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TMI Blog2015 (9) TMI 1451X X X X Extracts X X X X X X X X Extracts X X X X ..... rder accepting the scheme. 3. Before commencing with arguments, we had directed both sides to file detailed written submissions with reference to the court pagination. Both sides have filed the written submissions and exchanged the same. 4. We had also called for the record of Co.Pet.No.275/2011 which has been received. 5. Dr. Manmohan Sharma, learned counsel for the appellant as well as Mr. Alok Agarwal, learned counsel for the respondent no.1 have been heard at length. They have carefully taken us through the paper book of this appeal as well as the records of Co.Pet.No.275/2011. We have given our considered thought to this matter. 6. We note hereunder certain undisputed dates. The Basti Sugar Mills Co. Ltd. (respondent no.1 herein) was incorporated in the year 1956 under the provisions of the Companies Act, 1956 for undertaking the business of running of a sugar mill in the state of Uttar Pradesh while the respondent no.1 maintained its registered office at Delhi. 7. Shri H.K. Chadha (appellant herein) was a statutory auditor of the company (hereinafter referred to as a „company‟). In the year, 1973, he acquired eight shares of the company and thereupon became a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho is said to have colluded with the Petitioner and his father (Sh. H.K. Chadha who also was the Statutory Auditor of the Respondent Company), cannot be said to be the person issuing certificated instrument and having been authorized to issue such so called instrument of transfer on the company‟s behalf. The petitioner's claim of deemed certification fails and the case of the respondents' regarding the alleged collusion is prima facie made out, the documents seem to self-serving documents prepared with the motive to get over the debarring provisions of a statutory auditor, this finding is confirmed by the fact that the normal procedure for transfer has not been followed by the petitioner and his father, the statutory auditor of the company. There is no answer to the respondents contention that the reverse side of the share certificate does not have valid transfer endorsement, there is no seal as well. There is no question of the respondent company replying to the petition allowing or refusing of transfer when the proper documents have not been filed with the company, the receipt is by a company secretary, Managing Director is directly endorsing and returning it to the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alified from being appointed as a statutory auditor of the respondent company. 15. The record of the case reflects that on the 31st of October 2005, 99% of the ownership, management and control of the company came into the hands of M/s Phenil Sugars Pvt. Ltd. (hereinafter referred to as "transferee company"). 16. So far as the appointment of a statutory auditor to replace the appellant is concerned, the annual general meeting of the Basti Sugar Mills Co. Ltd. was held on 30th December, 2006 when the shareholders appointed a new statutory auditor. 17. It appears that one of the shareholders of the company filed a suit on the original side of this court seeking an injunction against appointment of the new statutory auditor. Against the proceedings in the suit, the appellant filed RFA(OS)No.133/2006 entitled Mr. H.K. Chadha v. Basti Sugar Mills Co. Ltd. wherein the Division Bench of this court by an order dated 16th May, 2007 upheld the appointment of a new auditor. 18. In the meantime, so far as the affairs of the company are concerned, the applications being Co.App.(M)No.71/2011 and Co.App.(M)No.67/2011, as the first motion applications, were filed under Sections 391 to 394 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director that inspection of the books of account and record of both the companies had been conducted in 2008 as well as to certain violations of the statute. The Regional Director had also pointed out that pursuant to the applications made by the transferor and transferee companies, all violations have been permitted to be compounded by the competent authority. The Regional Director has also stated that both companies had since filed E-Form 21 along with the orders under Section 621A of the Companies Act. 25. Keeping in view the submissions of the appellant, by an order passed on 23rd November, 2011, the learned Company Judge directed the Regional Director to file a supplementary affidavit within four weeks clearly dealing with the objections raised by the appellant in CA.No.2168/2011. The record of the learned Company Judge shows that on 4th January, 2012, the Regional Director filed a further affidavit after examining the copies received from the appellant. 26. Dr. Manmohan Sharma, learned counsel for the appellant submits that the Regional Director had termed the allegations made by his client as very serious and that the matter was not free from doubt. Mr. Alok Agarwal, on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he prayers which were made before the learned Company Judge and have been rejected. It is submitted that the learned Single Judge, seized of with the writ petition, would be bound by the adjudication of the learned Company Judge and now by the orders in the present appeal. We refrain from commenting thereon. It shall be open for learned counsel for the respondent to make such submission as and when the writ petition is taken up for consideration. 31. The appellant assails the order dated 20th February, 2013 on factual objections only. On behalf of the appellant, Dr. M.M. Sharma has primarily contended that his objections have been overlooked by the learned Company Judge. 32. The respondent no. 1 contends that all objections raised by the appellant were without any substance and have been rightly rejected by learned Company Judge. 33. The respondent has placed before us a tabulation of the objections raised by the appellant before the learned Single Judge as well as in the grounds of appeal before us. The tabulation contains the response of the company as well as details of the para numbers in which they have been dealt with in the impugned order. 34. We have carefully examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve all been dealt with in the impugned order from paragraph 21 onwards. E AGMs not conducted Ground is Repetitive and vague Considered in paragraph 18 F AGMs not conducted for 2004-2005 Ground is repetitive and vague Considered in paragraphs 18 and 27 G AGMs not conducted for 2004-2005 Ground is repetitive and vague Considered in paragraphs 18, 19 and 20 H NOC not obtained from DSE NOC requirement is only directory. Also Basti Sugar Ltd. Had taken all steps, but DSE being defunct did nothing. Considered in paragraphs 28 and 29 I J&K Matter should have been investigated U/s 237 and by police Farfetched perverse allegations and demands Considered in paragraphs 24 and 25 35. Reliance was placed in the proceedings in the Company Court on the judgment reported at (2005) 125 Company Cases 289 (AP), Compact Power Sources P. Ltd v. HBL Nife Power Systems Ltd. The learned Single Judge has correctly applied the law and held that the listed company was only required to give a scheme/petition to the stock exchange at least one month before presenting the scheme under Sections 391 and 394 of the Act and that the failure of the stock exchange to respond would not pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent. 8. That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. 9. Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there would be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction. The aforesaid parameters of the scope and ambit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant by profession, such actions on the part of the appellant are in utmost bad faith. For this reason, apart from the appeal being devoid of legal merit, the appellant deserves to be burdened with heavy costs. 43. The malafide of the appellant has led to several proceedings before the Company Law Board, one suit on the original side, a regular first appeal before the Division Bench, a writ petition before the Single Judge, applications/objections in the proceedings under Sections 391 and 394 of the Companies Act at both stages and the present appeal before a Division Bench of this court. The appellant is represented by very senior and able legal experts. Clearly, he is a person of sufficient means, who is able to afford such malicious litigation. Shri H.K. Chadha thus has the capacity to pay reasonable costs to the other side as well. 44. Valuable judicial time has been caused to be squandered on this meritless litigation at the instance of the appellant who must also compensate the system. This is possible by making a deposit towards legal aid, the expense whereof are borne by the state. Legal aid is a constitutional right of poor and disadvantaged litigants and provided insti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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