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TMI Blog2024 (9) TMI 1500X X X X Extracts X X X X X X X X Extracts X X X X ..... ld ' as the amendment sought with regard to a fresh cause of action which has taken place more than three years back on 15th October, 2012, prayer made in amendment petition being barred by limitation, the Tribunal was not competent to allow the amendment.' Thus, for such substantial amendments, an application ought to have been moved with such proposed amendments and with a liberty to the appellants to rebut such proposed amendments and only thereafter, the amended petition ought to have been brought on record. The impugned order does not adhere to the principles of natural justice as it did not give an opportunity of being heard to the appellant - appeal disposed off. - ( Justice Yogesh Khanna ) Member ( Judicial ) And ( Mr. Ajai Das Mehrotra ) Member ( Technical ) JUDGEMENT JUSTICE YOGESH KHANNA , MEMBER ( JUDICIAL ) The Company Appeal (AT) No.277/2024 has been filed by the appellants against the order dated 21.08.2024 and Company Appeal (AT) No.276/2024 has been filed by appellants against the order dated 07.06.2024; both passed by the Ld.National Company Law Tribunal, Chandigarh in CA No.147/2024 in CP No.24(CH)/2024 seeking to place on record the amended petition. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , grounds and relief in amended petition and the main petition is as below:- SL NATURE OF AMENDMENT ORIGINAL PETITION AMENDED PETITION 1. Addition of new interim reliefs N/A c) Mandating that all transactions exceeding Rs. 1 lakh shall require the joint approval of the Petitioner and Respondent No. 2, and appointing an independent chartered accountant to oversee the day-to-day financial operations of the Company and report to the Tribunal monthly. d) Reinstating the Petitioner as a director of the Company with immediate effect, pending the final disposal of this petition; e) Restraining the Respondents from withdrawing any cash from the Company's accounts or retail counters exceeding Rs. 20,000 per day without proper documentation and approval; f) Suspending any loan agreements entered into by the Company since November 10, 2019, pending review by an independent financial expert appointed by the Tribunal; g) Restraining the Respondents from entering into any related party transactions without prior approval of the Tribunal; h) Directing the Company to update and maintain all statutory registers and records as required by the Companies Act, 2013, under the supervision of an inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of two years, detailing adherence to all statutory requirements and corporate governance norms 13. Restrain the Respondents from taking any retaliatory action against the Petitioner or altering his position in the Company without prior approval of the Tribunal for a period of three years 14. In the event that the Tribunal finds the Company's affairs have been conducted in a manner prejudicial to the public interest or that the Company's purpose cannot be achieved, consider ordering the just and equitable winding up of the Company under Section 271(e) of the Companies Act, 2013 [ Para 68(2)-(14) of Amended Petition /Pg. 209-211/Appeal ] 3. New party added The Registrar of Companies, Chandigarh, was not a party in the Original Petition Registrar of Companies, Chandigarh, added as Respondent No. 5 in the Amended Petition. [ Pg. 173/Appeal ] 4. New case as to Petitioner s role and contribution in the company has been set up which was not pleaded earlier No mention in the Original Petition 14. The Petitioner, Sunny Kochar, has been an integral part of the Company's success story. His contributions have been pivotal in the Company's growth trajectory: a) As a me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for mandatory constitution of an Audit Committee, has failed to establish this vital governance body. This violation deprives the Company of critical financial oversight, including the review of financial statements, scrutiny of inter-corporate loans, and evaluation of internal financial controls and risk management systems. [ Para 50(b) 55(b) of Amended Petition / Pg. 193 197/Appeal ] Absence of Nomination and Remuneration Committee (Section 178): The Company has not constituted a Nomination and Remuneration Committee as required by law. This failure compromises the integrity of processes for appointing directors, evaluating board performance, and determining remuneration policies, Notably, this violation invalidates any attempts to remove directors, including the purported removal of the Petitioner, as such actions require the committee's recommendation. [Para 50(c) 55(c), (o) of Amended Petition / Pg. 193 197/Appeal ] Non-Compliance with Cost Audit Requirements (Section 148): Despite meeting the turnover threshold requiring a cost audit, the Company has failed to appoint a cost auditor or conduct the mandatory cost audit. This omission not only violates statutory requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of independent directors, coupled with the non-constitution of mandatory committees, has resulted in inadequate oversight of the Company's affairs. This lack of checks and balances creates an environment conducive to mismanagement and oppression of minority shareholders. [Para 55(t) of Amended Petition /Pg. 201/Appeal ] u. Financial Reporting Irregularities: The failure to conduct various audits (cost, internal, secretarial) and file mandatory returns creates an environment of financial opacity. This lack of transparency raises serious concerns about the accuracy and reliability of the Company's financial reporting. [Para 55(u) of Amended Petition /Pg. 201/Appeal ] v. Regulatory Exposure: The systematic failure to comply with multiple statutory requirements exposes the Company to significant regulatory risks, potential penalties, and legal actions. This non- compliance jeopardizes the Company s legal standing and operational stability [Para 55(v) of Amended Petition /Pg. 201/Appeal ] w. Compromised Corporate Governance: The cumulative effect of these violations demonstrates a severe breakdown in corporate governance structures. This systemic failure not only facilitates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prioritize personal gain over the Company's welfare. b) The duty to exercise due and reasonable care, skill, and diligence (Section 166(3)) has been neglected, as evidenced by the financial irregularities and non-compliance with statutory requirements. c) The duty not to involve in a situation where there is a direct or indirect conflict of interest with the company (Section 166(4)) has been breached through actions such as booking personal expenses to the Company's account. [Para 59 of Amended Petition /Pg. 204/Appeal ] 9. The above chart would reveal that the amendments were substantial in nature though the learned counsel for the Respondent alleges it to be mere explanatory. Admittedly new reliefs have been added in the amended petition as also a new party being impleaded. Further the additional acts of oppression have also been added for which, of course, an opportunity ought to have been granted to the appellant to rebut such a move. 10. We have perused the impugned order dated 21.08.2024 which refers to order dated 07.06.2024 wherein it is noted on the last occasion the Respondent had sought time for amending the petition and leave was granted for amending the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meeting dated 31 December, 2012, and the appellant had knowledge of the same directly or through its representative, the same cannot be allowed to be pleaded. 7. Similarly, if during the pendency of the company petition further acts of 'oppression and mismanagement' taken place and is connected with the allegations already made, such as consequential action taken by Respondent, the Tribunal should allow the appellant to bring development to the notice of the Tribunal. 8. On the other hand, if the subsequent acts of 'oppression and mismanagement' is a fresh cause of action, such plea cannot be raised in the pending company petition, though it is always open to the aggrieved party to move before the NCLT under Section 241 and 242 of the Companies Act, 2015 by filing a separate petition. 13. In the circumstances and on perusal of the comparative chart, we are of considered opinion that for such substantial amendments, an application ought to have been moved with such proposed amendments and with a liberty to the appellants to rebut such proposed amendments and only thereafter, the amended petition ought to have been brought on record. The impugned order does not adhere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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