TaxTMI 
TaxTMI 
2023 (8) TMI 489
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....ion 421 of the Companies Act, 2013 against order dated 19.05.2023 passed in Company Application No.19/2023 and in Contempt Petition No.8/MB/C-1/2022 in CP No.755/MB/C-1/2017 by National Company Law Tribunal, Mumbai (hereinafter referred to as NCLT). 2. By the impugned order the Learned NCLT in Contempt Petition No.8/2022 held the appellant guilty for disobeying the order dated 30.09.2022. However, opportunity was accorded to the contemnor to purge the contempt by depositing the amount of Rs.3,94,99,355/- with the Registrar of the NCLT within four weeks and further imposed a fine of Rs.2,000/-. It was further directed that if the contemnor fails to deposit the said amount within the period of four weeks, the NCLT will direct for forfeiture of shares held by contemnor in applicant company against the said amount of Rs.3,94,99,355/- and directed the contempt petition to be listed after four weeks. By the same impugned order learned NCLT rejected the CA No.19/2023 which was filed for rectification of order dated 30.09.2022. The appellant before NCLT by filing CA No.19/2023 had prayed for rectification of order dated 30.09.2022 for deletion of line in para 42 of the order i.e. "the l....
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....uested that the Respondent be granted three (3) weeks to deposit the aforesaid amount. Considering the request made by the Ld. Counsel we allow and direct the Respondent to deposit the amount within three weeks from the date of the Order." It may please be noted that the extension of three weeks as sought hereinabove was merely an extension of the time period of 15 days as initially directed by the Hon'ble Tribunal, and does not indicate any acceptance of the said order by the Respondent. Yours faithfully. For SOLOMON & CO. Advocates for the Respondent Sd/- Partner" 4. He submits that the said communication i.e. email dated 04.102022 was enclosed with the rectification application which starts from running page 56 to 110. He further submits that there was no question of instructing the counsel of the appellant to give consent due to the reason that even before the order was pronounced, in the morning on 30.09.2022, the learned counsel Ms Malika Joshi. who was appearing on behalf of the appellant before NCLT was intimated through WhatsApp message that the appellant in worst scenario was prepared to file appeal. The learned senior counsel had drawn o....
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....ent No.1 company/Aranca (Mumbai) Private Ltd, opposing the appeal has prayed that the appeal is required to be rejected as the same is barred by principle of resjudicata. At the very outset he has referred to prayer made in the present Memo of Appeal. For better appreciation it is necessary to reproduce the relief sought for which is at para 21 running page 24 of the Memo of Appeal: "a) pass an order setting aside the impugned order dated 19.05.2023 passed in Company Application 19/2023 and in Contempt Petition bearing No.8/MB/C-1/2022 in CP No. 755/MB/C-1/2017 passed by the National Company Law Tribunal, Mumbai Bench, and; b) Pass a consequential order setting aside order dated 30.09.2022 passed in CP No.755/MB/C-1/2017." 9. Mr. N. Ganapathy, learned senior counsel submits that the order dated 30.09.2022 passed in CA No.231/MB/C-1/2023 in CP No.755/MB/C-1/2017 was earlier assailed by the appellant by filing an appeal vide Company Appeal (AT) No.198/2022. However, by a detailed order the said appeal was dismissed by this Tribunal by its order dated 11.11.2022. He submits that once the appellant was aggrieved with the order of rejection of appeal which was prefe....
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....red against the order of the NCLT was dismissed by this Tribunal, instead of preferring appeal before the Hon'ble Supreme Court, the appellant again approached the NCLT with a plea of rectification of order. 11. Mr. N. Ganapathy, learned senior counsel has also referred to running page 95, 96 of the Memo of Appeal which is the praecipe dated 04.10.2022. It has been argued that if Ms Malika Joshi learned counsel who had given consent before the NCLT was of the opinion that she had not given such consent then in that event only Ms Malika Joshi was required to file such praecipe. However, the present praecipe has been signed by one of the partners of Solomon & Co. Even in the said letter there is no whisper as to whether the signatory of said communication was instructed by Ms Malika Joshi or informed by her that she had not given consent. 12. It has further been argued on behalf of Respondent No.1 that the appellant with the Memo of Appeal has brought on record one another email i.e. email letter dated 24.11.2022 sent by Ms Malika Joshi, learned counsel for the appellant. However, the said communication/email reflects nothing about earlier filing of the appeal and rejection of ....
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....three weeks, till date payment has not been made by the appellant and as such the learned NCLT has rightly passed order in contempt petition for depositing the money. Mr. N. Ganapathy has also referred to para 6, 7 and 9 of the rectification petition filed by the appellant before the NCLT which is at running page in between Page 67 to 70. Those paras are quoted herein below:- "6. That Applicant was not present at the time of passing of the said order and he had not given any instructions to Adv. Mallika Joshi to offer to pay the money. It is submitted that Applicant had vehemently contested the said Company Application No.231 of 2022 by filing Affidavit dated 1st August, 2022 in Reply and the Written Submissions dated 10th August, 2022. The said Company Application was extensively argued too. Respondent has falsely alleged that Applicant executed a fraudulent transaction during his tenure as Director and allegedly Respondent have filed a criminal complaint. Hence under no conceivable circumstances Applicant would have instructed Adv Mallika Joshi to admit the alleged liability or submit to the findings and observation in the said Order without exercising Applicant's right ....
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.... (AT) No.198/2022. He submits that the conduct of the appellant shows that he is not proceeding in fair manner; rather one way or the other he is interested in not depositing the amount as directed by the Tribunal below. He further submits that once the order passed by the NCLT was not interfered with by this Appellate Tribunal and appeal i.e. Company Appeal (AT) No.198/2022 was dismissed by this Tribunal even before filing rectification petition it was mandatorily required on the part of the appellant to deposit the amount of Rs.3,94,99,355/- in terms of direction whereby within three weeks the appellant was required to deposit the amount. After rejection of rectification petition again till date the said amount has not been deposited. However, while present appeal was filed an interim order of stay was passed by a Bench of this Tribunal. He submits that interim order was passed for the limited period. However, even after expiry of the limited period of stay the appellant has preferred not to comply the order passed by NCLT. He has placed reliance on para 20 and 26 of judgement passed by the Hon'ble Supreme Court reported in (2007) 8 Supreme Court Cases 449 Prestige Lights Ltd Vs ....
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....gainst such advice and bind the principal, his client. This is as illegal as it is unprofessional." 18. Mr. Mukherjee has emphasised that consent which was given by the learned counsel for the appellant before the NCLT cannot be repudiated by the appellant at this stge. He submits that it is not the case of the appellant that his counsel Ms Malika Joshi was in a special term was prohibited to give any consent on behalf of the appellant and in absence of any such pleading in terms of the aforesaid judgement of the Hon'ble Supreme Court the appellant was deprived from filing rectification application before NCLT. He has also drawn our attention to running page 22 para 13 of present Memo of Appeal which is reproduced hereinbelow:- "13. Details of appeals, if any, preferred before this Appellate Tribunal against the same impugned order/direction, by respondents with numbers, dates...and interim order, if any. None" 19. He submits that in para 13 despite the fact that the appellant against the earlier order had approached this Tribunal by filing an appeal vide Company Appeal (AT) No.198 of 2022 and the same was rejected. The appellant made concealment of fact by ....
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....Ltd. and other directors of Aranca (Mumbai) Pvt. Ltd. to make payment of dues as per the terms of MoU in the Deed of Corporate Guarantee. Original Respondent No. 1 hereto replied to the said letter of 20.06.2019 inter-alia denying the liabilities and calling upon Mr. Vikram Kumar to share the copy of the Corporate Guarantee. 23. Therefore, Mr. Vikram Kumar, invoked the Corporate Guarantee issued by the Respondent on behalf of the Aranca (Mumbai) Pvt. Ltd. by his notice Dated 25.08.2020, and called upon Aranca (Mumbai) Pvt. Ltd to make payment of Rs. 3,94,99,355/- computed as on August 24.08.2020. Aranca (Mumbai) Pvt. Ltd. replied to the aforesaid letter thereby denying the liability and sought for a copy of the Corporate Guarantee. 24. Thereafter, Mr. Vikram Kumar through his Advocate addressed a letter to Aranca (Mumbai) Pvt. Ltd. on 28.09.2020 under the cover of which a copy of the Corporate Guarantee was shared. 25. In response to the same, Aranca (Mumbai) Pvt. Ltd. addressed the letter to Mr. Vikram Kumar, Advocate on 20.10.2020 inter-alia stating that they had not issued the Corporate Guarantee and it is a fraudulent document. Thus, nothing is due an....
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....,00,000 to his personal account. 33. On account of the said forging the respondent stood disqualified as a director of Aranca by operation of law. This is as per Section 84 and Section 167(1)(D) of the Companies Act, 2013. 34. The rights issue of December 2017 was undertaken to address the repayment of obligations of Aranca to R. B. L. Bank Limited. This default itself was the result of conduct of the Respondent. The said rights issue was not undertaken to dilute the Respondent's shareholding since he was at liberty to subscribe to shares in the said rights issue. Even at the time granting Interim relief in CP No. 755 of 2017 this Adjudicating Authority vide its Order dated 10.01.2018 did not grant stay on the rights issue, the Hon'ble NCLAT vide Order dated 19.02.2018 upheld the decision of the NCLT. 35. Pursuant to Section 7 Petition Aranca (Mumbai) Private Ltd. was exposed to the possibility of dragged into CIRP on account of the conduct of the Respondent. In any event, the Respondent is exposed to liability of at least Rs.3,94,99,355/- which is an amount claimed by Mr. Vikram Kumar in the Section 7 petition. 36. In the circumstances, the Resp....
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....arantee by the respondent and provisions under section 85 and provisions under section 185 of the Companies Act, 2013, were not followed. 42. Considering the above circumstances, this Bench direct the respondent herein, to deposit an amount of Rs.3,94,99,355.00/- with Registry of NCLT Mumbai Bench within 15 days from this order to secure interest of Aranca (Mumbai) Private Ltd. The Ld. Counsel Ms. Malliaka Joshi appearing for the Respondent has on instructions requested that the Respondent be granted three (3) weeks to deposit the aforesaid amount. Considering the request made by the Ld. Counsel we allow and direct the Respondent to deposit the amount within three weeks from the date of the Order. 43. With the aforesaid observation present CA No. 231 of 2022 In C.P No. 755/MB/C-I/2017 stands disposed of as allowed in above terms." 23. Against the said order the appellant preferred an appeal before this Tribunal which was numbered as Company Appeal (AT) No.198 of 2022. After noticing the fact that Ms Malika Joshi, learned counsel appearing on behalf of the appellant herein on instructions requested for extension of time for depositing of the aforesaid amount thi....
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....ents of Hon'ble Apex Court in P.R.Deshpande Vs. Maruti Balaram Haibatti,1 & A.V.G.P Chettiar & Sons and Ors. Vs T.Palanisamy Gounder2, submits that even though submission was made by Ld counsel of the Appellant 1 (1998) 6 SCC 507, para 9 & 11 2 (2002) 5 SCC 337 para 22 Company Appeal (AT) No.198 of 2022 3 before the NCLT for deposit of the said amount, the Appellant cannot be precluded to assail the said order. He further submits that Ld. counsel for the Appellant before the NCLT without the proper instruction of the Appellant had made such submission and as such the said submission made by the Ld. Counsel for the Appellant may not be treated as a hurdle to assail the impugned order. 6. Mr. Dhruba Mukherjee, Ld. Sr. Counsel for the Respondent submits that under Section 421 of the Act, a party can file an appeal provided he is aggrieved with the order. By way of referring to para 42 of the impugned order he submits that once on instruction, Ld counsel for the Appellant admitted regarding deposit of the said amount, the Appellant was precluded to assail the order that too while invoking 'Appellate Jurisdiction' of this Tribunal under section 421 of the Act. 7. Besid....
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....s made by the counsel, the integrity of the counsel may not be questioned that too without apprising the concerned court. Such submission is not permissible to be raised before the Appellate Court. 11. For deciding the present appeal on the point of primary issue of maintainability, it is necessary to reproduce Section 421 of the Act as follows: "Section 421: Appeal from orders of Tribunal. 421. (1) Any person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tribunal. (2) No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties. (3) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order of the Tribunal is made available to the person aggrieved and shall be in such form, and accompanied by such fees, as may be prescribed: Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days from the date aforesaid, but within a further period not exceeding forty-five days, if it is satisfied that the appellant was prevented by sufficient cause from fili....
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....without apprising the concerned Court. Such submission was not permissible to be raised before Appellate Court. In para 12 of the same order it was further observed "if the Appellant is of the view that his counsel had made incorrect statement before the NCLT, he would be at liberty to approach the NCLT, but he may not be permitted to raise such issue before this Tribunal". Such observation of this Tribunal may not be termed as if this Tribunal granted liberty to file rectification petition before the NCLT. The said observation appears to have been recorded while this Tribunal was not inclined to interfere with the impugned order. In normal course if the appellant was aggrieved with the order of this Tribunal he was at liberty to avail remedy of appeal. It has also not been disputed by learned counsel for the appellant that in the earlier appeal the appellant had not whispered as if his counsel before NCLT had given undertaking without authorisation of the appellant or learned counsel before the NCLT the appellant had not given such consent. If recording of the consent of the learned counsel for the appellant by the NCLT was incorrect in such situation learned counsel for the appel....
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.... in the aforesaid communication it has not even been indicated as if the signatory of the said praecipe has received any instructions or information from Ms Malika Joshi, learned counsel for the appellant. If the appellant was of the view that without any authorisation such consent was given by his counsel then in that event he would have taken immediate steps for filing a rectification application, instead of preferring an appeal before this Tribunal. Again alongwith the present Memo of Appeal one another communication has been brought on record which is dated 24.11.2022 i.e. email sent by Ms Malika Joshi, learned counsel for the appellant to the appellant which is at running page 92 and 93 and reproduced hereinbelow: "As requested by you, please find below an update on the hearing of Company Application No. 231 of 2022, which was listed at Sr. No. 1 on 30th September 2022 for pronouncement of order, when we were present through video conference. At this hearing, the Hon'ble Bench pronounced its judgment that it had allowed the said Company Application and directed the Respondent, L.e. you, to deposit a sum of INR 3,94,99,355.00/- with Registry of NCLT Mumbai....
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....used to accept the same. Since by then you had already commenced the process of fing an appeal at NCLAT, we did not pursue this further considering the same would be dealt with before the appellate court. Please find attached our email filing the said praecipe dated 4th October 2022 on [email protected] i.e. the email address of this Hon'ble Bench. Please do note that the intention in requesting the increase of time was only to enable you to consider your position and not to imply your consent to the order. It is not conceivable-that any kind of consent to the order of deposit would be made by us. The Company Application was heavily contested on the ground of maintainability and also merits and hence we had initially requested for stay of the order so as to prefer appeal against the Order of deposit. We re-emphasize that we, as your advocates have at no point of time consented to the order dated 30th September 2022 of the Hon'ble Bench and further we state and confirm that we did not have any instructions from you to give such consent on your behalf. We hope we have clarified your queries. If you require any further clarification, please do not hes....