2013 (7) TMI 1239 - HC - Companies Law

Issues Involved:

1. Impleadment and participation rights of a former director in company proceedings.
2. Validity of a stranger's application for intervention in winding-up proceedings.
3. Applicability of Sections 391-394 and 536(2) of the Companies Act in the context of the case.
4. Legal implications of a director's resignation not filed with the Registrar of Companies.

Issue-wise Detailed Analysis:

1. Impleadment and Participation Rights of a Former Director:

The applicant, claiming to be a director and shareholder of the company, sought to be impleaded in the proceedings related to the winding-up of the company, arguing that as per Section 41 of the Companies Act, he is a member and is entitled to ensure compliance with the law and company articles. However, the court noted that the applicant had previously communicated his resignation from the directorship, which was not disputed by his counsel. The court emphasized that the applicant had not shown interest in the company's affairs or the winding-up proceedings from the beginning and had only sought participation after the propounder of a revival scheme came forward. Consequently, the court found that the applicant had no locus standi to participate in the pending proceedings.

2. Validity of a Stranger's Application for Intervention in Winding-up Proceedings:

The application by M/s. Bhoomika Media Initiative Pvt. Ltd., a stranger to the company, for intervention in the winding-up proceedings was challenged. The applicant argued that such an application is not maintainable post the appointment of a Provisional Liquidator. However, the court noted that the propounder of the scheme was seeking validation of share purchase under Section 536(2) of the Companies Act to provide financial assistance for reviving the company. The court held that the propounder's actions were in line with the law, as any scheme for bailing out and reviving the company remains open for consideration even during pending winding-up proceedings.

3. Applicability of Sections 391-394 and 536(2) of the Companies Act:

The applicant contended that the application for compromise or arrangement should be made under Sections 391 and 394, which require the involvement of the company, its creditors, or members. However, the court clarified that the current application was under Section 536(2), which allows for validation of share purchases post winding-up order. The court rejected the argument that Sections 391-394 were applicable, affirming that the propounder's scheme was appropriately filed under Section 536(2).

4. Legal Implications of a Director's Resignation Not Filed with the Registrar of Companies:

The applicant argued that his resignation was not filed with the Registrar of Companies in Form No.32, thus he remained a director eligible to participate in the proceedings. The court noted that while the legal effect of not filing Form No.32 could be debated, the applicant's conduct and lack of participation in the company's affairs and winding-up proceedings negated his claim to participate in the current proceedings. The court emphasized that the applicant's resignation and subsequent lack of involvement indicated a lack of standing in the matter.

Conclusion:

The court concluded that the applicant had no legal standing to be impleaded or participate in the proceedings related to the company's revival scheme. The application filed by the applicant was rejected, and the court directed the office to proceed accordingly.

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