TaxTMI 
TaxTMI 
2026 (8) TMI 166
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....e aforesaid acts, the petitioner lodged a criminal complaint before the Crime Branch, Jammu, on 25.07.2023 alleging fraudulent acts on the part of the private respondents. He also submitted a complaint dated 22.05.2025 before the Department of Industries and Commerce alleging that the private respondents, in collusion with the official respondents, had fraudulently removed him from the Directorship on the basis of a purported Annual General Meeting of the year 2022, convened without serving any prior notice as mandated under the provisions of the Companies Act. 3. It is further alleged that the petitioner's Digital Signature Certificate (DSC) was misused for filing Form MGT-14 without his knowledge or consent and that, in connivance with the Company Secretary, the respondents falsely reflected the transfer of the petitioner's shares despite the absence of the mandatory Share Transfer Form (Form SH-4). The petitioner also alleges that the respondents acted in blatant violation of the Industrial Policy, 2021-2030, particularly Clauses 5.1.6 and 5.1.10, which require that the original shareholding of the Company should not undergo changes beyond the permissible limit of 49%....
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....sanguine that every possible endeavour shall be made to decide the matter finally or at least the pending application for interim relief at the earliest. Further, as agreed between the learned counsel for the parties, to avert any further complication, till the petition or the application for interim relief is finally decided by the Writ Court, no third-party rights/interest shall be created." 7. Thereafter, the matter came up for consideration before this Court. During the pendency of the writ petition, the petitioner filed an application seeking permission to place on record the status report in connection with FIR No. 58/2025 registered at Police Station Crime Branch, Jammu against respondent Nos. 8, 9 and 10 at the behest of petitioner for the commission of offences punishable under Sections 420 and 120-B of the Indian Penal Code. The said application was allowed and the status report was taken on record. 8. Upon completion of pleadings, LC appearing for the private respondents, on 29.06.2026, raised a preliminary objection with regard to the maintainability of the writ petition. It was submitted that the issue of maintainability had been raised from the very inception of....
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....hange of its object to setting up an Ethanol Manufacturing Unit, or in the events that followed thereafter. Accordingly, the allegations made by the complainant were found to be devoid of merit and unsupported by documentary evidence. 11. In fact, the incorporation of M/s Shree Katayani Metal Private Limited and M/s Shree Dakshayani Metal Private Limited was conceived pursuant to a mutual understanding between the complainant and the alleged accused. There was no fraudulent or dishonest intention at the inception of the transaction, nor was there any element of cheating or mala fide intent. The complainant continues to be a Director and shareholder of M/s Shree Dakshayani Metal Private Limited, which has also been allotted land by the Industrial Corporation. Taking note of these facts, the Crime Branch closed the complaint as "not admitted." 12. Placing reliance on 2026 INSC 42, the counsel for the respondents submitted that a person alleging fraud in the affairs of a company has an efficacious statutory remedy under Section 213 of the Companies Act, 2013, by filing an appropriate application before the National Company Law Tribunal (NCLT), subject to satisfying the eligibili....
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....he shareholding pattern, the original shareholders must continue to hold at least 51% of the shareholding in the same legal entity. According to the petitioner, the private respondents have blatantly violated the said requirement by reducing the shareholding of the original promoters below the prescribed threshold, in contravention of Clause 5.1.6 of the Industrial Policy. It was further submitted that the documents evidencing the transfer of shares in favour of outsiders already form part of the record. 16. Learned counsel further submitted that, in terms of Clause 5.1.11 of the Industrial Policy, if the leasehold rights are transferred or the constitution of the allottee company is altered before the industrial unit is brought into production, such transfer is void and the allotted land is liable to be resumed upon cancellation of the allotment. 17. It was further contended that Clause 36 of the Lease Deed dated 23.08.2022 expressly stipulates that the original Directors of the lessee company shall not alter the constitution of the company except with the prior written consent of the lessor, namely SIDCO, which had allotted the industrial plot to the company. It was argued ....
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....f SMPL for seeking lease of industrial plot of land for the purpose of setting up of an industrial unit for manufacturing of ETHANOL/ENA (Extra Neutral Alcohol) and other allied/intermediate products. Thus, vide an allotment letter No. SICOP/MD/2022/1630-38 dated 15.02.2022 approval for granting lease of 100 kanals of land comprised in the Industrial Estate SICOP, Sahar Logate, Kathua J&K (UT) resulted in execution and registration of a Lease Deed dated 23.08.2022 categorically bearing reference to the petitioner as well as to the respondents Nos. 8 & 9 with addition of one Sh. Nishit Khandelwal as directors of the lessee SMPL. 20. On behalf of SMPL, the signatory to the lease deed was the respondent No. 8-Nitin Gupta as being authorized signatory who incidentally is husband of the respondent No. 9-Nidhi Gupta, one of the three original directors of SMPL. While the recommendation for grant of lease of industrial plot in favour of the SMPL had come to be generated on 15.02.2022, by the month of May, 2022 one of three original directors, namely, Nitin Maheshwari, holder of 330 equity shares is said to have resigned resulting in induction of one Nishit Khandelwal in place of outgoi....
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....y, either at the time of its incorporation for carrying on the business of metal trading or thereafter upon the change in its objects to ethanol manufacturing, or in the subsequent course of events. When confronted with the aforesaid aspects, learned counsel for the petitioner argued that the Final Police Report has no bearing on the controversy involved in the present proceedings and that the findings recorded therein are open to challenge by the petitioner before the appropriate forum in accordance with law. 23. Having heard learned counsel for the parties, there is no dispute that the petitioner essentially claims that, being a Director of the company, he was clandestinely removed from the directorship on account of the alleged fraud perpetrated by the private respondents. During the course of arguments, learned counsel for the respondents drew the attention of the Court to the fact that the transfer of shares had taken place on 22.03.2022 and that the consideration towards the transferred shares had been credited to the petitioner's account, which fact has not been denied by the petitioner. It was further submitted that Form MGT-14, bearing the digital signature of the p....
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....hich they have asked for similar reliefs including the appointment of an interim administrator. The acts of mismanagement and only ground alleged in the writ petition for moving the High Court under Article 226 is that the Company Law Board is not moving in the matter under an excuse that the Company Law Board has not yet made an order, a shareholder cannot be allowed to bypass the express provisions of the Companies Act and move the High Court under Article 226. A shareholder has a very effective remedies under the Companies Act for prevention of oppression and mismanagement. When such remedies are available, the High Court should not readily entertain a petition under Article 226. Learned Single Judge before whom the present writ petition came up for hearing very rightly held that the Companies Act provides a forum to consider the grievances made out by the First respondent in the writ petition. When such a forum, statutorily constituted, exists, it is but appropriate that resort to Article 226 should be discouraged. There is an efficacious alternative remedy available under the statute. In fact, under the Companies Act, a more satisfactory solution is available. The Sin....
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....ies under the Companies Act, the present writ petition cannot be held to be not maintainable insofar as it seeks relief against the official respondents. According to the petitioner, respondent Nos. 8 and 9 have acted in violation of the Industrial Policy by effecting a change in the constitution and management of the industrial unit without obtaining the prior approval of the Director, Industries and Commerce (respondent No. 3), as mandated under Clause 5.1.10 of the applicable Industrial Policy. It was contended that no such permission had ever been obtained and that the stand taken by official respondent Nos. 3 to 6 clearly demonstrates their failure to enforce the provisions of the Industrial Policy, thereby substantiating the petitioner's grievance. 26. Learned counsel for the respondents, on the other hand, vehemently contended that even the aforesaid issue is ancillary to, and intrinsically connected with, the affairs and management of the company, which falls within the exclusive domain of the authorities constituted under the Companies Act. Drawing the attention of the Court to the jurisdiction of the National Company Law Tribunal (NCLT), it was argued that any pers....
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....ith the directions issued by the Tribunal. The proviso to Section 213 further provides that where the business of the company has been carried on with intent to defraud its creditors or members, or where any person concerned in the formation or management of the company is found guilty of fraud, every officer of the company who is in default shall be liable to be punished in accordance with Section 447 of the Companies Act. Section 447 defines "fraud" in relation to the affairs of a company to include any act, omission, concealment of fact or abuse of position committed by any person with intent to deceive, to gain undue advantage, or to injure the interests of the company, its shareholders or creditors, resulting in wrongful gain or wrongful loss. 29. Section 448 of the Companies Act further provides that any person who knowingly makes a false statement in any return, report, certificate, financial statement, prospectus or other document required under the Act shall be liable for punishment in accordance with law. It is also relevant to note that, pursuant to the Companies (Amendment) Act, 2015, the provisions of Section 213 became operational with effect from 01.06.2016, there....
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....erred merely from Form MGT-14, and contends that the alleged use of his digital signatures does not establish free and informed consent. He further disputes the authenticity of the documents relied upon by the respondents. These are disputed questions of fact requiring appreciation of evidence and investigation, which cannot appropriately be adjudicated in proceedings under Article 226 of the Constitution. 33. The petitioner further contends that he never executed Form SH-4 and that no such duly executed instrument of transfer is available. This, too, is a matter requiring examination by the competent authorities under the Companies Act. Learned counsel argued that the Registrar of Companies possesses powers under Sections 206, 207, 208, 209, 210 and 212 of the Companies Act to conduct inspection, inquiry or investigation and, having failed to exercise such powers, the petitioner was left with no remedy except to invoke the writ jurisdiction of this Court. Even if such contention is accepted, the petitioner nevertheless has an efficacious remedy under Section 213 before the National Company Law Tribunal, which is competent to examine allegations relating to the affairs of the co....