2017 (11) TMI 1993 - AT - Companies Law

Wrongful transfer of Petitioners' shares in favour of the Respondents - Sections 111, 397, 398, 402, 403 406 of the Companies Act, 1956 r/w Section 59 of the Companies Act, 2013 - difference of opinion - HELD THAT - The basic principle of Justice Delivery System is that a Court or a Tribunal, while passing an order is not only required to give reasonable opportunity of being heard to the parties but is also required to give good reasons based on record/evidence. It is also required to show that the order is passed after being satisfied itself on issues raised by the parties - In Indian Judiciary, Justice Delivery System including provisions of Companies Act, 2013, the Tribunal is required to give hearing in an open Court. Once such hearing is given in the open Court, the Court or the Tribunal, while passing an order is also required to pronounce order in the open Court. Under sub-Section (3) of Section 421, the Tribunal is required to send the copy of every order passed under Section 420, which is also required to be followed in a petition filed under Section 241 of the Companies Act, 2013 and other petitions. The Principle of Natural Justice is also require that the parties should be informed of the order pronounced by the Court/Tribunal. The Tribunal is required to pronounce its order or deliver its judgment on hearing the parties in the open Court - The case is remitted to the Hon'ble President, National Company Law Tribunal, Principal Bench, New Delhi, who in his turn will direct the Registry to provide free certified copies of the difference of opinion/order passed by two Hon'ble Members comprising Hon'ble Member (Judicial) and Hon'ble Member(Technical), both dated 30th September 2016, and the terms of reference framed by one of the Hon'ble Member dated 30th September, 2016. The Hon'ble President thereafter will refer the matter to a Third Hon'ble Member, other than the Third Hon'ble Member(Judicial), to whom it was earlier referred, who after notice to the parties will fix a date of hearing and on hearing the parties, will pass appropriate order in accordance with law. Appeal allowed.

Summary

Issues Involved:
Alleged wrongful transfer of shares, validity of transfer, delay in filing petition, procedural irregularities in delivering judgments.

Analysis:

1. Alleged Wrongful Transfer of Shares:
The petitioners filed a petition under various sections of the Companies Act, alleging the wrongful transfer of their shares to the respondents. The case was initially heard by a Division Bench, resulting in a disagreement between the Hon'ble Member (Technical) and the Hon'ble Member (Judicial). The former held the transfers as invalid due to exceeding the prescribed time limit, while the latter found no merit in the petitions and allowed the petitioners to seek alternative remedies.

2. Validity of Transfer and Delay in Filing Petition:
The disagreement between the bench members led to the matter being referred to the Hon'ble President of the National Company Law Tribunal. Subsequently, a Third Hon'ble Member (Judicial) passed an order, which was not made available to the parties. The final decision, delivered by another Hon'ble Member (Judicial), dismissed the company petition but allowed the petitioners to pursue alternative remedies. The procedural irregularities in delivering judgments were acknowledged by both parties' counsels.

3. Procedural Irregularities in Delivering Judgments:
The legal provisions under Sections 419, 420, and 424 of the Companies Act, 2013, were examined concerning the procedure to be followed in case of a difference of opinion among tribunal members. The tribunal's obligation to pronounce orders in open court, provide copies of orders to parties, and ensure adherence to principles of natural justice were emphasized.

4. Judgment and Remittal of the Case:
The judgment set aside the previous order passed by the National Company Law Tribunal, declaring the decision rendered by the Third Member (Judicial) as illegal and void due to procedural lapses. The case was remitted to the Hon'ble President for further action, directing the provision of certified copies of relevant documents and appointing a different Third Hon'ble Member for a fresh hearing and decision.

In conclusion, the judgment highlighted the importance of procedural fairness, open court pronouncements, and providing copies of orders to parties in legal proceedings, ultimately leading to the setting aside of the impugned order and remittal of the case for proper adjudication.