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TMI Blog2019 (4) TMI 1794X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants would not be liable. However, it is merely an e-mail purported to have been sent by Mr. Sanjay Gupta. There is no regular appointment as such as per the provisions of the Companies Act nor there is anything to show that Mr. Rahul Shah has given his consent in this behalf. The prescription is found in this regard in Rule 4BB(2) and (3) under Companies (Central Government s) General Rules and Forms, 1956 and Form of consent is Form 1AB. In the absence of any document to show that any director was specified as per Clauses (a) to (c) of Section 5 of the Companies Act or any valid document to show that any person was authorized by the Board of Directors, the appellant cannot escape the liability as per Clause (g) of Section 5 of the Companies Act. Similar is the case regarding the other appellants. We do not find merits in any of the appeals. - Appeal No. 227 of 2016 With Appeal No. 228 of 2016 With Misc. Application No. 90 of 2018 And Appeal No. 156 of 2017, With Misc. Application No. 91 of 2018 And Appeal No. 159 of 2017 - - - Dated:- 16-4-2019 - Justice Tarun Agarwala, Presiding Officer, Dr. C. K. G. Nair, Member AND Justice M. T. Joshi, Judicial Membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation which ultimately led to the passing of an ex-parte order dated June 3, 2015 and issuing notices to NTL as well as present appellants. Upon hearing the above order came to be passed therefore, the present appeals are filed. 4. As per the WTM the NTL had offered NCDs during the financial year 2013-2014 for an amount of ₹ 5.96 crores and issued to 341 persons, hence it was a public issue of NCDs in term of first proviso of Section 67 of the Companies Act. However, since the provision of compulsorily listing such securities in compliance with Section 73(1) of the Companies Act was not made by the NTL as well as its directors of relevant period, were liable and, therefore, the impugned order came to be passed. 5. Before us, there is no dispute that the NCDs were offered and issued by NTL without complying with the provisions of the Companies Act, etc. The appeal filed by Neesa Technologies Ltd. bearing Appeal No. 311 of 2016 was dismissed by this Tribunal by judgment dated April 28, 2017. The main thrust of the present appellants is that they are not liable for the action of NTL for the separate facts placed by them before the WTM and additionally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging director and the appellant never attended the Board meeting during 15 months of his tenure. The WTM merely finding that the appellant was director held him liable. The learned counsel relied on the judgment of this Tribunal in Manoj Agarwal vs. SEBI [Appeal No. 66 of 2016 dated July 14, 2017] wherein a director was held liable for the collection of amount for the period he was director and not further. Appeal No. 228 of 2016 Mr. Kamlendra Chunilal Joshi 10. The appellant submitted before WTM that he was also an employee of the Neesa Venture Holding Ltd. and was appointed as an additional director of the NTL on August 6, 2012. He resigned with effect from July 15, 2013 and, therefore, he cannot be termed as a director for the disputed period. In fact, since September 2012 he expressed his unwillingness to be in the board. Only in 2013 he was allowed to resign. The appellant did not participate in the affairs of the company. The control of the company vested with Mr. Sanjay Gupta Appellant in Appeal no. 156 2017 and his team. Financial decision was taken only by Mr. Sanjay Gupta. The appellant never participated or consented to any resolution for issue of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an independent director and was not involved in the day to day affairs and policy making decisions of the company. Exhibit C in his appeal is the copy of the letter claims to have been sent to Hon ble Presiding Officer of Securities Appellate Tribunal, Mumbai dated August 16, 2016 wherein he had applied to join him as a party in the appeal filed by NTL bearing Appeal no. 222 of 2016. FINDINGS OF WTM : 14. The WTM at the time of passing of the ex-parte order had already collected information from the Registrar of Companies (ROC) regarding the directors and the resignations if any of the director. He found that all the present appellants alongwith other persons were directors at the time NCDs were issued in the year 2013-2014 and continued to remain directors. Therefore, relying on the provision of Sections 5 and 73(2) of the Companies Act read with Section 27 of the SEBI Act, the present appellant s alongwith NTL and the other directors were held responsible as detailed (supra). 15. Heard the respective learned senior counsel, learned counsel for the appellants and the respondent. In our view, there is no merit in any of the appeal for the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form. 73. ALLOTMENT OF SHARES AND DEBENTURES TO BE DEALT ON STOCK EXCHANGE (1) .. (2). Where permission has not been applied under subsection (1) or, such permission, having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money. 19. The reading of the provisions of Section 5 of the Companies Act would show that in the absence of any of the officers specified in Clauses (a) to (c) any director or directors who may be specified by the Board would be called as officer who is in default and in absence of such specification all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the company complies with the provisions of the Companies Act and the rules framed thereunder. Therefore, the second contention that the petitioner cannot be proceeded against at all as he is only a nominee or appointed director by the State Government, cannot be sustained in law. A director either full time or part time, either elected or appointed or nominated is bound to discharge the functions of a director and should have taken all the diligent steps and taken care in the affairs of the company. 14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trust or violation of the statutory provisions of the Act and the rules, there is no difference or distinction between the whole-time or part time director or nominated or co-opted director and the liability for such acts or commission or omission is equal. So also the treatment for such violations as stipulated in the Companies Act, 1956. 15. Section 5 of the Companies Act defines the expression officer who is in default . The expression means either (a) the managing director or managing directors ; (b) the whole-time director or whole-time directors ; (c) the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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