TaxTMI 
TaxTMI 
2024 (4) TMI 242
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....sion dated 07th August, 2020 ('impugned decision'). 2. The ROC by its impugned decision had dismissed the Appellant's application dated 21st October, 2014 filed under Section 18 of the Companies Act, 2013 ('the Act') seeking conversion from an 'unlimited liability company' to a 'limited liability company'. 3. The Appellant herein had initially filed an application for conversion of the company into a 'limited liability company' along with all relevant and necessary e-forms on 21st October, 2014 ('the Appellant's application'). It is stated that subsequently on 12th November, 2014, the Appellant filed a clarification explaining the compliance of Section 18 of the Act. 4. It is a matter of record that during the pendency of the said application, Union of India brought out Companies (Incorporation) Third Amendment Rules, 2016 w.e.f. 27th July, 2016. Consequently, Rule 37 was inserted in the Companies (Incorporation) Rules, 2014 which prescribed the procedure for conversion of 'unlimited liability company' to 'limited liability company'. 5. The Appellant's application was initially rejected by ROC vide order dated 05th October, 2016, which was set aside by this Court in W.P....
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....ules made there under for making any application to the Registrar of Companies under this Act. Therefore, the Company is required to file conversion application in a prescribed e-form under Section 398, 400 r/w Section 18, 403 & Companies (Registration Office & Fees) Rules, 2014 for conversion from a Un-Limited Liability Company to Limited Liability Company so that on approval of said e-form system automatically change the name of the company by virtue of proviso to Section 13 and generate fresh Certificate of Incorporation from the date of approval of ROC. Thus, the company has not filed its conversion application dated 21.10.2014 in appropriate e-form GNL-1 (SRN C29807955) with ROC. iii. However, the ROC, Delhi has kept the Company's application dated 21.10.2014 alive till notification of Rules/procedure and e-form INC 27 and rejected the application on 05.10.2016 to protect the interest of creditors, stakeholders and public interest keeping in view of factual position, position of law on protection of interest of creditors on conversion of status from one class of company to another class as company was involved in falsification of Books of Accounts & financial stat....
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....14 Crores as on 31.03.2014, 31.03.2015 & 31.03.2019 respectively due to cash losses incurred by the company during the past financial years and the net worth of the company is negative and if company goes into winding up or is unable to pay its debts/liabilities then only the 3 shareholders of subject company (Reebok India Company) have to bring money to pay the debts of the company. They are liable to pay its creditors in full by virtue of section 2 (92) of the companies Act, 2013 as liability of shareholders are unlimited in case of Un-Limited Liability Company. viii. Whereas there is a dispute among shareholders and 1 shareholder namely Focus Energy Limited has filed petition under Section 237, 247, 397, 398 r/w 402, 403 & 406 of CA, 1956 against Reebok India Company, Auditors and Others and seeking various reliefs from NCLT Bench Delhi." (Emphasis supplied) 7. The Appellant challenged the impugned decision of the ROC on the ground that in view of Section 18(3) of the Act since the debts, liabilities, obligations or contracts incurred or entered by or on behalf of the company with unlimited liability will continue to be enforceable even after conversion, the....
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.... petitioner/company. The right of the Petitioner for conversion from unlimited company to limited company has not been taken away. In fact, the petitioner/company had no vested right to be granted a certification of conversion to a limited liability company. The rules have only become more stringent inasmuch as the RoC has additional criteria to satisfy himself regarding the net worth of the company and as to whether any investigation/inspection is pending against the company or not and only on being satisfied, the permission for conversion can be granted. 25. Viewed in this light, the reasons given by the RoC for rejecting the application of the Petitioner on the ground that various prosecutions have been filed by the Serious Fraud Investigation Organization against the Petitioner for offences under the Companies Act and the IPC and that the e-Form 27 which was to be filed with the Registrar of Companies was not in compliance with Rule 37 of the 2016 Rules cannot be said to be so perverse especially keeping in mind the interest of the shareholders and the interest of the creditors. The RoC has also observed that the petitioner/company has suffered substantial financial lo....
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.... in referring to and applying the conditions made applicable to conversion of an 'unlimited liability partnership' to a 'limited liability partnership'. He states that Section 366, which falls in Chapter XXI of the Act, cannot be relied upon by ROC for rejecting the application of the Appellant. 11. We have heard the learned senior counsel for the Appellant and perused the record. 12. The limited issue arising for consideration in the present appeal is whether the Appellant's application filed on 21st October, 2014 before the ROC will be governed by the conditions in the statutory provision of Section 18 of the Act as it existed on the said date or the additional criteria provided in Rule 37, which was inserted subsequently by the Legislature w.e.f. 27th July, 2016, would also be applicable to the said application. 13. The Appellant contends that it acquired a vested right for conversion on 21st October, 2014 when it had filed the application for conversion. The Appellant contends that all the conditions stipulated under Section 18 of the Act have been complied with and therefore, the application was to be allowed by the ROC. The Appellant contends that the reasons recorde....
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....not submit any fresh building plans in accordance with the first or the second scheme of restrictions. Many of the petitioners have not paid a single pie towards the conversion charges, some of them have paid only few instalments and the others though have paid the instalments but not according to the schedule. In any case the High Court is right in taking the view that the building plans can only be sanctioned according to the building regulations prevailing at the time of sanctioning of such building plans. At present the statutory bye-laws published on April 30, 1988 are in force and the fresh building plans to be submitted by the petitioners, if any, shall now be governed by these bye-laws and not by any other bye-laws or schemes which are no longer in force now. If we consider a reverse case where building regulations are amended more favourably to the builders before sanctioning of building plans already submitted, the builders would certainly claim and get the advantage of the regulations amended to their benefit." (Emphasis supplied) 17. The said statement of law was reiterated by the Supreme Court in NDMC v. Tanvi Trading and Credit (P) Ltd. (2008) 8 SCC 765, P....
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....islature and Rule 37 was inserted to supply the omission so as to facilitate the applications for conversion. 21. Further the Supreme Court in State of Bihar v. Ramesh Prasad Verma (2017) 5 SCC 665 has held that a legislation, if clarificatory, declaratory or explanatory in nature and purport will have retrospective operation especially in the absence of any indication to the contrary. The Supreme Court referred to its earlier decisions on this issue and held as under: "18. All the decisions cited at the Bar are to the effect that a delegated legislation cannot traverse beyond the contours of the authority endowed by the parent statute and unless authorised by it, is not empowered to make any law or provision with retrospective effect, impairing the already vested rights of those likely to be adversely affected thereby. In our mind, these pronouncements, in the singular facts of the case are of no avail to the respondents having regard in particular to the clarificatory nature of the Notification dated 26-12-2001. 19. In CIT v. Gold Coin Health Food (P) Ltd. [CIT v. Gold Coin Health Food (P) Ltd., (2008) 9 SCC 622], a three-Judge Bench of this Court, while dwel....
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.... clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect (Ibid., pp. 468-69)." (emphasis supplied) 21. The proposition has been so well laid that we do not wish to burden the present rendition by referring to other rulings in the same vein. Suffice it to state that any legislation or instrument having the force of law, if clarificatory, declaratory or explanatory in nature and purport, in order to supply an obvious omission or to clear up doubts qua any prior law, retrospective operation thereof is generally intended. Applying this test, in the absence of any indication to the contrary, either in the parent Act or the Rules or the notifications involved, we are thus of the unhesitant opinion that on a conjoint reading of Rule 26 and the two notifications, the enhanced rate of royalty at Rs 100 per cubic metre for boulder, gravel and shingle, which are used or are capable of being used for making chips would be realisable w.e.f. 1-4-2001 and axiomatically thus, the respondents are liable to discharge the demand, therefor, as raised in terms thereof. The respondents were ....