TaxTMI 
TaxTMI 
2023 (3) TMI 1076
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....Bijay Singh; The instant Appeal under Section 421 of the Companies Act, 2013 has been preferred by the Appellants being aggrieved and dissatisfied by the order dated 08th June 2021 passed by the National Company Law Tribunal (Mumbai Bench, Court-II) in CP No. 29/2016 which was filed by the Appellants under Section 241 and 242 of the Companies Act, 2013, wherein the Tribunal has disposed of MA No. 291 of 2018, MA No. 3186 of 2019 and MA No. 1086 of 2019 in CP No. 29/2016 and passed an order for winding up of the Respondent No. 1 Company herein which is hereunder: "9. To meet ends of Justice and in the interest of the Company this bench is left with no other alternative but to order of winding up of the Company and to appoint a Liquidator, accordingly, this bench appoints Ms. Anagha Anasingaraju (IBBI/IPA-002/IP-N00247/2017-18/10732) from Pune as Liquidator of this Company Modi Landscape Pvt. Ltd. The Liquidator is directed to proceed in accordance with the provisions of the companies Act, 2013 and other applicable provisions. 10. As per Section 242(3) a certified copy of this order shall be filed by the Company with the Registrar within 30 days from the date of ....
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....ered into an Agreement for Development (First Development Agreement) dated 16th August, 2013 with Saakaar Corporation, a registered partnership firm comprising of Respondent No. 4 as one of its Partners whereby Saakaar agreed to develop the Amenity Space admeasuring 13486 sq. mtrs. Out of the sanctioned layout laid on S. No.78 (Commercial Plot). The Respondent No. 1 company also executed Power of Attorney authorizing the partners of Saakaar for the limited purpose of enabling development of the land of the Respondent No. 1 company. However, nothing in this power of attorney entitled Saakaar or its partners to execute flat purchase agreements for the units/flats that would be constructed on said Commercial Plot. The Respondent No. 1 company subsequently entered into another Agreement for Development (Second Development Agreement) dated 16th August, 2013 with Saakaar whereby its agreed to develop the land bearing S. No.78, Hissa Nos. 1 to 6, and S. No. 79, Hissa Nos. 1 to 6, admeasuring 8160 sq. mtrs. Situated at Manjri, Tal. Haveli Dist. Pune (Residential plat). In respect of the Second Development Agreement, the Company also executed a similar Power of Attorney. iv) As per....
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....ter alia (i) a declaration to the effect that the conduct of the Respondents with respect to the affairs of the Company is oppressive to the Appellants, and (ii) permission to exit from the Company by directing the Respondent Nos. 2, 4 and the Deceased Director to buy all the shares held by the Appellants herein. Pursuant to the discussions and negotiations between the parties, Consent Terms (Annexure A-9 at page 171 to 195 of the Appeal) were drawn between the parties. In view of the consent terms entered, the NCLT passed an order dated 24th August, 2017 and disposed off the CP. It was also ordered that in view of non-compliance of the consent terms, the NCLT imposed a cost of Rs. 25,000/- each on both the Modis. vii) The Respondent No. 4, being one of the partners of M/s Saakaar Corporation and, ipso facto, being responsible for complying with the stipulation of clause (gg) (iv) of the Consent Terms, did not transfer the amount of Rs.4,75,17,171/- from Saakaar Corporation into the Escrow Account [being the difference of the amounts of Rs.18,43,28,352/- (received by Saakaar Corporation) and Rs. 13,68,11,181/- (amount transferred by Saakaar into the Escrow Account)]. The R....
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....the parties thereto. By resigning as directors of the Respondent No. 1 company before completion of all the obligations under the Consent Terms, the Respondent Nos. 2 and the Deceased Director are manifestly in contempt of clause (h) of the Consent Terms which states that Mr. Ramesh Thakkar, Mr. Mahesh Thakkar and Mr. Chandrakant Ghule shall resign as directors of the Respondent No. 1, simultaneously on their shares being bought back by the Respondent No. 1 company and on the Respondent No. 1 conveying portions of the land as stated in para 4(a) and (b). Furthermore, the resignation demonstrates a manifest attempt to create a deadlock in the Company and defeat the execution of the consent terms only to frustrate the rights of the Appellants herein in Respondent No. 1 company. ix) Further case is that the timing of the resignations of the Respondent No. 2 and the Deceased Director is indicative of the fact that the said Respondents intended to avoid the implications of being the directors of the Respondent No. 1 company which has to mandatorily file its audited financial statements for the preceding 2 years and the current year. It is also no co-incidence that the resignati....
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....es agreed to appoint an Observer-cum-Facilitator to facilitate a voluntary compliance of the Consent Decree and to oversee and assist in its compliance. By an order dated 8th March, 2021, Hon'ble Justice Dilip Karnik, Former Judge, High Court of Bombay was appointed as the Observer-cum-Facilitator and Mr. N.D. Desai, Chartered Accountant, to assist the Observer cum Facilitator and was directed to submit his progress report within three weeks from the date of his taking charge. Thereafter, various meetings were held through video conferencing. A report thereto was submitted by the Facilitator before the Tribunal wherein it was stated that the parties could not arrive at a consensus regarding the valuation and the method of valuation of the lands and assets of the Company. However, there was consensus about the respective shareholdings of the parties, except a minor difference regarding 5% of the shares. It was suggested that one group may value the lands and assets of the company and the other group would have a call and put an option i.e. (i) to buy the shareholdings of the group valuing the land by paying the price proportionate to their holding or (ii) to sell his holding and gro....
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....the full amount has not been deposited with the escrow account, and stated that the same ought to be set off against the security deposit to be refunded by Respondent No. 1. 4. It is further submitted that the Consent Decree was passed in CP No. 29 of 2016 and thereby the said petition was disposed of by the Tribunal by a Consent Decree passed on the basis of the consent terms which was an enforceable agreement between the Appellants and the Respondents. Further, since the Respondent Nos. 2, 4 and the Deceased Director have failed and neglected to comply with the consent order, the Appellants filed a Contempt Petition bearing No. 1046 of 2019 which was disposed of vide impugned order i.e. winding up order. The winding up of Respondent No. 1 Company would unfairly prejudice the rights and interest of the Appellants as well as the Respondent No. 1 company under the consent terms and therefore, the Tribunal ought to have restored the CP No. 29 of 2016 and heard the same on merits. 5. It is further submitted that no order of winding up is to be passed if there is other alternate remedy available or where the party praying for winding up is itself acting unreasonable. This is clea....
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.... Order 23, Rule 3 C.P.C. were therefore applicable in view of Section 424 of the Act. A consent decree would therefore operate as an estopple and would be binding unless it was set aside by a court which passed the consent decree. In the instant case, the order dated 24.08.2017 was not recalled by the NCLT before passing the impugned order and hence the impugned order is erroneous in law. In this regard the Appellants relied on following Judgments: * Pushpa Devi Bhagat v. Rajinder Singh, (2006) 5 SCC 566, Para 17; * Gujarat State Financial Services v. Amar Polyester Ltd. decided on 19th December, 1997, (1998) 1 GLR 731, Para 7-8. 7. It is further submitted that the other reason given in the impugned order for winding up of the company is the alleged deadlock in management which is equally erroneous. The Appellants hold only 40% shares versus the Respondents who hold 60%. There can be no question of a deadlock when the shareholdings are unequal. Just because there is litigation between the shareholders and the company's business comes to a standstill, would not form the basis for winding up of the company. Primarily the circumstances existed as on the date of fi....
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....recting winding up has been passed in their M.A. No. 3186 of 2019 does not hold ground since: * The petition was under Section 271, no order of winding up could have been passed without compliance of Section 272(4) and 272(5) of the Companies Act, which inter-alia requires the petition for winding up to be accompanied by statement of affairs in the manner prescribed and for a 60-day period to be given to the registrar whose views would be elicited before an order of winding up could be passed. Thus, there is non-compliance of Section 272 before the passing of order of winding up. * Companies (Winding up) Rules, 2020 further provides the manner in which an order of winding up has to be passed and contents of such order. Admittedly, the order of winding up is not in terms of Companies (Winding up) Rules, 2020. In view of above submissions, the impugned order is fit to be set aside and the Appeal be allowed. 11. The Ld. Counsel for the Respondent No. 1/Liquidator filed Affidavit, in which he has stated following facts: i) A commercial and residential housing project was undertaken by the Company along-with M/s. Saakaar Corporation and Thakkar group, na....
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....ding No. "B" in the multi storeyed ownership scheme namely "SAAKAAR ALMOND PARK" together with the attached appurtenant thereto, constructed on the said landed property, situated along with fixtures, fittings and amenities provided, constructed on the land Survey Number 78, Hissa No. 1 to 6 and Survey No. 79, Hissa No. 1 to 6 situate lying and being at Village Manjri Budruk, to one Priyanka Anil Mukkavar and Swapnil Maddalvar as per Agreement dated 29th March 2021 registered on 27th July 2021, Registration No. 1950/2021 for a price of Rs. 86,00,000/- (Rupees Eighty-Six Lakh Only). Further, it has also come to the knowledge that the Appellants herein along with M/S Saakaar Corporation being the confirming party to this transaction, have sold flat no. B-503 Flat No. 503, admeasuring about 78.48 sq. Mtr. (Carpet), along with attached Terrace, admeasuring about 10.46 sq. Mtr, (Carpet) and enclosed balcony, admeasuring abpout 13.07 sq. mtr, (Carpet) Plus/minus 3% on the Fifth Floor in the Wing/Building No. "B" in the multi-storeyed ownership scheme namely 'SAAKAAR ALMOND PARK' together with the attached appurtenant thereto, constructed on the land Survey Munber 78, Hissa No. 1 to 6 and ....
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....situation the parties to the Original Proceedings agreed to discuss the issues before an Observer cum Facilitator appointed by the NCLT. The NCLT appointed Hon'ble Justice Mr. Dilip Karnik, Former Judge, High Court of Bombay ("Observer cum Facilitator") and Mr. N.D. Desai, Chartered Accountant, to assist the Observer cum Facilitator vide its order dated 8th March, 2021. The parties to the Original Proceedings informed the NCLT that even after several rounds of meetings before the Observer cum Facilitator the matter was not settled. In view of thereof, the NCLT vide its order dated 12th May, 2021 issued directions to the Observer to submit his report before the NCLT. In view of the above directions of the NCLT, the Observer submitted his report dated 25th May, 2021 and Chartered Accountant filed his report dated 24th May, 2021 to the NCLT. The above-mentioned reports inter-alia stated as follows: * The Observer Cum Facilitator in his report stated that, "After hearing the Learned Advocates for the parties in the first and second meeting, "it appeared to me that the parties could not arrive at a consensus regarding the valuation or method of valuation of the lands and as....
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....tatements of Respondent No. 1 company have not been prepared since Financial Year 2015-2016 till date and no audit of Respondent No. 1 company has been conducted since Financial Year 2015-2016 till the last financial year; * It was the onus and responsibility of the Appellants to file statutory accounts and certify the same with the auditors and submit the same to the appropriate authorities which has not been done. Due to non-submission of appropriate documents the Respondent No. 1 company and its Directors/Officers stating that the Officer/Directors are in default. Further, a Strike Off Notice under Section 248(1) of the Act was received on 9th August, 2019 from the Registrar of Companies in relation to Respondent No. 1 company. 15. It is further submitted that based on the numerous steps taken by the NCLT which are hereunder: * Hearing parties at length with respect to compliance with the terms and conditions of the Consent Terms; * The previous orders passed by the NCLT in the Original Proceedings to ensure that Consent Terms are complied with in a timely manner; * The identification of an appropriate third party for hearing the issues bet....
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....ayable; * The development rights granted have since been completed as the residential project is over and the commercial project has been distributed amongst the Shareholders/Directors and their Nominees; * There is an evident deadlock in management and looking after the affairs of MLPL. The above demonstrates that there is inconsistency in the actual functioning of MLPL to what has been pleaded by the Appellants. It is trite knowledge that when a frustration occurs and there is no activity it is but natural that orders can be passed for ending this misery which is contemplated under the provision of Section 242 Sub Rule (1) Sub Rule (b). 17. It is further submitted that the essence of Respondent No. 2 agreeing to a settlement after taking a massive haircut was to resolve issues in his and late Mahesh Thakkar's lifetime. Mahesh Thakkar, the brother of the Respondent No. 2 agreed to the settlement as he anticipated his demise due to medical exigencies. Unfortunately, the proceedings delayed this desire and Mahesh Thakkar ultimately succumbed to his illnesses in September 2020. The last of the Thakkar Group is hinging on the Respondent No. 2 who himself is....
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..... 4 during the course of argument and in his reply affidavit along with written submissions/additional written submissions submitted that there are three shareholder groups in Respondent No. 1 i.e. (i) the Appellants holding 40% shares, (ii) the Respondent Nos. 2, 3 and 4 holding 35% shares and (iii) The Respondent No. 4 holding 25% shares. The Appellant filed the CP alleging acts of oppression and mismanagement in the affairs of Respondent No. 1 company. The several efforts were made by the parties to resolve the disputes. The Consent Terms were also executed. Subsequently, the Tribunal observed that there was a breach on the part of the Appellants to comply with their obligations under the Consent Terms and directed the Appellants to comply with the same. Therefore, an Observer cum Facilitator was appointed to mediate between the parties, however, settlement talks failed. Resultantly, due to the persistent failure on the part of the Appellants to bring an amicable end to the disputes, by the impugned order, the Respondent No. 1 company was directed to be wound up and the purpose behind which the CP was filed by the Appellants themselves is achieved. Therefore, the Appellants cann....
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....ween the groups of its shareholders. There is no doubt that the substratum of Respondent No.1 has been completely lost. The forced continuation of the operations of such a company cannot ensure any benefit to any person. The Hon'ble Bombay High Court in its judgment passed in the matter of "Majestic Infracon Private Limited v. Etisalat Mauritius Limited and Ors. (2014) 185 Com Cases 145 (Bom.)", has inter alia held that where a company is unable to carry on its main business and is found to be unable or incapable of undertaking any other business even in future in a commercially viable manner, it must be held that its substratum has gone and further that any attempt to do any business would only result in disastrous consequences plunging the company to a situation far worse than it is. 23. Further, in "M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raju and Anr., (2008) 6 SCC 750", the Hon'ble Supreme Court has held in the context of the Companies Act, 1956 that the jurisdiction of the Company Law Board (now NCLT) must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard and fast rule can be laid down. If an application is filed ....
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....ers and management and therefore, in order to save Respondent No. 1's assets from further depletion, it was just and equitable that Respondent No. 1 be directed to be wound up. Hence, there being no infirmity with the Impugned Order, the present Appeal does not warrant any consideration and deserves to be dismissed. 28. We have perused the pleadings made on behalf of the parties and considered the submissions of the parties. 29. Reliance has been placed by Ld. Counsel for the Respondent No. 2 in the case of "M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raju and Anr., (2008) 6 SCC 750", wherein the Hon'ble Supreme Court has held in the context of the Companies Act, 1956 that the jurisdiction of the Company Law Board (now NCLT) must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard and fast rule can be laid down. If an application is filed under Section 433 or Section 397/398 of the Companies Act, 1956, (now Section 241/242 of the Companies Act, 2013), an order of winding up may be passed but the Company Law Board in a winding up application may refuse to do so, if any other remedy is available. The Company Law Board may no....