Calcutta High Court | While dismissing a writ petition challenging the capacity of Registrar of Companies (ROC) to initiate multiple/ parallel proceedings under S. 206 of the Companies Act, 2013, Moushumi Bhattacharya, J. held that S. 206 of the Act does not preclude registrar from initiating parallel proceedings upon discovery of additional material warranting inquiry.

In the instant matter petitioners sought for injunction to restrain the respondents from taking any further action in pursuance of an inquiry report dated 13-04-2021 and any other inquiry report dated from 07-10-2021 to 26-07-2022.

The petitioners contended that ROC cannot initiate multiple proceedings under S. 206(4) of the Act and the inquiry report initiated under S. 206 could only have been made under S. 208 of the Act after completion of inspection and inquiry. The petitioners further contended that they came to know of the inquiry report dated 13-04-2021 only after a winding up proceedings was instituted against the company.

The respondents contended that it was necessary to initiate separate proceedings under S. 206(4) upon discovery of additional financial irregularities in the business of the petitioners.

The Court observed that the required action taken by the ROC was to be done before submitting the report in writing to the Central Government for further investigation into the business of the petitioners. The Court stated that

“The stage of filing a report comes only after inspection of books of accounts or conducting inquiry under sections 206 and 207 of the Act. Section 210 is the culmination of this batch of provisions relating to inspection, inquiry and investigation into the affairs of the company where the Central Government may investigate into the affairs of a company if it is of the opinion that it is necessary to do so and on fulfillment of the conditions under section 210(1)(a)-(c). To the extent of the steps taken by the respondents including the order under section 206(4) dated 4th July, 2022, the summons issued thereafter, the hearing given to the petitioners and the acceptance of the petitioners’ response, there is little doubt that the respondents must follow the step-wise compliance of sections 206-210 of the Act.”

Negating the contention of the petitioners that respondents cannot initiate a proceeding inquiry report initiated under S. 206, the Court stated that Sections 206-210 of the Act do not contain a bar on the Registrar calling for information or conducting an inspection or inquiry if the Registrar comes across additional material warranting the second proceeding under section 206.

Rejecting the contention of the petitioner that they did not know after the inquiry report dated 13-04-2021, the Court opined that the petitioners had every opportunity to contest the report as part of its defence in the winding up proceedings.

The Court observed that “the contention raised before this Court are purely factual in nature, namely the time of initiation of the two proceedings and whether the said proceeding was served on the petitioners at the material point of time. The Writ Court is not the forum for deciding these questions particularly where the parties are before the statutory forum which is mandated to deal with these factual questions.”

The Court refused to interfere with the inquiry report based on S. 273 of the Act since the winding up proceedings has already commenced.

[Shree Radhe Tea Plantation (P) Ltd. v. Registrar of Companies, W.B., 2022 SCC OnLine Cal 3620, decided on 18-11-2022]

Advocates who appeared in this case :

Mr. Abhrajit Mitra, Mr. Shaunak Mitra, Mr. Sanket Sarangi, Mr. Deepam Sarkar, Mr. Sanjiv Kr. Trivedi, Mr. Iram Hassan and Mr. Subhajit Ghosh, Counsel for the Petitioners;

Mr. Avinash Kanakani, Counsel for the Respondents.

*Ritu Singh, Editorial Assistant has put this report together.

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