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2021 (10) TMI 994 - Tri - Companies LawSeeking modification of the order of CLG - CLB directed the company appointment of two Government Directors/Government Nominee Directors - failure of the company in repaying the public deposits - Section 408 read with Section 397/398 of the Companies Act, 1956 - HELD THAT - As rightly pointed out by the learned counsel appearing for the Union of India as against the claims of ₹ 156 Crores from the fixed deposit holders, even according to the company it has paid only a little more than ₹ 18 Crores and it cannot be said that either the original fixed deposit holders or any of the legal heirs or successors keep quiet without claiming their fixed deposits irrespective of issuance of any advertisements for this purpose. No valid reasons are shown. No details of the fixed deposit holders who have not claimed their deposits back are given. Nothing forthcoming even with regard to the payment or otherwise of the interest on the fixed deposits said to have been repaid. Even with regard to the submission made by the learned senior counsel appearing for the applicant company with regard to conversion of some of the fixed deposits into shares and trading thereof, as the applicant failed to furnish the details of the fixed deposit receipts which were converted into equity shares and those equity shareholders who approached the company for refund of the fixed deposits and those equity shareholders who have not approached the company for refund of their original fixed deposits is unacceptable. There are no merits in the present application - application dismissed.
Issues Involved:
1. Modification of the order dated 01.07.2005 regarding the appointment of Government Directors. 2. Compliance with the Scheme for repayment of public deposits. 3. Jurisdiction and power of the Tribunal to modify or cancel the order dated 01.07.2005. 4. Contempt proceedings for non-compliance with the order dated 01.07.2005. Issue-wise Detailed Analysis: 1. Modification of the order dated 01.07.2005 regarding the appointment of Government Directors: M/s. Morepen Laboratories Ltd. sought modification of the order dated 01.07.2005 to exempt the appointment of two Government Directors, citing subsequent developments. The company argued that it had transitioned from a loss-making to a profit-making entity and had repaid a significant portion of the fixed deposits. However, the Tribunal found that the company's claims were unsubstantiated and lacked detailed evidence regarding the outstanding fixed deposits and interest payments. The Tribunal held that the order dated 01.07.2005, which was upheld by the Hon'ble Supreme Court, could not be modified or canceled by the Tribunal. 2. Compliance with the Scheme for repayment of public deposits: The Tribunal noted that the company had defaulted on its repayment obligations under the Scheme framed by the Company Law Board (CLB) in 2003. Despite the company's claims of having repaid a portion of the deposits, the Tribunal found discrepancies and lack of transparency in the company's submissions. The Tribunal emphasized that the company had not provided adequate details of the fixed deposit holders who had not claimed their deposits and the status of the remaining deposits. 3. Jurisdiction and power of the Tribunal to modify or cancel the order dated 01.07.2005: The Tribunal reiterated that the order dated 01.07.2005, directing the appointment of two Government Directors, was upheld by the Hon'ble High Court of Himachal Pradesh and the Hon'ble Supreme Court. The Tribunal held that it did not have the jurisdiction or power to modify or cancel an order that had attained finality through the highest judicial authority. The Tribunal also distinguished the present case from the Sterling Holiday and Resorts India Limited case, where the Hon'ble High Court had set aside the CLB's order based on significant improvements in the company's conduct. 4. Contempt proceedings for non-compliance with the order dated 01.07.2005: The Union of India filed an application under Section 425 of the Companies Act, 2013, seeking contempt proceedings against M/s. Morepen Laboratories Ltd. for willful disobedience of the order dated 01.07.2005. The Tribunal issued a notice to the respondents, rejecting the company's argument that the order had merged with the Hon'ble Supreme Court's decision. The Tribunal clarified that the Hon'ble Supreme Court had not modified the CLB's order and that the contempt application was maintainable. Conclusion: The Tribunal dismissed the application for modification of the order dated 01.07.2005, emphasizing the finality of the order upheld by the Hon'ble Supreme Court. The Tribunal also initiated contempt proceedings against the company for non-compliance with the said order. The detailed analysis highlights the Tribunal's adherence to judicial precedents and the emphasis on transparency and accountability in corporate governance.
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