parties before the Civil Court only. Section 65 of the Insolvency and Bankruptcy Code, 2016 has no manner of application in the instant case as the challenge is against issuance of shares by the auditor of a company in derogation of his fiduciary with the company and whether the said act of the auditor is in contravention of the provisions of Company Act, 2013 is on act of fraud or not is to be decided by the Civil Court.
This Court finds that NCLT is not competent to enquire into the allegation of fraud specifically when the plaintiff has prayed for declaration of recording the names of defendant no. 2 and 3 as share holders in the books and the register of defendant no. 4 fraudulently and also prayed for perpetual injunction against the defendant nos.1 to 3. Accordingly, the suit filed by the plaintiff is maintainable.
Application dismissed.
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2022 (12) TMI 1247 - GUJARAT HIGH COURT
Seeking dissolution of the company - Section 481 of the Companies Act, 1956 - HELD THAT:- The Official Liquidator, relying upon the auditor's certificate dated 22.02.2022 submitted that no balance is available in the Bank Account of the Company. Moreover, no assets of the Company in liquidation are available. It was submitted that the report may be accepted and appropriate order of dissolution of the Company in liquidation may be passed as prayed for.
Considering the ratio laid down by the Apex Court in the case of Meghal Homes Pvt. Ltd. [2007 (8) TMI 447 - SUPREME COURT], the report deserves to be accepted. The Company, named, M/s. Arya Silk Mills Pvt. Ltd. (In Liquidation) is hereby dissolved under Section 481 of the Act and the Official Liquidator attached to this Court stands discharged and is relieved as liquidator of M/s. M/s. Arya Silk Mills Pvt. Ltd.(In Liquidation) - the official liquidator is also permitted to make payment towards professional fees of Rs.1,500/- to M/s. Naimish N. Shah & Co., Chartered Accountants towards preparation of Auditor’s Certificate from the Common Pool Account maintained by the Office of the Official Liquidator.
The report is allowed.
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2022 (12) TMI 1246 - GUJARAT HIGH COURT
Misuse of own personal purpose and benefit funds of the company and became liable and accountable for money or property of the Company - guilty of misfeasance - breach of the trust - breach of duties - gross negligence - contribution to the assets of the company in liquidation by way of compensation - contribution to the assets of the company in liquidation and to pay official liquidator of the company in liquidation - section 478 read with section 543 of the Companies Act, 1956 - HELD THAT:- Considering the progress of the matter since 2007 till date, it appears that the Official Liquidator is not keen to proceed with the matter and the matter is being adjourned from time to time on one pretext or another. The Income Tax department has already instituted the prosecution which is pending as stated in the aforesaid affidavit filed on 28.11.2022.
The Official Liquidator has also not pursued the matter after filing further report dated 15.09.2011 pursuant to the order dated 20.07.2011 passed by this Court - the application is disposed of due to sheer negligence on part of the Official Liquidator to pursue the same in accordance with law and keeping it pending for more than 15 years on one pretext or another and permitting the respondent to take advantage of delay tactics to see that entire cause of action is frustrated, this Court has no other option but to dispose of this matter because keeping such stale matters pending in the Court would not result into any fruitful action on part of the Official Liquidator.
Application disposed off.
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2022 (12) TMI 1179 - CALCUTTA HIGH COURT
Application for amendment in the plaint by deleting the name of the defendant no. 1 by substituting the name of the Liquidator of the defendant no. 1 in the cause title as well as in the plaint - overriding provisions of IBC over other laws - Section 238 of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- In the instant case, one of the financial creditors of the defendant had initiated proceeding under Section 7 of the Insolvency and Bankruptcy Code 2016 against the defendant and the Tribunal had admitted the application and appointed Liquidator. The Liquidator had made Public announcement calling upon all the stakeholders of the defendant company for submission of their respective claim, if any, and the plaintiff has lodged its claim before the Liquidator but the same was rejected on the ground of limitation but in appeal the Learned Tribunal had admitted the claim of the plaintiff and admittedly the same is to be adjudicated by the Liquidator.
As Section 238 of the Code is having the override effect in any other law for the time being in force and thus the suit cannot be proceeded further as the claim made by the plaintiff in the instant suit is similar to the claim raised before the Liquidator - Section 61 of the Code provide for an appeal. In case the Liquidator rejects the claim of the plaintiff, the plaintiff is having remedy of an appeal.
This Court held that the suit filed by the plaintiff is cannot be proceeded further and thus CS No. 1 of 2016 is dismissed. The Registrar, Original Side of this Court is directed to release the Bank Guarantees submitted by the defendant no.1 in terms of the order passed by this Court in favour of the Liquidator Shri Krishna Kumar Chhaparia - Application disposed off.
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2022 (12) TMI 1153 - TELANGANA HIGH COURT
Abuse of dominant position - scope of CCI’s (Respondent No.1) power and jurisdiction under S.26(1) of the Act, 2002vis-à-vis the scope of interference by High Court under Article 226 of Constitution of India - whether the order dated 03.10.2019 passed by Respondent No. 1 forming a prima facie opinion regarding existence of abuse of dominant position is liable to be set aside as similar reliefs were claimed by Respondent No.2 in W.P. No. 13298 of 2019 and the same is pending before this Court? - HELD THAT:- An order passed under S.26(1) of the Act, directing investigation by the Director General is an administrative order passed only to determine whether the allegations made by the informant under S.19 (1) of the Act, about possible violations of competition law are true. Once information is received under Section 19(1) of the Act, CCI, based on the material produced by the informant has to form a prima facie opinion regarding the possible competition law violations. It is relevant to note that while forming a prima facie opinion, CCI has to only determine if the allegations along with the material produced are taken to be true, will that result in breach of competition law. CCI cannot determine the legality or correctness of the allegations by going into the merits of the case. It only has to see whether the allegations, prima facie, constitute violation of competition law.
It is also relevant to note that the scope of interference of High Courts under Article 226 of the Constitution of India, in an order passed directing investigation under Section 26(1) is extremely limited. CCI and the authorities under the Act, 2002 are well equipped to conduct investigation and possess expertise in the said field. High Courts cannot interfere with such investigation unless there is an abuse of process and prima facie it appears that the investigation was marred by mala fides.
A same cause of action may have reliefs under different areas of law and the party aggrieved by the same can invoke both remedies. For instance, remedy for fraud is available under civil law which may include a claim of money and under criminal law the said fraud can be prosecuted under IPC. Similarly, a party may claim damages for defamation under tort law and also initiate criminal proceedings under S.499 of IPC. Therefore, it cannot be said that Respondent No. 2 could not have approached CCI with concerns of abuse of dominant position of Petitioner No. 1.
The other contentions raised by the Petitioners that CCI/Respondent No. 1 delineated the relevant market, the share of and participation of the parties in the downstream and upstream market erroneously cannot be decided at the preliminary stage when investigation is yet to be completed. The said grounds can be raised by the Petitioners at an appropriate stage if it is found that they are guilty of abusing their dominant position. At this stage when matter is yet to be investigated, this Court cannot consider disputed questions of facts.
The writ petition is dismissed.
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2022 (12) TMI 1152 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Valuation of shares - Sick industrial unit - scheme of exit - Validity of order passed by the Tribunal asking an Independent Valuer be appointed forthwith from the list of approved valuers of IBBI by the Appellant Company - HELD THAT:- It is also not in dispute that one day before the exit offer, its promoters have purchased lot of shares from Bank of Maharashtra and similarly inter se purchase has been made during exit offer from specific persons by the promoters - The Tribunal has given lot of thrust on lower valuation of shares and it seems that it is even less than earning per share. A doubt has also arisen to the Tribunal why the Appellant company has not provided Annual Returns and Balance Sheet to the Petitioners for the years 2014-2018 as also the valuation report of the Appellant company.
The Respondent has sought the reliefs before the Tribunal comprising of 6 reliefs mainly and the Tribunal has granted only one relief i.e. appointing an independent valuer from the panel of valuers of IBBI in terms of Section 247 of the Act, the cost of which to be borne by the Appellant Company
We are not commenting at the moment what will be the valuation of shares but apparently it is difficult to perceive as to how the fair value can be lower than the earning per share - It is an incumbent duty to the Appellant company to disclose all material information to its shareholders disclosing thereon even the justification for the existing price offered by the Promoters which also seems to be missing in this case.
There are no inconformity in the order and the appeal deserves to be dismissed and is dismissed.
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2022 (12) TMI 1062 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Conspiracy - omission and commission of misconduct by official of Pune Municipal Corporation in connivance with appellants filed a detailed information application before the CCI - levy of penalty - HELD THAT:- On examination of entire material we are of the opinion that sufficient evidence were brought on record to show forming cartelisation by the appellants in influencing tender. It was specific case of contravention of Section 3(3)(d) of the Act read with Section 3(1) of the Act. Besides evidence by way of filing leniency application all the appellants have already accepted their guilt. Most of the appellants on the strength of their leniency application have also got reduction in the penalty which is reflected from the relevant portion of the impugned order which we have quoted in the present order. We are of the opinion that disclosure made in leniency application admitting involvement amounts to confession. If confessional statement is also corroborated even by some sort of evidence one is precluded to assail an order imposing penalty/punishment on such confession. Moreover, in the present case at the time of admission itself it was admitted by the appellants that the appeal may be heard on the point of penalty only.
Now coming to the discretionary jurisdiction of the CCI in considering the turnover on the higher level i.e. 10% which is maximum percentage prescribed under Section 27(b) of the Act is concerned we are of the opinion that though CCI is empowered to take turnover upto 10% but while taking up such percentage i.e. maximum as prescribed in the Act it was required for the CCI to elaborately assign reason for coming to the conclusion for maximum penalty. It may not be held that CCI in no case can impose higher penalty upto 10% but in such situation it would be required for the CCI to afford full opportunity to the concerned party to address the CCI as to why such higher penalty may not be imposed - On going through the impugned order we find no indication as to whether the appellants were asked to explain regarding exemplary penalty i.e. maximum 10% or detailed reasons has been assigned for the same. It is true that in respect of imposing penalty discretion has been given to the CCI, but at the same time it is settled that discretion may not be exercised indiscreet manner.
Though discretionary jurisdiction may not be interfered with but in view of facts and circumstances particularly the fact that discretion by the CCI in the present case has not been exercised in a reasonable manner it would be a fit case for remanding back the matter to CCI to examine the issue to afford opportunity to the appellants to address on the point as to whether instead of exemplary penalty i.e. upper limit of 10%, the appellants are entitled to get the said percentage reduced or not.
In the present case it has been noticed that in the information petition which was filed by the informant it is evident that the informant had alleged that conspiracy and collusion by Accused No.1 and 2 alongwith technically ineligible company (nevertheless qualified) on the one hand and personnel of PMC Accused No.3 on the other hand as a result and by giving effect to this fraud Accused No.2 became L1 in 5 tenders in 2014 bagging contracts for worth of Rs.14,82,94,580/- while the internal estimate was Rs.11.45 crores i.e. 30% lower. Even during investigation DG had examined the role of PMC in its report.
We are of the opinion that while remitting back the aforesaid appeals to CCI to reconsider the penalty a direction can be issued to the Director General of Police Maharashtra/Director General, Anti-Corruption, Maharashtra to conduct an enquiry in respect of role played by the Pune Municipal Corporation in relation to Tender No.34, 35, 44, 62 and 63 of 2014. It goes without saying that if during enquiry any cognisable offence comes to fore in that event it would be necessary to register FIR for its statutory investigation to its logical end.
Let a copy of this order be sent to Director General of Police, Maharashtra/Director General, Anti Corruption, Maharashtra.
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2022 (12) TMI 982 - DELHI HIGH COURT
Seeking grant of Regular bail - misuse of cheque discounting facilities - diversion and siphon-off the borrowed funds - fictitious sale of food grain and in creation of accommodation/adjustment accounting entries - section 447 of the Companies Act - HELD THAT:- There is no allegation by the SFIO that during the course of the investigation, the petitioner attempted to destroy evidence or intimidate witnesses, or that she otherwise interfered in the course of investigation - It is apparent that the essence of the allegation against the petitioner is, that being the wife of the main accused Suman Chadha and a director of the company, the petitioner signed various papers, documents and records in her capacity as a co-director, and is therefore an ‘officer who is in default’ in relation to the affairs of the company within the meaning of section 2(60) of the Companies Act.
Despite having the power under section 212(8) of the Companies Act, to arrest the petitioner in the course of investigation, the investigating officer did not arrest the petitioner, by which it can reasonably be inferred that the officer did not have reason to believe that the petitioner was guilty of any offence punishable under the concerned sections of the Companies Act. Even when the report under section 212(12) of the Companies Act was filed, there is nothing on record to show that the investigating officer sought for the petitioner to be remanded to judicial custody - In the opinion of this court, the petitioner’s conduct cannot have a worse effect now, than it possibly could have had during the course of investigation, since all the purportedly incriminating evidence and material has already been collected and placed before the learned Special Judge as part of the criminal complaint.
The proviso to section 212(6) of the Companies Act cannot be treated as nugatory or dead letter. By way of the proviso, the Legislature has specifically carved-out an exception to the otherwise strict provision for bail, to say that though the twin conditions in section 212(6)(i) and (ii) of the Companies Act must otherwise be satisfied before a person is released on bail, those conditions would not apply inter-alia to a woman. In view of the proviso, it would be anathema to the legislative intent to not grant the benefit of the relaxation to a woman accused.
The notion that a person summonsed after cognisance must necessarily be remanded to judicial custody, simply because the allegation relates to a ‘serious offence’, must be disabused. Merely because the offence is cognizable and non-bailable, it is not essential that an accused must be taken into custody when the charge-sheet is filed. Bail, it is trite to say, is the rule and not the exception. Arrest at the hands of the investigating officer and remand by the court must not be done on a whim or without reason.
The petitioner is entitled to benefit of the proviso to section 212(6) of Companies Act - the court is persuaded to admit the petitioner to regular bail, subject to the conditions imposed.
Application allowed.
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2022 (12) TMI 981 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Issuance of notice under Section 230(5) of the Companies Act - It is submitted that in view of the sole Financial Creditor having approved the scheme, there was no occasion for issuing any notice under Section 230(5) of the Companies Act and Adjudicating Authority had ample jurisdiction to dispense the notice under Section 230(9) of the Companies Act - HELD THAT:- The sole Financial Creditor having approved the scheme, the condition as provided in Section 230(9) were clearly met and the Tribunal can very well dispense with the calling of a meeting of creditor or class of creditors. Present is a case where hundred per cent of the Financial Creditor has approved the scheme.
The direction of the Tribunal needs to be set aside and the Adjudicating Authority is required to consider the dispensation of the second motion notice in view of the facts of the present case as per Section 230(9) of the Companies Act, 2013.
Appeal disposed off.
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2022 (12) TMI 980 - NATIONAL COMPANTY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Contravention of the provisions of Section 4 of Competition Act, 2002 - it is alleged that several clauses of the agreement which was entered into between the appellant and Respondent No.2 in the present appeal were violative of provisions of Section 4(2)(a)(i) of the Act - Section 53(B) of the Competition Act, 2002 - HELD THAT:- On examination of the provisions contained in Section 26 of the Act it is evident that the CCI is having a very limited jurisdiction to direct for further investigation that too in a case as per Section 26(5) of the Act if the DG recommends that there is no contravention of provisions of Act then Commission shall invite objections or suggestions and thereafter under sub-section (7) of Section 26 of the Act after consideration of objections and suggestions referred to in sub-section (5) further investigation is necessary only then direct for further investigation. Meaning thereby that purport of Section 26 of the Act is that if after investigation DG submits report disclosing therein violation of the provisions contained in the Act, the CCI is required to pass appropriate order. In a case DG submits a closure report and thereafter under sub-section (5) of Section 26 of the Act, after inviting objections, CCI is satisfied, only then under sub-section (7) of Section 26 of the Act, CCI can issue direction for further investigation. Further investigation as per Act is required in a case of closure not in a case where DG has submitted report showing contravention of provisions of the Act by a party/parties.
The Regulation 20 describes procedure about the investigation by the DG, whereas Regulation 20(6) empowers the CCI to direct DG for further investigation. However, in view of Section 26 of the Act it can be concluded that Regulation 20 (6) of CCI(General) Regulations, 2009 can be used in furtherance of exercise of jurisdiction under Section 26(7) of the Act which is required to be invoked in a case where DG under Section 26(5) submits report regarding non contravention of the provisions of the Act. In any event taking shelter of Regulation 20(6) of Regulation 2009 CCI was not authorised to pass an order for further investigation and the same cannot be justified - without going into further detail or delving into merit of the case the order impugned is liable to be set aside since the order is primarily passed on the supplementary investigation report submitted by the DG which was conducted on a void order of the CCI.
The matter is remitted back to the CCI to pass order afresh on the basis of the 1st DG Report i.e. Report dated 18.03.2016 submitted by the DG - Appeal allowed.
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2022 (12) TMI 919 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Restoration of the name of the Appellant Company in the Register maintained by the Registrar of Companies (RoC) - Section 252 of Companies Act - HELD THAT:- In view of the fact that the sale deeds executed in favour of the Appellant Company and Audited Balance sheet from Financial Year 2011-12 to 2018-19 of the Appellant Company 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 - appeal allowed.
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2022 (12) TMI 896 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking restoration of name of the company in the Register of Companies - it is alleged that the Company is not an active company and not carrying on any business for which it was incorporated - Section 252(3) of the Companies Act, 2013 - HELD THAT:- From the records, it is seen that the Appellant Company filed its statutory compliances as per law. Whilst the NCLT though in its order at para 3 observed that the Appellant Company enclosed/annexed with the Appeal the copies of the Annual Returns, Balance Sheet and Income Tax Returns for the Financial Years 2015-16, 2016-17 and 2017-18 and 2018-19. Despite sufficient evidence placed before it, the NCLT failed to consider the same on merits.
Even though the law provides for striking off the name of the Company for non-complying the statutory requirement as stipulated under Section 248 Companies Act, 2013, the statute also provides Section 252 of the Act to prefer an Appeal to the Tribunal by the aggrieved person against such dissolution of the Company. The Appellant rightly exercised its jurisdiction under Section 252 of the Companies Act, 2013 before the NCLT. This Tribunal is of the opinion that the removal of the name of the company from the Register of Companies is not justified.
There is no other ground except as mentioned in the notice dated 29.06.2018 for striking the name of the Appellant Company suo motu. The reasons for not restoring the company and dismissing the application of the Applicant is in our view not a sound ground - The ROC, West Bengal is hereby directed to restore the name of the Appellant Company to the Register of Companies, West Bengal subject to the compliances mentioned.
Application allowed.
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2022 (12) TMI 895 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking restoration of the name of the Appellant Company in the Register maintained by the Registrar of Companies (RoC), Chhattisgarh - failure to file Financial Statements & Annual Returns for the period 2016-17 to 2017-18 - whether the Appellant Company is carrying on any business or operations or not? - HELD THAT:- In view of the fact that the sale deeds executed in favour of the Appellant Company and Audited Balance sheet from Financial Year 2015-16 to 2018-19 as also Income Tax Return of the Appellant Company 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, we are of the view that 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 impugned order passed by the National Company Law Tribunal (Cuttack Bench, Cuttack) is set aside. The name of the Appellant Company be restored to the Register of Companies subject to the compliances mentioned - Appellant shall pay costs of Rs. 50,000/- to the Registrar of Companies, Chhattisgarh within 08 (Eight) weeks from passing of this Judgment - appeal allowed.
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