TaxTMI 
TaxTMI 
2020 (8) TMI 583
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....ennai Bench ('for short Bench'). These Appeals were heard together and disposed of by this common judgment. 2. The brief facts of the case are that Zynergy Solar Projects and Services (hereinafter referred as Respondent No. 2 or R-2 in short) have Appellant as 49% shareholder and Cascade Energy Pvt. Ltd. (hereinafter referred as Respondent No. 1 or R-1 in short) as 51% shareholder as per the shareholding Agreement signed between them. The Appellant is a company registered under companies Act, 1956 engaged in the business of purchase, sale, supply and distribution of power. R-2 Company was promoted by Mr. Rohit Rabindranath (hereinafter referred as Respondent No. 3 or R-3 in short) and also the Managing Director of R-2 Company. The Appellant is a shareholder of R-2, initially holding 49% and claiming to hold 51.1% shares which is contested and is part of the subject matter of the Company Appeal (AT) No. 296 of 2017. R-2 ventured into solar power generation in 2010 and required additional funds to expand its business. In 2015 R-3 entered into a Strategic Investment Agreement with Kohli Ventures. Pursuant to the Agreement Rs. 30 Crores was invested into R-2 Company by Kohli Ventures ....
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....e Company Secretary. Regarding the payment of remuneration to the Chartered Accountant and the Company Secretary, both are at liberty to fix their remuneration s per the practice in vogue. The payment of remuneration to them shall be borne by the Petitioner and Respondents equally. Accordingly, the relief as prayed is granted to the petitioner. 5. It is also on record that an application has been filed by the Counsel for R2. The Petitioner is directed to file the counter within two weeks and thereafter within ten days the Counsel for the Respondent may file rejoinder, if any. Matter is posted for arguments on the application. Put up on 13.7.2017 at 10.30 a.m." 5. Aggrieved by the same the Appellant approached NCLAT through this Company Appeal (AT) 213 of 2017. NCLAT set aside the order passed by the NCLT, Chennai and remanded back to the NCLT, Chennai by passing an Order on 14.07.2017 as under: "5. It is informed by the parties that the Appellants have filed the original Company petition under Section 241 of the Companies Act, 2013 alleging 'oppression and mismanagement' by Respondents. The Respondents have also filed a cross petition under Section 241 alleging 'oppression a....
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....ll advised to deal with the issue of maintainability of the original proceedings or that comes within the sweep of prima facie case for entertaining this prayer for interim relief. " 7. NCLT, Chennai Bench in consideration of I.A. 110 of 2017 filled in the same Company Petition No. 19 of 2017 has directed the respondents under the company petition to maintain the status quo and passed the following order on 18.07.2017: "7. It is also on record that the petition came to be filed on 07.04.2017 and, if the shareholding composition of the management as it existed on 27.04.2017 is not protected. The balance of convenience existing in favour of the petitioner may get disturbed and there is an apprehension of causing irreparable loss to the petitioner that cannot ve compensated by way of monetary consideration. In the light of the above discussion, we are inclined to grant the relief as contained under para vi(1) of the I.A. No. 110 of 2017 and order as follows:- We direct the Respondents to maintain status quo with regard to the Board Composition, shareholdings and Articles of Association of the 1st Respondent Company as it existed on 27.04.2017. 8. In relation to the applicati....
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....n 23- 03-2017 the KEB Hana Bank issued letters stating that the KYC of Kohli/Kohli Ventures is not satisfactory and that in the event that the Investor continues to be a shareholder in R-2 Company, it will be constrained to recall the loan (ECB) of 4 Million USD that it had advanced. It is pertinent to note that the Appellant has secured, from its shareholders, property worth more than 100 Crores INR in relation to the loans. Any recall of loans due to the KYC of the Respondent would have crippling consequences for the Appellant and would essentially sound the death knell for the Appellant as well as the business life of R-3. 13. It is also submitted that R-1 and Kohli ventures have failed to disclose several material facts with respect to their background, and specifically that of their promoter, i.e. Kohli. Therefore the said Respondent has willfully misrepresented and has consequently violated the provisions of the Indian Contract Act, 1872. Due to these illegal acts of R-1, the Appellant has been forced to run from pillar to seek remedy. Aggrieved by the blatant violation of the Foreign Exchange Management Act, 1999 ("FEMA") and the failed KYC due to fraudulent misrepresentati....
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....rgue on the question of removal of 11th Respondent, if he is removed by the decision of the EGM during the pendency of the Company Petition." 17. It is further stated by the Counsel of Appellant that any order arising out of Company Petition/application filed by R-1 could have been decided only after it has been established that R-1 can maintain the petition under Section 244 read with Section 89(8) of the Companies Act, 2013. Therefore the said Impugned Orders of Hon'ble NCLAT are not only erroneous and illegal, but the said illegality also goes to the root of the matter, since the NCLT has failed to properly consider whether R-1 was even entitled to maintain C.P. No. 19 of 2017 filed by it, and further whether it could have exercised its rights as a shareholder on the date of filing the petition under Section 241 despite the failure to make declarations under Section 89. Therefore R-1 is disqualified from exercising any rights of shareholder under section 89(8) of the Companies Act, 2013 and for that reason cannot maintain CP No. 19 of 2017. 18. It is further contended by the Appellant that as per Section 242 (4) an interim order could be passed only for the purpose of regulati....
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....t to have granted the order directing forensic audit only after satisfying itself with the criteria mentioned in the Section 213 and that too only at the final stage. 22. Respondent No.1 filed their reply and rebutted in brief. It is submitted on behalf of R-1 that as per law laid by Hon'ble Apex Court, administrative orders passed by courts or judicial orders that do not affect the rights or liabilities of a party are not appealable. In the instant case, the impugned order merely directs a forensic order of the records of R-2 as NCLT deemed it fit and necessary to determine the status of the affairs of the said Company before progressing in the matter. The obligation to maintain proper records and to subject them to annual audit is a statutory obligation of the said Company. Hence the impugned order does not impose a new obligation upon R-2 Company. The impugned order does not in any way impose any obligation or curtails the right/liberty of the Appellant, who is nothing more than a mere 49% shareholder. The Appellant cannot in any way be a "person aggrieved" for the purpose of Section 421 and the impugned order cannot possibly cause prejudice or give rise to a grievance to the A....
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....hat though it monitored the transections, the said Kohli Venture (P) Ltd. is not the beneficial owner of the investment made by R-1 Company. The investment is made by R-1 in the R-2 Company in its own name and for its own absolute benefit. The Respondent No. 1 is the registered owner and the beneficial owner of its shares held in the company. The said Kohli Ventures (P) Ltd does not hold any right, title or interest in the said shares. Even the Company Secretary of R-2 Company issued certificates confirming that all applicable laws and regulations were complied with while making the investment. The entire investment in equity and debentures is fully reported to RBI as required by applicable regulations. 28. It is further submitted on behalf of R-1 that after receiving the investment, R-2 Company and R-3 excluded R-1's nominee directors from the activities and affairs of the company. Despite persistent efforts by R-1 and its representatives, the Appellant and R-3 did not divulge any information about the affairs and business operations of the Company to R-1. Realising that things were amiss R-1 enquired with statutory authorities and discovered that the R-2 Company :- a) Had not ....
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.... transections. Further the Tribunal also directed the Appellant and R-2 Company to maintain status quo on the said date. 30. It is also submitted by R-1 that despite the aforesaid order the Appellant did not supply the requisite information to R-1 and instead filed a false and frivolous "complaint" purportedly dated 17/05/2017 to the Deputy Commissioner Income Taxes, to the effect that this Respondent is a Benamidar of Kohli Ventures (P) Ltd. Based on the complaint of R-3, the said IT Officer absurdly and without jurisdiction passed an order dated 19/05/2017 under the Benami Transection (Prohibition) Amendment Act 2016 directing the Registrar of Companies, Chennai to attach the shares of R-1 in R-2 Company, without prior notice to R-1. On Issuance of this order, the Appellant filed an application CA No. 112 of 2017 in CP No. 19 of 2017 seeking summary dismissal of CP 19 of 2017 on the premise that the shares have been attached and therefore no right in respect of the same can be exercised by R-1. 31. It is argued on behalf of R-1 that while the said attachment was malafide and illegal it is also respectfully submitted that mere attachment does not divest the shareholder of owners....
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....er of the subject shares. Hence the burden of proof cannot be shifted upon the Respondent to disprove that which has merely been asserted but not substantiated by any material whatsoever. 36. It is also submitted on behalf of R-1 that the allegation that the application challenging maintainability and the application seeking status quo ante were listed on 13/07/2017 but the Tribunal only ordered the application for maintainability is erroneous. As is apparent from the records R-1 had filed a counter in CA 112 of 2017 and hence on their specific request, the Appellant had been permitted by the Tribunal to file a rejoinder. This direction was in fact specifically sought by the Appellant. In fact the Appellant has also filed a rejoinder in CA 112 of 2017 thereafter. Further the application for status quo namely CA 110 of 2017 was argued by both sides. There is nothing on record to demonstrate that the Appellant objected to the said application being argued on the said and factually no such objection was raised. On the other hand the Appellant took its chance by arguing the application CA 110 of 2017 in CP 19 of 2017 and when orders have now been passed against it, the Appellant is no....
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....d along with main petition. Thus the NCLT under Rule 11 of National Company Law Tribunal Rules, 2016 has the inherent powers to pass such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. Therefore, the orders passed by NCLT are not questionable on the grounds contended by the Appellant. Also, we are of the opinion that maintainability is a mixed question of facts and law and conducting a forensic audit could produce the important facts that may be required by the NCLT in order to decide the preliminary issue. 40. The Other issue raised by the Appellant that whether the impugned interim order dated 14th June 2017 passed by the Tribunal is in consonance with sub-section (4) of Section 242 of the Companies Act, 2013, as quoted below:- "Powers of Tribunal - (1)If, on any application made under Section 241, the Tribunal is of the opinion- (a) that the company's affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company;and (b) that to wind up the company would unfairly prejudice su....