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2023 (2) TMI 671 - AT - Insolvency and BankruptcyMaintainability of petition - Petitioner is neither a Member of the first Respondent Company nor did the 24 persons who had given consent to file the Company Petition are Members of the CSITA - whether the Appellant is a Member of the Section 8 Company and has the locus standi to file this Appeal and also whether the Petitioner could have file the Petition under Sections 241 242 of the Companies Act, 2013? HELD THAT - As per the definition, a person cannot be treated as Member of the Company unless his name is entered in the Register of Members of the Company - The term Member is different from that of Shareholder. A Shareholder can be Shareholder by acquiring shares but will not be Member till his name is entered in the Register of Members of the Company. This definition is relaxed in case of Section 244 of the Companies Act, 2013, where even a Shareholder is treated as a Member. In the instant case, apart from not being a party to the main Petition, the Appellant herein is, admittedly, only a Member of the Church and he has not filed any documentary evidence to substantiate that any of the requirements under Section 2(55) of the Companies Act, 2013, is met. Admittedly, there is a four layered Election Process to become a Member of the Company. The persons acting as Member of CSITA are in fact first elected by various Parishes falling under more than 20 Dioceses and these Parishes Member elect people to the Diocesan Council and also to the Synod Council who in turn elect the process of the Company - This Tribunal is of the earnest view that merely because a person is a Member of Church, he does not have the locus standi to file a Petition under Sections 241 242 of the Companies Act, 2013, against a Section 8 Company of which, he is admittedly, not a Member. As the Petitioner in application, does not satisfy any of the requirements stipulated under Section 2(55) of the Companies Act, 2013, he cannot seek any exemption under Section 244 of the Companies Act, 2013 - A brief perusal of the paragraphs in the Impugned Order, shows that the said paragraphs are by and large the submissions of the parties and there were no strictures or conclusion, arrived at by the Tribunal (NCLT), which require Expunging. Appeal dismissed.
Issues Involved:
1. Maintainability of the Company Petition under Section 241 of the Companies Act, 2013. 2. Locus standi of the Appellant to file the Petition. 3. Compliance with Section 244 of the Companies Act, 2013. 4. Jurisdiction of the Tribunal (NCLT) to entertain the Petition. 5. Validity of the NCLT's observations and whether they require expunging. Detailed Analysis: 1. Maintainability of the Company Petition under Section 241 of the Companies Act, 2013: The Appellant challenged the dismissal of the Company Petition (C.P.02/2016) by the NCLT on the grounds of 'Oppression and Mismanagement' of the affairs of CSITA. The NCLT had previously held the Company Petition to be maintainable, but upon final hearing, it ruled that the Petition was not maintainable as the Petitioner was not a 'Member' of the Company as defined under Section 2(55) of the Companies Act, 2013. 2. Locus Standi of the Appellant to File the Petition: The Appellant argued that he had the right to file the Petition in a representative capacity under 'Order 1 Rule 8' to protect the interests of a large number of persons with a common interest in the Respondent Company. However, the Tribunal found that the Appellant was not a 'Member' of the Company and thus lacked the locus standi to file the Petition. The Tribunal emphasized that merely being a 'Member' of the Church does not confer the right to file a Petition under Sections 241 and 242 of the Companies Act, 2013. 3. Compliance with Section 244 of the Companies Act, 2013: The Tribunal examined whether the Petitioner met the requirements under Section 244, which stipulates the conditions for filing a Petition under Section 241. The Tribunal noted that the Petitioner did not fulfill the criteria of being a 'Member' as defined under Section 2(55). The Tribunal also highlighted that the Appellant did not provide any documentary evidence to substantiate his claim of fulfilling the requirements under Section 2(55). Therefore, the Tribunal concluded that the Petitioner could not seek any exemption under Section 244. 4. Jurisdiction of the Tribunal (NCLT) to Entertain the Petition: The Tribunal reiterated that it must always ensure it has the jurisdiction to exercise its powers under the specified sections. The NCLT had initially waived the procedures under Section 244(1)(b), but upon final hearing, it ruled that the Petition was not maintainable as the Petitioner was not a 'Member' of the Company. The Tribunal emphasized that jurisdiction is not a matter of discretion and must be strictly construed as per the statute. 5. Validity of the NCLT's Observations and Whether They Require Expunging: The Appellant sought to expunge certain observations made by the NCLT in its order. However, the Tribunal found that the paragraphs in question were primarily submissions of the parties and did not contain any 'strictures' or 'conclusions' by the NCLT that warranted expunging. The Tribunal concluded that there was no illegality or infirmity in the NCLT's well-considered and reasoned order. Conclusion: The Tribunal dismissed the Appeal, upholding the NCLT's order that the Company Petition was not maintainable. The Tribunal found that the Appellant lacked the locus standi to file the Petition as he was not a 'Member' of the Company under Section 2(55) of the Companies Act, 2013. The Tribunal also ruled that the Petitioner did not meet the requirements under Section 244 and could not seek any exemption. The Tribunal found no grounds to expunge the observations made by the NCLT. Consequently, the Appeal was dismissed with no costs.
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