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TMI Blog2021 (3) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... eps to challenge the scheme of amalgamation through various writs. The genesis of the present writ appeal is the merger of three companies and the very same subject matter was questioned in the PIL, which has been withdrawn unconditionally. The order passed by the Division Bench has not been challenged before any Court or any forum. Undisputedly, the legal effect and consequence of the unconditional withdrawal of the said PIL is to bar and prohibit all subsequent proceedings before any Court or Tribunal, raising the same contentions - This Court really fails to understand as to how in case of merger of three private companies, the funds of Government of India have been siphoned. On the contrary, on account of the order passed by the High Court of Delhi, the Central Government has passed an order dated 10.11.2017 and the same makes it very clear that the Government of India was not having any stake in the three amalgamating companies. This Court is of the considered opinion that the writ petition is nothing but sheer abuse of process of law. The appellant has been unsuccessful on almost about nine occasions by filing the frivolous proceedings. Therefore, the learned Single Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act 2013 (b) issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1st Respondent to forthwith act based on the information dated 14.03.2017, 30.01.2020 and 09.11.2020 furnished by the Petitioner under Annexure Y and based thereon act under Section 241 of the Companies Act 2013 to seek reliefs for the acts of oppression and mismanagement. (c) issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1st Respondent to forthwith act based on the information dated 14.03.2017, 30.01.2020 and 09.11.2020 furnished by the Petitioner under Annexure Y and based thereon prosecute the offence of the 2nd to 5th Respondents under Sections 447, 448 and 449 of the Companies Act 2013 and (d) issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1st Respondent to take up the actions under (a) to (c) above expeditiously given the magnitude of the offences and to report the progress of the same periodically to the Hon ble Court so that this Hon ble Court can monitor the same (e) In the alternate direct the 1st Respondent to authorise the Petitioner under Section 439(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Delhi were in respect of merger of three companies i.e. M/s. Vidya Investment and Trading Company Private Limited, M/s. Napean Trading and Investment Company Private Limited and M/s Regal Investment and Trading Company Private Limited. Respondent Nos. 2 to 5 have proposed a merger of three companies with the 5th respondent without taking approval from the RBI. The merger envisages ₹ 31,342/- crores of assets of the three companies vested with the 5th respondent and a fraud has taken place causing loss to the State exchequer. 7. It has also been argued by the learned Counsel that a prayer was made for investigation in the matter as the alleged violations were committed by respondent Nos.2 to 5. The learned Single Judge should have ordered for an enquiry and could not have dismissed the writ petition by taking the shelter of the judgment delivered in the case of Sarguja Transport Service (supra) and the prayer has been made in this appeal to set aside the order passed by the learned Single Judge. 8. The learned Counsel has also placed reliance upon the following judgments: (a) Apex Court Judgment in the Case of Vallabh Das Vs Dr Madan Lal Others Reported as 1970 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (t) Apex Court Judgment in the Case of Directorate of Enforcement Vs Deepak Mahajan and others Reported as 1994 (3) SCC 440 (u) Apex Court Judgment in the Case of Jasbhai Motibhai Desai Vs Roshan Kumar Haji Bashir Ahmed Reported as 1976 (1) SCC 671 (v) Apex Court Judgment in the Case of Bar Council of Maharashtra Vs M V Dhabolkar and others Reported as 1975 (2) SCC 702 (w) Apex Court Judgment in the Case of State of Karnataka and others Vs All India Manufacturers Organization and others Reported as 2006 (4) SCC 683 9. A reply has been filed on behalf of respondent Nos.4 and 5 and it has been argued that the writ appeal is not maintainable: (i) The learned Senior counsel appearing in the matter has argued before this Court that the Union of India acting through the Ministry of Corporate Affairs has passed an order dated 17.08.2018 revoking the appellant s licence as not for profit company under Section 8 of the Companies Act, 2013 and has directed the appellant to add the words Private Limited in its name and an appeal has been filed in the name of India Awake for Transparency without using the words Private Limited and therefore, the appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed C.A. No.185/1016 on 23.04.2016 for recalling of the order dated 26.03.2015 and the aforesaid C.A. is pending for final adjudication. (viii) It has been further argued that the issue relating to merger was again raised before the High Court of Delhi by filing W.P. No.4905/2017 and a prayer was made in the aforesaid writ petition for issuance of a direction to Union of India (Ministries of Financial Services and Corporate Affairs) and the RBI to carry out enquiries into the alleged violations committed by respondent No.5 namely, there was criminal misappropriation of properties of the Central Government on account of the amalgamation and the High Court of Delhi has passed an order on 10.11.2017 directing respondent No.1 to decide the appellant s representation. The representation has also been decided by the Government of India. (ix) It has been argued that, the present appellant has also filed a petition before the National Company Law Tribunal (hereinafter referred to as NCLT for short) under Sections 241, 242 and 244 of the Companies Act and the same was registered as CP No.15/2017. It was alleged before the NCLT that pursuant to the merger of three amalgamating co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d summons and all further proceedings have been stayed by the Hon ble Supreme Court vide its order dated 18.12.2020. (xi) It has been further argued that writ petition No.3635/2020 was preferred by the appellant by way of public interest litigation and the learned Counsel for the appellant Sri R. Subramanian argued the matter for 50 minutes and it was observed by the Division Bench of this Court that it would dismiss the writ petition in limine by imposing exemplary costs and at that point of time, Sri R. Subramanian sought leave of the Court to withdraw the said PIL unconditionally. (xii) It has been stated that after withdrawal of the PIL on 26.12.2020, the appellant has filed another petition under Section 156 read with section 190 of Cr.P.C. before Additional Chief Metropolitan Magistrate, Bengaluru for a direction to the 1st respondent therein i.e. MCA to register a case against respondent Nos.2 to 5 for the alleged offences committed under Sections 447, 448 and 449 of the Companies Act, 2013 and the matter is still pending. It has been further stated that it is after withdrawal of PIL, a writ petition i.e. W.P. No.172/2021 was preferred and the learned Single Judge has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litigation which was also arising out of the same scheme of amalgamation. In the aforesaid PIL, the appellant has prayed for the following reliefs: (a) issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1st respondent to recover from 11th respondent and his associates all the assets removed from the companies Vidya Investment and Trading Company Private Limited, Regal Investment and Trading Company Private Limited and Napean Trading and Investment Company Private Limited being escheat assets vested with the Union of India and further to fix a time frame for the actions of the 1st respondent and to monitor the same. (b) issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1st respondent to 10th respondent to forthwith constitute a Multi Disciplinary Investigation Team to investigate and prosecute the offences of 11th respondent and his associates set out in representation dated 30.01.2020 and 03.02.2020 of the petitioner to the respondents 1 to 6 and to conduct the said investigation in a time bound manner under the supervision of this Hoh ble Court. (c) Issue such other writs, pass such othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and it reads as follows: This has reference to your letter cited above, which was forwarded by the Ministry of Corporate Affairs vide its letter dated 02/05/2017 for examination. In this regard, you are informed that this office examined the issue raised by you in so far as it relates to the role of this office, O/o ROC and O/o OL in the case of merger of three transferor companies, viz 1) M/s. Vidya Investment and Trading Company Private Limited, 2) M/s. Napean Trading and Investment Company Private Limited 3) M/s Regal Investment and Trading Company Private Limited with the transferee Company viz M/s Hasham Investment and Trading company Private Limited vide CP No.182 to 185/2014 (not 181 to 184) as marked by you) and have to state as follows. 1. The equity shareholding of all the three transferor companies are interlinked/cross held and that each of the transferor companies owned by the other two transferor companies. M/s. Vidya Investment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the companies involved in the scheme are also not falling any complaints nor any Regulatory actions. 5. Accordingly, there is no negative ground or observation whatsoever for the Regional Director to report to the Hon'ble Court in the said scheme, except to the extent that, the transferee company is not NBFC while the three transferor companies were NBFC's and were registered with the RBI, being the Regulator. The Regional Director had also observed that the transferee company cannot undertake the business of transferor company and hence, need to undertake to register with RBI as NBFC company. The Regional Director's report to the Hon'ble Court specifically requires submission on NOC from RBI. It also dealt with/pointed out the qualifications of Auditors on the balance sheets of transferor companies which were relating to certain non-compliance of RBI Regulations applicable for NBFCs thus, the Regional Director has carried on due diligence before filing his report on the merger before the Hon'ble High Court in response to the notice u/s 394A of the Companies Act, 1956. 6. It is also observed that the OL, Bangalore had caused appointment of Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2020, petitioner has stated that the entities controlled by Mr. Azim Premji including the seven companies named therein have committed various violations under the Companies Act. Out of the said seven Companies, three are the very same Companies namely Vidya Investment and Trading Company Pvt. Ltd., Regal Investment and Trading Company Pvt. Ltd. and Napean Trading and Investment Company Pvt. Ltd. 24. In the PIL filed before the Delhi High Court, petitioner has prayed for a direction against the Ministry of Finance, Ministry of Corporate Affairs and Reserve Bank of India to decide within four weeks that nature of actions required in law to be taken by them in respect of complaints dated November 1, 2016, March 14, 2017 and April 28, 2017. In paragraph No.14 of the said writ petition, petitioner has averred that the very same 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., were registered as non-Banking Finance Companies. In paragraph No.29 of the said writ petition, petitioner has averred that the said three Companies had given large sums of monies to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the financials from 2012. Hence, the appellant company does not have even two shareholders and it is disabled from carrying out any business including holding of general body meetings, appointment of directors, auditors, and therefore could not have filed the present writ appeal. The learned Senior Counsel has also informed this Court that Sri R. Subramanian, who is having five years of standing at the Bar has spent about 1/3rd of his time in jail. Though Sri R. Subramanian might have spent time in jail, however, this Court cannot debar him from arguing the matter. Therefore, Sri R. Subramanian was granted liberty to argue the matter at length. 14. As stated earlier, the genesis of the present writ appeal is the merger of three companies and the very same subject matter was questioned in the PIL, which has been withdrawn unconditionally. The order passed by the Division Bench has not been challenged before any Court or any forum. Undisputedly, the legal effect and consequence of the unconditional withdrawal of the said PIL is to bar and prohibit all subsequent proceedings before any Court or Tribunal, raising the same contentions, keeping in view the judgment delivered in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. UNION OF INDIA reported in (2014)8 SCC 470, the Hon ble Supreme Court has observed that one needs to keep in mind that in the process of litigation, there is an innocent sufferer on the other side, of every irresponsible and senseless claim. The litigant suffers long drawn anxious periods of nervousness and restlessness, whilst the litigation is pending, without any fault on his part. He pays for the litigation, from out of his savings (or out of his borrowings), worrying that the other side may trick him into defeat, for no fault of his. He spends invaluable time briefing counsel and preparing them for his claim. Time which he should have spent at work, or with his family, is lost, for no fault of his. The Hon ble Supreme Court has also observed that it is a settled canon of law that this Court has inherent powers to prevent the abuse of processes. A similar view has taken by the Hon ble Supreme Court in cases of INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION Vs. UNION OF INDIA reported in (2011) 8 SCC 161 and ADVOCATE GENERAL, STATE OF BIHAR Vs. M.P. KHAIR INDUSTRIES reported in (1980) 3 SCC 311. 17. Lastly, in case of DNYANADEO SABAJI NAIK AND ANOTHER VS. PRADNYA PRAKASH KHADEKAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling of frivolous cases. It is only then that the courts can set apart time to resolve genuine causes and answer the concerns of those who are in need of justice. Imposition of real time costs is also necessary to ensure that access to courts is available to citizens with genuine grievances. Otherwise, the doors would be shut to legitimate causes simply by the weight of undeserving cases which flood the system. Such a situation cannot be allowed to come to pass. Hence it is not merely a matter of discretion but a duty and obligation cast upon all courts to ensure that the legal system is not exploited by those who use the forms of the law to defeat or delay justice. We commend all courts to deal with frivolous filings in the same manner. 18. In the light of the aforesaid judgments, this Court is of the considered opinion that the writ petition is nothing but sheer abuse of process of law. The appellant has been unsuccessful on almost about nine occasions by filing the frivolous proceedings. Therefore, the learned Single Judge was justified in imposing the exemplary costs while dismissing the writ petition. The learned Single Judge has also observed that petitioner is indulgin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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