2020 (6) TMI 16 - HC - Companies Law

Writ petition dismissed for suppression of facts, relief denied under Articles 226 & 227

The court dismissed the writ petition due to the petitioners' suppression of material facts and failure to disclose crucial information, disqualifying ... Suppression of facts - Change in management - the petitioners did not seek any permission from BIFR for any change in the management - increase in authorized share capital - HELD THAT:- It appears that there are disputed questions of facts as stated by both the sides on affidavit. Moreover, it is also not in dispute that BIFR was functional when the interim order was passed by this Court. It appears that the petitioners have suppressed the material facts on record when the interim order was passed by this Court by pointing out that resolution dated 27.11.2015 was contrary to the directions of the BIFR in its order dated 18.2.2009. However, the petitioners did not point out that BIFR had already sanctioned the scheme on 17.7.2013 after taking into consideration the order dated 18.2.2009 and subsequent various orders passed from time to time - It appears that thereafter, petitioners have tendered their resignations on 4.2.2015 which is suppressed by the petitioners. The petitioners have also suppressed about the appointments of respondents nos. 1 and 2 as directors way back in 2007 and 2009. The petitioners have also suppressed the fact of execution of shareholders agreement, indemnity bond and personal guarantees on 27.9.2007 in favour of respondents nos. 1 and 2. Thus it is apparent that the petitioners have not come with clean hands before the Court. In the facts of the present case as there is active suppression on part of the petitioners, the decision of the Jharkhand High Court in case of MUNNAM SANJAY AND ORS. VERSUS THE STATE OF JHARKHAND AND ORS. [2019 (1) TMI 1779 - JHARKHAND HIGH COURT] relying upon various decisions of the Supreme Court would be applicable wherein it has been held It is thus evident that it is the duty of the litigant to approach the Court at equity with clean hand and it is not available to him that which fact is to be disclosed and which fact is not to be disclosed rather his duty is only to approach the court of law by complete disclosure at each and every fact and it is upon the court to decide which fact is necessary to be accepted and which is not necessary to be accepted. This writ petition deserves to be dismissed only on the ground of suppression of material facts - When the petitioners have not come with clean hands before the Court and have suppressed the material facts, the petitioners are not entitled to any relief under Articles 226 and 227 of the Constitution of India. Moreover, the petitioners have also suppressed that BIFR was functional when the interim order was passed by this Court. Petition dismissed. Issues Involved:1. Legality of the meeting held on 27/11/2015 and the resolutions passed therein.2. Alleged violation of the sanctioned scheme (SS13) by the respondents.3. Suppression of material facts by the petitioners.4. Jurisdiction and applicability of SICA Act over the Companies Act, 2013.5. Alleged oppression and mismanagement by the respondents.Detailed Analysis:1. Legality of the Meeting Held on 27/11/2015 and the Resolutions Passed Therein:The petitioners contended that the meeting held on 27/11/2015 was illegal and resolutions passed therein, including the allotment of new shares and the change in management, were in violation of the sanctioned scheme SS13 and the directives of the BIFR. The court noted that the petitioners alleged that the meeting resulted in a 'Change Of Management' without the approval of the BIFR, which was contrary to the sanctioned scheme and the provisions of section 22 of the SICA Act. The petitioners argued that the respondents acted without authority and in contravention of the legal procedures prescribed under the Companies Act, 2013.2. Alleged Violation of the Sanctioned Scheme (SS13) by the Respondents:The petitioners claimed that the respondents, who were appointed as directors in a professional capacity to assist in the revival process, conspired to change the management and allocated shares to themselves and an outsider, thereby becoming major shareholders. The petitioners argued that this action was contrary to the directives and orders of the BIFR as per the sanctioned scheme. The court observed that the petitioners did not seek any permission from BIFR for the change in management, which was a requirement under the sanctioned scheme.3. Suppression of Material Facts by the Petitioners:The respondents argued that the petitioners suppressed material facts, including their resignations as directors in February 2015 and the prior appointment of respondents as directors in 2007 and 2009. The court found that the petitioners failed to disclose these crucial facts, which were material for the determination of the case. The court cited various legal precedents to emphasize that suppression of material facts disqualifies a litigant from obtaining any relief. The court concluded that the petitioners did not come with clean hands and had suppressed material facts, thereby abusing the process of the court.4. Jurisdiction and Applicability of SICA Act Over the Companies Act, 2013:The petitioners contended that the provisions of the SICA Act would override the provisions of the Companies Act, 2013, as both cannot exercise concurrent jurisdiction regarding the control of assets of the sick company, its management, and the allotment of shares. The court noted that the SICA Act contains a non-obstante clause and is a special statute, which prevails over the Companies Act. The court referred to the Supreme Court decision in NGEF Ltd v. Chandra Developers, which held that the provisions of the SICA Act would prevail over the Companies Act.5. Alleged Oppression and Mismanagement by the Respondents:The petitioners relied on the Supreme Court decision in Kamal Kumar Dutta v. Ruby General Hospital Ltd. to argue that the actions of the respondents amounted to oppression and mismanagement. However, the court found that the facts of the present case did not align with those in Kamal Kumar Dutta, as there were no proceedings of oppression or mismanagement by any shareholders or directors. The court also noted that the petitioners had tendered their resignations, which was a material fact suppressed by them.Conclusion:The court dismissed the writ petition on the grounds of suppression of material facts by the petitioners and active suppression of the fact that BIFR was functional when the interim order was passed. The court emphasized that the petitioners did not come with clean hands and had concealed vital information, thereby disqualifying them from obtaining any relief under Articles 226 and 227 of the Constitution of India. The interim relief was vacated, and the rule was discharged with no order as to costs.