TaxTMI 
TaxTMI 
2024 (5) TMI 729
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.... This Appeal has been filed under Section 421 of the Companies Act, 2013 challenging the Impugned Order dated 3rd June, 2022 passed by National Company Law Tribunal, Chandigarh Bench (in short, the Tribunal) in the Execution Application filed by the Respondent Nos.1 to 9 herein being Company Application No.722/2019 in Company Petition No.146/ND/2012 (RT CP No.27/Chd/Pb/2016). 2. Heard the Counsel for the parties and perused the record made available including cited judgements. 3. The Execution Application CA No.722 of 2019 was filed by the Respondents No.1 to 9 seeking enforcement of Order dated 16th April, 2019 passed by this Appellate Tribunal in Company Appeal No.394 of 2017 and Company Appeal No.55 of 2018. These Company Appeals were filed by the Respondents No.1 to 9 and the Appellants respectively against the final Order dated 15th November, 2017 passed by the Tribunal, Chandigarh in CP No.146/ND/2012 being oppression and mismanagement petitions filed by the Respondents No.1 to 9 against the Appellants under Section 397, 398, 237(b) and 111(4)(a)(ii) of the Companies Act, 1956. It has been alleged by the Appellants that Impugned Order wrongly concluded that Appellants....
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....9.6.2011 (Allotment No.1) and allotment of 4,00,000 shares by the Appellant No.1 Company to Appellant No.2, 3, 8, 9 and 10 on 10.10.2012 (Allotment No.2). 7. It was submitted that the Tribunal vide its Judgement dated 15.11.2017, disposed Company Petition No.146/ND/2012, inter alia, setting aside the second transfer and directed the Appellants to transfer back 14,96,000 shares to Respondent No.1 Company. It was brought to the notice of this Appellate Tribunal that the detailed directions were contained in para - 161 of the Tribunal's Order dated 15.11.2017, especially, para- 161(ii) contained direction of transfer of 14,96,000 shares to the Respondent No.1 which was to be with prospective effect from 15.11.2017 and the second transfer of 24.5.2010 was primarily declared invalid by the Tribunal on the ground that the supporting board resolution in respect of the second transfer was not produced. The Appellants stated that, under protest and without prejudice, it transferred 14,96,000 shares to the Respondent No.1 Company w.e.f. the date of Judgement dated 15.11.2017 and transferred date was recorded in the list of transfers in the Register of Members of Appellant No.1 Company at ....
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.... Appellant No.2 Company and it reflected in the register of members of Appellant No.1 Company at Sl. No.28 (Termed as "FRESH TRANSFER"). 11. The Appellants have highlighted that all directions were complied and steps were taken to issue the fresh transfers, without prejudice with the rights of the Appellants to challenge the Tribunal's Order dated 15.11.2017 and the same was specifically mentioned in Clause - 5 of the share purchase agreement dated 28.11.2017 according to which in case Appellants succeed in the Appeal that the Respondent No.1 Company would be liable to return the sale consideration. 12. The Appellants submitted that pursuant to fresh transfer of 28.11.2017, the Register of Members of Appellant No.1 Company reflected the ownership of 14,96,000 shares as under:- " Transfer No. Date Event Owner of 14,96,000 shares 16-20 19.05.2010 Transfer of 14,96,000 shares from five investment companies to R1 R1 (Aar Kay Chemicals) 21 24.05.2010 Transfer of 14,96,000 shares from R1 to A2 A2 (Dhuri Cold Storage) 24 15.11.2017 Date of NCLT Judgment R1 (Aar Kay Chemicals) 28. 28.11.2017 Fresh Transfer Deed again t....
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....ied the Order dated 15.11.2017 passed by the Tribunal to the extent that instead of "transferring back" the 14,96,000 shares to the Respondent No.1 Company but it set aside the transfer of 14,96,000 shares retrospectively w.e.f. 24.5.2010 and this Appellate Tribunal never made any mention about fresh transfer dated 28.11.2017 in the said Order dated 16.4.2019. Thus, the direction of this Appellate Tribunal was that in the list of transfers in the register of members of the Appellant No.1 Company regarding entry at Sl.No.21 and 24 would have to be omitted and 14,96,000 shares would stand registered in the name of R1 Company w.e.f. 19.5.2010. 17. The Appellants conceded that they challenged the Order of this Tribunal dated 16.4.2019 before the Hon'ble Supreme Court by filing Civil Appeal No.4774 - 4775 of 2019 which is still pending before the Hon'ble Supreme Court of India. 18. In this background, the Appellants pointed out that this Tribunal in Order dated 16.4.2019 did not reflect the present ownership of 14,96,000 shares as on 28.11.2017 and the Respondent No.1 Company vide fresh transfer deed had independently transferred these 14,96,000 shares to the Appellant No.2 Compan....
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....d Order to return back the share certificates to the Respondent No.1 Company are illegal and perverse and need to be set aside as it completely ignored the fact that the subsequent fresh transfer of 28.11.2017 was beyond the scope of the original decree/original proceedings. 21. The Appellant emphasised that, under protest and without prejudice to their rights and contentions in the Civil Appeal pending before the Hon'ble Supreme Court, the Appellant have complied with direction passed by the Tribunal in the Order dated 15.11.2017 and the Order of this Appellate Tribunal contained in Order dated 16.04.2019 and also rectified the register of members in accordance with the direction passed by the Tribunal as well as this Appellate Tribunal. 22. The Appellant further stated that the Tribunal did not appreciate the reason that 14,96,000 shares stand in the name of the Appellant No.2 Company is because of the fresh share transfer of 28.11.2017 which was independent cause of Respondent No.1 Company to retransfer 14,96,000 shares to Appellant No.2 Company by way of fresh transfer deed, which incidentally was not subject matter of Company Petition No. 146/ND/2012 or Company Appeal No....
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....1 Company had rectified its Register of Member and other relevant records to reflect cancellation/setting aside of the allotment of 3,50,000 shares to Appellant No. 2 on 29.06.2011 and allotment of 4,00,000 shares on 10.10.2012 to Appellant No.2, 3, 8, 9 and 10 in terms of directions recorded at Para 40(C) of the order dated 16.04.2019 passed by this Appellate Tribunal. 26. The Appellants stated that the Tribunal wrongly noted that the Respondent No. 1 never received back the share certificates for 14,96,000 shares in pursuance of Order dated 16.04.2019, without appreciating the fact that there is no direction in the Appellate Tribunal's order with respect to the Share Certificates, moreover, the Appellant No. 1 Company has never issued any physical share certificates to any of its shareholders. As such, there was no question of delivering back the Share Certificates to the Respondent No. 1 Company. 27. Concluding pleadings, the Appellants requested to allow their Appeal and set aside the Impugned Order. 28. Per contra, the Respondent stated that the pleadings of the Appellants are baseless, mischievous and misleading and submitted that the Adjudicating Authority, after go....
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....the Appellants group which was without consent of the Respondents No.1 to 9. 33. The Respondent alleged that the Appellant No.3 - Ravi Nandan Goyal and Appellant No.4 - Shiv Kumar Goyal who are on Board of Directors of all the relevant companies i.e. Respondent No.1 Company (AAR KAY Chemicals Pvt. Ltd.) purported transferor), Appellant No.2 Company - Dhuri Cold Storage Pvt. Ltd. (purported transferee) and Appellant No.1 - A.P. Refinery Pvt. Ltd., it is the case of the Respondents No.1 to 9 that the fraudulent transfer of 14,96,000 shares illegal transfer was caused by Respondent No.1 company to the Appellant No.2 Company, which was facilitated by Appellant No.3 and Appellant No.4 at a time when the Respondents No.1 to 9 herein held clear majority shares in the Respondent No.1 Company. 34. The Respondents No.1 to 9 stated that the Tribunal vide Order dated 15.11.2017 after hearing all the parties came to the clear conclusion regarding oppression and mismanagement being done by the Appellants and set aside the illegal transfer of 14,96,000 shares from Respondent No.1 Company to Appellant No.2 Company. The Respondents No.1 to 9 submitted that cross appeals were filed by both the....
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....ellant in fact filed I.A. No.78176 of 2019 for ex-parte stay on operation of this Appellate Tribunal's Order dated 16.4.2019,however, Hon'ble Supreme Court of India vide Order dated 10.5.2019 did not grant any stay of operation of the Judgement of this Appellate Tribunal and in absence of any stay and also keeping in view the fact that the Appellant had not implemented the Orders dated 16.4.2019, Respondent No.1 to 9 on 6.9.2024 filed an Application before the Tribunal under Section 424(3) of the Companies Act, 2013 for execution and enforcement of the order passed by this Appellate Tribunal. 39. The Respondent elaborated that during the Execution Petition, the Tribunal called for report from ROC, Punjab and Chandigarh who filed its report dated 14th January, 2020 clearly advising regarding non-compliance by the Appellants of this Appellate Tribunal's Orders dated 16.4.2019 and based on such report of the ROC, the Tribunal passed the Impugned Order dated 3.6.2022 allowing the Execution Petition and directed ROC to appoint a Gazetted Officer to ensure strict compliance of this Tribunal's Order dated 16.4.2019 and to verify and ensure that the Appellant No.1 Company had rectified ....
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....ents No.1 to 9 submitted that the Appellants have failed to comply with Appellate Tribunal's Order dated 16.4.2019 and the same fact has been elaborated by the ROC and further the register of members of the Appellant No.2 Company does not reflect the name of Respondent No.1 Company even on date i.e. after this Tribunal's Order dated 16.4.2019, holding14,96,000 shares. 44. The Respondents No.1 to 9 also alleged that no share certificate has been handed over to the Respondent No.1 company in pursuant to direction contained in this Appellate Tribunal's Order dated 16.4.2019. 45. The Respondent further mentioned that subsequent transfer dated 28.11.2017 regarding transfer of 14,96,000 shares from Respondent No.1 Company to Appellant No.2 Company was specifically set aside by this Appellate Tribunal and the pleadings of Respondents No.1 to 9 were acknowledged by this Appellate Tribunal and therefore this Appellate Tribunal in the common Order dated 16.4.2019 recorded the correct position in para - 23. Further, this Appellate Tribunal also observed in para - 30 of the Order dated 16.4.2019 to show Respondent No.1 as shareholders of 14,96,000 shares w.e.f. 19.5.2010 as if shares wer....
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....any towards loan to AP Oil Mills shall stand written off and the name of R-2 company be omitted from the register of members of R-1 company; and iii) R-1 company shall hold fresh meeting of the Board of Directors offering the proportionate shares out of additional allotment of 3,50,000 shares in 2011 and 4,00,000 shares in 2012 respectively at the rates at which these were transferred to some of the respondents. The transfer shall be made in favour of the petitioners proportionately as per shares held by P-2 to P-9, on these petitioners offering to subscribe to these shares at the rates allotted to some of the respondents within the time to be allotted by R-1 company in the said meeting and they shall deposit the required amount with R -1 company; and iv) Failing the petitioners to send the offer for allotment of proportionate shares as were held by them on the date of allotment of additional shares or in making payment, the Board of Directors of R-1 Company would be at liberty to decide against the said allotment of proportionate shares; and v) Rest of the shares out of the additional allotment of 3,50,000 and 4,00,000 shares, will continue to be held by....
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.... herein. This was followed by the second transfer on 24th May, 2010 whereby the Respondent No.1 Company subsequently transferred exact number of shares i.e. 14,96,000 to Appellant No.2 Company. This transfer was reflected in the list of transfers in the register of members of the Appellant No.1 company at Serial No.21 and the said transfer of 24th May, 2010 has ben referred as "Second Transfer" in various petitions and the Appeal herein. 52. This was challenged by Company Petition No. CP 146/ND/2012 filed by the RespondentsNo.1 to 9 herein challenging the validity of second transfer and the Tribunal in its Order dated 15th November, 2017 directed transfer back of share to Respondent No.1 company. 53. The bone of contention is regarding subsequent fresh transfer which occurred on 28th November, 2017 whereby the Respondent No.1 Company retransferred the same exact number of shares to the Appellant No.2 Company under alleged separate Board Resolution and alleged share purchase agreement against which the Company Petition No.276/2017 and Company Petition No.24/2018 were filed by the Respondents No.1 to 9 challenging the validity of the Board Resolution and fresh transfers made th....
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....d Order contained in Order dated 15.11.2017 and this Appellate Tribunal upheld the Appeal of the Respondent and partially modified the Order of the Tribunal 15.11.2017. We have noted from the Order contained in this Appellate Tribunal in para - 40, the five directions were given, (which we have already discussed in detail in previous discussion). 57. The directions of this Appellate Tribunal were not to disturb directions contained in para marked 163 of the impugned Order dated 15.11.2017 and also agreed with the Tribunal with regard to operative directions contained in para - 161(i) i.e. "CA 255/2015 filed by the Appellants herein deserve to be dismissed." However, this Tribunal after recording detailed reasons set aside rest of the operative part as recorded in para - 161(ii) to (vi) of the Orders of the Tribunal dated 15.11.2017. It is important to note that this Appellate Tribunal recorded in para - 40(A) last line, which recorded that "any steps taken by the parties pursuant to such directions recorded in para - (ii) and (vi), pending Appeals shall stand set aside." 58. We have taken into consideration that the Order of this Appellate Tribunal dated 16.4.2019 was challen....
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.... - 23 of the Impugned Order by referring to para - 40(A) of this Appellate Tribunal on 16.4.2019. Third issue whether the Appellant has implemented completely directions of this Appellate Tribunal dated 16.4.2019 was also discussed in full in para - 25 and 26 of the impugned Order and concluded that the Appellants were found to be non-compliance of the direction contained in Order dated 16.4.2019 under execution. 62. We note that there was no dispute regarding the first transfer of shares dates 19th May, 2010. However, the second transfer dated 24.5.2010 was challenged and was adjudicated by the Tribunal as well as this Appellate Tribunal in terms of para - 40 of this Appellate Tribunal's Order dated 16.4.2019. The second transfer dated 24.5.2010 recorded in the register of members transferred the shares in favour of Appellant No.2 was set aside and further direction was given to the Appellant No.1 company to rectify the Register of Members so as to reflect 16,94,000 shares standing in the name of Respondent No.1 Company w.e.f. 19.5.2010 and second transfer dated 24.5.2010 shall stand ignored. 63. This Appellate Tribunal also recorded in para - 40(C) that the first allotme....
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....sh Transfer) and there was no restriction by the Tribunal or this Appellate Tribunal and this transaction being completely new, separate and independent transaction was valid as per the Appellants. 68. In this regard, we revisit the Order of the Tribunal. We also take into account the discussion on the arbitral Tribunal as contained in para - 5 of this Appellate Tribunal as contained in its earlier Order dated 16.4.2019 which reads as under:- "5. The Impugned Judgement and Order of NCLT when perused, shows summary recorded from the Company Petition. The NCLT noted the various contentions raised and prayers made by the original Petitioners. The Respondents filed written Reply in NCLT and the learned NCLT took note of the defence raised by the Respondents. The Respondents defended their actions, details of which can be seen in the Impugned Order. It appears that the original Petitioners filed Rejoinder and Respondents filed Sur-Rejoinder to support the respective cases as pleaded by the parties. All this is summarized in the Impugned Order which can be seen and we need not prolix this judgement reproducing those details, though we note the same. In para - 88 of the Impugn....
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....ide rest of the operative Order as recorded in para - 161 of the Impugned Order and reasons recorded by NCLT in support of the same. Any steps taken by the parties pursuant to such directions recoded in para - ii to vi, pending Appeals shall stand set aside." [ emphasis supplied ] 70. The intent of this Appellate Tribunal was very clear to restore the status quo as was at the time of first transfer of shares on 19th May, 2010 and all subsequent actions of the Appellants was set aside. 71. In this background and in view of the detailed discussion above, we do not find any sound logic of the Appellants to issue alleged fresh transfer dated 28.11.2017 to justify the action of transferring back 14,96,000 shares in the name of Appellant no.2. 72. We note that the concerned persons i.e. Appellant No.3 - Ravi Nandan Goyal and Appellant No.4 - Shiv Kumar Goyal executed the documents for transfer of the shares and board resolution, were the common directors of all three companies i.e. Appellant No.1, Appellant No.2 and Respondent No.1. If the contention and the arguments of the Appellants about alleged fresh transfer dated 28.11.2017 are accepted, it will tantamount of mak....