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TMI Blog2022 (2) TMI 1178X X X X Extracts X X X X X X X X Extracts X X X X ..... , Advocate R3 JUDGMENT (VIRTUAL MODE) Per: Kanthi Narahari Member (T) Brief Facts of the Case: 1) The present appeal is filed by the Appellant against the Impugned Order dated 5th February 2021 passed by the NCLT, Bengaluru Bench whereby the Company Petition of the appellant has been dismissed. Aggrieved by the same the present appeal is preferred. Appellant's Submissions: 2) Sri Antony R. Julian, Advocate appearing for the appellant submitted the brief facts. He submitted that the appellant company was incorporated as a private limited company, limited by shares under the Companies Act, 1956 with the ROC, Bengaluru and the main object of the appellant company as stated in its Memorandum of Association is to carry on the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Series-A CCPS. 6) Subsequently, on 25.04.2014 the appellant company issued Series-B CCPS shares to the entities as per the tabular column in para-14 page-6 of appeal paper Book. The respondent No.1 was issued 2,880 Series-B CCP shares at Rs. 27,788 per share. 7) The investment made in Series-A CCPS and Series-B CCPS were reported to RBI by filing Form on 03.07.2014. The fair value of the shares of the appellant company 4,827 per equity shares as per the valuation report prepared as per RBI guidelines dated 24.12.2013. The documents have been filed before the RBI and the RBI acknowledged vide letter dated 26.05.2014. 8) The formula for conversion of Series-A CCPS and Series-B CCPS into equity shares as per the pricing guidelines in FEMA R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excess 51,889 equity shares with an appropriate approval from the Registrar of Companies or National Company Law Tribunal as may be required under the Companies Act, 2013 vide letter dated 10.10.2019. 12) It is submitted that in response to the appellant's letter as cited above, the RBI vide their letter dated 26.11.2019 advised the appellant company to approach Register of Companies for cancellation of shares. 13) It is submitted that appellant company had also intimated the R1 regarding the erroneous conversion price and the R1 issued No Objection Letter dated 13.12.2019 along with the Resolution from the Board of Directors agreeing for rectification of Register of Members of appellant company for cancellation of excess 51,889 equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 20.03.2013 and sought direction to the ROC, Bengaluru to effect the cancellation of 51,889 equity shares excess allotted to Respondent No.1. 19) The learned NCLT was of the view that without approaching the Registrar of Companies the appellant has filed the present company petition and observed that the filing of the Company Petition is not maintainable and accordingly the same is dismissed. 20) It is to be seen that whether the appellant has approached NCLT in accordance with law or not? Sec.59 of the Companies Act, 2013 deals with rectification of Register of Members. The said provision is recaptured here at for better appreciation. "59. Rectification of register of members - (1) If the name of any person is, without sufficient cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Register of the Members by cancelling the shares. However, the NCLT in the impugned order taken a stand that the Appellant has not approached the Registrar of Companies. 22) The appellant addressed a letter dated 10.10.2019 to RBI (page-234 of appeal paper Book) and sought permission to cancel / reduce the excess 51,889 equity shares allotted on conversion to said Zephyr Peacock India Fund II Ltd (Respondent No.1). However, the RBI vide its letter dated 26.11.2019 (page-242 of appeal paper Book) replied and stated that the cancellation of excess shares allotted will not come under purview of RBI and hence, you may approach Registrar of Companies for cancellation of shares. Further, the RBI advised the appellant to intimate them with d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ror and the appellant company bonafidely informed the RBI and its Regulators with regard to the inadvertent error / bonafide mistake crept in and sought permission to rectify the mistake by cancelling the excess shares. Even the R1 company also through its Board Resolution expressed their No Objection for cancellation of excess shares. 25) Having analysed the above legal and factual aspect, this Tribunal comes to a resultant conclusion that the appellant has made out a prima facie case to allow the appeal. Accordingly, this Tribunal passed the following orders/ directions: - (i) The impugned order dated 05.02.2021 passed by the NCLT, Bengaluru Bench is hereby set aside and the Company Petition being CP No.38/BB/2020 is hereby restored to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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