- Section 25 of the Companies Act, 1956 - Charitable Companies - Power to dispense with “Limited” in name of charitable or other company - Rescission of Order No. S.O. 3879, dated 22-12-1962 regarding registration fee in respect of companies licensed under section 25 of Companies Act - notification no. s.o. 2218(e), dated 28-12-2007 25

sebi

- Section 4A of the Securities Contracts (Regulation) Act, 1956 - Corporatisation and Demutualisation of Stock Exchanges - Notified date - notification no. mrd/dsa/111917/2007, dated 31-12-2007

order

companies act

- Section 25 of the Companies Act, 1956 - Charitable Companies - Power to dispense with “Limited” in name of charitable or other company - Withdrawal of exemption given under section 303 of Companies Act vide Notification No. S.O. 1578, dated 1-7-1961 in respect of companies licensed under section 25 of Companies Act - order no. s.o. 2219(e), dated 28-12-2007

reports

table of cases

Areva T and D India Ltd., In re (Cal.)

Kanoria Wisconsin Centrifugal Ltd., In re (Cal.)

Mata Holding (P.) Ltd. v. Dy. Director, Enforcement Directorate (ATFFE - New Delhi)

Omer A. Vahedna v. Director, Enforcement Directorate (ATFFE - New Delhi)

Paliwal (J.K.) v. Paliwal Steels Ltd. (CLB - New Delhi)

R.G. Softdrinks (P.) Ltd. v. Official Liquidator (Delhi)

Sudharshan Exporters v. Directorate of Enforcement (ATFFE - New Delhi)

Trade Well v. Indian Bank (Bom.)

subject index

Companies Act, 1956

Amalgamation

- Transferee-company filed petition for sanction of proposed scheme of amalgamation of two transferor-companies with it - Central Government objected to one of clause of scheme, which laid down that difference between amount recorded as additional share capital issued by transferee-company upon amalgamation and amount of share capital of transferor companies in lieu whereof such additional share capital was to be issued, would be adjusted against and reflected in general reserves and/or such other reserves of transferee-company as its board of directors would determine - According to Central Government, difference arising out of scheme of amalgamation should be treated by transferee-company as amalgamation reserve, which should not be free for distribution to shareholders in form of dividend or bonus shares - Whether inasmuch as Accounting Standard 14 (AS-14), which deals with treatment of accounts upon amalgamation, does not specifically require treatment of such surplus or deficit in manner that Central Government suggested, such onerous condition could not be foisted upon petitioner - Held, yes - Areva T and D India Ltd., In re (Cal.)

- Whether when a scheme seeks merger of authorised capital of a transferor-company into that of transferee, there is neither any merger sought, nor is any merger of such kind possible; it is indeed a term of scheme or an application to Court sanctioning scheme for an increase in authorised capital of transferee-company by extent of authorised capital of transferor-company - Held, yes - Whether single-window clearance that sanction of a scheme affords to applicants is as to procedure and so as to avoid several applications being made in respect of several matters and for all of them being combined into one, such abridged or facilitating procedure cannot affect right of revenue to receive fees that would otherwise be payable in respect of any part of approval or for purpose of giving effect to approval - Held, yes - Whether, therefore, transferee-company is liable to pay additional fee for consequential increase of its authorised capital following sanction of a scheme of amalgamation - Held, yes - Whether right accrued to a company as to its authorised share capital upon payment of requisite fees, is not ‘property’ as defined under section 394(4)(a); it is a right unique to each company and is incapable of being transferred - Held, yes - Areva T and D India Ltd., In re (Cal.)

Oppression and mismanagement

- Whether old issues, which had already been waived and acquiesced by parties by their conduct in past, could be raked up in order to raise a plea of unclean hands in petition under section 397/398 - Held, no - Whether appointment of respondents as additional directors to create a new majority in illegal manner by forging signature of petitioner on Form No. 32 and without complying with provisions of Act would be an act of oppression, particularly when circumstances did not warrant expansion as company was not carrying on any regular business actively and had become inoperational for quite some time - Held, yes - Whether simply fabricating Form No. 32 and filing same with ROC and getting a certified copy thereof could give a stamp of genuineness to such a document so as to contend that appointment of additional directors was legal and valid - Held, no - Whether selling off assets of company by respondent-directors in favour of their family members for inadequate consideration and at back of petitioners, who were majority shareholders in company, was not only an act of oppression and mismanagement but also a serious breach of fiduciary capacity within which directors have to conduct affairs of company - Held, yes - Whether, therefore, impugned sale deserved to be set aside and inadequate consideration was to be brought back into account of company - Held, yes - J.K. Paliwal v. Paliwal Steels Ltd. (CLB - New Delhi)

Winding up

Avoidance of certain attachment, executions etc.

- On failure of appellant-company to repay its loan, certain property of appellant was attached by Pradeshiya Industrial and Investment Corporation of UP (PICUP) - On other hand, some creditors filed winding up petition against appellant, which remained pending till 10-10-1984 and was dismissed on 19-2-1986, on account of non-prosecution - Meanwhile, property of appellant was put on auction under U.P. Public Moneys (Recovery of Dues) Act, 1972 wherein PICUP purchased said property and thereafter transferred same to respondent No. 2 on 19-1-1990 - Thereafter on 28-9-1994, appellant-company filed an application seeking restoration of winding up petition - Petition was restored, but effective only from 28-9-1994 - Thereafter, Official Liquidator attached all assets of appellant including asset sold by PICUP to respondent No. 2 - Respondent No. 2 filed an application seeking desealing of his asset, which application was allowed by Company Judge - Whether since property had been sold in public auction in terms of provisions of 1972 Act, which had become final and binding, Company Judge was justified in holding that public auction in favour of PICUP could not be challenged before Company Court - Held, yes - R.G. Softdrinks (P.) Ltd. v. Official Liquidator (Delhi)

Companies Act, 1956

- Section 394

- Section 397/398

- Section 537

Companies (Court) Rules, 1959

Sale by Official Liquidator in case of winding up

Sale to be subject to sanction of Court

- Whether in case of sale of assets of company in liquidation there ought to be finality of orders and a sale confirmed in favour of one should not be reopened merely for extra rupees being offered by another - Held, yes - Whether, however, where successful bidder left door ajar, upon his failing to put in balance consideration within time stipulated, and there was another to step into shoes of purchaser and to better bid originally received, bid made by new purchaser could be accepted - Held, yes - Kanoria Wisconsin Centrifugal Ltd., In re (Cal.)

Companies (Court) Rules, 1959

- Rule 272

Foreign Exchange Regulation Act, 1973

Appellate Board

Appeal to

- Respondent imposed penalties upon appellant-company and its managing director for contravention of section 18 - Appellant filed appeal before Tribunal along with application for dispensation of pre-deposit of penalty as per section 52 - Tribunal allowed appellant to make pre-deposit of 10 per cent of penalty amount and its managing director to submit unconditional bank guarantee of penalty on condition that on failure of pre-deposit, appeal would be dismissed - However, appellant did not pre-deposit said amount, nor appeared in subsequent proceedings - Whether since appellant had not shown any bona fide efforts for not making pre-deposit of 10 per cent of penalty amount, appeal was liable to be dismissed for non-compliance of conditional order of Tribunal - Held, yes - Mata Holding (P.) Ltd. v. Dy. Director, Enforcement Directorate (ATFFE - New Delhi)

Foreign exchange

Restrictions on dealing in

- Whether where charge was found established that appellant acquired foreign exchange abroad without having any permission from RBI by misutilising his domestic credit card, he had rightly been held guilty of charges of section 8(1) - Held, yes - Sudharshan Exporters v. Directorate of Enforcement (ATFFE - New Delhi)

Payment for exported goods

Respondent

- Enforcement Directorate imposed penalty upon appellant-firm and its managing partner for contravention of section 18(2)/(3) for not taking reasonable steps to realize outstanding export dues in respect of six GRs - Appellants contended that for 3 GRs, foreign buyer having become bankrupt, amount could not be realized and in case of remaining 3 GRs, goods were sold to alternate buyer and, therefore, penalty was wrongly imposed upon them by Adjudicating Officer - Whether since appellants had neither given any certificate in support of their case that foreign buyer had gone bankrupt, nor they could prove reasonable efforts on their part to realize outstanding export dues and further they had failed to move extension application before RBI despite its direction, they had rightly been held guilty by Adjudicating Officer - Held, yes - Whether, however, a firm and its partners cannot be penalized for same contravention and, therefore, it would be appropriate to impose whole penalty against appellant-firm and its managing partner would be absolved from payment of penalty in entirety - Held, yes - Sudharshan Exporters v. Directorate of Enforcement (ATFFE - New Delhi)

Restrictions on payments

- On basis of information made available by one ‘R’, who was investigated by custom authorities, respondent issued show-cause notice to appellant in respect of amount received by him from a person resident outside India without permission of RBI - Appellant admitted receipt of payment on behalf of his brother, a person resident outside India - Respondent imposed penalty upon him for contravention of section 9 - On appeal, appellant contended that respondent had not been independently able to prove identity of person from whom payment was received and impugned order was based only on retracted confessional statement of appellant - Whether since confessional statement of appellant was fully supported by evidence available on record and attended circumstantial evidence of case, identity of person, who delivered said amount to appellant, even if not established, would not help appellant - Held, yes - Whether, however, appellant being a senior citizen, amount of penalty was to be reduced from Rs. 1 lakh to Rs. 70,000 - Held, yes - Omer A. Vahedna v. Director, Enforcement Directorate (ATFFE - New Delhi)

Foreign Exchange Regulation Act, 1973

- Section 8

- Section 9

- Section 18

- Section 52

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset

- Whether Chief Metropolitan Magistrate, acting under section 14, is not required to give notice either to borrower or to third party; he has to only verify from bank or financial institution whether notice under section 13(2) has been given or not and whether secured asset falls within his jurisdiction - Held, yes - Trade Well v. Indian Bank (Bom.)

Right to appeal

- Whether since remedy provided under section 17 is an efficacious alternative remedy available to third party as well as to borrower where all grievances can be raised, ordinarily, writ petition should not be entertained - Held, yes - Whether even if in exceptional cases of gravest injustice, a writ petition is entertained, as far as possible, parties should be relegated to remedy provided under section 17 before DRT by passing an interim order, which would protect secured assets and adjudication and final order should be left to DRT - Held, yes - Trade Well v. Indian Bank (Bom.)

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

- Section 14

- Section 17

MAGAZINE

features

corporate management practices

c.s. balasubramaniam (Professor of Finance at Institute of Management and Computer Studies, Thane)

- Balanced Score card - concept, implementation and emerging perspectives

general topic

charu malhotra (Company Secretary)

- The outsourcing wave

Case Digest

table of cases

Everest Advertising (P.) Ltd. v. State, Government of NCT of Delhi (SC)

Subject Index

Negotiable Instruments Act, 1881

Dishonour of cheque for insufficiency, etc., of funds in accounts

Offences by companies

- By an agreement, accused No. 6-company appointed appellant-company as its advertising and publicity agent - Appellant carried out various jobs and raised bills therefor - Accused No. 6 issued cheques towards payment of dues, but same were dishounoured on presentation - Appellant filed complaint against accused persons including respondent Nos. 2 and 3, who were chairman and managing director of accused No, 6-company - Magistrate directed to issue process against accused persons - However, on application of respondent Nos. 2 and 3, Magistrate recalled order of issuing summons to them - High Court upheld said order holding that allegations in complaint were not sufficient to summon respondent Nos. 2 and 3 for offence committed by accused No. 6 - Whether since in complaint, it had categorically been averred at more than one place that payments were made after meetings held by and between representative of appellant-company and accused persons which included respondent Nos. 2 and 3 and even thereafter, as a result of fall out of non-payment of cheques, negotiations were held between parties wherein respondent Nos. 2 and 3 took part, it could be said that ingredients of provisions of section 141 stood satisfied - Held, yes - Whether, therefore, impugned judgment could not be sustained and was liable to be set aside - Held, yes - Everest Advertising (P.) Ltd. v. State, Government of NCT of Delhi (SC)

Negotiable Instruments Act, 1881

- Section 141

SEBI AND CORPORATE LAWS