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2021 (2) TMI 521 - AT - Companies LawViolation of principles of natural justice - main grievance of the Appellant is that the Devas Company was grossly deprived of Principles of Natural Justice and in fact, more than 2400 pages were filed on the side of the First Respondent/Petitioner before the Tribunal in petition on the earlier date and on the next date, the Petition was numbered and listed before the Tribunal - HELD THAT - As per Section 273(1c) of the Companies Act, the Tribunal has the requisite powers to pass interim orders, even against a stranger to the proceedings, with a view to preserve the property of the company Furthermore, the Tribunal has necessary powers to appoint Provisional Liquidator which will also necessarily affects the rights and interests of numerous parties which may not be parties to the winding up proceedings - In this connection it is pertinent to make a mention that the Tribunal has an inherent power to pass an interim order(s) , which is just and necessary to prevent an abuse of process of the Tribunal or to advance the cause of Justice or to pass orders, which are vital to meet the ends of justice. In fact, the words, occurring in Section 273(1)(e) of the Companies Act, 2013, any other order as it thinks fit means that the Tribunal in winding up petition has wide powers to pass necessary orders. In so far as the Principles of Natural Justice are concerned, it cannot be imprisoned in a strait-jacket form. It cannot be lost sight of that a necessary party is an individual who should have been arrayed as a party and in whose absence, no effective order can be passed by a Court of Law / Tribunal , as the case may be - It is to be remembered that a proper party is a party who although not a necessary party, is a Person whose presence will enable the Tribunal to completely, effectively, efficaciously and adequately to determine all the issues/questions encircling around a particular case. Although the Appellant claims that it is Shareholder of Third Respondent/Devas Multi Media Pvt.Ltd.(Company) presently holding 3.48% of Issued Equity Share Capital therein and in as much as the impugned order dated 19.1.2021 passed by the National Company Law Tribunal according to the Appellant, affects its right to participate in the Affairs and Management of Third Respondent, this Tribunal taking note of the entire facts and Circumstances of the instant case, in a Conspectus Fashion at this stage, simpliciter without traversing / and not delving deep into the controversies centering around the pending main C.P.No.06/BB/2021 pending on the file of National Company Law Tribunal, Bengaluru Bench, deems it fit and proper in Directing the Appellant to file necessary Interlocutory Application before the Tribunal seeking permission to implead itself in the main pending Company Petition setting out necessary facts/reasons for the same and if such an Application is filed by the Appellant for redressal of its grievances before the Tribunal , then the Tribunal can take it on file (if it is otherwise in order) and after numbering of the same it shall provide reasonable opportunity of being heard to the respective sides by adhering to the Principles of Justice , and to pass an order ascribing reasons on merits, of course, in the manner known to Law and in accordance with Law . The instant Company Appeal shall stand disposed of, but without costs.
Issues Involved:
1. Validity of the appointment of the Provisional Liquidator. 2. Compliance with the principles of natural justice. 3. The maintainability of the appeal by the shareholder. 4. Allegations of fraud and the conduct of the company. Issue-wise Detailed Analysis: 1. Validity of the Appointment of the Provisional Liquidator: The National Company Law Tribunal (NCLT) observed that the Respondent Company had adverse findings from various statutory authorities. The Tribunal, under Section 283 of the Companies Act, 2013, found it just to appoint a Provisional Liquidator to take control of the company's property and claims. The Tribunal exercised its powers under Section 273 and other provisions of the Companies Act, 2013, to appoint the Official Liquidator of Bangalore as the Provisional Liquidator pending the final adjudication of the winding-up petition. The Appellant argued that the appointment was made without following the required procedure, including the issuance of notice and providing a reasonable opportunity to the company, as mandated by the Companies Winding Up Rules, 2020. 2. Compliance with the Principles of Natural Justice: The Appellant contended that the principles of natural justice were violated as the company was served with the petition only a day before the hearing, not allowing sufficient time to respond. The Tribunal noted that the company was given notice, though short, and its counsels appeared and argued on merits. The Appellant argued that the Tribunal relied on one-sided submissions and did not provide adequate notice or a fair hearing before appointing the Provisional Liquidator. The Tribunal, however, justified the interim order citing urgency and the prima facie case of fraud. 3. The Maintainability of the Appeal by the Shareholder: The Appellant, a shareholder holding 3.48% of the company's equity, argued that it was an aggrieved person under Section 421(1) of the Companies Act, 2013, and thus entitled to appeal. The Tribunal acknowledged the Appellant's right to participate in the company's affairs and management, directing the Appellant to file an interlocutory application before the NCLT to seek permission to implead itself in the main petition. The Tribunal emphasized that the Appellant, as a contributory, had the right to be heard in the winding-up proceedings. 4. Allegations of Fraud and the Conduct of the Company: The First Respondent alleged that the company was involved in fraudulent activities, justifying the appointment of the Provisional Liquidator. The Tribunal noted that the Provisional Liquidator's report indicated that the company existed only on paper and was engaged in fraudulent acts. The Appellant argued that the allegations were unproven and sub judice before the Delhi High Court. The Tribunal, however, found that the allegations warranted the interim appointment of the Provisional Liquidator to prevent further misuse of the company's property and to protect the interests of the creditors and shareholders. Conclusion: The Tribunal directed the Appellant to file an interlocutory application before the NCLT for impleading itself in the main petition, ensuring adherence to the principles of natural justice. The appeal was disposed of with liberty granted to the Appellant to raise all factual and legal pleas before the Tribunal. The Tribunal emphasized the necessity of appointing the Provisional Liquidator to address the prima facie case of fraud and to safeguard the company's assets.
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