TaxTMI 
TaxTMI 
2021 (9) TMI 670
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....Mr.Abhigyan, Advocates. YOGESH KHANNA, J. (Through Video Conferencing) 1. Both these petitions are taken up together as similar issues are being raised. 2. W.P.(CRL.)1823/2020 is filed for impugning the letter dated 29.06.2019 and the corrigendum issued on 29.11.2019 by the respondent no.1 directing the respondent no.2 to file complaint against the petitioners for the offences under the Companies Act, 2013 mentioned therein and secondly issuing directions to respondent no.2 to initiate the proceedings under Section 241/242/246 read with Section 339 of the Companies Act, before the NCLT. 3. It is submitted the letter dated 29.06.2019 calls for freezing and disgorgement of assets of 157 companies to be sold despite the fact such companies are functional. Following grounds have been taken to challenge the impugned order a) per Section 212(14) of the Companies Act if the final report is filed before the Central Government, it needs to be examined by it and after taking legal advice it may initiate the prosecution. Section 212(14) of the Companies Act runs as under: "212. Investigation into affairs of Company by Serious Fraud Investigation Office (1) to (13) xxxxx. (14) On ....
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....y under Section 241, 242 of Companies Act and lastly it was argued such power of disgorgement, even otherwise, can be ordered only after trial and not at filing of chargesheet. It is argued unless the State proves its case of disgorgement, no order can be passed by NCLT for such an action. 4. The learned senior counsel for the petitioner, to prove such penal provisions only have a retrospective effect, referred to Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Private Limited (2015) 1 SCC (1), a Constitutional Bench judgment, wherein the Court held as under: "31. In such cases, retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a re....
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....xamine the issue of jurisdiction. It is a settled law the challenge to the jurisdiction of NCLT ought to have been raised before NCLT itself. Once the proceedings have been initiated before NCLT and if the NCLT is seized with the company petition, all contentions including power of the respondent to initiate such proceedings before NCLT must be raised before such forum and be determined in those proceedings. The petitioner herein in fact is seeking quashing of impugned order/letter dated 29.06.2019 which is in effect challenging the jurisdiction of NCLT. Since the petition has already been filed under Section 241, 242 of the Companies Act; notice having been issued; the contention raised before this Court on the point of jurisdiction of NCLT can very well be raised before the NCLT. Companies Act is a complete code hence statutory mechanism under it cannot be bypassed. Section 430 of the Act provides the jurisdiction of all Civil Courts is barred in respect of the matter which the NCLT or the NCLAT is empowered to determine by or under Act. 8. Section 430 of Companies Act is as under: "430. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of a....
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.... and in accordance with law. The normal Rule is that a writ petition Under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well defined exceptions as observed in Commissioner of Income Tax and Ors. v. Chhabil Dass Agarwal, MANU/SC/0802/2013 : 2014 (1) SCC 603, as follows: 15. Thus, while it can be said that this Court has recognised some exceptions to the Rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titaghur Paper Mills case and other similar judgments that the High Court will not entertain a petition Under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievanc....
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....ction. An order passed on writ petition questioning the constitutionality of a Parliamentary Act whether interim or final keeping in view the provisions contained in Clause (2) of Article 226 of the Constitution of India, will have effect throughout the territory of India subject of course to the applicability of the Act. Situs of office of the Respondents - whether relevant? 23. A writ petition, however, questioning the constitutionality of a Parliamentary Act shall not be maintainable in the High Court of Delhi only because the seat of the Union of India is in Delhi. (See Abdul Kafi Khan v. Union of India and Ors., MANU/WB/0086/1979 : AIR 1979 Cal 354 ). 24. Learned counsel for the appellant in support of his argument would contend that situs of framing law or rule would give jurisdiction to Delhi High Court and in support of the said contention relied upon the decisions of this Court in Nasiruddin v. State Transport Appellate Tribunal MANU/SC/0026/1975 : [1976] 1 SCR 505 and U.P. Rashtriya Chini Mill Adhikari Parishad, Lucknow v. State of U.P. and Ors. MANU/SC/0422/1995 : AIR 1995 SC 2148. So far as the decision of this Court in Nasiruddin v. State Transport Appellate Trib....
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.... with High Court of Judicature at Allahabad. 17. The Hon'ble Supreme Court in various judgments have held Section 430 of the Companies Act has to be construed strictly and the NCLT has been given inherent powers to decide the matters of the companies and should not be interfered with lightly. In SAS Hospitality Pvt. Ltd. vs. Surya Constructions Pvt. Ltd. 2018 SCC Online Delhi 11909 the Court held: ".... 10. Before going into the question as to whether this Court has the jurisdiction to entertain and try the present suit and grant reliefs prayed for, it is necessary to analyze the scheme of the Companies Act, 2013, along with the constitution of the NCLT. The NCLT has been vested with powers that are far reaching in respect of management and administration of companies. The said powers of the NCLT include powers as broad as * '(regulation of conduct of affairs of the company) under Section 242(2)(a), as also various other specific powers. NCLT is a tribunal which has been constituted to have exclusive jurisdiction in the conduct of affairs of a company and its powers can be contrasted with that of the CLB under the unamended Companies Act, 1956. 26. The bar under Section 43....
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....t under section 241 and 242(1)(l)(m) de hors Section 212 (14A) amendment. The Central Government can authorize initiation of proceedings and the relief of freezing assets and disgorgement of property under Section 241, Section 242 r/w Sec.246, and Section 339/447 of the Companies Act inasmuch as disgorgement is a civil action in nature of an equitable relief and not a penal action. In Karvy Stock Broking Ltd. v. Securities and Exchange Board of India, MANU/SB/0064 /2008 it has been held that: "...Disgorgement is a monetary equitable remedy that is designed to prevent a wrongdoer from unjustly enriching himself as a result of his illegal conduct. It is not a punishment nor is it concerned with the damages sustained by the victims of the unlawful conduct. Disgorgement of illgotten gains may be ordered against one who has violated the securities laws/regulations but it is not every violator who could be asked to disgorge. Only such wrongdoers who have made gains as a result of their illegal act(s) could be asked to do so. Since the chief purpose of ordering disgorgement is to make sure that the wrongdoers do not profit from their wrongdoing, it would follow that the disgorgement amo....