2020 (7) TMI 424 - AT - Companies Law

Advance Deposit - Section 2(31) of the Companies Act, 2013 read with Rule 2(c)(xii)(b) of the Companies (Acceptance of Deposits)Rules, 2013 - main contention was that the advance against immovable property is deposit and such deposit was given to 1st Respondent based on fraudulent representations of 2nd and 3rd Respondent as their sole intent was to defraud the appellant - HELD THAT - The appellant has raised the issue of deposit in its Company Petition. But this issue has not been determined by the NCLT. Such determination will requiring looking into the facts and the nature of the transactions which may call for more submissions to be examined to arrive at a conclusion. In absence of such exercise having not been done by NCLT, we are unable to express our opinion on this issue. Matter remanded back to NCLT to decide whether the advance received by the Respondent against allotment of flat is deposit in terms of Section 2(31) of Companies Act, 2013 read with the Rule 2(c)(xii) of the Companies (Acceptance and Deposits) Rules, 2014 and whether the Tribunal has the jurisdiction under the Companies Act, 2013 - Appeal allowed by way of remand.

Issues Involved:
1. Whether the advance paid by the appellant constitutes a 'deposit' under Section 2(31) of the Companies Act, 2013.
2. Whether the NCLT's dismissal of the petition due to multiplicity of proceedings was justified.
3. Whether the appellant's claims of fraud and misrepresentation by the respondents hold merit.
4. Whether the NCLT failed to consider the appellant's request for cross-examination and other procedural aspects.

Detailed Analysis:

1. Whether the advance paid by the appellant constitutes a 'deposit' under Section 2(31) of the Companies Act, 2013:

The appellant contended that the ?48.99 lakhs paid to the respondent for booking a flat should be considered a 'deposit' as per Section 2(31) of the Companies Act, 2013, read with Rule 2(c)(xii) of the Companies (Acceptance of Deposits) Rules, 2014. The appellant argued that the respondents fraudulently retained the advance without delivering the property, thus violating Sections 73 and 74 of the Companies Act, 2013. The respondents countered that the amount paid for real estate does not qualify as a 'deposit' under the specified rules. The NCLT did not determine whether the advance constituted a 'deposit,' leading the Appellate Tribunal to remit the matter back to NCLT for a thorough examination and decision on this issue.

2. Whether the NCLT's dismissal of the petition due to multiplicity of proceedings was justified:

The NCLT dismissed the petition on the grounds that numerous proceedings were pending between the parties, which could lead to multiplicity of proceedings. The appellant argued that only the NCDRC matter was pending and that civil and criminal remedies could be sought separately, as per various judgments of the Apex Court. The Appellate Tribunal noted that the NCLT did not provide a detailed reasoned order on this issue and directed the NCLT to rehear the matter, focusing on whether the advance constitutes a 'deposit.'

3. Whether the appellant's claims of fraud and misrepresentation by the respondents hold merit:

The appellant claimed that the respondents induced him to pay the advance through fraudulent representations, promising delivery of the property by March 2013 and showing false property layouts. The appellant also alleged that the respondents utilized the funds for other projects. The respondents denied these allegations, stating that the delay was due to external factors like farmers' agitation and the National Green Tribunal's intervention. They also claimed to have offered possession of the flat to the appellant. The Appellate Tribunal did not make a determination on these fraud claims but remitted the matter back to the NCLT for a detailed examination.

4. Whether the NCLT failed to consider the appellant's request for cross-examination and other procedural aspects:

The appellant sought a detailed hearing and the opportunity to cross-examine respondents under Section 424(2) of the Companies Act, 2013. The NCLT did not address these procedural requests in its dismissal order. The Appellate Tribunal directed the NCLT to provide a reasonable hearing opportunity to the appellant and to deliberate on these procedural aspects during the rehearing.

Conclusion:

The appeal was disposed of with directions to the NCLT to rehear the matter, specifically to determine whether the advance paid by the appellant constitutes a 'deposit' under Section 2(31) of the Companies Act, 2013, and to provide a detailed reasoned order on all issues raised. The NCLT was also directed to consider the appellant's procedural requests, including the opportunity for cross-examination.

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