TaxTMI 
TaxTMI 
2021 (2) TMI 521
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....OPAL M. J Introductory: The Appellant has preferred the present Appeal being aggrieved against the order dated 19.1.2021 passed by the National Company Law Tribunal, Bengaluru Bench in company Petition No.06/BB/2021. 2. The National Company Law Tribunal while passing the impugned order dated 19.1.2021, inter-alia at Para 11 to 13 had observed the following: "Para 11: Since the RI Company has suffered various adverse findings with cogent evidence at the hands of various Statutory Authorities, as detailed supra, it would not be proper to permit R1 Company to continue its name on the rolls of Registrar of Companies, Bangalore. Therefore, in terms of provisions of Section 283 of Companies Act, 2013, it would be just to permit Provisional Liquidator to forthwith take into his or its custody or control all the property, effects and actionable claims to which the R1 Company is or appears to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the R1 Company and to avoid misuse of its property. Para 12 : So far as the contentions of the Learned Counsel for the R1 Company, as detailed supra, are concerned, it is settled po....
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....ntegrated hybrid satellite and terrestrial communications system and in connection with its business activities, it entered into an agreement dated 28.1.2005 ('Devas Agreement') with Antrix Corporation Limited ("Antrix"/"Respondent No.1" which is the marketing arm of the Government of India's Indian Space Research Organization ("ISRO") set up under the DOS. 4. The Learned Counsel for the Appellant points out that Deutsche Telekom Asia Pte. Ltd is a wholly-owned subsidiary of Deutsche Telekom AG, which is the world's fourth largest telecommunications, media, and information technology service companies in the world and that the Government of Germany is substantial shareholder of Deutsche Telekom AG and owned approximately 32% of Deutsche Telekom in Devas at the relevant time. 5. The Learned Counsel for the Appellant brings to the notice of this Tribunal that the investment by Deutsche Telekom in Devas was made pursuant to the approval granted by the Foreign Investment Promotion Board ('FIPB') on 18.5.2006 and was recognised as one of the largest Foreign Direct Investment into Karnataka during the period January 2000 to December 2010. 6. The plea of the Appellant is that on 25.2.2....
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....earned Counsel for the Appellant brings to the notice of the Tribunal that the Appellant's Director, Mr.Arun Kumar Gupta, is residing in Mc Lean, Virgenia, USA and accordingly executed the 'Appeal Memo', verifying Affidavit', 'Affidavits' in support of Application for Stay (IA 5/2021, Pg.2824 Vol.XV Appeal), application for Exemption (IA 4/2021-Pg 2877-Vol.XV of the Appeal Paper Book) and in fact all the Affidavits were sworn to before a 'Notary Public' in Virgenia, USA, in accordance with the Law of 'USA' and the 'Apostles Convention'. In this regard, the Learned Counsel for the Appellant points out that all such Notarised Affidavits etc. were sent for 'Apostillation and the same will be filed before this Tribunal soon after the receipt, eight weeks from 28.1.2001, sought in IA 4/2021, due to COVID-19 restrictions in USA. 13. The Learned Counsel for the Appellant adverting to Section 421(1) of the Companies Act, 2013, points out that the words 'any person aggrieved' by an order of the Tribunal may prefer an 'Appeal' before the 'Appellate Tribunal'. Added further, the Learned Counsel for the Appellant expatiating his contention proceeds to point out that Section 421(1) of the Comp....
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....of 'Provisional Liquidator' in Form WIN-7' must be supported by a separate Affidavit containing reasons for appointing a 'Provisional Liquidator' and that neither the Petition filed before the National Company Law Tribunal contends such reasons or ground nor as the impugned order adverted to such reasons or grounds. A clear cut position of the Appellant is that the 'Company Petition' filed before the National Company Law Tribunal, Bengaluru bench is non-est in Law as such the same cannot be acted upon the 'Tribunal '. 19. The Learned Counsel for the Appellant takes a primordial stand that the C.P.No.06/BB/2021 was served on 'Devas' at 4.30 p.m. on 18.1.2021 and that the matter was listed before the 'Tribunal' for hearing on 19.1.2021 at 10.30 a.m. and immediately order appointing 'Provisional Liquidator' was passed without complying with the Companies Act, 2013 and 'Companies Winding up Rules, 2020, or permitting 'Devas' to file its 'Reply' to the petition or prayer for the Appointment of 'Provisional Liquidator'. 20. The Learned Counsel for the Appellant by referring to Paragraph 5 of the impugned order dated 19.01.2021 passed by the Tribunal contends that the only submissions m....
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..... 24. The Learned Counsel for the Appellant contends that none of the allegations are 'Fraud', 'Alleged Illegalities etc. are proven to be true under the 'Prevention of Money Laundering Act and Foreign Exchange Management Act, and or the Central Bureau of Investigation' proceedings. APEPLLANT'S CITATIONS: 25. The Learned Counsel for the Appellant refer to the decisions for the proposition that appointment of 'Provisional Liquidator' is the drastic step and should not be resorted to when assigning 'special reasons'. 1) In re London, Hamburg and Continental Exchange Bank,(1866)LR Eq 231 1866, Page 236 2) In Re.Gaya Sugar Mills Ltd. Lakshminarayan Bhandani and Ors. 1949 SCC Online Pat 32 3) Virendrasingh Bhandari and Ors. V. Nandlal Bhandari and Sons P.Ltd. (1974) 1 Comp LJ 245 (MP) 4) Kailash Prasad Mishra and Ors v. Medwin Laboratory P Ltd. 1985 SCC Online MP 194 5) The Learned Counsel for the Appellant relies on the decision of the Hon'ble High Court of Judicature, Hyderabad (For the State of Telengana and the State of Hyderabad) in the case of Avon Lifesciences Limited V. Ashika Credit Capital Ltd. reported in MANU/AP/0303/2018, wherein it is observed that to contend....
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....68 SC 279 (b) East Indian Wires Limited v. Mohan Lal Ghosh 2003 SCC Cases Online Cal -164. 29. In regard to the contention that 'what cannot be done' directly, cannot be done 'indirectly' vis a vis the Ministry of Corporate Affairs, investigation under Companies Act, 1956, and the National Company Law Tribunal Petition under the Companies Act, 2013, the Learned Counsel for the Appellant relies on the decision of Hon'ble Supreme Court Jagir Singh V. Ranbir Singh and Anr. reported in 1979 1 SCC 560. 30. The Learned Counsel for the Appellant submits that since an 'Inquiry' for 'Fraud' was initiated under the Companies Act, 1956, the provision of the Companies Act, 2013, relating to 'Fraud' could not have been applied retrospectively and refers to the order of the Hon'ble High Court of Delhi in Alchemist Infra Reality Ltd.. v. Union of India and Ors. LPA No.189/2019 and Cm Appl.12577/2019 dated 18.3.2019. The First Respondent's submissions: 31. The Learned Counsel for the First Respondent submits that the First Respondent/Petitioner before the 'Tribunal' had served a notice both on the company petition and the application for the appointment of a 'Provisional Liquidator', 'Devas....
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....single justifiable reason to support, the averments made in Paragraph 7.1 (Page 32 of the Appeal Memorandum) and Paragraph 7.5 (Page 33-34 of the Appeal memorandum) read with the 'List of Dates and Events'(Serial No 1-6 at Pages 7-9 of the Appeal Memorandum) wherein it was pleaded that, "Devas was engaged in the business of delivering broadband, wireless access and audiovisual services through an integrated hybrid satellite and terrestrial communication system and from inception resources and funds had been raised from its shareholders in developing technology and carrying out various acts in furtherance of its obligation under the 'Devas' Agreement". 36. The Learned Counsel for the First Respondent points out that it is a well settled position of law that any false statement in a 'Sworn Memorandum of Appeal' will be an adequate ground to reject the Appeal inlimine and in this connection reliance of the decision of Hon'ble Supreme Court in Sciemed Overseas Inc v. BOC India Ltd & others reported in 2016(3) SCC page 70 (Vide Paragraph No 28 & 29). 37. The Learned Counsel for the First Respondent projects an argument that 'Fraud' vitiates everything and such a Litigant is not ent....
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....tions of Section 272 had proceeded to appoint a 'Provisional Liquidator', of course, after hearing both parties, in terms of Section 273 (1) (c) of the Companies Act, 2013. First Respondent's Decisions: 43. The Learned Counsel for the First Respondent cites the decision of Hon'ble Supreme Court in Satluj Jal Vidyut Nigam v. Raj Kumar Rajinder Singh reported in (2019) 14 SCC at Page 449, wherein it is observed that no right can be claimed by a 'Fraudster' on the ground of technicalities. 44. The Learned Counsel for the First Respondent relies on the decision of Hon'ble Supreme Court in Bhaurao Dagdu Paralkar v. State of Maharashtra reported in (2005) 7 SCC at Page 605, wherein it is observed that 'Fraud' is an act of deliberate deception with design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. 'It is a cheating intended to get an advantage'. 45. The Learned Counsel for the First Respondent refers to the decision of Hon'ble Supreme Court in Shrist Dhawan (SMT) v. M/s. Shaw Brothers reported in (1992) 1 SCC at Page 534, wherein it is observed that 'Burden to prove fraud or collusion is on the person who alleges....
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....(Finance & HR), (a misleading designation) had stated that one Mr.Rajiv Mahajan V.P.(Finance) based in USA was giving approval for expenses and withdrawals who accessed data on 'Accounts and Finance' online through 'cloud', gave approvals to the said Mr.Mohan. 51. The Learned Director (Legal & Prosecution) for the second Respondent contends that the Former Director(s) inspite of numerous opportunities provided to them, had failed to appear before the 'Provisional Liquidator' even through 'video conference' and some of the Director(s) had sent a similar 'Reply' stating that 'Auditors' are best positioned to provide the information requisite and as a matter of fact, the 'Auditor' of the Company cannot step into the shoes of the 'Director'. 52. On behalf of the second Respondent, it is submitted that the Former Management had fraudulently conducted the affairs of the Company from the beginning and had the technology or 'IPR" to develop such technology which they claimed. 53. Apart from this, the 'French Authorities' issued a 'Letter Rogatory' which clearly established that 'DMPL' misrepresented in 2005 which they claimed to have the ownership of IPR to use the technology which was ....
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.....3) in Appeal and shall report to the 'Tribunal' Directly. 56. Before the 'Tribunal, the third Respondent/'Devas Multi Media Pvt.ltd.'/First Respondent was represented through Learned Counsels and as seen from the impugned order, they accepted the notice for the third Respondent/First Respondent and prayed for some time to file short reply. In regard to the interim reliefs sought for by the First Respondent/Petitioner(Government Company), in fact, on behalf of the Third Respondent/First Respondent Company, it was submitted before the 'Tribunal' that the Company is suffering from various litigations and some of the properties of the Company were also attached by 'Statutory Authorities' and that although the 'Central Bureau of Investigation' had filed a 'charge-sheet', the case is pending and all the more there was no urgency on the part of the First Respondent/Petitioner to prefer the Application in a hurried manner, for the simple reason that 'cause of action' arose, long time back. 57. On behalf of the Second Respondent/Ministry of Corporate Affairs, 'notice' was accepted by Shri Mr.Manmohan Juneja, Director General of Corporate Affairs and Mr.Sanjay Shouri, Director ,Legal & Pr....
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....dator' on 3.2.2020. 64. On behalf of the Second Respondent, a plea is taken that the 'Appellant' is a miniscule share holder of the Third Respondent Company and that the Appellant was not authorised to 'Resolution' by the 'Board of Directors' of the Third Respondent which is essential before anyone represents the Company. Further that, the Application for waiver to 'Apostil' and in the absence of 'Resolution' by the 'Board of Directors, itself is not maintainable. 65. The other ground taken on behalf of the Second Respondent is that from the beginning the fraudulent intent of the Company may be unearthed by the 'Provisional Liquidator' and a reference is made to Section 339 of the Companies Act, 2013 in regard to all liability for fraudulent conduct of business as a matter of fact, it is represented on behalf of the second Respondent that 'Provisional Liquidator' ought to allow to continue the unravel the massive fraud because of the reason that it is just a necessary to lift 'Corporate Veil' to identify all the persons who were acting as 'facilitators'. 66. Before the National Company Law Tribunal, Bengaluru Bench in C.P.No.06/BB/2021, the Appellant is not a 'party'. However, t....
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....ve been arrayed as a 'party' and in whose absence, no effective order can be passed by a 'Court of Law'/'Tribunal', as the case may be. 73. It is to be remembered that a 'proper party' is a 'party' who although not a necessary party, is a 'Person' whose presence will enable the 'Tribunal' to completely, effectively, efficaciously and adequately to determine all the issues/questions encircling around a particular case. 74. It cannot be gain said that in 'Law' 'adding of parties' is a matter of judicial discretion to be exercised by a 'Tribunal' resting upon a well laid down judicial principle and this discretion can be exercised by a 'Tribunal' either on the 'Application of a Petitioner/Respondent' or on the 'Application of an Individual' who is not a party of any pending proceedings etc. 75. For 'adding of a party' or 'impleading of a party', in regard to a pending main proceedings, the 'Tribunal' is to exercise due care, circumspection and caution. 76. It is trite in Law that an 'unlawful purpose' in 'Memorandum' is void and is not be enforced. Furthermore, if a Company's business is 'unlawful', its 'locus' can be questioned on legal plane. 77. It is significant to make a men....