TaxTMI 
TaxTMI 
TaxTMI 
2021 (6) TMI 599
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....ed by Shri K.K. Vohra, Hon'ble Member (Technical) "19. It may be appropriate to refer the decision reported in the case of Nathi Devi v. Rahda Devi Gupta 2005 (2) SCC 271, wherein Hon'ble Supreme Court in Para 14 of the judgment held that: "It is equally well settled that in interpreting a statue, effort should be made to give effect to each and every word used by the legislature. The courts always presume that the legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statue should have effect. A construction which attributes redundancy to the legislature will not be accepted except for compelling reasons such as obvious drafting errors." Further, Hon'ble Supreme Court in the case of CIT v. Pawan Kumar Laddha, (2010) 13 SCC page 294 has laid down that "The Courts have to be careful in reading into the Act such dis-enabling provisions as that would tantamount to judicial legislation which the Courts must eschew..." It is specifically mentioned in Section 230(9) of the Act that meetings can be dispensed in case of Creditors. Section 230(1) of the Act refers to meetings of Shareholders and Creditors. In view o....
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....ompromise or make arrangements with creditors and members (1) Where a compromise or arrangement is proposed-- (a) between a company and its creditors or any class of them; or (b) between a company and its members or any class of them, the Tribunal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator order a meeting of the creditors or class of creditors, or of the members or class of members as the case may be, to be called, held and conducted in such manner as the Tribunal directs. 6. As we all know scheme cases are taken up in two stages, first one is called first motion seeking a direction u/s. 230(1) of the The Companies Act 2013 (the Act) to hold meetings of the stakeholders as stated in the Act, upon such order, once the meeting ordered is held, on the report of the Chairman/Chairmen of the meeting/meetings, second motion will be initiated for admission, after admission, at the final hearing, Tribunal will adjudicate on the scheme petition finally heard. Why all these checkmates arranged at first motion is, if anybody has any objection to seek for approval of the s....
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....r calling meetings, not otherwise. The Tribunal cannot read dispensation of calling and holding shareholders meeting into Subsection 230(1) that is conspicuously absent in the section, rather it is a provision for calling meeting and thereafter to proceed with consequential steps carved out in the ensuing subsections for issuing notices to the stakeholders and all regulators governing the applicant company for holding meeting based on the order passed by the Tribunal. If shareholders meeting is dispensed with, it will not only nullify Section 230(1) but also make other consequential subsections redundant. In way as stated in the citation in between CIT v. Pawan Kumar Laddha, (2010) 13 SCC page 294, NCLT has attempted to legislate the section of law by incorporation of something by implication that is not present in the subsection, As to subsection 230(9) (dispensation of holding creditors meeting provided 90 percent consent is given by way of filing affidavits) is a standalone provision, it cannot be understood that this stand alone provision can even permit dispensation of shareholders meeting. If such is the discretion contemplated in Subsection 230(1), the legislature would not ....
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....proval of this Tribunal to call and hold meetings. 13. By close scrutiny of subsection 230(1), it is obvious that the applicant company is not at liberty to seek dispensation of meetings, it is also obvious that the Tribunal has no discretion to dispense with meetings of the shareholders. As to creditors meetings, subsection 230(9) is a proviso to sub-section 230(1), such proviso cannot be stretched out to apply to shareholders meetings as well. 14. To make it more clearer, I shall reiterate subsection 230(1), it says "may...... order a meeting of the creditors or the class of creditors or members or class of members, as the case may be, to be called, held and conducted in such manner as Tribunal directs. The direction mentioned at the end of the section speaks about the manner in which meeting is to be called, to be held and conducted. The Tribunal has discretion to decide the mode of calling meeting, the Tribunal has discretion how to hold the meeting, the Tribunal has discretion how to conduct the meeting, but not to dispense with shareholders meetings. By seeing this discretion in relation to the manner of calling, holding and conducting meeting, one cannot misconstrue that s....
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....imes and to the times to come. 18. In that process, Parliament Standing Committee, on Companies Bill 2011, recommended for dispensation of holding shareholders meeting as well saying as below: 19. Upon which, the Government has rejected the standing committee recommendation for dispensation of shareholders meeting stating that members and creditors stand on different footing, in view thereof, it is essential to hold shareholders meeting to ensure corporate democracy and principle of participation, on such consideration by the Government, enactment has come, after all these happened, how NCLT can now ignore or re-legislate the Companies Act by giving a tweak to the provision of law by saying previously dispensation was provided. After repeal of the old enactment, the old regime cannot be seen as still in force, while reading the provisions, wholesome idea and spirit behind the legislation is to be seen. 20. If the chronology of Section 230 is read, it is evident that NCLT at the outset shall look into compromise or arrangement proposal on the application filed by the company. On filing such application, if at all it is of the view that proposal shall be examined and allow the com....
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....d and unsecured creditors; (iii) report by the auditor that the fund requirements of the company after the corporate debt restructuring as approved shall conform to the liquidity test based upon the estimates provided to them by the Board; (iv) where the company proposes to adopt the corporate debt restructuring guidelines specified by the Reserve Bank of India, a statement to that effect; and (v) a valuation report in respect of the shares and the property and all assets, tangible and intangible, movable and immovable, of the company by a registered valuer. (3) Where a meeting is proposed to be called in pursuance of an order of the Tribunal under sub-section (1), a notice of such meeting shall be sent to all the creditors or class of creditors and to all the members or class of members and the debenture-holders of the company individually at the address registered with the company which shall be accompanied by a statement disclosing the details of the compromise or arrangement, a copy of the valuation report, if any, and explaining them effect on creditors, key managerial personnel, promoters and non-promoter members, and the debenture-holders and the effect of the compro....
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.... occasion to understand that mergers and amalgamations can have its own procedure for calling meetings. Perhaps Parliament is of the view that even for creditors meeting, unless sanction is there from NCLT, 90% consent in value cannot be automatically applicable. If we see subsection 3 of this section, it is evident that the Tribunal can order for sanction of scheme only after it has been satisfied with accomplishment of compliance laid out under subsection (1) 8B (2) of section 230. As we know already that for mergers and amalgamations, the procedures given in subsections 1-6 of section 230 shall apply mutatis mutandis and there being additional disclosures under sub-section (2) of section 232, NCLT could sanction post compliance as mentioned in Section 232. Therefore, the applicant cannot invoke a procedure that is not present in subsections (1) & (2) of Section 230 for sanction of the scheme falling under Section 232 as well. As to rest of subsections of this section (section 232), they only talk of actions of post sanction of the scheme; hence we believe that the applicant is not permitted to import something other than the procedure given for grant of approval for holding meet....
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....supposed to overreach its jurisdiction by constituting with more than two members, which is repugnant to the spirit of Section 419(3) of the Companies Act 2013. Fact finding courts are normally to decide cases on the facts available looking at the statute. And if any ratio is decided in a judgment of the constitutional court, it is because they are constitutional courts empowered by the constitution to decide the question of law. If NCLT is adherent to this concept of two member or three member bench, there won't be any end to it. It has no jurisdiction to constitute such Benches. Moreover if any aberration of applicability of law comes anywhere from the orders of NCLT, it does not mean other NCLT Benches also to follow it. NCLT cases are dependent on multiple facts with different different logical ends, for NCLT - one guiding principle is the statute under which it is working. 28. This concept of ratio decidendi is a common law doctrine to be applied to the cases where statutory guidance is absent, but not in the cases where section is so telltale leaving no scope to doubt its mandate. Here we cannot simply proceed blindfolded shirking the duty of implementing the law given b....