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Companies Law - Case Laws
Showing 501 to 520 of 15082 Records
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2023 (4) TMI 451
Impleadment to an oppression and mismanagement petition - allegation of misconduct against the Appellant - violation of principles of natural justice by not affording an opportunity of hearing to the Appellant - HELD THAT:- Corporate governance can be a complex matter, especially when it comes to the appointment of directors. Disputes can arise when a nominee director’s appointment is subsequently withdrawn by the nominating group. The issue at hand is whether a nominee director, who no longer has the support of the nominating group, should be allowed to join a petition seeking relief against oppression and mismanagement against other members/ shareholder groups of the company.
DKJ group's interests hold precedence - HELD THAT:- According to the AoA of Respondent No. 3, the DKJ Group is entitled to an equal number of directors on Respondent No. 3’s Board, as the SKG Group. The Appellant was a nominee of DKJ Group. Following Mr. D.K. Jain's demise, the Appellant began acting against the interests of her nominating group. Despite DKJ Group's request to SKG Group to not accept Appellant as their nominee director, she continued to act as a nominee director. Due to her lack of cooperation, the DKJ Group intimated CLB that her nomination had been withdrawn and in her place, a new director had been appointed - In such circumstances, when DKJ approached the CLB for interim directions, it was held that SKG Group was under obligation to uphold the interest of DKJ Group and thus, suspended Appellant’s directorship. This was only to ensure that DKJ Group’s interests are not jeopardised, pending final adjudication of the proceedings in the company petition.
Appellant has contrary interests to DKJ Group and past association with the group is of no consequence - HELD THAT:- The Court finds the Appellant’s past relationship with DKJ Group to be irrelevant to the matter at hand. Her assertion that she continues to be a nominee director is misconceived as the AoA stipulates that a nominee director can continue to serve on the Board of Directors only if they have the support of the nominating group. The pleadings on record show that the Appellant no longer has the backing of the DKJ Group, which is essential for a nominee director's continuation. Appellant was to further the interests of DKJ group, but since she was not acting in their interests, she risked losing their support and being removed from the board.
No sufficient cause u/s 405 of the Act - whether the presence of the Appellant is essential for adjudicating the issues arising in the company petition? - HELD THAT:- In the instant case, since the Appellant no longer has the support of the DKJ Group, she has no right to participate in the proceedings. The Court agrees with the CLB's decision that Appellant has failed to show sufficient cause under Section 405 of the Act to join the proceedings.
Appellant's shareholding stands conclusively transferred - HELD THAT:- Since Appellant has transferred her entire shareholding in Respondent No. 3 to Ms. Usha Jain, her plea premised on the basis of shareholding is of no consequence.
It is clear that the Appellant does not enjoy the support of DKJ Group. Appellant’s shareholding in Respondent No. 3 stands transferred which underscores DKJ Group’s right to make decisions which are in their best interests. There is no valid cause to implead the Appellant in a dispute that involves DKJ Group's pursuit to defend their representation rights in Respondent No. 3.
Application dismissed.
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2023 (4) TMI 450
Oppression and Mismanagement - Time Limitation - Transfer of shares - Petition was filed on 09.11.2018 which is beyond three years as per Article 113 of the Limitation Act, 1963 - locus standi to file application - HELD THAT:- First of all, the money has not been transferred by the Appellants in favour of the Respondents. Secondly, as admitted in the averments as well as recorded clearly in the impugned order that, Mr. Linganameni Ramesh gave Rs. 14,67,41,557/- and took back Rs. 9 Crores from the Respondents as such prima-facie this does not seem to be a clear transaction of payment of money towards acquisition of shares and consequently allotment of shares in favour of the Appellants is also not established.
Time Limitation - HELD THAT:- The Tribunal has held that alleged transfer of shares in favour of the Appellant herein was claimed to be on 18.04.2015, whereas, the Petition was filed before the Tribunal on 09.11.2018 which is beyond three years and as per Article 113 of the Limitation Act, 1963 the limitation period is only three years. This Appellate Tribunal do not find any error in the impugned order.
This Appellate Tribunal also do not find any material which can substantiate that all the procedures laid down in the companies Act, 2013 as well as the Article of Association were followed by the Appellants herein. The photocopies of the share capital as a form have already been denied to be true by the Respondents and the same has been held by the Tribunal as tannable averments from the Respondents herein. This Appellate Tribunal also observes that the Tribunal had discussed this aspect in detail in the ‘impugned order’ and recorded that no concrete evidence or documentary proof could be furnished by the Appellants herein to proof their claims of genuine certificates. In fact, the Tribunal held that the alleged Share Certificate submitted by the Appellants herein to be fabricated and fraudulent as there were lot of discrepancies, in the forms and substance, of the Shares Certificate vis-à-vis the original certificates held by the Respondents.
This Appellate Tribunal also observed that there is no communication between the Appellant herein and the Respondent herein during the relevant period of alleged dates of transfer of shares in the year 2015 and immediately thereafter and in absence of any concrete trail of suitable communications between the various parties involved, it is difficult to believe that indeed such transaction took place which establishes the right to claim said shares by the Appellants.
This Appellate Tribunal further finds it surprising that although the Appellants is claiming to hold 94.8% of Share Capital of the 1st Respondent Company, yet they did not bother to take over the management and control of the 1st Respondent Company. It is natural and established commercial prudence that person holding the majority of share will have dominating position in composition of Board of Directors of the Company - this Appellate Tribunal also does not find convincing that the Appellants did not get any notice of the meeting including that of AGM or have not received any documents/ minutes/circular/ agenda/ annual financial statement/ statutory audit report and yet did not seek any remedy thereafter in the entire period.
The case of Oppression and Mismanagement, claimed by the Appellants, under Section 241 r/w Section 242 of the Companies Act, 2013, the Appellants/ Claimants, has to cross the first hurdle of Locus. The Oppression and Mismanagement, is available only to a person who is aggrieved and who is also a Member / Shareholder, of the Company - the Appellants could not establish regarding their entitlement to receive Transfer Shares, from the Respondents, neither could prove that the payment, was indeed made by the Appellants to the Respondent for consideration of said shares. It is, therefore, establishes that the Appellants, did not have any share in their names and were therefore not members / shareholders, of the 1st Respondent Company and therefore, the Appellants, do not have any Locus, to file an application, under Section 241, r/w Section 242 of the Companies Act, 2013.
This Appellate Tribunal, do not find any error in the impugned order - Appeal is dismissed.
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2023 (4) TMI 82
Delay in filing of CHG-4 form - due to the death of the Founder-Director, there was a delay, in filing form - sufficient cause for delay present or not - Sections 82 of Companies Act read with Rule 8(1) of the Companies (Registration of Charges) Rules 2014 - HELD THAT:- Under Sections 82 of the Act read with Rule 8(1) of the Companies (Registration of Charges) Rules 2014, there exists an obligation on the Company to record satisfaction of charge within a period of 30 days from the date of such payment - A perusal of the order of the Hon’ble Supreme Court in In Re Suo Motu [2022 (1) TMI 385 - SC ORDER] clearly shows that the entire period between 15th March, 2020 till 28th February, 2022 was excluded from computation of limitation.
In the present case, the usual period of limitation is thirty days. Thus, a period of thirty days would be added from 28th February 2022, meaning thereby that the limitation would have expired only on 28th March 2022 - The filing of the Form in the present case has been made on 28th November, 2022 which would be a total delay of eight months.
The observations of the Madhya Pradesh High Court in M/S. SHALINI PLASTIC PRIVATE LIMITED THROUGH SHRI KAPIL ATLASIYA VERSUS UNION OF INDIA, REGISTRAR OF COMPANIES MADHYA PRADESH [2018 (7) TMI 2301 - MADHYA PRADESH HIGH COURT] are also relevant in the present case, wherein the Court observed that In the present case the petitioner has disclosed that delay had taken place because there was change in entire management of the company, therefore, the default had taken place for the bonafide reason.
Keeping in mind orders passed by the ld. Supreme Court as also the order of the ld. Single Judge of Madhya Pradesh, the delay cannot be held to be deliberate. The demise of the Founder-Director due to COVID-19 is a genuine cause for the delay. The costs are accordingly reduced to 25,000/- qua each of the charges. Thus, the total costs payable by the Petitioner would be Rs.50,000/-.
Petition allowed in part.
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2023 (4) TMI 14
Seeking restoration of name of the company in the Register of Companies (ROC) - Section 252 of Companies Act - HELD THAT:- Under Section 10A of the Companies Act 2013, before commencement of business, and after incorporation, a Company has to file a declaration through one of its directors within 180 days that the share capital has been duly contributed as agreed by the subscribers to the memorandum - Under section 10A(3) of the said Act, the ROC can initiate action for the removal of the name of the company in terms of Chapter XVIII i.e. under Section 248.
In the present case, the present writ petition has been premised on the ground that the notice itself was not issued, therefore, a writ petition would be liable to be entertained. It is stated that the striking off has taken place vide STK -7 issued on 13th December 2022 and published in the official gazette on 17th December 2022. For whatever reasons, the Petitioner has not approached the National Company Law Tribunal (NCLT) and has chosen to come before this Court - A perusal of Section 10A as also Section 252(3) of the said Act would show that the delay ultimately is condonable upon the payment of monetary penalty in terms of Section 10A. Even the standards that have been stipulated for restoration of the company by the NCLT is if the NCLT feels it is just that the name ought to be restored or if the company was carrying on business and was in operation.
Considering the fact that the bonafides of the Petitioners are not in doubt as the companies are running companies, and the striking off has already been prejudicial to them, this Court deems it appropriate not to relegate the Petitioners to the alternative remedy under Section 252.
The Petitioner shall deposit a sum of Rs.1 lakh each for each of the companies as a pro term deposit of penalty under Section 10A(2). The said deposit shall be made within one week, upon which the names of the companies shall be restored - Petition disposed off.
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2023 (3) TMI 1541
Sanction of Scheme of Amalgamation is presented under sections 232 read with Section 230 of the Companies Act, 2013 - HELD THAT:- The Petitioner Companies shall determine the Consideration under the Proposed Scheme on the basis of actual financial results of the Petitioner Companies as on appointed date i.e. 1.4.2023 and file the valuation report substantiating such consideration. In case, there is any change in the consideration under the scheme, the Petitioner Companies shall serve a copy of scheme afresh upon all noticee, highlighting the changes effected therein distinctively.
That the Applicant Companies shall file affidavit of service in and compliance of serving the notices to all the Regulatory Authorities as stated above and do report to this Tribunal that the directions regarding the issue of notices have been duly complied with.
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2023 (3) TMI 1280
Oppression and Mismanagement - mismanagement on the part of the R-1 Company and R-2 in particular - reduction in shareholding - wrongful removal of R-5 and R-6 as directors of the R-1 Company - HELD THAT:- Even non-members could be transferred shares of the company if it is in the interest of the company. This provision is supported by the list of non-members produced by the Appellant who have been transferred shares of R-1 Company from the year 1987-88 onwards. Significantly, this averment has not been disputed by the Respondents.
The rights of a nominee are different from the actual holder of the shares and those of the guardian are not the same as that of the nominee of the shares, in the event that the owner of the shares is deceased. It is quite clear that the Appellant could not have claimed to be holder of the 3890 shares whose nominee was Ms Harsheika Doshi, more so when he does not show in the original company petition how the interests of the minor Ms. Harsheika are being prejudiced by the action of the Respondents. It would be a matter of adjudication though, as the Appellant was relying on the entry in the Register of Members to claim shareholding of 3890 shares by him. Yet it is a fact that he was holder of the 4160 shares till the time of their cancellation, which is also one of the acts of oppression alleged by the Appellant.
The ownership of 4160 shares, certainly vests with Mr. Yash Vardhan Mall and the allegation that the Company has not followed the due procedure in cancelling these shares is found to be correct. The plea taken by the R-2 that these shares were awarded on the mistaken notion that Mr. Yash Vardhan Mall is the holder of 3890 shares is also not found to be supported by facts since the transfer of 4160 shares to Yash Vardhan Mall has nowhere been shown to be done in consequence of his ‘holding’ 3890 shares and moreover Article 30 of the Articles of Associations allows transfer of shares to non-members if it is done in the interest of the company. Therefore, the unilateral cancellation of the 4160 shares, which is alleged to be an oppressive act, is a question open for adjudication. The section 241-242 petition preferred by the Appellant cannot be, therefore, decided at the threshold on the issue of maintainability on the basis of non-ownership of these shares as their illegal cancellation is itself the subject matter of the original company petition C.P. No. 189 of 2015.
The issue of maintainability which was raised in the demurrer application C.A. 1755 of 2015 should not have been adjudicated at the threshold to arrive at the main petition’s non-maintainability when the issue was itself claimed as an act of oppression - The NCLT, by allowing the demurrer application on the basis on non-ownership of these 4160 shares, and consequently dismissing CP No. 189 of 2015 in a cursory manner without looking at the merits of the various allegations made in the company petition has incorrectly adjudicated both the demurrer application and also C.P. 189 of 2015.
The Impugned Order, which allows the demurrer application, is set aside - issue of guardianship of 3890 shares and whether the Appellant was entitled to maintain the original company petition on the basis of these 3890 shares should also be looked at afresh - appeal allowed.
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2023 (3) TMI 1079
Application seeking winding up proceedings relating to Shree Shyam Cotspin Ltd. (the company) be transferred to the National Company Law Tribunal for further proceedings under the Insolvency and Bankruptcy Code, 2016 - whether the learned Company Court had erred in proceeding on the basis that irreversible steps have been taken? - HELD THAT:- The said question is required to be answered in the negative. It is clear from the record that several steps have been taken for winding up of the company; assets claims have been invited from creditors; parts of the company’s assets have been sold; all movable assets taken over by respondent no.4 SARFAESI Act have been sold; the immovable asset of the company is under acquisition; and the assets are insufficient to meet the company’s liabilities.
There are no error in the impugned order - appeal dismissed.
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2023 (3) TMI 1018
Seeking restoration of the name of the company in the Registrar of Companies, Chhattisgarh - Section 252 of the Companies Act, 2013 - HELD THAT:- The NCLT has recorded that in this case, Registrar of Companies, Chhattisgarh also did not have objection for restoration of the Company’s name in the Register. However, in view of the fact that the Audited Annual Accounts of the Company for the Financial Years 2012-2013, 2013-14, 2014-15, 2015-16, 2016-17 & 2017-18 and Income Tax Return of the Company for the Financial Years 2012-2013, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 & 2018-19 shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (Cuttack Bench, Cuttack) as well as Registrar of Companies, Chhattisgarh, is not sustainable in law.
The name of the Appellant Company be restored to the Register of Companies subject to the compliances imposed - application allowed.
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2023 (3) TMI 898
Recovery of electricity dues of the Company - personal liability of the Directors of the Defaulter Company/Corporate debtor which went into insolvency - Company under moratorium period (undergoing CIRP) - It was urged that once the Company went into insolvency, the outstanding electricity dues towards the defaulter company being Corporate debtor could not have been recovered from its Directors.
Whether the Director of the Company who is claimed to be the personal guarantor in the matter of payment of electricity dues of the Company would be able to sustain the challenge to the demand of dues of electricity from the personal assets of the Directors, in view of the Insolvency Proceedings concluded in relation to the defaulter company namely the Corporate debtor?
HELD THAT:- In STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [2018 (8) TMI 837 - SUPREME COURT], the controversy revolved around Section 14 of the Insolvency and Bankruptcy Code, 2016 which provides for moratorium for the limited period mentioned in the Code. The issue before the Apex Court was as to whether on admission of insolvency petition, the moratorium under Section 14 of the Code would apply to a personal guarantor of a Corporate debtor.
While answering the said question, the Apex Court had considered different provisions of the Code and the effect of enforcement of Section 2(e) w.e.f 23.11.2017 by the Amendment Act, 2018. It was noted that under Part II of the Code which deals with insolvency resolution and liquidation for Corporate persons, a financial creditor or a Corporate debtor may make an application to initiate the insolvency resolution process. Once initiated, the adjudicating authority, after admission of such application, shall by order declare a moratorium for the purposes referred to in Section 14 (as per Section 13 of the Code).
It was, thus, held therein that the object of the Code is not to allow personal guarantors such as Directors who are in management of the companies to escape from an independent and co-existent liability to pay off the entire outstanding debt. The decision in Sanjeev Shriya vs S.B.I [[2017 (9) TMI 1638 - ALLAHABAD HIGH COURT]] wherein moratorium was applied to enforcement of guarantee against personal guarantor to the debt, has been overruled.
Thus, it is clear that approval of a resolution plan does not ipso facto absolve the surety/guarantor of his or her liability, which arises out of an independent contract of guarantee. To what extent, the liability of a guarantor can be pressed into service would depend on the terms of the guarantee/contract, itself - the main contention of the learned counsel for the petitioner to challenge the recovery on the ground that approval of the resolution plan in the insolvency proceeding in relation to the defaulter company namely M/s Trimurti Concast Pvt ltd (Corporate debtor) would ipso facto discharge both the Directors of the defaulter Company, one of whom is the petitioner, is liable to be turned down.
As to the issue of applicability of Clause 4.3(f)(v) of the Electricity Supply Code, 2005, the arguments with regard to validity of the same or the said provision being ultra vires to the Electricity Act, 2003, made in rejoinder half-heartedly, cannot be entertained, in as much as, no foundation has been laid in that regard in the writ petition.
Thus, it is clarified that the legal issue with regard to the liability of the personal guarantor of the Corporate debtor whose liability is co-extensive with the principal debtor, i.e the Corporate debtor has been answered by us taking into consideration the law laid down by the Apex Court - the challenge to the demand notice for dues of electricity, issued jointly in the name of the Directors of the Corporate debtor, the defaulter company which went into insolvency cannot be sustained on the ground that in view of the acceptance of the resolution plan under Section 31 of the Code, all liabilities of the Directors, who may be the guarantor, stood automatically discharged/extinguished.
Petition dismissed.
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2023 (3) TMI 839
Validity of ICC Arbitral Award - The termination of the Devas Agreement by Antrix was disputed by Devas - Whether the ICC Award suffers from patent illegality, fraud and is in conflict with the public policy of India - binding nature of the the judgment in DEVAS MULTIMEDIA PRIVATE LTD. VERSUS ANTRIX CORPORATION LTD. & ANR. [2022 (1) TMI 774 - SUPREME COURT] - applicability of principles of res judicata - The petitioner contended that the the Judgment of the Apex Court are at best obiter dicta and do not constitute ratio decidendi
HELD THAT:- It is summarised as under:
a) The findings of the Apex Court in its Judgment in DEVAS MULTIMEDIA PRIVATE LTD. while upholding the findings of the NCLT and NCLAT, noted that Devas was incorporated for a fraudulent purpose and that its affairs were being conducted in a fraudulent manner. The Apex Court has given these findings after being aware of the fact that an arbitral award has been passed in favour of Devas and the same is under challenge in a petition under Section 34 of the Arbitration Act. The Apex Court has repelled the contention of Devas that the application for winding up was filed only to circumvent the enforcement of the arbitral award. Without the findings rendered by the Apex Court regarding fraud, the Apex Court could not have come to the conclusion that Devas had been incorporated for fraudulent purposes and that its affairs were being conducted in a fraudulent manner and, therefore, the order of winding up Devas under Section 271(c) of the Companies Act, 2013 was correct. These findings, therefore, become the ratio and not the obiter of the case and therefore, were binding on the learned Single Judge under Article 141 of the Constitution of India. It is settled law that even obiter of a judgment of the Hon’ble Supreme Court is binding on all Courts subordinate to it. The Apex Court in PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VERSUS RESERVE BANK OF INDIA [1992 (1) TMI 337 - SUPREME COURT] has reiterated that though the focus of the Apex Court may not be directly on a partiuclar point, yet, a pronouncement by the Apex Court, even if it cannot be called the ratio decidendi of the judgment, will still be binding on the High Courts.
b) The proceedings before the Apex Court in DEVAS MULTIMEDIA PRIVATE LTD. are formal proceedings between the same parties i.e., Antrix, Devas and DEMPL, arising out of the same factual matrix, and the issue of the effect of fraudulent actions of Devas was directly and substantially in issue before the Hon'ble Supreme Court. The issue of fraud was raised and agitated before the Apex Court in Civil Appeal No.5766/2021 and has been heard and finally decided by the Apex Court which was competent to render the findings on the issue before it. As a consequence, the findings of the Apex Court in its Judgment in Civil Appeal No.5766/2021, particularly Paragraphs No. 12 and 13, would be binding between the parties on the basis of the principle of res judicata.
c) Article 144 of the Constitution of India mandates every authority to aid in enforcing the orders and decrees of the Supreme Court. The Apex Court in DEVAS MULTIMEDIA PRIVATE LTD. has held that Devas was incorporated for fraudulent purposes and the affairs of the company were being conducted in a fraudulent manner, and therefore, the agreement, from which the present arbitration arises, was a product of fraud. After such a finding has been rendered by the Apex Court, it was not open for the learned Single Judge to come to the conclusion that the award, which has been held to be a product of fraud, would still be enforceable in the country. Such a finding by the learned Single Judge would be against the spirit of Article 144 of the Constitution of India.
d) The phrase “the Court finds that”, which finds mention in Section 34(2)(b) of the Arbitration Act, enables the Court to look into attendant circumstances to form its own opinion as to whether the award is in conflict with public policy of India or not. As a corollary, it follows that the Court would also have the power to discover on its own, whether the making of an award is induced or affected by fraud or corruption or is in violation of Section 75 or 81 of the Arbitration Act. This phrase has been interpreted by the Court, as an enabling provision, allowing the Court while deciding an application under Section 34 of the Arbitration Act to grant leave to amend an application under Section 34 of the Arbitration Act, if the peculiar circumstances of the case so warrant and it is so required in the interest of justice.
e) In view of the various Judgments of the Hon'ble Supreme Court interpreting Section 34 of the Arbitration Act, the amendments to Section 34 of the Arbitration Act and in view of the categorical findings of the Apex Court in its Judgment passed in DEVAS MULTIMEDIA PRIVATE LTD. , nothing prevented the learned Single Judge from relying on those findings and using them for the purpose of setting aside the ICC Award under Section 34 of the Arbitration Act on the ground that the agreement itself was a product of fraud and, therefore, the making of award is automatically induced by fraud and corruption. The findings by the Apex Court, which is the highest Court of the land, could not have been ignored by the learned Single Judge and those findings would automatically become the findings of the learned Single Judge while considering an application under Section 34 of the Arbitration Act for which there was no necessity of a specific pleading. From a comprehensive reading of the Impugned Judgment, it is evident that the learned Single Judge has applied his mind to the amendment applications and has taken it into consideration while deciding the petition under Section 34 of the Arbitration Act and the issue as to whether the making of award was vitiated by fraud or corruption.
f) The principle of “fraud vitiates all solemn acts” is applicable not only to the primary proceedings, but also to all collateral proceedings that arise out of the same facts and circumstances. The act of fraud is an anathema to all equitable principles and every transaction tainted with fraud must be viewed with disdain by Courts. In the instant case, the Supreme Court in DEVAS MULTIMEDIA PRIVATE LTD.has held that the commercial relationship between Devas and Antrix is a product of fraud, and as a consequence, the Devas Agreement, the ICC Award, and all other disputes arising out of the transaction would be tainted by fraud. Permitting Devas and its shareholders to reap the benefits of the ICC Award would amount to this Court perpetuating the fraud. Such a view would be against all principles of justice, equity and good conscience.
g) The learned Single Judge has not made an error in setting aside the ICC Award on the grounds of fraud and it being in conflict with the public policy of India. Accordingly, the challenge to the Impugned Judgment by the Appellant, on the ground that the Ld. Single Judge could not consider the grounds of public policy and fraud under Section 34 fails.
Appeal dismissed.
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2023 (3) TMI 838
Termination of proceedings pending, with immediate effect - rectification of the name of the company - premise of the challenge is that the proceedings are lacking in jurisdiction and ex-facie, barred by limitation - assumption of jurisdiction and the bar of limitation - HELD THAT:- The issue relating to assumption of jurisdiction and the bar of limitation hinges upon Section 16 of the Companies Act, 2016. Section 16 deals with rectification of name of company and states that if, through inadvertence or otherwise, a company on its first registration by a new name, is registered by a name which, in the opinion of the Central Government, or on an application by a registered proprietor of a trademark, is identical with, or too nearly resembles the trademark of a proprietor under the 1999 Trade Marks Act, such claim may be rectified, if such application were filed within 3 years of incorporation/registration/change of name of the company.
The right of the officer has come to an end on 31.03.1956 and as on that date, the proceedings lapse. There was no possibility for the dead proceedings to be revived thereafter merely because the amended Section gave vested authority in the power to issue notice. Thus, and since the right to issue notice under the earlier Act had come to an end before the new Act came into force, the notice was struck down - In the present case, it is not merely a provision that has been amended but an entirely new enactment, the 2013 Act that has replaced the 1956 Companies Act. There is simply no avenue for the timelines under the old Act to enure to the benefit of R2.
Thus, the limitation under Section 22 of the 1956 Act had long expired with the repeal of that Act and there is no question of any person being entitled to the benefit of the same thereafter. This argument is rejected.
Thus, the jurisdictional fact of bar of limitation is clearly attractive/established. The Court has observed that a Writ of Prohibition is not normally issued for a mere error of law unless the error makes the proceedings fall outside the jurisdiction of the authority.
Writ of Prohibition as sought for is issued and this Writ Petition is allowed.
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2023 (3) TMI 749
Oppression and Mismanagement - non-speaking order - misguided attempt to scuttle proceedings brought by the Respondent before the NCLT - HELD THAT:- Since this Tribunal in Company Appeal (AT) No. 99 of 2021 sets aside the impugned order dated 03.03.2021 passed by the NCLT, Ahmedabad Bench in C.P. No. 100 of 2018 whereby the NCLT allowed withdrawal of withdrawal pursis made in C.P. No. 100 of 2018, consequently, the C.P. No. 100 of 2018 and the withdrawal of withdrawal pursis has to be heard and decided by the NCLT afresh. Thereby this Tribunal is of the view that the C.P. No. 100 of 2018 and its continuum was suspended until the issue of withdrawal of withdrawal pursis is decided. That being so, the passing of interim order in such a situation may not be appropriate.
The order of NCLT set aside - appeal allowed.
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2023 (3) TMI 592
Provisional attachment of property - Power of the NCLT to protect the assets of corporate debtor - Action under the Prohibition of Benami Property Transactions Act, 1988 - clear cut stand of the Respondent is that, in the instant case, the Adjudicating Authority (Prohibition of Benami Property Transactions Act, 1988), having passed an Order, treating the Appellant’s Assets as Benami Assets, only the Appellate Tribunal, under PBPT Act, can test the veracity of the PBPT Adjudicating Authority.
HELD THAT:- It transpires that the Appellant / Liquidator, had placed the proposed Resolution Plans, before the Committee of Creditors, during the 9th CoC Meeting, that took place on 02.11.2018. After due consideration of the Resolution Plans submitted, the CoC, had rejected the Resolutions Plans, and consciously had resolved to prefer an Application for Liquidation of the Corporate Debtor, before the Adjudicating Authority. In MA/604/2018, filed by the Appellant / Liquidator /Petitioner, under Section 33 (2) of the I & B Code, 2016, for Liquidation of the Corporate Debtor, a Liquidation Order, was passed on 14.02.2019.
It appears that the Appellant / Petitioner / Liquidator (pending the Liquidation Proceeding), had received a Notice dated 01.11.2019, from the Respondent, to Show Cause, as per Section 24(1) of the The Prohibition of Benami Property Transactions Act, 1988, as to why the Property being the proportionate share of the Land, owned by the Corporate Debtor, out of the total extent of 889.82 Acres, where the factory of the Corporate Debtor, was located, should not be treated as Benami Property, and that, any Reply ought to be provided on or before 21.11.2019. The Respondent, also had issued a Provisional Attachment Order dated 01.11.2019, as per Section 24(3) of the Act, 1988.
The crystalline stand of the Appellant / Liquidator is that, there was no Cash Inflows into the Company, either in the form of Cash or Cheque, from the Promoters of the Company or others, and the same is evidenced from the Disclosure on Specified Bank Notes, given by the Statutory Auditor, in his Report for the Financial year 2016-17, filed with the Ministry of Corporate Affairs. To support the fact that there was no Cash Flows into the Corporate Debtor, the Appellant / Petitioner, had enclosed the Copy of the Audited Balance Sheets for the Financial Years 2016-17, 2017-18 and 2018-19, Income Tax Returns for the Years 2016-17, 2017-18 and 2018-19 and the Bank Statements from October 2016 to March 2017 of the Corporate Debtor.
In the instant case, it is quite evident that the Respondent / Department had attached the Property of the Corporate Debtor, as per the ingredients of the Provisions of The Prohibition of Benami Property Transactions Act, 1988. Therefore, an Attachment effected, under The Prohibition of Benami Property Transactions Act, 1988, is to be assailed under the relevant provisions of the said Act, 1988, and in fact, the I & B Code, 2016, only pertains to questions concerning the Insolvency Resolution or Liquidation Proceedings of the Corporate Debtor - the Attachment, made as per Section 24(3) of The Prohibition of Benami Property Transactions Act, 1988, cannot be a subject matter of proceedings, under Section 60(5) of the I & B Code, 2016, in the considered opinion of this Tribunal. To put it differently, the Adjudicating Authority (National Company Law Tribunal), is not the proper FORA, to determine the controversies, revolving around the Attachment of the Property, under The Prohibition of Benami Property Transactions Act, 1988, as held by this Tribunal. As such, it is held by this Tribunal, that the filing of the instant Comp. App (AT) (CH) (INS.) Nos. 188 and 189 of 2022, by the Appellant / Petitioner / Liquidator, per se are not Maintainable, in the eye of Law.
A closure scrutiny of The Prohibition of Benami Property Transactions Act, 1988, and the I & B Code, 2016, clearly exhibit that they do operate in their own field and without any simmering doubt, this Tribunal, without any haziness, holds that an element of public interest, is involved in PBPT Act - Only when a Resolution Plan was approved by the Adjudicating Authority (Tribunal), Section 32A of the I & B Code, 2016, gets attracted. In reality, an Adjudicating Authority (Tribunal), cannot traverse upon matters which is beyond its scope. To put it precisely, issues/disputes, pertaining to an Attachment, effected under The Prohibition of Benami Property Transactions Act, 1988, cannot be gone into, by an Adjudicating Authority (Tribunal), under the I & B Code, 2016. In short, the Appellant / Liquidator, cannot take umbrage, either under the ingredients of Section 32A, coupled with Section 60(5) of the I & B Code, 2016.
This Tribunal, taking note of the divergent contentions advanced on either side, considering the fact that Liquidator, cannot bypass a remedy, provided under The Benami Transactions (Prohibition) Act, 1988, in assailing the Order, passed by the Adjudicating Authority, before the Appellate Tribunal, under the PBPT Act, 1988, keeping in mind of the surrounding facts and circumstances of the case, in a holistic fashion, comes to a resultant conclusion that the view arrived at, by the Adjudicating Authority (National Company Law Tribunal, Division Bench – II, Chennai), in dismissing the MA/1373/2019 and MA/1372/2019 in MA/1130/CAA/2019 in CP/612(IB)/2017, through its Impugned Order, dated 29.03.2022, is free from Legal Infirmities.
Appeal dismissed.
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2023 (3) TMI 302
Dissolution of the company - discharge of dues of OL, as the Liquidator - HELD THAT:- It has been stated that since the funds available in the account of the Company (In Liqn.) were insufficient, therefore, the unsecured creditors had been paid on pro-rata basis and after the deduction of the liquidation expenses of Rs.12,98,918.58/-, the fund position of the Company (In Liqn.) as on date is NIL.
It is stated that the OL has no further assets, either moveable or immoveable, from which any money may be realized for the Company (In Liqn.) and, therefore, no useful purpose would be served by keeping this matter pending.
The liquidation proceedings deserve to be brought to an end. Consequently, the Company (In Liqn.) is dissolved.
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2023 (3) TMI 248
Seeking directions to the Respondents to allow benefit of Companies Fresh Start Scheme (CFSS) in respect of overdue filings to the Petitioner who could not avail the benefit of filing under CFSS-2020 by 31st December, 2020 - HELD THAT:- After the Petitioner company was incorporated in the year 2003, only one Balance Sheet/ Annual Return was filed. There is no explanation whatsoever for non-filing of the documents and the balance sheets for more than a decade by the company. This led to the company being struck off and disqualification of the directors in 2017. The Petitioner has chosen to get the company restored only in 2019 and the DIN restored in September, 2020 after filing of a writ petition.
If there was any delay in processing of the DIN restoration pursuant to the orders, which were passed by this Court in RAVINDER SINGH CHAUHAN VERSUS MINISTRY OF CORPORATE AFFAIRS & ANR [2020 (9) TMI 1285 - DELHI HIGH COURT], the Petitioner ought to have availed of its remedies in accordance with law to ensure restoration of the DIN during the subsistence of CFSS. The Petitioner cannot be seen as being recalcitrant in its filing of documents and forms and choose to seek extension of benefits of CFSS, which is merely an alleviating measure. The said Scheme starts by saying that the alleviating measure has been introduced by the government primarily in view of the COVID-19 pandemic and was extended in view of the same.
The Petitioner has been a consistent defaulter in filing the documents and forms including the balance sheets for over several years. Thus, the CFSS cannot be extended in this manner beyond the date of operation inasmuch as there were a large number of companies, which were disqualified and if benefit under CFSS is extended to such companies beyond the date, the said scheme would be completely unworkable. The Petitioner was quite conscious of the fact that it had to file its documents and balance sheets in time, but has chosen not to do so. Thus, the long delay by the Petitioner cannot be completely sought to be condoned by the two or three months delay in restoring the DIN by the ROC.
The Petitioner was conscious of the deadlines under the CFSS and ought to have taken its remedies, but has chosen not to do so. In view of the same, this would not be a case of an extension the benefit of the CFSS scheme to the Petitioner - considering that the DIN was restored only after the order was passed by the Court in above cited case, the documents and forms shall be permitted to be submitted by the Petitioner along with requisite fee in accordance with the Companies Act and Rules.
Petition disposed off.
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2023 (3) TMI 247
Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - HELD THAT:- The Audited Balance sheets from Financial Year 2017-18 to 2018-19 as also the company repeatedly renewed Bank Guarantees for the project awarded to it by the Government of Odisha, as has a long-term loan of Rs. 29,96,000/- 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, Odisha is not sustainable in law.
The name of the Company directed to be restored to the Register of Companies subject to the compliances imposed - application allowed.
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2023 (3) TMI 179
Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - HELD THAT:- In view of the fact that the Company is having a large plot of land approximate area of 27,822 square yards, from the U.P.S.I.D.C., being Plot No. 2/l, in Sahibabad Industrial Area, Sahibabad, Ghaziabad, U.P. vide lease deed dated 15th July, 1972 shows that the Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Company is not carrying on any business or operations.
The order passed by the National Company Law Tribunal (Court-V, New Delhi) as well as Registrar of Companies, NCT of Delhi & Haryana is not sustainable in law - The name of the Company be restored to the Register of Companies subject to the compliances imposed - application allowed.
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2023 (3) TMI 178
Circular Resolutions - the main grievance of the Appellants / Petitioners is that the Circular Resolutions, are not duly circulated to all the Directors, as per Section 175 of the Companies Act, 2013, these Resolutions, were contrary to the clause 6.2 of the ‘Secretarial Standard – 1, on the Meetings of the Board of Directors, and in Violation of the Articles of Association of the Company.
HELD THAT:- In reality, Section 175 of the Companies Act, 2013, provides that no Resolution, shall be deemed to have been duly passed by the Board, or by a Committee, by circulation, was circulated in Draft, all the Directors or Members of the Committee, at their addresses, registered with the Company in India, and was approved by a Majority.
This Tribunal, points out Clause 22.4 of the Articles of Association of the Company, clearly mentions that A Circular Resolution, shall be deemed to have been duly passed by the Board, if it has been approved in writing (which would include confirmation via electronic or other means) by a majority of directors constituting the Board for the time being - Also that, Section 118 (10) of the Companies Act, 2013, enjoins that Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under Section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.
Furthermore, it is latently and patently quite clear that, as per Article 21.3 of the Articles of Association, the Majority, includes the consent of the 1st Appellant. That apart, as per Secretarial Standards-1 clause 6, the Circular Resolutions, have the same effect, as that of passed in the Board Meeting and hence, the Majority Vote, as applicable, for the Board Meeting, equally applies, to the Resolutions, passed by the Circulation, as well - the Circular Resolutions, cannot be said to have been duly approved, by the Majority Directors, and hence, this Tribunal, holds that the said Resolutions, are Void in Law.
This Tribunal, keeping in mind of the divergent contentions, raised on either side and taking note of the facts and circumstances of the case, in a conspectus fashion, without any haziness, holds that the Circular Resolutions No. 1 to 6 dated 03.11.2020, are Void in Law.
Appeal disposed off.
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2023 (3) TMI 76
Seeking permission to operate the bank account without any further fetters from the respondent Bank - HELD THAT:- The Learned Single Judge was mindful of the fact that an interim application is pending before NCLT, Kolkata for joint operation of bank accounts. Therefore, the order to make bank transactions by the parties with the concurrence of the other was passed to protect the interest of the parties pending final adjudication of the company petition and to prevent hampering of the pending application before the NCLT. The matter pending before the NCLT relates to affairs of a private company; its business efficacy, financial transactions, management and disputes between the shareholders of the company and thus the need for judicial intervention and interference into orders and proceedings of the NCLT must be kept to bare minimum.
Thus, no case is made out to interfere in the order of the Learned Single Judge and therefore, the appeal is devoid of any merits - application disposed off.
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2023 (3) TMI 75
Scheme of amalgamation - suit for specific performance - Direction to amend the schedule of property attached to the Approved scheme removing New Mill Factory Estate from property scheduled - HELD THAT:- From the facts it appears that the HMCL filed Civil Suit for Specific Performance of Contract on the basis of agreement against FGIL. The said suit being CS No. 168 of 2009 is still pending before the High Court of Calcutta wherein the Respondent was substituted as plaintiff on the basis of agreement dated 12.02.2009 (on record). The civil dispute with regard to North Mill Estate is pending for consideration before the Hon’ble High Court of Calcutta. On the other hand, the FGIL has also filed title suit No. 987 of 2015 before the Learned Civil Judge (Junior Division, First Court, Uluberia) for possession of that property against the Respondent.
From the record, it is evident that a Civil Suit No. 168/2009 is pending before the Hon’ble High Court of Calcutta with regard to the dispute passing of title of the suit property i.e. North Mill estate. Further, it is also on record that prior to filing of reply affidavit by the Appellant, the Appellant on or about 16.08.2019 filed a Suit bearing No. 192/2019 in Uluberia Court for ejectment of the Respondent No.1 from the North Mill property.
It reveals that certain proceedings / suits are pending with regard to claim of title to the North Mill Estate property. The contention of the Respondent that the Appellant did not disclose with regard to the pendency of civil disputes and it is mandatorily to make a disclosure under Section 230(2) of the Companies Act, 2013. Since the Appellant included the North Mill property as the property in the scheme of amalgamation, therefore, all the details with regard to the said property ought to have been disclosed in the scheme. However, the Appellant failed to do so.
Appeal dismissed.
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