2023 (3) TMI 76 - HC - Companies Law

Seeking permission to operate the bank account without any further fetters from the respondent Bank - HELD THAT - The Learned Single Judge was mindful of the fact that an interim application is pending before NCLT, Kolkata for joint operation of bank accounts. Therefore, the order to make bank transactions by the parties with the concurrence of the other was passed to protect the interest of the parties pending final adjudication of the company petition and to prevent hampering of the pending application before the NCLT. The matter pending before the NCLT relates to affairs of a private company; its business efficacy, financial transactions, management and disputes between the shareholders of the company and thus the need for judicial intervention and interference into orders and proceedings of the NCLT must be kept to bare minimum. Thus, no case is made out to interfere in the order of the Learned Single Judge and therefore, the appeal is devoid of any merits - application disposed off.

Summary

Issues:
1. Challenge to the correctness of a judgment regarding the operation of bank accounts.
2. Dispute over the operation of bank accounts involving multiple parties.
3. Interpretation of orders from the National Company Law Tribunal (NCLT) and the High Court.
4. Allegations of fraud, forgery, and misappropriation of funds by a director.
5. Legal implications of freezing bank accounts as a preventive measure.

Analysis:
1. The appellant challenged the judgment of the Learned Single Judge regarding the operation of bank accounts, which was clarified in an order dated November 17, 2022. The appellant questioned the requirement for concurrence from the present directors and the intervenor for bank transactions.

2. The dispute involved the appellant, respondent bank, and an intervenor who filed a Title Suit to restrict bank account operations. The City Civil Court granted an ad-interim injunction, later withdrawn, but the bank continued to freeze the account despite representations.

3. The NCLT passed an order directing the appellant to maintain shareholding and provide accounts to the intervenor. The High Court allowed the writ petition, but subject to any NCLT orders, emphasizing the need for concurrence in transactions to protect parties' interests.

4. Allegations of fraud, forgery, and misappropriation were raised against a director, leading to the Title Suit and freezing of accounts. The respondent No.5 accused the director of illegal actions, including issuing cheques to bogus vendors and withdrawing funds unlawfully.

5. The respondent bank justified freezing the accounts due to suspicious transactions and to prevent illegal activities. The High Court upheld the Single Judge's decision, emphasizing the importance of protecting all parties' interests pending NCLT proceedings and minimizing judicial interference.

In conclusion, the High Court dismissed the appeal, maintaining the Single Judge's order to operate bank accounts subject to NCLT decisions. The judgment aimed to safeguard the interests of all parties involved in the ongoing disputes and prevent disruptions in the company's affairs. The appellant was granted the liberty to raise concerns before the NCLT while upholding the necessity for concurrence in bank transactions to ensure transparency and protection of rights.