AI Drafter 
TaxTMI 
TaxTMI 
2022 (12) TMI 619
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....inst the same judgment of National Company Law Tribunal, Principal Bench, New Delhi dated 13.07.2017 in Company Petition No. 110(ND) of 2013. Brief facts giving rise to these two appeals necessary for deciding the Appeals as well as the two I.As. No. 1540 of 2019 and 1600 of 2019 are as follows: (i) A Joint Venture Agreement was entered into inter alia by Connaught Plaza Restaurants Pvt. Ltd and Vikram Bakshi (Appellant No.1 and Respondent No.1 in Company Appeal (AT) No. 275 of 2017) on 31.03.1995 for setting up McDonald's Restaurants initially in the National Capital Region of Delhi and later in Northern India. (ii) Respondent No. 3 in Company Appeal (AT) No. 275 of 2017 - Connaught Plaza Restaurants Pvt. Ltd. was incorporated on 29.06.1995 with equity capital being 50% - 50% between Vikram Bakshi directly and indirectly through its holding company - Bakshi Holdings Pvt. Ltd. and McDonald's India Pvt. Ltd. McDonald's investment in the share capital was 92.95%. (iii) The Respondent - Vikram Bakshi was the Managing Director of the Company, whose term came to an end on July 17, 2013 by efflux of time. At the meeting of the Board held in on August 6, 2013, V....
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....nal or the Appellate Tribunal. A joint application I.A. No. 1540 of 2019 has been filed by the parties in Company Appeal (AT) No. 275 of 2017 and Company Appeal (AT) No. 280 of 2017, where it was stated that the parties to put a quietus to their inter se disputes, through a process of negotiations, settlement has been entered into by the parties. It was further stated that the Learned Administrator has accorded his noobjection to the filing of I.A. No. 1540 of 2019. In Para 6 of the application following has been stated: "6. It is contemplated by and between the Parties that, on or around May 9, 2019, upon fulfillment of the Conditions Precedent and the performance of the closing obligations of the Parties (the "Closing"): (a) a meeting of the board of directors of CPRL will be held to adopt certain mutually agreed resolutions and consequently the presence of the Ld. Administrator will not be required at such proposed board meeting (the "proposed Board Meeting"); (b) Mr. Vikram Bakshi will resign as the managing director of CPRL and such resignation will be accepted at the proposed Board meeting; and (c) CPRL will record the transfer of the entire shareholding of Mr. Vikra....
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....4 of 2013 dated 01.08.2013 was filed before the Debts Recovery Tribunal-II Delhi under Section 19 for recovery of Rs.73,78,82,759/- alongwith pendent lite and future interest. During the pendency of OA No.224 of 2013, HUDCO has preferred an application before the DRT in respect of attachment of 3100 shares which were in the name of Vikram Bakshi in his company Connaught Plaza Restaurants Pvt. Ltd. Vikram Bakshi had given his affidavit and undertaking that the shares held by him in Connaught Plaza Restaurants Pvt. Ltd shall not be alienated or transferred. OA No.224 of 2013 was decided by judgment dated 12.08.2015. Recovery Certificate No. 330/2015 dated 12.08.2015 was issued in favour of HUDCO. Execution proceedings were initiated on the basis of Recovery Certificate. An I.A. No. 1010 of 2016 dated 01.02.2016 was filed by the HUDCO praying for attachment of 3100 shares (Rs.1000/- each share) of M/s Connaught Plaza Restaurants Pvt. Ltd in the name of Vikram Bakshi. The order dated 02.02.2016 was passed where Vikram Bakshi was restrained from alienating or transferring or creating any third party interest in the aforesaid 3100 shares of M/s Connaught Plaza Restaurants Pvt. Ltd. or an....
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....9 filed by both the parties to the dispute. 8. Learned counsel appearing for Vikram Bakshi submits that order of Debts Recovery Tribunal in the OA filed by the HUDCO for recovery of dues on 02.02.2016 where direction was issued not to alienate or transfer or create any third party interest in the 3100 shares held by Vikram Bakshi in the Company - M/s Connaught Plaza Restaurants Pvt. Ltd. and by subsequent order dated 09.05.2019 proceeds have been directed to be deposited. Vikram Bakshi has already deposited the amount of Rs.10 Crores on 28.05.2019 towards share consideration for the transfer of 3100 shares in M/s Connaught Plaza Restaurants Pvt. Ltd., which amount has already been withdrawn by the HUDCO. It is submitted by learned counsel for Vikram Bakshi that Ascot Hotels and Resorts Pvt. Ltd. have forwarded One Time Settlement proposal to the HUDCO offering to pay one time full and final settlement of Rs.57.32 Crores. Subsequently, the Ascot Hotels and Resorts Pvt. Ltd. has increased his OTS to Rs.70 Crores, it however was not accepted by the HUDCO. The Ascot Hotels and Resorts Pvt. Ltd. has subsequently filed a Writ Petition in Delhi High Court being WP (C) No. 12089 of 2019....
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....is submission that corporate veil deserved to be lifted. It is submitted that the settlement between the parties is contrary to the orders dated 02.02.2016 and 09.05.2019 passed by the DRT. It is further submitted that the proceedings before the Delhi High Court with regard to OTS is being contested by the HUDCO. Learned counsel for the HUDCO submits that the proceeds of present settlement are essential for the recovery of HUDCO dues, hence, I.A. No. 1540 of 2019 deserves to be dismissed. 10. We have considered the submissions of learned counsel for the parties and perused the record. 11. Both the Company Appeals (AT) Nos. 275 of 2017 and 280 of 2017 have been filed by the parties to the Company Petition No. 110(ND) of 2013 passed by the National Company Law Tribunal, Principal Bench, New Delhi. The Company Petition was filed by Vikram Bakshi and M/s. Bakshi Holdings Pvt. Ltd. under Sections 397, 399, 402, 403 and 406 of the Companies Act, 1956. The subject matter of the dispute was Joint Venture Agreement between the parties entered on 31.03.1995. The dispute between the parties arose consequent to meeting of Board held on 06.08.2013 when resolution was taken no to re-appoin....
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.... AND such other order (s), which this Hon'ble Tribunal deems fit & proper in the facts & circumstances of the case, may also be passed in favour of the CD No.4." 14. On the said application order was passed on 0202.2016 by the Recovery Officer. The operating direction dated 02.02.2016 is as follows: "In the meantime, CDs#1, 3 and 4 are restrained from transferring the funds from and/or operating the current/savings accounts till further orders. CD#3 is also restrained from alienating or transferring or creating any third party interest in the aforesaid 3100 shares (Rs.1000/- each share) of M/s Cannaught Plaza Restaurants Pvt. Ltd. or any other quantity in the name of CD#3 till further orders. Let a copy of this order be given dasti to the CH Bank for compliance. To be listed on 11.02.2016, as scheduled." 15. An affidavit has been filed on the record that subsequent to order dated 02.02.2016 another order was passed on 09.05.2019 by the Recovery Officer by which following directions have been issued: "Direction 1. Let Rule 83 Notice be issued to M/s McDonald's India Pvt. Ltd. at 202-206 Tolstoy H No. 15 Tolstoy Marg, New De....
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....f Rajasthan vs. Gotan Lime Stone Khanij Udyog Pvt. Ltd., (2016) 4 SCC 469" Para 24 to 27, which is to the following effect: "24. In State of U.P. vs. Renusagar Power Co.10 this Court observed: "66. It is high time to reiterate that in the expanding horizon of modern jurisprudence, lifting of corporate veil is permissible. Its frontiers are unlimited. It must, however, depend primarily on the realities of the situation. The aim of the legislation is to do justice to all the parties. The horizon of the doctrine of lifting of corporate veil is expanding......... 67. In the aforesaid view of the matter we are of the opinion that the corporate veil should be lifted and Hindalco and Renusagar be treated as one concern and Renusagar's power plant must be treated as the own source of generation of Hindalco and should be liable to duty on that basis. In the premises the consumption of such energy by Hindalco will fall under Section 3(1)(c) of the Act. The learned Additional AdvocateGeneral for the State relied on several decisions, some of which have been noted. 68. The veil on corporate personality even though not lifted sometimes, is becoming more and m....
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....nd summarised their central holding in the following words: "The various classes of cases where the concept of corporate entity should be ignored and and veil drawn aside have now been briefly reviewed. What general rule, if any, can be laid down ? The nearest approximation to generalization which the present state of the authorities would warrant is this: When the conception of corporate entity is employed to defraud creditors, to evade an existing obligation, to circumvent a statute, to achieve or perpetuate monopoly, or to protect knavery or crime, the courts will draw aside the web of entity, will regard the corporate company as an association of live, upand-doing, men and women shareholders, and will do justice between real persons." 25. In Palmer's Company Law, this topic is discussed in Part-II of Vol-I. Several situations where the court will disregard the corporate veil are set out. It would be sufficient for our purposes to quote the eighth exception. It runs : "The courts have further shown themselves willing to 'lifting the veil' where the device of incorporation is used for some illegal or improper purpose.... Where a vendor of la....
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....ive? It is true that when the individuals have been granted lease of mining of the property belonging to the Government, the object of such transfer was to augment the economic empowerment of the transferee by himself or by a cooperative society or partnership composing persons to work out the mines to achieve economic empowerment. Whether such a transfer could be made a subterfuge to circumvent the constitutional philosophy and thereby the constitutional objective be sabotaged in that behalf? Answer would be obviously in the negative............"" 19. There can be no dispute to the proposition of law laid down by the Hon'ble Supreme Court regarding principle of lifting of corporate veil. The lifting of veil can be invoked when the corporate entity is in attempt to evade legal obligation or there is necessity to unravel tax evasion. The HUDCO on the strength of Recovery Certificate granted by the Recovery Officer is already taking steps for recovery against the entity. 20. We have noticed that on the application which was filed by the HUDCO on which order was passed on 02.02.2016 was only with regard to 3100 shares held by Vikram Bakshi in M/s Connaught Plaza Restaurants Pvt.....