TMI Blog2020 (10) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... such an inspection? - HELD THAT:- It is to be seen that recording satisfaction to take action means to form an opinion which again is traceable to the nature of allegations against the person/Company or both. In this case respondents on even number of occasions received complaints from the 4th respondent alleging mis-management, oppression and fraudulent acts on the part of the 2nd petitioner, who has been the director of the Company, which itself are to be construed as the basis for forming opinion to record satisfaction for ordering inspection under Section 206 of the 2013 Act. Non recording of reasons for satisfaction in the order itself or if not manifestly appear from the order, is not fatal and the impugned order cannot be invalidated on that ground alone when the allegations are serious in nature touching upon the very functioning of the Company that too by a share holder group of 50% of the Company, now as per the orders of the NCLT, subject to orders the Appellate Tribunal. Admittedly, apart from the ROC, the Central Government (Ministry of Corporate Affairs) has the authority to direct the Registrar or an inspector appointed for the purpose, to initiate an inquiry into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the 3rd respondent-the Registrar of Companies in ordering inspection through the impugned notice No. RAP/INS/206/2016, dated 15-03-2016 as being illegal, arbitrary, contrary to Chapter XIV particularly Section 206 of the Companies Act, 2013, (for short, the 2013 Act ) and violative of Articles 14, 19 of the Constitution of India and for grant of consequential reliefs. Writ petition No. 12296 of 2019 is filed by the 2nd petitioner in writ petition No. 10201 of 2017 and his two sons as shareholders of the Company to declare the action of the 3rd respondent-the Inspector Joint Director, Ministry of Corporate Affairs, in issuing summons dated 27-05-2019 under Section 207(3)(b) of the 2013 Act as being illegal, ultra-virus, arbitrary, contrary to Chapter XIV of the Act and violative of Articles 14, 19 21 of the Constitution and for grant of consequential reliefs. 2. Since the parties and the subject matter being similar in these writ petitions, they are heard and disposed of together. Suffice it to advert to the facts in WP No. 10201 of 2017. 3. The case of the 2nd petitioner is that the 1st petitioner-Company was established in the year 1978 engaged in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares by the brother-in-law of the 2nd petitioner has taken place on 27-02-2007, hence the set transfer of shares on 08-04-2010 is farce and void under Section 23 of the Contract Act and goes contrary to Section 113 of the 2013 Act. It is also stated that in June, 2010, the 2nd petitioner could lay his hands on the share certificates transferred by his brother-in-law from a safe-vault and when he confronted the 4th respondent, the 4th respondent fearing legal consequences had agreed to the transactions that had actually taken place on 27-02-2007 be maintained and bound by it and had also specifically agreed that the fabricated documents would be put away as ineffective; however, later the 4th respondent's shares were transferred which originally belonged to him in 2nd petitioner's name, on 09-09-2010, to maintain the status-quo ante. That thereafter, the 2nd petitioner withdrawn the powers of the 4th respondent to deal with the affairs of the Company. That due to the above said incident, the 4th respondent absconded from the Company from 29-10-2010 and thereafter, he never returned back to the Company and did not stand to trial for his criminal acts. That as he did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t inspection invoking Section 206 of the 2013 Act. That it is the discretion of the 1st respondent (Central Government-Ministry of Corporate Affairs) to conduct/order for the inspection based on the recommendations given by the respondents 2 3. That in a given situation, the 3rd respondent also got power to order for supplementary inspection. That according to the complaint filed by the 4th respondent, no notices issued to him regarding the annual general meetings of the Company. That the 4th respondent also submitted online complaint dated 11-05-2013 vide SRN No. B74751553 against the petitioners Company alleging that he has been illegally removed from the directorship of the Company, for which the e-form 32 was filed by the 2nd petitioner to ROC. As per item No. 5(1) of the said e-form 32, his cessation date is shown as 15-12-2011 whereas as per minutes of board meeting attached thereto, he has vacated office under Section 283(1)(g) of the 2013 Act, on 29-10-2010 on the ground that he was absent for 3 consecutive meetings of the Board of directors of the Company. He further prayed to cancel the said e-form 32, mark the Company under management dispute, penalize and launch prose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the complaint lodged by the 4th respondent alleging acts of oppression and mismanagement in the conduct of the affairs of the Company prejudicial to the interest of the stakeholders, steps were taken under Section 206 of the 2013 Act as well as under Section 207 and no exception can be taken to the impugned action of the respondent-authorities. 11. Learned counsel for the 4th respondent submits that in the light of the company petition, CP No. 40 of 2011 being allowed and the consequent allotment of shares of the Company in the ratio of 50 : 50 to both groups of the petitioners and the 4th respondent, the mismanagement, oppressive and vindictive conduct of the 2nd petitioner stands exposed. It is also contended that the impugned inspection of the Company and the consequent steps thereof are statutory in nature to protect the interest of the stakeholders in the Company and to prevent any prejudicial action in dealing with the affairs of the Company by the 2nd petitioner and his sons. 12. Power to call for information, inspect books and conduct inquiries and conduct of inspection and inquiry are defined under Section 206 and 207 of Indian Companies Act, 2013, they are reprodu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dressed, the Registrar may, after informing the company of the allegations made against it by a written order, call on the company to furnish in writing any information or explanation on matters specified in the order within such time as he may specify therein and carry out such inquiry as he deems fit after providing the company a reasonable opportunity of being heard: Provided that the Central Government may, if it is satisfied that the circumstances so warrant, direct the Registrar or an inspector appointed by it for the purpose to carry out the inquiry under this sub-section: Provided further that where business of a company has been or is being carried on for a fraudulent or unlawful purpose, every officer of the company who is in default shall be punishable for fraud in the manner as provided in section 447. (5) Without prejudice to the foregoing provisions of this section, the Central Government may, if it is satisfied that the circumstances so warrant, direct inspection of books and papers of a company by an inspector appointed by it for the purpose. (6) The Central Government may, having regard to the circumstances by general or special order, authorize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees. (ii) If a director or an officer of the company has been convicted of an offence under this section, the director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified from holding an office in any company. 13. Both the above provisions are self explanatory. From Section 206 to 229 of the 2013 Act, the details of inspection, inquiry and investigations are explained. A reading of the above provisions it is clear that under Section 206 of the 2013 Act, the Registrar of Companies where on a scrutiny of any document filed by a Company or on any information received by him, and he is of the opinion that any further information or explanation or any further documents relating to the Company is necessary, he may by a written notice require the company; (a) to furnish in writing such information or explanation; or (b) to produce such documents, within such reasonable time, as may be specified in the notice. Further as per sub-Sections (5) and (6) of Section 206, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P by the 4th respondent, being OP No. 40 of 2011 and the NCLT has disposed of the said OP restored the shareholding in the ratio of 50 : 50 to the two groups, though the matter is appealed against by the petitioners in the appellate Tribunal. Though the proceedings now impugned in these writ petitions are also on the set of allegations by the 4th respondent which form part of the pleadings in CP No. 40 of 2011, the scope of inquiry is different in both the proceedings. No statutory bar, muchless the ground of violation of principles of natural justice is pointed out to fault the impugned proceedings of inspection and inquiry by the official respondents on the allegation of oppression and mismanagement which the 2013 Act provides for. Pendency of proceedings before the NCLT or continuing of thereof in appeal by the aggrieved party is not to the exclusion of other proceedings if instituted for valid reasons. Even otherwise, what is sought to be undertaken by the impugned notice issued under Section 206(5) in WP No. 10201 of 2017 is inspection of the books of account and other books and papers of the subject company and for that purpose; 1) minute books of meetings of the Board of Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Company that too by a share holder group of 50% of the Company, now as per the orders of the NCLT, subject to orders the Appellate Tribunal. Admittedly, apart from the ROC, the Central Government (Ministry of Corporate Affairs) has the authority to direct the Registrar or an inspector appointed for the purpose, to initiate an inquiry into the affairs of the Company under Section 206(4) of the 2013 Act. The Central Government has the power to authorise any statutory authority to carry out the inspection of books of account of a company or class of companies by an order, general or special, under Section 206(5). 18. In a petition for prevention of oppression and mis-management and where there is a prayer to investigate into the affairs of the Company, though sometimes it is called a motivated complaint, if there are serious allegations made in it, there is no reason why inspection, inquiry be not ordered against such a Company. Section 206 of the 2013 Act corresponds to Sections 209A and 234 of the repealed Companies Act, 1956. Section 206 of the 2013 Act is a combination of Sections 209A and 234 of the Act 1956. The scope of sub-Sections (1) and (3) of Section 206 of the 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
