Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): A Coram of Justice A.I.S Cheema (Judicial Member) and Justice Balvinder Singh (Technical Member) set aside the judgment passed by National Company Law Tribunal, Hyderabad Bench (NCLT) and directed the cancellation of entry of the name of appellant in the register of member of respondent 2 showing equity shares purported to have been credited on the basis of conversion of Compulsory Convertible Debentures (CCDs) standing in the name of appellant.

In the present case, appellant company had filed a Company Petition claiming rectification in the register of member of respondent-company, seeking cancellation of entry of the name of petitioner in the Register of Members of respondent-company showing 906599 equity shares purported to have been credited on the basis of conversion of 906599 CCDs standing in the name of the petitioner. The aforementioned Company Petition under Section 59 of the Companies Act, 2013 was then dismissed by NCLT, Hyderabad claiming that the issues raised were complex and could not be dealt with by NCLT. NCLT ruled that in Ammonia Supplies Corpn. (P) Ltd. v. Modern Plastic Containers (P) Ltd., (1998) 7 SCC 105 it was held that in case of a serious dispute as to title, the matter could be relegated to a civil suit. Aggrieved by the said order, the instant appeal was filed.

Learned counsel for appellant Arun Kathpalia, argued that after passing of Companies Act, 2013 the aforementioned case did not hold good in the light of the bar on civil courts. He submitted that in Shashi Prakash Khemka v. NEPC Micon, 2019 SCC OnLine SC 223 the Supreme Court had held that after Companies Act, it is not in dispute that were a dispute to arise today, the civil suit remedy would be completely barred and the power would be vested with the NCLT under Section 59 of the said Act”.

Further, Section 430 of the Companies Act, states that “Civil court will not have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate.”

On the basis of above arguments and in view of the law laid down in NEPC Micon case, it was held that NCLT had jurisdiction to deal with all the cases which dealt with questions regarding rectification and all questions incidental and peripheral to rectification, for the purpose of deciding the legality of the rectification. It was opined that in the present matter, there were really no complex questions involved and even if it were then the same had to be decided by the NCLT and in appeal, this Tribunal was bound to consider whether or not entry made in the Register of Members could be upheld

Hence, the impugned judgment was set aside and cancellation of entry of the name of the appellant in the register of members of respondent 2 showing equity shares purported to have been credited on the basis of conversion of CCDs standing in the name of the appellant was directed.[MAIF Investment India PTE Ltd. v. Ind-Barath Power Infra Ltd., 2019 SCC OnLine NCLAT 203, decided on 28-05-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal: Order of the Adjudicating Authority rejecting the application filed by the petitioners under Section 7 of the Insolvency and Bankruptcy Code 2016, was set aside by a two-member bench comprising of S.J. Mukhopadhaya, Chairperson and Bansi Lal Bhat, Judicial Member.

The petitioners were financial creditors of the respondent company. They filed an application under Section 7 for initiating the insolvency resolution process. However, such an application was rejected by the Adjudicating Authority observing that the application did not disclose ‘dates of default’. The petitioners were in appeal against the said order of the Adjudicating Authority.

The NCLAT after considering the record held that the impugned order was not sustainable. The application was rejected on technical grounds. As stated by the petitioners, there was only a typographical defect as to the dates mentioned in the application, which could have easily been corrected. The Tribunal held that before rejecting petitioners’ application, the Authority must give opportunity to the applicants to rectify defect. In absence of such an opportunity, the impugned order was set aside. Appeal was accordingly disposed of. [Satyaprakash Aggarwal v. Vistar Metal Industries (P) Ltd., 2018 SCC OnLine NCLAT 264, dated 21-05-2018]