2021 (11) TMI 1050 - Tri - Companies Law

Appointment of one or more competent persons as Inspectors to investigate the affairs of the 1st respondent Company - seeking direction to 1st respondent to reimburse and compensate the petitioner - Section 213 of the Companies Act, 2103 r/w Rules 11, 13, 14, 80 of the NCLT Rules, 2016 - HELD THAT - The present Petition falls under sub-section (b) of Section 213 of the Companies Act, 2013 and as per the said Section the Petitioner is required to satisfy this Tribunal that there are circumstances suggesting that the business of the 1st Respondent company is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to any of its members or that the company was formed for any fraudulent or unlawful purpose. All the averments made in the Petition by the Petitioners are not supported by any material documents in order to substantiate such allegations. The documents filed by the Petitioner and listed in para 17 supra and a perusal of the said documents filed along with the Petition would show that the allegations made by the Petitioner are not corroborated with the documents filed therewith. Prima facie, the Petitioner has miserably failed to make out a case under Section 213(b) of the Companies Act, 2013 and has also failed to satisfy this Tribunal that the affairs of the 1st Respondent Company have been conducted in a fraudulent manner or unlawful purpose and on the said count itself this Petition is liable to be dismissed. The Petition as filed by the Petitioner under Section 213 of the Companies Act, 2013 stands dismissed.

Summary

Issues Involved:
1. Appointment of inspectors to investigate the affairs of the 1st Respondent Company.
2. Compensation for pecuniary loss due to unpaid lease rentals.
3. Appointment of an administrator and a receiver for the 1st Respondent.
4. Interim reliefs including injunctions and appointment of an Advocate Commissioner/Surveyor.
5. Allegations of fraudulent and unlawful conduct by the 1st Respondent.

Issue-wise Detailed Analysis:

1. Appointment of Inspectors to Investigate the Affairs of the 1st Respondent Company:
The Applicant sought the appointment of inspectors to investigate the affairs of the 1st Respondent Company under Section 213 of the Companies Act, 2013, alleging fraudulent conduct. The Tribunal noted that Section 213(b) requires the Petitioner to show circumstances suggesting fraudulent or unlawful business conduct. However, the Tribunal found that the allegations were not substantiated by material documents. The documents listed by the Petitioner did not corroborate the claims of fraud or mismanagement. Consequently, the Tribunal concluded that the Petitioner failed to make a prima facie case under Section 213(b) and dismissed the petition.

2. Compensation for Pecuniary Loss Due to Unpaid Lease Rentals:
The Petitioner claimed compensation for pecuniary loss incurred due to the 1st Respondent's failure to pay lease rentals. The Tribunal observed that the Petitioner did not provide sufficient evidence to support the claim. The allegations of unpaid lease rentals, including the amounts due to the Petitioner and the Government of Tamil Nadu, were not backed by adequate documentation. As a result, the Tribunal did not grant the requested compensation.

3. Appointment of an Administrator and a Receiver for the 1st Respondent:
The Petitioner requested the appointment of an administrator and a receiver to manage the affairs of the 1st Respondent. The Tribunal found no compelling evidence to justify such appointments. The Petitioner’s claims of mismanagement and fraudulent activities were not sufficiently substantiated. Therefore, the Tribunal denied the request for appointing an administrator and a receiver.

4. Interim Reliefs Including Injunctions and Appointment of an Advocate Commissioner/Surveyor:
The Petitioner sought various interim reliefs, including injunctions to restrain the 1st Respondent from dealing with its property and the appointment of an Advocate Commissioner/Surveyor. The Tribunal found that the Petitioner did not provide adequate evidence to justify these interim measures. The claims of unlawful occupation and sub-leasing of land were not sufficiently supported by the submitted documents. Consequently, the Tribunal did not grant the interim reliefs.

5. Allegations of Fraudulent and Unlawful Conduct by the 1st Respondent:
The Petitioner alleged that the 1st Respondent engaged in fraudulent and unlawful conduct, including tax evasion and land grabbing. The Tribunal noted that these allegations were not corroborated by the documents provided by the Petitioner. The Tribunal emphasized that the Petitioner failed to substantiate the claims of fraud, mismanagement, and unlawful activities with concrete evidence. As a result, the Tribunal dismissed the petition on these grounds as well.

Conclusion:
The Tribunal dismissed the petition in limine, citing the Petitioner’s failure to provide sufficient evidence to support the allegations of fraud and mismanagement. The Tribunal also noted the inordinate delay in filing the petition, which was based on events occurring prior to 1996. The Petitioner did not explain the delay or provide adequate documentation to support the claims. Consequently, the petition was found to be devoid of facts and not maintainable in law. No costs were awarded.