TaxTMI 
TaxTMI 
2023 (12) TMI 187
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....n short 'Rules') has been dismissed as not maintainable before the Tribunal (in short 'first appeal') and CA (AT) (CH) No. 96 of 2023 filed by Mr. Gireesh Sanghi (HUF) against the order dated 07.09.2023 passed by the National Company Law Tribunal, Hyderabad Bench - 1, by which CP/33/59/HDB/2018 filed under Section 59 of the Act r/w Rule 11 of the Rules has been dismissed as not maintainable before the Tribunal (in short 'second appeal'). 2. In the first appeal, the application under Section 59 of the Act was filed seeking the following relief:- "a. Declare that 1,33,62,800 shares transferred on 18.12.2014 is in willful violation of Orders of Hon'ble Company Law Board, 23.10.2008 and 28.10.2009. b. Direct rectification of Register of Members of Respondent No. 1 Company to the extent of 1,33,62,800 shares transferred to Respondent No. 2 on 18.12.2014, previously held by R7 to R l7 and as detailed below and consequent rectification of shareholding of R2 in R1 Company: SI. No. Name of the Respondent Impugned Transfer of Shares 1. SZF Pvt Ltd (R7) 24,00,000 2. Balaji Zippers Pvt Ltd (R8) 6,00,000 3. Sanghi Poly Zips Pvt Ltd (R9) ....
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....mmediately." 4. The Tribunal after referring to the averments made by the Applicant and the reply by the Respondents framed a question as to whether the rectificatory jurisdiction under Section 59 of the Act, which is summary in nature can be exercised where there are contested facts and disputed questions? 5. The Tribunal relied upon two decisions of the Hon'ble Supreme Court, namely, Ammonia Supplies Corporation P. Ltd. Vs. Modern Plastic Containers Pvt. Ltd. & Ors., (1998) 7 SCC 105 and IFB Agro Industries Limited Vs. SICGIL India Limited & Ors., (2023) SCC On Line SC 8 and observed that "therefore, in the light of the law as laid down in re, Ammonia Supplies and IFB Agro, Supra, the present petition since filed under section 59 Companies Act 2013, it is imperative for us to examine whether or not the factual assertions as made tantamount to 'contested facts and disputed questions' and if the same are found to be so, then relegate the parties to a competent forum. So that these facts can be investigated and adjudicated." Thereafter, the Tribunal made the following observations in Paras 11 and 12 which are reproduced as under:- "11. Thus, both the pleadings....
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.... Hon'ble Supreme Court was not deciding the issue which has arisen in this case rather it was determining the appropriate forum for adjudication and determination of violation of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 and Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 framed under the Securities and Exchange Board of India Act, 1992 and has not dealt with Section 430 of the Act. 7. On the other hand, while defending, Counsel for the Respondent has argued that in the case of Ammonia Supplies (Supra), the Hon'ble Supreme Court has held, which has been extracted also by the Tribunal that "it is a summary power to carry out corrections or rectifications in the register of members and that the rectification must relate to and be confined to the facts that are evident and need no serious enquiry". Similarly, while referring to IFB Agro Industries Limited (Supra) he has again referred to the extracted portion in the impugned order which read as under:- "The rectificatory powers of a Board/Company Court under Section 38 of the Companies Act, 1913, then under Section....
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....vention of any of the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992) or this Act or any other law for the time being in force, the Tribunal may, on an application made by the depository, company, depository participant, the holder of the securities or the Securities and Exchange Board, direct any company or a depository to set right the contravention and rectify its register or records concerned. (5) If any default is made in complying with the order of the Tribunal under this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to 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 one year or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both." "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 determin....
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....ended to be exercised where there are contested facts and disputed questions and in regard to the second issue it was held that transactions falling within the jurisdiction of Regulatory bodies created under a statute must necessarily be subjected to their ex-ante scrutiny, enquiry and adjudication. It was therefore rejected the contention that NCLT has exercised a parallel jurisdiction under Section 59 with Securities and Exchange Board of India for addressing violations of the Regulations and framed under the SEBI Act. However, when the matter pertaining to Ammonia Supplies (Supra) was decided on 04.09.1998, there was no such provision like Section 430 which is now existing in the Act by which the legislature has completely barred the jurisdiction of the Civil Court to entertain any suit or proceedings in respect of any matter which the Tribunal or Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force. In the case of IFB Agro (Supra), the provisions of Section 430 were not brought to the notice of the Hon'ble Court and were not adverted to whereas in the case of Shashi Prakash Khemka (Supra) relied upon by the Appellant, th....