|
SEBI AND CORPORATE LAWS |
|
Vol. 81, Part 6,
for the week of February 11 – February 17, 2008 |
CONTENTS
STATUTES
circular/press note
rbi/fema
- Exim Bank’s Line of Credit
(LoC) of USD 60 million to Myanmar Foreign Trade Bank, Myanmar - A.p. (DIR series)
circular no. 26, dated 28-1-2008
- Deferred Payment Protocols
dated April 30, 1981 and December 23, 1985 between Government of India and
erstwhile
sebi
- Removal of Initial Issue
Expenses - circular
no. md/cir no. 11/115723/08, dated
31-1-2008
- FII Investments in Debt
Securities - CIRCULAR
NO. imd/fii & C/27/2008, DATED 31-1-2008
- Extending number of centers
where refund shall be made through ECS in public/rights issues - circular no.
cfd/dil/dip/29/2008/01/02, DATED 1-2-2008
reports
table of cases
Gangeshwar Ltd. v.
Hema (P.) v. Muthusamy (M.) (Mad.)
Neycer India Ltd. v. Commercial Tax Officer (
Sinha (S.K.), Chief Enforcement Officer v. Videocon International
Ltd. (SC)
subject index
Companies Act, 1956
Winding up
Circumstances in which a company may be wound
up
- Respondent supplied coal to
appellant-company - Certain payments towards said supplies remained pending -
As appellant did not pay amount due even after respondent’s notice of demand,
respondent filed a winding up petition, alleging that appellant was unable to
pay its debts, which included certain principal amount plus interest
thereon - Company Judge, however, directed appellant to pay only principal
amount to respondent - Appellant filed appeal against said order, but during
pendency of appeal, it paid principal amount to respondent - Respondent also
filed appeal claiming interest on principal amount - Whether since appellant
never disputed claim of respondent before issue of notice under section 434,
Company Judge had rightly directed appellant for payment of principal amount
due to respondent - Held, yes - Whether, however, since liability of
interest was not totally admitted, it would be appropriate for respondent to
file a suit for award and recovery of interest before civil court and its
appeal against order of Company Judge was liable to be dismissed - Held,
yes - Gangeshwar Ltd. v. India Coal Traders (All.)
Liability for fraudulent conduct of business
- Whether Company Judge/Tribunal can
give a declaration and pass an order either under section 542 or under section
543 or both only if an application is preferred by Official Liquidator or
liquidator or any creditor or contributory of company-in-liquidation and any
such application filed by administrator of that company is not maintainable - Held,
yes - Whether Company Judge/Tribunal may give an appropriate declaration and
pass order under sections 542 and 543, but for penal order under section 542(3)
it can only give permission to Official Liquidator or liquidator to prefer an
application before Court of competent criminal jurisdiction and no order of
punishment with imprisonment or fine or both can be passed by Company
Judge/Tribunal under section 542(3) - Held, yes - P. Hema v.
M. Muthusamy (Mad.)
Companies Act, 1956
- Section 433
- Section 542
Foreign Exchange Regulation Act, 1973
Payment for exported goods
- Whether issuance of process in
a criminal case can be equated with taking cognizance by a criminal court - Held,
no - On 24-5-2002, a complaint was filed against company for contravention of
section 18 - On same day, Chief Metropolitan Magistrate took cognizance of
offence - However, process was issued on 3-2-2003 - On writ, High Court, by
impugned order, quashed proceedings initiated against respondents on ground
that cognizance could be said to have been taken when process was issued and
since process was issued in February, 2003, proceedings were time-barred, in
view of section 49 of FEMA – Whether, on facts, cognizance of offence had been
taken by Chief Metropolitan Magistrate on 24-5-2003 and it could not be said
that proceedings were barred by section 49(3) - Held, yes - Whether High
Court was in error in equating issuance of process with taking cognizance by
criminal court and in quashing proceedings treating them as time-barred - Held, yes - Whether
therefore order passed by High Court was to be set aside - Held, yes - S.K.
Sinha, Chief Enforcement Officer v. Videocon International Ltd. (SC)
Foreign Exchange Regulation Act, 1973
- Section 18
Sick Industrial Companies (Special Provisions) Act, 1985
Suspension of legal proceedings, contracts, etc.
- Whether embargo envisaged in
section 22 can apply only to dues which are included in sanctioned scheme and
amounts like sales tax, etc., which a sick company is enabled to collect after
date of sanctioned scheme, are not covered within section 22 - Held, yes
- Neycer India Ltd. v. Commercial Tax Officer (Mad.)
Sick Industrial Companies (Special Provisions) Act, 1985
- Section 22
CUMULATIVE INDEX TO VOLUME 81 |
|
STATUTES |
|
circular/press
note |
|
insurance
matters |
|
- Benefit illustrations for Unit
Linked Products - circular no. 49/irda/actL/ulip/january-08, dated 1-1-2008 |
|
rbi/fema |
|
- Permission for short selling
of equity shares by SEBI registered FIIs - a.p. (dir series)
circular no. 23, dated 31-12-2007 |
|
- Exim Bank’s Line of Credit
(LoC) of USD 5 million to Nigerian Export-Import Bank - A.p. (DIR series)
circular no. 24, dated 23-1-2008 |
|
- Exim Bank’s Line of Credit
(LoC) of USD 60 million to Myanmar Foreign Trade Bank, Myanmar - A.p. (DIR series)
circular no. 26, dated 28-1-2008 |
|
- Deferred Payment Protocols dated
April 30, 1981 and December 23, 1985 between Government of India and
erstwhile USSR - A.p. (DIR series) circular no. 25, dated 25-1-2008 |
|
rbi/nbfcs |
|
- Regulatory framework for
Mortgage Guarantee Company - CIRCULAR
NO. DNBS/PD(MGC) C.C. 111/ 03.11.001/2007-08, DATED 15-1-2008 |
|
sebi |
|
- Introduction of
Mini-derivative (Futures and Options) Contract on Index (Sensex and Nifty) - circular no.
dnpd/cir-33/2007, dated 27-12-2007 |
|
- Amendments to Equity Listing
Agreement - circular
no. cfd/dil/la/4/2007/27/12, dated 27-12-2007 |
|
- Change in Affiliation of
Sub-brokers - circular no. mirsd-dr 1/mk/cir-15/111600/07, dated 20-12-2007 |
|
- Establishment of Connectivity with
both Depositories NSDL and CDSL - Companies eligible for shifting from Trade
for Trade Segment (TFTS) to Rolling Segment - circular no. mrd/dop/se/cir-16/2007, dated
24-12-2007 |
|
- Waiver of load for direct
applications - circular no. imd/cir no. 10/112153/07, dated 31-12-2007 |
|
- Introduction of Index options
with longer tenure - circular no. dnpd/cir-34/2008, dated 11-1-2008 |
|
- Introduction of Volatility
Index - CIRCULAR NO.
DNPD/CIR-35/2007, DATED 15-1-2008 |
|
- Trading and settlement of
trades in dematerialized scrips - CIRCULAR NO. mrd/se/dep/cir-1/2008, DATED
22-1-2008 |
|
- Removal of Initial Issue
Expenses - circular
no. md/cir no. 11/115723/08, dated 31-1-2008 |
|
- FII Investments in Debt
Securities - CIRCULAR NO. imd/fii & C/27/2008, DATED 31-1-2008 |
|
- Extending number of centers
where refund shall be made through ECS in public/rights issues - circular no.
cfd/dil/dip/29/2008/01/02, DATED 1-2-2008 |
|
notification |
|
companies
act |
|
- 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 |
|
foreign
exchange management act |
|
- Section 17 of the Foreign
Exchange Management Act, 1999 - Appeal to Special Director (Appeals) -
Notified Special Director - notification no. s.o. 44(e), dated 8-1-2008 |
|
prevention
of money laundering act |
|
- Section 57 of Prevention of
Money Laundering Act, 2002 - Letter of request to Contracting State in
certain cases - Specified letter of request - NOTIFICATION NO. S.O. 83(E), DATED 14-1-2008 |
|
rbi/nbfcs |
|
- Section 45-I(f)(iii)
of the Reserve Bank of India Act, 1934 - Non-Banking Financial Company -
Notified Non-Banking Financial Company - NOTIFICATION NO. DNBS (MGC) 1/CGM(PK)-2008, DATED 15-1-2008 |
|
- Section 45NC of the Reserve
Bank of India Act, 1934 - Power of bank to exempt - Notified Non-Banking
Financial Company - NOTIFICATION NO. DNBS (MGC) 2/CGM(PK)-2008, dated 15-1-2008 |
|
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 |
|
- Section 4 of the Securities
Contracts (Regulation) Act, 1956 - Grant of recognition to Stock Exchange -
Renewal of recognition to Vadodara Stock Exchange Limited, Vadodara - notification f. no.
sebi/le/112072/08(e), dated 1-1-2008 |
|
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 |
|
rules/regulations |
|
prevention
of money laundering act |
|
- Prevention of Money Laundering
(Appointment and Conditions of Service of Chair-person and Members of
Appellate Tribunal) Rules, 2007 - notification no. g.s.r. 519(e), dated
1-8-2007 |
|
- Prevention of Money Laundering
(Appointment and Conditions of Service of Chair-person and Members of
Adjudicating Authorities) Rules, 2007 - notification no. g.s.r. 520(e), dated
1-8-2007 |
|
rbi/fema |
|
- Foreign Exchange Management
(Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2007 -
Amendments in regulations 2, 6, 6B, 8, 16, 18, 22 and 26; insertion of
regulation 19A and Schedule - notification no. g.s.r. 13(e) [no. fema
164/2007-rb], dated 9-10-2007 |
|
- Foreign Exchange Management (Permissible
Capital Account Transactions) (Amendment) Regulations, 2007 - Amendment in
regulation 4 - notification no. g.s.r. 14(e) [no. fema 165/2007-rb], dated
10-10-2007 |
|
SEBI |
|
- Securities and Exchange Board
of India (Foreign Institutional Investors) (Second Amendment) Regulations,
2007 - Amendment in regulation 15 - NOTIFICATION F. No. 11/LC/GM/2007/31/12/2007,
DATED 31-12-2007 |
|
Magazine |
|
features |
|
- Article Browser |
|
banking
laws |
|
Abhinav
Kumar |
|
- Role of asset management
companies in resolving banking and financial crisis |
|
companies
act |
|
l.v.v.
iyer |
|
- Your queries |
|
Company
law |
|
r.
kalidas (Company Secretary) |
|
- Law relating to interim
dividend - An analysis |
|
competition
law |
|
surendra
u. kanstiya (Company
Secretary) |
|
- Competition test for big
mergers |
|
corporate
laws |
|
Ankur
sood and vardaan ahluwalia |
|
- Corporate Criminal Liability :
A post Standard Chartered Bank’s case analysis |
|
m.
srinivas |
|
- Industrial Sickness in India |
|
l.v.v.
iyer |
|
- Corporate Law Referencer |
|
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 |
|
readers’
views |
|
vivek
sadhale (Company Secretary) and vikas
agarwal (Asstt.
Manager-Secretarial, Persistent Systems Ltd., Pune) |
|
- Go chase overseas entities,
Indian Venture Capital Funds |
|
securities
laws |
|
sudhendhra
putty (Company Secretary) |
|
- Analysis of revised clause 41
of the listing agreement |
|
priyadarshini
shetty |
|
- Disgorgement - Its use and
misuse? |
|
Case Digest |
|
Table
of cases |
|
Canteen Mazdoor Sabha v.
Metallurgical Engg. Consultants (I) Ltd. (SC) |
|
Everest Advertising (P.) Ltd. v.
State, Government of NCT of Delhi (SC) |
|
Khamgaon Urban Co-op. Bank Ltd. v.
Karunashanhar Ramkishore Tiwari (Bom.) |
|
Srinivasa Rice & Flour Mill v.
Authorised Officer, State Bank of India (AP) |
|
Reports |
|
Table
of Cases |
|
Andhra Printers Ltd. v.
Arjun Rao (V.) (AP) |
|
Areva T and D India Ltd., In
re (Cal.) |
|
Asha Anil Kumar Kataria v.
Ashok Kumar (Bom.) |
|
Asian Telephone Services Ltd., In
re (MP) |
|
Bharat Heavy Plate & Vessels
Ltd. v. Asstt. CCE (AP) |
|
Brij Mohan Grover v.
O.L., High Court of Bombay (Bom.) |
|
Director of Enforcement v.
Kothari Vegetable Products Ltd. (ATFFE - New Delhi) |
|
Dolphin Investment (P.) Ltd. v.
C. Pinto Trade Commerce (P.) Ltd. (Bom.) |
|
Enforcement Directorate v.
Ilyas Moosa (AP) |
|
Enforcement Directorate v.
Sangeeta Granites Ltd. (ATFFE - New Delhi) |
|
Erach Boman Khavar v.
Tukaram Sridhar Bhat (Bom.) |
|
Gangeshwar Ltd. v. India
Coal Traders (All.) |
|
Ghanshyam Das Moolrajani v.
Enforcement Directorate (Raj.) |
|
Hema (P.) v. Muthusamy
(M.) (Mad.) |
|
Jain (P.D.) v. Oswal Agro
Mills Ltd. (Punj. & Har.) |
|
Jain (S.P.) v. Official
Liquidator (Punj. & Har.) |
|
Kanoria Wisconsin Centrifugal
Ltd., In re (Cal.) |
|
Kiran (K.R.) v. Vidya
Pracharanam (P.) Ltd. (CLB - Chennai) |
|
Kultar Sehgal v.
Broadvision Digital Prints (India) (P.) Ltd. (CLB - New Delhi) |
|
Kyatanagoudar (B.S.) v.
Maharashtra Apex Corporation Ltd. (Kar.) |
|
M.H.F. International v.
Director, Enforcement Directorate (ATFFE - New Delhi) |
|
Mata Holding (P.) Ltd. v.
Dy. Director, Enforcement Directorate (ATFFE - New Delhi) |
|
Mohd. Saleem, Proprietor v.
Enforcement Directorate (ATFFE - Delhi) |
|
Muniswamappa Sonnegowda (P.) v.
Mysore Lighting Works (P.) Ltd. (CLB - Chennai) |
|
Narendra Kumar Jain v.
Ahimsa Mines and Minerals Ltd. (CLB - New Delhi) |
|
Neycer India Ltd. v.
Commercial Tax Officer, Cuddalore (Mad.) |
|
Official Liquidator of Dunford
Fabrics Ltd. v. G.C. Lohia (Kar.) |
|
Official Liquidator, Metallic
Soaps and Chemicals (P.) Ltd. (In Liquidation) v. Manager, Karnataka
State Financial Corpn. (Kar.) |
|
Omer A. Vahedna v.
Director, Enforcement Directorate (ATFFE - New Delhi) |
|
Paliwal (J.K.) v. Paliwal
Steels Ltd. (CLB - New Delhi) |
|
Peerless General Finance &
Investment Co. Ltd. v. Poddar Projects Ltd. (Cal.) |
|
Polymermann (Asia) (P.) Ltd. v.
Union of India (Bom.) |
|
R.G. Softdrinks (P.) Ltd. v.
Official Liquidator (Delhi) |
|
Rashtriya Chemicals &
Fertilizers Ltd. v. State Bank of Patiala (Delhi) |
|
Rydak Syndicate Ltd. v.
Roshanlal Agarwal (Cal.) |
|
Shanth Kumar (K.N.) v. The
Printers (Mysore)(P.) Ltd. (CLB - Chennai) |
|
Shree Rama Multi-Tech Ltd. v.
SEBI (SAT - Mum.) |
|
Sinha (S.K.), Chief Enforcement
Officer v. Videocon International Ltd. (SC) |
|
Sri Yarnala Leela Krishna Prasad
v. Central Bank of India (AP) |
|
State Bank of India v.
Sapna Scooters Industries (P.) Ltd. (All.) |
|
Sudharshan Exporters v.
Directorate of Enforcement (ATFFE - New Delhi) |
|
Thimme Gowda (M.) v. SPR
Sugars (P.) Ltd. (CLB - Chennai) |
|
Timmappa (V.) v. M.G.
Brothers Finance Ltd. (AP) |
|
Trade Well v. Indian Bank
(Bom.) |
|
Union of India v. ABN
Amro Bank (Delhi) |
|
Union of India v. Sunair
Hotels Ltd. (CLB - New Delhi) |
|
VCCL Ltd. v. Ram Karan
(All.) |
|
Vaishu Engineering Industries
Ltd. (In Liquidation) v. A.P. Industrial Development Corpn. (AP) |
|
Vast Textiles Ltd., In re
(Raj.) |
|
Ved Kapoor v. Kalima
Plastics (P.) Ltd. (CLB - New Delhi) |
|
Waterfall Estate (East) (P.)
Ltd. v. State of Tamil Nadu (Mad.) |
|
Subject
Index TO REPORTS |
|
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 not 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.) |
|
- Petitioner-transferor-company
filed a company petition under section 391/394 seeking its amalgamation along
with six other companies with transferee-company - All persons, who were
directly or indirectly associated and dealing with the transferor-companies,
such as shareholders, creditors, Registrar of Companies, Regional Director of
Companies Affairs, had given their no objection certificate/consent for
approval of scheme and none of liabilities of any nature of either of
companies was, in any way, going to be adversely affected by scheme - Whether
proposed scheme was to be sanctioned - Held, yes - Asian Telephone
Services Ltd., In re (MP) |
|
Company Law Board |
|
Enforcement
of orders of |
|
- Original authorized capital of
company consisted of 200 equity shares, which got subsequently enhanced to
1,200 equity shares - Paid-up capital before enhancement of capital accounted
for 162 shares and remaining 38 shares were not admittedly issued - CLB, by
an order, had directed company to issue shares in favour of petitioner Nos. 1
to 4 from and out of its unissued enhanced share capital in proportion to
their existing shareholding in accordance with principles approved by board
of directors - In compliance with said order, company allotted 110 shares to
petitioner Nos. 1 and 2 but no share was allotted to petitioner Nos. 3 and 4
(applicants herein) - On application filed by applicants under section 634A,
company contended that share capital was enhanced by 1,000 shares, out of
which, 110 shares alone remained unissued and in view of issuance of entire
110 unissued shares in favour of petitioner Nos. 1 and 2, company could not
allot any further shares to applicants - Whether when paid-up capital of company,
after issuance of 1,000 shares, accounted for 1,162 shares as against
authorized capital at 1,200 shares, thus, leaving 38 shares as unissued, plea
of company that there were no unissued shares for issuance in favour of
applicants, could be sustained - Held, no - Whether company was to be
directed to issue shares to applicants out of unissued 38 shares in ratio and
at price approved by board of directors - Held, yes - K.R. Kiran v.
Vidya Pracharanam (P.) Ltd. (CLB - Chennai) |
|
Compromise and arrangement |
|
- Whether ‘majority of the
members’ contemplated in section 391 is a majority in number present and
voting at meeting - Held, yes - B.S. Kyatanagoudar v.
Maharashtra Apex Corporation Ltd. (Kar.) |
|
- High Court, while allowing
company petition filed by petitioner-company for approving scheme of
arrangement, directed to delete para 19(c) of section 4 of scheme,
which laid down that since on arrangement share capital of
transferor-companies would become authorised capital of transferee-company,
no fee to Registrar of Companies or stamp duty to State Government would be
payable, holding that capital of company can be increased only after
following procedure prescribed under Act and payment of requisite fee to
Registrar of Companies and Stamp Duty to State Government - In instant
application, petitioner-company sought modification of said order specially
direction to delete para 19(c) of scheme, stating that said para did
not contemplate that relevant provisions of Companies Act would not be
complied with - Petitioner relied upon decisions in Juggilal Kamlapat
Holding Ltd., In re [2006] 68 SCL 40 (All.) and Hotline Hol Celding
(P.) Ltd., In re [2005] 127 Comp. Cas. 165 (Delhi) to contend that where
in case of merger, capital of transferor-companies becomes authorised capital
of transferee-company, no fee to Registrar of Companies or Stamp Duty to
State Government is payable - Whether in view of ratio indicated in aforesaid
two decisions, impugned order omitting para 19(c) was to be deleted
and scheme, as prayed for, was to be approved, but subject to fulfilling
condition of enhancing authorised capital after following procedure under Act
- Held, yes - Vast Textiles Ltd., In re (Raj.) |
|
- Whether wide powers have been
given to Company Court to modify scheme of a compromise or arrangement as it
may consider necessary for proper working of compromise or arrangement and
Court can exercise these powers even suo motu without calling meeting
of all members or creditors at time of sanctioning scheme - Held, yes
- Whether workers of company, who were not paid their dues, were creditors of
company and, therefore, persons entitled to propose a scheme under section
391 - Held, yes - Petitioner, who was shareholder and ex-managing director
of company in liquidation, filed petition seeking sanction of scheme of
arrangement between company and its shareholders, creditors and workers -
Scheme was approved by shareholders and creditors, but workers did not
approve scheme and suggested modifications therein - Whether since no
objection had been raised to scheme as modified by workers and said scheme
was more advantageous to all concerned, scheme as modified by workers should
be sanctioned and scheme proposed by petitioner was liable to be rejected - Held,
yes - Brij Mohan Grover v. O.L., High Court of Bombay (Bom.) |
|
Courts |
|
- Whether provisions of section
10 have application to suits for recovery of money filed by a company
registered under Act - Held, no - Whether since Companies Act does not
contain provisions relating to recovery of money, either lent by or borrowed
from, a company registered under provisions of Act and jurisdiction of civil
court for recovery of money lent by or borrowed from company is not, either
expressly or by implication, barred by provisions of said Act, in view of
section 9 of Code of Civil Procedure, civil court will have jurisdiction to
entertain suit for recovery of money filed by a company registered under
Companies Act, from its debtors - Held, yes - V. Timmappa v. M.G.
Brothers Finance Ltd. (AP) |
|
Investigation of company’s
affairs in other cases |
|
- Whether scope of investigation
under section 237(b) is wide enough to include past acts of defaulter
as if it is an act of past presentia - Held, yes - Whether CLB has an
onerous duty to form an opinion with regard to existence of intent to defraud
before ordering any investigation under section 237(b) - Held,
yes - Petitioner, holding 24.17 per cent shares in respondent-company, filed
petition under sections 397 and 398, alleging that respondents had
fraudulently allotted shares of Rs. 21 crores to themselves without actually
bringing any cash for same in respondent-company - CLB dismissed said
petition accepting respondents’ plea that in terms of a memorandum of
understanding for sale of their properties, they had received an advance of
Rs. 21 crores from purchaser, and said amount was brought in
respondent-company for purchase of impugned shares - Thereafter, petitioner,
along with Union of India, filed application seeking for investigation into
affairs of respondent-company, alleging that whole case of respondents was
based on memorandum of understanding, which was a false and fabricated
document - Whether in view of facts that petitioner had invested in equity of
respondent-company even after dismissal of its petition by CLB, and that
project of respondent-company was successfully functional, it could not be
said that any case was made out for ordering investigation under section 237(b)
- Held, yes - Union of India v. Sunair Hotels Ltd. (CLB
- New Delhi) |
|
Meetings and proceedings |
|
Length
of notice for calling meeting |
|
- Whether requirement of giving
not less than twenty one days notice under section 171 is inapplicable to
private limited companies - Held, yes - P. Muniswamappa Sonnegowda v.
Mysore Lighting Works (P.) Ltd. (CLB - Chennai) |
|
Oppression and mismanagement |
|
- Petitioners filed petition
under section 397/398, alleging that company and its promoters did not comply
with MOU, in terms of which, petitioners were to get fifty per cent shares
and equal participation in financial management, and had mismanaged affairs
of company to detriment of petitioners and other shareholders - Petitioners
contended that loan advanced by them was siphoned off by respondents in
complete disregard to purpose for which it was advanced; that share
certificates were not endorsed despite handing over shares to company
secretary of company for endorsement; that company had closed bank account and
changed its registered office without any intimation or notice to them and
without following proper procedure - However, petitioners had failed to prove
their case and facts and circumstances of case revealed that respondents had
acquiesced to terms of MOU, and petitioners themselves had not endeavoured to
get it implemented in de facto; that they had not brought in required
funds, and by their conduct had acted contrary to interest of company -
Whether, on facts, equity was in favour of respondents as it were they who
had been nurturing company even while facing brunt of various cases against
them and it was conduct of petitioners which had been prejudicial to interest
of functioning of company - Held, yes - Whether since no act of
oppression or mismanagement in affairs of company could be established by
petitioners, petition filed by them was to be dismissed - Held, yes - Narendra
Kumar Jain v. Ahimsa Mines and Minerals Ltd. (CLB - New Delhi) |
|
- Whether where entire
grievances and reliefs claimed by petitioners were found flowing from share
purchase agreement entered into between petitioners and respondents, no
application would lie before CLB under section 397/398 for any remedial
measure - Held, yes - Whether isolated grievance of petitioner that respondent
No. 2 was convening extraordinary general meeting of shareholders of company
for amendment of articles was enough for claiming any relief under section
397 - Held, no - M. Thimme Gowda v. SPR Sugars (P.) Ltd. (CLB
- Chennai) |
|
- Whether if directors of a
company exercise their power to issue further shares not for benefit of
company, but simply and solely for their personal aggrandizement and to
detriment of company, CLB will interfere and prevent them from doing so - Held,
yes - Whether if a member is deprived of his privilege and right, it will be
undoubtedly harsh, burdensome and wrongful and will necessarily be an act of
oppression to member concerned - Held, yes - Whether further issuance
of shares, which resulted in conversion of petitioners into minority, was
nothing but an act of oppression and, therefore, was liable to be set aside -
Held, yes - P. Muniswamappa Sonnegowda v. Mysore Lighting
Works (P.) Ltd. (CLB - Chennai) |
|
- Whether petitioner having
participated in annual general meeting could challenge minutes of meeting as
invalid and unenforceable - Held, no - Whether grievances arising out
of contractual obligations between respective contesting parties can be
agitated in a section 397/398 proceeding - Held, no - Whether mere
non-filing of statutory returns would attract provisions of section 397 - Held,
no - P. Muniswamappa Sonnegowda v. Mysore Lighting Works (P.) Ltd. (CLB
- Chennai) |
|
- 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) |
|
- Petitioners, claiming to hold
twenty per cent shares in company, alleged that second respondent, being MD
of company, was guilty of transferring business of company to firm K owned by
his company, leasing out various portions of land belonging to company to
said firm at very low rent, selling land belonging to company to a benami of
respondents at very low price, and transferring certain shares in his name -
Whether since company had ceased to be doing any business and transfer of
business, if any, had taken place more than five years ago, allegation of
diversion of business of company to firm K could not be made - Held,
yes - Whether in view of facts that rent charged on portion of land leased to
firm K was very low in comparison to rent charged from others, board of
directors was to be directed to fix rental on a realistic basis - Held,
yes - Whether once need for sale of portion of land was established, it was
for board of directors to decide portion of land to be sold and no one could
challenge such decision - Held, yes - Whether once factum of release
of advertisement for sale of land was established, no one could complain that
enough offers had not been received or land was sold at low price - Held,
yes - Whether when there was an admitted liability in form of bank loan,
which could be reduced by availing OTS, it was for board of directors to
decide timing of availing of same and no shareholder could claim that company
should have waited till last date - Held, yes - Whether as regards
transfer of shares in name of second respondent, since none of transferors of
impugned shares had questioned factum of transfer and since percentage
holding of petitioners of 20 per cent as claimed by them in petition had not
in any way been affected, petitioners could not impugn said transfers - Held,
yes - Whether on facts, petitioners had failed to establish any of
allegations; however, since there was complete loss of mutual trust and
confidence among parties, petitioners were to be given an option to go out of
company on receipt of consideration for their shares - Held, yes - Ved
Kapoor v. Kalima Plastics (P.) Ltd. (CLB - New Delhi) |
|
- Petitioner was director and
editor of respondent No. 1, a publishing company - He filed petition under
section 397/398 complaining about his removal from post of editor and
appointment of respondent No. 2 as editor without sanction of board of
directors - CLB, by an ex parte interim order, directed respondents to
maintain status quo regarding position of petitioner as editor -
Respondents sought for quashing of said order, contending that it had been
practice in company for managing director to appoint editor and petitioner's
appointment as editor was also not by board of directors, but by respondent
No. 2 who was occupying position of a managing director and, thus,
appointment of respondent No. 2 as editor of publications followed by
statutory declarations was decision taken by competent person in normal
course of business - Whether since in terms of articles of association of
company, power of managing director was not absolute, but only subject to
supervision, control and directions of board of directors, appointment or
removal of editor could be made only with sanction of board of directors of
company - Held, yes - Whether, therefore, board of directors of
company would convene meeting to deliberate and decide appointment of editor
and till that process was over, status quo in regard to position of
petitioner as editor would be maintained - Held, yes - K.N. Shanth
Kumar v. The Printers (Mysore) (P.) Ltd. (CLB - Chennai) |
|
- Whether where respondents had
squarely refuted petitioners’ allegations of mismanagement and siphoning off of
funds of company and their preliminary objection that petitioners had not
come with clean hands was also found to be true, petition filed by
petitioners under section 397/398 deserved to be dismissed - Held, yes
- Kultar Sehgal v. Broadvision Digital Prints (India) (P.) Ltd. (CLB
- New Delhi) |
|
Share certificate |
|
Limitation
of time for issue of |
|
- Whether right to get share
certificates within three months of allotment is an irrevocable right vested in
every allottee of shares and is enforceable through an order of CLB under
section 113(3) - Held, yes - P. Muniswamappa Sonnegowda v.
Mysore Lighting Works (P.) Ltd. (CLB - Chennai) |
|
Subsidiary company |
|
- ‘K’ Ltd. transferred its two
tea estates to its two subsidiary companies - While getting registered
instruments of transfer, remission of stamp duty was claimed in accordance
with Notification No. 1224 issued by State of Tamil Nadu - Sub-Registrar
allowed remission of stamp duty and registered documents - District
Registrar, however, asked for payment of stamp duty on ground that
transferor-company did not hold 90 per cent of issued share capital of
transferee-companies as required under notification in question to avail
stamp duty remission - Evidence on record showed that holding of issued share
capital of transferor-company was 14,493 shares out of issued share capital
of 90,350 shares in one company and 8,585 shares out of issued share capital
of 35,350 shares in other company - Whether there was any illegality in
impugned order - Held, no - Waterfall Estate (East) (P.) Ltd. v.
State of Tamil Nadu (Mad.) |
|
Transfer of shares |
|
Power
to refuse registration and appeal against refusal |
|
- Whether shares of public companies
are freely transferable between transferor and transferee and company has
nothing to do with same in case by virtue of sanction of scheme by Court,
certain shares are transferred from transferor-company to transferee-company;
in such a case, company is only obliged to record such rectification once
shares are lodged with it by person who is lawful person to do so - Held,
yes - Whether, in such a case, documentation contemplated in section 108 is
required to be done - Held, no - Whether once order of sanction is
passed by Court and same is indicated to company by way of application,
company should not refuse registration on plea of limitation - Held,
yes - Peerless General Finance & Investment Co. Ltd. v. Poddar
Projects Ltd. (Cal.) |
|
Rectification
of register on |
|
- Whether in terms of section
111A, in case of refusal of company to register transfer without sufficient
cause, transferee has to wait for two months to approach CLB; however, such
two months period is not an outer limit contemplated in said section - Held,
yes - Peerless General Finance & Investment Co. Ltd. v. Poddar
Projects Ltd. (Cal.) |
|
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) |
|
- Whether sale effected by State
Financial Corporation of company’s property without leave of Court after
commencement of winding up proceedings was void in terms of section 537(1)(b)
- Held, yes - Official Liquidator, Metallic Soaps and Chemicals
(P.) Ltd. (In Liquidation) v. Manager, Karnataka State Financial
Corpn. (Kar.) |
|
- Whether after liquidation
proceedings have commenced, any attachment or sale of assets of said company,
effected without leave of Court and without association with Official
Liquidator, would be null and void - Held, yes - Whether
once proceedings of BIFR recommending winding up of company are received by
registry, proceedings for winding up would be deemed to have commenced and
pending before High Court - Held, yes - Whether where auction purchaser,
after purchasing company’s property in auction bona fide without
having any notice of pendency of winding up proceedings against company, had
invested huge amount on purchased property and Official Liquidator also did
not move High Court immediately after sale or within reasonable time, but
after seven years, sale in favour of auction purchaser could not be
interfered with - Held, yes - Vaishu Engineering Industries Ltd.
(In Liquidation) v. A.P. Industrial Development Corpn. (AP) |
|
Circumstances
in which a company may be wound up |
|
- In terms of an agreement,
petitioner advanced certain amount to respondent-company ‘S’ - ‘P’
respondent-company and one ‘R’ stood as first and second guarantors - ‘S’
defaulted in repayment and petitioner issued notices to all respondents -
Since no repayment was made, petitioner filed petitions under section 433(e)
against ‘S’ and ‘P’ - During pendency of petitions, parties went for
arbitration and in terms of an award, ‘P’ and ‘R’ agreed jointly to pay
certain amount to petitioner - However, thereafter no payment was made,
rather respondents challenged maintainability of petitions on grounds that
petitioner’s debt was contingent and disputed, and that respondents were
required to be given fresh notice in terms of section 434, since under
arbitral award, cause of action had changed as well as liabilities inter
se amongst respondents had also changed - Whether since petitioner had
called upon ‘S’ and ‘P’ and both had failed to make payment due to petitioner
under agreement, it could be said that petitioner was a contingent creditor
and there was any contingency to be met - Held, no - Whether, on
facts, parties went for arbitration due to differences between respondents inter
se and there was no dispute at all as regards liability of respondents
towards petitioner in terms of agreement in question - Held, yes -
Whether since notice was given to both respondents, it was certainly not
expected from petitioner to have given a fresh notice, after award was filed
and winding up petitions could not be dismissed on that ground - Held,
yes - Whether therefore, winding up petitions were to be admitted - Held,
yes - Dolphin Investment (P.) Ltd. v. C. Pinto Trade Commerce (P.)
Ltd. (Bom.) |
|
- Respondent-company defaulted in
payment of dividend payable to appellant - Appellant filed winding up
petition, but later parties resolved their differences and, therefore,
Company Court passed a consent order - Respondent paid settled amount -
Thereafter, appellant claimed further interest under section 205A(4) - Single
Judge of High Court dismissed his application and, therefore, appellant filed
instant appeal - Whether no proceedings could have been initiated by
appellant since respondent had agreed to pay a sum of Rs. 1.51 crores as full
and final amount settled between parties for all claims which included claim
of interest - Held, yes - Whether application and appeal of appellant
were a sheer misuse of process of Court and there being no merit in appeal,
same was liable to be dismissed - Held, yes - P.D. Jain v.
Oswal Agro Mills Ltd. (Punj. & Har.) |
|
- Whether in absence of any
pleadings or prayer for winding up of company on any of grounds mentioned in
section 433, mere filing of petition under heading of some of its
sub-clauses, would not automatically mean that there is a prayer for winding
up of company - Held, yes - Whether where petition was titled as
company petition under section 433(c), (d), (e) and (f),
but, in substance, it contained allegation that since proceedings were
pending before Industrial Tribunal, company be restrained from transferring
or alienating property, during pendency of those proceedings, Company Judge
was justified in allowing petition - Held, no - VCCL Ltd. v.
Ram Karan (All.) |
|
- Respondent’s petition for
winding up of appellant-company on ground that it failed to pay its dues was
admitted by Company Judge - Appellant challenged said order, inter alia,
on ground that respondent’s claim could not be adjudicated in summary
proceedings - Whether fact that during pendency of petition, appellant
remitted certain amount towards respondent’s dues and statement of
appellant’s advocate before Company Court that at best respondent’s claim
could be of Rs. 3,49,000 and not Rs. 5,50,417 as claimed by him showed that
as on that date, said amount was due and payable by appellant to respondent
and, therefore, there was no reason to interfere with order passed by Company
Judge on given facts - Held, yes - Rydak Syndicate Ltd. v.
Roshanlal Agarwal (Cal.) |
|
- Respondent supplied coal to
appellant-company - Certain payments towards said supplies remained pending -
As appellant did not pay amount due even after respondent’s notice of demand,
respondent filed a winding up petition, alleging that appellant was unable to
pay its debts, which included certain principal amount plus interest
thereon - Company Judge, however, directed appellant to pay only principal
amount to respondent - Appellant filed appeal against said order, but during
pendency of appeal, it paid principal amount to respondent - Respondent also
filed appeal claiming interest on principal amount - Whether since appellant
never disputed claim of respondent before issue of notice under section 434,
Company Judge had rightly directed appellant for payment of principal amount
due to respondent - Held, yes - Whether, however, since liability of
interest was not totally admitted, it would be appropriate for respondent to
file a suit for award and recovery of interest before civil court and its
appeal against order of Company Judge was liable to be dismissed - Held,
yes - Gangeshwar Ltd. v. India Coal Traders (All.) |
|
Liability
for fraudulent conduct of business |
|
- Whether Company Judge/Tribunal can give a declaration and pass an order either under section 542 or under section 543 or both only if an application is preferred by Official Liquidator or liquidator or any creditor or contributory of company-in-liquidation and any such application filed by administrator of that company is not maintainable - Held, yes - Whether Company Judge/Tribunal may give an appropriate declaration and pass order under sections 542 and 543, but for pe |