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TMI Blog2016 (12) TMI 1824X X X X Extracts X X X X X X X X Extracts X X X X ..... alpractices in the working of Respondent 1 Company to show that deeper probe is necessary. There has been complaint of mismanagement in the affairs of Respondent-1 Company. The applicant has also made out a good case by showing that there has been prima facie violations of the provisions of Companies Act in the maintenance of the minutes of various proceedings of the Respondent-1 company. Apparent misdeeds and dishonesty in the maintenance of minutes of the company in contravention of the provisions of the Act cannot be ruled out. Law makes the investigation comprehensive of all sorts of illegalities. Sub clause 1 clause (b) of section 213 is wide enough to include contravention of any law. There has been prima facie existence of malpractices in tampering of records, which cannot be overlooked. In the facts, it appears that deeper probe in the affairs of Respondent No. 1 company is necessary" 2. The facts in a nutshell as pleaded by the Appellant are as follows: - The appellant is a company incorporated under the Companies Act 1956 to carry out business in the field of renewable The appellant was to setup a 99.45 MW of wind power project at Satara district, Maharashtra by investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board of the Appellant was present in both meetings and accorded his consent/approval. The said approval was granted as the WTGs to be manufactured by Proforma 10th Respondent for the aforementioned projects. 10. Even the Board of Directors of Proforma 10th Respondent, whose chairman was Mr. Uddesh Kohli (a Director of 1st Respondent) approved the grant of the aforementioned corporate guarantee and pledge of shares by the Appellant in favour of Bankers of Proforma 10th Respondent in its meeting held on 30th June 2011. The minutes of the said meeting were confirmed in the next meeting of the Board of Directors of Proforma 10th Respondent in presence of and with the concurrence of Mr. Uddesh Kohli. 11. Similarly, the Board of Directors of RSIGEPL also approved grant of corporate guarantee and pledge of shares in favour of Bankers of Proforma 11th Respondent. 12. It f was only after a lapse of more than one year that 1st Respondent on 30th July 2012 for the very first time raised an objection with respect to grant of corporate guarantee. 13. Three years thereafter i.e. on 7th May 2015, 1st Respondent filed a criminal complaint before the EOW against the Appellant and its Prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Proforma 10th Respondent the signed ones and they were exactly the same as the one filed by the Appellant along with its reply to the company petition, whereas the minutes filed by 1st Respondent were not even signed. In this background it is alleged that the genuineness and reliability of the minutes filed by 1st Respondent was extremely doubtful. 19. However, as CLE had noted in the said order dated 16th October 2015 that the observations were only prima facie and were not an expression of final opinion and that the main petition shall be heard uninfluenced by the said observations, no appeal was preferred by the Appellant against the said order. 20. Thereafter, when the company petitions carne up for hearing before the CLB on 14th December 2015, the counsel for the 1st Respondent, without specifying any particular document, submitted that certain documents and information were required by the 1st Respondent for adjudication of the main petition. Considering that the said prayer must have been made with respect to the documents and information pertaining to the Appellant company the counsel appearing for the Appellant in a bonafide manner submitted before the CLB that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of time, were different and there are, variations/discrepancies in about ten of those minutes. The 1st Respondent that there were differences in the two sets of minutes of meetings of the Board of Directors of the Appellant Company held on 11th February 2008, 11th April 2008, 30th August 2008, 22nd September 2008, 27th December 2008, 31" March 2009, 26th May 2009, 15th October 2009, 18th May 2010 and 30th June 2011. The 1st Respondent further alleged that there are fabrication of minutes and that the Appellant was maintaining multiple versions of the minutes book. On hearing the parties Tribunal directed the SFIO to carry out an investigation into the financial irregularities and fraudulent conduct of the controlling shareholders in the affairs of the Appellant Company as well. as Proforma 10th Respondent. It is the order passed by the Tribunal, New Delhi, in CA 92/ C-1/2016 which is under challenge in the present appeal. 25. Learned Senior Counsel appearing for the Appellant submitted that the application under Section 213 of the Companies Act 2013 was filed in March 0016 under Regulation No. 44 of the Company Law Board Regulations 1991 when Section 213 was not in force. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation. An action, not based on circumstances suggesting an inference of the enumerated kind, will not be valid. 30. Learned Senior Counsel for the Appellant placed reliance a tabular chart filed on behalf of the Appellant regarding alleged variance in minutes of meeting. Therein discrepancies as were alleged before the Tribunal by the 1st Respondent have been explained by the Appellant to justify the minutes of meeting. For example, with regard to minutes of meeting dated 11th February 2008, the discrepancy pointed out by the 1st Respondent related to missing of last two pages supplied on 1st February 2016. Stand of the Appellant is that it was inadvertently missed out while photocopying the pages. Similarly, with regard to proceeding dated 11th April 2008, it was contended that the minutes allegedly supplied by Appellant at, the contemporaneous period of time are not even signed. Hence, their genuineness is extremely doubtful. 31. It was further contended that the Appellant adduced sufficient before the Tribunal to show that all steps were taken in accordance with resolutions passed in the minutes of the meeting of the Board of Directors of the Appellant and were duly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that there is a puma facie violation of the provisions of the Companies Act in the maintenance of the minutes of various proceedings of the Appellant company and apparent misdeeds and dishonesty in the maintenance of minutes-Of the company in contravention of the provisions of Act cannot be ruled out, The Tribunal further observed that sub-clause (i), clause (b) of Section 213 is wide enough to include contravention of any law. There has been prima-facie existence of malpractices in tempering of records, which cannot be overlooked. 36. We have heard Learned counsel for the parties and perused the record. On the directions of this Appellant Tribunal the Appellant Company also produced the originals of the relevant minutes of meeting. The 1st Respondent also produced the Photostat copies of the minutes of meeting of the same period which were forwarded to the 1st Respondent for confirmation. 37. From minutes of meeting dated 22nd September 2008, we find that signatures of CMD appears to be different in two sets of minutes. The meeting dated 27th December 2008 also show that one Mr. Arun Bhalla's (Nominee Director of 1st Respondent) name was inserted in the minutes which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material, the general scope of the statute and the mischief that it was intended to remedy. This statement of the rule was later fully adopted by the Supreme Court. It is a rule now firmly established that the intention of the Legislature must be found by reading the statute as a whole. The rule is referred to as an -"elementary rule" by VISCOUNT SIMONDS; a "compelling rule" by LORD SOMERVELL OF HARROW; and a "settled rule" by BK. MUKHERJEE, J. agree", said LORD HALSBURY, that you must look at the whole instrument inasmuch as there may be inaccuracy and inconsistency; you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it". And said LORD DAVEY: "Every clause a statute should be construed with reference to the context and other clauses of the Act; so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter." It is spoken of construction "ex visceribus actus". "It is the most natural and genuine exposition of a statute", laid down LORD COKE "to construe one part of a statute by another part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to the abuse of process of law, it is for the legislature to amend, modify or repeal it, If deemed necessary; (See Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd.). The legislative casus omissus cannot be supplied by judicial interpretative process. Language of Section 6(1) is plain and unambiguous. There is no scope for reading something into it, as was done in Narasimhaiah case. In Nanjudatah case the period was further stretched to have the time period run from date of service of the High Court's order. Such a view cannot be reconciled with the language of Section 6(1). If the view s accepted it would mean that a case can be covered not only clause (i) and/or clause (ii) of the proviso to Section 6(i), but also by a non-prescribed period. Same can never be the legislative intent. 15. Two principles of construction - one relating to casus omissus and the other in regard to reading the statute as a whole appear to be well settled. Under the first principle a casus omissus cannot be supplied by the court except in .the case of clear necessity when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of showing that the applicants have good reasons for seeking an order for conducting an investigation into the affairs of the company; or (b) on an application made to it by any other person or otherwise, if it is satisfied that there are circumstances suggesting that- (i) the business of the company is beihg condüttéd with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to any of its members or that the company was formed for any fraudulent or unlawful purpose; (ii) persons -concerned in the formation of the company -or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or (iii) the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the Calculation of the commission payable to a managing or. other director, or the manager; of the company, order, after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to pass order, after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of the company ought to be investigated by an inspector or inspectors appointed by the Central Government. 47. The rest part of the provision relates to the action, thereafter to be taken by the Central Government. On investigation by the Inspector(s) if offence is proved, the officer(s) of the company in default or any person concerned in the formation of the company or the management are punishable for fraud in the manner as provided in Section 447 of the Companies Act,2013. 48. The basic principle of justice delivery system involving offence resulting punishment is that if any-allegation is made by any person before a court of law or Tribunal such person is required to support the allegation by bringing on record some evidence to suggest that a prima facie case is made out and there are good reasons for seeking an order. Therefore, the sentence "Supported by such evidence as may be necessary for the purpose of showing that applicants have good reasons for seeking an order for the conducting an investigation into the affairs of the company", as mentioned below clause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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