TaxTMI 
TaxTMI 
2021 (10) TMI 994
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.... allow the Applicant to annex photocopies of the same; and/or d) Pass any such order that this tribunal deem fit and in the interest of justice." 2. Before the CA No. 785/2019 is taken up, it is necessary to refer to certain facts in CP No. 4 of 2005 and they are as under:- 3. M/s. Morepen Laboratories Ltd. i.e. the applicant in CA No. 785/2019 was incorporated as a Private Limited Company on 01.12.1984 and became public limited on 16.03.1992 and its registered office is situated at Morepen Village, Nalagarh Road, Near Baddi, District Solan, Himachal Pradesh. 4. When M/s. Morepen Laboratories Ltd. which collected public deposits under Section 58A of the Companies Act, 1956 has defaulted in repayment of the said deposits on maturity and when the Company Law Board (CLB) received applications from aggrieved depositors in terms of Section 58A(9) of the Companies Act, 1956, it has examined the said issue and after hearing the company as well as the depositors, the CLB vide its order dated 19.08.2003 (Annexure A-5) in File No. 25/13/2000-CLB framed a Scheme for repayment of the deposits and the relevant paragraphs of the said order read as under:- "13. I have c....
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....at a later date. iii) The repayments should be spread over all the months in each year. iv) Notwithstanding the aforesaid scheme, the company will be at liberty to make repayment of deposits along with the interest thereon before the stipulated time, if funds are available. v) The company shall make repayment of deposit and interest according to the above scheme by cheque/demand drafts/Pay order which shall be sent by registered post/couriers/speed post to the respective depositors. vi) The company will file an affidavit once in three months on the state of repayment deposits, the first on 1st November, 2003 with Company Law Board, Northern Bench, New Delhi with copy to the Registrar of Companies, Punjab, U.P. & Chandigarh at Jalandhar and also Department of Company Affairs (I.P. Cell). vii) During the hearing the company had undertaken to keep a sum of Rs. 9.00 lakhs per month total Rs. One crore per year for payment towards hardship cases like old age, senior citizen, medical, marriage etc. in addition to the amount needed for repayment as per the schedule of repayment. To consider the hardship cases, I hereby appoint a committee consi....
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.... "7. I have considered the pleadings and arguments of the counsel. At the outset, I reject the preliminary objections raised by the company. The plea of the company that this Board has no jurisdiction to entertain a petition under Sections 397/398/408 of the Act is unsustainable. Section 10FB providing for constitution of National Company Law Tribunal has not yet been notified and as such it has not come into operation and therefore, Company Law Board continues to have the jurisdiction to deal with the matters under Sections 397/398 and 408 of the Act. As far as the locus standi of the Central Government to file this petition is concerned, it is to be noted that in terms of Section 401 of the Act, the Central Government has the right to apply under Sections 397/398 of the Act. 8. As far as the merits of the case are concerned, the admitted fact is that the company is in great financial difficulties and it has not even been able to comply with the scheme given by this Board for repayment of public deposits. It is also a matter of act that a number of complaints are being received from the depositors regarding non compliance of the order of this Board by the company. Th....
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....ately is at the lowest ebb today. The effect of whatever happened earlier continues as on date and is likely to continue for some more time, which will be against the interest of the company. The main object of sections 397/398 and 408 is to safeguard a company by suitable remedial measures. This, we find that there is very justification to restructure the board of directors of the company so that the interest of the company is safeguarded.... "If we examine the way in which the affairs of the company have been conducted bringing the company to a near financial collapse, the ratio in Sakthi Trading Co. Pvt. Ltd.'s case [1985] 57 Comp Cas 789 (Delhi) is directly applicable. In that case, as already stated, it was held that an order under Section 408 may not cure the illegal or prejudicial acts which may have already been performed by the company but preventive steps could be taken to ensure that such repetitions do not recur, by appointment of Government directors. In this connection, it is worthwhile to examine whether relief under Sections 397/398 and 408 can be granted only if it is shown that there is an element of fraud, misfeasance or breach of trust in the conduct of affa....
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.... Court. Thus, there is a precedent to appoint Government Directors with the view to build a public confidence in a company which due to its unsatisfactory financial position is unable to meet its liabilities towards its creditors, more so towards general public having deposits in the company. Thus in the present case, there is every jurisdiction to appointment government directors which would also definitely be advantageous to the company in pursuing the case before the High Court, CDR and DRT. 9. The Central Government has sought for appointment of 6 directors with the view to have the majority on the Board. It is on record that the company has already two nominees of the financial institutions and therefore, I am of the view that appointment of 2 government directors would suffice to monitor and assist the company. Accordingly, I direct the Central Government to appoint two directors on the board of the company for a period of 3 years." 6. Both the company as well as Union of India having aggrieved with the order of the CLB dated 01.07.2005 in CP No. 4 of 2005 filed separate company appeals before the Hon'ble High Court of Himachal Pradesh at Shimla. The Hon'b....
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....for the said Directors will start from the day the first meeting is held. With these directions, both these appeals are disposed of. No costs." 7. M/s. Morepen Laboratories Ltd. as well as Union of India again challenged the order of the Hon'ble High Court before the Hon'ble Supreme Court of India by filing two separate Special Leave Petitions and the Hon'ble Supreme Court of India directed to maintain status quo by orders dated 16.07.2007 and 07.09.2007 respectively and the said status quo order continued till the disposal of the said SLPs (Annexure A-16 Colly). The SLP filed by the company was later converted as Civil Appeal No. 3165 of 2010 and the Hon'ble Supreme Court of India vide its order dated 09.07.2019 (Annexure A-2) dismissed the said appeal and the said order reads as under:- "Civil Appeal No(s). 3165/2010 We are not inclined to interfere with the finding of facts recorded by the High Court in the impugned judgment with respect to siphoning off the amount and the loss etc. It was submitted by the learned counsel for the appellant that there are subsequent events and liabilities have been cleared. We are not commenting on the subsequ....
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....Morepen Laboratories Ltd. and Mr. Alok Jain, the learned counsel appearing for the respondent-Union of India and perused the pleadings on record. 11. Mr. Atul Nanda, the learned senior counsel appearing for the company while drawing our attention to the order dated 01.07.2005 in CP No. 4 of 2005 whereunder the CLB directed the Central Government to appoint two directors on the Board of the company for a period of three years, submits that the said order was passed by considering the state of affairs of the company on the date of presentation of the petition. The learned senior counsel further submits that from 2005 to till date the company has turned from the loss making company to a profit making company and company had issued two advertisements dated 13.08.2019 and 27.07.2020 and has paid all those fixed deposit holders who approached the company for repayment. As against the 5116 fixed deposit holders who submitted their claims, a total of 4953 have been paid a sum of Rs. 1,884.29 lakhs against cancellation of 50,38,983 equity shares. The company is ready and willing to repay to any other fixed deposit holder whoever approaches the company and surrender the equity shares. Acc....
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.... Supreme Court of India and hence, this Tribunal has no power or jurisdiction to modify or cancel the said order dated 01.07.2005 of the CLB. The learned counsel further submits that the company was due and payable of a total amount of more than Rs. 156 Crores to various fixed deposit holders as on 30.09.2003 but even now the company is claiming that it has paid a total amount just more than Rs. 18 Crores only as against the said Rs. 156 Crores. He further submits that nothing coming out what happened to the balance fixed deposit holders and whether the said fixed deposits were genuine or fake. The learned counsel further submits that no details of payment of any interest on the deposits were given by the company and there were no valid answers were given with regard to the same. Making profits is not only the criteria when serious allegations of conducting the company in a manner prejudicial to public interest are still to be answered. Accordingly, the learned counsel submits that the CA is liable to be dismissed. The learned counsel also submits that since there were no major changes in the way the company is being conducted i.e. the company is still being conducted in a manner p....
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....ed under Section 408 of the Companies Act, 1956 the Hon'ble High Court while noticing the improvement in conducting the affairs of the company set aside the order of the CLB, in the facts of the said case. Since in the instant case, the company not even able to show when the dues were Rs. 156 Crores as on 30.09.2003, why only claims were received to the extent of Rs. 18 Crores and above and what is the exact nature and status of the remaining fixed deposits and whether the said fixed deposit holders were genuine deposit holders or fake deposit holders. In view of the difference of facts, the said decision has no application to the present case. 18. In these circumstances and for the aforesaid reasons, we do not find any merit in the instant CA No. 785/2019 and accordingly, the same is dismissed with costs of Rs. 1 lakh payable to the PM National Relief Fund within four weeks from the date of receipt of this order. 19. Accordingly, CA No. 785/2019 is dismissed. CA No. 1207/2020 20. This application has been filed by the Union of India against M/s. Morepen Laboratories Ltd. and four others under Section 425 of the Companies Act, 2013 read with the provisions of the Co....