TaxTMI 
TaxTMI 
2016 (11) TMI 1678
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....ith the consent of the parties giving liberty to the applicant to raise all the issues afresh while setting aside the order dt.19-12016 passed by the erstwhile CLB in C.A 201/2015, hence the applicant filed this CA. 3. The applicant submits that he filed this CP u/s 397-398 of the Companies Act 1956 against his sister and others impugning the conduct of them as prejudicial to the interest of him as a shareholder of the Company. 4. The applicant submits that Section 164 (2)(a) of the Act mandates that no director of a company which has not filed financial statements or annual returns for three consecutive financial years shall be eligible to be reappointed as director of that Company or appointed in any other Company for a period of five years from the date on which the said Company fails to do so. The applicant further submits that Section 167 (1) (a) of the Act says that office of a director shall become vacant in case he incurs disqualification of non-filing of financial statements or annual returns for a continuous period of three financial years as stated in Section 164 of the Act. 5. That RI Company, wherein R4 & R5 functioning as directors, having not filed financial....
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....not being a permeant director, he is liable to be retired at every ensuing AGM, but till date he has not been reappointed in any AGM by the shareholders of RI Company. 9. The counsel has reiterated in this CA as well about retirement of deceased Davendra Ahuja, but the said Ahuja having already passed away, there is no point in making any discussion over the said issue to show him as now disqualified. 10. The petitioner counsel further states that since R4 has not been reappointed and no Resolution has been passed in any of the AGMs since 1-10-2009, he ceased to be director of the Company even under the Article above mentioned. To fortify the above proposition, the counsel relied upon (Krishnaprasad J. Pilani v. Colaba Land and Mills Co. Ltd [(1959)29 Comp Cas 273 (Bom)J. 11. The applicant counsel further submits that the power conferred upon this Tribunal is of widest amplitude and the power u/s 403 (equivalent to Section 242 (4) of the new Act) of the Companies Act 1956 for passing interim order as the same is incidental to the power to order substantial reliefs as set out in Section 402 of the Companies Act 1956. To show that this Tribunal can pass any order which it th....
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....emoval of R4&R5, he consciously left taking such plea in CA 201/2015 filed on 19th October 2015. Since the reliefs sought in CA 201/2015 being substantially the same as that of the reliefs sought in the present CA, it is hit by the doctrine of Resjudicata. To say that this CA is hit by constructive Resjudicata for the petitioner failed to take this plea of disqualification of R4 & R5 u/s 164 (2)(a) r/w 167 (l)(a) of the Act, the Respondents' counsel relied upon Satyadhyan Ghosal & Ors. v. Smt. Deorajain Debi &Anr [(AIR 1960 SC 941) (Paragraphs 7 and and Arjun Singh vs. Moinder Kumar & Ors. [(AIR 1964 SC 993) (Paragraphs 10, 11 and 13)]. 14. The respondents counsel submits that interim relief sought in this CA is not in aid of the reliefs in the main CP, therefore, the same is liable to be dismissed, for which the respondents counsel relied upon Shanti Prasad Jain v. Kalinga Tubes Limited (AIR 1965 SC 1535 para 35); Shree Ram Urban Infrastructure Limited v. R. K. Dhall& Ors. [(2010) 153 Comp Cas 150 (Bom) pages 152,154-157, 160-162)J and United Commercial Bank v. Bank oflndia and Ors. [(1981) 2 SCC 766, paras 50-541. 15. The Respondent counsel further submits that this app....
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....prejudice by non-compliance of filing financial statements within the time prescribed. It is not the case of this applicant that he is not aware of figures in the financial statements and it is also not the case of him that these respondents are indulged in configuring of the financial statements to the benefit for their selves. In the present case, R5 is the promoter holding 93.37% of RI Company. The counsel further submits that this applicant has not raised any objection in the AGMs stating that R4 & R5 should not continue as Directors of the Company, more so, the Company approved R4 and R5 continuing as Directors on year to year basis in the AGMs held. In fact, the applicant himself filed CA for holding AGMs for the years 2009-10 to 2013-14; therefore this applicant now cannot say that the respondents on their violation failed to file financial statements for the year 2009-10 to 2013-14. Besides this, this petition has never challenged the audited financial statements or the AGMs held for the year 2009-10to 2013-14 as prejudicial to him or to RI Company. Hence, he could not raise as a plea in the CP filed u/s 397-398 ignoring the fact that non-compliance of any section of law of....
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.... R-4 and R-5 have vacated the office of Directors of R-1 by operation of law under the provisions of Section 167 (a)(a) of the Companies Act,2013 w.e.f 30^th September 2013, b. The Hon'ble Board be pleased to pass an order declare that R-4 and R-5 have become disqualified from the directorship of TCFC Finance Ltd. and vacated the office of its directorship w.e.f.30th September 2013, c. The Hon 'ble Board be pleased to pass an order declaring that R-4 and R-5 have also become disqualified from the directorship of TCFC Securities Pvt.Ltd.(another associate company) and Citi Leasing Pvt.Ltd. (100% subsidiary company) and vacated the office of its directorship w.e.f 30^th September 2013 21. The applicant asked various other reliefs without prejudice to the reliefs sought above. Though the applicant asked various other reliefs, the counsel has not pressed the remaining reliefs; except the reliefs above mentioned, this Bench has therefore not discussed those reliefs. In the remaining reliefs, most of them are nothing but repetition of the reliefs already determined or sought in the CAS filed by this applicant 22. The applicant herein has asked to declare t....
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....s attained finality. 25. The Hon'ble High Court further held that all the rights of either side in relation to the controversy in between the parties are still left open to be decided by CLB/NCLT. 26. For the CA 201/2015 was disposed of without any order by setting aside the order already passed, it is meant that the parties consented not to raise the issues in CA 201/2015 anymore, at least in another CA, if not in the main petition. If at all on the same subject or set of facts, another CA is entertained, it would be nothing but making the order of High Court redundant. The only solace given to the applicant in the appeal order is that he can take out fresh application for interlocutory reliefs pleading such additional fact as he may choose to. Yes, he is free to take out a fresh application if additional facts emanate giving cause of action to him. In CA 201/2015 and in the present CA 47/2016, the relief asked is for removal of R4&R5 as directors. The Sections 164 & 167 of the Act were in force when CA 201/2015 was filed, as they are in force today. Then, one should not lose sight of the fact that these new Sections 164 and 167 have come into force from 1-4-2014, i.e., ....
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....mpleteness, remaining two points are dealt with assuming 1 st point has been decided against the Respondents. Point.2: - whether the disqualification set forth in Section 164(2)(a) r/zv 167 (1) (a) of the Act 2013 has retrospective effect or not: 30. Senior counsel Shri Chaudhry vehemently argued that Section 164 (2) (a) and 161 (1) (a) of the Act 2013 is squarely applicable to the failure of filing financial statements for three financial years before notification of above Sections for the reason the posterior disqualification on the past conduct does not become retrospective for part of the requisition for its action is drawn from a time antecedent to passing new Act. For which he relied upon In Re. Solicitor's clerk, and Ishwarnagar Co-Operative Housing Building Society case, Supra to fortify his arguments that the Provisions aforesaid are applicable to the defaults happened antecedent to new enactment. 31. On perusal of Solicitor's clerk case, it appears that a solicitor's clerk was convicted of larceny before 1956 amendment to the Solicitors Act 1941, was made ineligible to continue as solicitor's clerk after amendment in the year 1956. The said clerk ....
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....rs continuing until before enactment were also not disqualified to continue as directors. When in solicitor's case clarified that 1956 amendment to Solicitors Act 1941 would not any ante to 1956 is not declared as void, making it clear that past status is not changed, the solicitor Act not made anybody in the past either as convict or defaulter. Therefore, an act antecedent to the enactment cannot and shall not be construed void relating the enactment to the acts back to it unless and until it explicitly said as retroactive. Indeed, Solicitor's case ratio comes to the rescue of the respondents rather to the applicant. 35. The need for accessibility, precision and general application flow from the concept of rule of law, a person should be able to know of the law and be able to confirm his or her conduct according to the law. Basis of presumption is based on eliminatory consideration of fairness which dictates that individuals should have an opportunity to know what the law is and confirm their conduct accordingly. 36. In the present case non-filing of financial statements before this enactment would not tantamount to disqualification to become Director or to continue ....
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....Mills Co., that "a resolution passed by the directors may be perfectly legal and yet oppressive, and conversely a resolution which is in contravention of the law may be in the interests of the shareholders and the company". On this question, Lord President Cooper observed in Elder v. Elder: "The decisions indicate that conduct which is technically legal and correct may nevertheless be such as to justify the application of the 'just and equitable' jurisdiction, and, conversely, that conduct involving illegality and contravention of the Act may not suffice to warrant the remedy of winding up, especially where alternative remedies are available. Where the 'just and equitable' jurisdiction has been applied in cases of this type, the circumstances have always, I think, been such as to warrant the inference that there has been, at least, an unfair abuse of powers and an impairment of confidence in the probity with which the company's affairs are being conducted, as distinguished from mere resentment on the part of a minority at being outvoted on some issue of domestic policy" Neither the judgment of Bhagwati J, nor the observations in Elder are capable of ....