2021 (2) TMI 16 - Tri - Companies Law

Tribunal asserts jurisdiction, finds fraud, appoints Provisional Liquidator, emphasizes natural justice.

Antrix Corporation Ltd. Versus Devas Multimedia Pvt. Ltd. and Ors.

Antrix Corporation Ltd. Versus Devas Multimedia Pvt. Ltd. and Ors. - [2021] 224 Comp Cas 573 (NCLT–Beng) Issues involved:1. Jurisdiction of the Tribunal.2. Prima facie case for granting interim relief.3. Opportunity for Respondent No. 1 Company to make representations.4. Appointment of Provisional Liquidator.5. Compliance with procedural requirements for filing the petition.Detailed Analysis:Jurisdiction of the Tribunal:The Tribunal confirmed its jurisdiction over the matter, stating that it is conferred with exclusive authority to deal with issues arising from the Companies Act, 1956/2013. Section 430 of the Companies Act, 2013, explicitly ousts the jurisdiction of civil courts over matters that the Tribunal or Appellate Tribunal is empowered to determine. Despite various judicial proceedings in other courts, the Tribunal affirmed that these do not pertain to the winding-up of Respondent No. 1 Company, thereby establishing its jurisdiction in this petition.Prima Facie Case for Granting Interim Relief:The Tribunal found prima facie evidence of fraud, misfeasance, and misconduct by Respondent No. 1 Company, as detailed in the petition and supported by investigations from the CBI and other statutory authorities. The Tribunal noted that the company was incorporated shortly before obtaining a significant contract from the Government of India without requisite experience, which justified the need for interim relief. The Tribunal emphasized that the incorporation and subsequent actions of the company appeared fraudulent, warranting immediate intervention.Opportunity for Respondent No. 1 Company to Make Representations:The Tribunal acknowledged the principles of natural justice, which require that the Respondent be given a reasonable opportunity to present its case before any adverse order is passed. However, it also noted that courts and tribunals have the authority to pass interim orders at the admission stage if circumstances justify such actions. In this case, the Tribunal found that the urgency and gravity of the allegations warranted the appointment of a Provisional Liquidator without further delay.Appointment of Provisional Liquidator:The Tribunal decided to appoint the Official Liquidator, Bangalore, as the Provisional Liquidator for Respondent No. 1 Company. This decision was based on the need to take immediate control of the company's affairs to protect and preserve its properties and avoid misuse. The Provisional Liquidator was directed to take custody or control of all the property, effects, and actionable claims of the company and to take necessary steps to protect its assets.Compliance with Procedural Requirements for Filing the Petition:Respondent No. 1 argued that the petition was not filed in accordance with the prescribed rules, specifically referencing the requirements under Section 273 of the Companies Act, 2013, and related notifications. The Tribunal, however, held that procedural errors, such as misquoting rules, are not fatal to the case and can be rectified. The Tribunal exercised its inherent powers to condone such mistakes and proceeded with the petition.Conclusion:The Tribunal admitted the company petition and granted Respondents time to file their replies. It appointed the Official Liquidator as the Provisional Liquidator and directed the existing management of Respondent No. 1 Company to cooperate fully. The Provisional Liquidator was authorized to take control of the company's management and assets, ensuring compliance with the extant provisions of the Companies Act, 2013. The order was passed without prejudice to the parties' rights in pending litigation before the Delhi High Court and the Supreme Court of India. The case was posted for further hearing on February 8, 2021, and the registry was directed to communicate the order to all parties and the Official Liquidator.