2019 (7) TMI 1024 - HC - Companies Law

Maintainability of application - Rule 9 of the Company (Court) Rules - approval of the scheme of amalgamation under Section 391 of the Act and not Section 394 of the Act - whether the present appeal, directed against an order dismissing a review petition is maintainable? - HELD THAT - The approval of the scheme of amalgamation was under Section 391 of the Act and not Section 394 of the Act. The corresponding provision in the Companies Act, 2013 ( 2013 Act ) is Section 230. However, at the relevant time when the appeal was filed, the provision relevant for that purpose was Section 391(7) of the Act. Although in terms of the Companies (Second Amendment Act) 2002, Section 391 (7) stood omitted, the said amendment was to take effect only from date notified by the Central Government. The purpose behind omitting the Section 391 (7) of the Act was to provide jurisdiction in respect of the matters in relation to mergers and amalgamations to the National Company Law Tribunal (NCLT) which was constituted under the 2002 Amendment. Till such time the NCLT was not constituted, there was no question of matters involving Section 391 of the Act being transferred to it. The NCLT came into being finally when the 2013 Act came into force 1st June 2016. The fact remained that when the appeal was filed on 18th February 2013, Section 391(7) of the Act continued in the statute book. The entire 2002 Amendment omitting Section 391(7) of the Act stood repealed finally only on 14th May 2015 with the passing of the Repealing and Amendment (Second) Act, 2015. This Court is also not persuaded with the plea of the Appellant that he was not seeking a review of the main order by filing CA 730 of 2002 but invoking the inherent jurisdiction on the basis that a fraud had been committed by the answering Respondents - The Appellant was seeking to explain away the limitation on that basis since he was seeking a review of the main order nearly three years after it was passed. Once it is clear that CA 730 of 2002 was nothing but a review petition, the corollary is that the impugned order is one that dismisses a review petition and against such order no appeal is maintainable. The present appeal is not maintainable and is dismissed as such.

Summary

Issues Involved:
1. Maintainability of the appeal.
2. Notice of the shareholders' meeting.
3. Family settlement and share transfer.
4. Fraud allegations.
5. Availability of alternative remedies.

Detailed Analysis:

1. Maintainability of the Appeal:
The primary issue was the maintainability of the appeal filed by the Appellant against the order dated 17th December 2012. The Appellant had filed an application under Rule 9 of the Company (Court) Rules seeking recall of the order approving the Scheme of Amalgamation. The Respondents contended that the application was effectively a review petition, and an order declining review is not appealable. The Court agreed with this view, citing various precedents, including Vishnu Aggarwal v. State of UP and Bussa Overseas and Properties Private Limited v. Union of India. The Court concluded that the appeal was not maintainable as it was essentially against an order dismissing a review petition.

2. Notice of the Shareholders' Meeting:
The Appellant claimed he did not receive notice of the shareholders' meeting held on 17th April 1999, which approved the amalgamation. The learned Single Judge found that the Appellant's name did not appear in the register of members of TEL, and thus, no notice was required to be sent to him. The Local Commissioner's report confirmed that the Appellant was not listed as a shareholder in the official records.

3. Family Settlement and Share Transfer:
The Appellant argued that a family settlement had occurred, and shares were to be transferred to him as part of this settlement. He claimed that the Respondents failed to honor this settlement. The learned Single Judge noted that the share transfer forms were unstamped and did not meet the requirements of Section 108 of the Companies Act, 1956. The Appellant did not take steps to invoke Section 111 of the Act to appeal against TEL's refusal to register the share transfer.

4. Fraud Allegations:
The Appellant alleged that the Respondents committed fraud by not informing him about the amalgamation. The learned Single Judge found these allegations unsubstantiated. The Court noted that the Appellant was seeking to explain the delay in filing the application on the basis of alleged fraud, which was not proven.

5. Availability of Alternative Remedies:
The Respondents argued that the Appellant had alternative remedies available under Section 391(7) of the Companies Act, 1956, which was still in force at the time of filing the application. The learned Single Judge held that the Appellant could have invoked the appellate remedy under Section 391(7) but chose to file an application under Rule 9 of the Company (Court) Rules instead. The Court agreed that the Appellant had an alternative remedy and should have pursued it.

Conclusion:
The Court dismissed the appeal, concluding that it was not maintainable. The Appellant's application was treated as a review petition, and an order declining a review is not appealable. The Court also found that the Appellant had alternative remedies available and failed to pursue them. The allegations of fraud were unsubstantiated, and the Appellant was not listed as a shareholder, negating the need for notice of the shareholders' meeting.