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TMI Blog2016 (1) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... ances. On the contrary, the Applicant (Petitioner No.2) and Petitioner No. 1, without making some Company Application in the pending legal proceedings since 2010 before this Hon'ble Board seeking directions/reliefs as to filing of the financial statements and invocation of Sections 164 and 167 of the Companies Act, 2013, have claimed to be Promoters and new Directors have been appointed. As a matter of fact, there are controversial arguments as to whether there is Promoter in the Company, especially due to the claims of both the rival parties of having control over the state of affairs of the Respondent No. 1 Company. In addition, the provisions of Sections 164 and 167 of the Companies Act, 2013 have been notified w.e.f. 01.04.2014 and hence, consequential action under Section 167(3) accrues on non-filing of financial statements for three years commencing from 01.04.2014. In view of this legal position, the erstwhile Directors continue to be validly and legally appointed directors and hence, the said Board of Directors is competent to appoint the Advocate by following the provisions of law. As such, in the interest of justice, the prayers made in the instant Company Application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate-on-record claimed to be made on behalf of the Respondent No. 1 Company under the authority of its erstwhile Directors and/or any such representation made by any such new Advocate-on-record and/or Counsel on the authorization of its erstwhile Directors would be unauthorized and illegal. 1.1 In addition, in a supplementary Affidavit dated 08.06.2015, filed by the Respondent No. 1 Company/Applicant Advocate, it has been stated that the Petitioners filed a Writ Petition being W.P. No.3296/2015 before the Hon'ble Delhi High Court praying for direction upon the Ministry of Corporate Affairs (MCA) to take steps to upload the digital signature of the new Directors of the Respondent No. 1 Company, viz., Mr. Raj Shekhar Agrawal, Mrs. Vandana Agrawal and Mr. Yudhisther Kumar Gauba, on the Portal of the MCA within a time frame. Thereafter, during the course of hearing of the aforesaid Writ Petition on 18.05.2015, some Advocates made an endeavour to represent the Respondent No. 1 Company who were not authorized by the present Board of Directors of the Respondent No. 1 Company and it is quite obvious that those Advocates were acting on the purported authority of the erstwhile Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by Mr. Partha Ghosh as Managing Director of the Respondent No. 1 Company before the District Court against the injunction. It has been highlighted that the Respondent No. 1 Company had made an application on 03.09.2010 to the Registrar of Companies (ROC), West Bengal, for extension of time of the date of the AGM which was rejected by the ROC on 09.09.2010 and consequently, Mr. Partha Ghosh as Managing Director of the Respondent No. 1 Company purported to file an appeal before the District Court against the injunction, while in an Affidavit filed before this Hon'ble Board in March, 2014 by the Respondent No.2 on behalf of himself and Mrs. Sumana Ghosh, has stated that he supported the Suit for such an injunction, thereby admitting to such collusion in procuring a Court Order by plying fraud on the Court. It is also a matter of record that despite the AGM of the Respondent No. 1 Company not being held, the Respondent No.2 had filed the financial statement for the year ended 31.03.2010, along with the Statement of facts and reasons, clearly acknowledging the Respondent No. 1 Company's responsibility to file the financial statement as required under Section 220(3) of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted Board of Directors could remain totally incapacitated to take any corporate action and from such averment, it is evident that upon their own admission, the Petitioners are not qualified to instruct Advocates or move the instant Company Application on behalf of the Respondent No. 1 Company. Also, such Writ Petition was moved without any notice or intimation to the Respondent Nos.1 to 3 and also, without impleading the Respondent Nos.2 3 or the Company being the Respondent No. 1 Company, as parties. The Petitioners had approached the Hon'ble High Court at Delhi in an attempt to stealthy validate their wrongful appointment as Directors of the Respondent No. 1 Company, despite the fact that all disputes concerning the Respondent No. 1 Company are pending before this Hon'ble Board. However, the Respondent No.2 is vitally interested in the outcome of the aforesaid Writ Petition and through his Advocate intervened in the matter and sought to be added as party thereto and the Hon'ble High Court at Delhi has permitted to the Respondent No.2 to file an Application for impleadment as party to the said Writ Petition. In any event, the present Application cannot be decided u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry requirement of Section 220(2) of the Act for the financial year 2009-10 and hence, now the Respondent No.2 cannot take shelter of the Order of Injunction dated 15.12.2010 for the failure to file the Financial Statements for the financial years 2010-11, 2011-12 and 2012-13 and also, non-compliance with the provisions of Section 220(2) of the Companies Act, 1956. In view of the aforesaid premises, the failure to file the Financial Statements for the subsequent years 2010-11, 2011-12 and 2012-13 was not at all caused due to the presence of the said Court Order dated 15.12.2015, but was the sole consequence of an absolute intentional default. 4. The Respondent Nos. 2 3 Advocate argued that the Applicant has made the instant Application in pursuance of the authority conferred on the said Applicants by way of a Board Resolution dated 06.02.2015 which was passed in a purported Board Meeting of the Respondent No. l Company to derive the competence to file the instant Application in the first place on the basis of such purported resolution passed in an alleged Board Meeting. Further, under the terms of Section 167(3) of the Act, upon vacation of the office by the Board of Directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standstill of the affairs of the Company. In any event, the provisions of erstwhile Section 220 of the Companies Act, 1956 providing for filing of unapproved balance sheet is of limited relevance inso far as in absence of suitable machinery to prepare financial documents, the question of even unapproved balance sheet and/or other financial documents does not and cannot arise. The provision for filing of unapproved balance sheet becomes relevant only when a Company having appointed statutory auditors in its last AGM and having prepared the audited accounts, has been prevented from tabling the same in the AGM by virtue of an injunction preventing such Company from holding any AGM. In fact, this was the precise situation in which the audited accounts for the financial year 2009-10, which were duly prepared, but could not be tabled before the members of the Company in the AGM, were tendered for filing. 4.2 It has also been argued that the provision of Section 164 of the Act came into effect on 01.04.2014 and as such, disqualification, if any, have to accrue prospectively upon coming into effect of the said provision by failure to file financial statements of the Company for three co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Order of injunction for its deliberate failure to file the financial statements for the years 2010-11, 2011-12 2012-13 and also, non-compliance with the provisions of Section 220(2) of the Companies Act, 1956, especially when the Respondent No.2 was aware of the statutory compliance and has made a specific reference to the need of filing the Annual Account in accordance with Section 220(2) of the Act. Further, in the letter of the Respondent No.2, the given date is 19.01.2011 which was after the Order of Injunction dated 15.12.2010 on holding the Annual General Meeting, which clearly establishes the fact that the Respondent No.2 understood the gravity of the situation and was aware of the fact that the Court Order never restrained the filing of the financial statements and/or Annual Returns of the Respondent No. 1 Company and its subsidiaries. Moreover, the Advocate-on-record and/or Counsel has been duly appointed by the present directors to represent the Respondent No. 1 Company (the Applicant herein) and representing the Respondent No. 1 Company since 09.02.2015 till date, without any challenge being ever made regarding their appointment either before the Hon'ble Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while directors of the Respondent No. 1 Company vacated their offices in terms of Section 167(1) read with Section 164(2) of the Companies Act, 2013 due to the default committed by the erstwhile directors in filing the financial statements of the Respondent No. 1 Company and its subsidiary Companies for the years 2010-11, 2011-12 and 2012-13. Further, it has been highlighted that during the course of hearing of the Writ Petition filed by the Petitioners herein, the Advocates claiming to appear for the Respondent No. 1 Company has read out to the Hon'ble Court a letter dated 10.04.2015 signed by the Respondent No. 2 (Mr. Partha Ghosh), wherefrom it emerged that Mr. Partha Ghosh continues to represent himself as the Managing Director of the Respondent No. 1 Company and also, an admission on his part that the Company has not filed the relevant annual returns and financial statements. However, on or about 06.02.2015, a Board Meeting of the Respondent No. 1 Company was held, wherein it was recorded that the new Board has been constituted and the required number of Directors were appointed in terms of Section 167(3) of the Companies Act, 2013 as the provisions of Sections 164 and 167 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of even unapproved balance sheet and/or other financial documents does not and cannot arise. As regards the financial statement for the year 2009-10, it has been stated that the said accounts were already duly prepared and audited, but could not be tabled before the members in the AGM and hence, the same without adoption by members were filed. Moreover, disqualification under Section 274 does not result in vacation of the Board of Directors under Section 283 of the Companies Act, 1956. Even, the provisions of Section 164 of the Companies Act, 2013 came into effect on 01.04.2014 and hence, qualification, if any, has to accrue prospectively upon coming into effect of the said provision by failure to file financial statements of the Company for three consecutive financial years post coming into effect of the said provision. 6.3 The Applicant Advocate has, however, contended that since the erstwhile directors have vacated their offices due to the default in filing the financial statements of the Respondent No. 1 Company and its subsidiary Companies for the financial years 2010-11, 2011-12 2012-13 in terms of Section 167(1) of the Companies Act 2013, no new Advocate-on-record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company. Over and above, the Applicants instituted a writ petition being W.P. (C) No.3296/2015, wherein the applicants admitted that so long as their digital signatures are not uploaded on the MCA Portal, the purported new Board of Directors would remain totally incapacitated to take any corporate action and the said writ petition has been dismissed by the Hon'ble High Court at Delhi, by an Order dated 14.09.2015 without any reliefs to the Applicants. 6.4 Under the aforesaid facts and circumstances, it is crystal clear that the Company Petition being CP. No. 859/2010 was filed by the Petitioners based on the allegations of acts of oppression and mismanagement on the part of the Respondents and this implies that the Petitioners were not having control over the affairs of the Company. This is further confirmed by the fact that in any annual return, the Petitioners were not shown as Promoters. As admitted by the Applicant Advocate as well as the Advocate for the Respondent Nos.2 3, there has been restraint Order dated 15.12.2010, whereby interim injunction has been imposed from holding the general meetings of the Company. Consequently, the financial statements for the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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