TaxTMI 
TaxTMI 
2021 (6) TMI 161
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....ation before this Tribunal. 3. Brief facts of the Application are as follows:- a. The Petitioner/Applicant is the majority shareholder of Respondent No. 1 ("Company") holding 92% of the issued, (in the year 2016 he acquired 60% and after filing of this petition acquired 32% share from R-2 and R-3) subscribed and paid-up equity share capital of the Company. In addition, pursuant to the rights conferred upon it under the Shareholders Agreement, the Petitioner/Applicant has also nominated majority of the directors on the board of the Company. The Petitioner/Applicant has invested a sum of INR 600 crores (approx.) towards acquiring 92% majority shareholding and 100% Compulsorily Convertible Preference shares in the Company. In addition, the Petitioner/Applicant has committed a sum of INR 770 Crores (approx.) as financial support to the Company towards providing collaterals for securing the working capital and debt facilities availed by the Company. b. It is contended by the Applicant that as part of their sinister design to oppress the Petitioner/Applicant, the Respondent Nos. 2 to 8 have been constantly and deliberately obstructing the Petitioner/Applicant's a....
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....icant that the Company has paid the rental amount for the corporate office in Prime Tower are being set off against Debit Note no. 1/2018-19 dated 10.10.2018 for INR 12,278,028 and Debit Note no. 1/2018-19 dated 10.10.2018 for INR 13,024,418 (aggregating to INR 25,302,446; collectively "Debit Notes") raised by the Company upon PCI Limited. These debit notes have been issued by the Company pursuant to invocation of bank guarantees in September, 2018, aggregating to INR 25,302,446 issued by the Company in favour of PCI Limited. f. It is an undisputed fact that the bank guarantees issued by the Company were invoked solely owing to PCI Limited's inability to timely renew the bank guarantees furnished by them in favour of DHBVN and UHBVN despite the Company having provided back-to-back guarantees in favour of Respondent No. 4 PCI Limited. The mechanism for set-off of the rentals for Prime Tower office has also been clarified by the Company to Respondent No. 4 PCI Limited on several occasions including vide e-mails dated October 26, 2018, January 24, 2020, March 16, 2020 and October 24, 2020. In addition to INR 25,302,446, further amounts are also due to the Company from Res....
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....d Respondents was brought to the notice of Hon'ble National Company Law Appellate Tribunal vide Contempt Petition No. 11 of 2017, Company Case (AT) No. 21 of 2018 and Interlocutor Application No. 1032 filed in Company Appeals No. 397-399/2017. m. The Hon'ble Appellate Tribunal, vide order dated 20.12.2018, issued directions to both the parties to ensure that no hindrance is made by any of the parties or its officers and employees to ensure smooth functioning of the company and in case of any entry of outsider, it will be open to parties to inform the same to the Hon'ble Appellate Tribunal but will not make any obstruction/objection. n. It was contended by the Applicant that on 04.01.2019 and 04.02.2019, Respondent No. 3 Mr. Rohan Mehta had violated the order dated 20.12.2018 by obstructing the entry of the Company Secretary Mr. Rajnish Kumar and the HR Head Mr. Mazhar Hussain into the Company Prime Tower premises. o. The Hon'ble Appellate Tribunal, in Contempt Case (AT) No. 02 of 2019 in Company Appeal (AT) No. 397-399 of 2017, vide order dated 30.01.2019 allowed the counsel for the respondent- Mr. Surinder Mehta and Mr. Rohan Mehta to han....
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....rbitration Centre wherein each of the eleven claims of the Respondent Nos. 2 to 8 (that were in excess of INR 1300 crores) were dismissed. v. Due to Covid-19 Pandemic, in compliance with the advisories issued by the concerned Governmental departments, the Company was constrained to take recourse to work from home for all its employees. However, the operations of the Company remained curtailed and many actions cannot be completed without access to physical and archival records of the Company, which remain at Prime Tower. With steady improvement in the COVID-19 situation, the Company's management is desirous to re-start its operations from its corporate office as normal with effect from 04.01.2021. It is contended by the Applicant that such re-start is necessary for normalization of the operations of the Company (which have been severely battered owing to the COVID-19 pandemic) and aids the completion of long pending work and compliances, as the employees of the Company will have access to all physical records of the Company. The Head HR of the Company Mr. Mazhar Hussain vide his email dated 01.01.2021 accordingly communicated the said decision to the employees of the Co....
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....d implemented a "Work from Home Policy'. Resultantly, there is neither any requirement nor any reason for the Petitioner/Applicant to claim that Respondent No. 1 Company is being prevented from functioning. g. Even in November 2020, the Respondent No. 1 Company adopted the "Need Based Use" policy for functioning from the Premises. Specifically, Mr. Rajnish Kumar, one of the representatives of the Respondent No. 1 Company as per their request, was allowed to enter the Premises on 4.11.2020 to collect various documents while the complete building was closed due to Covid-19 related renovation work. h. Ever since the lockdown restrictions were eased by the Government, the Respondent No. 4 decided to take appropriate measures in the central air-conditioning system installed at Prime Tower to contain the spread of Covid-19 for the safety of all employees working in Prime Towers, which includes the Premises. The measures to be undertaken included upgradation work of its Heating, Ventilation and Air Conditioning System ('HVAC System'). Thus, restrictions were imposed on entering Prime Towers on account of these measures and not to create obstructions for the P....
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....asis" from 2.11.2020. Further, Mr. Mazhar Hussain specifically stated that a detailed policy governing the specifics of "Need Based Use" of the office premises would also be circulated. p. Respondent No. 1 Company did not have any plans for the use of the Premises up till 01.11.2020. q. On 04.11.2020, with prior arrangement with the facility head of the Premises, Mr. Rajnish Kumar, who is employed as Respondent No. 1 Company's Company Secretary, visited Prime Tower to remove certain records and documents from the Premises. The following documents/files were removed: i. File of Share Transfer document; ii. Register of Members; iii. Statutory Register (Share transfer register); and iv. Share split Register. To this extent, Mr. Rajnish Kumar provided an acknowledgement to the security officers of Respondent No. 4 Company, thanking them for their cooperation. It is explained that on this day, 04.11.2020, Mr. Rajnish Kumar was provided full access to the Premises as per requirement of the Respondent No. 1 Company. The abovementioned documents were removed by Mr. Rajnish Kumar from his office almirah without any impedimen....
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....n (PML employee in the Projects Department) to Mr. Rajnish Kumar (CS and Head Legal of PML) requesting Mr. Kumar to facilitate access to the corporate office. 6. Both the parties have filed the written submissions and the averment made in the written submissions filed by the petitioner in short is that the present Application has been necessitated in view of the continuing incessant impediments being created by and at the behest of Respondent Nos. 2, 3 and 4 in the smooth functioning of the Company inter-alia by preventing the personnel of the Company from accessing the Company's corporate office in Prime Tower Plot No. 287-288 Udyog Vihar Phase II, Gurugram-122016 ("Prime Tower"), and the corporate and statutory records lying therein. It is clarified that the present Company Application filed by the Petitioner/Applicant is squarely "in relation to" the affairs of the Company. It has not been filed "on behalf of the Company, as was wrongly argued by the Respondent Nos. 2 to 8. The language of the Power of Attorney dated March 26, 2020 (authorising the Petitioner/Applicant's authorised representative to act on its behalf) is clear and unambiguous. 1. Further, the....
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....es were issued, and the lockdown was lifted phase-wise commencing from May 18, 2020. However, despite repeated requests from the Respondent No. 1 Company personnel, Shiv Sharma, Admin-in-charge of PCI Limited has refused to allow the Company personnel to access the premises on one false pretext or the other (Annexure 2 (Colly.) at pages 30 to 33, Annexure 5 (Colly.) at pages 51 to 58 and Annexure 6 (Colly.) at pages 59 to 60 of the instant Company Application). At times, Respondent No. 4 PCI Limited has wrongly asserted nonpayment of rent despite the same having been set-off against amounts due from PCI to Respondent No. 1 PML while on other occasions, access has been denied under the garb of maintenance work being carried out at the Prime Tower premises. It is incomprehensible why Prime Tower has still not been able to meet the prescribed safety and sanitization measures for tackling the COVID-19 pandemic when offices across India including Delhi NCR are operational and more than 10 months have elapsed since the onset of the pandemic. In relation to the false allegations regarding non-payment of rent, it is relevant to mention that the Respondent No. 4 has already invoked th....
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....ion that this is the usual modus operandi of Respondent Nos. 2 to 4 who have adopted similar coercive tactics in the past to oppress and harass the Petitioner/Applicant and its nominee directors in Respondent No. 1 Company. Due to the hostile, belligerent and obstructionist actions of Respondent Nos. 2 to 8, the Petitioner/Applicant was constrained to approach this Hon'ble Tribunal ("NCLT") as well as the Hon'ble National Company Law Appellate Tribunal ("NCLAT"). Both the Hon'ble NCLT and the Hon'ble NCLAT have passed several orders to safeguard the interests of the Company and the Petitioner/Applicant, however, the Respondent Nos. 2 to 4 and others at their behest unabashedly continue to obstruct the Company's operations to coerce the Petitioner/Applicant to succumb to their unlawful demands. Even after passage of various orders, the Respondent Nos. 2 to 4 by utilising their muscle power prevented duly appointed employees of the Company (including the HR-Head Mr. Mazhar Hussain and Company Secretary Mr. Rajnish Kumar) from entering the corporate office of the Company. Despite warnings and in clear abuse of the orders passed by the Hon'ble NCLT, the Responde....
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....irected by this Bench, the Petitioner/Applicant now proceeds to list out various orders which were passed by this Hon'ble Tribunal as well as the Hon'ble NCLAT to safeguard the Petitioner/Applicant as well as the Company from various instances of impediments in the operations of the Company: Copies of the aforesaid orders passed by the Hon'ble NCLT and the Hon'ble NCLAT have been enclosed with these submissions for ease of reference. 11. As is apparent from the above, the Respondent Nos. 2 to 4 have been systematically and repeatedly hindering the smooth functioning of the Company to serve their vested interests. At the behest of Respondent Nos. 2 to 4, Mr. Shiv Sharma (Admin in-charge) continues to further their unlawful objectives by harassing the Petitioner/Applicant and the Company. 12. Apart from the aforesaid, the Respondent Nos. 2 and 3 are obstructing (Annexure 14 (Colly.) at Pages 131-137 of the instant Company Application) shifting of PML's corporate office despite resolutions (Annexure 12 (Colly.) at Pages 80-83 of the instant Company Application) to that effect having been passed by the Board of Directors of the Company. Pertinently. Respond....
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....e premises being a part of Ground, 6th, and 7th floors of "Prime Tower", 287-288, Udyog Vihar Phase II, Gurugram, Haryana - 120015, (the 'Premises') which is owned, operated, and maintained by the Respondent No. 4. [Refer para 6 on page 3 of the captioned Application; Refer para 31 on page 12 of the Reply to the captioned Application]. 16. On 01st June 2016, the Respondent No. 1 (and not the Petitioner/Applicant) and Respondent No. 4 entered into a Service Facility Agreement ('the Agreement') in terms whereof the Respondent No. 4 licensed an area of 5892 sq. ft. out of the total leasable area of approx. 1.40 lac sq. ft. spread over 9 floors of the Premises for use by the Respondent No. 1. [Refer Annexure 1 at page 23-29 of the captioned Application] 17. Pertinently, the Agreement provides that the Respondent No. 1 would be allowed to use the Premises upon payment of the monthly service charges to Respondent No. 4. 18. The Respondent No. 1 has however failed and defaulted in payment of the monthly service charges from the month of October 2018, which is almost for 28 months with unpaid rent accumulating to over Rs. 2.90 Crore. The Respondent No. 1 is therefo....
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....that, the Application is not maintainable as the Petitioner/Applicant has no locus standi in respect of the Premises. 24. The Petitioner/Applicant has sought the following reliefs in the Company Application: "(i) Direct the Respondent Nos. 2 to 4 to offer full cooperation to the Company and desist from obstructing in any manner (directly or indirectly) the employees and other Company personnel from entering the corporate office in Prime Tower and/or accessing the records therein: (ii) In case of any further obstructions being perpetrated by or at the behest of Respondent Nos. 2 to 4, direct for police assistance to prevent the Respondent Nos. 2 to 4 from continuing to block the entry of Company personnel into the corporate office at Prime Tower: and (iii) Pass such other or further order(s) or direction(s) as this Hon'ble Tribunal may deem just and proper in the prevailing facts and circumstances." 25. The above prayers and reliefs as per the captioned Application cannot be granted as the Petitioner/Applicant has no locus standi, either in law or under the contract, to prefer an application of such nature. The Petitioner has no right, title, or ....
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....matter between the Respondent No. 1 and the Respondent No. 4 and not concerned with Section 242 (2) of the Companies Act, 2013. Therefore, this Tribunal does not have jurisdiction to entertain the captioned Application within the provisions of Section 242 (2) of the Companies Act, 2013. [Refer Gyan Dev Sadh vs. Permashwar Exports Ltd. - (2012) 107 CLA - 265 (CLB)] 32. The Hon'ble Supreme Court has held in the matter of Chatterjee Petrochem. (I) Pvt. Ltd. vs Haldia Petrochemicals Ltd. & Ors. - AIR 2012 SC 2753, that when a grievance made in the petition relates to breach of agreement between two members, since the same is not in the affairs of the company, CLB has no jurisdiction to deal with the matter. 33. The Petitioner/Applicant's claims of set off are not only absurd but also against the legal principles under the law of contract. The Code of Civil Procedure, under Order VIII, Rule 6 provides for the claim of set-off, exercised by one party against another, only if the following conditions, as enumerated within Order VIII Rule 6, are satisfied: a. That it must be a suit for recovery of money; b. That the amount sought to be set-off must be a cert....
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....rs. vs. Meidensha Corporation" under Section 340 of the Criminal Procedure Code, 1973 read along with Rule 11 of the National Company Law Tribunal Rules, 2016 seeking judicial action against Mr. Ko Yamamoto for having committed offence under Section 195 of the Indian Penal Code, 1872 by filing false affidavit before this Hon'ble Court. This Hon'ble Tribunal has been pleased to issue notice on the said application vide its order dated 5th February 2021. 39. Further, the Hon'ble Supreme Court, through its order dated 30th July 2020, in the matter of "Surinder Mehta & Ors. vs. Prime Meiden Limited and Ors.", Civil Appeal Nos. 2748/2020, directed this Tribunal to decide the main Petition, being Company Petition No. 369 (ND) of 2017 within 6 months. But the Petitioner/Applicant's act of filing such applications on false, frivolous, baseless, specious, and unsubstantiated grounds has significantly and intentionally delayed the hearings in the main Company Petition. The Applicant intends to misuse the judicial process and powers of this Hon'ble Tribunal to harass the Respondents by filing such baseless and meaningless Applications. This Tribunal should reject such f....
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.... captioned Application] b. On 03rd December 2020, Mr. Mazhar Hussain (the representative of the Respondent No. 1) sought entry into the Premises to collect documents for replying to notice from Karnataka VAT Authorities. The Notice is dated 25th November 2020 and was to be replied within 7 days. By the time access was sought by the Respondent No. 1, the time for reply had already elapsed. Regardless, Mr. Shiv Sharma (the representative of the Respondent No. 4) issued a reply to the request and explained that due to the ongoing work and the precautions which have to be observed, it will be hard to provide access to the Premises on such a short notice. c. On 18th December 2020, 10 days after Mr. Shiv Sharma's reply, an email was issued by the Respondent No. 1 stating that its Managing Director (Mr. Kazumi Ikarashi) will be visiting the Premises. Then, within 2 hours of the email, Mr. Kazumi Ikarashi presented himself at the gates of the Prime Tower. It is explained that the Wicket Gate was opened for him and he entered through it. The Boom Barriers which are situated immediately after main gate were closed. Resultantly, Mr. Kazumi Ikarashi stopped before the Boo....
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....ent no. 4 is claiming from respondent no. 1 company and which according to the applicant is set off against the outstanding dues, which is payable by the respondent no. 4 to the respondent no. 1. 49. We further notice that an arbitration clause is provided in the Service Facility Agreement and it is the admitted fact of the parties is that the respondents have already invoked the said arbitration clause. 50. Before making any comment on the submissions made on behalf of the parties, we would like to examine the terms and conditions of the Service Facility Agreement and the same is quoted below: "That if the service charge or any part thereof shall remain unpaid for more than one month after the same becomes due and payable, and in case of any breach of any terms and conditions, the Licensee be adjusted insolvent, it shall be lawful for the licensor notwithstanding any earlier waiver in respect of the same to enter the said portion of space and immediately thereupon revoke this agreement without any prejudice to recover any due or claim antecedent of the terms and conditions herein contained". 51. Further, the term and condition is "That if the conditions mentioned....
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....itten statement by a defendant apply to a written statement in answer to a claim of set off. Before considering the aforesaid provision, at this juncture, we would like to refer to the decision upon which the respondent has placed reliance and reported in (2013) 8 SCC 769 in the case of Jitendra Kumar Khan and Ors. vs. Peerless General Finance and Investment Company Ltd. and Ors. Hon'ble Supreme Court in para 11 of the decision held that "On a reading of the aforesaid rule it is noticeable that certain conditions precedent are to be satisfied for application of the said Rule. Two primary conditions are that it must be a suit for recovery of money and the amount sought to be set off must be a certain sum". 56. In the light of aforesaid decision and provision, we consider the contention of the applicant on the point of set off, and we are of the considered view that a defence of set off can be claimed by the defendant in a suit for the recovery of money and set off must be a certain sum but herein the case in hand, of course by filing the written submissions, the respondent claimed set off of the service charge but nowhere it is mentioned in the application that any s....
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....f the first respondent Company to take such action as they deem fit in the day-to-day affairs of the Company, particularly with reference to evaluation of the quantum of work completed by AKSH, supply of the equipments and materials under the EPC contract, investments made by AKSH towards the share capital of the Company, realization of the final call money from the shareholders of the Company, recovery of the security-deposit from the first petitioner covered under the rental agreement, settlement of pending bills of the contractors, audit of accounts of the Company etc., which are within the lawful domain of the board of directors of the Company. Ordered accordingly. In view of this, all the interim orders stand vacated." 60. In the light of the aforesaid decision, when we consider the case in hand, we notice that agreement was also subject matter of consideration in that proceeding too. Similarly, herein also the grievance is based on the agreement and the violation of that would be decided by the competent court and not under the proceeding under Section 241-242 of the Companies Act, 2013. 61. Arbitration Proceedings are also between the respondent no. 1 and 4 and the app....
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....ccordance with the provisions of law, the Respondent nos. 2 to 4 have no right to create any hindrance or obstruction to anyone (employees, officers, shareholders, directors of the respondent no. 1 company) in entering inside the premises and this view has also earlier been taken by the Hon'ble NCLAT in Company Appeal (AT) No. 21/2018 in which Hon'ble NCLAT held that "In the meantime, both the parties should ensure that no hindrance is made by any of the parties or its officers and employees to ensure smooth functioning of the company. In case of any entry of outsider, it will be open to parties to inform the same this Appellate Tribunal but will not make any obstruction/objection." 66. Therefore, we are of the considered view that though the act of respondent no. 2 to 4 does not come within the purview of oppression, for the smooth functioning of the company, we direct, in the meantime, both the parties should ensure that no hindrance is made by any of the parties or its officers and employees to ensure smooth functioning of the company. 67. Further, the respondent no. 2 to 4 are at liberty to take legal recourse in accordance with the provisions of law for the breac....
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....r 12, 2017. The NCLT upheld the new procedural formats (dispensing with signature of the Promoter Shareholders) approved by the board meeting on November 12, 2017 and directed employees propped up by the Respondent Nos. 2, 3 and 4namely, Mr. Anil Sethi and Mr. Krishan Kumar to sign the said formats. 6. NCLAT order dated (i) The NCLAT directed the parties December 01, 2017 (Passed in Company Appeal Nos. 397- 399/2017 filed by Respondents 2 to 8 challenging the orders dated Nov 10, 17 and 23 passed by (ii) the Hon'ble NCLT) (including the Respondent Nos. 2 to 8) to ensure that the Company remains on-going without any hindrance of its work including the work as required to be taken from its officers, employees, workmen, experts etc. While the NCLAT stayed the NCLT order dated November 23, 2017 and reinstated the old formats related to the day-to-day functioning of the Company, the parties (including Respondent Nos. 2 and 3) were Document 3 directed to sign the formats and cooperate with the Company. (iii) There was no stay imposed on the other NCLT orders challenged (i.e. the ....
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....t). Contempt notice was issued against the Respondent Nos. 2 and 3 for obstructing ingress of materials procured by the Petitioner/ Applicant on behalf of the Company from third-party vendors other than PHEL (a company owned and controlled by Respondent Nos. 2 and 3). This NCLAT vide the said order disposed-off the Company Appeal Nos. 397-399/2017 and prescribed a timeline of four days for Respondent Nos. 2 and 3 to sign formats. no The NCLAT directed that hindrance should be made to ensure smooth functioning of the Company and that no obstruction/ objection should be made in relation to the entry of any person into the Prime Tower office. The NCLAT directed that Respondent Nos. 2 and 3 (Mr. Surinder Mehta and Mr. Rohan Mehta) will ensure that no hindrance is made in the smooth Document 5 16. NCLAT order dated February 08, 2019 17. NCLAT judgement dated January 23, 2020 18. NCLAT order dated February 06, 2020 19. NCLAT order dated March 04, 2020 20. NCLAT order dated March 12, 2020 functioning of the Company and recognized that Mr. Rajnish Kumar (who had been stopp....