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TMI Blog2022 (12) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the shares mentioned in prayer (a) above; (c) Decree for perpetual injunction restraining the defendant nos. 1 to 3 and each one of them by themselves or through their respective servants, agents or assigns from exercising any ownership right in respect of the said shares mentioned in paragraph (a) above in any manner whatsoever; (d) Decree for perpetual injunction restraining the defendant nos. 1 to 3 and each one of them either by themselves or through their respective servants, agents or assigns from exercising any voting right in respect of the said shares in any manner whatsoever;." Learned Counsel for the defendant by referring Section 9 of the Code of Civil Procedure submits that this Court has no jurisdiction as the suit filed by the plaintiff is impliedly barred in terms of the provisions of Companies Act, 2013. Learned counsel for the defendant has referred Section 430 of the Companies, Act, 2013 and submits that this Court has no jurisdiction to entertain the suit filed by the plaintiff. Learned counsel for the defendant has also relied upon Section 56(4), 58(3) and Section 59 read with Rule 70(5)(a) of the National Company Law Tribunal Rule, 2016 and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has challenged the said order of injunction in appeal but the same was dismissed for default. Learned Counsel for the plaintiff relied upon the following judgments : i. (2017) 203 Com Cases 574 (Mad) (N. Ramji - versus- Ashwath Narayan Ramji & Ors). ii. (2020) 13 SCC 308 (Embassy Property Developments Private Limited - versus- State of Karnatka & Ors.). Heard the Learned Counsel for the respective parties, perused the pleadings and the judgment relied by the respective parties. The plaintiff has pleaded fraud in paragraph 28 of the plaint which reads as follows : "28. The plaintiff states that the defendant No. 1 while acting as the Auditor of the defendant no. 4 had committed fraud on late Shambhu Nath Shaw and his family as well as on the defendant no. 4 by illegally causing the defendant no. 4 to issue shares in favour of companies in which he had substantial interest and control. The particulars of fraud so perpetrated by the defendant nos. 1 to 3 and particularly by the defendant no. 1 which the plaintiff could ascertain after 14th August, 2018 are, inter alia, as follows: (a) The defendant no. 1 actively connected the fact that the defendant nos. 2 and 3 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificates had been given to somebody else who had subsequently transferred them to a third party. As soon as she became aware of the fraud that was perpetrated on her, the appellant requested the Company to issue revalidated fresh share certificates for the said 903 equity shares on 17-9-2014. Since this was not done, despite repeated reminders for the same, a company petition was filed on 31-7-2015 before the Company Law Board, which was then taken up under the amended Act by the National Company Law Tribunal. 4. In a significant order that was passed by NCLT on 20-3-2017 [Adesh Kaur v. Eicher Motors Ltd., 2017 SCC OnLine NCLT 668] , NCLT recorded that it was acknowledged, both by the Company as well as by SEBI, that procedural aspects and due care were not adhered to in the process of issuance of duplicate shares, as otherwise such fraud would easily have been unearthed. In the order passed by NCLT, NCLT adverted to the aforesaid facts and afforded relief to the appellant in the following terms: "The objection of Respondent 1 that the case in hand cannot be adjudicated by the Tribunal is a frivolous attempt to escape any liability and or grant relief to the petitioner. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal." 6. It is not in dispute that were a dispute to arise today, the civil suit remedy would be completely barred and the power would be vested with the National Company Law Tribunal (NCLT) under Section 59 of the said Act. We are conscious of the fact that in the present case, the cause of action has arisen at a stage prior to this enactment. However, we are of the view that relegating the parties to civil suit now would not be the appropriate remedy, especially considering the manner in which Section 430 of the Act is widely worded. 7. We are thus of the opinion that in view of the subsequent developments, the appropriate course of action would be to relegate the appellants to remedy before NCLT under the Companies Act, 2013. In view of the lapse of time, we permit the appellants to file a fresh petition within a maximum period of two months from today." In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants herein is that allegations of fraud and collusion can also be inquired into by NCLT and NCLAT and that therefore the Government could not have bypassed the statutory remedy. 50. The objection of the appellants in this regard is well founded. Section 65 specifically deals with fraudulent or malicious initiation of proceedings. It reads as follows: "65. Fraudulent or malicious initiation of proceedings.-(1) If, any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency or liquidation, as the case may be, the adjudicating authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees. (2) If, any person initiates voluntary liquidation proceedings with the intent to defraud any person, the adjudicating authority may impose upon such person a penalty which shall not be less than one lakh rupees but may extend to one crore rupees." 51. Even fraudulent tradings carried on by the corporate debtor during the insolvency resolution, can be inquired into by the adjudicating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crore rupees. (2) If, any person initiates voluntary liquidation proceedings with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees but may extend to one crore rupees. [(3) If any person initiates the pre-packaged insolvency resolution process - (a) fraudulently or with malicious intent for any purpose other than for the resolution of insolvency; or (c) with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.]" The plaintiff has categorically pointed out the fraudulent act of the defendants in paragraph 28 of the plaint and the said fraudulent act is not committed while initiating proceeding before the NCLT. The plaintiff has also prayed for other relief with regard to perpetual injunction relates to the title of share of the plaintiff. Section 58 and 59 of the companies Act, 2013 deals with refusal by company to transfer of shares but in this case before transfer of share it is to be declared that the recording of share in the name of the defendant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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