2021 (2) TMI 16 - Tri - Companies Law

Seeking to wind up the respondent company - seeking direction to existing management of the Respondent No. 1 Company to peacefully cooperate with the Provisional Liquidator to carry out his duties under the Companies Act, 2013 - Jurisdiction of this Tribunal to deal with the subject matter - HELD THAT - The Tribunal is conferred with exclusive jurisdiction to deal all matters arise out of provisions of Companies Acts, 1956/2013, as case may be. Section 430 ousts jurisdiction of Civil Court over the matters, the Tribunal is having jurisdiction. By perusal of investigation reports by CBI and the actions taken by other statutory Authorities, the incorporation of R1 Company and obtaining a contract in a fraudulent manner that too within a short time, without having requisite experience, would not justify its continuance on the rolls of Registrar of Companies, Bangalore. Though various proceedings are pending against the Award in question, there is no bar to initiate the present proceedings. It is unheard that a Company incorporated hardly one and half months earlier, can able to get a Contract from the Govt. of India, that too without having any technical experience in the relevant field. Therefore, without prejudice to the rights of Parties in the litigation pending before the Hon'ble High Court of Delhi and the Hon'ble Supreme Court, the Tribunal can exercise its powers conferred on this Tribunal, under Chapter XX Part 1 of Companies Act, 2013, to appoint provisional Liquidator before passing final winding up order, which would be decided after hearing the Parties. Since the R1 Company has suffered various adverse findings with cogent evidence at the hands of various Statutory Authorities, as detailed supra, it would not be proper to permit R1 Company to continue its name on the rolls of Registrar of Companies, Bangalore. Therefore, in terms of provisions of Section 283 of Companies Act, 2013, it would be just to permit Provisional Liquidator to forthwith take into his or its custody or control all the property, effects and actionable claims to which the R1 Company is or appears to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the R1 Company and to avoid misuse of its property. It is settled position of law that principles of natural justice mandates judicial forums to afford reasonable opportunity to other side before passing any order by judicial Authorities. However, Courts/Tribunal are empowered to pass appropriate Ad Interim/interim order at the stage of admission itself, if circumstances, in a case justifies for passing such interim order(s). In the instant case, it is not in dispute that R1 Company was given notice though it was short for duration and thus their Counsels appears before the Tribunal and advanced their arguments on merits of the case. Prima facie case is made out by the Petitioner in favour of granting interim order as prayed for. It is just and proper to appoint Provisional Liquidator to take control of the affairs of R1 Company pending final adjudication of main petition for winding up. Petition admitted.

Summary

Issues involved:
1. Jurisdiction of the Tribunal.
2. Prima facie case for granting interim relief.
3. Opportunity for Respondent No. 1 Company to make representations.
4. Appointment of Provisional Liquidator.
5. Compliance with procedural requirements for filing the petition.

Detailed Analysis:

Jurisdiction of the Tribunal:
The Tribunal confirmed its jurisdiction over the matter, stating that it is conferred with exclusive authority to deal with issues arising from the Companies Act, 1956/2013. Section 430 of the Companies Act, 2013, explicitly ousts the jurisdiction of civil courts over matters that the Tribunal or Appellate Tribunal is empowered to determine. Despite various judicial proceedings in other courts, the Tribunal affirmed that these do not pertain to the winding-up of Respondent No. 1 Company, thereby establishing its jurisdiction in this petition.

Prima Facie Case for Granting Interim Relief:
The Tribunal found prima facie evidence of fraud, misfeasance, and misconduct by Respondent No. 1 Company, as detailed in the petition and supported by investigations from the CBI and other statutory authorities. The Tribunal noted that the company was incorporated shortly before obtaining a significant contract from the Government of India without requisite experience, which justified the need for interim relief. The Tribunal emphasized that the incorporation and subsequent actions of the company appeared fraudulent, warranting immediate intervention.

Opportunity for Respondent No. 1 Company to Make Representations:
The Tribunal acknowledged the principles of natural justice, which require that the Respondent be given a reasonable opportunity to present its case before any adverse order is passed. However, it also noted that courts and tribunals have the authority to pass interim orders at the admission stage if circumstances justify such actions. In this case, the Tribunal found that the urgency and gravity of the allegations warranted the appointment of a Provisional Liquidator without further delay.

Appointment of Provisional Liquidator:
The Tribunal decided to appoint the Official Liquidator, Bangalore, as the Provisional Liquidator for Respondent No. 1 Company. This decision was based on the need to take immediate control of the company's affairs to protect and preserve its properties and avoid misuse. The Provisional Liquidator was directed to take custody or control of all the property, effects, and actionable claims of the company and to take necessary steps to protect its assets.

Compliance with Procedural Requirements for Filing the Petition:
Respondent No. 1 argued that the petition was not filed in accordance with the prescribed rules, specifically referencing the requirements under Section 273 of the Companies Act, 2013, and related notifications. The Tribunal, however, held that procedural errors, such as misquoting rules, are not fatal to the case and can be rectified. The Tribunal exercised its inherent powers to condone such mistakes and proceeded with the petition.

Conclusion:
The Tribunal admitted the company petition and granted Respondents time to file their replies. It appointed the Official Liquidator as the Provisional Liquidator and directed the existing management of Respondent No. 1 Company to cooperate fully. The Provisional Liquidator was authorized to take control of the company's management and assets, ensuring compliance with the extant provisions of the Companies Act, 2013. The order was passed without prejudice to the parties' rights in pending litigation before the Delhi High Court and the Supreme Court of India. The case was posted for further hearing on February 8, 2021, and the registry was directed to communicate the order to all parties and the Official Liquidator.