TaxTMI 
TaxTMI 
2023 (4) TMI 782
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....MBER (JUDICIAL) The appellant, who purchased a piece of land through registered sale deed dated 13.07.2020 from Respondent No.2-Galaxy Cinema Private Limited, registered under the Companies Act, is aggrieved with an interim order passed by National Company Law Tribunal, Ahmedabad Division Bench Court I, Ahmedabad in CP/01/(AHM)/2023 (hereinafter referred to as NCLT). By the order dated 06.03.2023 in CP/1/(AHM)/2023 which was filed under Section 241, 242 of the Companies Act, 2013, the Learned NCLT, directed Respondent No.1 to 9 of CP/1/(AHM)/2023 "to maintain status quo relating to remaining 227 units by not creating any third party interest and not to carry on work construction beyond 302 units till disposal of main CP." The appellant has specifically pleaded that being purchaser of the land in question he was not at all related in any manner with the Respondent No.2, who was the vendor of land in question. The appellant asserts that the appellant or its partner was neither director nor shareholder and also was not connected with the company in question. However, by the impugned order the appellant has been restrained from proceeding further with transferring/executing sale dee....
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....He has drawn our attention to application and filed by the Respondent No. 1 herein before NCLT under Section 241, 242 of the Companies Act which was numbered as Company Application No.CP/1/(AHM)/2023. By way of referring to relief portion which is at running page 223 to 227 he submitted that the applicant before the NCLT had while making prayer of grant of interim reliefs she also prayed as follows:- "Pending hearing and final disposal of the petition this Tribunal may be pleased to restrain Respondent No.9 (appellant herein) for putting up any construction on the subject land and from creating any third party rights, in the interest of justice." Learned counsel for the appellant at the very outset has argued that admittedly the property in question was purchased by the appellant herein long back on 13.07.2020 through registered sale deed after payment of total consideration amount of Rs.6 crore to the vendor, the Respondent No.1 claiming to be one of the shareholder of the Respondent No.2 company (vendor) approached the NCLT with a petition filed under Section 241, 242 which was registered in the year 2023. Whereas in the meanwhile after purchasing the open land severa....
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....LT which has been enclosed in the Volume III of Memo of Appeal and submits that the deed rectification of sale deed dated 13.7.2020 was executed on 2.2.2021, since there were certain typographical error in the sale deed. He further submits that construction project was registered under the Real Estate (Regulation Development) Act, 2016 on 17.3.2021. According to Mr. Dutta for obtaining cash credit facility upto Rs.6 crore a mortgage deed was created in favour of Rajkot Nagrik Sahkari Bank Ltd. The mortgage was created by executing a registered equitable mortgage by deposit of title deeds. By way of referring to para 6.5, Page 462 Volume III of the Memo of Appeal it was submitted that the said mortgage was executed after issuing a public notice dated 6.8.2021 calling for objections. However, no objection was raised by anyone, including the applicant. By April 2022 part of the construction work completed and as such part building use permission was granted on 21.4.2022 for certain construction in the cellar ground floor and 1st floor. Again on 28.9.2022 the development permission (revised) was obtained from the Jamnagar Municipal owing to certain changes in the plan. By way of ....
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....before the NCLT was filed in the month of January 2023. Accordingly the NCLT is not having jurisdiction to examine the allegation of correctness of the sale deed which was executed in favour of the applicant on 13.7.2020 that too in the year 2023. Mr Dutta has further, by way of referring to Section 180(1)(a) of the Companies Act, 2013 submits that though there is restriction on the power of the Board to deal with the sale, lease or otherwise dispose of the property of the company without the consent of the company by a special resolution, but in the present case since the appellant in good faith has purchased land in question, the sale is protected under the provisions of Section 180(3) (a) of the Companies Act. According to learned counsel for the appellant, the appellant in good faith without having any connection directly or indirectly with the Respondent No.2 (vendor), had purchased the land in question after making payment of full consideration amount of Rs.6 crore and as such the protection under Section 180(1)(a) was not available to the Respondent No.1 herein who was applicant before NCLT. Mr Dutta had also drawn our attention to the Page 433 Volume II of the Memo of....
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....d and thereafter on 13.7.2020 finally the property in question was transferred to the appellant through registered sale deed. The applicant before the NCLT did not assign any reason for filing company petition after such long delay in the month of January, 2023. He has also drawn our attention to Page 216 Volume II at para 45 which is quoted hereinbelow: "45.The petitioner submits that in the above circumstances, the daughters of Shri Vinodrai Hirjibhai Kansagara filed a petition u/s 241 and 242 of the companies Act, 2013 against Gujarat Cine Enterprises Pvt Ltd, the respondent No.3 to 8 and Ishwarlal Jadavbhai Jagani before this Tribunal which came to be registered as Company Petition No.18 of 2020. This Hon'ble Tribunal, vide order dated 01.06.2020 was pleased to issue notice and directed the respondent No.3 to 8 as well as Ishwarlal Jadavbhai Jagani to maintain status quo in respect of the two theatres situated in Ahmedabad. However, the respondents flauted the said order. This Hon'ble Tribunal then further ordered to continue the status quo vide order dated 21.07.2020. The petitioner begs to annex the copy of orders dated 01.06.2020 and 21.07.2020 in the Company Petiti....
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....Company No.2. This itself shows a collusive transaction between the appellant and the Respondent No.2. By way of referring to aforesaid stand taken by the Respondent No.1 in its reply affidavit it was argued that the intention of the applicant before the NCLT was not regarding allegation of oppression/mismanagement rather to extract something from the purchaser who is appellant herein. According to him the applicant had not approached the NCLT with clean hands. In support of his argument learned counsel for the appellant has also placed reliance on para 12 of the judgement K. Santhakumari Vs KJ Trading and para 5,6,7 of Anuragha Paultries & Breeders Pvt Ltd & Anr Vs. Padmavathi & Ors and para 57 of Greater Noida Industrial Development Authority (GNIDA) Vs. Roma Unicon Designex Consortium which are quoted herein below: K. Santhakumari Vs KJ Trading: "12. The court below held that the Company Law Board has got very wide powers under Section 402(f) to set right the issue and has got the jurisdiction to declare the invalidity of the document executed in favour of strangers. But it is to be noted that the power to pass orders under Section 402(f) is to set aside ....
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....s and when such proceedings have been launched by the respondents, the respondents cannot resort to a Civil Suit which is barred by under Section 430 of the Companies Act, 2013. Section 430 of the Companies Act reads as follows; "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. " 6.A very reading of the provision shows that the bar enacted therein would apply only when the Tribunal or the Appellate Tribunal under the Act i.e., the Companies Act is empowered to determine any matter which is also the subject matter of a Civil Suit and in such event, the proceedings before the Civil Court would be barred. The Scope of the bar enacted under law was considered by a full bench by this Cour....
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....ed on behalf of Learned Counsel for the Flat Buyer Association that both Corporate Debtor and Lessee, land holding companies were alter ego of each. The law is well settled that subsidiary company and the holding company are separate entities. Learned Counsel for the Appellant in the above reference has relied on Judgement of the Hon'ble Supreme Court in "Bacha F. Guzdar, Bombay Vs. Commissioner of Income Tax, Bombay" [(1955) 1 SCR 876] Paragraph 7. It was held by the Hon'ble Supreme Court that shareholder does not acquire any interest in the assets of the company by purchasing shares of company. Following was observed in paragraph 7 of the Judgement: Company Appeal (AT) (Insolvency) Nos.180, 629 & 630 of 2022 74 "It was argued by Mr. Kolah on the strength of an observation made by Lord Anderson in Commissioners of Inland Revenue v. Forrest that an investor buys in the first place a share of the assets of the industrial concern proportionate to the number of shares he has purchased and also buys the right to participate in any profits which the company may make in the future. That a shareholder acquires a right to participate in the profits of the company may be readily con....
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....to Mr. Gaggar there is no error in the impugned order. Mr. Ranjit Kumar, learned senior counsel has appeared on behalf of Respondent No.1, who is that applicant before the NCLT. At the very outset he submitted that the Respondent No.1 was having sufficient shareholding for maintaining the company petition under 241, 242. He has drawn our attention to page 231 Volume II i.e. list of shareholder as on 31.3.2021 of Galaxy Cinema Pvt Ltd (Respondent No.2)/vendor. According to Mr. Ranjit Kumar, at least on the date i.e. on 31.3.2021 the applicant (Respondent No.1) was having shareholding of 22.5% and she was entitled to maintain the petition under Section 241 and 242 of the Companies Act. He further raised an objection that appellant is not a registered partnership firm and it is not entitled to file the present appeal. However, such submission is required to be noticed only for its rejection due to the simple reason that neither before the NCLT nor before this Tribunal any specific pleading on this issue has been raised. On the contrary it was asserted by Mr. Dutta that before the NCLT in Company Petition the applicant has arrayed appellant herein as partnership firm. There is no in....
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.... "18. Once it is found that NCLT has jurisdiction, the jurisdiction of the Civil Court to determine the matter which the NCLT is empowered to determine would stand excluded under Section 430 of the Act. A co-ordinate bench recently in Sas Hospitality Pvt. Ltd. Vs. Surya Constructions Pvt. Ltd. 2018 SCC OnLine Del 11909 has also held that, (a) NCLT is a Tribunal which has been constituted to have exclusive jurisdiction in the conduct of affairs of companies; (b) it has been vested with powers to pass such order as it may deem fit, to review and also to punish for contempt; (c) NCLT is empowered to oversee and supervise the working of the company and also appoint such persons as may be deemed necessary to regulate affairs of the company; (d) the powers of NCLT are wider than that of the Civil Court; and, (e) the bar under Section 430 is absolute. 19. As far as the judgments cited by the counsel for the plaintiff are concerned, (i) Dhulabhai Etc. supra was concerned with a suit instead of a writ petition under Article 226 of the Constitution of India impugning the Notifications under the Sales Tax Act on the ground of the same being violative of Article 301 of ....
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.... in Vidya Drolia Vs. Durga Trading Corporation 2019 SCC OnLine SC 358 and the matter referred to the larger bench. (v) N. Radhakrishnan supra is also about arbitrability of a complicated matter and not concerned with the jurisdiction of the Civil Court. (vi) Sahara Fabrics Pvt. Ltd. supra holds a suit for declaration of respective shareholding in a company and of illegality of the acts of the purported directors of the company to be maintainable. The question for consideration was, whether remedy of rectification of share register under Section 111 of the Companies Act, 1956 was the appropriate remedy. It was reasoned, that even the CLB when approached for rectification of share register was empowered to relegate the parties to the Civil Court and thus the jurisdiction of the Civil Court could not be said to be barred. Again, the said judgment is in its own facts and which have no application to the present controversy. I may in this context also refer to the dicta of the Supreme Court in Ammonia Supplies Corporation (P) Ltd. Vs. Modern Plastic Containers Pvt. Ltd. (1998) 7 SCC 105 qua Section 111 of the Companies Act, 1956, also holding to the same effect. ....
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....y based on the challenge to the board resolution dated 2 nd February, 2014, which is subject matter of challenge before the NCLT. In any event, the relief sought in prayer clause 23 (b) before the Civil Court, which consists of a challenge to the said board resolution, cannot be entertained by the civil court as it is the NCLT, which can deal with any such challenge. In that view of the matter, I do not find that exception can be taken to the impugned order upholding the objection under S. 9A of the CPC." A. Renuga Vs Star Theme Park Pvt Ltd 11.We have gone through the pleadings of both the parties. We have also observed that Appellant is free to exercise her remedy under the Companies Act, 2013 when the Company law provides for "Oppression and Mismanagement" and hence imposition of costs needs review. It is also evident that the Appellant came to know about the Board Resolution dated 04.09.2014 for the first time when Respondent No.3 has submitted its reply affidavit dated 08.03.2019 and at that juncture the Appellant wish to file a rejoinder affidavit but the NCLT refuse to allow her to do so and subsequently reserved the judgment. Since the Companies Act, 2013 ....
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....angements, the discounting of bills and the issue of other short-term loans of a seasonal character, but does not include loans raised for the purpose of financial expenditure of a capital nature; (d) to remit, or give time for the repayment of, any debt due from a director. (2) Every special resolution passed by the company in general meeting in relation to the exercise of the powers referred to in clause (c) of sub-section (1) shall specify the total amount up to which monies may be borrowed by the Board of Directors. (3) Nothing contained in clause (a) of sub-section (1) shall affect- (a) the title of a buyer or other person who buys or takes on lease any property, investment or undertaking as is referred to in that clause, in good faith; or (b) the sale or lease of any property of the company where the ordinary business of the company consists of, or comprises, such selling or leasing. (4) Any special resolution passed by the company consenting to the transaction as is referred to in clause (a) of sub-section (1) may stipulate such conditions as may be specified in such resolution, including conditions regarding the use, dis....
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....t to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. (2) Without prejudice to the generality of the powers under sub-section (1), an order under that subsection may provide for-- (a) the regulation of conduct of affairs of the company in future; (b) the purchase of shares or interests of any members of the company by other members thereof or by the company; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d) restrictions on the transfer or allotment of the shares of the company; (e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case; ....
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....s inconsistent with the order, either in the memorandum or in the articles. (6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum or articles of a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered. (7) A certified copy of every order altering, or giving leave to alter, a company's memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who shall register the same. (8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. 12.From the above provisions of Companies Act....
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....eferred to the sale deed whereby Respondent No.2 transferred the property of the company in favour of Respondent No.7 which sale deed is at Page - 90 (CA 409 of 2017) to show that the sale deed purported that the vendor has received consideration of Rs.1,20,00,000/- which is contrary to the pleadings of these parties before NCLT (Counsel referred to Para - 3(v) of Impugned Order which we have already reproduced) where the Respondents claimed that they entered into exchange of property with Respondent No.7. The argument is that the Company neither received land in exchange nor the consideration which is shown in the sale deed which was bogus. According to the counsel when admittedly Respondent No.2 was no more a Director and it is claimed that he had resigned on 24.08.2015, he could not have executed the sale deed on 3rd November, 2015. The counsel claimed that admittedly this Respondent No.2 - Katta Jagadeesh had not only resigned but also was disqualified Director having been convicted. 15.1 Going through the above reasonings of the learned NCLT and the submission now made before us, we do not find that any grounds have been raised or documents shown to find fault with the reasoni....
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....rrectness of the interim order, we are not expected to record any finding, which may affect either of the party in a proceeding which is pending before NCLT. Admittedly the company petition filed under Section 241 and 242 of the Companies Act is pending before NCLT. Accordingly, we are of the opinion that we may not record any finding either in favour of the sale deed executed in question or against the said transaction. If we record such finding it will amount to usurping the jurisdiction of the NCLT. However, we are only required to examine as to whether in the facts and circumstances it was permissible to grant an ad interim injunction in favour of the applicant by the NCLT. Whether NCLT was correct in directing Respondent 1 to 9 to maintain status quo relating to remaining 227 units by not creating any third party interest and not to carry on work construction beyond 302 until disposal of the main company petition or not?" In view of facts and circumstances which has emerged from the record as well as on the basis of argument advanced by the party it is not in dispute that in respect of the open land a registered sale deed was executed by the company (vendor) after receipt o....