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2019 (1) TMI 194 - AT - Companies LawTyping error in the operative order - Validity of allotment of shares - petitioner claims that deposits made by him to the extent of ₹ 1.54 crores in the account of Respondent No.1 Company was in the nature of loan paid to save mortgaged properties and not for allotment of shares as was done by the Company - Held that - There is typing error in Operative Order (Para 17) in direction 3 which is apparent on the face of record. Although we are proceeding to dismiss the Appeal and also propose to saddle the Appellant with costs, we are also correcting direction 3 of the operative Order regarding the typing error in operative order of para 17 of the Impugned Order under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 to meet the ends of Justice. In the Impugned Order para 17(3) at both places where it is mentioned Rs.1,50,00,000/- read Rs.1,54,00,000/- . The Impugned Order is approved with this correction of typing error. The Appeal is dismissed with costs. The Appellant will pay ₹ 1,50,000/- as costs to Respondent No.1 LVN Muralidhar. Other Respondents to bear their own costs.
Issues Involved:
1. Maintainability of the Company Petition under Sections 59 and 62 of the Companies Act, 2013. 2. Nature of the payment of ?1.54 crores by the Petitioner – whether it was a loan or share application money. 3. Legality of the issuance of shares by the Company. 4. Reliefs entitled to the Petitioner. Issue-wise Detailed Analysis: 1. Maintainability of the Company Petition under Sections 59 and 62 of the Companies Act, 2013: The NCLT examined whether the petition was maintainable under Sections 59 and 62 of the Companies Act, 2013. It concluded that the main issue was the repayment of the loan provided by the Petitioner to the Company for repaying its banker, rather than the unpaid share capital. The Tribunal found that the Company failed to provide proper notices or evidence of acceptance of the shares by the Petitioner, thus holding the petition maintainable. 2. Nature of the Payment of ?1.54 Crores by the Petitioner: The Petitioner claimed that the amount deposited was a loan to save mortgaged properties, not for the allotment of shares. The Company argued that the amount was for share subscription. However, the NCLT found no evidence of the Petitioner’s consent to convert the loan into equity. The Tribunal noted the lack of proper documentation and acceptance of the offer by the Petitioner, rejecting the Company’s claim of implied consent. The NCLT held that the amount was indeed a loan and not share application money. 3. Legality of the Issuance of Shares by the Company: The NCLT scrutinized the procedures followed for the issuance of shares under Section 62 of the Companies Act, 2013. It found that the Company failed to provide evidence of sending the offer letter to the Petitioner or obtaining his consent. The Tribunal emphasized that the Company did not follow the statutory requirements for issuing shares, including the lack of proper notices and acceptance. Consequently, the NCLT declared the allotment of shares to the Petitioner as illegal and void. 4. Reliefs Entitled to the Petitioner: The NCLT directed the Company to repay the amount of ?1.54 crores to the Petitioner with interest. The Tribunal also noted a typographical error in the judgment regarding the amount, which was rectified to reflect the correct figure of ?1.54 crores. The Appellate Tribunal upheld the NCLT’s decision, dismissing the appeal and ordering the Company to pay costs of ?1,50,000 to the Petitioner. Conclusion: The Appellate Tribunal affirmed the NCLT’s judgment, concluding that the Petitioner’s deposit was a loan and not for share subscription. The Company failed to comply with the statutory requirements for issuing shares, and the allotment was declared illegal. The Tribunal ordered the repayment of the loan amount with interest and imposed costs on the Company.
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