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TMI Blog2023 (3) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 421 of the Companies Act, 2013 has been preferred by the Appellants being aggrieved and dissatisfied by the order dated 08th June 2021 passed by the National Company Law Tribunal (Mumbai Bench, Court-II) in CP No. 29/2016 which was filed by the Appellants under Section 241 and 242 of the Companies Act, 2013, wherein the Tribunal has disposed of MA No. 291 of 2018, MA No. 3186 of 2019 and MA No. 1086 of 2019 in CP No. 29/2016 and passed an order for winding up of the Respondent No. 1 Company herein which is hereunder: "9. To meet ends of Justice and in the interest of the Company this bench is left with no other alternative but to order of winding up of the Company and to appoint a Liquidator, accordingly, this bench appoints Ms. Anagha Anasingaraju (IBBI/IPA-002/IP-N00247/2017-18/10732) from Pune as Liquidator of this Company Modi Landscape Pvt. Ltd. The Liquidator is directed to proceed in accordance with the provisions of the companies Act, 2013 and other applicable provisions. 10. As per Section 242(3) a certified copy of this order shall be filed by the Company with the Registrar within 30 days from the date of receipt of the copy of the order. With the above directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation, a registered partnership firm comprising of Respondent No. 4 as one of its Partners whereby Saakaar agreed to develop the Amenity Space admeasuring 13486 sq. mtrs. Out of the sanctioned layout laid on S. No.78 (Commercial Plot). The Respondent No. 1 company also executed Power of Attorney authorizing the partners of Saakaar for the limited purpose of enabling development of the land of the Respondent No. 1 company. However, nothing in this power of attorney entitled Saakaar or its partners to execute flat purchase agreements for the units/flats that would be constructed on said Commercial Plot. The Respondent No. 1 company subsequently entered into another Agreement for Development (Second Development Agreement) dated 16th August, 2013 with Saakaar whereby its agreed to develop the land bearing S. No.78, Hissa Nos. 1 to 6, and S. No. 79, Hissa Nos. 1 to 6, admeasuring 8160 sq. mtrs. Situated at Manjri, Tal. Haveli Dist. Pune (Residential plat). In respect of the Second Development Agreement, the Company also executed a similar Power of Attorney. iv) As per the Development Agreements, the Gross Sales Proceeds were to be apportioned between the Respondent No. 1 company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssive to the Appellants, and (ii) permission to exit from the Company by directing the Respondent Nos. 2, 4 and the Deceased Director to buy all the shares held by the Appellants herein. Pursuant to the discussions and negotiations between the parties, Consent Terms (Annexure A-9 at page 171 to 195 of the Appeal) were drawn between the parties. In view of the consent terms entered, the NCLT passed an order dated 24th August, 2017 and disposed off the CP. It was also ordered that in view of non-compliance of the consent terms, the NCLT imposed a cost of Rs. 25,000/- each on both the Modis. vii) The Respondent No. 4, being one of the partners of M/s Saakaar Corporation and, ipso facto, being responsible for complying with the stipulation of clause (gg) (iv) of the Consent Terms, did not transfer the amount of Rs.4,75,17,171/- from Saakaar Corporation into the Escrow Account [being the difference of the amounts of Rs.18,43,28,352/- (received by Saakaar Corporation) and Rs. 13,68,11,181/- (amount transferred by Saakaar into the Escrow Account)]. The Respondent No. 4, through Saakaar Corporation, had not only manifestly failed to comply with the aforesaid obligation under the Consent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the Respondent Nos. 2 and the Deceased Director are manifestly in contempt of clause (h) of the Consent Terms which states that Mr. Ramesh Thakkar, Mr. Mahesh Thakkar and Mr. Chandrakant Ghule shall resign as directors of the Respondent No. 1, simultaneously on their shares being bought back by the Respondent No. 1 company and on the Respondent No. 1 conveying portions of the land as stated in para 4(a) and (b). Furthermore, the resignation demonstrates a manifest attempt to create a deadlock in the Company and defeat the execution of the consent terms only to frustrate the rights of the Appellants herein in Respondent No. 1 company. ix) Further case is that the timing of the resignations of the Respondent No. 2 and the Deceased Director is indicative of the fact that the said Respondents intended to avoid the implications of being the directors of the Respondent No. 1 company which has to mandatorily file its audited financial statements for the preceding 2 years and the current year. It is also no co-incidence that the resignations were filed after receipt of prosecution notice from the Income Tax department and after the Respondent No. 1 received a notice dated 5th December ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order dated 8th March, 2021, Hon'ble Justice Dilip Karnik, Former Judge, High Court of Bombay was appointed as the Observer-cum-Facilitator and Mr. N.D. Desai, Chartered Accountant, to assist the Observer cum Facilitator and was directed to submit his progress report within three weeks from the date of his taking charge. Thereafter, various meetings were held through video conferencing. A report thereto was submitted by the Facilitator before the Tribunal wherein it was stated that the parties could not arrive at a consensus regarding the valuation and the method of valuation of the lands and assets of the Company. However, there was consensus about the respective shareholdings of the parties, except a minor difference regarding 5% of the shares. It was suggested that one group may value the lands and assets of the company and the other group would have a call and put an option i.e. (i) to buy the shareholdings of the group valuing the land by paying the price proportionate to their holding or (ii) to sell his holding and group valuing the land and assets would have to buy it by paying proportionate price. Thereafter some 'without prejudice offers' were exchanged between the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No. 1. 4. It is further submitted that the Consent Decree was passed in CP No. 29 of 2016 and thereby the said petition was disposed of by the Tribunal by a Consent Decree passed on the basis of the consent terms which was an enforceable agreement between the Appellants and the Respondents. Further, since the Respondent Nos. 2, 4 and the Deceased Director have failed and neglected to comply with the consent order, the Appellants filed a Contempt Petition bearing No. 1046 of 2019 which was disposed of vide impugned order i.e. winding up order. The winding up of Respondent No. 1 Company would unfairly prejudice the rights and interest of the Appellants as well as the Respondent No. 1 company under the consent terms and therefore, the Tribunal ought to have restored the CP No. 29 of 2016 and heard the same on merits. 5. It is further submitted that no order of winding up is to be passed if there is other alternate remedy available or where the party praying for winding up is itself acting unreasonable. This is clear from a perusal of Section 273(2) of the Companies Act, 2013. In this regard, the Appellants relied on following judgments: * Hind Overseas (P) Ltd. v. Raghunath Pras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt which passed the consent decree. In the instant case, the order dated 24.08.2017 was not recalled by the NCLT before passing the impugned order and hence the impugned order is erroneous in law. In this regard the Appellants relied on following Judgments: * Pushpa Devi Bhagat v. Rajinder Singh, (2006) 5 SCC 566, Para 17; * Gujarat State Financial Services v. Amar Polyester Ltd. decided on 19th December, 1997, (1998) 1 GLR 731, Para 7-8. 7. It is further submitted that the other reason given in the impugned order for winding up of the company is the alleged deadlock in management which is equally erroneous. The Appellants hold only 40% shares versus the Respondents who hold 60%. There can be no question of a deadlock when the shareholdings are unequal. Just because there is litigation between the shareholders and the company's business comes to a standstill, would not form the basis for winding up of the company. Primarily the circumstances existed as on the date of filing of the company petition ought to be looked at to see if the winding up order could be passed. Therefore, the other reason given in the impugned order stating that the company was snot conducting business a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch inter-alia requires the petition for winding up to be accompanied by statement of affairs in the manner prescribed and for a 60-day period to be given to the registrar whose views would be elicited before an order of winding up could be passed. Thus, there is non-compliance of Section 272 before the passing of order of winding up. * Companies (Winding up) Rules, 2020 further provides the manner in which an order of winding up has to be passed and contents of such order. Admittedly, the order of winding up is not in terms of Companies (Winding up) Rules, 2020. In view of above submissions, the impugned order is fit to be set aside and the Appeal be allowed. 11. The Ld. Counsel for the Respondent No. 1/Liquidator filed Affidavit, in which he has stated following facts: i) A commercial and residential housing project was undertaken by the Company along-with M/s. Saakaar Corporation and Thakkar group, named "SAAKAAR ALMOND PARK" ("said Project") situated at "all that piece and parcel of land or ground admeasuring 8160 sq. mtrs. bearing Plot "A" out of the Sanctioned Layout in respect of the contiguous block admeasuring Hectares 18 = 35 Ares formed of the lands bearing Survey N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey No. 79, Hissa No. 1 to 6 situate lying and being at Village Manjri Budruk, to one Priyanka Anil Mukkavar and Swapnil Maddalvar as per Agreement dated 29th March 2021 registered on 27th July 2021, Registration No. 1950/2021 for a price of Rs. 86,00,000/- (Rupees Eighty-Six Lakh Only). Further, it has also come to the knowledge that the Appellants herein along with M/S Saakaar Corporation being the confirming party to this transaction, have sold flat no. B-503 Flat No. 503, admeasuring about 78.48 sq. Mtr. (Carpet), along with attached Terrace, admeasuring about 10.46 sq. Mtr, (Carpet) and enclosed balcony, admeasuring abpout 13.07 sq. mtr, (Carpet) Plus/minus 3% on the Fifth Floor in the Wing/Building No. "B" in the multi-storeyed ownership scheme namely 'SAAKAAR ALMOND PARK' together with the attached appurtenant thereto, constructed on the land Survey Munber 78, Hissa No. 1 to 6 and Survey No. 79, Hissa No. 1 to 6 situated lying and being at Village Manjri Budruk, to one Sheetal Sandip Raskar and Sandi Namdev Raskar as per Agreement dated 16 September 2021 registered on 16 September 2021, Registration No. 14222/2021 for a price of Rs. 80,00,000/- (Rupees Eighty Lakh Only). v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litator vide its order dated 8th March, 2021. The parties to the Original Proceedings informed the NCLT that even after several rounds of meetings before the Observer cum Facilitator the matter was not settled. In view of thereof, the NCLT vide its order dated 12th May, 2021 issued directions to the Observer to submit his report before the NCLT. In view of the above directions of the NCLT, the Observer submitted his report dated 25th May, 2021 and Chartered Accountant filed his report dated 24th May, 2021 to the NCLT. The above-mentioned reports inter-alia stated as follows: * The Observer Cum Facilitator in his report stated that, "After hearing the Learned Advocates for the parties in the first and second meeting, "it appeared to me that the parties could not arrive at a consensus regarding the valuation or method of valuation of the lands and assets of the company". * The report of Observer cum Facilitator referred to options that were considered by stating that, "I therefore suggested to the Learned Advocate that one group may value the lands and assets of the company and the other group would have a call and put option-i.e. would have an option (i) to buy the shareholdings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities which has not been done. Due to non-submission of appropriate documents the Respondent No. 1 company and its Directors/Officers stating that the Officer/Directors are in default. Further, a Strike Off Notice under Section 248(1) of the Act was received on 9th August, 2019 from the Registrar of Companies in relation to Respondent No. 1 company. 15. It is further submitted that based on the numerous steps taken by the NCLT which are hereunder: * Hearing parties at length with respect to compliance with the terms and conditions of the Consent Terms; * The previous orders passed by the NCLT in the Original Proceedings to ensure that Consent Terms are complied with in a timely manner; * The identification of an appropriate third party for hearing the issues between the parties and appointment of the Observer cum Facilitator in order to ensure an amicable settlement of disputes between the parties; * The Observer cum Facilitator entertaining various options for exit of any of the parties from Respondent No. 1 company as well as options of ascertaining the valuations and distribution / division of assets of Respondent No. 1 company. It is amply clear that the National Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no activity it is but natural that orders can be passed for ending this misery which is contemplated under the provision of Section 242 Sub Rule (1) Sub Rule (b). 17. It is further submitted that the essence of Respondent No. 2 agreeing to a settlement after taking a massive haircut was to resolve issues in his and late Mahesh Thakkar's lifetime. Mahesh Thakkar, the brother of the Respondent No. 2 agreed to the settlement as he anticipated his demise due to medical exigencies. Unfortunately, the proceedings delayed this desire and Mahesh Thakkar ultimately succumbed to his illnesses in September 2020. The last of the Thakkar Group is hinging on the Respondent No. 2 who himself is presently 82 years old. The end result has to be achieved and therefore the need for winding up the Company. The winding up would entail payments to be made to statutory liabilities/statutory authorities/creditors and such other necessary and incidental expenses which are statutory in nature. The contractual obligations would also be fructified and achieved with such winding up. Various parcels of land of MLPL are also encumbered which do not have clear title and thus to untie the knots it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to resolve the disputes. The Consent Terms were also executed. Subsequently, the Tribunal observed that there was a breach on the part of the Appellants to comply with their obligations under the Consent Terms and directed the Appellants to comply with the same. Therefore, an Observer cum Facilitator was appointed to mediate between the parties, however, settlement talks failed. Resultantly, due to the persistent failure on the part of the Appellants to bring an amicable end to the disputes, by the impugned order, the Respondent No. 1 company was directed to be wound up and the purpose behind which the CP was filed by the Appellants themselves is achieved. Therefore, the Appellants cannot be aggrieved by the same. Since the past several years, there has been a continuous deadlock between the Appellants and the Respondents and as a result of which the Respondent No. 1's business has come to a standstill. The parties have been embroiled in litigation pertaining to the business of Respondent No. 1 since 2016. Further, no meeting of the Board of Directors has been held since 01.04.2016. The financial statements and accounts of Respondent No. 1 have not even been prepared since 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r incapable of undertaking any other business even in future in a commercially viable manner, it must be held that its substratum has gone and further that any attempt to do any business would only result in disastrous consequences plunging the company to a situation far worse than it is. 23. Further, in "M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raju and Anr., (2008) 6 SCC 750", the Hon'ble Supreme Court has held in the context of the Companies Act, 1956 that the jurisdiction of the Company Law Board (now NCLT) must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard and fast rule can be laid down. If an application is filed under Section 433 or Section 397/398 of the Companies Act, 1956, (now Section 241/242 of the Companies Act, 2013), an order of winding up may be passed but the Company Law Board in a winding up application may refuse to do so, if any other remedy is available. The Company Law Board may not shut its doors only on sheer technicality even if it is found that unless its jurisdiction is exercised, there will be complete mismanagement in regard to the affairs of the company. 24. In "Kamal Kumar Dutta & Ors. V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .S.D.C. Radharamanan v. M.S.D. Chandrasekara Raju and Anr., (2008) 6 SCC 750", wherein the Hon'ble Supreme Court has held in the context of the Companies Act, 1956 that the jurisdiction of the Company Law Board (now NCLT) must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard and fast rule can be laid down. If an application is filed under Section 433 or Section 397/398 of the Companies Act, 1956, (now Section 241/242 of the Companies Act, 2013), an order of winding up may be passed but the Company Law Board in a winding up application may refuse to do so, if any other remedy is available. The Company Law Board may not shut its doors only on sheer technicality even if it is found that unless its jurisdiction is exercised, there will be complete mismanagement in regard to the affairs of the company. The ratio laid down in the aforesaid case is applicable in the facts of the instant case. 30. In view of the aforenoted discussion, the following facts are admitted in the instant case: * The Consent Terms were drawn between the parties. The Respondent No. 4, being one of the partners of M/s Saakaar Corporation and, ipso facto, bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rive at a settlement. I received full co-operation from the Learned Advocates for the parties as well as Mr. Nitin Desai in an attempt to facilitate a settlement." 31. We observe that the Consent Terms entered between the parties in the past, pursuant thereto, the Original Petition was disposed off, thereafter, violation of Consent Terms, applications were filed before the NCLT, therefore, the NCLT appointed Observer cum Facilitator to settle the disputes, to revive the company etc. however, the parties could not arrive at any amicable settlement despite several opportunities given by the NCLT. In view of aforenoted facts, we are of the considered view that order passed by the NCLT is correct in nature to meet ends of Justice and in the interest of the Company, winding up order was passed. Keeping in view of the aforenoted background, we do not find any merit in the instant appeal. The impugned order dated 08th June 2021 passed by the National Company Law Tribunal (Mumbai Bench, Court-II) in MA-291/2018, MA-1046/2019 and MA-3186/2019 in CP No. 29/2016 is hereby affirmed. The instant Appeal is hereby dismissed. No order as to costs. I.As. if any, stand disposed off. Accordingly, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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