TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 882
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....dana Agrawal (the Respondent No.3 herein), Director of the Respondent No. 1 Company, praying for an Order of injunction restraining and/or declaring as non-est the appointment of any Advocate-on-record and/or Counsels under the claimed authorization of the erstwhile Directors of the Respondent No. 1 Company. Precisely speaking, the Respondent No. 1 Company/Applicant Advocate submitted that all the erstwhile Directors of the Respondent No. 1 Company vacated their offices in terms of Section 167(1) of the Companies Act, 2013 read with Section 164(2) of the said Act, due to the default committed by the erstwhile directors in filing the financial statements of the Respondent No. 1 Company and its subsidiary Companies for the years 2010-11, 2011-12 and 2012-13. Subsequently, on or about 06.02.2015, a Board Meeting of the Respondent No. 1 Company was held wherein it was recorded that the new Board has been constituted and the required number of Directors were appointed in the Respondent No. 1 Company in terms of Section 167(3) of the said Act. The Respondent No. 1 Company/Applicant Advocate emphasised that any purported appointment of new Advocate-on-record claimed to be made on behalf o....
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....he office of all the defaulting Directors stood vacated on coming into force of these provisions w.e.f, 01.04.2014. Further, the reasons given by the Petitioner No. 1 (Mr. Partha Ghosh) in the said letter for not filing of annual accounts that the Junior Division of Ld. Alipore Court, Kolkata, vide Order dated 15.12.2010, injuncted the Respondent No. 1 Company from holding any General Meeting and hence, from approving the annual accounts, cannot be a ground for not filing annual accounts, per se, meaning that the Respondent No. 1 Company, even in those self created and orchestrated circumstances, was obliged to file unapproved annual accounts. In fact, Mr. Partha Ghosh (Petitioner No. l) and Mr. Arun Banerjee, along with Others, since December, 2010, colluded to fraudulently procure and maintain an injunction on the Respondent No. 1 Company and its subsidiaries, preventing them from holding the General Meeting by filling a Title Suit being T.S. No.3469/2010 by Mr. Arun Banerjee and another, before the Ld. Alipore Court, without making the other shareholders as parties to the said Suit and also, by taking no steps to pursue the appeal filed by Mr. Partha Ghosh as Managing Director o....
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.... No. 1 Company is illegal and untenable as no valid reconstitution of the Board of Directors of the Respondent No. 1 Company can take place in view of the fact that the existing management of Company is already in power and discharging its duties. In addition, it has been submitted that the purported allegation of the Applicant that the existing Board of Directors have vacated their offices as they have been disqualified under Section 167(1) read with Section 164(2) of the Companies Act, 2013 for non-filing of the Annual Returns and/or financial statements before the ROC for the financial years 2010-11, 2011-12 & 2012-13, is false and baseless. In fact, the existing Board of Directors has been unable to file the Annual Returns and/or financial statements owing to an Order of the Court preventing the Respondent No. 1 Company from holding the Annual General Meetings. 2.1. Further, in a Writ Petition being W.P. (C) 3296/2015 filed by the Respondent Nos.2 & 3 before the Hon'ble High Court at New Delhi, it has been specifically averred that until the digital signature certificates are uploaded on the website of the MCA, the newly constituted Board of Directors could remain totally ....
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....n order of ad-interim injunction from holding any general meetings of the Respondent Companies till 14.01,2011." Therefore, it is evident that the said Order, which was obtained by perpetrating fraud on the Learned Court, does not in any manner make any reference to any restriction on the filing of the financial statements. In addition, it has been submitted that on 19.01.2011, on behalf of the Respondent No. 1 Company, the Petitioner No. 1 had filed a Statement of Facts and Reasons with the Registrar of Companies (ROC), West Bengal, wherefrom it is evident that despite there being an Order of Injunction dated 15.12.2010, on holding of the Annual General Meeting, the Petitioner No. 1 has made a specific reference to the need to file the Annual Accounts in accordance with Section 220(2) of the Companies Act, 1956. Therefore, such reference to the ROC clearly shows that the Petitioner No. 1 was aware of and has appropriately complied with the statutory requirement of Section 220(2) of the Act for the financial year 2009-10 and hence, now the Petitioners/Non-Applicants cannot take shelter of the Order of Injunction dated 15.12.2010 for the failure to file the Financial Statements for ....
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....rements on account of complete standstill of the affairs of the Company. In any event, the provisions of erstwhile Section 220 of the Companies Act, 1956 providing for filing of unapproved balance sheet is of limited relevance in so far as in absence of suitable machinery to prepare .financial documents, the question of even unapproved balance sheet and/or other financial documents does not and cannot arise. Further, the provision for filing of unapproved balance sheet becomes relevant only when a Company having appointed statutory auditors in its last AGM and having prepared the audited accounts, has been prevented from tabling the same in the AGM by virtue of an injunction preventing such Company from holding any AGM, In fact, this was the precise situation in which the audited accounts for the financial year 2009-10, which were duly prepared, but could not be tabled before the members of the Company in the AGM, were tendered for filing. 4.3 The provision of Section 164 of the Act came into effect on 01.04.2014 and as such, disqualification, if any, have to accrue prospectively upon coming into effect of the said provision by failure to file financial statements of the Company f....
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....nancial statements for the years 2010-11, 2011-12 & 2012-13 and also, non-compliance with the provisions of Section 220(2) of the Companies Act, 1956, especially when the Petitioner No. 1 was aware of the statutory compliance and has made a specific reference to the need of filing the Annual Account in accordance with Section 220(2) of the Act. Further, in the letter of the Petitioner No. 1, the given date is 19.01.2011 which was after the Order of Injunction dated 15.12.2010 on holding the Annual General Meeting, which clearly establishes the fact that the Petitioner No. 1 understood the gravity of the situation and was aware of the fact that the Court Order never restrained the filing of the financial statements and/or Annual Returns of the Respondent No. 1 Company and its subsidiaries. 5.1 It has been further argued that in the Shareholders' Agreement, the Respondent Nos.2 & 3, viz,, Mr. Raj Shekhar Agrawal and Mrs. Vandana Agrawal, are named as Promoters of the Respondent No. 1 Company and as such, they have been given substantial authority and responsibility in terms of the Said Shareholders' Agreement. It has been highlighted that on prognosis of the definition of bo....
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....constitution of the Board of Directors of the Respondent No. 1 Company can take place in view of the fact that the existing management of Company is already in power and discharging its duties. Moreover, the existing Board of Directors has been unable to file the Annual Returns and/or financial statements owing to an Order of the Court preventing the Respondent No. 1 Company from holding the Annual General Meetings. However, the Applicant Advocate has given the plea that the Order dated 15.12.2010 does not in any manner put a restriction on the filing of the financial statements as the operative portion of the said Order, inter alia, states "Accordingly, the defendants are hereby restrained, by an order of ad-interim injunction from holding any general meetings of the Respondent Companies till 14.01.2011." Further, this contention has been further strengthened on the ground that despite there being an Order of injunction dated 1512,2010 on holding of the Annual General Meeting, the Petitioner No. 1 has made a specific reference on 19,01.2011 to the ROC explaining the need to file the Annual Accounts in accordance with Section 220(2) of the Companies Act, 1956 and thus, the statutor....
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....rawal, are named as Promoters of the Respondent No. 1 Company. Besides, on prognosis of the definition of both 'Control' and 'Promoter' as defined in Sections 2(27) and 2(59) of the Companies Act, 2013, it has been interpreted that the right to appoint directors shall accrue by virtue of shareholding or shareholders agreement and as a shareholder, shall have control over the affairs of the Company and thus, by all means, the Respondent Nos.2 & 3 satisfy the test of Promoters and hence, the directors of the Respondent No. 1 Company were rightly appointed in terms of Section 167(3) of the Companies Act, 2013. In this context, the Advocate for the Petitioners/Non-Applicants has extended the argument that upon vacation of the office by the Board of Directors of a Company by reasons of incurring disqualification under Section 164 of the Companies Act, 2013, an interim Board of Directors can only be appointed either by the Promoter or the Central Government under the terms of Section 167(3) of the said Act, whereas the Respondent Nos.2 & 3 are not the Promoters within the meaning of the definition of Promoter in Section 2(69) of the Companies Act, 2013 and as such, are no....