TMI Blog2022 (11) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... sed that they are Disqualified as Directors of the Company, for the period from 01.11.2016 to October 2022 - HELD THAT:- The ₹ 2nd Appellant / 3rd Respondent is described as a Director, of the ₹ 4th Appellant / 1st Respondent / Company, and not directly holding any Shares in the said Company. As a matter of fact, the ₹ 1st Appellant / 2nd Respondent along with his family members is described as promoted the ₹ 3rd Appellant / 4th Respondent / Company and further that the ₹ 1st Appellant / 2nd Respondent is described as the Managing Director of the ₹ 3rd Appellant / 4th Respondent / Company. Further, the entire Share Capital of Rs.1,00,000/- of the ₹ 3rd Appellant / 4th Respondent / Company is mentioned, to be held by the ₹ 1st Appellant / 2nd Respondent, together with his family members, etc. A mere glance of the Cause Title of CP/54/2012 (TCP/26/2018 filed by the Petitioners / Respondents in Appeal), indicates that the Respondents / Appellants, do figure as Appellants, in Comp. App (AT) No. 83 of 2020. Therefore, it is candidly clear that the Appellants in Comp. App (AT) No. 83 of 2020, on the file of this Tribunal, when they were arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 and 2 as Directors, put forward on the side of the Respondents / Petitioners is unworthy of acceptance by this Tribunal. Bar of Order II Rule 2 of Civil Procedure Code - the plea taken on behalf of the Appellants is that the Respondents / Petitioners after unconditionally withdrawing an earlier proceeding cannot be permitted to file a subsequent proceeding on similar facts - HELD THAT:- The Learned Counsel for the Respondents proceeds to point out that the Company Law Board in its Order dated 26.05.2015 had not dealt with the issues raised in the Company Petition on merits, but ordered that Final Adjudication of the Company Petition, shall be deferred, until completion of two events (a) Adjudicating by the Enforcement Directorate on the validity of the acquisition of the 1st Respondent / 1st Petitioners in the Shareholding in the company and the Adjudication on the prayer for withdrawal of certain reliefs by the Respondents / Petitioners in CS No. 139 of 2012, before the Hon ble High Court of Madras (both of them) were completed before the Final Hearing of the main Company Petition. Plea of Bar - Order II Rule 2 of the Civil Procedure Code - HELD THAT:- Order II Rule 2 of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not Grant Leave, to file another Suit/ Given Proceeding. If the Law permits, the Plaintiff, may file another Suit, but not on the basis of observations made by a Superior Court. This Tribunal without any haziness, comes to a cocksure conclusion that either the ingredients of Order II Rule 2 of the Civil Procedure Code or Order II Rule 3 of the Civil Procedure Code are inapplicable, based on the facts and circumstances of the instant case, which float on the surface and answered accordingly. In the instant case on hand, the Allotment of Shares, to the 1st Respondent / 1st Petitioner (Foreigner) is not a legally valid one, as opined by this Tribunal, because of the fact that the Acquisition and holding of Shares by the ₹ 1st Respondent / 1st Petitioner in the ₹ 4th Appellant / 1st Respondent / Company (M/s. Kumudam Publications Pvt. Ltd.), in the Year 2001-2002, is in violation of Regulation 4 and 7 of Foreign Exchange Management (Transfer or Issue of Security by a Person, resident outside India) Regulations (FEMA Regulations), which clearly prohibits the issuance of shares of a Print Media company to a person resident outside India, Regulations 2000 - It cannot be for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned order dated 27.05.2020 (delivered on 01.06.2020) in CP/54/2012 (TCP/26/2018), passed by the Tribunal (National Company Law Tribunal, Chennai Bench), in the teeth of attendant facts and circumstances of the case, in an integral, holistic and conspectus fashion, comes to an inescapable, inevitable, and an irresistible conclusion that the said Order, is an Invalid, Untenable and Unsustainable one, bristling with Legal Infirmities. Appeal allowed. - [ Justice M. Venugopal ] Member ( Judicial ) And [ Shreesha Merla ] Member ( Technical ) For the Appellants : Mr. K.G. Raghavan, Senior Advocate For Ms. Pooja M. Saigal, Advocate For the Respondent : Mr. Sudipto Sarkar, Senior Advocate Nos. 1 2 For Mr. T.K. Bhaskar, Mr. Rigved Prasad Mr. Aditya Verma, Advocates JUDGMENT (Virtual Mode) Justice M. Venugopal, Member (Judicial): Company Appeal (AT) No. 83 of 2020: Preface: The Appellants have preferred the instant TA No. 283 of 2021 in Comp. App (AT) No. 83 of 2020, as `Aggrieved Persons , on being dissatisfied with the `impugned order dated 27.05.2020 (delivered on 01.06.2020 through Video Conferencing), in TCP/26/2018 (CP/54/2012), passed by the `National Company Law Tribunal , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 (CP/54/2012) and disposed of the related CAs/IAs. The Summation of Facts in TCP/26/2018 (CP/54/2012), filed by the `Petitioners / `Respondent Nos. 1 and 2 in TA/283/2021 (Comp. App (AT) No.83 of 2020): 3. The 1st Petitioner in TCP/26/2018 (CP/54/2012) / 1st Respondent in TA/283/2021 (Comp. App (AT) No.83 of 2020) as `Director of the ₹ 4th Appellant / ₹ 1st Respondent / `Company held 3,32,640 `Equity Shares of Rs.100/- each, constituting 64.73% of the `Paid up Capital of the ₹ 4th Appellant / 1st Respondent / `Company . The split up details of 3,32,640 `Shares , runs as under: Original Holding 1,100 By inheritance 23,010 Pursuant to the Scheme of amalgamation of Kumudam Printers Private Limited with Kumudam Publications Private Limited as sanctioned by the Hon ble High Court of Madras 3,08,530 Total 3,32,640 4. The ₹ 2nd Respondent / 2nd Petitioner is the wife of the Late SAP Annamalai Chettiar, founder of `Kumudam Magazine , holds 9660 `Equity Shares of Rs.100/-, constituting ₹ 1.88% of the Paid up Capital of the ₹ 4th Appellant / 1st Respondent / Company . In fact, the ₹ 2nd Respondent / 2nd Petitioner , is one of the `Subscribers to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / 2nd Respondent, is a `Director of the ₹ 4th Appellant / ₹ 1st Respondent / `Company and does not directly hold any `Shares in the ₹ 4th Appellant / ₹ 1st Respondent / `Company . 11. The ₹ 3rd Appellant (`Imprint Tech India Pvt. Ltd. ) is the 4th Respondent, in the main Company Petition. The ₹ 1st Appellant / 2nd Respondent (P. Vardarajan) along with his `Family Members , had promoted the ₹ 3rd Appellant / 4th Respondent / Company and he is the `Managing Director of the ₹ 3rd Appellant / 4th Respondent / Company . 12. According to the Respondents / Petitioners, Mr. SAP. Annamalai Chettiar (referred to as `SAP ), Late father of the ₹ 1st Respondent/1st Petitioner and the husband of the ₹ 2nd Respondent / 2nd Petitioner , was the brain behind the magazine `Kumudam and he tirelessly worked from 1947 till 1994, for the upliftment of the Magazine throughout his life time, dedicating his whole life, for the development of the Magazine. The ₹ 2nd Respondent /2nd Petitioner, wife of Late Mr. SAP was lending a helping hand to her husband, since the inception of the magazine and being a great source of support from the year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Respondent/1st Petitioner worked out an oral arrangement with the ₹ 1st Appellant / 2nd Respondent (`PVP ), by which, the ₹ 1st Appellant / 2nd Respondent (`PVP ) and his family members would manage the day-to-day affairs of the ₹ 4th Appellant / ₹ 1st Respondent / `Company and would become ₹ 1/3rd Shareholders in the `Company for no consideration. 18. Based on the `Agreement with the ₹ 1st Appellant / 2nd Respondent (PVP), despite the ₹ 2nd Respondent / 2nd Petitioner , was appointed as `Managing Director of the Company, it was the ₹ 1st Appellant / 2nd Respondent (PVP), who was looking after the day-to-day affairs of both the Companies, it was the ₹ 1st Appellant / 2nd Respondent , who filed a `Scheme of Amalgamation of `Kumudam Printers Private Ltd. with the ₹ 4th Appellant / ₹ 1st Respondent / `Company (Kumudam Publications Private Ltd.), as per Sections 391 to 394 of the Act, before the Hon ble High Court of Madras, which sanctioned the `Scheme in June 2001. 19. The dissolution of the `Transferor Company i.e.., `Kumudam Printers Pvt. Ltd. , was ordered in July 2003. As a result of the Merger, ₹ 4,64,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociation of the company at the `General Meeting that took place on 19.03.2003, as under: M/s. Imprint Tech India Private Limited shall, so long as they hold shares in the Company, be entitled to nominate two Directors to the Board. Such nominees shall be entitled to function as Directors from the date their nomination is received by the Company. In the event that one of such nominees is Mr. P. Varadarajan, he shall occupy the post of Chairman of the Board. Notwithstanding anything contained Article 33, such Nominee Directors, shall not be required to hold any share qualification. Such Nominee Directors shall not be liable to retire by rotation. So long as Shri. P. Varadharajan continues to be a Director of the Company, he shall also be the Managing Director of the Company. He shall be paid a monthly remuneration as fixed by the Board by resolution in this behalf. He shall be further entitled to receive a remuneration up to 11% of the net profits of the Company . 23. It is the version of the Respondents / Petitioners that the aforesaid Clauses were inserted in the `Articles , which are prima facie, `Biased , `Harsh in nature, and absolutely `Oppressive to the interest of the `Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs were called upon to Show Cause, as to why Customs Duties plus 15% interest per year ought not to be recovered and action under `Foreign Trade (Development Regulation) Act, 1992 , not be initiated against the `Company and its `Directors . The ₹ 1st Appellant / 2nd Respondent is solely responsible for such a failure, and because of his irresponsibility and incompetency, the `Respondents / Petitioners and the ₹ 4th Appellant / ₹ 1st Respondent / `Company had to face this `Show Cause Notice . In fact, the ₹ 1st Respondent / 1st Petitioner suggested that the difference in `Excise Duty , can be paid through availment of loans from Banks, which in turn can be obtained by furnishing `Personal Guarantees and `Securities , by the `Respondents / Petitioners . The ₹ 1st Appellant / 2nd Respondent holding, a responsible position in the ₹ 4th Appellant / ₹ 1st Respondent / `Company should have assessed the investment made for the purchase of the machineries and the `Foreign Exchange income that can be generated over a period of ten years. Because of the inefficient and irresponsible act of the ₹ 1st Appellant / 2nd Respondent , the ₹ 4th A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 4th Appellant / 1st Respondent / Company was entering into transactions with the firm `M/s. Lotus Inks , in which, the ₹ 1st Appellant / 2nd Respondent and ₹ 2nd Appellant / 3rd Respondent are partners. Any transaction with a `Firm in which the Directors are Partners, requires `prior approval of the Central Government, as per Section 297 of the Act. Also that, there were several transactions, for availing services from M/s. Devi Press, a Partnership Firm in which the Directors of the Company are partners, requiring previous `Approval of the Central Government, but that was not complied with, by the Respondent / Managing Director. (iv) The Income Tax Department s Order had clearly brought out the fact that the ₹ 4th Appellant / 1st Respondent / Company , is managed by the ₹ 1st Appellant / 2nd Respondent , has purchased the `LED Panel worth Rs. 8 Lakh from a firm (M/s. Tricom Vision) that is owned by the ₹ 1st Appellant / 2nd Respondent himself, for an inflated value of Rs. 3 Crore and this is another act of `Mismanagement by the ₹ 1st Appellant / 2nd Respondent and over and above the inflated value of Rs.2.92 Crore which the ₹ 4th Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny , by illegally transferring funds of the ₹ 4th Appellant / 1st Respondent / Company . (viii) The ₹ 1st Respondent / 1st Petitioner , to bring the illegal acts of the ₹ 1st Appellant / 2nd Respondent to an end, had convened a `Board Meeting on 22.04.2010, after duly serving `Notices to the ₹ 1st Appellant / 2nd Respondent and ₹ 2nd Appellant / 3rd Respondent (through mail as well as by Speed Post), which was duly acknowledged by them. But, the ₹ 1st Appellant / 2nd Respondent had expressed his inability, to attend the `Meeting , due to his preoccupation and prior engagements and had informed his willingness to be contacted during the `Meeting through Telephone. The `Board had discussed the provisions of the `Amended Articles of Association , which were amended only to benefit the ₹ 1st Appellant / 2nd Respondent , completely curtailing the rights of other `Directors on the `Board . With a view to protect the spirit of Section 287 read with Section 9 of the Act, the Board had decided to keep the Amended Articles of Association under suspension. But, had decided to implement the Resolution at a later date. The Board has also expressed its a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in `illegal acts , even after the signing of the `MoU . 26. The `Respondents / Petitioners received a notice dated 15/9/2011 from the ₹ 1st Appellant / 2nd Respondent , convening a `Board Meeting , on 20/9/2011, with an Agenda (i) to discuss the legal implications of the holding of `Equity Shares by the ₹ 1st Respondent / 1st Petitioner in his capacity as a `Foreign Citizen , and (ii) to discuss of the issue of the ₹ 1st Respondent / 1st Petitioner , holding editorial position in the magazines published by the Company. 27. The `Respondents / Petitioners were not able to appreciate as to why the ₹ 1st Appellant / 2nd Respondent , after having agreed to exit the ₹ 4th Appellant / 1st Respondent / Company , issued such a notice, which is prima facie baseless. The ₹ 1st Respondent / 1st Petitioner was born and brought up in India and is a major `Shareholder . Having worked with the ₹ 1st Respondent / 1st Petitioner for nearly 16 years, the ₹ 1st Appellant / 2nd Respondent had now raised a issue, which is a baseless one. The ₹ 1st Appellant / 2nd Respondent with the malafide intention of depriving the family members having majority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners . 32. Indeed, the matter was under examination by the `Enforcement Directorate and the purported cancellation of `Shares by the `Appellants / Respondents would amount to pre-judging the determination of the `Regulator of Foreign Exchange and usurping the powers of the Hon ble High Court at Madras, as per Section 100 of the Act. 33. The ₹ 1st Appellant / 2nd Respondent also filed the `Annual Return in Schedule-V for the years ended from 31/03/2009 to 31/03/2011 reducing the number of shares held in the name of the ₹ 1st Respondent / 1st Petitioner as a `Shareholder . On receipt of such `Letters from the ₹ 1st Appellant / 2nd Respondent , informing the cancellation of the `Shares , the `Respondents / Petitioners had conducted a `Board Meeting on 26/09/2011, after issuing due notice to the ₹ 1st Appellant / 2nd Respondent and the ₹ 2nd Appellant / 3rd Respondent and both the `Appellants / Respondents , despite acknowledging the receipt of the notices had failed to attend the Meeting on the said date. 34. In the meeting that took place on 26/09/2011, the `Board passed `Resolutions (i) Removing the ₹ 1st Appellant / 2nd Respondent from the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each in the name of the ₹ 1st Respondent / 1st Petitioner (v) In declaring the Form 32 filed by the ₹ 1st Appellant / 2nd Respondent with the RoC, Chennai, wrongly intimating the cessation of `Respondents / Petitioners , as `Directors of the ₹ 4th Appellant / 1st Respondent / Company , with effect from 02/01/2012, as an illegal, invalid and non-est in law.; Contents of ₹ 4th Appellant / 1st Respondent s Counter: 38. The instant `Company Petition , is an exercise in `Forum Shopping , by the `Respondents / Petitioners . The `Respondents / Petitioners , are `guilty of misrepresentation and `suppression of material facts . The averment that the ₹ 1st Respondent / ₹ 1st Petitioner , is the `Holder of 3,32,640 `Equity Shares of the Company or being a `Director on the `Board , as on the date of the filing of Petition, are denied. Based on the `Resolution , passed by the `Board in the Meeting held on 20.09.2011, the ₹ 1st Respondent / 1st Petitioner , holds only ₹ 200 Equity Shares , of Rs. 100/- each, of the ₹ 4th Appellant / 1st Respondent / Company , amounting to a mere 0.10% of the Issued, Subscribed and Paid up Share Capital of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted as the `Chairman of the ₹ 4th Appellant / 1st Respondent / Company and continues to hold the said Positions, the `Respondents / Petitioners were present at such Meetings of the Board and had approved the `Resolution , appointing the ₹ 1st Appellant / 2nd Respondent of the Managing Director of the ₹ 4th Appellant / 1st Respondent / Company . 44. It comes to be known that in the `Board Meeting dated 20.09.2011, after detailed consideration, the following `Resolutions were passed: (a) Cancelling / Annulling transfer of 3,32,440 `Shares of the ₹ 1st Respondent / 1st Petitioner and passing consequent `Resolutions , thereto; and (b) Removing the ₹ 1st Respondent / 1st Petitioner from the editorial position and prohibiting him from taking any role in the editorial matters of the magazines published by the Company. The `Respondents / Petitioners had accepted that the ₹ 1st Respondent / 1st Petitioner had occupied the position of the `Honorary Editor in the ₹ 1st Respondent / 1st Petitioner till 2011, which imply that `Meeting of the Board dated 20.09.2011 and the `Resolutions passed direct are valid. 45. According to the ₹ 4th Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents / Petitioners had `Voted unanimously in favour of the `Resolutions passed. Both the Respondents / Petitioners had signed the `Board and the `Extra-Ordinary General Meeting , and in fact, the 1st Respondent / 1st Petitioner had signed the `every page of the Articles of Association , as amended by the `Resolution , passed by the Members in the Annual General Meeting dated 19.07.2022. 52. The Statement of the Respondents / Petitioners that Articles of Association were carried out by the ₹ 1st Appellant / 2nd Respondent , in the absence of ₹ 1st Respondent / 1st Petitioner from India is blatantly false. 53. As a matter of fact, the documents submitted by the ₹ 4th Appellant / 1st Respondent / Company , will show that the ₹ 1st Respondent / 1st Petitioner was in India and present at the several meetings, in which, the Amendments to the Articles of Association were made. Moreover, the Board of Directors of the Company, which included the Respondents/ Petitioners, considering the Scheme available for the import of equipments, for printing and financial position of the company, unanimously approved the import of such equipments `EPCG Scheme . The company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the years ended 31.03.2009, 31.03.2010 and 31.03.2011, could not inturn be finalised by the ₹ 4th Appellant / 1st Respondent / Company , which led to a situation where the ₹ 4th Appellant / 1st Respondent / Company is classified as a `Defaulting Company , and the Directors were notified as `Defaulters . 59. The transactions referred to by the `Respondents / Petitioners (vide paragraphs 6.19) were carried on by the Company with the knowledge and the consent of the Board of Directors of the Company, including the `Respondents / Petitioners . All these transactions are duly reflected in the Financial Statements of the Company, which were approved in the Board Meeting of the Company and that `Financial Statements were signed by the ₹ 2nd Respondent / 2nd Petitioner up to the Financial Year ended 31.03.2007. 60. The fact of the matter is that a partnership firm, in the name and style of `M/s. Tricom Vision , was floated on 07.10.1998 by two Partners Viz. Mrs. A. Kothai (the ₹ 2nd Respondent / 2nd Petitioner ) and Mr. P. Varadarajan (₹ 1st Appellant / 2nd Respondent ). All the Partners individually or collectively are entitled to manage and conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t / 2nd Petitioner . In fact, on 01.07.2004, between the Company, represented by the ₹ 2nd Respondent / 2nd Petitioner an agreement was signed in her position, as the Director and `M/s. Tricom Vision represented by the ₹ 1st Appellant / 2nd Respondent in his capacity as the `Managing Partner . Moreover, it was recorded that: The purchaser is looking for a new method for advertising the periodicals to cover the general public to expand the readership base. As an initial measure the purchaser wanted to install an electronic display board in Chennai to telecast their advertisements and had approached the sellers for the purchase of the Board. The sellers shall sell on an as is where is basis. 64. A `Supplementary Agreement , on 03.10.2004, was entered into between the Company, represented by the ₹ 2nd Respondent / 2nd Petitioner `as the Director of the Company and M/s. Tricom Vision, represented by the ₹ 1st Appellant / 2nd Respondent in his capacity as Managing Partner. The Company had entered into an agreement, in the month of July 2004, after an elaborate discussion although, the negotiation for the transactions began, on 01.02.2004. 65. In reality, the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icles of Association of the ₹ 4th Appellant / 1st Respondent / Company , the `Coram for a meeting of the Board is complete for the purpose of transacting any business only, if the ₹ 1st Appellant / 2nd Respondent is present. ₹ 4th Appellant / 1st Respondent / Company is bound by the ingredients of the `Articles of Association and Article 39 (b) of the AoA, was approved by the `Respondents / Petitioners . 70. The ₹ 4th Appellant / 1st Respondent / Company , is not a party to any `Memorandum of Understanding , entered into between the `Parties and it is a well settled `principle that a `Company is not bound by `any Private Contract between its Shareholders . 71. The `Overseas Citizenship of India , was made operational by the Ministry of Home Affairs, Government of India only from 2nd December 2005. Every person who is registered as an `overseas citizen of India , is issued with a `Registration Certificate printed like an `Indian Passport in different colour and an `OCI Visa Sticker is pasted in the person s Foreign Passport. These two documents were furnished by the `Respondents / Petitioners , to support their claim that the ₹ 1st Respondent / 1st Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Government of India and that too up to 26% of the `Paid up Equity Share Capital , made effective from 2005. As per the `Foreign Exchange Management (Transfer of issue of Security by a Person Resident outside India) Regulations, 2000, framed under FEMA prohibits the ₹ 4th Appellant / 1st Respondent / Company from issuing any Shares to the ₹ 1st Respondent / 1st Petitioner in his `Foreign Citizenship / Non-Resident Status and that the ₹ 4th Appellant / 1st Respondent / Company was further prohibited from recording `any Transfer of its Shares to the ₹ 1st Respondent / 1st Petitioner , except to the extent permissible under the said Regulations. The `Respondents / Petitioners had not obtained any such `Approval , even as on date and in any event, prior `Approval is required for acquiring `Shares in `Print Media . 76. The ₹ 4th Appellant / 1st Respondent / Company through its 99% Subsidiary holds a substantial `Real Estate Properties and no `FDI and `no Form of Investment by NRIs / PIOs / FIIs , is permitted in `Real Estate Business and therefore, the ₹ 1st Respondent / 1st Petitioner / Foreigner and a `Non-Resident is disentitled to hold any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osited in the said Account, were placed under the `Seizure and had directed the `Bank , not to permit any `Encashment /`Withdrawal /`Transfer or not, to allow anyone to deal with the `Deposit , in any manner, without an `Express Approval , from the said `Enforcement Directorate . 83. Based on the `Resolutions passed by the `Board in its `Meeting dated 20.09.2011, the ₹ 1st Respondent / 1st Petitioner presently, holds ₹ 200 Equity Shares of Rs.100/- each of the ₹ 4th Appellant / 1st Respondent / Company , amounting to a mere 0.10% of the `Issued , `Subscribed and `Paid up Share Capital of the ₹ 4th Appellant / 1st Respondent / Company . 84. The `Respondents / Petitioners had file three 20B Forms Schedule V with the Registrar of Companies for the `Financial Years ended 31.03.2009, 31.03.2010 and 31.03.2011. Moreover, there was no `Board Meeting on 26.09.2011 and there could be no authorisation to the `Respondents / Petitioners to file such Forms and therefore these Forms are invalid and an illegal one, etc. 85. The `Enforcement Directorate , had issued a `Show Cause Notice on 06.06.2012, in regard to the `illegal shareholding of the 1st Respondent / 1st Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant Nos. 1 and 3 (2nd 4th Respondents and Adopted by 3rd Respondent in TCP/26/2018 (CP/54/2012): 89. The ₹ 1st Respondent / 1st Petitioner other than inheriting the 200 Shares, the `remainder of the `Shares , was acquired only through an `Allotment by the `Company / acquired from the then `Shareholders of the `Company . 90. The ₹ 1st Respondent / 1st Petitioner s contribution is that, he mismanaged the `Affairs of the Editorial of the Magazines , and he had contributed to the fall in `circulation of the magazine. He had assumed the `Office of the Editor of the Magazine for some time. He became the `Honorary Editor of the Magazine , for a `Collateral Purpose , though such position is impermissible in `Law and in fact prohibited by `Law , being a `Foreign Citizen / `Non-Resident . 91. There was `no oral arrangement , that Mr. P.V. Parthasarathy and his family members would manage the affairs of the ₹ 4th Appellant / 1st Respondent / Company and become 1/3rd Shareholder as alleged. After the ₹ 1st Respondent / 1st Petitioner , shifted to United States of America in 1976, it is only Mr. P.V. Parthasarathy was managing the Company s affairs and was responsible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g . The ₹ 1st Appellant / 2nd Respondent was appointed as the `Chairman of the Company , by amending the `Articles of Association of the Company , by way of passing `Unanimous Resolutions in the Board Meeting dated 05.03.2003 and in the `Extra-Ordinary General Meeting dt. 19.03.2003. 95. The ₹ 1st Respondent / 1st Petitioner got the ₹ 1st Appellant / 2nd Respondent , arrested on a false complaint and had kept him under pressure, in order to part with the `Shareholding of the ₹ 3rd Appellant / 4th Respondent in the ₹ 4th Appellant / 1st Respondent / Company . In fact, after being fully aware of the `Amendments and after unanimously approved the `Minutes , it is not open to the `Respondents / Petitioners to aware that the ₹ 1st Appellant / 2nd Respondent had amended the `Articles , to secure his position. The Amendments, were in vogue, from the year 2002 / 2003. There is nothing wrong in the `Articles , granting protection to the ₹ 1st Appellant / 2nd Respondent as well as the interest of the ₹ 3rd Appellant / 4th Respondent , which is holding the `Shares on behalf of the ₹ 1st Appellant / 2nd Respondent and his family. 96. The `R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A letter dated 22.04.2010 was sent by the ₹ 1st Respondent / 1st Petitioner , misinterpreting the ₹ 1st Appellant / 2nd Respondent s offer to have a `Conference Call or Exchange of emails, as his availability for the `Meeting through `Conference Call and taking note of the fact that the ₹ 1st Appellant / 2nd Respondent s presence was required for `constituting the Quorum . 101. The 1st Appellant / 2nd Respondent and the ₹ 2nd Appellant / 3rd Respondent , had pointed out that the `Board Meeting , could not be proceeded, in the absence of the ₹ 1st Appellant / 2nd Respondent . 102. The 3rd Appellant / 4th Respondent, on 19.09.2011, had addressed a letter to the `Respondents / Petitioners , stating that the `Memorandum of Understanding dated 15.08.2010 was bad and unenforceable. Moreover, the `Respondents / Petitioners , after knowing full well that the `Board Meeting was convened on 20.09.2011 to discuss the legal implication of `Equity Shares held by the ₹ 1st Respondent / 1st Petitioner , as a `Foreign Citizen / Non Resident as well as his `Editorial Position , started raising unsustainable objections, in regard to the `Holding of the Board Meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the Appellants places reliance on the MIB s Letter dated 29.06.2012, addressed to `FIPB , on the request made by the ₹ 1st Respondent /₹ 1st Petitioner (`AJP ) to `FIPB , in the year 2012, to regularise his `Shareholding in the ₹ 4th Appellant / 1st Respondent / Company (`M/s. Kumudam Publications Pvt. Ltd. / `Kumudam ), clearly mentions that `Proposal , may not be considered for `Approval . 108. The Learned Counsel for the Appellants refers to the decision of the Hon ble Supreme Court of India in National Agricultural Co-operative Marketing Federation of India v. Alimenta S.A., reported in 2020 SCC Online SC at Page 381, wherein at paragraphs 68 69, it is observed as under: 68. It is apparent from above-mentioned decisions as to enforceability of foreign export could have taken place without the permission of the Government, and the NAFED was unable to supply, as it did not have any permission in the season 1980-81 which pertains to the fundamental policy of India and parties were aware of it, and contracted that in such an exigency as provided in clause 14, the Agreement shall be cancelled for the supply which could not be made. It became void under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Appellants, it is brought to the notice of this Tribunal and that the `Matter was referred to the `Standing Committee and the said `Committee s Report had advised, against any kind of `Foreign Investment / `Control in the `Print Media Sector . 112. In this background, a `Press Note dated 05.07.2005 was issued, providing a maximum of ₹ 26% Sectoral Cap Limit for Investment , including FDI with a lot of restrictions and conditions. In fact, all the `Acquisition of Shares in the ₹ 4th Appellant s company , by the `AJP (₹ 1st Respondent / 1st Petitioner ) was in the year 1998 2001, when the limit was `Zero and not even 26%. 113. The Learned Counsel for the Appellants comes out with a plea that an exclusive jurisdiction is vested as per Section 34 of the Foreign Exchange Management Act, 1999, to adjudicate the `Violations of the Provisions lies with an `Adjudicating Authority , appointed as per Section 16 read with Section 13 of the Foreign Exchange Management Act, 1999, and there is an express bar as per Section 34 of the said Act for any Civil Court (including the `National Company Law Tribunal ) to determine, on any matter pending before the `Authorities , u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omotion Ministry of Commerce Industry Govt. of India- No proposals relating to acquisition of shares in an existing Indian company in favour of a foreign / NRI investor was permitted under Automatic route and No NRI investment was permitted in print media. 115. The Learned Counsel for the Appellants submits that since the Shares was already cancelled / annulled, as noticed by the `Adjudicating Authority , there were no Shares available for confiscation. Moreover, the `consideration for the cancelled Shares which were kept in `Fixed Deposit was directed to be used, to pay the `penalty and `Confiscation is a Discretion to be exercised by the `Adjudicating Authority . 116. According to the Learned Counsel for the Appellants, the reliance placed by the `Tribunal (`National Company Law Tribunal ) on FIPB Letter dated 19.06.2013 and RBI s Letter dated 15.06.2013 in the `impugned order in TCP/26/2018 in CP/54/2012 (pronounced on 27.05.2020 and delivered on 01.06.2020) is an erroneous one. In fact, these Letters were placed before the `Adjudicating Authority by the `Respondents / Petitioners , yet the `Adjudicating Authority had returned the `Findings of Violation . Indeed, the Letter date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n SCN No.T-4/02-CHE/2012 dated 06.06.2012), the `Tribunal had not dealt with the said `Application , praying for `dismissal of the `Company Petition , filed by the `Appellants , which Application was noticed in the Order dated 25.09.2018. Therefore, it is projected on the side of the Appellant that the `impugned order passed by the `Tribunal in the instant case amounts to `Review of the `Company Law Board Order and the same is `impermissible , because of the fact that `no Powers of Review are vested with the `National Company Law Tribunal . 119. The Learned Counsel for the Appellants submits that the `Enforcement Directorate through its Order dated 22.05.2017 came to a categorical conclusion that the `Acquisition and Holding of the ₹ 1st Respondent / 1st Petitioner , is in violation of Regulation 7 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations (FEMA Regulations) and this was reiterated in the `Reply of the `Enforcement Directorate dated 02.11.2018 (before the `Appellate Tribunal of `Foreign Exchange ), wherein at Paragraph 8, it is mentioned as under: 8. With regard to para 6 of the Appeal, it is submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which includes the shares that were cancelled, in this Board Meeting held on 20.9.2011, being null and void ab initio. Hence, they would keep the Department informed as soon as the company receives the Share Certificates. (ii) A sum of Rs.2,57,70,495/- was kept in the F.D. in the name of the company with Indian Bank, Purasawalkam Branch, Chennai. The said money / amount would be released to him (Jawahar Palaniappan), based on the consent / instructions of the Directorate of Enforcement or after the outcome of any other legal proceedings. From the above, it was seen that the Share Certificates issued to Shri. A. Jawahar Palaniappan were not yet surrendered to the company and they were still in the custody of Shri. A. Jawahar Palaniappan. However, the amount of Rs.2,57,70,495/- representing the shares issued to Shri. A. Jawahar Palaniappan was secured by the company in the form of F.D. in Indian Bank, Purasawalkam Branch, Chennai. Therefore, either 3,32,640 Shares or the amount equivalent to the said shares were available for the Department for the purpose of confiscation under the provisions of FEMA, 1999. and further that even in a case where the `Breach was established like the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not backed by previous permission of the RBI. Further, the Punjab Haryana High Court erroneously assumed that there was no provision regarding confiscation of the immovable property referred to in Section 31. Section 63 of the 1973 Act clearly refers to property in respect of which contravention has taken place for being confiscated to the Central Government. The expression property therein would certainly take within its sweep an immovable property referred to in Section 31 of the Act. The expression property in Section 63 is an inclusive term and, therefore, there is no reason to assume that consequence of confiscation may not apply to immovable property in respect of which contravention of the provisions of sub-section (1) of Section 31 had taken place. The basis of that judgment is tenuous and is palpably wrong. For the same reason, the decision in R. Sambasivam (supra) of the Madras High Court is erroneous as it has merely followed the dictum of the Punjab Haryana High Court. Suffice it to observe that the transaction of gift deed without previous permission of the RBI may not be nullity, but certainly not enforceable in law until such permission is granted. 35. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8, p.141). It is well established that a contract which involves in its fulfilment the doing of an act prohibited by statute is void. The legal maxim 'A pactis privatorum publico juri non derogatur means that 'private agreements cannot alter the general law. Where a contract, express or implied, is expressly or by implication forbidden by statute, no court can lend its assistance to give it effect. (See Mellis v. Shirley L.B.) (Supra). What is done in contravention of the provisions of an Act of the Legislature cannot be made the subject of an action. If anything is against law though it is not prohibited in the statute but only a penalty is annexed the agreement is void. In every case where a statute inflicts a penalty for doing an act, though the act be not prohibited, yet the thing is unlawful, because it is not intended that a statute would inflict a penalty for a lawful act. Penalties are imposed by statute for two distinct purposes (1) for the protection of the public against fraud, or for some other object of public policy; (2) for the purpose of securing certain sources of (1) L.R. (1885) 16 Q.B.D, 446. (2) [1957] 1 Q.B. 267 revenue either to the state or to certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espects, particularly in respect of penalties. It is also true that FEMA does not have provision for prosecution and punishment like Section 56 of FERA and its enforcement for default is through civil imprisonment. However, insofar as conservation and/or augmentation of foreign exchange is concerned, the restrictions in FEMA continue to be as rigorous as they were in FERA. FEMA continues with the regime of rigorous control of foreign exchange and dealing in the foreign exchange is permitted only through authorised person. While its aim is to promote the orderly development and maintenance of foreign exchange markets in India, the Government s control in matters of foreign exchange has not been diluted. The conservation and augmentation of foreign exchange continues to be as important as it was under FERA. The restrictions on the dealings in foreign exchange continue to be as rigorous in FEMA as they were in FERA and the control of the Government over foreign exchange continues to be as complete and full as it was in FERA. 67. The importance of foreign exchange in the development of a country needs no emphasis. FEMA regulates the foreign exchange. The conservation and augmentation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the communication dated 19.06.2013 from FIPB to 1st Respondent / 1st Petitioner also informs that `all outstanding issues have to be decided by the Competent Authorities . 131. The Learned Counsel for the Appellants brings it to the notice of this `Tribunal , that the `Shares acquired / held by the ₹ 1st Respondent / ₹ 1st Petitioner in Kumudam Printers Pvt. Ltd. (Company which got Amalgamated with `Kumudam ) was not through inheritance, but through only by an `Allotment / `Transfer after 1976 or after 1996, as evident from the following: 1st Respondent / 1st Petitioner s details of Shareholding in Kumudam Printers Pvt. Ltd. (incorporated on 01.08.1972) runs as under: Date Allotment / Transfer Mode of Payment No. of Shares Cumulative Holding of AJP 1.8.72 Allotment (for consideration other than cash) Against sale of properties 10,150 10,150 16.8.72 Allotment On Payment 100 10,250 23.3.74 Allotment On Payment 50 10,300 29.6.82 Allotment On Payment 26,000 36,300 24.6.83 SALE of Shares Received Payment 36,300 NIL 28.5.84 Allotment On Payment 100 100 2.4.85 SALE of Shares Received Payment 50 50 14.5.86 Purchase of Shares On Payment 50 100 19.5.86 SALE of Shares Recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to say __ (a) neither the person to whom the security is to be issued nor the person, if any, for whom he is to be a nominee is resident outside the scheduled territories; and (b) the prescribed evidence is produced to the person issuing the security as to the residence of the person to whom it is to be issued and that of the person, if any, for whom he is to be a nominee [Spl Pg : 354] a ``LACOP was a person resident outside the scheduled territories at the relevant time, and the permission of the Treasury was not obtained in respect of the issue of the 200,000 shares. Accordingly, it is clear that this issue did involve a breach of the provisions of s 8 (I). Though Sch 5 to the 1947 Act renders certain breaches of the provisions of the Act a punishable offence, the Act appears to contain no further explicit guidance as to the effect in law of issuing securities without Treasury permission in breach of s 8 (I). Section 8(2), so far as material for present purposes, provides as follows: b `The subscription of the memorandum of association of a company to be formed under the Companies Act, 1929 by a person resident outside the scheduled territories shall, unless he subscribes the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use by the legislature of the phrase `purporting to effect , in s I 8 (2), in my judgment further illustrates that the acts which purport to effect the issue in a prohibited manner do not in fact operate to effect that issue ab initio. In these circumstances, on a bare reading of the Act, I would conclude that the purported issue of 200,000 ordinary shares by the company in March 1974 was wholly invalid and void j Counsel for the company has been unable to refer me to any decided case which touches directly on the construction of s 8 of the 1947 Act, but he has referred me to one decision which, I think, provides some indirect assistance. In Re Fry [1946] 2 All ER 106, Romer J had to consider the effect of a transfer of shares by a father in favour of a son, effected in breach of the restrictions imposed on the transfer of securities by para (I) of reg 3A of the Defence (Finance) Regulations 1939 [SR O 1940 No 1254], Paragraph (I), so far as material for present purposes, provided: a b c `(I) Subject to any exemptions which may be granted by order of the Treasury no person shall transfer otherwise than by operation of law or by inheritance, any securities or any interest in securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction which involved the doing of anything prohibited by that Act. In my judgment the wording of s II6 of the Companies Act 1948 is wide enough in its terms to empower the court to order the rectification of a company s register by deleting a reference to some only of a registered shareholder s shares. The section can, in my judgment still operate, even though the proposed transaction does not involve the entire deletion of the name of the registered holder concerned as a member of the company concerned, in as much as he, or it, is still properly shown as the holder of other shares, to which the rectification does not relate. I therefore conclude that the court has jurisdiction to order the rectification sought in the present case. Are there then any reasons why the court should, in the exercise of its discretion, decline to make the order sought? Mr Beard s affidavit contains evidence to the effect that the company no longer writes new insurance business and its insurance liabilities would be amply covered by its available assets, without the net amount of 150,000 which it intends to repay to LACOP in the event of the order for rectification sought being made. This evidence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved as under: 63. We have already extracted sec.29(1) and we notice that the expression used is general or special permission of the Reserve Bank of India and that the expression is not qualified by the word previous or prior . While we are conscious that the word 'prior or previous may be implied if the contextual situation or the object and design of the legislation demands it, we find no such compelling circumstances justifying reading any such implication into Section 29(1). On the other hand, the indications are all to the contrary. We find, on a perusal of the several, different sections of the very Act, that the Parliament has not been unmindful of the need to clearly express its intention by using the expression previous permission whenever it was thought that previous permission was necessary. In Sections 27(1) and 30, we find that the expression 'permission' is qualified by the word 'previous' and in Sections 8(1), 8(2) and 31, the expression 'general or special permission' is qualified by the word previous , whereas in Sections 13(2), 19(1), 19(4), 20, 21(3), 24, 25, 28(1) and 29, the expressions 'permission' and 'general' or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take the broad factual situations contemplated by the Act and interpret its provisions so as to advance and not to thwart the particular national interest whose advancement is proposed by the legislation. Traditional norms of statutory interpretation must yield to broader notions of the national interest. If the legislation is viewed and construed from that perspective, as indeed it is imperative that we do, we find no difficulty in interpreting 'permission' to mean 'permission', previous or subsequent, and we find no justification whatsoever for limiting the expression 'permission' to 'previous permission' only. In our view what is necessary is that the permission of the Reserve Bank of India should be obtained at some stage for the purchase of shares by non-resident companies. 84. On an overall view of the several statutory provisions and judicial precedents, it is clear that a shareholder has an undoubted interest in a company, an interest which is represented by his share holding. Share is movable property with all the attributes of such property. The rights of a share holder are (i) to elect directors and thus to participate in the managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asked to register the transfer of shares may not refuse to register the transfer, except for bona fide reason, neither arbitrarily, nor for any collateral purpose. The paramount consideration is the interest of the company and the general interest of the shareholders. On the other hand, where, for instance, the requisite permission under FERA is not obtained, it is open to the company, and indeed, it is bound to refuse to register the transfer of shares of an Indian company if favour of a non-resident. But once permission is obtained, whether before or after the purchase of the shares, the company cannot, thereafter refuse to register the transfer of shares. Nor is it open to the company or any other authority or individual to take upon itself or himself, thereafter the task of deciding whether the permission was rightly granted by the Reserve Bank of India. The provisions of the Foreign Exchange Regulation Act are so structured and woven as to make it clear that it is for the Reserve Bank of India alone to consider whether the requirements of the provisions of the Foreign Exchange Regulation Act and the various rules, directions and orders issued from time to time have been fulfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is neither intended to nor does it impinge in any manner on any legal right of the company or any of its shareholders. Conversely, neither the company nor any of its shareholders is clothed with any special right to question any such permission. and proceeds to point out that without the permission of `Reserve Bank of India , which is necessary, the `Holder of `Shares , is not clothed with the right to enter the `Register of Members and till the time, the permission of `Reserve Bank of India is secured, it is the duty of the `Board of Directors , to refuse `Registration of Shares . 135. The Learned Counsel for the Appellants urges that the `Tribunal had not recorded its finding `on satisfaction of the `Just and Equitable Ground , to Windup the Company , while passing the `impugned order in the main Company Petition and in the absence of the same, it issued further directions either in regard to the `Restoration of Shares or in regard to the `Appointment of Directors or `Alteration to the Articles of Association of `Kumudam . 136. The Learned Counsel for the Appellants seeks in aid of the decision of the Hon ble Supreme Court of India in Tata Consultancy Services Limited v. Cyrus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagement. But under the 2013 Act conduct prejudicial to any member or prejudicial to public interest or prejudicial to the interest of the company are all added along with oppression; (iii) Under the 1913 Act, the Court should be satisfied that winding up under the just and equitable clause will not only unfairly prejudice but also materially prejudice the interests of the company or any part of its members. But in the 1956 Act and 2013 Act, the words and materially do not follow the word unfairly . Moreover, under the 1956 Act and 2013 Act all that is required to be seen is whether the winding up will unfairly prejudice such member or members indicating thereby that the focus was on complaining/affected members. 16.2 An analysis of the provisions of Section 241(1)(a) read with clauses (a) and (b) of Sub section (1) of Section 242 shows that a relief under these provisions can be granted only if the Tribunal is of the opinion (1) that the company s affairs have been or are being conducted in a manner (a) Prejudicial to any member or members or (b) Prejudicial to public interest or (c) Prejudicial to the interests of the company or (d) Oppressive to any member or members and (2) tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahimi v. Westbourne Galleries Ltd.8, decided by House of Lords, one of the Directors who was voted out of office by the other two Directors (father son duo) petitioned for an order under Section 210 of the English Companies Act, 1948. The very relief sought by the ousted director was for a direction to the other two persons to purchase his shares in the Company or to sell their shares to him on such terms as the Court should think fit. Alternatively, he prayed for winding up. The Court of the first instance held that a case for winding up had been made out, as the majority was guilty of abuse of power and a breach of good faith which the partners owed to each other not to exclude one of them from all participation in the business. The court of Appeal reversed it by applying the tests of (i) bonafide exercise of power in the interest of the company; and (ii) whether a reasonable man could think that the removal was in the interest of the Company. While reversing the decision of the Court of Appeal, the House of Lords held, that the formula bonafide interest of the company should not become little more than an alibi for a refusal to consider the merits of the case. Holding that, equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r just and equitable winding up In Re Sailing Ship Kentmere Co.11. The second of these is where a company is a corporate quasi partnership and an irretrievable breakdown in trust and confidence between the participating members has taken place. In the first type of these cases, where there is a complete functional dead lock, winding up may be ordered regardless whether the company is a quasi partnership or not. But in the second type of cases, a breakdown of trust and confidence is enough even if there is not a complete functional dead lock. 16.50 Therefore, for invoking the just and equitable standard, the underlying principle is that the Court should be satisfied either that the partners cannot carry on together or that one of them cannot certainly carry on with the other12. 16.51 In the case in hand there was never and there could never have been a relationship in the nature of quasi partnership between the Tata Group and S.P. Group. S.P. Group boarded the train half way through the journey of Tata Sons. Functional dead lock is not even pleaded nor proved. 16.52 Coming to the Indian cases, this court held in Rajahmundry Electric Supply Corpn. Ltd. v. Nageshwara Rao13 that for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Suit were granted by the Hon ble High Court in allowing the said `Application . Hence, a `plea , is taken on behalf of the Appellants. The Respondents / Petitioners cannot be permitted to re-agitate the correctness of the Resolution dated 20.09.2011. 138. The Learned Counsel for the Appellants comes out with an emphatic plea that at the instance of Respondents / Petitioners MA/543/2019 in TCP/26/2018 (CP/54/2012), on the file of the National Company Law Tribunal, Division Bench, Chennai) was filed and on 24.06.2019, the `Tribunal had passed an `Order of Restraint on holding of any `Annual General Meeting and consequently no `Accounts could be either prepared or approved by the `Shareholders . Furthermore, it is the stand of the `Appellants that the `Purported Non-compliance with the requirements of Law , having resulted from an `Order of a `Tribunal `will not and cannot operate to prejudice the Appellants Rights . Therefore, the stand of the Respondents / Petitioners that the Appellant Nos. 1 and 2 are disqualified, as per Sections 164 and 167 of the Companies Act, 2013, is an `incorrect and an `untenable one. 139. The Learned Counsel for the Appellants contends that the Civil S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to agree with the same in view of the object behind the enactment of the provisions of Order II Rule 2 of the CPC as already discussed by us, namely, that Order II Rule 2 of the CPC seeks to avoid multiplicity of litigations on same cause of action. If that is the true object of the law, on which we do not entertain any doubt, the same would not stand fully subserved by holding that the provisions of Order II Rule 2 of the CPC will apply only if the first suit is disposed of and not in a situation where the second suit has been filed during the pendency of the first suit. Rather, Order II, Rule 2 of the CPC will apply to both the aforesaid situations. Though direct judicial pronouncements on the issue are somewhat scarce, we find that a similar view had been taken in a decision of the High Court at Allahabad in Murti v. Bhola Ram[7] and by the Bombay High Court in Krishnaji v. Raghunath[8]. 142. The Learned Counsel for the Appellants submits that in the `Board Meeting , purported to have been held by `Respondents /`Petitioners in the instant `Appeal on 26.09.2011 (to nullify the Resolutions passed by `Kumudam on 20.09.2011) a `Disclosure was made that a `Board Meeting was held on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 (against the `Order dated 27.04.2012 in I.A. No. 16197 of 2011 in O.S. No. 7554 of 2011), before the City Civil Court, Chennai, which was dismissed on 05.10.2012 and ultimately the Respondents withdrew the `Original Suit No. 7554 of 2011 on 11.11.2013 in effect, the `Alleged Board Meeting of 26.09.2011 , purported to have been held by the Respondents / Petitioners, being `non-est in the eye of law , had attained `finality . 147. The Learned Counsel for the Appellants submits that in a `Notice convening the `Board Meeting of 10.10.2011, it was sought to be contended by the 2nd Respondent that at `Board Meetings alleged to have taken place on 22.04.2010 and 24.06.2010, Article 31 (a) and 39 (b) of the Articles of Association were kept in abeyance and a new Chairman was to be elected and referred to the requisition for the said purpose. But, till date, the `Requisition was not `disclosed and further the Respondents had not specifically contended that they had really conducted the `Board Meeting on 10.10.2011. In short, it is the plea of the `Appellants that the `Purported Meeting of 26.09.2011 was intended to be a complete `Usurpation of Management Rights , even though as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Financial Year 31.03.2009, but the Accounts could not be adopted as the Respondents / Petitioners had `Voted against these Accounts , at the `Extra-Ordinary General Meeting that took place on 24.12.2009. Moreover, no `Personal Benefit was derived by the 1st Appellant / 2nd Respondent by the use of `Casting Vote . 153. The Learned Counsel for the Appellants submits that the `Tribunal in the `impugned order dated 27.05.2020 (delivered on 01.06.2020) had permitted the `Respondents / Petitioners in Company Petition, to `Appoint Four Directors , by citing proportionate Representation, purportedly as `Representative of the Majority Shareholders , on the `Board of Kumudam , had granted an `Order , which goes beyond the `Relief prayed for, by the `Respondents / Petitioners . 154. The Learned Counsel for the Appellants projects an `Argument that the `Tribunal had failed to `Appreciate that the `Article 29 of the `Articles of Association limits the `Appointment of Directors , to a `maximum of Four , excluding any `Ex-officio Directors , nominated by any `Financial Institution and / or `Banks . 155. The Learned Counsel for the Appellants points out that if the `impugned order of the `Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquired property (as defined in Section 3(1)(c) of the 1976 Act) either by himself or through any other person on his behalf. It is well settled that when penalty (such as forfeiture of such property) is imposed by statute for the purpose of preventing something from being done on some ground of public policy, the thing prohibited, if done, will be treated as void, even though the penalty if imposed is not enforceable. Such acts of commission and omission become void even without express declaration regarding its voidness, because such penalty implies a prohibition26. Be it noted that Section 4 of the Act posits a clear mandate that the person to whom the Act applies shall not hold any illegally acquired property and there person to whom the Act applies shall not hold any illegally acquired property and there is a corresponding duty on the Competent Authority to initiate process after due inquiry under Section 18 of the 1976 Act for forfeiture of such property_ whether acquired before the commencement of the Act or thereafter. 57. In the first part of Section 6(2), the expression used is any person . That is a person to whom primary notice under Section 6(1) is addressed. This pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... likely to be affected by the proposed forfeiture of the property. The person immediately and directly to be affected is the person who is the recorded owner of the property and in possession thereof himself or through some other person on his behalf. In the latter case, the burden of proof under Section 8 is not to be discharged by the convict or detenu, but by the person who holds the illegally acquired property either by himself or through any other person on his behalf. 160. The Learned Counsel for the Appellants cites the decision of the Hon ble Supreme Court of India in Vijay Karia Ors., v. Prysmian Cavi E Sistemi SRL Another, reported in (2020) 1 SCC Page 85 at Spl Pgs: 85 to 89 and 101, wherein at Paragraphs 84 to 88 and 101, it is observed as under: Violation of FEMA Rules 84. It has been argued by the appellants, based on the Non-Debt Instrument Rules, that a foreign award by which shares have to be purchased at a discounted value, would violate the aforesaid Rules, and therefore, would amount to a violation of the fundamental policy of Indian law. Resultantly, the appellants contended that as a result of this, the award in the present case would not be enforceable in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one in accordance with Securities and Exchange Board of India regulations where the pricing is specified by Securities and Exchange Board of India. (2) Unless otherwise prescribed in these rules, the price of equity instruments of an Indian company_ b) transferred from a person resident in India to a person resident outside India shall not be less than__ (iii) the valuation of equity instruments done as per any internationally accepted pricing methodology for valuation on an arm s length basis duly certified by a Chartered Accountant or a Merchant Banker registered with the Securities and Exchange Board of India or a practising Cost Accountant, in case of an unlisted Indian company. 86. Based on the aforesaid Rules, the appellants have argued that the transfer of shares from the Karias, who are persons resident in India, to the Respondent No.1, who is a person resident outside India, cannot be less than the valuation of such shares as done by a duly certified Chartered Accountant, Merchant Banker or Cost Accountant, and, as the sale of such shares at a discount of 10% would violate Rule 21(2)(b)(iii), the fundamental policy of Indian law contained in the aforesaid Rules would be br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... economy was a closed economy and the accent was to conserve foreign exchange by effectively prohibiting transactions in foreign exchange unless permitted. As pointed out by the Supreme Court in LIC v. Escorts Ltd.86, the object of FERA was to ensure that the nation does not lose foreign exchange essential for economic survival of the nation. With the liberalization and opening of India's economy it was felt that FERA must be repealed. FERA was enacted to replace the Foreign Exchange Regulation Act, 1947 which was originally enacted as a temporary measure. The Statement of Objects and Reasons of FERA indicate that FERA was enacted as the RBI had suggested and Government had agreed on the need for regulating, among other matters, the entry of foreign capital in the form of branches and concerns with substantial non-resident interest in them, the employment of foreigners in India etc. 110. The contention that enforcement of the Award against Unitech must be refused on the ground that it violates any one or the other provision of FEMA, cannot be accepted; but, any remittance of the money recovered from Unitech in enforcement of the Award would necessarily require compliance of reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14) 2 SCC 433; the interpretation of an agreement by an arbitrator being perverse is not a ground that can be made out under any of the grounds contained in Section 48(1)(b). Without therefore getting into whether the tribunal s interpretation is balanced, correct or even plausible, this ground is rejected. 161. The Learned Counsel for the Appellants refers to the decision of the Hon ble Supreme Court of India Raja Ram Kumar Bhargava (dead) by LRs v. Union of India 1988 (1) SCC at Page 681 at Spl Pgs: 688 689, wherein at paragraph 19, it is observed as under: 19. Generally speaking the broad guiding considerations are that wherever a right, not pre-existing in common law, is created by a statute and that statute itself provides a machinery for the enforcement of the right, both the right and the remedy having been created uno-flatu and a finality is intended to the result of the statutory proceedings, then, even in the absence of an exclusionary provision the civil courts' jurisdiction is impliedly barred. If, however, a right pre-existing in common law is recognised by the statute and a new statutory remedy for its enforcement provided, without expressly excluding the civil co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, notwithstanding that registration has not occurred, the beneficial interest in the shares may have passed from the transferor to the transferee. The English courts have held that if an agreement is followed by the delivery of the signed transfer forms, a beneficial interest would accrue in favour of the transferee, if the agreement is one which the courts would order to be specifically enforced (See Re Kilnoore Ltd (In Liquidation) Unidare Plc v. Cohen [2006] 1 Ch. 489). In Wood Preservation Ltd v. Prior reported at [1969] 1 W.L.R. 1077 CA, it was held that the fact that the agreement is subject to fulfilment of a condition beyond the control of the parties will not prevent it from being specifically enforceable, notwithstanding that the condition has not been fulfilled, if the party for whose benefit the condition was inserted is prepared to waive it. It has been held in Hardoon v. Belilios [1901] AC 118 PC, that where the beneficial interest has passed, in terms of what has been discussed hereinabove, without the transferee's name being registered, the seller/transferor then becomes a trustee for the buyer and must account to him for any dividends he receives and vote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is extracted herein above, the company...recognises only the person who is its member as a share-holder. In other words, the rights that may exist between the Company and its members or shareholders can be exercised only by members. Therefore, for the transferee to have maintained an action against the company for oppression and mismanagement, the reliefs would have had to be couched in terms through the transferor. However, even then, for the reasons indicated in the preceding paragraph, the proper forum to grant those reliefs would be the NCLT. This is another reason, in addition to the reason given in the paragraph above, for the suit to not be maintainable. 74. Additionally, Mr. Banerjee was quick to point out that if the suit were to be entertained by this court, an anomalous situation could possibly arise. The rights of the appellants as the supposed transferees of shares are predicated on them being able to prove that there was an oral agreement in June 2018 and that signed transfer deeds had been made over to them as security. The respondent no. 2 and 3 had contended first that the transfer deeds were merely for comfort and later that they were not signed. From the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 244 of the 2013 Act for the limited purposes of granting interim reliefs as claimed in the company petition. In fact, all the reliefs claimed in the present proceeding can be considered and allowed in the proceeding pending before the NCLT. The NCLT proceeding is a prior proceeding. In Mathalone (supra) and Killick Nixon (supra), the transferor- transferee relationship was clearly established. All parties had understood the relationship between the constructive trustee and the cestui que trust to have been in place. However, in the present case, the respondent no. 2 and 3 deny that such a relationship exists. This is another reason why it is difficult to adjudicate the issues in the suit in light of the reliefs claimed. If, however, the NCLT does return a positive finding in favour of the appellants in their application under section 58 and 59 of the 2013 Act and directs the company to register them as members of the company, the NCLT could then also adjudicate and decide on the reliefs sought in this suit on the grounds of oppression and mismanagement. 75. For the aforesaid reasons, no reliefs as prayed for by the appellant can be granted at this stage since the court is of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for the Tribunal to consider the preliminary objections raised by a party at a later stage of the main proceedings. If maintainability is a triable issue, the acceptance of a petition or rejection of the same has to be decided along with the issues raised, to be heard with the merits of the case in the considered opinion of this Tribunal. 164. The Learned Counsel for the Appellants falls back upon the Order of the Hon ble High Court of Andhra Pradesh in WP 8085 of 1984 dated 09.04.1985 in M/s. Avanti Explosives (P) Ltd. v. Principal Subordinate Judge, sitting in the Court of the Principal Sub-Judge, Tirupathi, Chitoor District Another, wherein at paragraph 10, it is observed as under: 10. It will be noted that there is no express provision ousting the jurisdiction of the Civil Court in any particular respect. All that Section 10 does is to state that the Court having jurisdiction under the Act shall be the High Court in whose jurisdiction, the registered office of the Company is situate, except to the extent to which the jurisdiction has been conferred on any District Court under sub-section (2) by notification issued by the Central Government. The Central Government can empowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, the Act nowhere specifically excludes the jurisdiction of the Civil Courts. It is true that the Company itself is the creation of law. It is an artificial person. But that does not mean that everything connected with the Company and all matters governing the constitution and management of the Company are special rights and liabilities. When a person has contributed to the shareholding of the Company, which is the very basis of the Company, a right to participate in the matter of electing or removing a director should be considered as a right inherent in the member . The right sought to be enforced in the instant case is an individual right. The two statutory provisions relied upon by the parties, Section 257 and 284 regulate the exercise of the said right. No particular provision of the Act creates a specific jurisdiction to enforce the said right exclusively. Therefore the Civil Suit filed by the plaintiff is maintainable. [Paras 9, 10, 12, 13 18] Respondents Contentions: 167. The Learned Senior Counsel for the Respondents contends that the `jurisdiction of the `Enforcement Directorate and the `Tribunal operate in `mutually exclusive domain and that Section 34 of the Foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent / 1st Petitioner was `null and void in view of the `Violation of Foreign Exchange Management Act, 1999 . Also that, there is no finding rendered by any `Authority that the `Shareholding of the ₹ 1st Respondent / 1st Petitioner or the `Allotment of Shares , to him in the Company is an `Invalid or `Void . 172. The Learned Counsel for the Respondents points out that the `Enforcement Directorate , had imposed `Penalties on the `Appellants as well as the ₹ 1st Respondent / 1st Petitioner for `Violation of Foreign Exchange Management Act , which are assailed in `Appeals , preferred by the `Parties before the `Competent Forum . Moreover, the `Enforcement Directorate , according to the `Respondents had placed the blame for the `Violation in Question on the Appellants and not on the ₹ 1st Respondent / 1st Petitioner , by observing as under: The onus, to adhere to the provisions of rules and regulations of an existing law (FEMA 1999 in this case), which issuing shares of the amalgamated company to non-resident shareholders, lied on the company issuing such shares and not on the individual shareholders. I therefore, do not order for the confiscation of 3,32,640 Shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h statement recorded in on 10.10.2011, before the Deputy Director, Directorate of Enforcement, which is part of the relied upon documents and copies of which were provided to all the Noticees. P. Vardarajan, Director of Kumudam Publication Pvt. Ltd. was in know of the fact that A. Jawahar Palaniappan was a person resident outside India and U.S. Citizen when in the capacity of Managing Director of the company, he issued share certificates to A. Jawahar Palaniappan (AJP) by virtue of which AJP held 66% of shares of the company. His averment that he came to know the non-resident status of noticee no. 3 only at the latter stage is baseless and false as is evident from the GPA dated 21.12.1998 wherein P. Vardarajan signed as a witness which allowed that he (AJP) was residing in U.S.A. i.e. to say he was a person resident outside India. 176. The Learned Counsel for the Respondents points out that the 1st Respondent / 1st Petitioner is a ₹ 64.73% Shareholder of the Company `holding 33,26,040 Shares and that the `Board Minutes of 20.09.2011, which was the subject matter of challenge in the main Company Petition, purport to cancel the said `Shares held by the 1st Respondent / 1st Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Homes (P) Ltd. vs. Shree Niwas Girni K.K. Samiti and Others reported in (2007) 7 SCC 753, the Court has held that a modification in the Scheme of Arrangement can be made in accordance with Section 392 for the proper working of the arrangement. The Court cannot make substantial modifications in the scheme which has been approved by the shareholders in terms of Section 391 of the Companies Act. The Court further held as follows: 54. It was argued on behalf of the respondents that under Section 392 of the Act, the court has the power to make modifications in the compromise or arrangement as it may consider necessary and this power would include the power to approve what has been put forward by LBPL who has come forward to discharge the liabilities of the Company on the rights in the properties of the Company other than in the office building and in the godown, being given to it for development and sale. As we read Section 392 of the Act, it only gives power to the court to make such modifications in the compromise or arrangement as it may consider necessary for the proper working of the compromise or arrangement. This is only a power that enables the court to provide for proper workin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy the conclusion that such ratification was in fact given. As was said by Lord Chelmsford in Spackman v. Evans L.R. 3 H.L. 171 (p. 234): To render valid an act of the directors of a company which is ultra vires, the acquiescence of the shareholders must be of the same extent as the consent which would have given validity from the first, viz., the acquiescence of each and every member of the company. Of course this acquiescence cannot be presumed unless knowledge of the transaction can be brought home to every one of the remaining shareholders. By knowledge of the transaction Lord Chelmsford clearly meant knowledge of the invalidity of the transaction. Lord Cranworth in the same case said this (p. 194):_ Looking to all which was thus done, I should certainly hold that the conduct of the continuing shareholders amounted to a ratification of the illegal or irregular acts of the directors; provided it be clear that the shareholders knew that they were illegal or irregular........ Much to the same effect was said by Sir Barnes Peacock in delivering the judgment of this Board in the case of Irvine v. Union Bank of Australia (2 App. Cas. 366 (p. 375): Their Lordships think that it would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the directors of a company or any officer of a company to make any alteration to the register in the circumstances alleged in the present case. If these members names had been improperly added to the register, the remedy of the company was to apply to this Court under S. 38 for the rectification of its register and not to take upon itself to alter the register. 183. The Learned Counsel for the Respondents refers to the decision of the Hon ble Supreme Court of India in Afzal Khan Ors. v. Mehboob Ayub Khan Ors., reported in (2016) SCC OnLine Bom. 1445, wherein at paragraphs 14 to 16, it is observed as under: 14. As is apparent from the provisions quoted above, there are three categories of persons who may file an appeal before the CLB for redressal, namely, (i) the person aggrieved (by such refusal, entry or omission, or default or delay), (ii) any member of the Company and (iii) the Company itself. On the other hand, the grievances themselves may arise in three different ways, namely, as a result of (a) refusal to register any transfer or transmission, (b) entering or omission of a name without sufficient cause and (c) default or delay in entering or omitting any name. In sofar as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and Debentures . Section 108 deals with the requisites of a valid transfer. It mandates the company not to register a transfer of shares (or debentures) unless the transfer is in accordance with its provisions. Section 108A to 108I deal with restrictions on acquisition or transfer of shares in special cases. Section 109 enables transfer of shares held by a deceased member by his legal representative without such representative himself being a member. Section 109A provide for nomination of shares by a holder thereof and vesting of the shares in such nominee upon the death of the holder. Section 110 provides for the application for transfer and notice before registration of transfer. In this context, Section 111 deals with the various grievances, which may arise as a result of a wrongful entry or omission or refusal to register, or delay or default in registration. As the scheme of these Sections indicates, a company may refuse to register any transfer or transmission by reason of non-compliance with Section 108 or Sections 108A to 108I or simply delay or default, in which case the aggrieved person or any member may apply for rectification; If a company refuses to register a trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch case, Mr. Chinoy would have to admit, the company could well be said to have the power to do so and the only contested question would be of sufficiency of the cause to do so. That, I am afraid, cannot be a correct interpretation of the law. 16. The reason for not reserving unto the company the power to correct a subsisting entry (as opposed to making of an entry or omission occasioned by allotment, transfer or transmission) in the register is not far to seek. The register of members of a company is an important public document and its sanctity cannot be tampered with except in accordance with law. This question was considered by Madras High Court in the case of P.V. Damodara Reddy vs. Indian National Agencies Limited5. In that case, the Applicants before the Court in an application for rectification of register were duly entered on the register of members as allottees of shares. The directors later resolved to cancel the allotment and proceeded to remove their names from the register. This is what Madras High Court said in that case: 4. Before proceeding further, I may say I am disposed to regard the removal by the company of the applicants' names from the register of membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14-1-1971 was held to be illegal. The Board of Directors of the company was superseded and a special officer was appointed to carry on management of the company with the advice of Barooah, Khaund and a representative of the labour union. There were several other directions issued by the court which are not necessary to be mentioned here. The Division Bench considered in detail the relevant legal position. Without using the phrase 'proper purpose doctrine' the principle enunciated therein, was applied. The following observations of Justice A.N. Sen are reproduced: It is well settled that the Directors may exercise their powers bona fide and in the interest of the company. If the Directors exercise their powers of allotment of shares bona fide and in the interest of the company, the said exercise of powers must be held to be proper and valid and the said exercise of powers may not be questioned and will not be invalidated merely because they have any subsidiary additional motive even though this be to promote their advantage. An exercise of power by the Directors in the matter of allotment of shares, if made mala fide and in their own interest and not in the interest of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity shareholders regarding issue of further share capital. The High Court accepted the finding of oppression. However, it placed it on a much broader base by taking into consideration various other factors. The High Court's finding is based on a much stronger footing. In fact, the High Court has gone on to conclude that Ramanujam has played a fraud on the minority shareholders by manipulating the allotment of shares in his favour. We find no reason to differ with the finding of the High Court. 31. This brings us to the issue regarding locus standi of Prathapan and Prathapan's family to maintain the petition under Sections 397 and 398 of the Companies Act and their failure to obtain permission of Reserve Bank of India as per Section 29 of the Foreign Exchange Regulation Act. So far as the question of permission of the Reserve Bank of India under FERA is concerned, the same can be obtained ex-post facto. This stands concluded by judgment of this Court in LIC of India v. Escorts Ltd [1986] l SCC 264. The statute does not provide any time limit for obtaining the permission. We cannot lose sight of the subsequent development in this connection. FERA stands repealed and the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prathapan and his wife by Ramanujam. Such an order amounts to rewarding the wrongdoer and penalizing the oppressed party. In the circumstances of this case asking the oppressed to sell his shares to the oppressor not only fails to redress the wrong done to the oppressed, it also results in heavy monetary loss to him. The relief granted by the High Court was a proper relief in the facts of the case. and submits that it is not open to a person at whose behest, the `Issue of Shares , has occurred to later, raised the question of `FEMA Violation . Apart from that, converting a `Majority to a `Minority (as in the instant case) is an `Oppressive one. 185. The Learned Counsel for the Respondents points out that during the pendency of the Company Petition, the 1st Appellant / 2nd Respondent filed three Compounding Applications before the Reserve Bank of India, and on 26.05.2015, the Company Law Board had passed the following `Order : An application filed by R-2 [A1] for compounding the offence in relation to the above is pending before the RBI under FEMA Act read with FEMA (Compounding Proceedings) Rules As held in LIC v. Escorts Ltd (1986) 1 SCC 264 while the task of enforcement rests wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The Learned Counsel for the Respondents submits that a finding of mere `contravention of FEMA , does not by itself render a transaction `void , as per decision of the Hon ble Supreme Court of India in Vijay Karia Ors., v. Prysmian Cavi E Sistemi SRL Another, reported in (2020) SCC OnLine SC 177, wherein at Paragraphs 91 to 93, it is observed as under: 91. This reasoning commends itself to us. First and foremost, FEMA - unlike FERA - refers to the nation s policy of managing foreign exchange instead of policing foreign exchange, the policeman being Reserve Bank of India under FERA. It is important to remember that Section 47 of FERA no longer exists in FEMA, so that transactions that violate FEMA cannot be held to be void. Also, if a particular act violates any provision of FEMA or the Rules framed thereunder, permission of Reserve Bank of India may be obtained post facto if such violation can be condoned. Neither the award, nor the agreement being enforced by the award, can, therefore, be held to be of no effect in law. This being the case, a rectifiable breach under FEMA can never be held to be a violation of the fundamental policy of Indian law. Even assuming that Rule 21 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised person. While its aim is to promote the orderly development and maintenance of foreign exchange markets in India, the Government's control in matters of foreign exchange has not been diluted. The conservation and augmentation of foreign exchange continues to be as important as it was under FERA. The restrictions on the dealings in foreign exchange continue to be as rigorous in FEMA as they were in FERA and the control of the Government over foreign exchange continues to be as complete and full as it was in FERA. 67. The importance of foreign exchange in the development of a country needs no emphasis. FEMA regulates the foreign exchange. The conservation and augmentation of foreign exchange continue to be its important theme. Although contravention of its provisions is not regarded as a criminal offence, yet it is an illegal activity jeopardising the very economic fabric of the country. For violation of foreign exchange regulations, penalty can be levied and its non- compliance results in civil imprisonment of the defaulter. The whole intent and idea behind Cofeposa is to prevent violation of foreign exchange regulations or smuggling activities which have serious and delete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. We are of the view that the same shows a legislative intent to not void the transaction even if in violation of the said Act. Thus we are of the opinion that the plea of the appellant Company in this regard is without any force. Respondents Citations : 190. The Learned Counsel for the Respondents refers to the decision of the Hon ble Madras High Court in Shoe Specialities (P) Ltd. v. Standard Distilleries Breweries (P) Ltd., reported in (1996) SCC OnLine Mad. Page 621, wherein at Paragraphs 28 to 40, it is observed as under: 28. it is clear that though the petitioners had majority shares, they were not allowed to work or manage the company. Everything was controlled by the employees of the ninth respondent who were acting against the interest of the company. That was the matter which was complained of in C.P. No. 44 of 1993 and the complaint was proved. Therefore, all grounds were made out for invoking the powers under section 397 of the Companies Act. 29. Now, we will consider the scope of section 397 of the Companies Act. Section 397 of the said Act reads thus: Application to Company Law Board for relief in cases of oppression. (1) Any members of a company who complain that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, appointing or removing directors, appointing a receiver to manage the company's business temporarily, and altering the voting and other rights of classes of members. The court has an equally wide discretion under the present statutory provision, and the only limitation is that the order it makes must be relevant and appropriate to give relief from the matters complained of. The petitioners must state in their petition what orders they wish the court make and a petition will not be heard if it merely asks the court to make an order regulating the company's affairs, or such order as the court thinks just. Without affecting the generality of its power to give whatever relief is appropriate in the circumstances, the new statutory provision empowers the court to make any order it thinks fit regulating the conduct of the company's affairs in future; to require the company not to do or not to continue doing any act complained of, or to require it to do any act when the petitioner has complained of the company's omission to do it in the past (injunctive and mandatory injunctive relief). 32. In Rajahmundry Electric Supply Corporation Limited v. A. Nageswara Rao [1956] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e charges against the directors and an investigation into those charges would be necessary even for the purpose of regulating the affairs of the company. We do not think that the absence of any formal prayer in the petition under section 397 would entitle the court to refrain from investigating into the various charges levelled against the directors. In Gower's Modern Company Law (second edition), at page 513, the scope of section 210 of the English Act which corresponds to section 397 of the (Indian) Companies Act is discussed and referring to the Cohen Report, on which the section in the English Act was based, the learned author says 'that it was the intention that the court should have power to impose upon the parties whatever settlement the court considers just and equitable . While recognising that the court could not be expected in every case to find and impose a solution it was thought that its discretion must be unfettered for it is impossible to lay down a general guide in the solution of what are essentially individual cases'. Referring to the decision in Antigen Laboratories Ltd., In re [1951] 1 All ER 110 (Ch D), the learned author says 'that it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reconstituted by the court or not and whether the court has power to frame an article inconsistent with the provisions of section 255 of the Act or not must in the ultimate analysis depend upon the true ambit of the powers of the court under section 397 or 398 read with section 402 for, if these sections confer upon the court jurisdiction and powers of the widest amplitude to pass appropriate orders which the circumstances of the case may require, it would be difficult to accept Mr. Sen's submission that the impugned orders and directions are liable to be set aside on the basis that the reconstituted board or modified article 95 was not in consonance with section 255 of the Act. To correctly appreciate the ambit of the court's jurisdiction and the amplitude of the court's power under sections 397, 398 read with section 402 of the Companies Act, 1956, it will be necessary to consider the entire scheme of the Act pertaining to corporate management of companies. At the outset, it may be stated that all these concerned provisions occur in Part VI of the Act which deals with the management and administration of companies. It may be further pointed out that in this part t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions contained in the other chapters which deal with normal corporate management of a company and in our view, in the context of this scheme having regard to the object that is sought to be achieved by sections 397, 398 read with section 402, the powers of the court thereunder cannot be so read. Further, an analysis of the sections contained in Chapter VI of Part VI of the Act will also indicate that the powers of the court under section 397 or 398 read with section 402 cannot be read as being subject to the other provisions contained in sections dealing with usual corporate management of a company in normal circumstances. As stated earlier, Chapter VI deals with the prevention of oppression and mismanagement and the provisions therein have been divided under two heads - under head A powers have been conferred upon the court to deal with cases of oppression and mismanagement in a company falling under sections 397 and 398 of the Act while under head B similar powers have been given to the Central Government to deal with cases of oppression and mismanagement in a company but it will be clear that some limitations have been placed on the Government's powers while there are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany 'with a view to bringing to an end or preventing the matters complained of or apprehended'. Both the wide nature of the power conferred on the court and the object or objects sought to be achieved by the exercise of such power are clearly indicated in sections 397 and 398. Without prejudice to the generality of the powers conferred on the court under these sections, section 402 proceeds to indicate what type of orders the court could pass and clauses (a) to (g) are clearly illustrative and not exhaustive of the type of such orders. Clauses (a) and (g) indicate the widest amplitude of the court's power; under clause (a) the court's order may provide for the regulation of the conduct of the company's affairs in future and under clause (g) the court's order may provide for any other matter for which in the opinion of the court it is just and equitable that provisions should be made. An examination of the aforesaid sections clearly brings out two aspects, first, the very wide nature of the power conferred on the court and, secondly, the object that is sought to be achieved by the exercise of such power with the result that the only limitation that could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner prejudicial to the public interest and if that be the objective the court must have power to interfere with the normal corporate management of the company. If under section 398 read with section 402, the court is required by its order to provide for the regulation of the conduct of the company's affairs in future because of oppression or mismanagement that has occurred during the course of normal corporate management, the court must have the power to supplant the entire corporate management or rather corporate mismanagement by resorting to non-corporate management which may take the form of appointing an administrator or a special officer or a committee of advisors, etc., who could be in charge of the affairs of the company. If the court were to have to such power the very object of the section would be defeated. We must observe in fairness to Mr. Sen that it was not disputed by him that powers of the court under section 398 read with section 402 of the Companies Act were wide enough to enable the court to appoint an administrator or a special officer or a committee of advisors for the future management of the company and thereby supplant completely the corporate manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of India [1977] 47 Comp Cas 92, the Bombay High Court had occasion to consider the same. Their Lordships said thus (at page 116): An examination of the aforesaid sections brings out two aspects; first, the very wide nature of the power conferred on the court, and, secondly, the object that is sought to be achieved by the exercise of such power, with the result that the only limitation that could be impliedly read on the exercise of the power would be that nexus must exist between the order that may be passed thereunder and the object sought to be achieved by those sections and beyond this limitation which arises by necessary implication it is difficult to read any other restriction or limitation on the exercise of the court's power. 37. In Rakhra Sports Pvt. Ltd. v. Khraitilal Rakhra [1993] 76 Comp Cas 545, a Division Bench of the Karnataka High Court, while dealing with the powers of court under section 397 of the Companies Act, had held thus (at page 586): Under section 397 of the Companies Act, 1956, the court is empowered to make an order 'as it thinks fit'; similar is the power vested in the court under section 398. Power under section 402 is a power which may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Companies Act has already been explained in the various decisions. The Board has got unlimited power. Learned senior counsel contended that even the petitioners did not want their board of directors to be handed over management and by virtue of the impugned order, the relief that was sought for in Company Petition No. 44 of 1993 is now granted in an interlocutory application. We cannot accept the said argument. At the time when Company Petition No. 44 of 1993 was filed, the extraordinary general meeting was not held and, therefore, that could be the only relief at that time. In view of the subsequent events and that too after the extraordinary general meeting under the guidance of the observer, the only thing that had to be considered was, whether the new directors were duly elected to the board and whether the existing board is to be removed. Company Petition No. 44 of 1993 itself was filed to get management of the company by the majority shareholders and that was the main complaint. We do not find any difficulty in coming to the conclusion that under the provisions of the Companies Act, the Board was legally entitled to and has got the power which it exercised under the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 77, by which reduction of the share capital of a Company can be effected. But both these procedures have one feature in common, namely, that there is Court's intervention before the Company can reduce its share capital, and this is of vital importance from the stand point of creditors of the Company. 7. Sections 100 to 104 provide a detailed procedure for reduction of share capital. Without being exhaustive Section 100 mentions three modes of reduction of share capital, viz., (i) extinction or reduction of the liability on any of the shares in respect of share capital not paid up, (ii) cancellation of any paid up share capital which is lost or is unrepresented by available assets, and (iii) paying off any paid up share capital. Section 101 provides that a Company which has adopted a special resolution for reduction of share capital has to move the Court by a petition for an order confirming the reduction. A detailed procedure is prescribed which the Court should ordinarily follow before confirming the resolution. This procedure has to be followed where the proposed reduction of share capital involves either the dimunition of liability in respect of unpaid share capital or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ives a direction to the Company to purchase shares of its own members, a consequent reduction of the share capital is bound to ensue, but before granting such a direction it is not necessary to give notice of the consequent reduction of the share capital to the creditors of the company. No such requirement is laid down by the Act. Two procedures ultimately bringing about reduction of the share capital are distinct and separate and stand apart from each other and one or the other may be resorted to according to the situation. That is the clearest effect of the disjunctive `or in section 77. 10. The scheme of Sections 397 and 406 appears to constitute a code by itself for granting relief to oppressed minority shareholders and for granting appropriate relief, a power of widest amplitude, inter alia, lifting the ban on Company purchasing its shares under Court's direction, is conferred on the Court. When the Court exercises this power by directing a purchase of its shares by the Company, it would necessarily involve reduction of the capital of the Company. Is such power of the Court subject to a resolution to be adopted by the members of the Company which, when passed with statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der ss. 397 and 398 read with s. 402 power has been conferred upon the court to make such orders as it thinks fit. The power conferred upon the court by the above-mentioned sections is very wide and object or objects sought to be achieved by the exercise of such power have been stated in ss 397 and 398. As we read sub-cls. (a) and (g) of s. 402 of the Act we have no doubt in our mind that the intention of the Legislature under the above-mentioned sections was to confer wide and ample powers upon the court for the regulation of the conducting of a company s affairs and to provide for any other matter which the court thinks just and equitable to provide for in the interest of the corporate body and the general public. Reference in this connection may be made to the case of Bennet Coleman and Company v. Union of India, [1977] 47 Comp Cas 92 (Bom). 31. By reason of what has been stated hereinabove, it appears to us that the court had power to make the order in regard to convening and holding of the meeting, filing of proxies or nominations or any other matter for the purpose of conducting the affairs of a company which might be contrary to the provisions of the articles of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a question of true and proper construction of the court s powers under section 397 and 398 read with section 402 and having regard to the scheme of Part VI which includes all the sections dealing with management and administration of companies, the language employed in the relevant sections 397, 398 and 402 and the object that is sought to be achieved by these sections if once it is held that on a true construction the court has the widest possible jurisdiction and ample powers to pass such orders as it thinks fit to bring about the desired result in the management of the affairs of a company and that the exercise of such powers is not subject to the other provisions of the Act, there would be no question of the court not being able to reframe or insert a new article which would be in conflict with some provisions of the Act. We are inclined to take the view that sections 397, 398 and 402 by their very nature and contents indicate that they are intended to operate as express provision to the contrary and would be covered by the phrase Save as otherwise expressly provided in the Act . In any case, as discussed earlier the two sets of situations in which the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted the contention that reframing or insertion of a new article by the court acting under section 398 read with section 402 will be hit by section 9 (2) of the Act. 20. Having regard to the above discussion, we are clearly of the view that the court had jurisdiction to reconstitute the board in the manner done in this case and such board is not violative of section 255 of the Companies Act and we are also of the further view that the learned judge had ample powers to alter the original article 95 of respondent No. 1 company in the manner done by him while acting under section 398 read with section 402 of the Act. 195. The Learned Counsel for the Respondents cites the decision of the Hon ble Madras High Court in M. Senthilkumar Anr. V. Sudha Mills (India) Pvt. Ltd. Ors., reported in (1995) SCC Online Mad. 551, wherein at Paragraph 17, it is observed as under: 17. Winding up of a company on just and equitable grounds should not be ordered except as a last resort, as the presumption is in favour of the desirability of the continued existence and effective functioning of the company. Section 397 provides for relief in case of oppression even where a winding up order on just and equita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to an end or preventing further mismanagement, it can pass such order as it deems fit including that of winding-up. Therefore, the parameters in both the Sections i.e. Sections 397 398 are very clear. It will depend upon case to case. No hard and fast rule can be laid down. In the case of oppression to the interest of member or members, if the Tribunal is satisfied that the winding-up is just and equitable then it can do so or pass any order as it thinks fit. Likewise in Section 398 if the management wants to bring any material change in the management and control of the company prejudicial to the interest of the company, then in that case, appropriate order can be passed by the Tribunal. The acts which would amount to oppression to the members or mismanagement or material alteration in the control of the company or prejudice to the interest of the company would depend upon facts of each case. (Paras 30 and 40) 197. The Learned Counsel for the Respondents relies on the decision of the Hon ble Supreme Court of India in Hind Overseas Pvt. Ltd. v. Ragunath Prasad Jhunjhunwala, reported in (1976) 3 SCC at Page 259 at Spl Pg: 260, wherein at paragraphs 37 38, it is observed as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause of conflicting interest. However, while considering this aspect it has taken shelter of the very Articles of Association to reject the petitioner's submission and acrimonious relations between the parties. The CLB has thus adopted narrow and incommodious approach to this issue. In the facts of this case, as already observed by me, equity is in favor of the petitioner. Such a situation should not be allowed where the petitioner/Prentice Hall is not associated with the company but the company carries on with its name. It is an exceptional kind of a case where the petitioner who is responsible for the incorporation of the Indian company is driven out of the company but the company continues to adopt its name and wants to continue to ride on its goodwill without being associated with it. Such unprecedented situation would call for unprecedented solution and in my opinion the second alternative suggested by the petitioner that in case the petitioner has to go out from the company it is willing to do so provided the words Prentice Hall are also dropped from its name, is not something which is unreasonable. In such a situation, the argument of the learned counsel for the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention to paragraph 19 of decision in Shanti Prasad Jain v. Kalinga Tubes Ltd., reported in [1965] 35 Comp Cas 351; AIR 1965 SC 1535. 200. The Learned Counsel for the Respondents refers to the decision in JK Paliwal Anr. v. Paliwal Steel Ltd. Ors. [2007] SCC OnLine CLB 35, wherein at Paragraphs 24 25, it is observed as under: 24. The respondents have been oppressive to the petitioners by appointing respondent No.3 and respondent No.4 as directors. Creating new majority by way of representation on Board of the respondent No.1 and selling off the asset of the respondent No.1 at the back of the petitioners are acts of continuous oppression to the petitioners as well as the mismanagement of the affairs of the respondent No.1 company. The respondents conduct has been burdensome, harsh and wrongful. Besides, the affairs of the company have been mismanaged as pointed out above. 25. Keeping these circumstances in view, to do substantial justice between the parties, I hereby order as follows: (i) Appointment of the respondents Nos. 3 and 4 as Additional Directors is declared null and void and status quo ante is restored. Form No. 32 filed with the Registrar of Companies in respect of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares to minority as the latter was in control of the company for a long time. However, where both the sides are in management and the company has more than one separate and identifiable divisions/businesses, this Board had divided the company by allocating one or more divisions/businesses to one group and the remaining to other groups (Achal Nath / Hind Samachar2 / Trackparts / Jaidka Motors2). Likewise, when there were two companies controlled and managed by common shareholders, this Board had directed one group to take one company and the other group the other company (Micromeritics3). In the present case, admittedly there are three groups of shareholders and there are three identifiable independent companies carrying on similar businesses with the three group as shareholders. Therefore, as rightly pointed out by the Learned Counsel for the petitioners, the most equitable way of putting to an end of the disputes would be to direct the group in control of a company to purchase the shares held by the others in that company on a fair value to be determined by an independent valuer. It was vehemently argued by the counsel for the respondents that it would be highly inequitable to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem in Bateli, the Saraff group shall release the petitioners from the guarantees given in respect of New Terai and likewise, B.L. Dalmia group shall release the petitioners from the guarantees given by them in respect of Belgachi. 8. The fair value of the shares of Bateli shall be determined by M/s. Carritt Moran Co. In case, the Saraff and B.L. Dalmia groups exercise the option of purchasing the shares held by the petitioners in other two companies as per the option given in par 29:3, the fair value of the shares of the other two companies will also be determined by the same valuer. 9. The valuation exercise should be completed within a period of three months from the date of assignment. The fees payable will be negotiated by the concerned companies and paid by them. 10. All the parties are at liberty to make written as well as oral submissions before the valuer which shall be taken into consideration by the valuer in determining fair value of the shares. 11. The parties are at liberty to decide whether they would purchase the shares by themselves or the respective companies would do so. In case the company/ies purchase the shares, consequent reduction in the share capital is aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank . 208. The `Foreign Exchange Regulation Act , was a `Criminal Law . In `FEMA , the provisions pertaining to the `Burden of Proof and `Presumption of Culpable Mental State are not found. However, the declaration to the effect that the `Transaction undertaken by a `Person , is not designed for the purpose of `Violation or `Evasion of the `Provisions of the `Act , as was required under `FERA 1977 , continues to be there. 209. Under the `Foreign Exchange Regulation Act 1973 , there was a presumption of negative intention (`Mens Rea ). In the `Foreign Exchange Management Act, the presumption of `Mens Rea (`Guilty Mind ) is not there. `Mens Rea , is not essential for the purpose of imposition of penalty under `FERA (Also, `FEMA). Mere providing a blame worthy conduct is enough to attract penalty, as per the decision of the Hon ble Supreme Court of India, in the Matter of Director of Enforcement v. MCTM Corporation (P) Ltd., AIR 1969 SC 1100. Hon ble Supreme Court Decision : 210. At this stage, this `Tribunal , points out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment Route: 218. The `Government Route , is the `Entry Route , through which an `Investment by a `Person , `Resident Outside India , requires prior `Government Approval . Reserve Bank of India: 219. It is for the `Central Bank of India i.e., Reserve Bank of India , to decide on merits whether the violation under `Foreign Exchange Management Act 1999 , is to be treated as `technical and / or `minor and the need / necessity of referring the `matter , to the Directorate of Enforcement. Analysis: Maintainability of Appeal: 220. According to the `Appellants / `Respondents , they have preferred the instant Comp. App AT No. 83 of 2020 (TA No. 283 of 2021) as `Aggrieved Persons , (under Section 421 of the Companies Act read with Rule 19 of NCLAT Rules, 2016) on being dissatisfied with the `impugned order dated 27.05.2020 (delivered on 01.06.2020) in CP/54/2012 (TCP/26/2018), in allowing the Company Petition against them and because of their personal / private rights are adversely affected, the filing of the instant `Appeal , is maintainable. 221. It is the version of the Respondents / Petitioners that the instant `Appeal , preferred by the ₹ 1st Appellant / 2nd Respondent and the &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l children. One of the conditions for participating in the tender is that the bidder has to enclose the Audited Accounts and Income-Tax Returns. Hence, the Applicant No.1 / Respondent No.1 prays that the Applicant No.1 / Respondent No.1 be permitted to Audit the Accounts for the Financial Years 2017-18 and 2018-19 for filing of Income Tax Returns alone. Accordingly, the Applicant No.1 / Respondent No.1 is permitted to have accounts of the Applicant No.1 / Respondent No.1 for the Financial Year 2017-18 and 2018-19 audited and is permitted to file Income Tax Returns of the Applicant Company for the said Financial Years. The Applicant No.1 / Respondent No.1 is also permitted to enclose the said Income Tax Returns along with the audited accounts for the aforesaid years for participating in Government tenders. The Applicants / Respondents are also directed to furnish copies of the accounts and Income Tax Returns to the Petitioners. Along with the Accounts and Returns, the Applicants / Respondents shall also provide the tender documents with the price specification redacted, to the Respondents / Petitioners. The Applicant / Respondent Company has by an undertaking recorded by this Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the main Company Petition, as engaged in the `business of Printing and Publication of Magazines, Newspapers, Journals and Periodicals, etc., in the State of Tamil Nadu . 229. The ₹ 1st Appellant / 2nd Respondent is described as a `Former Company Secretary , of the ₹ 4th Appellant / 1st Respondent / Company , being a `Director of the said `Company , and does not directly hold any `Shares in 4th Appellant / 1st Respondent / Company. 230. The ₹ 2nd Appellant / 3rd Respondent is described as a `Director , of the ₹ 4th Appellant / 1st Respondent / Company , and not directly holding any `Shares in the said Company. As a matter of fact, the ₹ 1st Appellant / 2nd Respondent along with his family members is described as `promoted the ₹ 3rd Appellant / 4th Respondent / Company and further that the ₹ 1st Appellant / 2nd Respondent is described as the `Managing Director of the ₹ 3rd Appellant / 4th Respondent / Company . Further, the entire `Share Capital of Rs.1,00,000/- of the ₹ 3rd Appellant / 4th Respondent / Company is mentioned, to be held by the ₹ 1st Appellant / 2nd Respondent , together with his family members, etc. 231. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (delivered on 01.06.2020), imposing a burden / obligation upon them, in main Company Petition No. 54 of 2012 (TCP/26/2018), passed by the `Tribunal , they are entitled to prefer an `Appeal , before the `Appellate Tribunal , considering the fact that an `Appeal is a continuation of the `Original Proceedings , in `Law . Viewed in that perspective, the contra plea taken on the side of the Petitioners / Respondents is not acceded to, by this `Tribunal . 236. In regard to the plea of the Respondents / Petitioners that no accounts were audited and `no Annual Returns , filed by the ₹ 4th Appellant / 1st Respondent / Company and was in `Default and therefore, the `Appellant Nos. 1 and 2 were `Disqualified as per Section 164 read with 167 of the Companies Act, 2013, the same cannot be countenanced because of the fact that the `National Company Law Tribunal , Chennai, in MA/543/2019 in TCP/26/2018 on 24.06.2019, had passed an `Order based on the consensus arrived between the parties and on the basis of `Draft Terms , being filed inter alia stating that the `Applicant / Respondent / Company has by an undertaking recorded by this `Hon ble Tribunal , in its `Order dated 02.11.2018, propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , to agitate the same in the `Company Petition , clearly proves that the main CP/54/2012 (TCP/26/2018) is barred, as per the ingredients of Order II Rule 2 of the Civil Procedure Code, because of the reason that the issues raised in the CS No.139 of 2012 and in CP/54/2012 (TCP/26/2018) are common and predicated on the same set of facts. 241. The Learned Counsel for the Appellants contends that their `impugned order dated 27.05.2020 (delivered on 01.06.2020), passed by the `Tribunal , had failed to consider the objections, in regard to the `Maintainability of Company Petition , and hence, the same is to be set aside. 242. The Learned Counsel for the Appellants relies on the decision of the Hon ble Supreme Court in Virgo Industries (Eng.) Pvt. Ltd. v. Venturetech Solutions Pvt. Ltd., reported in (2013) SCC at Page 625, wherein at Paragraph 17, wherein it is observed that it is not necessary that the earlier `Suit has to be disposed of and further the Paragraph 17 reads as under: 17. However, we are unable to agree with the same in view of the object behind the enactment of the provisions of Order 2 Rule 2 CPC as already discussed by us, namely, that Order 2 Rule 2 CPC seeks to avoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the said Code and in particular Rule 1 of Order XXIII of the said Code are applicable to the Letters Patent Appeal. As the earlier appeal was withdrawn without obtaining a leave of the Court to file a fresh appeal, the Division Bench applied the bar created by Rule 1 of Order XXIII and upheld the objection regarding maintainability of the Letters Patent Appeal. 18. Even otherwise, Rule 1 of Order XXIII of the said Code being a rule of public policy, the principles analogous to Rule 1 of Order XXIII of the said Code are applicable to the present appeals. We have quoted the order dated 11th July 2017 passed by the Division Bench of this Court wherein while withdrawing the earlier appeals preferred against the same impugned judgment and order, a limited liberty was sought and was granted to prefer review petitions. The review petitions were rejected. SLP was filed against the impugned judgment and order and the order passed on the review petitions. After filing SLP against the impugned judgment and order that the present appeals were preferred by the appellant. On plain reading of the order dated 10th August 2018 passed in the SLP, we find that there was no liberty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it styled as Noble Broadcasting Corporation put up on the suit schedule property, as per the terms of MOU dated 15.8.2010. (h) For a permanent injunction restraining the defendants 2 and 3 from in any manner spending the monies of the first defendant company in connection with litigation revolving round the disputes between the Directors / Shareholders of the first defendant company / from drawing salary or personal expenses. 249. It comes to be known that the 1st Respondent / 1st Petitioner / Plaintiff / Applicant, had filed Appln No. 4914 of 2016 in C.S. No. 139 of 2012 against the ₹ 4th Appellant / 1st Respondent / Company (`Kumudam Publications Pvt. Ltd. 3 Others as `Respondents ), seeking permission to `Withdraw the Prayers (b), (c), (d) and (e), forming part of the Claim in C.S.No. 139 of 2012 and the Hon ble High Court of Madras 22.11.2016 at Paragraph 20, had observed the following: 20. In view of the above discussions that the applicant has not sought for liberty to file a fresh suit, it is like giving up his claim. In such a context of the matter, once the plaintiff files an application to withdraw the suit in full or part, that is the end of the litigation and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent (2nd Appellant in Appeal), as directors of the company and not to take any policy decisions with regard to the affairs of the 1st Respondent Company (4th Appellant in Appeal). (iii) In directing the 1st Respondent Company (4th Appellant in Appeal) to maintain status quo with regard to the shareholding pattern as on 19/09/2011; (iv) In permitting the 1st Petitioner (1st Respondent in Appeal) to continue to exercise all his corporate rights including voting rights, right to dividend, bonus, rights issue and other corporate benefits under the Companies Act, 1956, and other economic laws with respect to 3,32,440 Shares that were illegally cancelled at the purported board meeting alleged to have been held on 20/09/2011, till the disposal of the company petition; (v) To appoint an independent chairman to chair the board and general body meetings and to conduct the affairs of the 1 st Respondent Company (4th Appellant in Appeal) in a prudent manner; (vi) To appoint one or more competent persons as inspectors to investigate the affairs of the 1st Respondent Company (4th Appellant in Appeal); (vii) In directing the Respondents (Petitioners in Appeal) to furnish financial statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te `up to 20.02.2012 and further that the `Suit was filed on 24.02.2012. But, no `Reliefs were claimed. 254. Be it noted, that Order II Rule 2 of the Civil Procedure Code is based on the Rule of Law that `no man shall be vexed twice for one and the same cause of action . In fact, Order II Rule 2 of the Civil Procedure Code, requires a `Collection of all Claims , based on the `same cause of action in one Suit , as per decision in State Bank of India v. Gracure Pharmaceuticals Limited, reported in AIR 2014 SC at Page 731. Cause of Action : 255. The term `cause of action refers to the media upon which the `Plaintiff asks the Court to arrive at a conclusion in his favour. Furthermore, the term `cause of action has no relation to the `Defence that may be set up by an `Defendant nor it depends upon the `Relief prayed for by a `Plaintiff . 256. It cannot be forgotten that the purpose of Order II Rule 2 of Civil Procedure Code is, `to prevent a `Party from enforcing `Claims on the `same Cause of Action . Furthermore, the `cause of action in two Suits may be considered to be the same, if, in `substance , they are identical. 257. The requirement of Order II Rule 2 (3) of the Civil Procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 139 of 2012, by the `Plaintiff, before the Hon ble High Court of Madras (after deletion of Prayer (b), (c), (d) and (e), withdrawn vide `Order dated 22.11.2016 and 03.03.2017 in Application No.4914 of 2016, shows that the main `Reliefs sought for in the CP/54/2012 (TCP/26/2018) filed on 19.05.2012, before the `Company Law Board , now `Tribunal are quite different. 264. As a matter of fact, the `Reliefs , prayed for in the main CP/54/2012 (TCP/26/2018), before the `Tribunal by the `Respondents / Petitioners are to be sought for only before the `Tribunal , as opined by this `Appellate Tribunal . Further, in the main Company Petition at paragraph 6.38, it was averred that As agreed in the MoU dated 15.08.2010, the 4th Respondent in CP/54/2012 (3rd Appellant in Appeal), shall sell its entire 1,71,600 Shares, constituting 33.40% of the Share Capital to the `Petitioners (Respondents in Appeal). Though, no specific prayer has been made in the Company Petition in this regard in view of the `MoU being considered for implementation in CS No. 139 of 2012, the Hon ble Bench may pass an `Order under the provisions of Section 402 (b) of the Act, directing the 4th Respondent to sell its 1,71, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rushed aside that the `Rights conferred by the Companies Act, accrue in most cases only to `Members and not to the `Subscribers . 270. One cannot remain in `oblivion to the fact that a `Civil Court , does not `Grant Leave , to file another `Suit / `Given Proceeding . If the `Law permits, the `Plaintiff , may file another `Suit , but not on the basis of observations made by a `Superior Court , as per decision of the Hon ble Supreme Court of India in Shiv Kumar Sharma v. Santosh Kumari, reported in AIR 2008 SC Page 171. 271. Considering the fact that CP/54/2012 (TCP/26/2018), filed by the Respondents/Petitioners (1st Respondent / 1st Petitioner / Plaintiff in CS No. 139 of 2012) and the (2nd Respondent / 2nd Petitioner in CP/54/2012 (representing as Managing Director of M/s. Kumudam Publications Pvt. Ltd. in CS No. 139 of 2012), under Sections 111, 397, 398, 402, 403, 404, 406, 408, 237 read with Schedule XI of the Companies Act, 1956, and that the Respondents / Petitioners in the main CP/54/2012 (TCP/26/2018) had exercised their `Proprietary Rights (because they were recognised / treated as `Shareholders by the Company, till their cessation), under the Companies Act, there is `no em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is not an `Indian and holds an `American Citizenship and further that the said 1st Respondent / 1st Petitioner had obtained the `Shares allotted by making them to believe that he is an `Indian Citizen . Therefore, the 1st Respondent / 1st Petitioner s holding of 66.7%, without any permission or clearance from the Government of India and his holdings are not `Fresh Equity and as on date, his holdings are `illegal , from the initial allotment in the Year 1995 itself, because `no `NRI holdings or `Foreign Investments were permitted in `Print Media till 2006. Moreover, till Nov 1996, the 1st Respondent / 1st Petitioner was an `NRI and he relinquished his `Indian Citizenship and became an `American in Nov 1996. 276. Apart from the above, the 1st Appellant / 2nd Respondent in his letter dated 26.04.2010 (addressed to the Commissioner of Police), which was enclosed before the Special Director (Directorate of Enforcement, New Delhi), had also stated that as per provisions of `Foreign Exchange Management Act , read with Foreign Exchange and Management (Transfer) or Issue of Security by a Person, resident outside India) and read with Press Note No. 2 of 2000, `no Foreign Holding is permiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial Policy Promotion, Ministry of Commerce Industry, Govt. of India are liable for confiscation under section 13(2) of FEMA, 1999. and a request was made for `issuance of Show Cause Notice , to them. 279. The `Adjudicating Authority (Joint Director), Directorate of Enforcement (Foreign Exchange Management Act and Prevention of Money Laundering Act), Government of India, New Delhi, had passed an `Order of Adjudication dated 22.05.2017 (in F No.: T-4/02-CHE/2012 Adjudication Order No.01/JD/HIU/2017/2391 - vide Book Volume 2 - Docs. Vol. III IV Page 662 Appellants Compilation), observing among other things that; (b) P. Vardarajan, Director of Kumudam Publications Pvt. Ltd. (1st Appellant / 2nd Respondent), was in know of the fact that A. Jawahar Palaniappan was a person resident outside India and U.S. Citizen when in the capacity of Managing Director of the company, he issued share certificates to A. Jawahar Palaniappan (AJP) by virtue of which AJP held 66% of shares of the company. His averment that he came to know the non-resident status of noticee no. 3 only at the latter stage is baseless and false as is evident from the GPA dated 21.12.1998, wherein P.Vardarajan signed as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Palaniappan), which runs as under: 1.(a) Kumudam Publications Pvt. Ltd. Rs.2,50,00,000/- (Rs. Two Crore Fifty Lac only) for contraventions of the provisions of Regulation 4 of FEM (transfer or issue of security by a person resident outside India) Regulation 2000 r/w Section 42 of FEMA, 1999 r/w clause (b) of sub-section (3) of Section 6 Section 47 of FEMA, 1999. 1.(b) Kumudam Publications Pvt. Ltd. Rs.2,50,00,000/- (Rs. Two Crore Fifty Lac only) for contraventions of the provisions of Regulation 7 of FEM (transfer or issue of security by a person resident outside India) Regulation 2000 r/w Section 42 of FEMA, 1999 r/w clause (b) of sub-section (3) of Section 6 Section 47 of FEMA, 1999. 2.(a) Sh. P. Vardarajan, Director of Kumudam Publications Pvt. Ltd. Rs.50,00,000/- (Rs. Fifty Lac only) for contraventions of the provisions of Regulation 4 of FEM (transfer or issue of security by a person resident outside India) Regulation 2000 r/w Section 42 of FEMA, 1999 r/w clause (b) of sub-section (3) of Section 6 Section 47 of FEMA, 1999. 2.(b) Sh. P. Vardarajan, Director of Kumudam Publications Pvt. Ltd. Rs.50,00,000/- (Rs. Fifty Lac only) for contraventions of the provisions of Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d justice and the same is pending. 284. It transpires that in the Minutes of the Board Meeting dated 20.09.2011 of the 4th Appellant / 1st Respondent / Company (Kumudam Publications Pvt. Ltd., signed by the 1st Appellant / 2nd Respondent Chairman and Managing Director), among other things, the following `Resolutions were unanimously approved: Resolved that as consequence of the issue and allotment of the following equity shares of the Company to Dr. A. Jawahar Palaniappan being null and void ab initio, the same be and are hereby cancelled and annulled. Distinctive No(s). Number of Equity Shares Share Certificate No(s). 9681 319290 309430 2 Further Resolved that the transfer of the following equity shares of the Company in favour of Dr. A. Jawahar Palaniappan being likewise null and void ab initio, the same be and are hereby cancelled and annulled. Distinctive No(s). Number of Equity Shares Share Certificate No(s). 319291 342300 23,010 2 Further Resolved as a consequence of the aforesaid cancellations and annulments, that the Register of Members of the Company be and is hereby rectified by removing / deleting the name of Dr. A. Jawahar Palaniappan in respect of the above shares i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of Rs.100/- each in the name of the 1st Petitioner (1st Respondent in Appeal). 289. The plea of the Appellants is that the `Cancellation / Nullifying the Shares of the 1st Respondent / 1st Petitioner, allotted pursuant to the `Scheme of Amalgamation , amounts to `modification of the Scheme of Amalgamation and in the present case, the `Allotment itself is in negation of Regulation 4 and 7 of FEMA regulation read with the Schedules prescribing Sectoral Caps. 290. Furthermore, it is the plea of the Appellants that all the `Acquisition of Shares , in Kumudam by the ₹ 1st Respondent / 1st Petitioner (Foreigner) , where in the Years 1998 / 2001, when the limit was `Zero and not even 26%. In this connection, the Learned Counsel for the Appellants submits that the 1st Respondent / 1st Petitioner, had not obtained any permission, as there is a clear `restraint on a `Foreign Citizen owning any shares, in a `Print Media company . 291. The Learned Counsel for the Appellants emphatically submits that the `prohibition on a Foreigner acquiring the control was absolute (`Zero percent holding), till the year 2005, without any distinction being maintained, as to whether the `Shares are acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich involves in its fulfillment, the `doing of an act prohibited by `Law / a `Statute is void . The legal maxim, `A pact is pro vatorum public juri non derogatur means, the `Private Agreements cannot alter the `General Law . 298. If an act performed in violation of the provision of an `Act / `Statute of the Legislature, it cannot be made the subject of an `Action . At this stage, this `Tribunal aptly points out that `where a contract express or implied, is expressly or by an implication forbidden by the Statute, the `Tribunal cannot lend its assistance to give effect . 299. It is to be remembered that if Section 23 of the Indian Contract Act, 1872, is to apply, it must be forbidden by `Law or it must be of such a nature that it would defeat the provision of any `Law or it is fraudulent or it involves injury to `person or `property of another or the `Court regards it, `immoral or `opposed to `Public Policy . 300. The `Doctrine of Public Policy or the `Policy of Law is an `Unruly Horse and the `Doctrine is extended to a `Harmful Case and `Harmful Tendencies . No wonder, the `Doctrine of Public Policy , is only a `Branch of Common Law . 301. In so far as the plea taken on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Broadcasting, Government of India, dated 26.09.2012 (in respect of the proposal received from the 1st Respondent / 1st Petitioner (Dr. A. Jawahar Palaniappan, U.S.A.), addressed to the Under Secretary, Foreign Investment Promotion Board, Department of Economic Affairs, Ministry of Finance, New Delhi, wherein it was mentioned among other things that the `Shareholding of Dr. Palaniappan in M/s. Kumudam Publications Pvt. Ltd. was more than the permissible limit of 26% and hence the `Proposal , may not be considered for approval, which had resulted in prejudice being caused to the `Appellants . 305. Coming to the plea taken on behalf of the Respondents / Petitioners that the `Cancellation of Shares of the 1st Respondent / 1st Petitioner is contrary to the `Scheme of Merger , that was approved by the `Hon ble High Court of Madras , by an `Order dated 12.04.2001, with effect from the appointed date of 01.04.1999 and therefore, the `Cancellation of Shares is an `Invalid one , it is pointed out by this `Tribunal that the `Sanction of Scheme , is independent of the permission that was required to be obtained for an `Allotment of Shares from the `Reserve Bank of India . Moreover, only after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1956, are slightly different from the `Title Suit , although, sub-section 7 of Section 111 of the Act, confers the `Tribunal the `jurisdiction to `decide any question . Further, this `Tribunal points out that the `Respondents / Petitioners cannot seek umbrage, under Section 111 of the Companies Act, 1956 (Section 59 of the Companies Act, 2013), for `Rectification of Share Register to put the `Name of the ₹ 1st Respondent / 1st Petitioner , when in `Fact or in `Law , he could not be called as `Owner of Valid Shares , Meaning of Void: 311. The term `Void means, an `instrument or `transaction is a `nugatory , `invalid , and an `ineffectual one. Non-Existent: 312. When the `Allotment of Shares of the 1st Respondent / 1st Petitioner is against the `Public Policy of the `Government of India and against the prevailing `Law of the Country, then, the said `act is non-existent, from its very inception, as per decision of the Hon ble Supreme Court of India in Kalawati v. Bisheshwar, reported in AIR 1968 SC Page 269 (vide paragraph 9). 313. In view of the fact that the `Allotment of Shares to the ₹ 1st Respondent / 1st Petitioner is not `Valid in `Law , the `Invocation of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the character of `Fiduciary Powers and is to exercise the same in good faith. Their act of `Allotment of Shares to a `Person , must have a sanction coming with the limits and parameters of `four corners of Law , and added further, their acts which are mala fide in exercising their discretion, the same may be vitiated. 318. It cannot be brushed aside that if any `action of Directors of a company, is in `violation of law , the company or the shareholders can initiate appropriate action before the `Competent Forum . However, a `Petition for `Oppression and Mismanagement is not the `Remedy , in the considered opinion of this `Tribunal . 319. It is an `axiomatic principle in Law , a `Resolution , passed `validly by the Board of Directors of a Company, cannot be assailed in a `Petition , under Section 397 or 398 of the Companies Act, 1956, or under Section 241 / 242 of the Companies Act, 2013. 320. In so far as the `Minutes of the Board Meeting that took place on 20.09.2011 (wherein the 1st Appellant / 2nd Respondent Chairman and Managing Director of M/s. Kumudam Publications Pvt. Ltd.) and the 2nd Appellant / 3rd Respondent) were present and the 2nd Respondent / 2nd Petitioner and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Account of the company necessarily means and implies that the `Shares continued to be `Validly held by the 1st Respondent / 1st Petitioner. 325. It is to be pointed out that the term `Forfeiture of Shares is different from `Cancellation of Shares . Before the `Forfeiture of Shares , every condition is to be followed strictly and complied with, with a very little inaccuracy being fatal as greatest, as per the decision of the Hon ble Supreme Court of India in The Public Passenger Service Ltd. v. M.A. Khader 2 Ors., reported AIR 1966 SC Page 489. 326. In English Law, `Forfeiture is the term, `applied ordinarily, to the exercise of this Right . `Confiscation , must be an `act done in some way on the part of the Government of the Country , where it takes place and in some way beneficial to that Government though the proceeds may not strictly speaking be brought in to its Treasury (per Ellen Borough L.J. in Levin v. Allnut 15 East 269). 327. The word `Confiscation , may be used as `Applicable to Appropriation by the Government as an act of State . The act of making `Void of a particular act, may be done `Retrospectively / `Retroactively , as well as `Prospectively , in the considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t point of view, the `impugned order of the `Tribunal dated 27.05.2022 (pronounced on 01.06.2022) in setting aside the `Cancellation of the Equity Shares , held by the 1st Respondent / 1st Petitioner, observing that the same is an `Illegal , `Invalid and `non-est in Law , further the `issuance of direction by the `Tribunal in ordering the `Register of Members of the 4th Appellant / 1st Respondent / Company, is to be `Rectified , to restore 3,32,640 Equity Shares of Rs.100/- in the `Name of the 1st Respondent / 1st Petitioner, the intimation of cessation of the Respondents / Petitioners as `Directors of the 4th Appellant / 1st Respondent / Company, by the 1st Appellant / 2nd Respondent, with the `Registrar of Companies, Chennai, from 02.01.2012, being held as `Illegal and `Non-est in Law are set aside by this `Tribunal , to secure the `ends of Justice and answered accordingly. Board Meetings: 333. In so far as the three `Board Meetings dated 20.09.2011, 10.10.2011 and 02.01.2012 are concerned, according to the Appellants, the Respondents / Petitioners had not attended the same, though they had received the `Notice of `such Meetings . In this connection, it is the stand of the `Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1956 had vacated the `Office of the Directorship of the 4th Appellant / 1 st Respondent / Company, by an `operation of Law . Hence, Form-32 filed by the 1st Appellant / 2nd Respondent with the `Registrar of Companies , intimating the cessation of `Respondents / Petitioners as `Directors of the ₹ 4th Appellant / 1st Respondent / Company from 02.01.2012, is held by this `Tribunal as a legally `Valid one, and the contra view taken by the `Tribunal that the same is set aside by this `Tribunal , and answered accordingly. 339. In fact, the `Reliefs of `Declaring the Resolutions , passed in the `Board Meeting of the 1st Defendant / Company, sought for in the main Suit CS No. 139 of 2012 were deleted as per `Order of the Hon ble High Court of Madras dated 22.11.2016 in Application No. 4914 of 2016 in CS No. 139 of 2012. 340. In this connection, a closure perusal of the `Final Prayer portion of the CP/54/2012 (On the file of the Company Law Board) and TCP/26/2018 (On the file of the Tribunal) shows that `no relief of 10.10.2011 Board Meeting is sought for, by the Respondents / Petitioners. Although, in a `Notice convening Board Meeting dated 10.10.2011, according to the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired as per clause 26(a) of the Articles of Association. RESOLVED FURTHER THAT the consent of all the members of the company be and hereby accorded for the shorter notice of three days in view of the brief duration of stay of Dr. A. Jawahar Palaniappan in India. (ii) RESOLVED THAT the new Articles of Association of the Company s copy of which is placed before the meeting duly initiated by the Chairman for the purpose of identification thereof, be and hereby approved and adopted as the Articles of Association of the Company, in substitution of existing Articles of Association. Further, it was RESOLVED THAT the 1st Appellant / 2nd Respondent was be and hereby authorised to take all steps for giving effect to the `Resolution Minutes of Extra Ordinary General Meeting: 345. In the Extra-Ordinary General Meeting of M/s. Kumudam dated 19.03.2003 at 10.30 a.m., it was mentioned that the 2nd Respondent / 2nd Petitioner and 1st Respondent / 1st Petitioner (`Proxy) and the 1st Appellant / 2nd Respondent on his own and on behalf of M/s. Imprint Tech India Pvt. Ltd. were `Present as `Members and that, the 1st Appellant / 2nd Respondent took the `Chair and the `Consent of all Members present in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Law , is not a `Valid and `Tenable one in the `eye of Law , and the same is set aside, by this `Tribunal , in furtherance of `substantial cause of justice . Oppression: 347. To come within the purview of Section 397 of the Companies Act, 1956, there should be `Material Evidence of `Oppression , in regard to the `Affairs of a `Company . 348. The `Conduct complained of, should at least involve a `Deviation , from the `Standards of Fair Dealing and a `Breach of Conditions of `Fairplay , of which, every `Shareholder , `who entrusts his money to a Company , is entitled to rely as per decision `Elder v. Elder Watson 1952 SC Page 49. Laches: 349. It means, an `unreasonable delay and neglect , in enforcing an `Equitable Right . `Laches (or `Lasches ), is an old `French Word , for `Slackness or `Negligence or `not doing . `Laches , in `Law , is `Failure to do something at the proper time , especially, such a dealing will prohibit a `Person from initiating a `Legal Proceeding , `negligence in observance of duty , `a delay in asserting a `Legal Right or `Privilege , `lack of promptitude in pursuing a `Legal Remedy . 350. As a matter of fact, if the `Petitioner / Plaintiff in a given case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of two more Directors in the `Board of Directors of the 4th Appellant / 1st Respondent / Company, bringing the total number of Directors to `Six and this `Direction , according to the `Appellants goes beyond `Article 29 of the `Articles of Association , which enjoins the `Appointment of Directors to a maximum of `Four , excluding any ex-officio Directors, nominated by any `Financial Institution and / or `Banks . 356. Such a `Direction , issued by the `Tribunal in the considered opinion of this `Tribunal , is an `untenable one, especially, when no `Direction was issued by the `Tribunal , directing the `Alteration of `Article 29 of the Articles of Association . Apart from that, the `Direction , issued by the `Tribunal , in nominating the `Persons as `Directors , is in `violation of `Article 33 of the `Articles of Association , which visualises a `Minimum Share Qualification , for being `Appointed as `Director of the 4th Appellant / 1st Respondent / Company (M/s. Kumudam) and in the absence of any `Direction , being issued, to change the ingredients of `Article 33 of the `Articles of Association , the `impugned order of the `Tribunal in `issuing directions in nominating two more Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 359. Dealing with the plea of the `Appellants , that the `Tribunal , has passed the `impugned order in the main CP/54/2012 (TCP/26/2018) dated 27.05.2020 (delivered on 01.06.2020), after reserving the `Orders on 14.06.2019, after one year, this `Tribunal , pertinently points out that the `Tribunal , is to keep in mind of the ingredients of Rule 150 of the NCLT Rules, 2016, for its `Guidance , since it is to `dispense justice and `not to dispense with justice . Also that, the delay in Pronouncement of the `Order of the `Tribunal , will not vitiate the same, on that score, as opined by this `Tribunal . Speaking Orders : 360. In a welfare State, the `Tribunal (Having the trappings of a Court), is to pass a `Reasoned Order , which is a `Palatable Requirement of any `Judicial Disposal . A `Speaking Order , is a `must , `just , `proper and `reasonable one and at the extreme, a `plausible one , in the earnest opinion of this `Tribunal , because of the candid fact that the `Stakeholders , `ought not to be deprived of this primordial safeguard . 361. The requirement of acting `Judicially , in essence, is nothing but, a requirement to act justly and fairly and not arbitrarily and capriciou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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