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TMI Blog2019 (8) TMI 1628X X X X Extracts X X X X X X X X Extracts X X X X ..... ons are inconsistent with provisions of such special Act, and such body corporate, incorporated by any Act for the time being in force, as the Central Government may by notification, specify in this behalf, subject to such exceptions modifications or adaptation, as may be specified in the notification etc. The Contention of the Learned Counsel that since the main Company petition is filed under Sections, 210, 213, 219 of Act by inter alia seeking investigation in the affairs of Applicants/ Respondents, and by virtue of Section 228 of Act, the Tribunal is having extra jurisdiction over the affairs of foreign Companies, Applicants/ Respondent herein, is farfetched argument, and it is not all tenable and it is without any basis. The Tribunal cannot expand its territorial jurisdiction on the alleged principle of defacto/ de jure relationship between the Respondent No. 1 Company and Applicants/ Respondents. When the Tribunal do not have jurisdiction over the affairs of Applicants/ Respondents herein, it cannot have any right to lift corporate veil so as to see alleged acts of Oppression and Mismanagement and to order any investigation into their affairs. It is not in dispute that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order as they have already suffered adverse add Interim order dated 12.06.2019 till date and thus urged the Tribunal not to suspend the order and relied upon judgments rendered in Hon'ble High Court of Karnataka in MFA 6200/2016 for the date of order 27.06.2017. 4. This Tribunal, at the time of admission, passed ad-interim order dated 12.06.2019, and the same was questioned before the Hon'ble High court of Karnataka by filing W.P. No.28376 of 2019 (GM-RES) and W.P. No. 28338 of 2019 (GM-RES) and the same was disposed of by separate order of even dated 22.07.2019, by inter alia directing to decide the preliminary objections raised by the Respondent with regard to the maintainability of the Company Petition against the Respondent No.4 Accordingly, the Tribunal passed the order today by vacating ad interim order dated 12.06.2019. Therefore, it is just and proper to suspend the order passed in said IA's, in order to afford the opportunity to the Respondent/ Petitioner to avail the remedy available before NCLAT, New Delhi, by merely suspending the order for few days would not cause irrecoverable damage to the Applicant/ Respondent No.4 5. As per the law, judicial re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cooperation for proper conduct of the above-mentioned investigation; c) To restrain Respondent No.5 from altering its shareholding composition in Respondent No.4 or causing the same to be altered in any manner whatsoever; d) To restrain Respondent No.2 to 5 from soliciting the employees of the Petitioner and the Company; e) To frame a suitable scheme/ arrangement to be followed by the Petitioner and Respondents No.2 to 5, in respect of the conduct of the affairs of the Company etc. 2) At the time of taking up for admission of case on 12.06.2019, the Tribunal, while issuing notices to the Respondents, has inter alia granted ad-interim order restrained Respondent No.5 from altering, in any manner whatsoever, the shareholding composition of Respondent No.4 or causing the same to be altered in any manner with further direction to the Respondent No.2 to 5 to give access to the Petitioner Company/ GETL immediate access to all of the Company's data including electronics data and emails of employees of the Company, which are saved on/ available on the servers of Respondent No.5 and/or it group Companies. 3) Aggrieved by the said order, M/s.Baker Hughes A GE Company L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, Spinco (as defined below) shall be considered to be an Affiliated of Party and the Company shall not be considered to be an Affiliated of Party A or Party B for the purpose of this Contract. As per Article 2.1 (B), a Company will be incorporated with an initial authorized share capital of divided into 25,000,000 shares of face value of ₹ 10/- each and subscribed and paid up share capital of 500,000 divided into 50,000 shares of the face value of ₹ 10/- each, fully paid up which shall be subscribed to by party A and/or its nominees. 5) Article 4 deals with Share Capital. Article 4.1.2 is relevant to refer here, which reads as under: Article 4.1.2 -subject to the fulfilment of the Conditions precedent contained in Article 6.1 below, the shareholders shall cause the Company and/or their nominee(s) to take all actions by further issue of shares by the Company to Party A and Party B or otherwise such that the Shareholders subscribe to the share capital on the closing date in the following manner: a. Party A shall contribute ₹ 9,500,010 for subscribing to 950,001 shares of ₹ 10 each fully paid, such that the shares held by Party A and its nominees rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company shall always be as follows: Party A or its Affiliate: 50% plus 1 share Party B or its Affiliate: 50% minus 1 share The Company shall issue share certificates to each shareholder for the shares subscribed in accordance with Article 5, as per the Applicable Law. Such certificates shall represent the shares held and owned by each shareholder. The Company shall be a public company in accordance with applicable law, each shareholders' liability shall be limited to the amount of its subscribed contribution to the paid up share capital required to be made pursuant to the contract and neither shareholder shall have any other liability to the Company or by virtue of being shareholder to any third party jointly or severally unless such shareholder expressly assumes such liability. The shareholders shall share the profits and, subject to the above, bear risks and losses in accordance with the ration of their respective equity interest at the time the Board decided on a distribution ofprofits or, as the case may be an allocation of losses. 8) Article 140 of Article of Association Respondent No. 1 Company dealt with Settlement of Disputes, which reads as under: In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that would show any prejudice/ hardship that would be caused to the Respondent No.4 if the interim order is not vacated. The Petitioner of Company Petition, on the other hand, demonstrates that the business of the joint venture Company would in fact come to a standstill if Respondent No.5 is permitted to exit from the joint venture directly or indirectly by exiting Respondent No.4. Deletion of Respondent No.4 from the array of parties in the Company Petition would not only be incorrect on facts, but also would cause grave, irreparable loss to the Petitioner as well as Respondent No. 1 and its business operations inasmuch as the Respondent would likely wash its hands off the joint venture, which would sound a death knell for Respondent No. 1. Further, grave injustice and irreparable damage would be caused to the Petitioner and Respondent No. 1, if data of the employees of Respondent No. 1, hosted on the servers of the Respondent No.4 and 5 is permitted to be destroyed. 3) The Applicants/ Respondent No.4 5 are proper and necessary party to the Company petition. The Petitioner has sought several reliefs in the Company Petition against Respondent No.4 5 and other respondents we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raghavan, learned Senior Counsel for Applicant/ Respondent No.5, and Shri Arun Kumar, learned Senior Counsel for Applicant/ Respondent No.4 and Shri Udaya Holla, and learned Senior Counsel for Respondent/ Petitioner. We have carefully perused the pleadings of both the parties and extant provisions of the Companies Act, 2013 and the law on the issue. 6. Shri K.G.Raghavan, learned Senior Counsel for Applicant/ Respondent No.5, while reiterating the various averments made in the application, has further advanced an elaborate arguments touching upon merits of the case, by inter alia contending that the Tribunal do not have any extra territorial jurisdiction over the Respondent No. 4 5, as they are registered under US law and are thus governed by the Law prevailing there. Therefore, the impugned interim order passed by Tribunal with reference to the Applicants/ Respondents is without jurisdiction and it ought to be vacated immediately as it is coming in the way of their free trading rights. And there is no dispute that Applicants/ Respondents Companies are incorporated outside India, and they are not amenable to jurisdiction of this Tribunal, even to entertain any the Petition/ app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to defraud its creditors, members or any other persons etc; Section 219 deals with the powers of inspector to conduct investigation into affairs of related Companies etc.; ultimately, Section 228 of the Act, which an-says that the provisions of entire Chapter XIV shall apply mutatis mutandis to inspection, inquiry or investigation in relation to foreign companies. Therefore, learned Senior Counsel asserted that the Tribunal is empowered to order an investigation into the affairs of even foreign Company if the circumstances so warrants. Therefore, the main Company Petition is maintainable and the Tribunal is hearing jurisdiction over the affairs of Applicants/ Respondents herein and that the impugned orders are to be sustained in the interest justice. The following judgments are relied upon in-support of his case: Dalpat Kumar and another Vs. Prahlad Singh and Others (1992) 1 SCC 719 Therefore, the Learned Counsel summed up that if the impugned interim orders are vacated as sought for, irreparable loss or damages would cause to the interest of the Petitioner as well as the RI Company, and thus sought the instant applications are summarily rejected and sustain the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government may by notification, specify in this behalf, subject to such exceptions modifications or adaptation, as may be specified in the notification etc. Section 2(42) of the Act, Companies Act, 2013 deals with definition of Foreign Company. And the Section reads as under: Foreign Company means any Company or body corporate incorporated outside India, which (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner As stated supra, the Petitioner itself stated that Applicant/Respondent No. 5 is in de facto/ de jure in the affairs of Respondent No. 1 Company and admittedly, the Respondent No. 1 is not an Agent of it. As per reading of JVC and Memo and Articles of Association of Respondent No. 1 Company, it can be inferred that Respondent No. 1 Company may be termed as Affiliate, having status of separate legal entity under Indian Laws. The Contention of the Learned Counsel that since the main Company petition is filed under Sections, 210, 213, 219 of Act by inter alia seeking investigation in the affairs of Applicants/ Respondents, and by vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confer any right on the Responden t/ Petitioner to seek any relief on the Applicants/ Respondent Nos. 4 5. 15. It is not in dispute that the Applicants/ Respondents are foreign legal entities having incorporated and governed by their respective laws and they are not amenable to Indian Laws. Therefore, we agree with the contention of the Learned Senior Cou.nsels for the Applicants/ Respondents that the Tribunal do not have any jurisdiction to interfere in their affairs by passing any interim order (s) and thus the impugned interim order is liable to vacated with immediate effect. Since the parties have not completed their respective pleadings to the main Company Petition, we are not directing the Petitioner to delete the Applicants/ Respondents at present, and it will be considered at the time of final hearing of the case. 16. In the result, both IA. Nos. 341 342 of 2019 in C.P No. 102 of 2019 are disposed of by vacating the interim orders passed on 12.06.2019 with immediate effect, with reference to Para 7 (c) of the order viz. An order to ad-interim injunction is granted restraining Respondent No.5 from altering, in any manner whatsoever, the shareholding composition o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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