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Companies Law - Case Laws
Showing 1 to 20 of 15026 Records
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2025 (3) TMI 1356
Validity of revival of struck off company - Interpretation of statute - second proviso of Section 252 of Companies Act, 2013 - Striking off the name of a company from the register of companies - HELD THAT:- The plain reading of second proviso to Section 252, shows that where the Registrar of Companies feels that the name of the company has been struck off from the Register of Companies either inadvertently or on the basis of incorrect information furnished (as has been stated to be the case by the Respondents in the present Petition), the Registrar of Companies may within a period of three years from the date of passing of the order dissolving such company under Section 248 of the 2013 Act, file an application under Section 252 of the 2013 Act seeking restoration of the name of such company before the Tribunal.
The procedure, as set out in second proviso to Section 252 of the 2013 Act, is that the Registrar must, within a period of three years from the date of order of dissolving the company, file an application before the National Company Law Tribunal seeking restoration of such company.
Concededly, the Respondent No. 2 has taken no such steps as are required under the provisions of the 2013 Act, yet the Company was revived. In addition, since the order dissolving the Company was dated 11.01.2016, such steps were required to be taken by the Respondent No. 2 within three years from such date – which has also not been done. Thus, the action of the Respondent No. 2 cannot be sustained.
Conclusion - The Respondent No. 2 is directed to strike off the name of the company from the Register of Companies and to take all necessary steps in accordance with the law.
Petition allowed.
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2025 (3) TMI 1257
Seeking restoration of the name of the appellant in the Register of the Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The appellant is right in the sense that in view of the findings recorded by the NCLT on the review petition, the time consumed in prosecuting the review petition ought to have been excluded. However, there is a delay on the part of the appellant at every stage. The application for restoration of the appellant’s name in the Register of the Companies was filed after a lapse of four months from the date on which it was struck out. The review petition was filed five months after the NCLT dismissed the application. After the review petition was dismissed, it took more than one year for the appellant to prefer an appeal before the NCLAT. There is no justification for this delay of five months and one year respectively.
Looking to the nature of the proceedings, the NCLAT was justified in holding that no case was made out to condone the delay, especially when under Section 421 of the Companies Act, the delay could have been condoned provided it was upto forty-five days.
Conclusion - The application for restoration was delayed by four months, the review petition by five months, and the appeal by over a year, with no adequate justification provided. Given these delays, the NCLAT was deemed justified in denying condonation, as Section 421 of the Companies Act limits condonation to delays of up to forty-five days.
Appeal dismissed.
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2025 (3) TMI 914
Power of Bombay High Court to intervene u/s 9 of the Arbitration and Conciliation Act, 1996, to protect the interests of the Petitioner, Manmohan, particularly concerning the Greater Kailash Property, which is not owned by Kapani Resorts but was released using Manmohan's funds - shares were not allotted to Manmohan as per the Agreement - parties are indeed privy to an arbitration agreement contained in the Agreement - HELD THAT:- Even a plain reading of the foregoing would show that it is now a statutory obligation of Kapani Resorts to refund the monies invested by Manmohan. The allotment of shares ought to have been made within sixty days of February 11, 2022 (for USD 350,000) and of February 22, 2022 (for USD 650,000). Such allotment not having been made, these amounts ought to have been refunded within fifteen days of such deadline to make allotment. Manmohan’s right to refund has accrued on expiry of the 75-day period from the date of the receipt of the share application money. Before the funds infused by Manmohan could have been used to repay SIDBI, it was incumbent on Kapani Resorts to allot shares (which would have given control to Manmohan over Kapani Resorts), after which allotment, it was permissible to use such funds to repay SIDBI. This was a necessary statutory condition precedent that has not been met. Now, the statutory obligation to refund has kicked in on the expiry of 75 days from each tranche of infusion.
Evidently, a strong prima facie case has been made out on behalf of Manmohan, for grant of protective reliefs. Grave and irreparable harm and injury would be occasioned to Manmohan if such intervention is not made. The protection that Manmohan enjoyed at the hands of the NCLT (a freeze on the capital structure of Kapani Resorts) too now stands removed owing the withdrawal of the NCLT proceedings in reaction to the objection raised on behalf of Virendra and Vaibhav, who have shown scant regard for legal obligations owed by them under the solemn Agreement executed by them.
Evidently, a strong prima facie case for refund of the amounts invested by Manmohan exists in law. Evidently, a strong prima facie case of the Respondents enjoying the fruits of their violation of the Agreement exists on the record. Evidently, a strong prima facie case to show that the properties mortgaged to secure Kapani Resorts’ obligations owed to SIDBI now stand released. Indeed, the personal guarantees too stand discharged. All these benefits are being enjoyed without fetter, thanks only to Manmohan’s funds, even while the Respondents frustrate Manmohan’s rights under the Agreement and under Company Law.
The interim reliefs granted hereby shall hold the field until completion of the arbitral proceedings - Kapani Resorts, Virendra and Vaibhav shall jointly or severally deposit an Indian Rupee equivalent of USD 1 million (valued at the US Dollar-Indian Rupee exchange rate applicable as of the respective dates of their remittance by Manmohan) along with interest at the statutory interest rate of 12% per annum (on the INR equivalent of USD 350,000 from the expiry of 75 days after February 11, 2022; and on the INR equivalent of USD 650,000 from the expiry of 75 days after February 22, 2022, until the date of deposit) with the Registry of this Court, which deposit shall be made no later than two weeks from the date on which this Order is uploaded on the website of this Court.
Conclusion - i) The Greater Kailash Property is relevant to the arbitration dispute, and the Court can issue interim measures concerning it under Section 9 of the Act. ii) The failure to allot shares to Manmohan, despite using his funds to discharge debts, constitutes a breach of the Agreement and statutory obligations under Section 42 (6) of the Companies Act. iii) The actions of Virendra and Vaibhav, in benefiting from Manmohan's investment without fulfilling their obligations, demonstrate a misappropriation of funds.
Petition disposed off.
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2025 (3) TMI 785
Validity of Foreign Arbitral Award - Enforcement of the Award would be violative of the provisions of FEMA or not - remittance of Euro 5.5 million by Minda Corporation Limited to Mercedes Benz AG pursuant to the consent award passed in the arbitration proceedings - overlap between the settlement with the Liquidator of Minda Germany and Consent Award with Minda India - benefit of ‘double dip’ by virtue of the payments agreed by Minda India under the settlement - Whether the enforcement of the Award would be contrary to the public policy of India, as per Section 48(2)(b) of the A&C Act?
HELD THAT:- Considering in the instant case, the issue of violation of provisions of FEMA is not germane to the matter anymore considering the post facto approval of the RBI
Only issue would be whether ‘fundamental policy of law’ would cover the principal objection of the JD that they did not have visibility of the ‘Bilgery Settlement’ and therefore, could not ascertain whether there was a ‘double dip’ by the DH (i.e. recovery both from the Liquidator of Minda Germany and also from Minda India), or if there was a waiver in the ‘Bilgery Settlement.’ - Needless to state, both these aspects become a non-issue since the Consent Award was passed with the JD having full knowledge of what was before them.
The Settlement Agreement itself, would show that the agreement was the ‘entire agreement’ between the parties, superseded and extinguished all previous agreements, promises, assurances, warranties, and parties has agreed that no other claim shall lie between them with respect to the matters being settled.
Firstly, the parties have unconditionally and irrevocably waived any or all claims against each other existing prior to the date of the settlement; secondly, the request for ‘Bilgery Settlement’ had been made prior to the settlement with Minda India and a motion was filed before a court in Germany for disclosure, which had been rejected by the courts in Germany. This would obviously preclude the JD from raising this issue yet again, post the Consent Award; thirdly and more specifically, regards the issue of ‘double dip’, the communication of 28th September 2021 recorded Minda India’s confirmation to render an Award by consent and the preamble of the settlement leaves no doubt of the DH’s confirmation that it will not benefit from any ‘double dip’ by virtue of payments agreed under the settlement.
As regards the waiver, DH had filed an affidavit before this Court, pursuant to order dated 17th November 2023. The said affidavit of 22nd November 2023 also confirmed the enforcement of the Award will not result in a double benefit to the decree holder and that there was no overlap between the settlement with Minda Germany and the Consent Award with Minda India.
The JD, therefore, had consistently confirmed that they were agreeing to settlement, not only through the communication dated 28th September 2021 but also as per clause 3(i) of the Settlement Agreement and agreed to passing of the Consent Award. The objections being pressed by the JD to the enforcement are not bona fide, unjust, unreasonable and a clear attempt to obstruct the enforcement, deploying one stratagem or the other.
The Court deprecates the stand taken by the JD, particularly, having fully and knowingly entered into a settlement and agreed to a Consent Award being passed, in complete know of facts and circumstances available to them, relating to the previous ‘Bilgery Settlement’.
Accordingly, it is directed, that the Foreign Award dated 29th November 2021 passed by an Arbitral Tribunal comprising of Dr. Fabian Von Schlabrendorff, Dr. Ulrich Trost, And Mr. Arne Fuchs in Stuttgart, Germany under the Rules of Arbitration of the International Chambers of Commerce, 2012 in ICC Case No. 22523/FS, be enforced as a decree of this Court, per section 49 of the A&C Act.
As JD was directed to deposit the entire amount, being EUR 5.5 million, in terms of the Arbitral Award with the Registrar General of this Court in an interest-bearing deposit. The said amount is approximately Rs. 52 Crores and has since been deposited by JD before the Registry of this Court, as noted in the order of this Court dated 20th May 2024.
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2025 (3) TMI 692
Seeking direction from this Court to the official liquidator to handover vacant and peaceful possession of the said premises, which were taken on monthly tenancy basis by the company in liquidation - HELD THAT:- The instant application has been filed under Section 446 of the Companies Act. The said provision indeed provides wide powers to the Company Court to pass appropriate orders. The Court has jurisdiction to even entertain and dispose of any suit or proceeding by or against the company, as also any claim made by or against the company in liquidation.
In the case of Patel Engineering Co. Ltd. v/s. Official Liquidator [2004 (2) TMI 383 - HIGH COURT OF BOMBAY], even when eviction proceedings were initiated by the landlord in respect of the premises in question, this Court held that such an application by the landlord, seeking possession of the premises, could not be dismissed because, by approaching the Company Court, the landlord had invoked an independent and special remedy available to the landlord under the Companies Act.
There is substance in the contention raised on behalf of the applicant that under Section 446 of the Companies Act, this Court has wide powers, with the focus being on examining issues and passing orders with the object of carrying on the winding up proceeding and in that process, examining whether the premises are required for the purposes of winding up of the company in liquidation. In the case of Metal Tubes and Rolling Mills v/s. Official Liquidator [2020 (8) TMI 584 - BOMBAY HIGH COURT], after referring to a number of judgments of the Supreme Court in this context, it was held that the Company Court under Section 446 of the Companies Act, has very wide powers to decide all questions that may relate to or arise in the course of winding up of the company.
This Court is unable to agree with the learned counsel for the official liquidator that the present application ought not to be entertained, as the landlord can institute eviction proceedings.
There is substance in the contention raised on behalf of the applicants that in Official Liquidator’s Report No. 77 of 2022, the official liquidator has specifically stated that a search of flat Nos. 4 and 5 revealed that there were no books of accounts or records belonging to the company in liquidation. In the face of such material, this Court is of the opinion that the bald statement made on behalf of the official liquidator in the affidavit in reply, that the premises in question are required for storing books and records of the company in liquidation, is nothing but an attempt to somehow cling on to the said premises, despite the fact that the premises have been in disuse.
The contention raised on behalf of the ex-directors is only stated to be rejected, for the reason that perfunctory applications have been filed in these proceedings, claiming that the company can be revived. No genuine efforts appear to have been made on behalf of the ex-directors in that direction. In any case, as noted herein above, the continued burden of rentals is wholly unjustified and in the facts and circumstances of the present case, the prayer made on behalf of the applicants deserves to be granted.
Conclusion - The official liquidator's claim of needing the premises was not genuine and that the premises were not required for the winding up and liquidation process. Therefore, the issue decided in favor of the applicants, directing the official liquidator to hand over possession of the premises.
Application disposed off.
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2025 (3) TMI 691
Seeking recall or review of order - legality of compromise under Order XXIII Rule 3 of the Code of Civil Procedure, 1908 - legality of assignment of Shaila Clubs’ loan to Savannah - Savannah’s contention is that the transaction involved in the present case is not governed by 2021 - delay in filing of Interim Application - HELD THAT:- It is failed to understand as to how reliance on Clause 11 of the RBI directives assists the case of Savannah. All that Clause 11 provides is that loan transfer would result in transfer of economic interest without being accompanied by any change in underlying terms and conditions of the loan contract and in all cases where there are any modifications in the terms and conditions of the loan contract during or after transfer, the same shall be evaluated against the definition of the term “restructuring” provided in Paragraph No.1 of the Annexure to Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 dated 7 June 2019. Dr. Tulzapurkar has placed on record copy of the said Prudential Directions, 2019 which again does not assist the case of Savannah in any manner. All that Clause 11 provides is that there would be no change in the terms and conditions of loan contract upon transfer of loan and whenever such terms or conditions are modified, the same shall be evaluated against definition of the term ‘restructuring’ in Prudential Directions. Thus, Prudential Directions apply for limited purpose of definition of the term ‘restructuring’ that too when there are modification of terms and conditions in loan agreement.
The transaction of assignment of loan of Shaila Clubs by the Bank in favour of Savannah is specifically prohibited under the 2021 RBI Directives as Savannah is not an eligible transferee. One of the objectives behind the RBI Directives is to ensure that the Banks do not transfer loan accounts to ineligible transferees. Otherwise, Banks would transfer loan accounts to private money lenders. Since Savannah is not one of the recognized transferees under the 2021 RBI guidelines, transfer of loan account of Shaila Clubs in favour of Savannah would clearly be unlawful - the compromise entered into between the Bank and Savannah is something which this Court could not have accepted for the purpose of disposal of Writ Petition No. 11610 of 2022.
On the basis of assignment of loan of Shaila Clubs in its favour, Savannah has instituted CIRP against Shaila Clubs and would ultimately realise the outstanding loan amount alienating the property of Shaila Clubs. Thus, the Minutes of Order directly affect the rights of Shaila Clubs. The objective behind RBI Directives of not permitting ineligible lender to purchase NPA is totally frustrated in the present case, where Savannah is actually eyeing to secure ownership of property under its management as mere Conductor by paying sum of Rs.3.37 crores in Shaila Clubs’ loan account. The compromise effected between Bank and Savannah actually affects the interest of Shaila Clubs, who is not the signatory to the compromise. Mere presence of Advocate of Shaila Clubs before the Court on 21 October 2022 or failure on the part of the Advocate to raise any objection to disposal of the petition in view of the Minutes of Order would not convert unlawful compromise into lawful one.
Judgment of the Apex Court in Suleman Noormohamed [1978 (2) TMI 222 - SUPREME COURT] is relied upon in support of contention of unlawful compromise. The Apex Court has dealt with the issue of eviction for the tenant on the basis of compromise where the tenant opposed execution of the decree on the ground that the decree was nullity as the compromise, in absence of making out the ground for eviction under rent control legislation, was itself unlawful. The Apex Court held 'If the agreement or compromise for the eviction of the tenant is found, on the facts of a particular case, to be in violation of a particular Rent Restriction or Control Act, the Court would refuse to record the compromise as it will not be a lawful agreement. If on the other hand, the Court is satisfied on consideration of the terms of the compromise and, if necessary, by considering them in the context of the pleadings and other materials in the case, that the agreement is lawful, as in any other suit, so in an eviction suit, the Court is bound to record the compromise and pass a decree in accordance therewith. Passing a decree for eviction on adjudication of the requisite facts or on their admission in a compromise, either express or implied, is not different.'
The Minutes of Order dated 20 October 2022 has a seal of this Court in the form of order dated 21 October 2022. If the compromise is itself unlawful, the seal of this Court put on such compromise must be removed so that no party is permitted to rely on the same in any collateral proceedings by contending that that the compromise has been accepted by the High Court and that the same is therefore valid - the review petition filed by the Shaila Clubs cannot be dismissed by relegating it to remedy of raising objection in CIRP before NCLT which does not have the jurisdiction to declare that the compromise effected through the Minutes of Order accepted by this Court is unlawful. NCLT would always treat the Minutes of Order, with seal of this Court, to be lawful. It is therefore necessary that the order dated 21 October 2022 is recalled.
The real issue involved in the present case is whether the compromise is lawful and whether the order dated 21 October 2022 deserves to be recalled and /or reviewed. After having arrived at the conclusion that compromise is unlawful and the order passed by this Court on 21 October 2022 deserves to be recalled, it is not inclined to entertain the technical plea sought to be raised by Savannah about Liquidator’s locus to file Interim Application for recall, especially in the light of the fact that the order is otherwise reviewable on application filed by Shaila Clubs and its suspended director.
On the issue of delay in filing of Interim Application No.13400 of 2024 and in filing the two Review Petitions, it is well settled position of law that mere delay, not involving latches, acquiescence or estoppel, would not prevent this Court from exercising inherent power of recalling its order. The inherent power of this Court in recalling an order is not circumscribed by considerations of delay. Once this Court arrives at a conclusion the compromise is unlawful and could not have been acted upon by this Court, mere delay would not be a hurdle for this Court to recall and/review the recording of unlawful compromise - Once this Court arrives at a conclusion that the compromise itself is unlawful, mere delay in filing applications for recall or review cannot be a reason for shutting the doors of this Court on technical ground of delay.
The order passed by this Court on 21 October 2022 on the basis of Minutes of Order dated 20 October 2022 deserves to be recalled both in application filed by the Bank as well as in the Review Petitions filed by Shaila Clubs and its suspended director.
Conclusion - i) The compromise recorded in the Minutes of Order was unlawful as it violated the RBI Directives, which prohibit the transfer of loan accounts to ineligible transferees like Savannah. ii) The RBI Directives have statutory force and are binding on banks, thus rendering the assignment of the loan to Savannah impermissible. iii) The order is recalled.
Interim Application filed for seeking condonation of delay in filing Review Petition is allowed - Order dated 21 October 2022 passed in Writ Petition No. 11610 of 2022 in view of Minutes of Order dated 20 October 2022 is recalled - petition restored.
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2025 (3) TMI 690
Challenge to scheme of arrangement - right to reverse book building - unfair valuation and swap ratio - validity of relaxation granted by SEBI - undue influence caused by the company over its shareholders - non-disclosure of the relaxation granted by SEBI - participation of employees and mutual funds of ICICI group in the voting as public shareholders.
Unfair valuation - reverse book building process (RBB) may have yielded a better price or not - HELD THAT:- Regulation 37 was introduced after detailed deliberations as an alternate mode of delisting by way of an amendment. As part of the process, SEBI had issued a board memorandum dated 29 September 2020 which specifically deliberated upon the merits of providing an alternative mode of delisting and the safeguards to be built in when opting for this route. The Board memorandum specifically discussed three key safeguards for protecting the interest of public shareholders. viz a) regarding the valuation of shares being not less than 60-days volume weighted average price (VWAP) of the companies; b) the voting threshold being 66% of the public shareholders of the listed subsidiary in addition to the usual requirement of 75% amongst all shareholders of the listed subsidiary in terms of Section 230 of the Act; c) the shares of the holding company (in this case ICICI Bank) are frequently traded which ensures the shareholders have the ability to freely exit the holding company at any time by selling the shares in the stock market - The Appellants’ claim reverse book building RBB would have guaranteed a better price is mere speculative as is held valuation is not an exact science and is subject to professional judgment and can vary from one valuer to another and as long as recognized methods are adhered to, valuation cannot be faulted as held in Indiabulls Real Estate Limited v. Department of Income Tax [2025 (1) TMI 555 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI].
Whether RBB mechanism requires 90% of public shareholders to tender their shares is completely baseless as the said regulation only says the total shareholding of the acquirer should become more than 90% for the delisting to take place? - HELD THAT:- SEBI has after thoughtful consideration introduced the alternate mechanism of delisting through a scheme of arrangement under Reg. 37. More so the Ld. NCLT also noted the argument on RBB is entirely speculative, since stock exchange trading platform is considered to be the best price discovery mechanism. Further, the Ld. NCLT per order dated 21.08.2024 observed the shareholders of ICICI Securities would also benefit indirectly by receiving shares of ICICI Bank and merger will lead to an increase in the intrinsic value of ICICI Bank, which would reflect in the traded price consequent upon implementation of Scheme. Thus it is entirely baseless to argue that any prejudice is being caused to the public shareholders.
Joint valuation report has been prepared by 2 (two) independent and registered valuers - HELD THAT:- The valuation of ICICI Securities is in accordance with the minimum requirement prescribed under Reg. 37(2)(j) of the Delisting Regulations i.e., the per share valuation of the listed subsidiary shall be at least equal to 60-day VWAP. It is settled law the courts should not enquire into the issue of valuation of shares as the same is a question of fact which is based on technical and complex considerations and should be left to the experts in the field of accountancy as is held in G.L. Sultania & Anr. v. Securities and Exchange Board of India [2007 (5) TMI 334 - SUPREME COURT] and Miheer H. Mafatlal v. Mafatlal Industries Ltd. [1996 (9) TMI 488 - SUPREME COURT].
Relaxation granted by SEBI in exercise of its regulatory powers - HELD THAT:- Regulation 42 of the Delisting Regulations specifically empowers SEBI to grant relaxation from strict compliance of the Delisting Regulations. The fact of such relaxation being granted is undisputed. It is beyond the scope of the present proceedings to sit in appeal over the relaxation granted by SEBI, which is an expert regulatory body. The Ld. NCLT has rightly noted this aspect and held that with the relaxation in place, the Companies were entitled to propose the Scheme in terms of Reg. 37. In Sahara India Real Estate Corporation Limited & Ors. v. Securities and Exchange Board of India, [2012 (9) TMI 559 - SUPREME COURT] the Hon’ble Supreme Court has held that on the subject of protecting the interests of investors, the SEBI Act, 1992 is a standalone legislation, and SEBI’s powers thereunder are not fettered by any other law, including the Companies Act.
Breach of legal provisions by ICICI Bank in the course of the outreach initiative - HELD THAT:- The Administrative Warning Letter dated 6 June 2024 does not in any manner suggest ICICI Bank has resorted to any illegal methods or has interfered with or attempted to influence the voting process or the free will of the shareholders of ICICI Securities. There is nothing in the administrative warning which can be said to be connected to the voting process or the outcome of the voting. Further SEBI has nowhere stated the voting would stand invalidated on account of the outreach initiative, nor has SEBI referred to any circumstance that would invalidate the votes cast by the shareholders of ICICI Securities. At best, the SEBI may have taken exception to the mode of carrying out a outreach and not the outreach per se nor even the objective of such outreach.
Failure to disclose the relaxation granted by SEBI - HELD THAT:- The disclosure made in the Explanatory Statement informs the shareholder the Scheme in the present case will be in terms of the requirements stipulated in Reg. 37(2) of the Delisting Regulations. In fact, the Explanatory Statement provides a detailed chart of provisions of Reg. 37(2) showing how each of the provisions thereof are met. Thus the shareholders had all information necessary for voting on the Scheme. All requisite details required for the shareholders to make an informed decision in respect of the Scheme were available in the explanatory statement, the Scheme itself and the joint valuation report, each of which were accessible to the public shareholders at the time of voting.
Whether the participation of ICICI group employees and mutual funds in voting as public shareholders was appropriate? - HELD THAT:- Only those funds of ICICI Prudential which held 21,675 shares as on the record date have cast their votes. This constitutes 0.0067% of the paid-up capital of ICICI Securities, and therefore, their participation had negligible impact on the overall voting. The definition of “public shareholding” under Rule 2(e) of the Securities Contract (Regulation) Rules, 1957, does not exclude employees holding ESOP shares, nor does Rule 2(d) classify them as promoters or part of the promoter group. Since no such exclusion exists, the argument that employee shareholders should not be considered “public shareholders” does not hold good.
Whether the appellant is entitled to object to the scheme under Section 230(4) of the Companies Act, 2013? - HELD THAT:- Not only is the Appellant not entitled in terms of the proviso to Section 230(4) to object to the Scheme, but the Appellant has also failed to demonstrate any illegality in either the process followed for sanctioning of the Scheme or in the terms of the Scheme itself. The Impugned Order is a detailed, well-reasoned order which has effectively dealt with all the contentions raised by the Appellant whilst noting that the Appellant is not entitled to object to the Scheme.
Conclusion - i) The scheme's safeguards under Regulation 37 of the Delisting Regulations adequately protect public shareholders, and the removal of RBB does not prejudice them. ii) The valuation is a complex issue best left to experts, and the joint valuation report met regulatory requirements. iii) The relaxation granted by SEBI was within its regulatory powers, and the Court cannot sit in appeal over SEBI's decisions. iv) No evidence of undue influence found from ICICI Bank's outreach initiative, and SEBI's administrative warning did not suggest any legal breach. v) The disclosure of SEBI's relaxation was deemed sufficient, and the shareholders had all necessary information for informed voting. vi) The participation of ICICI group employees and mutual funds in voting was appropriate and had a negligible impact on the outcome. vii) The appellant's lack of entitlement to object under Section 230(4) was upheld, and the scheme's approval by the majority of shareholders was emphasized.
Appeal dismissed.
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2025 (3) TMI 633
Grant of an interim injunction restraining the Appellants from alienating their shareholding in the company pending arbitration - Share Purchase Agreement, a contingent contract - HELD THAT:- This Court while dealing with an appeal under Section 37 (2) of the A&C Act, especially one arising from discretionary orders passed at an interlocutory stage, has to be circumspect in its approach, keeping in view the principle of least intervention. The A&C Act is intended to provide an alternative avenue for dispute resolution and any interpretation of the act which tends to multiply disputes must be avoided. An appellate court will ordinarily not interfere with the discretion exercised by the AT in the first instance, unless the said discretion is proved to have been exercised arbitrarily, capriciously, perversely or ignoring the settled principles of law regulating grant or refusal of interlocutory injunctions.
In Bakshi Speedways v. Hindustan Petroleum Corpn. [2009 (8) TMI 1306 - DELHI HIGH COURT], this Court imported the principles governing appeals arising from interim injunctions given under Order 39 Rules 1 and 2 CPC to the appeals under Section 37 (2) (b) A&C Act, holding that 'The principles applicable to an appeal under Section 37 (2) (b) in my view ought to be the same as the principles in an appeal against an order under Order 39 Rules 1 and 2, CPC i.e., unless the discretion exercised by the Court against whose order the appeal is preferred is found to have been exercised perversely and contrary to law, the appellate Court ought not to interfere with the order merely because the appellate Court in the exercise of its discretion would have exercised so otherwise'.
The SPA in question pertains to an ostensible sale of shares, though, for all intent and purpose, the underlying Plot, which is the only immoveable property, in which Appellant No 1 has interest, is being conveyed, in favour of Respondent, by ceding ownership and control over the Appellant No 1 Company in favor of the Respondent by the Appellant Nos. 2 and 3 - There is no provision for termination of SPA until the sale is consummated. Appellant’s have alleged breach of SPA by the Respondent and resorted to termination, which is disputed by the Respondent. The adjudication of underlying dispute is pending before the AT and pending the adjudication, the AT has passed the impugned order to ensure that the subject matter of the SPA i.e. the shares, are not lost by way of sale to a third party by the Appellant Nos. 2 and 3 - the impugned order passed by AT does not suffer from any legal vice for this court to overturn the same in this appeal.
The Appellant’s objection that the SPA being a contingent contract and not capable of being enforced because the contingent event of sale of the Plot in favor of the Appellant by the OL, did not occur, is without any merit. The Appellant is alleging breach of the SPA by the Respondent to terminate the SPA and not on the ground that the Plot in question is no longer capable of being acquired by the Appellant No 1 for reasons, beyond its control, thereby frustrating the objective of the SPA.
Conclusion - i) The Respondent's actions demonstrated readiness to perform the SPA, justifying the interim injunction. ii) The AT cannot be said to have exercised its discretion arbitrarily, capriciously, perversely or ignoring settled principles of law.
Appeal dismissed.
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2025 (3) TMI 632
Requirement of prior approval under Section 35(1) of the Insurance Act, 1938, at the stage of amalgamation of the Respondent Companies - HELD THAT:- The Transferor Companies were holding major portion of the Transferee Companies which are in Life Insurance and Non-life Insurance business respectively. It has been held by respective Tribunals that upon merger / amalgamation the Shareholders of the Holding Companies will hold Shares of the Transferee Companies which are Insurance Companies, the same number and same per centage and hence, this will not attract, the provisions contained under Section 6A of the Insurance Act.
There is another important aspect, which is required to be considered that in all these Company Appeals, by virtue of the Impugned Orders, the Transferor Companies, which were not engaged in Insurance Business have been permitted to be merged with the Transferee Companies, which are Insurance Companies and it has been done strictly in accordance with the provisions contained under Section 230 to 232 of the Companies Act, which prescribes for an amalgamation and which is not in contravention to or in consistent with any of the provisions of the Insurance Act.
In accordance to the provisions contained under Section 230 to 232 of the Companies Act as referred to hereinabove, there are certain prescribed procedures, which are required to be followed in accordance with the rules as framed thereunder i.e. “Companies (Compromises, Arrangements and Amalgamations) Rules, 2016” before it is contemplated to sanction a Scheme of Arrangement for amalgamation of the two Companies irrespective of the fact that whether it is between two Insurance Companies or only one of them being engaged in insurance business.
On perusal of the respective notices, it is quite clear that the notices thus published, had specifically invited, from the concerned Authorities, objection if any, as against the proposed Scheme of Arrangement for Amalgamation - The Petitioner Companies had also filed the Affidavit of Compliance through their Authorized Signatories, along with the relevant documents.
As there happens to be no statutory bar created under the Insurance Act, which could have called for a prior compliance of Section 35 of Insurance Act, for Amalgamation in the instant cases to be carried under Section 230 to 232 of the Companies Act, 2013, the Amalgamation as made by the Impugned Orders do not suffer from any apparent legal error which could call for an interference in the exercise of our Appellate powers under Section 421 of the Companies Act, 2013.
Conclusion - The amalgamations were conducted in compliance with the Companies Act and did not contravene the Insurance Act.
Appeal dismissed.
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2025 (3) TMI 392
Ownership/possession of property - transfer of ownership rights/interest in a property by way of a relinquishment deed - modes of transfer defined in the Transfer of Property Act - HELD THAT:- The High Court based its order on an interpretation of Section 14 of the Partnership Act and taking into consideration the fact that it was an admitted position that the property was contributed by late Bhairo Prasad Jaiswal to the partnership firm.
The law on this point is settled which is that separate property of an individual partner, can be converted into partnership property. In this context, reliance can also be placed upon a judgment of this Court in Addanki Narayanappa v. Bhaskara Krishnappa, [1966 (1) TMI 75 - SUPREME COURT] in which this Court has held that irrespective of the character of the property, when it is brought in by the partner when the partnership is formed, it becomes a property of the partnership firm, by virtue of Section 14 of Partnership Act.
A similar view has been taken by the Full Bench of the Madras High Court in The Chief Controlling Revenue Authority vs. Chidambaram, Partner, Thachanallur Sugar Mills and Distilleries and Ors. [1969 (1) TMI 74 - HIGH COURT OF MADRAS], wherein it was held that Section 14 of the Partnership Act enables a partner to bring a property which belongs to him, by the ‘evidence of his intention’ to make it a property of the firm and in order to do so, no formal document or agreement would be necessary.
It is apparent from a perusal of the record that late Bhairo Prasad Jaiswal, first acquired the property in the year 1965 and then after constituting the partnership firm (respondent No. 1) in 1972, he jointly constructed a building over the property with his brother and partner, Hanuman Prasad Jaiswal, pursuant to which the building was constructed which was to run as a hotel. This leaves no room for any doubt that late Bhairo Prasad had brought the property in question to the stock of the partnership firm as his contribution to the same - In fact, this is precisely the reason which prompted the High Court to clarify that the decree rendered by the Trial Court ought to be read in favour of the partnership firm respondent No. 1 alone, as opposed to being read in favour of the firm along with the other three partners, i.e. respondent Nos. 24 herein, because the property had become the firm’s property at the very moment late Bhairo Prasad Jaiswal started constructing the hotel on his land after constituting the partnership. The evidence of his intention to contribute the land and the building of ‘Hotel Alka Raje’ is quite clear.
Conclusion - The property brought into a partnership becomes the property of the firm, and any individual claims to such property are extinguished upon its contribution to the partnership. The property was owned by the partnership firm alone.
There are no reason to take a view different from that of the High Court in this regard. There is absolutely no scope for interference with the order of the High Court dated 09.03.2022 in the exercise of our jurisdiction under Article 136 of the Constitution of India - appeal dismissed.
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2025 (3) TMI 341
Professional Misconduct - Failure to comply with Companies (Audit and Auditors) Rules, 2014 in timely reporting of fraud to the Central Government under Section 143(12) of the Companies Act, 2013 in respect of the Corporate Loan Book (CLB) of Rs. 2,036 crores - Failure to appropriately assess the risk of fraud and risk of management override of controls in RFL - Failure to document sufficient evidence regarding the audit procedures performed in the audit of the loan book of RFL - Failure in verifying the certainty of future taxable income against which the Deferred Tax Assets (DTA) of Rs. 495.63 crores were recognised in the books - failure to obtain sufficient appropriate evidence regarding impairment/diminution of such investment and failure to verify the interest income received on the investments - Failure to give an appropriate audit opinion in light of the cumulative impact of mis-statements which were material and pervasive - Failure to obtain sufficient appropriate audit evidence regarding the appropriateness, completeness and accuracy of consolidation adjustments - penalty and sanctions.
HELD THAT:- The EP has committed professional misconduct as defined in Section 132(4) of the Companies Act, read with Section 22 the Chartered Accountants Act 1949 (the CA Act), as amended from time to time, as detailed below:
i. The Auditors committed professional misconduct of failure to report a material misstatement known to them to appear in a financial statement with which they are concerned in a professional capacity. (Refer Clause 6 of Part I of the Second Schedule of the CA Act).
ii. The Auditors committed professional misconduct by failing to obtain sufficient information which is necessary for expression of an opinion, or its exceptions are sufficiently material to negate the expression of an opinion.
iii. The Auditors committed professional misconduct by not exercising due diligence and being grossly negligent in the conduct of their professional duties.
iv. The Auditors committed professional misconduct by failing to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances.
Penalty and sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The seriousness with which proved cases of professional misconduct are viewed is evident from the fact that a minimum punishment is laid down by the law.
The EP in the present case was required to ensure compliance with SAs to achieve the necessary audit quality and lend credibility to Financial Statements to facilitate its users. As detailed in this Order, substantial deficiencies in the audit, abdication of responsibility and inappropriate conclusions on the part of CA Neeraj Bansal establish his professional misconduct. The lack of documented evidence in the original Audit File severely compromises the credibility of the audit and the reliability of the Financial Statements.
Considering the fact that professional misconducts have been proved and considering the nature of violations and principles of proportionality, in exercise of powers under Section 132(4)(c) of the Companies Act, 2013, order imposition of a monetary penalty of Rs. 5,00,000/- upon CA Neeraj Bansal. In addition, CA Neeraj Bansal is also debarred for five (5) years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of Financial Statements or internal audit of the functions and activities of any company or body corporate.
Conclusion - The EP committed professional misconduct under Section 132(4) of the Companies Act and the Chartered Accountants Act, 1949. The EP failed to report material misstatements, obtain sufficient information for opinion expression, exercise due diligence, and invite attention to material departures from audit procedures. The court imposed a monetary penalty of Rs. 5,00,000 and debarred the EP for five years from being appointed as an auditor.
Application disposed off.
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2025 (3) TMI 275
Eligibility of Appellant to submit a resolution plan under Section 29A of the Insolvency and Bankruptcy Code, 2016 - locus to seek reconsideration of its resolution plan after the refund of the Earnest Money Deposit (EMD) - HELD THAT:- The default under Section 164(2) had occurred on 01.12.2017, the date on which the GADPPL failed to file financial statements and annual returns for a continuous period of three years. Thus, Mr. Avanish Kumar Singh was ineligible to be a director as per provisions of Section 164(2) of the Companies Act, 2013 and the Appellant company also accordingly was not eligible to be a resolution applicant in terms of provisions of clause (e) of Section 29A of IBC, 2016. Further, it is noticed that the Appellant, after writing repeated reminders to RP, had taken back the EMD amount, and it is only as an afterthought, after nearly six months, that the Interlocutory Application was filed for consideration of the resolution plan. This clearly appears to be an attempt to delay the process of CIRP/liquidation. The CoC, in its commercial wisdom, has not accepted the resolution plan and had directed the liquidation of the Corporate Debtor. The commercial wisdom of the CoC regarding acceptance/rejection of the resolution plan is “non-justiciable”.
Conclusion - The Ld. NCLT had rightly refused to intervene in the decision of the CoC and its commercial wisdom in rejecting the resolution plan of the Appellant.
There is no ground to interfere with the order of the Ld. NCLT, and accordingly, the appeal fails and is dismissed.
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2025 (3) TMI 205
Illegal share transfer - Maintainability of petition - present petition is barred by delay and latches or not - suppression of material facts and continuance of the present petition would tantamount to an abuse of process of law or not - issues raised in the present petition are barred by Res Judicata or not.
Whether or not the present petition is barred by delay and latches? - HELD THAT:- The substratum of the dispute relates to illegal share transfer and the same has been litigated and reagitated time and again and no useful purpose will be served in oppressing the opposite parties herein. The only addition in the present petition is to create a “cause of action” seems to be that certain RTI applications have been made by various parties and no suitable response has been received with regard to them which seems to be more like an afterthought which has been introduced to create a fresh cause of action in order to make the present petition maintainable.
Even otherwise the present petition raises disputed question of facts thus a Writ Court not the appropriate remedy, especially given the fact that the Companies Act is a self-contained Code and in relation to matters therein, there is a specific bar from other Courts entertaining pleas which are the subject matter of the said Act. However, in the present scenario this Court deems it fit to go into other issues as well and does not incline to reject the present petition on the ground of maintainability alone.
Whether or not the present petitioners are guilty of suppression of material facts and continuance of the present petition would tantamount to an abuse of process of law? - HELD THAT:- This Court cannot ignore the fact the Petitioners might be in cahoots with other setup unscrupulous persons who have earlier agitated the self-same issue guised as “public interest petitions”. Although a party is never precluded from raising genuine claims in collusion with others are indulging in blatant forum-shopping and are taking recourse to multiple parallel proceedings for the same subject matter. It is well-settled that re-litigation of the same matter itself amounts to an abuse of the process of law and ought to be nipped at the bud.
This Court in the given factual backdrop is constrained to hold that not only has there been a suppression of material facts but, in fact, there are persons who seem to be relentless in their pursuit to oppress Opposite Party No. 8 company for reasons best known to them. Such a fact cannot be lost sight of and is a matter of grave concern and needs to be dealt with sternly.
In the case of Prestige Lights Ltd. v. SBI [2007 (8) TMI 446 - SUPREME COURT] it was held that in exercising power under Article 226 of the Constitution of India the High Court is not just a court of law, but is also a court of equity and a person who invokes the High Court's jurisdiction under Article 226 of the Constitution is duty-bound to place all the facts before the Court without any reservation. If there is suppression of material facts or twisted facts have been placed before the High Court then it will be fully justified in refusing to entertain a petition filed under Article 226 of the Constitution.
The Petitioners have dishonestly not disclosed the above material facts in the present writ petition. The Petitioners have abused the process of law by suppressing the aforesaid litigations. It is well-settled that writ remedy is an equitable remedy and since the Petitioners have not approached the court with clean hands it is appropriate that their challenge deserves to be rejected.
Whether the issues raised in the present petition are barred by Res Judicata? - HELD THAT:- . The Hon’ble Supreme Court recently in the case of Celir LLP Vs Sumati Prasad Bafna & Ors. [2024 (12) TMI 879 - SUPREME COURT] has exhaustively dealt with the principle of Res Judciata/ Constructive Res Judicata and has propounded the “Henderson principle” as a corollary of Constructive Res-Judicata. It is therein been recognized that the is intrinsically tied to “issue estoppel” and “cause of action estoppel”.
The Supreme Court in the case of Devilal Modi v. Sales Tax Officer, Ratlam [1964 (10) TMI 43 - SUPREME COURT], clarified and highlighted the need to extend rule of constructive res judicata to writ proceedings. It was held that it would not be open to the party to take one proceeding after another and urge new grounds every time, and would be inconsistent with considerations of public policy.
The Petitioner No. 2 herein who had petitioned this Court earlier could have and ought to have relied upon the grounds with relation to the applications made to the registrar of companies (between 2013 to 2015) at the time of filing of that Writ Petition. After having not being done it would be impermissible to allow the same petitioners to urge the said facts which were otherwise had occurred at that point in time when that prior Writ Petition had been filed. That being the case, the instant case is squarely covered by the discussion here in above. The subsequent/ successive petition i.e. the present petition would be barred by the principles of constructive res judicata by applying the “Hendersen principle”.
Conclusion - This Court arrives at a clear and unequivocal conclusion that the present Writ Petition is not only liable to be dismissed at the very threshold on account of the principles discussed and issues framed hereinabove. But also, on account of the fact that the Petitioners have approached this court with unclean hands and the conduct of the petitioners herein leaves much to be desired. This Court can only express hope that the petitioners will be well advised not to indulge in such unbecoming practice of abusing the process of law in the future.
Petition dismissed.
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2025 (3) TMI 131
Interpretation of Section 212(15) and sub-section (5) of Section 223 - Legality of investigation Report submitted by the Serious Fraud Investigation Office (SFIO) under Section 212(12) of the Companies Act, 2013 - admissible as legal evidence or not, as SFIO Report have been equated as report prepared under Section 173 of the Code of Criminal Procedure (CrPC) 1973 - relevance of 2nd SFIO Report and the Compilation of Documents filed by the Respondent on 07.02.2024 before the NCLT - no sufficient pleadings in the Company Petition/ Miscellaneous Application filed by the Respondent with respect to the SFIO Report and documents and Compilation of the Documents.
HELD THAT:- Section 212 provides for investigation into affairs of Company by Serious Fraud Investigation Office and contains detailed provisions pertaining to investigation to be carried out by the SFIO. Section 212(1) provides that where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company by the Serious Fraud Investigation Office by order, assign the investigation into the affairs of the said company to the Serious Fraud Investigation Office.
On looking into the scheme of Section 212, it is clear that after investigation report is received under sub-section (11) or sub-section (12) of Section 212, Central Government may direct the SFIO to initiate prosecution against the company and its officers or its employees. Sub-section (15) is in reference to the SFIO Report which provided that investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed by the police officer under Section 173. Thus, investigation report submitted by the SFIO and filed in the Special Court has to be deemed to be a report filed by the police officer under Section 173 of the CrPC. It is on the basis of the report submitted by police officer under Section 173 of the CrPC charges are framed by Special Court in offences alleged in the charge-sheet. When SFIO Report is deemed to be a report filed by police officer (for framing of charges) sub-section (15) begins with notwithstanding clause and deeming fiction is created to treat the report as report submitted under Section 173 of the CrPC so that charges may be framed in the prosecution which has been directed by the Central Government under sub-section (14) after receipt of the investigation report.
There can be no quarrel to the proposition that the police report is not legal evidence. The present is a case it is required to examine the purpose and object of Section 212 and whether the statutory scheme indicate that the SFIO Report which is submitted after the investigation as directed by the Central Government is not to be looked into in any material or evidence for any purpose as contemplated under the Act apart from framing of charges and legal fiction under sub-section (15) of Section 212 was engrafted for the purpose that SFIO Report be not treated as legal evidence.
The legislature is well aware about the provisions of law and when sub-section (14A) was added in Companies Act by Act 22 of 2019 legislature was well aware about existing provisions of Section 212(15). When legislature specifically provides SFIO Report to take a proceeding against any director, key managerial personnel and other officers of the company, obviously the said report is to be relied for the said purpose and in event, the submission of the Appellant is accepted that the said report cannot be looked into it not being the legal evidence, the purpose and object of sub-section (14A) becomes meaningless and otiose - The statutory interpretation on legal fiction as noticed above has repeatedly laid down that deeming fiction should not be extended beyond language of the section and must be limited to the context it was introduced. Deeming fiction was introduced to make the SFIO Report as a Report of police officer under Section 173 of the CrPC for framing the charges. Thus, object of legal fiction was to make the SFIO Report as report within the meaning of Section 173. Legal fiction was not for the purpose that SFIO Report be treated as inadmissible for the purposes of Companies Act, 2013.
Section 212 also contain a provision where any person concerned by making an application may obtain a report. Thus, sub-sections (1), (2) and (3) are already reflected in provisions of Section 212. Thus, when we come to sub-section (5) which says that nothing in this section shall apply to the report referred to in Section 212, the said sub-section obviously is relating to sub-section (4) where authentication is required for inspector’s report to be admissible in a legal proceeding - Section 223 which provision dealt with the inspector’s report there was no occasion to include any provision which is contrary to the scheme of Section 212. We, thus, are of the view that sub-section (5) of Section 223 in no manner has effect on the admissibility of the SFIO Report in proceeding under sub-section (14A) and the interpretation which was put by the Appellant under Section 223(5) cannot be accepted.
The ground which was raised by the Appellant for rejecting the compilation of documents and SFIO Report submitted by the SFIO cannot be accepted at this stage to throw out the compilation of documents and the SFIO Report. The issue as to what has been pleaded in the application or the petition and what is the material or evidence on the record are issues which are to be examined when applications are decided on merits. Thus, on the submission that there are no pleadings with regard to compilation of documents cannot be a reason to accept the prayers made in CA No.65 of 2024.
Conclusion - The SFIO Report is admissible in proceedings under Section 212(14A), and the NCLT did not err in considering the report and associated documents.
No grounds have been made out to interfere with the impugned order. All the appeals are dismissed.
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2025 (2) TMI 1118
Levy of penalty u/s 454 (3) of the Companies Act, 2013 read with Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014 amended by the Companies (Adjudication of Penalties) Rules, 2019 - non compliance of the provision of Section 203 (4) of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - whether the authority could have applied its discretion while adjudicating the default on the part of the petitioners?
HELD THAT:- In Apex Traders [2024 (5) TMI 1525 - CALCUTTA HIGH COURT] the Court interpreted the expression ‘liability’ used in Section 203 (5) of the Companies Act, 2013. The Court was of the opinion that the language of Section 203 (5) confirms discretion on the Registrar of Companies to impose penalty. Such discretion also includes the converse, that is, the discretion not to impose penalty or to impose lesser penalty. The liability has been found to be subject to adjudication by the Registrar of Companies. Such discretion associates with it, responsibility of the adjudicating authority to consider any mitigating or alleviating circumstances which might have visited the Company for not adhering to the statutory provision.
The Hon’ble Supreme Court in the matter of Chairman, SEBI [2006 (5) TMI 191 - SUPREME COURT] interpreted the words ‘shall be liable’ under the SEBI Act and the regulations framed thereunder and held the same as mandatory provision for imposition of monetary penalties for breaches or non-compliance with the provisions of the Act and the regulations - The Court clearly laid down that penalty is attracted as soon as the contravention of the statutory obligation contemplated by the Act and the regulations are established and intention of the parties committing such violation becomes wholly irrelevant. Once contravention is established, the penalty is to follow.
The Court was of the view that the power to impose penalty would be severely curtailed if the presence of mens rea is to be considered. The same would set the stage for various market players to violate statutory regulations with impunity and subsequently claim ignorance of law or lack of mens rea to escape imposition of penalty. Imputing mens rea against the plain language of the statute would frustrate the entire purpose and the object of the Act to secure strict compliance of the statutory provisions.
Whether the authority could have exercised discretion in fixing the quantum of penalty and whether the quantum of penalty imposed is proper or not? - HELD THAT:- Section 203(5) of the Companies Act, 2013 lays down that if the Company contravenes the provisions of the Section, the Company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. Every Director in default shall be punishable with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In the instant case, the contravention continued for years together. The adjudicating authority gave benefit to the Company for the COVID period and calculated the fine. The authority exercised its discretion in doing so. Such exercise of discretion does not appear to be illegal, erroneous or arbitrary, requiring interference. Hence, the Court is not inclined to interfere with the same.
Petition dismissed.
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2025 (2) TMI 964
Violation of Section 197 (3), 197 (9) of Companies Act and Rule 7 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - effect of amendment to Section 197 (15) of the Companies Act, 2013, which substituted the expression "punishable with fine" with "penalty," - retrospective effect to offenses allegedly committed before the amendment came into force or not - HELD THAT:- The provisions contained in Section 197 (15) was amended vide Companies (Amendment) Act, 2019 by Central Act No. 22/2019. A bare perusal of the amendment Act is sufficient to come to the conclusion that Section 197 (15) has been substituted by the amended provisions. In this context, in the absence of anything to the contrary in the amendment the substitution of Section 197 (15) vide amendment w.e.f. 02.11.2018 would relate back to the date of original provision of the year 2013 and in the light of the undisputed fact that the alleged offences are said to have been committed in the year 2016, it is opined that the amended provision of Section 197 (15) would not apply even in relation to the offences said to have been committed in the year 2016.
Under these circumstances, having regard to the amendment to Section 197 (15) vide amended Act, 2019, Central Act No. 22/2019 w.e.f 02.11.2018, the impugned proceedings as against the petitioner clearly are not maintainable and same deserves to be quashed.
Conclusion - The amendment to Section 197 (15) of the Companies Act, 2013, applies retrospectively, thereby affecting the maintainability of proceedings initiated under the pre-amendment provisions.
The complaint and order of cognizance against the petitioner on the file of the Special Court for Economic Offences, Bengaluru are hereby quashed - Petition allowed.
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2025 (2) TMI 906
Public Interest Litigation or not - alleged role, irregularities, and misconduct on the part of the IRP - Siphoning of funds by the ex-promoters and directors of Three C Shelters Pvt. Ltd. - whether the submissions on the part of the learned counsels for the parties should at all be considered by this Court sitting in writ jurisdiction under section 226 of the Constitution of India, 1950? - HELD THAT:- Unhesitatingly, this Court finds no ground to recall the order dated 02.02.2024. The issues relating to the genuineness of the IRP report dated 09.08.2023, which has been espoused on behalf of the petitioner, respondent No. 11/Orris and respondent No. 4/Greenopolis Welfare Confederation on one side, and contested by applicants/respondents No. 12 and 13, along with respondent No. 5/Greenopolis Welfare Association on the other side, are complex set of facts which need to be addressed by the NCLT in view of the directions of the Supreme Court.
There is no gainsaying that the NCLT is seized of the matter with regard to the CIRP proceedings pertaining to respondent No. 3/TCSPL, which will invariably delve into all the relevant aspects of the matter. At the cost of repetition, a Monitoring Committee has already been constituted by the NCLT, which will naturally examine the complex factual issues and facts raised by the parties, including the successive reports by the three IRPs appointed including the present one, besides the revival of respondent No. 3/ TCSPL so as to provide some relief to the petitioner and homebuyers.
The bottom line is that the petitioner is espousing her personal cause and, in doing so, has also espoused the cause of the similarly placed investors/claimants/homebuyers, who form a distinct class and whose long-promised dream of owning residential flats remains unfulfilled, as construction has been stalled for over thirteen years now - The modus operandi adopted by them in defrauding the homebuyers has been exposed even in the above referred directions by the Allahabad High Court, the foot prints of which are evidently visible in the instant matter too.
This Court is not by-passing the jurisdiction of the NCLT to determine the fate of the respondent no. 3/TCSPL, which is involved in CIRP, nor is it usurping any power under Section 63 of the IBC. However, it is undeniable that the investigation by respondents No. 1 and 2 is progressing at a snail's pace qua respondent No. 3/TCSPL and its ex-promoters & directors, marked by tardiness and a lack of urgency, which is unacceptable in law and prejudicial to the interests of the homebuyers.
Section 212(3) of the Companies Act, 2013 provides that the Central Government has the power to order investigation in respect of any company which it deems necessary and also to order special investigations in respect of other concerns related to corporate law. The Central Government may appoint any authority, officer or agency to conduct the investigations and to report its findings to the Central Government with the primary objective of investigating frauds and offences relating to a company under section 447 of the Act. The entire setting of the present matter, compels this Court to direct the Central Government to entrust the investigation to the SFIO as regards the role of the ex-promoters and directors of respondent no. 3/TCSPL is concerned - in the instant matter, the entire facts and circumstances presented go beyond mere assumptions, surmises or conjectures. The stark fact is that the Greenopolis project has been abandoned by the respondent Nos. 6-10/ex-promoters and directors after siphoning of funds generated directly through respondent no. 3/TCSPL and the petitioner as well as those who are similarly placed investors/claimants/homebuyers are the victims at their hands, which is an undisputed proposition.
Conclusion - i) The investigation into the affairs of TCSPL and its ex-promoters is necessary to protect the interests of the homebuyers and ascertain the extent of the fraudulent activities. ii) The ACE Group is not to be investigated by the SFIO, but the Registrar of Companies will continue to examine their transactions with TCSPL. iii) The interim order remains in effect, with modifications to exclude certain parties from the SFIO investigation. iv) The NCLT will continue to handle the CIRP, with the Monitoring Committee overseeing the process.
Application disposed off.
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2025 (2) TMI 855
Seeking enlargement of bail - Siphoning of public money - active and managerial role in the offences by making misrepresentation to the banks in obtaining loans and siphoning the funds using puppet companies and by writing off the stocks and inventories - offence punishable under Section 447 of the Companies Act - HELD THAT:- This court feels that the present petition being one seeking personal liberty during the trial, it would be suffice to restrict the consideration of such materials to decide the question whether the petitioner is entitled to grant of bail.
A perusal of the materials would disclose that the present petition is the fifth one and on rejection of earlier three petitions, the petitioner appears to have approached the Apex Court, however, could not succeed in obtaining bail and the subsequent bail petition moved by him before the Apex Court was withdrawn seeking liberty to move the trial Court. Such application moved by the petitioner before the Trial Court also stood dismissed and thereupon, the present petition has been filed by the petitioner.
It is not a simple case where the petitioner was charged only for nonrecovery of certain outstanding amounts from the debtors, but, the petitioner is alleged to have indulged into cheating of Banks and siphoning off the public money using puppet Companies, writing off the stocks, inventories and receivables and thereby, he is facing serious economic offences and fraud of a great magnitude.
Though investigation has been completed in the case, the presence of the petitioner is very much required at the stage of framing of charges and the evidence like statements given by witnesses to the SFIO and the communication addressed by the petitioner to the Banks would clinchingly establish the role played by the petitioner and the control he has over the witnesses and thus the petitioner has not complied with the twin conditions stipulated under Section 212(6) of the Companies Act, 2013 and in the event of grant of bail to the petitioner, there is every possibility for the evidence being tampered and the witnesses being influenced by him.
On the aspect of long incarceration and application of the decision in V. Senthil Balaji vs. The Deputy Director, Directorate of Enforcement [2024 (9) TMI 1497 - SUPREME COURT], it has been brought to the notice of this court that the Apex Court has granted bail in that case considering the long incarceration of the petitioner therein coupled with the aspect that the trial in that case could be delayed due to the fact that existence of proceeds of crime under Section 3 of PMLA can be proved only if the scheduled offence is established and even if the trial of the case under PMLA proceeds is concluded, it cannot be finally decided, unless the trial of scheduled offences concludes and the dictum laid down in Senthil Balaji's case is not applicable to the present case as the trial in the present case, being one for offences under Companies Act, is not dependent on proving offences under any other Act and thereby the concept of long incarceration alone cannot be a ground for grant of bail.
Grounds of parity - HELD THAT:- So far as the question of parity in consideration, the petitioner pleads that a co-accused viz., A30-Devarajan has been granted bail by this court. However, it has been brought to the notice of this court by the respondent that such order has been under challenge before the Apex Court in SLP (Crl.) Diary No.21112 of 2023 and the same is pending. This court has also been apprised by the respondent that other co-accused viz., A4-Dineshchand Surana and A5-Vijayraj Surana, who failed before this court in their consecutive bail applications, had moved the Apex Court and their petitions in SLP (Crl.) No.15535 of 2024 and SLP (Crl.) No.17007 of 2024 respectively are pending as on date and thus, the Apex Court has seized of the matter.
Conclusion - The petitioner is alleged to have indulged into cheating of Banks and siphoning off the public money using puppet Companies, writing off the stocks, inventories and receivables and thereby, he is facing serious economic offenses and fraud of a great magnitude. This court finds that the present petition seeking bail cannot be entertained in the circumstances of the case.
Petition dismissed.
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2025 (2) TMI 690
Maintainability of writ petition filed by respondent no. 1 under Article 226 of the Constitution - directions issued by the learned Single Judge were beyond the scope of the writ petition - main grievance of the respondent no. 1 (writ petitioner) is that there is a failure to exercise the power by the RBI in relation to the affairs of ECL - HELD THAT:- It is an elementary principle that when a public authority is vested with specific powers, it is duty bound to act accordingly. Therefore, any failure to exercise statutory powers gives rise to a cause of action to secure performance of such duty by way of issuance of writ of mandamus under Article 226 of the Constitution of India.
In the case of CAG vs. K. S. Jagannathan & Anr. [1986 (4) TMI 344 - SUPREME COURT], the Hon’ble Supreme Court held that a writ of mandamus can be issued where there is a failure to exercise power vested with a public authority.
A duty is implied by the vesting of statutory power upon a public authority. Further, the performance of such duty can be secured by proceedings under Article 226 of the Constitution of India.
The respondent no. 1 has sought for the interference of the learned Single Judge considering the failure of RBI to act in exercise of its power under Chapter-III-B and more particularly Section 45-IE and Section 45MA of the RBI Act. Such reliefs claimed are, therefore, clearly maintainable in proceedings under Article 226 of the Constitution of India.
The learned NCLT has no jurisdiction to issue prerogative writs to RBI to exercise such powers under the RBI Act. Therefore, this fact has no bearing on the merits of the dispute or such that is determinative of the outcome of these proceedings since the existence of the NCLT proceedings is duly disclosed and considered by the learned Single Judge while passing the impugned order - The impugned order dated 23rd October, 2024, has been passed by the learned Single Judge on the basis of clear findings of the RBI that there have indeed been violations of mandatory regulations by the ECL. These findings recorded by an apex expert body like the RBI, certainly warrant for issuance of protective ad-interim orders.
Conclusion - i) The High Court has the power to issue a writ of mandamus when a statutory authority fails to exercise its powers. ii) Proceedings before the NCLT and NCLAT do not preclude the High Court's jurisdiction under Article 226 to address issues related to the RBI's statutory duties. iii) The principles of natural justice are upheld when parties are given the opportunity to argue on both maintainability and merits.
Appeal dismissed.
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2025 (2) TMI 689
Seeking winding up of company - Sections 433(e)/434(1)(a)/439 of the Companies Act, 1956 - HELD THAT:- Upon an examination of the record, it is evident that the present winding-up petition is a non-starter. The proceedings remain at a preliminary stage, with neither a provisional liquidator nor an official liquidator having been appointed to assume control over the assets and affairs of the respondent company. Consequently, no substantive orders have been passed in this petition for seven years.
Hon’ble Apex Court in the case of Action Ispat and Power P. Ltd. v. Shyam Metalics and Energy Ltd. [2020 (12) TMI 535 - SUPREME COURT] held that those winding up proceedings pending before the High Courts, which have not progressed to an advanced stage, ought to be transferred to the NCLT.
In the present case, the respondent has submitted written submissions explicitly requesting the transfer of the winding-up petition to the NCLT. In view of the respondent’s express request for transfer and the legal precedents affirming that a formal application is not indispensable, this Court finds no impediment in treating the written submissions as an application for transfer of the present petition to the NCLT. The Court is not bound to insist on a separate application when the intent of the party seeking transfer is evident from the record.
Considering the express request by the respondent, the fact that no substantive proceedings have been undertaken towards winding up of the company, the present petition cannot be allowed to be continued before this Court. Hence, the instant petition is transferred to the NCLT, Delhi Bench, for further proceedings.
Conclusion - The petition should be transferred based on the respondent's request and the lack of substantive progress towards liquidation.
List before the NCLT on 10.03.2025 - Petition disposed off.
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