2021 (10) TMI 1085 - AT - Insolvency and Bankruptcy

Appeal challenges NCLT order on shares & assets, remanded for reconsideration.

The appeal was filed against an NCLT order directing status quo on shares and assets due to a challenge before the High Court. The NCLT order was remanded ... Validity of Order directing Status Quo on the shares and assets of the Appellant Company - entire share transactions was a subject matter of challenge before the Hon’ble High Court of Delhi in various connected matters - HELD THAT:- It is seen from the record that the Respondent ‘M/s. Creative Souls Technology India Ltd.’ has been restrained by the Hon’ble High Court of Delhi in exercising any rights Qua such shares vide Order dated 19.07.2021 passed in OMP/1/COMM/213 of 2021. Learned Counsel for the Appellant has also filed an Additional Affidavit with respect to the first Respondent conducting Extraordinary General Meeting removing the existing Directors and appointing its own Directors at the Board of the Appellant and submitted that Contempt Proceedings were also being initiated before the Hon’ble High Court of Delhi. We refrain from passing any observations regarding the subsequent developments as it is not a subject matter before us. Keeping in view, the factual matrix of the instant case and the fact that Orders of the Hon’ble High Court of Delhi have not been placed before NCLT, we are of the considered view that the Order be set aside and the matter be remanded to NCLT and the same shall be decided by the Tribunal taking into consideration all the Orders of the Hon’ble High Court of Delhi and shall dispose of the Company Petition as expeditiously as practicable. Application disposed off. Issues involved:1. Challenge to NCLT order directing status quo on shares and assets.2. Allegations of concealment and misleading by the respondent.3. Interpretation of High Court orders regarding shareholding and control.4. Contention of suppression of material facts by the respondent.5. Conflict between NCLT order and High Court directives.6. Request for remand and consideration of all High Court orders by NCLT.Detailed analysis:1. The appeal was filed against an NCLT order directing status quo on shares and assets due to a challenge before the High Court. The NCLT order was contested based on the claim that the respondent concealed proceedings before the High Court, leading to erroneous directions by NCLT. The NCLT order was remanded for reconsideration, emphasizing the importance of considering all High Court orders in the matter.2. The appellant alleged that the respondent concealed proceedings before the High Court, misleading the NCLT. The High Court had restrained the respondent from exercising rights over shares, leading to a conflict between NCLT and High Court directives. The appellant's concerns regarding the respondent's actions, including an Extraordinary General Meeting, were highlighted, indicating potential contempt proceedings before the High Court.3. Interpretation of High Court orders regarding shareholding and control was crucial in the case. The High Court's directives on maintaining status quo as to the shares of the respondent company were significant, emphasizing the need to consider all High Court orders in determining the ownership and management rights over the shares and assets of the appellant company.4. The respondent argued that the Company Petition was filed before the High Court's order, and there was no material suppression. The respondent claimed to be the recorded 100% shareholder of the appellant company, justifying their right to control and manage affairs. The respondent's position was supported by the High Court's order allowing them to maintain status quo regarding the shares.5. The conflict between the NCLT order and High Court directives raised questions about the validity and impact of each decision. The NCLT order was set aside, emphasizing the need to consider all High Court orders and dispose of the Company Petition expeditiously. The lack of information sharing between NCLT and High Court necessitated a remand for a comprehensive review.6. The request for remand and consideration of all High Court orders by NCLT was crucial to ensure a fair and informed decision. The need for NCLT to review all High Court directives and dispose of the Company Petition promptly was highlighted, emphasizing the importance of aligning decisions and addressing any conflicts or discrepancies in the legal proceedings.