2021 (6) TMI 31

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....1st respondent pertaining to the vacation/removal of the respective second respondent and his family members as directors in the group companies under section 167 and 169 of the Companies Act, 2013 respectively. 2. The summons under Section 206 of the Companies Act have been issued by the 1st respondent based on a complaint given by the respective 2nd respondent in all these writ petitions. S.Vaikundarajan and S. Jegatheesan are brothers and there are certain family disputes between themselves. They are Directors of various Companies. The 2nd respondent Vaikundarajan in W.P. Nos.1338, 1340 and 1341 of 2021 and the 2nd respondent V. Subramanian in W.P.No.1345 of 2021 have given separate complaints under Section 206 of the Companies Act with the 1st respondent on 06.07.2020 against S. Jegatheesan and other members of his family, who are holding shares in various Companies along with the respective 2nd respondent on the ground that the Resolutions passed by S. Jegatheesan and his family members in June and July 2020, removing the respective 2nd respondent and his family members as Directors of various Companies viz., M/s.V.V. Renewable Energy Private Limited; M/s.V.V. Titanium Pigm....

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....anies, due to pending mediation proceedings. Therefore, he would submit that the enquiry under the impugned summons is not necessary as the very Resolution passed by the respective petitioners which is the subject matter of the complaint given by the respective second respondent has been dropped. 6. Mr.Vijay Narayan, learned Senior Counsel also drew the attention of this Court to the mediation proceedings pending before the Mediators comprising of Hon'ble Mr.Justice Shivaraj Patel (Retd.) and Hon'ble Mr.Justice K.Kannan (Retd.), pursuant to the directions given by this Court in CRP (MD) Nos.1797 to 1799 of 2019. He would submit that the mediation is still going on and therefore, there is no necessity for investigating the complaint given by the respective 2nd respondent under Section 206 of the Companies Act before the 1st respondent. 7. Per contra, Mr.M.K.Kabir, learned Senior Counsel appearing for the 2nd respondent, assisted by Mr.Lakshmi Narayanan; Mr.Karthik Seshadri for Mr.K.Aravintha Bharathi; Mr.S.Elambharathi and Ms.J.Johnsy Greeta, learned counsels would submit that these writ petitions have been prematurely filed and it is not maintainable, since the pet....

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.... (3) If no information or explanation is furnished to the Registrar within the time specified under sub-section (1) or if the Registrar on an examination of the documents furnished is of the opinion that the information or explanation furnished is inadequate or if the Registrar is satisfied on a scrutiny of the documents furnished that an unsatisfactory state of affairs exists in the company and does not disclose a full and fair statement of the information required, he may, by another written notice, call on the company to produce for his inspection such further books of account, books, papers and explanations as he may require at such place and at such time as he may specify in the notice: Provided that before any notice is served under this subsection, the Registrar shall record his reasons in writing for issuing such notice. (4) If the Registrar is satisfied on the basis of information available with or furnished to him or on a representation made to him by any person that the business of a company is being carried on for a fraudulent or unlawful purpose or not in compliance with the provisions of this Act or if the grievances of investors are not being ad....

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....hem to take action against the respective petitioners. The 1st respondent under the impugned summons have only called upon the respective petitioners to submit an explanation with regard to the alleged documents, which the respective 2nd respondent have alleged that they have been fabricated by the respective petitioners in order to play fraud upon the 2nd respondent and his family members. In the impugned summons, the respective petitioners have been only called upon to attend an enquiry on the specified date and submit documents, in respect of the complaints given by the respective 2nd respondent under Section 206 of the Companies Act. Even before investigation of the complaint and even before considering the objections to the impugned summons by the first respondent, the petitioners have approached this Court. 12. The respective petitioners have raised the following contentions before this Court : a) The respondent No.1 failed to see that the power under Section 206 of the Companies Act cannot be exercised with regard to the internal disputes in Management of a Company. b. The Respondent No.1 has no jurisdiction to conduct an enquiry regarding the contentiou....

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....tion are inadequate or if unsatisfactory state of affairs exists at the company, that a written notice can be issued by the Registrar of Companies. With an intention of ensuring that the power of the Registrar of Companies to call for inspection of the books and papers of the company is not misused in an arbitrary and unreasonable manner, the proviso to section 206(3) provides that before any notice is issued under this sub-section, the Registrar of Companies shall record the reasons in writing for issuing such notice. 15. Similarly, even under section 206(4) of the Act, the Registrar of Companies is required to issue a notice in writing if he is satisfied, on the basis of information available with him, or furnished to him on a representation made to him by any person that the business of a company is being carried on for a fraudulent or unlawful purpose or not in compliance to the provisions of the Act, or if the grievances of investors are not being addressed. The above provisions have ensured that there are checks and balances on the use of power by the Registrar of Companies. 16. The impugned summons have been issued under section 206(4) of the Companies Act calling upon....

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.... have not produced the dispatch proof and the acknowledgement proof for having sent the notices to all the directors for conducting Board Meeting from 01.04.2019 to 10.07.2020. Therefore only in accordance with section 204 of the Act, the respective impugned summons have been sent to the respective petitioners calling for further clarification / explanation. 19. For the foregoing reasons, this Court is of the considered view that these writ petitions have been filed prematurely, even before passing of any adverse orders by the Registrar of Companies against the respective petitioners. Any interference by this Court at this stage under Article 226 of the Constitution of India will amount to stalling the investigation initiated under section 206 of the Companies Act which is not permissible under law. 20. However, Registrar of companies will have to necessarily consider all the objections raised by the respective petitioners with regard to the complaint lodged by the respective second respondent under section 206 of the companies Act. The objections raised by the respective petitioners which have been extracted supra in paragraph 12 in this order will have to be considered b....