TMI Blog2016 (3) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... nts by holding AGM to meet the statutory compliances. On the contrary, the Applicant (Respondent No.3) and Petitioner No. 1, without making some Company Application in the pending legal proceedings since 2010 before this Hon'ble Board seeking directions/reliefs as to filing of the financial statements and invocation of Sections 164 and 167 of the Companies Act, 2013, have claimed to be Promoters and new Directors have been appointed. As a matter of fact, there are controversial arguments as to whether there is Promoter in the Company, especially due to the claims of both the rival parties of having control over the state of affairs of the Respondent No. 1 Company. In addition, the provisions of Sections 164 and 167 of the Companies Act, 2013 have been notified w.e.f. 01.04.2014 and hence, consequential action under Section 167(3) accrues on non-filing of financial statements for three years commencing from 01.04.2014. In view of this legal position, the erstwhile Directors continue to be validly and legally appointed directors and hence, the said Board of Directors is competent to appoint the Advocate by following the provisions of law. As such, in the interest of justice, the pray ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-on-record and/or Counsel on the authorization of its erstwhile Directors would be unauthorized and illegal. 1.1. In addition, in a supplementary Affidavit dated 08.06.2015, filed by the Respondent No. 1 Company/Applicant Advocate, it has been stated that the Respondent Nos.2 3 filed a Writ Petition being W.P. No.3296/2015 before the Hon'ble Delhi High Court praying for direction upon the Ministry of Corporate Affairs (MCA) to take steps to upload the digital signature of the new Directors of the Respondent No. 1 Company, viz., Mr. Haj Shekhar Agrawal, Mrs, Vandana Agrawal and Mr. Yudhisther Kumar Gauba, on the Portal of the MCA within a time frame. Thereafter, during the course of hearing of the aforesaid Writ Petition on 18.05.2015, some Advocates made an endeavour to represent the Respondent No. 1 Company who were not authorized by the present Board of Directors of the Respondent No. 1 Company and it is quite obvious that those Advocates were acting on the purported authority of the erstwhile Directors. During the course of hearing, the Advocates claiming to appear for the Respondent No. 1 Company has read out to the Hon'ble Court a letter dated 10.04.2015, address ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any had made an application on 03-09.2010 to the Registrar of Companies (ROC), West Bengal, for extension of time of the date of the AGM which was rejected by the ROC on 09-09-2010 and consequently, Mr. Partha Ghosh as Managing Director of the Respondent No. 1 Company purported to file an appeal before the District Court against the injunction, while in an Affidavit filed before this Hon'ble Board in March, 2014 by the Petitioner No. 1 on behalf of himself and Mrs. Sumana Ghosh, has staled that they supported the Suit for such an injunction, thereby admitting to such collusion in procuring a Court Order by plying fraud on the Court. It is also a matter of record that despite the AGM of the Respondent No. 1 Company not being held, the Petitioner No. 1 had filed the financial statement for the year ended 31.03.2010, along with the Statement of facts and reasons, clearly acknowledging the Respondent No. 1 Company's responsibility to file the financial statement as required under Section 220(3) of the Companies Act, 1956, Therefore, there remains no iota of doubt that the Petitioner No. 1 (Mr. Partha Ghosh) along with other previous Directors vacated their offices and they cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 3 are not qualified to instruct Advocates or move the instant Company Application on behalf of the Respondent No. 1 Company. Also, such Writ Petition was moved without any notice or intimation to the Petitioners and also, without impleading the Petitioners or the Respondent No.1 Company, as parties, The Respondent Nos.2 3 had approached the Hon'ble High Court at Delhi in an attempt to stealthy validate their wrongful appointment as Directors of the Respondent No. 1 Company, despite the fact that all disputes concerning the Respondent No. 1 Company are pending before this Hon'ble Board. However, the Petitioners herein are vitally interested in the outcome of the aforesaid Writ Petition and the Petitioner No. 1 through his Advocate intervened in the matter and sought to be added as party thereto and the Hon'ble High Court at Delhi has permitted to the Petitioner No. 1 to file an Application for impleadrnent as party to the said Writ Petition. In any event, the present Company Application cannot be decided unless this Hon'ble Board upholds the appointment of the Respondent Nos.2 3 in the main Company Petition as the Directors of the Respondent No. 1 Company, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1956. In view of the aforesaid premises, the failure to file the Financial Statements for the subsequent years 2010-11, 2011-12 and 2012-13 was not at all caused due to the presence of the said Court Order dated 15.12.2015, but was the sole consequence of an absolute intentional default. 4. The Petitioners/Non-Applicants Advocate in his argument in the instant Company Application has taken the same pleas as advanced in other Company Application being C.A, No.683/2013 connected with C-P. No.859/2010, as under :- 4.1 The instant Company Application has been made in pursuance of the authority conferred on the Applicants by way of a Board Resolution, passed in a purported Board Meeting held on 06.02.2015 to derive the competence to file the instant Application. Further, upon vacation of the office by the Board of Directors of a Company under Section 164 of the Act, an interim Board of Directors can only be appointed under the terms of Section 167(3) of the Act, either by the Promoters or the Central Government, whereas the Respondent Nos.2 3 are not the Promoters within the meaning of the definition of Promoter in Section 2(69) of the Companies Act, 2013 and as such, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ria provision Section 274 of the Companies Act, 1956 is of no relevance since the consequences of the disqualification under Section 274 of the Companies Act, 1956 as provided for in Section 283 of the Companies Act, 1956 are distinct from the consequences of the disqualification under Section 164 of the Companies Act, 2013, as provided in Section 167 of the Companies Act, 2013. It is noteworthy that disqualification under Section 274 does not result in vacation of the Board of Directors under Section 283 of the disqualification under Section 274 of the Act. As such, the provision for vacation of the Board of Directors under Section 167 consequent upon attracting any of the disqualification under Section 164 is a new consequence, effective only upon coming into effect of the said provision on 01.04.2014. 4.4 The Respondent Nos.2 3 instituted a Writ Petition being W.P. (C) No. 3296/7015, wherein the Applicants admitted that so long as their digital signatures are not uploaded on the MCA Portal, the purported new Board of Directors would remain totally incapacitated to take any corporate action . However, the said writ petition has been dismissed by the Hon'ble High Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reted that the right to appoint directors shall accrue by virtue of shareholding or shareholders agreement and as a shareholder, shall have control over the affairs of the Company, Hence, by all means, the Respondent Nos.2 3 satisfy the test of Promoters as per the stated criteria in the said Act and the directors of the Respondent No. 1 Company were rightly appointed in terms of Section 167(3) of the Act. 6. Having considered the Company Application, supplementary Affidavit reply, rejoinder and the arguments (oral and written) of the Advocates of the rival parties, it is observed that the Respondent No.3, viz., Mrs. Vandana Agrawal has moved the present C.A. No.684/2015 on behalf of the Respondent No. 1 Company, The Applicant Advocate has contended that all the erstwhile directors of the Respondent No. 1 Company vacated their offices in terms of Section 167(1) read with Section 164(2) of the Companies Act, 2013 due to the default committed by the erstwhile directors in filing the financial statements of the Respondent No. 1 Company and its subsidiary Companies for the years 2010-11, 2011-12 and 2012-13. Further, it has been highlighted that during the course of hearing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgued that now the Petitioner No. cannot take shelter of the Order of Injunction dated 15-12.2010 for the failure to file the Financial Statements for the financial years 2010-11, 2011-12 and 2012-13. 6.2 The Advocate for the Petitioners/Non-Applicants has controverted that it is a settled proposition of law that upon being prevented from holding any AGM, the entire business of the Company comes to a standstill and there can be no allegation of non-compliance of statutory filing requirements on account of complete standstill of the affairs of the Company. Further, in any event, the provisions of erstwhile Section 220 of the Companies Act, 1956 providing for filing of unapproved balance sheet is of limited relevance in so far as in absence of suitable machinery to prepare financial documents, the question of even unapproved balance sheet and/or other financial documents does not and cannot arise. As regards the financial statement for the year 2009-10, it has been stated that the said accounts were already duly prepared and audited, but could not be tabled before the members in the AGM and hence, the same without adoption by members were filed. Moreover, disqualification under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Not only this, the Respondent Nos.2 3 are not identified as Promoters in any Prospectus nor are identified as such in the Annual Return of the Company. Furthermore, the Respondent Nos.2 3 do not have control over the affairs of the Company, either directly or indirectly, whether as a shareholder, Director or otherwise nor are persons in accordance with whose advice/direction the Board of Directors of the Company is accustomed to act and therefore, the Respondent Nos.2 3 do not have any right to appoint majority of the Directors or to control the management and take decision in the affairs of the Company, either by virtue of their shareholding or management rights or shareholders agreement or voting agreements or in any manner whatsoever. Over and above, the Respondent Nos.2 6 3 instituted a writ petition being W.P. (C) No.3296/2015, wherein the said applicants admitted that so long as their digital signatures are not uploaded on the MCA Portal, the purported new Board of Directors would remain totally incapacitated to take any corporate action and the said writ petition has been dismissed by the Hon'ble High Court at Delhi, by an Order dated 14.09.2015 without any reli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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