TaxTMI 
TaxTMI 
2022 (1) TMI 1434
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....hra, Mr. Saransh Kothari, Ms. Drishti Harpalani, Mr. Varun Chopra & Ms. Simran Kumari, Advocates. Respondent: Mr. R.J. Goswami, Mr. S.R. Keshkani, Mr. Rahul Sahasrabudde (CS), Mr. Shailesh Bhandari, Mr. Mukesh Bhandari, Mr. Ashok R Bhandari, Advocates. Respondent No. 1 to 3: Mr. Rudreshwar Singh, Mr. LCN Shahdeo, Mr. Saurabh Jain, Advocates for R-1 to R-3 & Shailesh B Bhandari, Advocate for R-1 Respondent No. 18: Mr. Abhishek Baid, for R-18/SEBI. JUDGMENT [Per; Shreesha Merla, Member (T)] 1. Aggrieved by the Impugned Order dated 04.05.2021 passed by the National Company Law Tribunal, Ahmedabad Bench ('NCLT') in Company Application No. 27 of 2021 in Company Petition No. 38 of 2019 and MA No. 08 of 2021 in CP No. 93 of 2018 & CP No. 94 of 2018, 'M/s. Electrotherm (India) Ltd.'/the Appellant preferred Company Appeal (AT) No. 54 of 2021 & Company Appeal (AT) No. 55 of 2021 respectively, under provisions of Section 421 of the Companies Act, 2013, (hereinafter referred to as the 'Act'). 2. The Common Impugned Order dated 04.05.2021, has also been challenged by Mr. Sailash B Bhandari/the Appellant in Company Appeal (AT) No. 56 of 2021 & Company Appeal (AT) No. 57 of 2....
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....ned Senior Counsel Mr. Rashesh Sanjanwala appeared for two independent directors and submitted that independent directors were appointed in 2017 and the application challenging the validity of their appointment had been filed in 2018 after one year. Hence, this fact could not be ignored and such independent directors should be allowed to function as such in terms of the provisions of law. Learned Senior Counsel Mr. Navin Pahwa appeared on behalf of Respondent no.1 company and submitted that there were 6000 shareholders of the company and the interests of the company had to be protected. 2. In the back ground of these submissions and considering the fact that main applications need detailed arguments, however, due to impending summer vacations and pandemic situation prevailing in the country, we consider it appropriate to pass interim order so that the functioning of the company is not affected adversely till the final disposal of all matters. In this regard, we express our displeasure as to how both groups are acting because in such matter involvement of police as such is not desirable thing and both groups should act responsibly so that interests of the shareholders at la....
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.....f. 30.09.2019) 3. Rakesh Bhandari R3 4.02% NA 4. Shailesh B. Bhandari R4 6.66% Managing Director 5. Nagesh Bhandari R6 1.83% NA 6. Anurag Bhandari NA 0.60% NA 7. Suraj Bhandari NA 0.64% Whole Time Director w.e.f. 13.11.2019 Mr. Mukesh Bhandari, Mr. Rakesh Bhandari, Mr. Shailesh B. Bhandari & Mr. Nagesh Bhandari are brothers. Mr. Siddarth Bhandari and Mr. Anurag Bhandari are sons of Mr. Mukesh Bhandari. Mr. Suraj Bhandari is the son of Mr. Shailesh B. Bhandari. • It is submitted that Mr. Siddharth Bhandari/R-2 filed CP No. 93 of 2018 under Sections 149, 150, 152, 159 and 176 of the Act challenging the appointment of the Independent Directors appointed on the Board of the Appellant Company. • Learned Counsel drew our attention to the reliefs sought for in Company Petition No. 93 of 2018 which are detailed as hereunder: • Learned Counsel contended that the NCLT does not have jurisdiction to grant declaratory reliefs sought for in this Petition. • The third Respondent/Mr. Rakesh Bhandari filed identical CP No. 94 of 2018 under the same provisions seek....
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....aj Bhandari (whole time director) along with other authorised signatories (Mr. Mukesh Bhandari and other employees of the Company). While so Respondents 1 to 3, who were Petitioners in CP 38 of 2019 filed MA 7 of 2021 praying for nullifying the effect of letters dated 10.03.2021. But no Interim Order was passed in the IA and the same stood adjourned. The Board Meeting was held on 05.04.2021 wherein a Resolution was passed for operations of the Bank Accounts by joint signatories of Mr. Shailesh Bhandari (MD) or Suraj Bhandari (whole time director along with the other authorise signatory). Another Resolution was passed for 05.04.2021 Board Meeting, debarring the entry of Mr. Mukesh Bhandari, Mr. Siddarth Bhandari and Mr. Anurag Bhandari into the premises of Company and information of the same was sent to BSE and NSE on 05.04.2021 itself, Respondents 1 & 2 filed I.A. 21 of 2021 in CP No. 38 of 2019 seeking a direction to stay the Board Resolution dated 05.04.2021 and also to nullify the effect of the letter dated 10.03.2021. No urgent hearing was granted and the IA was adjourned. • It was strenuously contended by the Learned Senior Counsel that NCLT dismissed IA 49 of 201....
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....ndari under Section 242(4) of Companies Act, 2013 despite the fact that the subject Company Petition nos. 93/2018 & 94/2018 were filed under Sections 149, 150, 152, 159 & 176 of the Companies Act, 2013. • Further, IA No. 08/2021 in CP No. 93/2018 & 94/2018 was filed under Section 242(4) of the Companies Act, 2013, whereas the jurisdiction under Section 242(4) is available only in the proceedings under Section 241 and not for the proceedings under Sections 149, 150, 152, 159 & 176 of the Act. Moreover, even the Company Petition 38/2019 was held to be not maintainable by NCLT vide order dated 08.04.2021 passed in IA No. 499/2019 by which, the NCLT has dismissed the Application under Section 244 of the Act seeking waiver of eligibility criteria to file the Petition under Section 241/242 of the Act and held that the Petitioners in that Petition constitute only 5.61% of the total shareholding of the Company and are not entitled for waiver under Section 244 of the Act. • The Learned Senior Counsel submitted that a plain reading of Section 242(1) amply clarifies that the powers of Tribunal are available only for proceedings under Section 241. Further Section 242(....
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.... • 'Cryus Investments Private Limited Anr.' Vs. 'Tata Sons Limited & Ors.' 2017 SCC OnLine NCLAT 261. • The Learned Senior Counsel placed reliance on 'Jagmittar Sain Bhagat' Vs. 'Health Services, Haryana', (2013) 10 SCC 136 in support of his case that 'if a Court passes decree having no jurisdiction over the matter, it would amount to nullity'...... 7. Submissions of the Learned Senior Counsel representing Respondents No. 1 to 3: • It is contended that without giving any opportunity of being heard, with a malafide intention to control the Board of the Appellant Company, Mr. Shailesh Bhandari wrongly utilised the power of simple majority in the Board Meeting dated 04.07.2018 and removed Mr. Mukesh Bhandari from the post of Managing Director of the Appellant Company. Further, the Board has wrongly accounted the name of Mr. Siddharth Bhandari for retirement instead of Mr. Shailesh Bhandari as both had the same tenure in the office. Mr. Siddharth Bhandari has been removed from the post of Director in the AGM dated 30.09.2019 and simultaneously Mr. Shailesh Bhandari has started appointing Independent Directors without the approval of the Board. N....
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....nal. The Respondents in the current Appeal are the original Petitioners in CP 93 of 2018 and CP 94 of 2018 filed in September 2018 in which the pleadings were completed by 20.10.2018 itself and since then the matters have been listed for final hearing before NCLT, but the original Petitioners in the interregnum period had preferred an Application for impleadment of the first Respondent which was allowed, vide Order dated 30.01.2019. Original Appeal Nos. 54 & 55 as well as the present I.As under original Appeal No. 54 & 55 are not supported by any authority letter or Board Resolutions as directed in Rule 30 of NCLAT Rules 2016. Despite direction by this Tribunal vide Order dated 26.05.2021, the Applicant Company did not comply with the same and therefore all the I.As and Appeals are not maintainable. • The Learned Senior Counsel highlighted the portion of the Order dated 04.05.2021, whereby NCLT has directed 'both Respondent-1 Company as well as Respondent-5 Mr. Shailesh Bhandari to appoint Mr. Siddharth Bhandari as joint signatory of all Bank Accounts of the Company with immediate effect'. And with consent, Mr. Shailesh obeyed the said Order by writing the letter dated....
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....anaging Director of the Company. Learned Appellant Counsel relied on the ratio laid down in the Hon'ble Supreme Court in 'Jagmittar Sain Bhagat' (Supra) in which Hon'ble Apex Court has observed that conferment of jurisdiction is a legislative function and it cannot be conferred with the consent of the parties or by superior Court and if the Court passes a decree having no jurisdiction, it would amount to nullity as the matter goes to the root of the cause. 11. Company Appeals (AT) No. 56 of 2021 & 57 of 2021 are preferred by Mr. Shailesh Bhandari on the following grounds: 12. It is the case of Mr. Shailesh Bhandari, the Appellant in Company Appeal (AT) No. 56 and 57 of 2021, that he holds 8,48,275 equity shares of M/s. Electrotherm (India) Ltd. and preferred Company Application No. 27 of 2021, filed on 16.04.2021 in CP 38 of 2019 stating that this Company Petition was pending adjudication before the NCLT. It is submitted by the Learned Counsel appearing for the Appellant/Mr. Shailesh Bhandari that pending the adjudication of CP 93 & 94 of 2018 unwarranted circumstances arose and the Appellant was not in a position to attend to the office of the first Respondent Company. Under....
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....bide by the Board Resolution dated 05.04.2021 passed by Respondent-1 Company and further directed Respondent-2 to Respondent-3 not to intervene in the day-to-day affairs of the Respondent-1 Company and further debarred Respondent 2 to Respondent 4 from entering the premises of the Respondent 1 Company. c. to set aside or to terminate the Agreement entered into between Respondent 1 Company and Security Agencies at the behest of Respondent 2 to 4. d. to terminate to all the illegal appointment made by Respondent 2 to Respondent 4 and to award cost. 14. The Counsel for the Respondents 2 to 4 relied on the letter dated 06.08.2021 addressed by Mr. Shailesh B. Bhandari to the Bank to include the name of Mr. Siddharth Bhandari as joint signatory of all Bank Accounts of the Company. A similar letter dated 10.05.2021 addressed to the Branch Manager Axis Bank and signed by Mr. Shailesh Bhandari is reproduced as hereunder: The aforenoted letter shows that Mr. Shailesh Bhandari has informed the concerned Banks regarding the direction by the Tribunal to appoint Mr. Siddharth Bhandari as a joint signatory of all Bank Accounts. 15. Both parties have raised allegations a....
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....filed is not quite relevant and it does not debar the Court from exercising its jurisdiction which otherwise it possesses............." 17. Section 420(1) of the Companies Act, 2013 provides for 'the Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit.' 18. Rule 11 of the NCLT Rules, 2016 is observed as hereunder: "Inherent Powers.-Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal." 19. Even in the absence of Rule 11 this Appellate Tribunal, being essentially a judicial forum determining and deciding rights of parties concerned and granting appropriate relief, can, in exercise of its powers to meet ends of justice, or prevent abuse of its process, pass any such Interim Directions. Such Powers being inherent in the constitution of the Appellate Tribunal, Rule 11 can merely be said to be declaring the same to avoid ambiguity. 20. NCLT is empowered under Section 420(1) read with Rule 11of the ....
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....s. Having regard to the fact that NCLT has taken into consideration the involvement of both parties/both sides in the operation and function of the Company, we are of the view that no prejudice would be caused to the Appellants by such a direction of NCLT. 24. We are of the view that as long as the power is present, non-quoting or misquoting of the Section is not fatal. A harmonious construction thus requires that the direction should cover two different situations. If a particular action is valid under one Section, it cannot be rendered invalid, or that the Tribunal is not empowered to pass such a direction, if the wrong Section is quoted. The statute empowers the Tribunal from passing any Interim Order, it deems fit and in such a situation, keeping the affairs of the Company in mind, the Tribunal has rightly moulded the reliefs. Cases are known in which Courts have moulded the reliefs to meet a situation such as this. Quoting a wrong Section/sub-Section does not estop a Court from taking note of events, circumstances which happen during that time frame. Hence, the intent of the law maker and the nature and scope of the Legislation is to be kept in mind, as any departure from t....