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TMI Blog2021 (6) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... y are baseless and liable to be rejected. The Petitioner has no locus standi to file instant Petition, and it wants to order roving enquiry for ulterior purpose by abusing the process of law and resorting to forum shopping - petition dismissed. - C.P. No. 16/BB/2017 - - - Dated:- 28-5-2021 - Rajeswara Rao Vittanala, Member (J) And Ashutosh Chandra, Member (T) For the Appellant : R. Subramanian For the Respondents : S. Ganesh, Sr. Counsel and Saji P. John ORDER Rajeswara Rao Vittanala, Member (J) 1. The Company Petition bearing CP. No. 16/BB/2017 is filed by M/s. India Awake for Transparency (Applicant/Petitioner), U/ss. 213 221 of the Companies Act, 2013 against M/s. Hasham Investment and Trading Company Private Limited 4 Ors. (Respondents), by inter alia seeking to direct that the affairs of the R-1 Company be directed to be investigated by Inspector(s) appointed by the Central Government; the assets of the R-1 Company be frozen for a period of 3 years pursuant to the investigation by the Inspector(s) appointed by the Central Government. 2. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es had on 7.12.2010 gifted shares of M/s. Wipro Ltd., shares of this Company being listed and traded on the stock exchanges, worth ₹ 13,602 Crores (as at 31.3.2014) to 5th Respondent M/s. Azim Premji Trust a Private trust of the R-2 and 3. The said trust is managed by its Trustee M/s. Azim Premji Trustee Company Private Ltd., which is 100% owned by R-2 and of which only the R-2 3 are Directors. Thus, ₹ 13602 Crores out of the assets of the 3 Companies wholly vested with the Union of India were thus diverted for the private benefit of the R-2 and 3 Respondents by the 2nd and 4th Respondents. (5) In 2012-13, 3 partnership firms in each of which the 3 Companies and their wholly owned subsidiaries owned 35% stake gifted further shares of ₹ 18872 Crores of the said Wipro Ltd., to the same private trust to which the earlier mentioned gifts were made. Though the Gifts were to the extent of ₹ 18872 Crores in all from the 3 firms the 3 Companies and their subsidiaries being only 35% owners of the said firms the value of the assets taken out of the said 3 Companies was 35% of the Gift value of ₹ 18872 Crores viz., ₹ 6605 Crores. The 3 Companies were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raud the members whose assets were being in effect stripped off for no consideration. ii. The acts of the 3 Companies is allowing gifts of ₹ 18,872 Crores from firms in which it held 35% Stake to private Trust of its Directors and of which ₹ 6605 Crores pertained to the 3 Companies stake was clearly a act of R-2 to 4 as the Board of Directors of each of the 3 Companies to defraud the Members, whose assets were being in effect stripped off for no consideration. iii. The acts of the 3 Companies in giving interest free loans of ₹ 2500 Crores as at 31/3/2014 to the firms of which 65% was owned by R-2 is an act to defraud its Members as the 3 Companies and its members have been deprived of the hundreds of crores of rupees of interest income due on such loans from the firms resulting in fraudulent gain to the 2nd Respondent who owns 65% of the firms. (9) The 1st Respondent Company business as at 31.3.2015 and 31.3.2016 is that of a Non Banking Finance Company as per the determining tests in this regard stipulated by RBI. The 1st Respondent Company has carried on such NBFC business without complying with mandatory requirement of Registration with RBI and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intimidating activities of a vexatious litigant. (2) The Order of the Hon'ble High Court of Karnataka dated 26.03.2015 in Co. P. No. 183/2014, 184/2014 and 185/2014 approving the Scheme of Amalgamation of Vidya Investment and Trading Company Private Limited (Vidya), Regal Investment and Trading Company Private Limited (Regal) and Napean Trading and Investment Company Private Limited (Napean) and collectively referred to in the Petition as 3 Companies] with the 1st Respondent Company has attained finality. There can be no doubt that the said Order cannot be challenged before this Tribunal. The Petition before this Tribunal is a deception to contest the said Order of Amalgamation of the Hon'ble Karnataka High Court. (3) Judicial precedents have held that the expression any other person in Section 213(b) of the Companies Act, 2013 also refers only to an aggrieved person . Further, considering the limited scope of the expression the business of a Company is being conducted used in sub-clause (i) (b) of Section 213, the Petition is also not maintainable as it is a subterfuge seeking an order for investigation into non-existent Transferor Companies. The scope of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the case of 3 Companies, the wholly owned subsidiaries, and the R1. Further, the R-2 maintained an aggregate capital that is commensurate with his 65% share of profits. (7) Mr. P. Sadanand Goud purportedly is the Authorized Signatory of Petitioner and the Petition is filed on the strength of the said resolution dated 01.06.2015. The said extract only bears the names of three individuals, who were authorised to act on behalf of the Petitioner to file Petitions. All the three hail from Hyderabad. The Petitioner has its head office in Chennai, and the Petition is filed before the Tribunal in Bangalore. The signatory is purportedly having his office at 24, Desika Road, Mylapore, Chennai 600004, which is also the registered office of the Petitioner. (8) The Petitioner had also preferred another Petition under Section 241 read with Section 244 against the 1st Respondent Company alleging 'Oppression and Mismanagement' before this Hon'ble Tribunal vide CP No. 15/2017, which was dismissed vide its order dated 27/09/2017 on ground that a 'Non-member is not entitled to seek waiver under Section 244(1)'. Thereafter, the Petitioner approached the NCLAT with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he affairs of the Company, would be rendered otiose. The expression any other person referred twice concerns the same person, i.e. the person who is making the Application must demonstrate that he is aggrieved. (11) The Petition is a subterfuge seeking an order for investigation into non-existent Transferor Companies using the provisions of Section 213. It is a well settled principle in law that what cannot be done directly ought not to be done indirectly. The scope of the expression the business of a company is being conducted used in sub-clause (i) of clause (b) of Section 213 is limited, and it cannot travel to the Transferor Companies which are not in existence. It is a well settled legal principle that there cannot be an investigation into what is already well known, that too to transactions before the merger which were reported to all concerned regulators, stated explicitly in annual reports and widely deliberated in public and in which the 1st Respondent (Transferee Company), ex-facie, is not a beneficiary. (12) Since the Petitioner is not a shareholder/Member/Creditor/Depositor, or in any way aggrieved by the affairs of the 1st Respondent Company, the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtant provisions of the Companies Act, 2013 and Rules made there under. 6. Shri R. Subramanian, learned Counsel for the Petitioner, has once again reiterated his arguments in consonance with written gist of arguments filed on 19.02.2018, and some of his contentions are as follows: (1) The Applicant has filed in public interest the Application U/s. 213 R/w. 221 of the Act seeking investigation into the affairs of the R-1. As per the provisions of Sec. 213(a) of the Act deal with Applications made by Members of the Company and the same is not relevant to the Application as the Applicant is admittedly not a member of the R-1 Company. (2) The principles of interpretation of statutes are well settled in law. The Apex Court has in a catena of cases held that the golden rule of interpretation is literal interpretation. The Apex Court through a Constitution bench reported as 1984 (2) SCC 500 held as under: It is well established canon of construction that the court should read the Section as it is and cannot rewrite it to suit its convenience; nor does any canon of construction permit the court to read the Section in such manner as to render it somewhat otiose , (3) The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;public interest'. The Petitioner is no way related/affiliated to the R-1 Company. The intention of the law is to safeguard the interest of members/creditors/depositors of the Company. Although, the words set out U/s. 213(b) empowers Any Other Persons' to approach the Tribunal, the same must be restricted to a person who is either a member not meeting the criteria U/s. 213(a) (1) or creditor or a depositor of a Company etc. The word 'Any Other Person' in Section 213(b) must not be interpreted to mean a rank outsider who is in no way related/affiliated to a Company, as that would defeat the purpose of Sec. 213(a) (i) or (ii), which expressly limits that an Application U/s. 213 must made by members and any other person should mean the members/creditors/depositors and other aggrieved persons whose interest in the Company is affected. (2) The Respondents cited the doctrine of 'Ejusdem Generis The Supreme Court vide its order dated 25/02/2010 in Maharashtra University of Health and others v. Satchikitsa Prasarak Mandal Others Civil appeal No. 2050 of 2010 arising out of SLP (C) No. 15458 of 2007) has examined and explained the meaning of 'Ejusdem Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed U/s. 213(b) of the Companies Act, 2013. In the normal circumstances, the affairs of the Company would be conducted by a duly constituted Board of Directors elected by the Members of a Company. In case, any violation is committed by a Company and its Board of Directors, various Statutory Authorities like ROC, RD, SEBI etc., will take appropriate action against erring Company. Similarly, if any minority shareholders are aggrieved by the acts of oppression and mismanagement, they can also approach the Tribunal by seeking appropriate directions U/s. 241 of the Companies Act. In instant case, admittedly, the Petitioner is admittedly neither aggrieved party nor bonafide litigant and only personally interested litigant to abuse process of law. And it is stated to be a Non-profit Company incorporated U/s. 8 of the Companies Act. It has dubiously claimed that it focus on mis-governance in the private and corporate sector, especially in the matters, where the same has impact on larger public and exchequer. Therefore, the Petitioner has no locus standi to file the instant Petition. And the Petitioner failed to make out any prima facie case to entertain the instant Petition and it is making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble High Court heard the matter on maintainability and the said Application dismissed vide Order dated 17.3.2021. 11. In details, W.P. No. 172 of 2021 (GM-RES) was filed by the Petitioner against the Respondents, under Article 226 of the Constitution of India, by seeking to direct the R-1 (UOI), to forthwith direct investigation of M/s. Hasham Investment and Trading Company Private Limited (Respondent No. 5) basing on the information furnished vide letters dated 14.3.2017, 30.1.2020 and 9.11.2020. The Hon'ble High Court of Karnataka vide an Order dated 12.2.2021, dismissed the Writ Petition with a cost of ₹ 10 Lakhs. The relevant paragraphs in the order are as follows: 1) This is third Petition in succession filed by 'India Awake for Transparency' against different authorities to initiate action in the matter of acquisition of shares and amalgamation of Company. In all the cases, Shri Ganesh, learned Senior Advocate appearing for private Respondent has raised a preliminary objection with regard to maintainability of Writ Petitions. In substance, the preliminary objection is, Petitioner has filed a public interest litigation registered as W.P. No. 363 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the prayer clause of the Petition. 5) Admittedly, Petitioner has approached Delhi High Court for a direction against the Ministry of Corporate Affairs. Pursuant to the order passed by the Delhi High Court, Ministry of Corporate Affairs has passed a detailed order on November 10, 2017 after examining the issue raised by the Petitioner. 6) Not being satisfied, petitioner has filed a PIL in this Court and withdrawn unconditionally. Thereafter, he has filed five separate writ petitions against different authorities. 7) Shri Subramanian's specific contention is, relief sought in this writ petition is not the same as in the PIL before this Court. Prayers in clauses (a), (b), (c), (d) and (f) are not sought in the PIL. In prayer clause (e), petitioner has sought for a direction against the Ministry of Corporate Affairs to authorize petitioner under Section 439(2) of the Companies Act, 2013 to prosecute Respondents No. 2 to 5. 8) But, to a pointed question by this Court as to when the alleged offences have taken place, Shri Subramanian replied that they have taken place between 2010 and 2016-17. 9) Prayer Clause (a) in this writ petition is for a mandamus aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Awake for Transparency Vs. Union of India and others), the PIL filed in this Court, petitioner has sought directions against the respondents therein based on his representation/complaints dated January 30, 2020 and February 3, 2020. Though the dates of complaint is different, the subject matter is again the same i.e., transactions involving three Companies namely Vidya Investment and Trading Company Pvt. Ltd., Regal Investment and Trading Company Pvt. Ltd. and Napean Trading and Investment Company Pvt. Ltd. (paragraph No. 10 of the writ petition). 16) Thus, there remains no doubt that petitioner is indulging in forum shopping on the very same cause of action. As held in Udyami (1957) AC 436 at 461, this amounts to criminal contempt as the core issue in all these writ petitions is one and the same. 17) In the result, this writ petition is not only devoid of merits, but an absolute abuse of process of law. Though petitioner was forewarned, he chose to argue this writ petition as a standalone petition wasting the valuable time of this Court to deal with such frivolous cases. Therefore, imposition of punitive cost is necessary. 18) In view of the above, the prelimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been rejected not only by the Ministry of Corporate Affairs but also by the Reserve Bank of India. Under these circumstances also, I am of the considered opinion that the Application is not maintainable and the same is liable to be dismissed. 14. Aggrieved by the above order, the Petitioner has filed Original Side Appeal No. 1/2021 (OSA). After considering the matter, the Hon'ble High Court of Karnataka, by an Order dated 22.4.2021 has dismissed the Appeal, by inter alia holding as follows: 1) That apart, we find that in the instant case, the application filed by the appellant India Awake for Transparency before the learned Company Judge in Company Application No. 185/2016 in Company Petition No. 182/2014 of this Court seeking recall of order dated 26.3.2015 was by its authorized signatory, Sri. R. Subramanian, who is also the Counsel appearing for the appellant in this Appeal. When we queried Sri. R. Subramanian, he stated that he is now appearing as an advocate and Sri. P. Sadanand is the authorized signatory and there is no impediment for him to represent for the appellant/Company. 2) In this context, learned Senior Counsel Sri Ganesh submitted that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d like to remind ourselves that in recent years there has emerged a trend of filing speculative litigation before various courts of law, not just in the Court of first instance, but also in the High Court. It is the duty of the Courts to ensure that such speculative litigation is weeded out at the first instance rather than allowing it to be festered and thereby coming in the way of genuine litigants seeking justice in their cases. We find that this is one stark instance of speculative litigation being filing not just by this appeal, but repeatedly over the years has been stated, filing of litigation has been firstly, before the Court Hon'ble of the Chief Justice in the form of a public interest litigation and thereafter in separate writ petitions on the same cause of action after withdrawing unconditionally the public interest litigation and not being successful in those cases and not being able to get over the order passed by the Union of India, dated 10.11.2017, a litigative mechanism has been devised to indirectly question the said order by way of seeking recall of the order dated 26.3.2015 passed by the learned Company Judge of this Court sanctioning the amalgamation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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