TMI Blog2021 (5) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be unconstitutional. Whether order dated 18.01.2021 needs any interference? - HELD THAT:- In the case on hand, petitioner is a miniscule shareholder in Devas. It has already filed an application for impleadment before the appropriate forum namely the NCLT. Devas is not aggrieved by the sanction order. Petitioner has all opportunity to urge its contentions before NCLT. At this juncture, there is no order, which has any civil consequences - petitioner has challenged the order dated January 19, 2021 passed by the NCLT before the NCLAT and the NCLAT has disposed of the said appeal by its order dated February 11, 2021 by directing petitioner to file necessary interlocutory application before the NCLT seeking permission to implead itself in the main pending Company Petition. NCLAT has also granted liberty to raise all factual and legal pleas before the NCLT. Petitioner has accepted the said order and proceeded further and filed an application under Rules 11 and 34 of the NCLT Rules, 2016 for impleadment in the main petition. Having held that Registrar and 'a person authorized by the Central Government' fall into different categories, it does not warrant read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up Devas. Accordingly, Antrix Corporation has filed a Company Petition before NCLT, Bengaluru. By it's order dated January 19, 2021, NCLT has admitted the petition and granted time to the respondents therein to file replies; and appointed the official liquidator attached to this Court as provisional liquidator. 4. Petitioner has challenged NCLT s order before NCLAT (National Company Law Appellate Tribunal) Chennai in Company Appeal (AT)(CH)No.02/2021. The said appeal has been disposed of vide order dated February 11, 2021, by directing the petitioner to file necessary interlocutory application before NCLT seeking permission to implead itself and with liberty to raise all factual and legal pleas before the NCLT. Petitioner has filed an application seeking impleadment in the proceedings before NCLT. 5. Shri. Rajiv Nayar, for petitioner mainly urged following contentions: a winding up petition can be presented by persons specified in Section 272(1) of the Act, which includes both Registrar and 'any person authorized by the Central Government'. Section 272(3) provides that Registrar shall obtain previous sanction from the Central Government to present a winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er whether elected or appointed, shall be vacated on a given date. Section 16 of the said Act gave power to the State Government to remove any member of the Municipal Committee. Proviso to Section 16(1) of the said Act required the State Government to communicate the reasons for removal and provide an opportunity to the noticee to explain his stand. Thus, the Punjab Municipality Act had two distinct provisions, of which, one provided for notice and the other did not. Both provisions dealt with removal of a member. In contradistinction, in this case, Section 272 of the Companies Act permits different category of persons to present a petition for winding up. The Registrar of Companies is privy to all information of the Company and when he proposes to move a petition for winding up under Section 271(c) of the Companies Act, it shall be based on his opinion and satisfaction that the affairs of that Company were conducted in a fraudulent manner which is not the case of a person authorised by the Central Government. 11. Shri. Rajiv Nayar, placed reliance on another authority, Subramanian Swamy Vs. Director, Central Bureau of Investigation and another (2014)8 SCC 682 (paragraphs No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph No.5) (1995)6 SCC 225; Sultan Singh vs. State of Haryana and another (paragraph No.4) (1996)2 SCC 66; Designated Authority (Anti-Dumping Directorate), Ministry of Commerce Vs. Haldor Topsoe A/S (paragraphs No.24 25) (2000)6 SCC 626; State of Maharashtra Vs. Ishwar Piraji Kalpatri and others (paragraphs No.16 17) (1996)1 SCC 542; and Asst. Commissioner, Assessment-II, Bangalore and others Vs. Velliappa Textiles Ltd., and another (paragraphs No.7 8) (2003)11 SCC 405. 16. In Velliappa Textiles, the Apex Court has quoted Lord Reid s statement in Wiseman Vs. Borneman (1969)3 All ER 275 that 'every public officer who has to decide whether to prosecute or raise proceedings, ought, first to decide whether there is prima facie case, but no one supposes that justice requires that he should first seek the comments of the accused or the defendant on the material before him. So, there is nothing inherently unjust in reaching such a decision in the absence of other party'. 17. To buttress his argument that two distinct procedures can be prescribed in a statute, Shri. Venkataraman relied upon paragraphs No. 14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation, unless, the contrary is shown. In this authority is also held as follows: 20. It is also a settled and deeply-rooted canon of constitutional jurisprudence, that in the process of constitutional adjudication, the courts ought not to pass decisions on questions of constitutionality unless such adjudication is unavoidable. In this sense, the courts have followed a policy of strict necessity in disposing of a constitutional issue. In dealing with the issues of constitutionality, the courts are slow to embark upon an unnecessary, wide or general enquiry and should confine their decision as far as may be reasonably practicable, within the narrow limits required on the facts of a case. (Emphasis supplied) 21. It is settled that when a provision of law is challenged, Courts are required to exercise restraint and be cautious in striking down a provision. It may be profitable to note the decision of the Apex Court in Government of Andhra Pradesh and others Vs. P. Laxmi Devi (Smt) (2008)4 SCC 720, wherein it is held as follows: 46. .. But before declaring the statute to be unconstitutional, the court must be absolutely sure that there can be no manner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigated into the matter. Letters of Rogatory have been issued to France, USA and Singapore. The Director of petitioner's Company, Shri. Ramachandran Vishwanath, who is the deponent verifying the Affidavit annexed to the writ petition, is an accused in Criminal Proceedings and he is avoiding service of summons sent to the very address mentioned in the Affidavit. Therefore, petitioner has not come to this Court with clean hands. He submitted that Officers of ISRO, the Chairman and Executive Director of Antrix Corporation and other Officers are also accused in the Criminal cases. 26. The Secretary of Department of Space will also be ex-officio Chairman of ISRO and Antrix Corporation. The material on record (Annexure-G) discloses that on January 14, 2021, the Chairman-cum-Managing Director of Antrix Corporation has written a detailed letter to the Secretary, Ministry of Corporate Affairs giving chronological events and sought sanction to file winding-up proceeding against Devas. It is stated in the letter that Devas had committed fraud in collusion with earlier Officers of Antrix Corporation, Department of Space and ISRO and it has resulted in huge financial loss to the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by Antrix Corporation before NCLT as Annexure-H to the writ petition. Averment with regard to siphoning of money reads thus: 13(dd). Monies to the tune of ₹ 579 Crores were brought in, and when the same were not being used for the stipulated ends, the investment would be rendered illegal and loses the eligibility as a protected investment. 13(ee). The investment of ₹ 579 Crores instead of being used to render internet services, was used in the following manner that resulted in a case of Money Laundering: i) Around of ₹ 75 Crores were sent out of India by creating a wholly owned subsidiary in the USA, with the directors of Devas controlling the subsidiary. ii) Over ₹ 180 Crores were sent out as payment towards business support services, without receiving either assets or services and writing them off as losses in the books. iii) Over ₹ 233 Crores moved out of India in the guise of litigation services. When the earlier payments were made as business support, it resulted in service tax exposure on reverse charge basis. To avoid payment of such taxes, the monies were laundered in the guise of litigation support services. i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 487 Crores out of ₹ 579 Crores investment, were laundered out of Indian through the US subsidiary of the Respondent No.1 Company. 34. The averment with regard to financial transactions reads as follows: 79. Because of the ₹ 579 Crores of foreign investment amounts of ₹ 76,19,04,563/- as share subscription/investment in Devas America Inc (a wholly owned subsidiary of the Respondent No.1 Company) and ₹ 180,77,58,989/- (Rupees One Hundred and Eighty Crores Seventy-Seven Lakhs Fiffty-Eight Thousand Nine Hundred and Eighty-Nine) in the guise of service fee towards business support services, were laundered out of India. Out of the ₹ 180 Crores, the Respondent No.1 Company paid around 40 crores for the period 2006 October 2010 for which there was no agreement at all. The agreement was entered into only in October 2010 with the US subsidiary. If one adds the share subscription of ₹ 76,19,04,563 (Rupees Seventy Six Crores Nineteen Lakhs Four Thousand Five Hundred and Sixty Three), it would total upto ₹ 256,96,63,544 (Rupees Two Hundred and Fifty Six Crores Ninety-Six Lakhs SixtyThree Thousand Five Hundred and Forty Four). Over and above th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verred in paragraph No.42 that the agreement between Devas and Antrix was signed by one Shri. S.R. Gururaj, who was an Article Clerk of Shri. M. Umesh, a Chartered Accountant, who was one of the Directors of Devas. It is also averred that Shri. Gururaj has gone on record vide his statement dated 15.01.2016 before the CBI. 38. Petitioner has produced a copy of the agreement between Antrix Corporation and Devas dated 28.01.2005, as Annexure-C and it shows that on behalf of Antrix Corporation, the agreement is signed by its Executive Director, Shri. K.R. Sridhara Murthi and on behalf of Devas, the agreement is signed by Shri. S.R. Gururaj. 39. It is further alleged in paragraph No.55 of the Company petition that in the 58th meeting of the Board of Directors of Antrix Corporation, Shri. Madhavan Nair, the then Chairman had informed the Board that Antrix Corporation had signed a Contract with Devas. Ms. Veena S. Rao, the then Additional Secretary, Department of Space being one of the Directors on the Board of Antrix Corporation was also present in the said meeting and she was aware of the said agreement. However, the same was concealed before the 104th Space Commission Meeting whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the sanction. I have carefully perused it. It is has been dealt with by concerned personnel in the Ministry and their file notings are on record. 45. Shri. Rajiv Nayar contended that the sanction order has been gazetted on January 18, 2021 and petition has also been filed on the same day. The original file discloses communications by email and proposal for e-publication of the Notification in the Official Gazette. We are in the electronic era of instant communication and therefore no exception can be taken if a department functions with speed/efficiency. 46. Placing reliance on paragraph No.7 in S.L.Kapoor Vs. Jagmohan and others. Shri. Nayar (1980) 4 SCC 379, contended that an administrative order which involves civil consequences must be made consistently with the Principles of Natural justice. The comprehensive connotation of 'civil consequences' as held in Mohinder Singh Gill Vs. Chief Election Commissioner, New Delhi (1978)1 SCC 405 extracted therein, is, everything that affects a citizen in his civil life. 47. In the case on hand, petitioner is a miniscule shareholder in Devas. It has already filed an application for impleadment before the appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his amounts to abuse of process of law and a proxy war on behalf of Devas. 51. One of the most profound tenets of Constitutionalism is presumption of Constitutionality assigned to each legislation enacted. Indubitably, Parliament has competence. The sanction accorded by the Central Government does not meet petitioner with any Civil consequence. Devas has not challenged the sanction order. Petitioner has failed to demonstrate infringement of any rights enshrined in Part-III of Constitution of India. 52. Having held that Registrar and 'a person authorized by the Central Government' fall into different categories, it does not warrant reading down Section 272(3) of the Companies Act. 53. Accordingly, both points for consideration are held in the negative. 54. Resultantly, this writ petition must fail and it is accordingly dismissed with cost of Rs.Five Lakhs payable in the name of the Registrar General of this Court within four weeks from today and Registrar General shall report compliance. 55. In view of the dismissal of this petition, pending interlocutory applications, if any, do not survive for consideration and they stand disposed of. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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