TaxTMI 
TaxTMI 
2021 (10) TMI 248
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to: (i) Issue a writ in the nature of "certiorari", mandamus" or any other writ(s), order(s)/ direction(s) quashing the proceeding in C.P.No.11/CB/2021 pending before the NCLT, Cuttack; (ii) Pass as such other or further order as this Hon'ble Court may deem fit and proper. And for such act of kindness, the petitioners as in duty bound shall ever pray." 3. Similarly, prayer made in W.P.(C). No.23128 of 2021 reads as follows: "It is, therefore, most humbly prayed that this Hon'ble Court may graciously be pleased to: i) Issue a writ in the nature of "certiorari", mandamus" or any other writ(s), order(s)/ direction(s) quashing the proceeding in C.P.No.11/CB/2021 pending before the NCLT, Cuttack; ii) pass as such other or further order as this Hon'ble Court may deem fit and proper. And for such act of kindness, the petitioners as in duty bound shall ever pray." Through both the writ petitions it is again observed that there is almost a common relief sought for. 4. Common background involved in both the cases is that both the cases appear to be aiming with challenge to the initiation of the Company Proceeding No.11/CB/2021 pending before the National Company La....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y operate the bank accounts of the company; (h) Mandatory injunction upon the respondents to forthwith disclose upon oath books, records and accounts of the company; (i) Quash the election process held in pursuance to the Executive Committee dated 14.01.2021 for holding the election on and from 20.01.2021 to 22.01.2021, as well as the subsequent resolution passed, in consequence to the same; (j) Declare as illegal all such decisions taken by the Executive Committee against the interests of the Company; (k) A Special Officer/Administrator be appointed to take charge and custody of any records or accounts of the Company that may presently be in the custody of the Respondents and to make over the same to the Petitioners and ex-Directors consisting the Board of Directors as on 12.01.2021; (l) Direct an enquiry into the affairs of the Company as regarding the decisions taken by the Respondents for the acts of mismanagement and oppression; (m) Appropriate reliefs be passed in accordance with Sections 241 and 242 of the Companies Act, 2013; (n) Costs of and incidental to this application be paid by the respondents; (o) Such further orders be passed and/or directions be giv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cts. issue, as alleged in the Company Petition by the OP.-1 & 2 do not pertain to any oppression or mismanagement by the majority against any minority./ No financial irregularity was ever noticed or agitated upon in any forum speaks of smooth running of the organization. D) For that entire allegations in the Company Petition pertain to the power/ jurisdiction/ authorities/ duties/ functions of directors, Executive Committee and office bearers, election, suspension of members, retirement of office bearers and directorial issues accordingly fall beyond the scope of Section 241 and 242 of the Company's Act, 203; E) For that the AGM/adjourned AGM, EC, Meeting, Directors Meeting and election of the petitioner Company are direct out come of the order in I.A. No.1 of 2020 in C.S.No.1182 of 2020 and cannot be questioned before NCLT, Cuttack,. Except the statutory appeal; F) For that the allegation in the Company Petition 11 of 2021, even if accepted for the sake of argument, it disclose a dispute, which is civil kin nature being election dispute and the Civil Court has only the jurisdiction to try the same and not the NCLT as no corporate right is violated; G) For that the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....imed that there is no question of majority or minority. It is thus alleged that the Company Act Proceeding did not involve any oppression or mismanagement by the majority against any minority. Mr.Swain, learned counsel, therefore, contended that the entire allegation in the Company Petition is curtail to the power/ jurisdiction, authorities/ duties/ functioning of directors, Executive Committee and Office Bearers, election, suspension of members, retirement of Office Bearers and directorial issues, which undoubtedly fall beyond the scope of Section 241 and 241 of the Companies Act, 2013. Mr.Swain, learned counsel also pointed out that the AGM,/ adjourned AGM, E.C. Meeting, Directors Meeting and election of the petitioner Company are the direct outcome of the order in I.A.No.1 of 2020 arising out of Civil Suit No.1182 of 2020, which cannot be questioned before the NCLT, Cuttack as only requires to be questioned before the Appellate Authority having jurisdiction to sit over Civil Court order. Mr. Swain, learned counsel further contended that even assuming the allegation involving the Company Petition and accepting the same for the sake of argument since it discloses a dispute of civi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed as the Executive Members of the Company i.e. M/s. Utkal Chamber of Commerce and Industries Ltd. having no authorization on behalf of the Company to pursue such remedy, are not competent to pursue such litigation. Further, so far as the other writ petition bearing No.23128 of 2021 is concerned, Mr. Mishra, learned Senior Advocate contended that the person filing the writ petition one Brahmananda Mishra claiming to be the President of the Company has also no authorization of the Board of Directors of the Company to undertake such exercise. It is, in the premises, Mr. Mishra, learned Senior Advocate submitted that the authorization to pursue such litigation on behalf of the Company since is a mandatory requirement and in absence of such authorization as well as also required resolution of the Company, the W.P.(C) No.23128 of 2021 itself is also not maintainable in the eye of law. It is, on the ground of maintainability of the writ petition bearing W.P.(C) No.23128 of 2021, Mr. Mishra, learned Senior Advocate drawing the attention of this Court to a judgment of the Hon'ble Apex Court in the case of State Bank of Travancore Vrs. Kingston Computers India Pvt. Ltd. : (2011) 11 SCC 524 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een both the proceedings and submitted that there is no overlapping and/or overstepping of one proceeding over the other. Further, on the submission of Mr. Swain, learned counsel that for the dispute already involved in the civil suit and the issue raised in the Company proceeding since are available to be considered in the Company Petition by the "NCLT", Mr. Mishra, learned Senior Advocate here in clear objection to the submission of Mr. Swain, learned counsel, contended that not only there is factual difference, but for the difference in the claim in both the proceedings, it is wrong to claim that for pendency of the civil suit, the proceeding under the Act, 2013 is not maintainable. Mr. Mishra, learned Senior Advocate further taking this Court to the plea and the relief sought, argued that for the dispute involving the Company proceeding and the prayer requiring to be adjudicated in the suit involving such issue, the civil proceeding is prohibited through Section 430 of the Act, 2013. Mr. Mishra, learned Senior Advocate in reference to a decision in the case of Shashi Prakash Khemka (dead) through Legal representatives and Another Vrs. NEPC MICON (Now NEPC India Limited) and Oth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e one passed by the trial court dismissing the suit of the respondent is restored. The appellant shall be free to withdraw the amount deposited by it in the trial court in terms of this Court's order dated 24.07.2009. Since the respondent has not appeared to contest the appeal, the costs are made easy." 11. In another case decided by a Division Bench of this Court, in the case of Eimco Elecon (India) Ltd. (supra), this Court finds, in deciding similar issue the Division Bench of this Court in paragraph nos.6 & 7 has come to hold as follows: "6. This writ petition has been filed by a company being represented by its sales manager on the basis of a power of attorney given by the director. The board of directors of the petitioner-company passed a resolution authorizing the director to represent the company to institute the proceedings on behalf of the company. Therefore, the director has no further authority to execute the power of attorney in favour of the sales manager to act on his behalf in the court proceedings. The power can only be given by the board of directors of the company in exercise of its statutory power by passing the resolution under the provisions of Section 291 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ember or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the Company's share, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interest or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. (2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter. Section 242. Powers of Tribunal - (1) If, on any application made under section 241, the Tribunal is of the opinion- (a) that the company's affairs have been or are be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n though the Executive Committee has the power to amend the same." Similarly on reading of the document at page 148 internal page 27 this Court finds as follows "Election held during 20.01.2021 to 22.01.2021 is not as per the Articles of Association nor as per the Companies Act, 2013 and thus the result of the said Election is void-ab-Initio." Further in paragraph Nos.64, 66 & 69 of the C.P. proceeding, this Court finds as follows: "64. That without prejudice to the aforesaid, it is pertinent to mention herein that as per the Section 179 (4) r/w Section 180 of the Companies Act, 2013 even the Board of Directors of a Company have restrictions on its power and the concerned Company can control the power of the Boards, but in the present case the Executive Committee have no restrictions on its power, which is evident from the following clause of the Article of Association, and thus the said Article of Association can in no point be said to be in compliance of the Companies Act, 2013." 66. That further as per Section 169(3) on receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director concerned, and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the power was fairly wide, but in case of a serious dispute as to title, the matter could be relegated to a civil suit. The submission of the learned counsel is that the subsequent legal developments to the impugned order have a direct effect on the present case as the Companies Act, 2013 has been amended which provides for the power of rectification of the Register under Section 59 of the said Act. 5. The learned counsel has also drawn our attention to Section 430 of the Act, which reads as under: "430. Civil court not to have jurisdiction. - No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate tribunal." The effect of the aforesaid provision is that in matters in respect of which power has been conferred on NCLT, the jurisdiction of the civil cou....