TaxTMI 
TaxTMI 
2025 (10) TMI 13
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....1 and 2 in the Company Petition No. 40(PB) of 2012, filed under Section 397, 398, 402, 403, 235, 237 and 111A of the Companies Act, 1956. 3. During the course of litigation, a settlement agreement dated 19.05.2014 was entered into between the appellants no. 1 and 2 and Respondent No. 3 viz the brother of appellant no. 1. In view of the settlement dated 19.05.2014, the appellants no. 1 and 2 filed an application CA No. 122/C-1/2014 praying for withdrawal of company petition but the said application was dismissed by the Ld. Company Law Board vide its order dated 29.08.2014 as under: "ORDER Reply is filed by P-3 which is duly supported by an affidavit. Ld. Counsel for P-3 forcefully argued that the application CA No. 122 for withdrawal of CP No.40(ND)/2012 has been filed by P-1 & 2 in collusion with each other and no compromise between P- 1 & 2 and Respondents has ever taken place. Shri Arun Saxena, Id Chartered Accountant representing R 8&9 also argued that no compromise has ever taken place with the Respondents Shri Charanjit Singh Ahluwalia, the Patriarch of the family who is present also strongly denied the factum of the compromise. If a compromise ha....
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....llow the new counsel to appear for petitioner No.1 and 2 unless he has a valid petition to restore himself on record in view of the order of this Tribunal dated 19.01.2016. The counsel proposing to appear for applicant No.1 and 2 should clarify the position and appear in the proper manner after he is restored back to file. In so far as other cases are concerned, the matter will be listed on 22.09.2022," 7. It is argued the impugned order completely misread the earlier orders passed by the Ld. NCLT. Reference was made to L.RM K Narayanan and Another Vs Pudhuthotam Estates Ltd and others (1992) 74 Comp Case 30 wherein it was held once a petition is validly presented, it is well open to a shareholder to ask for substitution and prosecute the proceedings even though such a shareholder by himself could not have presented a petition under Section 397 for want of required share qualification. It was argued the court has to only consider whether the petition was a valid petition at the time of its presentation and that requirement of share qualification is relevant and material, only at the time of institution of the petition. Further in Rajamundry Electric Supply Corportion Ltd Vs A Na....
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....ctive of the question that whether there was any settlement or not, the Applicants themselves had chosen not to prosecute and not participate in CP No. 40(ND)/2012 Further without seeking any liberty to restore the proceedings qua them since 19.01.2016 till the filing of IA-321 of 2023 for any reason whatsoever. Even otherwise, there has been inordinate delay of 7 years in seeking the restoration of name in memo of parties, which cannot be justified. The conduct of Applicant speaks for themselves. 16. Furthermore, basis the alleged settlement, we cannot admit the contentions that there has been violation of the alleged settlement. This can also not be a ground for seeking restoration of proceedings qua Petitioner No. 1 and 2. Hence, we find no legal merit and we are inclined to dismiss the prayers sought in this Application." 12. Now the settlement talked above in the impugned order was entered into on 19.05.2014. Its salient features are as under: - "This agreement dated 19th May 2014 between the parties (parties), Sh Ramandeep Singh Ahluwalia s/o Sh Charanjit Singh Ahluwalia, [RSA] a resident of H No 132, Sector 8/A Chandigarh herein after referred to as Part....
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.... 14. We have also heard the Learned Counsel for the Respondents as well. He submits the settlement so far as it relates to the Respondent No. 1 company was fully implemented. He specifically referred to clause 2 of the Settlement to say the appellants no. 1 & 2 admittedly held shares in M/s Sun Time Energy Limited and both were the directors in the said company, but in pursuance to the settlement above, both had sold their shares in the company to Respondent No. 3 for consideration and then both the appellants no. 1 and 2 had resigned from the directorship of the company. It was argued from 19.05.2014 till date both the appellants had no shares in Respondent No. 1 company and sale/purchases of their shares were rather uploaded on the portal of the ROC/MCA etc. 15. Admittedly, per order dated 18.11.2014, the Ld. Company Law Board had noted the appellants no. 1 and 2 does not wish to participate and prosecute the proceedings before the Company Law Board and it was only upon objections raised by someone else, their withdrawal applications were dismissed, as not pressed. In any case the stand of appellants no. 1 and 2 was absolutely clear; both never wished to participate in the pro....
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....n can no longer be a matter in issue in the company petition. 26. What emerges from all these is that today there is no scope to give any relief to Hungerford by making an order under section 397. Even if all the prayers are allowed, it will not be benefited in any way. As a result, if it is held that the company petition should be proceeded with for giving a decision on the merits, in my view, it will produce only an academic decision. As is known, no court is to permit litigants to pursue any litigation inviting decision on academic questions. 27. For these reasons, I hold that the company petition should be dismissed. I accordingly allow the application taken out by Turner Morrison and dismiss the company petition. On the facts of the case, I find no reason to make any order for costs: Hence there shall be no order for costs in the case." 17. Now admittedly none of the appellants had challenged the settlement agreement between the parties and in fact the appellants had moved an application viz IA No.122/C-1/2014 praying for withdrawal of the company petition on the basis the appellants have compromised the matter with Respondent No. 3, but since the appellan....