TMI Blog2020 (8) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... the Shareholding Agreement, but having a separate legal entity R-1 can hold shares in its own name. There is nothing on record that any action was initiated or any competent authority have decided the question of beneficial interest in the company. Thus no such rights could be taken away from R-1 in respect of such shares - As R-1 is registered as a shareholder as on the date of petition and no competent court has passed any order affecting its rights as on the date of petition eligibility of R-1 to file a petition is to be reckoned on the date of the petition. Therefore, the petition is maintainable per se on the date of petition. Direction for Forensic Audit before deciding the issue of maintainability - Status Quo Ante - HELD THAT:- The question of maintainability need not to be decided as preliminary issue which can be decided along with main petition. Thus the NCLT under Rule 11 of National Company Law Tribunal Rules, 2016 has the inherent powers to pass such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. Therefore, the orders passed by NCLT are not questionable on the grounds contended by the Appellant - ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant is a company registered under companies Act, 1956 engaged in the business of purchase, sale, supply and distribution of power. R-2 Company was promoted by Mr. Rohit Rabindranath (hereinafter referred as Respondent No. 3 or R-3 in short) and also the Managing Director of R-2 Company. The Appellant is a shareholder of R-2, initially holding 49% and claiming to hold 51.1% shares which is contested and is part of the subject matter of the Company Appeal (AT) No. 296 of 2017. R-2 ventured into solar power generation in 2010 and required additional funds to expand its business. In 2015 R-3 entered into a Strategic Investment Agreement with Kohli Ventures. Pursuant to the Agreement ₹ 30 Crores was invested into R-2 Company by Kohli Ventures from various sources, and shares were allotted to the nominee company of Kohli ventures, one Cascade Energy Private Limited i.e R-1 Company. 3. R-1 is a Singapore based Investment Company. R-1 entered into a Shareholder Agreement dated 27.07.2015 with R-2 Company. R-1 holds 67,46,998 equity shares of ₹ 10/- each, in R-2 constituting 51% of the Equity Share Capital in R-2. R-1 submits that on noticing certain acts and omissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r R2. The Petitioner is directed to file the counter within two weeks and thereafter within ten days the Counsel for the Respondent may file rejoinder, if any. Matter is posted for arguments on the application. Put up on 13.7.2017 at 10.30 a.m. 5. Aggrieved by the same the Appellant approached NCLAT through this Company Appeal (AT) 213 of 2017. NCLAT set aside the order passed by the NCLT, Chennai and remanded back to the NCLT, Chennai by passing an Order on 14.07.2017 as under: 5. It is informed by the parties that the Appellants have filed the original Company petition under Section 241 of the Companies Act, 2013 alleging oppression and mismanagement by Respondents. The Respondents have also filed a cross petition under Section 241 alleging oppression and mismanagement on the part of the Appellants. Both the matters are pending and no affidavit or reply has been filed, as the Appellants have raised the question of maintainability of the petition filed by Respondents under Section 241 of the Companies Act, 2013. The original petitions were filed in April 2017 and though approximately three months have passed but the petitions have not been taken up for consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on 18.07.2017: 7. It is also on record that the petition came to be filed on 07.04.2017 and, if the shareholding composition of the management as it existed on 27.04.2017 is not protected. The balance of convenience existing in favour of the petitioner may get disturbed and there is an apprehension of causing irreparable loss to the petitioner that cannot ve compensated by way of monetary consideration. In the light of the above discussion, we are inclined to grant the relief as contained under para vi(1) of the I.A. No. 110 of 2017 and order as follows:- We direct the Respondents to maintain status quo with regard to the Board Composition, shareholdings and Articles of Association of the 1st Respondent Company as it existed on 27.04.2017. 8. In relation to the application for maintainability of the petition that has been filed by R2, counter has been filed by the other side. The opposite party is directed to file rejoinder. The matter is posted for arguments on the maintainability of the Company Petition. Put up on 27.04.2018 at 10:30 A.M. 8. The above order was challenged before the NCLAT through this Company Appeal (AT) 296 of 2017. Both the Appeals i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100 Crores INR in relation to the loans. Any recall of loans due to the KYC of the Respondent would have crippling consequences for the Appellant and would essentially sound the death knell for the Appellant as well as the business life of R-3. 13. It is also submitted that R-1 and Kohli ventures have failed to disclose several material facts with respect to their background, and specifically that of their promoter, i.e. Kohli. Therefore the said Respondent has willfully misrepresented and has consequently violated the provisions of the Indian Contract Act, 1872. Due to these illegal acts of R-1, the Appellant has been forced to run from pillar to seek remedy. Aggrieved by the blatant violation of the Foreign Exchange Management Act, 1999 ( FEMA ) and the failed KYC due to fraudulent misrepresentation by R-1 and its agents, the Appellant filled a Company Petition alleging oppression and mismanagement and seeking rectification of Register of Members on 16-03-2017 (C.P. No. 13 of 2017) before the NCLT, Chennai Bench. 14. It is submitted that subsequently, R-1 also filled a company petition by way of counter blast, being C.P. No. 19 of 2017 before the NCLT, Chennai Bench, in Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 read with Section 89(8) of the Companies Act, 2013. Therefore the said Impugned Orders of Hon ble NCLAT are not only erroneous and illegal, but the said illegality also goes to the root of the matter, since the NCLT has failed to properly consider whether R-1 was even entitled to maintain C.P. No. 19 of 2017 filed by it, and further whether it could have exercised its rights as a shareholder on the date of filing the petition under Section 241 despite the failure to make declarations under Section 89. Therefore R-1 is disqualified from exercising any rights of shareholder under section 89(8) of the Companies Act, 2013 and for that reason cannot maintain CP No. 19 of 2017. 18. It is further contended by the Appellant that as per Section 242 (4) an interim order could be passed only for the purpose of regulating the conduct of the Company s affairs that too upon such terms and conditions which are just and equitable. Neither does the impugned order contemplate regulating the company s affairs nor does it state the reason for passing such a drastic order. For the very reason, the order of NCLT is liable to be set aside as perverse, erroneous and without jurisdiction. 19. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not affect the rights or liabilities of a party are not appealable. In the instant case, the impugned order merely directs a forensic order of the records of R-2 as NCLT deemed it fit and necessary to determine the status of the affairs of the said Company before progressing in the matter. The obligation to maintain proper records and to subject them to annual audit is a statutory obligation of the said Company. Hence the impugned order does not impose a new obligation upon R-2 Company. The impugned order does not in any way impose any obligation or curtails the right/liberty of the Appellant, who is nothing more than a mere 49% shareholder. The Appellant cannot in any way be a person aggrieved for the purpose of Section 421 and the impugned order cannot possibly cause prejudice or give rise to a grievance to the Appellant. The impugned order is innocuous. Consequently, as per the law laid by the Hon ble Supreme Court, such an order is not appealable, especially at the hands of the Appellant. On this ground alone the instant appeal ought to be dismissed. 23. It is further stated by the Counsel of R-1 that the impugned order is not arbitrary, perverse or capricious. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Ventures (P) Ltd does not hold any right, title or interest in the said shares. Even the Company Secretary of R-2 Company issued certificates confirming that all applicable laws and regulations were complied with while making the investment. The entire investment in equity and debentures is fully reported to RBI as required by applicable regulations. 28. It is further submitted on behalf of R-1 that after receiving the investment, R-2 Company and R-3 excluded R-1 s nominee directors from the activities and affairs of the company. Despite persistent efforts by R-1 and its representatives, the Appellant and R-3 did not divulge any information about the affairs and business operations of the Company to R-1. Realising that things were amiss R-1 enquired with statutory authorities and discovered that the R-2 Company :- a) Had not filled its financial statements for the year 2015-16 and 2016-17. b) Had not finalised its balance sheet for 2015-16 and 2016-17. c) Had advanced huge loans to its subsidiaries i.e. R-4 and R-5 without the approval and consent of R-1 s nominee directors. d) Advanced to subsidiaries and related party s was in violation of the Reserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 to the Deputy Commissioner Income Taxes, to the effect that this Respondent is a Benamidar of Kohli Ventures (P) Ltd. Based on the complaint of R-3, the said IT Officer absurdly and without jurisdiction passed an order dated 19/05/2017 under the Benami Transection (Prohibition) Amendment Act 2016 directing the Registrar of Companies, Chennai to attach the shares of R-1 in R-2 Company, without prior notice to R-1. On Issuance of this order, the Appellant filed an application CA No. 112 of 2017 in CP No. 19 of 2017 seeking summary dismissal of CP 19 of 2017 on the premise that the shares have been attached and therefore no right in respect of the same can be exercised by R-1. 31. It is argued on behalf of R-1 that while the said attachment was malafide and illegal it is also respectfully submitted that mere attachment does not divest the shareholder of ownership or his rights under the shares, only the right to transfer any rights therein is curtailed. Therefore, the presumption of the Appellant that merely because the shares were provisionally attached the same may be treated as non-existent is wholly fanciful and self serving. 32. It is further contended on the behalf of R- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion seeking status quo ante were listed on 13/07/2017 but the Tribunal only ordered the application for maintainability is erroneous. As is apparent from the records R-1 had filed a counter in CA 112 of 2017 and hence on their specific request, the Appellant had been permitted by the Tribunal to file a rejoinder. This direction was in fact specifically sought by the Appellant. In fact the Appellant has also filed a rejoinder in CA 112 of 2017 thereafter. Further the application for status quo namely CA 110 of 2017 was argued by both sides. There is nothing on record to demonstrate that the Appellant objected to the said application being argued on the said and factually no such objection was raised. On the other hand the Appellant took its chance by arguing the application CA 110 of 2017 in CP 19 of 2017 and when orders have now been passed against it, the Appellant is now raising the ground that the said application ought not to have been taken up. Nevertheless, it is respectfully submitted that by merely filling an application challenging maintainability of a proceeding and not pursuing it for several months, cannot be a ruse to stymie another party s recourse to law. Hence this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds contended by the Appellant. Also, we are of the opinion that maintainability is a mixed question of facts and law and conducting a forensic audit could produce the important facts that may be required by the NCLT in order to decide the preliminary issue. 40. The Other issue raised by the Appellant that whether the impugned interim order dated 14th June 2017 passed by the Tribunal is in consonance with sub-section (4) of Section 242 of the Companies Act, 2013, as quoted below:- Powers of Tribunal - (1)If, on any application made under Section 241, the Tribunal is of the opinion- (a) that the company s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company;and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at provision should be made. (3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal. (4) The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company s affairs upon such terms and conditions as appear to it to be just and equitable. 41. From the bare perusal of the impugned order we are of the view that the Tribunal have the power to make interim orders which it think fit for regulating the conduct of the company s affairs. There are allegations of siphoning of funds, breach of agreements and failure to maintain proper books of accounts thus it was required on the part of the Tribunal to conduct a forensic audit by an independent auditor in order to proceed further with the petition. We are of the opinion that imposition of forensic audit and calling for the report of Forensic Audit before the Tribunal is a measure to help the Tribunal to appreciate the issue on the basis of an independent report so as to ensure that the case is processed with due regard to rig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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