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TMI Blog2024 (9) TMI 1500X X X X Extracts X X X X X X X X Extracts X X X X ..... led by Respondent No.1 for taking on record the amended petition on the basis of an order dated 07.06.2024 which records "on the last occasion the petitioner has sought time for amending the petition and leave was granted for amending the petition." 3. It is argued a bare perusal of the order dated 10.05.2024 would reveal no such time was sought and no such liberty was granted to Respondent No.1. 4. CA No.147/2024 was thus filed by Respondent No.1 seeking to directly place on record an amended petition on the basis of order dated 07.06.2024 without even filing any application seeking liberty to amend the petition, which appears to be in the teeth of a valid legal position pertaining to amendment of pleadings and principles of natural justice which require that for amending a petition detailing of the changes proposed to be made and the grounds on which such amendment has been necessitated, be known to the opposite party. 5. It is the case of the appellant the amended petition was filed by Respondent No.1 by completely redrafting the original petition with additional grounds and thus it was a fresh petition in the guise of an amendment. 6. It is argued the impugned order was pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompliance with corporate governance norms to the Tribunal" [Para 68(1) of Amended Petition /Pg. 207, 208/Appeal] 2 Addition of new final reliefs N/A "2. Declare that the affairs of the Company have been and are being conducted in a manner oppressive to the Petitioner and prejudicial to the interests of the Company 3. Direct the rectification of the Company's registers, including the register of members, to reflect the true and correct shareholding as of November 10, 2019, nullifying any unauthorized transfers thereafter; b) Appointing two independent directors as per Section 149 of the Companies Act, 2013; c) Constituting proper Audit, Nomination and Remuneration, and other statutory committees as required by law 5. Order a comprehensive special audit of the Company's accounts from November 10, 2019, to date, by an independent auditor appointed by the Tribunal; 6. Direct the Respondents to repay to the Company any sums found to have been misappropriated or improperly withdrawn, with interest at 18% per annum 7. Declare null and void all major decisions, contracts, and transactions entered into by the Company without pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner has been involved in key strategic decisions that have shaped the Company's direction and success. b) The Petitioner has played a crucial role in expanding the Company's market reach, undertaking extensive business trips both within India and abroad to secure new clients and partnerships. c) Leveraging his expertise in design and market trends, the Petitioner has been instrumental in developing the 'Signature Blankets' brand, contributing significantly to product development and marketing strategies. d) The Petitioner has also been handling a paramount duty of handling and managing the employees, labour and security personnels along with overseeing and managing minutely all the construction activity on the properties of the Company. e) The Petitioner's efforts have directly contributed to the Company's financial growth, as evidenced by the increasing turnover and profitability during his active involvement in the Company's affairs." [Para 14 of Amended Petition /Pg. 179/Appeal] 5. New fact in relation to filing of suit by the Petitioner added ● The filing of the suit pre-dates th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te meeting the turnover threshold requiring a cost audit, the Company has failed to appoint a cost auditor or conduct the mandatory cost audit. This omission not only violates statutory requirements but also deprives the Company of valuable insights into cost efficiency and financial management." [Para 50(d) & 55(d) of Amended Petition / Pg. 194 & 198/Appeal] "Failure to Appoint Internal Auditor (Section 138): The Company, having exceeded the turnover threshold of Rs. 200 crore, has neglected to appoint an internal auditor. This violation exposes the Company to increased risk of financial irregularities and weakens internal control mechanisms." [Para 50(e) & 55(e) of Amended Petition / Pg. 194 & 198/Appeal] "Non-Filing of Critical Statutory Forms: * MGT-14 for adoption of financial statements and directors' report not filed (Section 179(3)). * BEN-2 forms for reporting significant beneficial ownership not filed for Mohinder Singh HUF and Pushpdeep Singh Kochar HUF (Section 90(4)). * DPT-3 (Deposit Return) forms for FY 2020, 2022 & 2023 not filed, violating Rules 16 and 16A of the Companies (Acceptance of Deposits) Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; "v. Regulatory Exposure: The systematic failure to comply with multiple statutory requirements exposes the Company to significant regulatory risks, potential penalties, and legal actions. This non- compliance jeopardizes the Company's legal standing and operational stability" [Para 55(v) of Amended Petition /Pg. 201/Appeal] "w. Compromised Corporate Governance: The cumulative effect of these violations demonstrates a severe breakdown in corporate governance structures. This systemic failure not only facilitates the oppression of minority shareholders but also threatens the Company's long-term viability and stakeholder interests." [Para 55(w) of Amended Petition /Pg. 202/Appeal] "x. Potential Invalidation of Corporate Actions: Given the irregular board composition and the absence of key committees, there is a risk that significant corporate actions, including the alleged removal of the Petitioner as a director, may be deemed invalid under scrutiny." [Para 55(x) of Amended Petition /Pg. 202/Appeal] "y. Breach of Fiduciary Duties: The extent and persistence of these violations suggest a serio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Pg. 204/Appeal] 9. The above chart would reveal that the amendments were substantial in nature though the learned counsel for the Respondent alleges it to be mere explanatory. Admittedly new reliefs have been added in the amended petition as also a new party being impleaded. Further the additional acts of oppression have also been added for which, of course, an opportunity ought to have been granted to the appellant to rebut such a move. 10. We have perused the impugned order dated 21.08.2024 which refers to order dated 07.06.2024 wherein it is noted on the last occasion the Respondent had sought time for amending the petition and leave was granted for amending the petition. We have also perused the order dated 10.05.2024 i.e. prior to 07.06.2024 and we find on that day neither any time was sought for amending the petition nor any such leave was granted to amend it. The order prior to 07.06.2024 is of 10.05.2024 and the same is as under : - "Head the submissions made by the learned counsel for the petitioner. Learned counsel for the respondents is also present. Petitioner's counsel has prayed for grant of two weeks' time in this matter. Time prayed for is granted. Wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. 8. On the other hand, if the subsequent acts of 'oppression and mismanagement' is a fresh cause of action, such plea cannot be raised in the pending company petition, though it is always open to the aggrieved party to move before the NCLT under Section 241 and 242 of the Companies Act, 2015 by filing a separate petition." 13. In the circumstances and on perusal of the comparative chart, we are of considered opinion that for such substantial amendments, an application ought to have been moved with such proposed amendments and with a liberty to the appellants to rebut such proposed amendments and only thereafter, the amended petition ought to have been brought on record. The impugned order does not adhere to the principles of natural justice as it did not give an opportunity of being heard to the appellant. Thus we set aside orders dated 21.08.2024 and 07.06.2024 and hence we direct one more opportunity be given to the Respondent herein to move an application for amendment, inclusive of the proposed amendments with a liberty to the appellant to respond tto such application and thereafter the Ld. NCLT to decide it as per law. 14. Both the appeals are thus dispose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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