2019 (4) TMI 1861 - HC - Companies Law

Appeal Dismissed for Unauthorized Filing: Director's Induction Deemed Void

M/s Sahara India Financial Corp. Ltd. Lko. Throu. Dir. And Anr. Versus Reserve Bank of India And Ors.

The court found the appeal maintainable under the Companies Act, 1956, but ruled it was not filed by an authorized person. The induction of Satish Kumar ... Winding up petition - appointment of whole-time Director - HELD THAT:- The Company Petition was filed by the respondent-Reserve Bank of India under Part VII of the Companies Act, 1956 in exercise of its power conferred under Section 45-MC of the RBI Act. The provisions of Section 45MC of the RBI Act itself make clear that whenever the Reserve Bank of India is satisfied with the grounds mentioned in Section 45 MC (1), it can file a petition under the provisions of Companies Act, 1956. The provisions with regard to winding-up of a company are governed by the provisions of Companies Act, 1956. As per Sub-Section (2) of Section 536 of the Companies Act, 1956, after filing of winding-up proceedings, no alteration in the status of members of the company is permissible. If any alteration is made after commencement of the winding-up proceedings, the same shall be void - In the present case also, the winding-up petition has been filed on 1.9.2015, whereas the Appellant No.2/Satish Kumar Singh was inducted as Director on 1.1.2016 which is contrary to the provisions of Section (2) of Section 536 of the Companies Act, 1956 and therefore, we are of the view that after winding-up initiation of proceedings, the Appellant-Company had no power to pass a resolution on 27.3.2018 appointing the appellant No.2 as whole-time Director and authorizing him to sign and execute affidavits, applications, etc. before any Court/Authorities and also in pending matters by or against the company. The authorization and induction of appellant No.2 as Director on 1.1.2016 and resolution dated 27.3.2018 passed by the appellant No.1/Company authorizing appellant No.2 as a Director of the Company and delegating its power and authorizing him to file Company Appeal is without permission of the Company Court as required under Section 536 (2) of the Companies Act. Such an authority is not recognized under law - appeal dismissed. Issues Involved:1. Maintainability of the appeal.2. Authorization for filing the appeal.3. Compliance with procedural rules and legal provisions.Detailed Analysis:1. Maintainability of the Appeal:The primary issue was whether the appeal filed by the appellant-Company against the winding-up order dated 15.2.2015 was maintainable. The appeal was filed under Section 483 of the Companies Act, 1956, read with Chapter VIII Rule 5 of the Allahabad High Court Rules, 1952. The respondents argued that the appeal was not maintainable because Section 45-MC(4) of the RBI Act does not provide for an appeal. However, the court observed that Section 45-MC(4) of the RBI Act states that all provisions of the Companies Act, 1956, relating to winding-up would apply to proceedings initiated by the RBI. Thus, the court concluded that the appeal was maintainable as it was deemed to be a continuation of the original proceedings under the Companies Act, 1956.2. Authorization for Filing the Appeal:The second issue was whether the appeal was filed by an authorized person. The appeal was filed by the company and its whole-time Director, Satish Kumar Singh, supported by an affidavit from Dinesh Shukla. The respondents argued that Dinesh Shukla was not authorized to file the affidavit, as he was not a director or principal officer of the company at the time of the winding-up proceedings. The court noted that Satish Kumar Singh was appointed as a director on 1.1.2016, after the winding-up petition was filed on 11.9.2015. As per Section 536(2) of the Companies Act, 1956, any alteration in the status of members of the company after the commencement of winding-up proceedings is void unless approved by the court. Since no such approval was sought, the court held that the induction of Satish Kumar Singh as a director was void, and consequently, the resolution authorizing him to file the appeal was also invalid.3. Compliance with Procedural Rules and Legal Provisions:The third issue was whether the appeal complied with the procedural rules and legal provisions. The respondents argued that the appeal violated provisions of Order VI Rule 15, Order XIX Rule 3, and Order XXIX of the Civil Procedure Code, 1908, as well as Rule 6 and Rule 21 of the Company (Court) Rules, 1959, and Chapter IV (Rules 9 to 12) of the Allahabad High Court Rules, 1952. The court observed that the affidavit in support of the appeal was not properly verified or sworn, and the person filing the affidavit (Dinesh Shukla) was not authorized to do so. The court emphasized that affidavits must be sworn by persons having knowledge of the facts and must comply with the procedural rules to be valid.Conclusion:The court concluded that the appeal was maintainable under the provisions of the Companies Act, 1956, but it was not filed by an authorized person. The authorization and induction of Satish Kumar Singh as a director were void due to non-compliance with Section 536(2) of the Companies Act, 1956. Consequently, the court dismissed the company appeal filed by Satish Kumar Singh.