2020 (3) TMI 35 - AT - Companies Law

Maintainability of Company petition - locus to seek intervention - whether the Appellants did have locus to seek intervention in the Company Petition preferred under Section 252 of the Act? - HELD THAT - It is well settled that the legal right sought to be enforced must ordinarily be the right of the petitioner himself who complains of infraction of such right and seeks legal remedy before a Court of Law. The principle of locus sandi may have been diluted to some extent by allowing public interest litigation in regard to enforcement of certain rights concerning the public at large, however, it does not detract from the broader principle that in case of any statutory violation, a right to seek remedy is conferred upon the statutory authorities like the Registrar of Companies entrusted with matters governing the companies or on members, creditors and other persons interested in the company. Even in case of a class action, a minimum threshold is prescribed. Merely because a Company happens to be a public company, it is not open to any member of the public to move the Court seeking directions to interfere in the management and affairs of the Company. Adverting to the facts of the instant case be it seen that the Appellants sought intervention in Company Petition on the ground that they had filed a Civil Suit against the Company. This ground, though does not justify intervention in Company Petition as person aggrieved , in fact warrants the Company s name being restored in the Register of Companies, more so, as the Company is said to be even now involved in active litigation for recovery of moneys allegedly siphoned off by the Appellants fraudulently which according to Respondent is a staggering amount of ₹ 112 Crore - Appellants cannot be heard to say that Ms. Mansi Vora, admittedly a shareholder of Respondent No. 1 having stakes in the Company, was not entitled to seek restoration of name of Respondent No. 1 in the Register of Companies. Appellants have miserably failed to prove their locus and their malafide intention to thwart the course of law is writ large on the face of their attempted intervention. The Appellants could not claim to be the aggrieved persons and had no locus to seek intervention in Company Petition. Neither of their legal rights was jeopardized nor was any of their legal right infringed - Appeal dismissed.

Issues Involved:
1. Maintainability of the Company Petition under Section 252 of the Companies Act, 2013.
2. Locus standi of the Appellants to seek intervention in the Company Petition.
3. Legal infirmity and jurisdiction of the impugned orders.
4. Public interest and potential harm to the Appellants.

Detailed Analysis:

1. Maintainability of the Company Petition under Section 252 of the Companies Act, 2013:
The Tribunal allowed the Company Petition No. 3713 of 2018 filed by Respondent No. 1 for restoration of its name in the Register of Companies. The Company had been struck off by the Registrar of Companies (ROC) on the grounds of not carrying on any business for the past two financial years and not applying for the status of a ‘Dormant Company’. Respondent No. 1 produced audited financial statements and Income Tax Returns to demonstrate that the Company was operational and had earned profits. The Tribunal found that restoring the Company's name would be 'just' and 'proper', considering the pending claims and potential public interest benefits.

2. Locus standi of the Appellants to seek intervention in the Company Petition:
The Appellants' Intervention Application was dismissed by the Tribunal on the grounds that they failed to establish their locus standi. The Appellants argued that they were 'persons concerned' under Section 252 of the Act and had filed a Civil Suit against Respondent No. 1, thus being aggrieved parties. However, the Tribunal held that the Appellants, being debtors and not members, shareholders, directors, or creditors of the Company, did not qualify as 'aggrieved persons'. The Tribunal emphasized that only those whose legal rights are jeopardized can seek legal remedy, aligning with the principle of 'ubi jus ibi remedium'.

3. Legal infirmity and jurisdiction of the impugned orders:
The Appellants contended that the impugned orders were passed without jurisdiction and suffered from serious legal infirmity. They argued that the Company had zero revenue and was involved in fraudulent activities, thus not justifying its restoration. The Tribunal dismissed these contentions, stating that the Appellants, as debtors, could not claim to be 'aggrieved persons' and had no legal standing to challenge the restoration order. The Tribunal found no material irregularity in the ROC's order of striking off the Company and upheld the restoration based on the merits presented by Respondent No. 1.

4. Public interest and potential harm to the Appellants:
The Appellants argued that restoring the Company would harm public interest as it was allegedly a shell company involved in fraudulent activities. They claimed that Respondent No. 1 was put up by an individual under investigation for financial scandals. The Tribunal, however, found that the Appellants' claims were unfounded and motivated by their own financial liabilities towards Respondent No. 1. The Tribunal noted that the Appellants owed significant amounts to Respondent No. 1 as per various awards and had resorted to filing frivolous applications to evade their liabilities. The Tribunal concluded that the Appellants' intervention was malafide and aimed at frustrating the process of law.

Conclusion:
The appeal was dismissed, and the Appellants were ordered to pay costs of ?2 Lakhs, with 50% directed to be released to Respondent No. 1. The Tribunal upheld the restoration of the Company's name, finding no legal basis for the Appellants' intervention and emphasizing the importance of legal standing and genuine grievances in seeking judicial remedies.

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