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TMI Blog2023 (8) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 244 to enable the members to apply under Section 241. Meaning thereby, if the conditions in Clause 244(a) and 244 (b) are not waived and the Applicant is not qualified so far as condition enumerated in Section 244(1)(a)(b) are concerned then the application itself would not be maintainable and the Tribunal cannot proceed with it for the purpose of taking it to any conclusion. It appears that original applicants sensed that it would be in their interest to seek waiver under Section 244 of the Act, therefore, application bearing 533 of 2020 was filed during the pendency of the main application. In the said application, the applicants of application bearing 272 of 2016, who have raised the issue regarding the maintainability of the application even under Section 399 of the Act, 1956. The deemed waiver, which has been granted, is nowhere provided in Section 244 of the Act rather the Act says that the Tribunal has to take a decision in regard to the merit of the application as to whether the waiter has to be given in respect of clause (a) and (b) of Section 244(1) and that order should not be arbitrary or capricious but should be speaking and reasoned. Since, the reasons a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als have been filed against the common impugned order dated 06.12.2022. 2. In brief, Company Petition No. 18/ND/2015 was filed by two shareholders, namely, Vikram Kapur and Angad Kapur against the Company (Atlas Cycle (Haryana) Limited), Respondent No. 2-11 18 are the shareholders and Respondent No. 12 17 are the directors. This petition is filed, invoking Sections 397, 398, 402, 403 of the Companies Act, 1956 (in short the Act, 1956 ) r/w Regulation 44 of the Company Law Board Regulations, 1991 with the following prayers:- a. Supersede the Board and appoint and administrator instead of the Board with a direction to constitute a committee of management with due representation of the petitioners to conduct the affairs of the Respondent No.1 Company. b. Declare that the Petitioners have independent management and control of the Sonepat Unit in pursuant to the memorandum of understanding signed and executed by the members of the Kapur family and permanently restrain the Board or any of the Respondents herein from acting in manner whatsoever which is likely to impede, obstruct, interrupt or interfere with Petitioners' independent control and management of Sonepat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall not construe as expression on the merits/de-merits of the matter. With the aforementioned observations the appeal stands disposed of 4. As a consequence of the aforesaid order, the main petition i.e. CP No. 18 of 2015 was restored. In the meantime, vide notification no. S.O. 1934(E) dated 01.06.2016 Section 434 of Companies Act, 2013 (in short the Act, 2013) came into force and in terms of Section 434 (1)(a) of the Act, 2013 the aforesaid case was transferred to the National Company Law Tribunal, New Delhi (in short Tribunal ) bearing the same case number. 5. While this petition was pending before the Company Law Board, the Respondent No. 1 12 to 16 raised an issue regarding its maintainability by filing an application bearing CA No. 272 of 2016 under Section 403 of the Act r/w Regulation 44 of the Company Law Board Regulations, 1991 in which the following prayer was made:- a) Frame the preliminary issue about the validity of consents given by the consenting shareholders and maintainability of the petition in term of Section 399 of the Companies Act, 1956; treat the same as a preliminary issue and adjudicate upon the same before hearing the petition on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the Appellant has submitted that on the one hand the application i.e. 272 of 2016 was kept to be decided alongwith main petition regarding preliminary issue raised by the Respondent No. 1 12 to 16 but not decided and on the other hand the application bearing 533 of 2020 filed for seeking waiver has been decided without giving any reasons much less cogent. It is further submitted that until and unless waiver is granted in terms of Section 244 of the Act, the application filed under Section 241 r/w 242 of the Act was not maintainable. It is further submitted that application no. 533 of 2020 was filed deliberately by the original applicants during the pendency of the application bearing 272 of 2016 because they were apprehending that they may not cross the threshold of 100 members as provided in Section 399 of the Act, 1956. In this regard, he has relied upon a decision of this Tribunal rendered in the case of Cyrus Investments Pvt. Ltd. Anr. Vs. Tata Sons Ltd. Ors. 2017 SCC Online NCLAT 261 and pressed Paragraphs 148, 150 and 151. The said paras are reproduced as under:- 148. Now there is a clear departure from earlier provision i.e. subsection (4) of Section 399 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor. (ii) Whether (proposed) application under Section 241 pertains to oppression and mismanagement ? If the Tribunal on perusal of proposed application under Section 241 forms opinion that the application does not relate to oppression and mismanagement of the company or its members and/or is frivolous, it will reject the application for waiver . Otherwise, the Tribunal will proceed to notice the other factors. (iii) Whether similar allegation of oppression and mismanagement , was earlier made by any other member and stand decided and concluded? (iv) Whether there is an exceptional circumstance made out to grant waiver , so as to enable members to file application under Section 241 etc.? 10. They have also relied upon another Judgment of this Tribunal rendered in the case of Golden Cashew products Pvt. Ltd. Vs. Ramaiya Pillai Thirumurugan, 2021 SCC Online NCLAT 5999. 11. On the other hand, Counsel for the Respondents have submitted that the contents of the main application has to be considered at the time when it was filed and the subsequent events are not to be seen, in this regard, Counsel for the Respondents has relied upon three judgments, namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Company Law Board] under section 397 or 398, notwithstanding that the requirements of clause (a) or (b), as the case may be, of sub- section (1) are not fulfilled. (5) The Central Government may before authorising any member or members as aforesaid, require such member or members to give security for such amount as the Central Government may deem reasonable, for the payment of any costs which the 1 Company Law Board] dealing with the application, may order such member or members to pay to any other person or persons who are parties to the application. 14. A reading of the aforesaid provision, much less Section 399(4) would show that for the purpose of maintaining the petition under Section 399(1)(a)(b) of the Act, 1956, the Central Government was given the power to form an opinion in this regard as to whether it is just and equitable to do so. 15. In the application bearing 272 of 2016, the applicants therein (Respondent No. 1 12 to 16) had precisely raised this issue about the maintainability of the application filed by the original applicants, however, in its wisdom the Ld. CLB, as it was then, kept this application to be decided as a preliminary issue with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... practices; (c) a company is or has been conducted and managed by such person in a manner which likely to cause, or has caused, serious injury or damage to the interest of the trade, industry or business to which such company pertains; or (d) the business of a company is or has been conducted and managed by such person with intent to default its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or in a manner prejudicial to public interest, the Central Government may intiate a case against such person and refer the same to the Tribunal with a request that the Tribunal may inquire into the case and record a decision as to whether or not such person is a fit and proper person to hold the officer of director or any other office connected with the conduct and management of any company. (4) The person against whom a case is referred to the Tribunal under sub-section (3), shall be jointed as a respondent to the application. (5) Every application under sub-section (3) (a) shall contain a concise statement of such circumstances and materials as the Central Government may consider necessary for the purpose of the inquiry; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence; (h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h); (k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct; (l) imposition of costs as may be deemed fit by the Tribunal; (m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made. (3) A certified copy of the order of the Tribunal under subsection (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal. (4) The Tribunal may, on the application of any party to the proceeding, make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant or applicants has or have paid all calls and other sums due on his or their shares; (b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members: Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241. Explanation.--For the purposes of this sub-section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member. (2) Where any members of a company are entitled to make an application under subsection (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them. 17. It is categorically provided in Section 244 proviso that the Tribunal can waive all or any of the requirements specified in clause (a) or clause (b) of Section 244 to enable the members to apply under Section 241. Meaning thereby, if the conditions in Clause 244(a) and 244 (b) are not waived and the Applicant is not qualified so far as condition enumer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said application has been just ignored and the Tribunal has thereafter considered the application bearing 533 of 2020 for the purpose of passing the order of waiver that too without giving any hearing to the contesting Respondents and recorded that the Petitioner has been heard at length and number of opportunity has been given to the Petitioner but nothing has been mentioned whether the Respondents have been heard or not except for mentioning that the parties have been heard. This approach of the Tribunal cannot be accepted at all because it goes against the very principle of natural justice that justice should not only be done but seems to have been done also. The deemed waiver, which has been granted, is nowhere provided in Section 244 of the Act rather the Act says that the Tribunal has to take a decision in regard to the merit of the application as to whether the waiter has to be given in respect of clause (a) and (b) of Section 244(1) and that order should not be arbitrary or capricious but should be speaking and reasoned. Since, the reasons are conspicuous by its absence in the order which has been passed in Para 8 of the impugned order, which goes to the root of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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