2019 (4) TMI 1873 - HC - Companies Law

Issuance of summons - direction issued to cause an inquiry into the matter - HELD THAT - Summons dated 20.3.2019 issued by the respondents speaks about action taken in accordance with the Companies Act 2013. Respondent Nos.1 to 4 to clarify the position within two weeks. List on 17th July 2019.

Summary

Issues:
1. Compliance with directions issued by the court regarding inquiry process under the Companies Act, 1956.
2. Interpretation of Section 16 of Section 213 of the Companies Act, 2013.
3. Clarification on the inquiry process to be followed in accordance with the Companies Act, 1956.
4. Clarification on the actions taken by the respondents in line with the Companies Act, 2013.
5. Stay on coercive steps as per the court's order and issued summons.

Analysis:
1. The court noted that the summons issued by the respondents did not align with the directions issued by the court regarding the inquiry process under the Companies Act, 1956. The court emphasized the importance of conducting the inquiry strictly in compliance with the provisions of Sections 234 and 235 of the Companies Act, 1956. It was clarified that objections could be raised by the parties during the inquiry process as permissible under the statutory authority.

2. The court considered the interpretation of Section 16 of Section 213 of the Companies Act, 2013, as highlighted by the appellant's counsel. The provision stated that any investigation or action initiated by the Serious Fraud Investigation Office under the Companies Act, 1956, should continue under that Act as if the Companies Act, 2013, had not been passed. The court agreed with the appellant's contention, emphasizing that the inquiry should be conducted in accordance with the provisions of the Companies Act, 1956.

3. In light of the above interpretation and clarification, the court directed that the inquiry should be held strictly in compliance with the provisions of the Companies Act, 1956. The parties were instructed to follow the procedures and raise objections as necessary during the inquiry process. The court disposed of the appeal and pending application based on these directives.

4. The court specifically instructed respondent Nos.1 to 4 to clarify their position within two weeks regarding the actions taken in accordance with the Companies Act, 2013. The court scheduled a further hearing on 17th July 2019 to address any clarifications provided by the respondents and to ensure compliance with the court's directives.

5. Finally, the court ordered a stay on any coercive steps related to the previous order and issued summons until further clarification was provided by respondent Nos.1 to 4. However, the respondents were given the option to proceed in accordance with the court's directions if they chose to do so.