2021 (2) TMI 88 - Tri - Insolvency and Bankruptcy

Seeking rectification of order by modifying the directions in clause iii of Paragraph 10 of the order by directing only the directors of the appellant Company (not the entire shareholder) to jointly submit to the Registrar of Companies an undertaking stating therein that the accounts of the Company were not used as means to transact tainted money during the period of demonetization - Rule 154 of National Company Law Tribunal Rules, 2016. Rule 154 of the National Company Law Tribunal Rules, 2016 - HELD THAT - The present case of the applicant falls within the meaning of error therein arising from any accidental slip or omission of this Tribunal. As correctly stated by the Applicant, it is not possible to give an undertaking as ordered by this Tribunal, by all the shareholders. Hence, this Tribunal pass the following order by correcting point No.(iii) in the Order dated 09.10.2020 as under - The shareholders/Directors of the appellant Company shall jointly submit an Undertaking to the Registrar of Companies stating therein that the accounts of the Company were not used as means to transact tainted money during the period of demonetization . Application disposed off.

Summary

Issues: Rectification of order directing shareholders to submit an undertaking jointly, practical difficulties faced by a public limited company with numerous shareholders residing in different locations.

Analysis:
1. The appellant filed a petition seeking rectification of an order dated 09.10.2020, directing shareholders to jointly submit an undertaking to the Registrar of Companies regarding the company's accounts during demonetization.

2. The appellant, a public limited company with 143 shareholders residing in various locations, argued that it is impractical for all shareholders to provide a joint undertaking due to their diverse locations and lack of involvement in day-to-day company affairs.

3. The appellant contended that only the directors, responsible for managing the company's operations, should be accountable for the undertaking, as shareholders are not directly involved in the company's transactions.

4. Despite issuing a notice to the Registrar of Companies (RoC) for a report, no response was received, implying no objection to the relief sought by the appellant.

5. The Tribunal examined Rule 154 of the National Company Law Tribunal Rules, 2016, allowing for rectification of clerical errors or omissions in orders, leading to the correction of the directive in the previous order.

6. Considering the practical challenges faced by the appellant, the Tribunal corrected the order by directing either the shareholders or directors to jointly submit the undertaking to the RoC, acknowledging the limitations faced by the shareholders in fulfilling the initial requirement.

7. The Tribunal disposed of the matter by amending the order dated 09.10.2020, thereby providing a practical solution to the issue raised by the appellant regarding the submission of the undertaking.

8. The judgment was delivered on 21st January 2021, rectifying the directive in the previous order and addressing the concerns raised by the appellant regarding the feasibility of compliance with the original order.