Additional Cases for

Company Law

(D1 –D25)
 D1. Mr. Pankaj Kumar Mishra vs.
Registrar of Companies, Mumbai & Ors. (NCLAT)
Brief • The name of the Company was struck off by ROC Mumbai.
facts:
• The Principal Commissioner of Income Tax challenged the order of ROC before the NCLT.
• It is stated before the Tribunal that the Company has certain Financial transactions that have
been entered into by the Company for the Assessment year 2011-12 and information regarding
this were received from the office of ITO Income Tax Officer. However, no return of income has
been filed. Therefore, notice under Section 148 of the IT Act, 1961 has been issued for
Assessment year 2011-12 proposing to assess/reassess the income.
• The NCLT, Mumbai allowed the Appeal of CIT and directed to restore the name of the Company
in the Register of Companies without giving any notice or opportunity of being heard to the
Company.
• Being aggrieved with this order, the Appellant Ex-Director and Majority Shareholder has filed
this Appeal. Appellant submitted that Section 252 (1) of the Companies Act, 2013, provides that
before passing any order for restoration, the Tribunal must give a reasonable opportunity of
being heard to the Registrar, the Company and all the persons concerned.
Decision: The NCLAT held that before making any order for restoration, opportunity of being heard has to be
given, and since in the given case opportunity for being heard was not given, the order of NCLT is
set aside.
Reason: • Tribunal must give a reasonable opportunity of making representations and of being heard
before passing an order, to the Registrar, the Company and all the persons concerned under
Section 252 (1) of the Companies Act, 2013.
• Accordingly, NCLAT set aside the order of NCLT, and the matter is remitted back to NCLT.
 D2. Alibaba Nabibasha vs.
Small Farmers Agri-Business Consortium & Ors. (Delhi, HC)
Brief • Mr. Alibaba (Petitioner) was a director of a company. The company has issued certain cheques to
facts: the Respondents, and the cheques have been dishonored and hence the respondent company
has filed case against Mr. Alibaba.
• Mr. Alibaba (Petitioner) has filed this petition against the cases filed contended that he was not
the Director when the underlying contract was executed, nor when the cheques were issued and
when they were presented and that he has resigned 8 years prior to the issuance of cheques,
and the resignation has been duly filed with ROC as well.
• According to the Respondent company, the Petitioner was involved in the discussion before an
agreement was executed. Further, the Petitioner had participated in meetings and assisted the
officials of the Respondent
• who had visited for verification of its financial and physical status.
Decision: HC held that after resignation, Director cannot be held responsible for daily affairs of Company
including Cheques issued and dishonored.
Reason: • Delhi High Court held that, in cases where the accused has resigned from the Company and it
has also been filed with the Registrar of Companies then in such cases if the cheques are
subsequently issued and dishonoured, it cannot be said that such an accused is in-charge of and
responsible for the conduct of the day-to-day affairs of the Company, as contemplated in Section
141 of the NI Act.
• Thus, Petitioner after his resignation cannot continue to be held responsible for the actions of
the Company including the issuance of cheques and dishonour of the same. Hence, complaint
cases filed under Section 138 of the NI Act, against the petitioner are quashed.
 D3. Dr. Rajesh Kumar Yaduvanshi vs.
Serious Fraud Investigation Office (SFIO) & Anr. (Delhi, HC)
Brief • In Complaint Case No. 770/2019 captioned “Serious Fraud Investigation Office (SFIO) vs. Bhushan Steel
facts: Limited and Ors.”, the court directs issuance of summons to the petitioner.
• The learned Court had found that there was sufficient material placed on record against the petitioner
for him to face prosecution in respect of offences under Sections 128, 129, 448 read with Section 447
of the Companies Act, 2013.
• The petitioner was PNB’s nominee on the Board of of Bhushan Steel Limited (‘BSL’) at that time.
• The petitioner has filed this petition against this prosecution by SFIO.
• The principal issue involved is:
 whether the petitioner can be prosecuted for the alleged fraud committed by BSL and/or promoters
solely for the reason that the petitioner was a director of BSL and,
 Whether there is any material on record to indicate that the petitioner was complicit (involved) in the
commission of the alleged offence.
Decision: Person as a Nominee Director of the Company cannot be summoned for offences in respect of Sections
128, 129, 448 read with Section 447 of the Companies Act, 2013, without any specific allegations against
him in Investigation report.
Reason: • Delhi High Court observed that there is no allegation that the petitioner was involved in the affairs of
BSL except in his capacity as a Nominee Director of PNB. In such capacity, he was not assigned any
executive work of BSL but was merely required to attend and participate in the Board Meetings of BSL.
• Even, SFIO investigation report does not contain any specific allegations against the Petitioner of being
complicit or having acted in bad faith.
• There is a material difference between the allegation that a Nominee Director has been negligent and
an allegation that he is complicit (involved) in approving financial statements, which he knows to be
false or conceal material information.
• Since, there is nothing against the nominee director in the investigation report he can be held liable for
negligence but can be prosecuted for fraud, Accordingly the summons are set aside.
 D4. QVC Exports Pvt. Ltd. & Ors. vs.
Cosmic Ferro Alloys Ltd. & Ors. (NCLAT)
Brief • Appellant and Respondent jointly entered into a Consortium Agreement and agreed to form a
facts: partnership to submit a Resolution Plan to take over a Company. Resolution plan was submitted
and approved by the COC as well as ratified by NCLT, Kolkata under Section 31 of Insolvency &
Bankruptcy Code, 2016. (irrelevant fact)
• Effectively, the Appellant is holding 40% and Respondent is holding 60% shares of the company
and as per the mutual understanding nominee directors of both the parties were appointed in
the Company.
• Due to several disputes which arose between both the parties, special notice was issued for
removal of nominee director of Appellant from directorship and the resolution was passed in an
EGM, and hence the Appellant have filed this case against the respondent.
• Respondents argued that there is no bar for removal of nominee of minority shareholder under
the Companies Act, 2013. Further, in spite of giving notice, the appellant was not were present
at the EGM and thus they did not raise any objection to passing of the resolution for removal of
nominee director and the removal has already been approved by the Registrar of Companies.
Decision: Removal of Nominee Director (appointed by minority shareholders) with majority vote in duly
convened EGM giving special notice is completely legal and valid.
Reason: The NCLAT held that as proper notice was issued to convene EGM and the same was received by the
appellants 6 PP-MCS including the nominee director, but they did not make any representation and
the EGM voted for removal of nominee director with majority. Thus, there is no illegality in this
process and dismissed the case.
 D5. Economy Hotels India Services Private Limited vs.
Registrar of Companies & Anr. (NCLAT)
Brief • The Appellant Company had filed a petition under Section 66 of the Companies Act praying for
facts: confirming the reduction of share capital.
• In the extract of the minutes submitted to NCLT, it was written that the ‘unanimous ordinary
resolution’ required for reduction has been obtained.
• The NCLT rejected the application for reduction.
• Hence the company has filed and appeal with NCLAT pleading that it was a mere typographical
error in the minutes characterising the ‘special resolution’ as ‘unanimous ordinary resolution’
and the Appellant had filed the special resolution with ROC and fulfilled all the statutory
requirements prescribed in the Companies Act, 2013, hence the order of the Tribunal is liable to
set aside.
Decision: Merely a ‘typographical error’ in the extract of ‘Minutes’, characterising the ‘special resolution’ as
‘unanimous ordinary resolution’ will not render a special resolution as invalid. The special
resolution passed is very well valid.
Reason: • NCLAT observed that ‘Reduction of Capital’ under Section 66 of the Companies Act, 2013 is a
‘Domestic Affair’ of a particular Company in which, ordinarily, a Tribunal will not interfere
because of the reason that it is a ‘majority decision’ which prevails.
• As the Appellant has admitted its typographical error in the extract of the Minutes of the
Meeting characterizing the ‘special resolution’ as ‘unanimous ordinary resolution’ and also
taking into consideration of the fact that the Appellant had filed the special resolution with ROC,
which satisfies the requirement of Section 66 of the Companies Act, 2013.
• NCLAT allowed the Appeal, thereby confirming the reduction of share capital of the Appellant
Company.
 D6. K.V. Brahmaji Rao vs.
Union of India (NCLAT)
Brief • In the huge financial scam in PNB, Union of India has initiated investigation against 107
facts: companies and 7 LLPs of Nirav Modi Group and Gitanjali Group of Companies.
• At the relevant time the Appellant was Executive Director, PNB, Head Office, New Delhi. NCLT,
Mumbai bench, passed the order for freezing Assets of the Appellant and prohibited him from
disposing movable and immoveable Properties/Assets.
• The Appellant submits that the order has been passed in violation of Principle of Natural Justice
since the Appellant was not served with advance copy of the said Application and without giving
opportunity of hearing order has been passed.
• Important legal issue is whether any person assets (who is head of some other organizations) be
attached in exercising the powers under Sections 337 & 339 of the Companies Act, 2013?
Decision: Any person assets (who is head of some other organizations) cannot be attached in exercising the
powers under Sections 337 & 339 of the Companies Act, 2013.
Reason: • The NCLAT observed that the person who may be the head of some other organizations cannot
be roped and his or her Assets cannot be attached in exercising the powers under Sections 337
& 339 of the Companies Act, 2013. Admittedly, the Appellant was the Executive Director of PNB,
Head Office, New Delhi i.e. employee of other organization. Therefore, he cannot be impleaded
as Respondent in the case against the Nirav Modi Group and Gitanjali Group of Companies.
• Thus, the order of NCLT, Mumbai bench is set aside, and the Appeal is allowed.
 D7. Vijay Goverdhandas Kalantri & Anr. vs.
Union of India & Ors. (HC of Punjab and Haryana)
Brief • This petition was filed as a writ petition for issuance of a writ of certiorari (for review of any
facts: case) for setting aside the action of Respondent Nos.1, 2 and 3 disqualifying the petitioners to
act as Director under Section 164(2)(a) of the Companies Act, 2013.
• The respondents simply argue that, In the present case, both the Petitioners are residents of
Mumbai and the Company itself is registered with the Registrar of Companies, Mumbai and has
no connection with the Registrar of Companies, Punjab and Chandigarh. Then how the present
writ petition was maintainable before this Court.
• The legal question involved is simple, whether the High Court can exercise power outside the
territorial jurisdiction of the State(s) of which it is the High Court?
Decision: The jurisdiction of the High Court is limited to the territorial jurisdiction of the State of which it is
the High Court.
Reason: • Punjab & Haryana High Court observed that there is no ground whatsoever made out for
invoking the jurisdiction of this Court under Articles 226/227 of the Constitution of India in as
much as neither the Petitioners are residents of Punjab, Haryana nor is the Company, registered
with the Registrar of Companies, Punjab and Chandigarh.
• The jurisdiction of the High Court is limited to the territorial jurisdiction of the State(s) of which
it is the High Court. Article 226 of the Constitution of India, in clear terms, empowers the High
Court to entertain a writ petition if the cause of action to file such a writ petition against the
Respondents of the said writ petition has arisen wholly or in part within the territorial
jurisdiction of the High Court.
• In the present case the petitioners have been unable to show as to what part of the cause of
action arose within the territorial jurisdiction of this Court, hence the initiation of the writ
proceedings before this High Court is clearly unsustainable and an abuse of jurisdiction.
• In view of the above, the present writ petition is dismissed with exemplary costs.
 D8. Aruna Oswal vs.
Pankaj Oswal & Ors. (SC)
Brief • The brief facts of the case are that Late Mr. Abhey Kumar Oswal, during his lifetime, held as
facts: many as 5,35,3,960 shares in M/s. Oswal Agro Mills Ltd., a listed company. He died on
29.3.2016. Mr. Abhey Kumar Oswal had nominated the shares in favour of Mrs. Aruna Oswal, his
wife. Two witnesses duly attested the nomination in the prescribed manner. The name of Mrs.
Aruna Oswal, the Appellant, was registered as a holder on 16.4.2016 as against the shares held
by her deceased husband.
• Pankaj Oswal, son of late Abhay Oswal filed a partition suit in High Court claiming entitlement to
1/4th of the estate of his father including the deceased’s shareholdings.
• While the suit was pending in High Court, Mr. Pankaj Oswal filed a case alleging oppression and
mismanagement under Companies Act, 2013 in the affairs of company in NCLT, Chandigarh.
• Mr. Pankaj claimed eligibility to maintain the petition on the ground of being a holder of 0.03%
shareholding and claiming entitlement and legitimate expectation to 9.97% shareholding of
M/s. Oswal Agro Mills Ltd. by virtue of his being the son of deceased Abhey Kumar Oswal.
• The NCLT eventually held that Mr. Pankaj, being a legal heir, was entitled to one-fourth of the
property/shares.
• The matter has reached the Supreme Court.
Decision: Dispute of Inheritance of Shares is a civil dispute, it cannot be decided under section 241/242 of
the Companies Act, 2013. The decision of NCLT is set aside.
Reason: • Supreme Court held that the basis of the petition is the claim by way of inheritance and such
issues cannot be decided in proceedings under Section 241/242 of the Companies Act, 2013,
moreover a suit for the issue of inheritance is already pending in High Court.
• SC ordered the NCLT to drop the proceedings filed before the NCLT regarding oppression and
mismanagement.
 D9. The Registrar of Companies, West Bengal vs.
Karan Kishore Samtani (NCLAT)
Brief • The Respondent was the Director, for more than 20 Companies till 31.03.2015.
facts: • On 27.01.2016 the Registrar of Companies, West Bengal sent show cause notice on the ground
that he was the Director of more than 20 Companies at once.
• The Respondent admitted the guilty and sent representation to the Registrar with a request to
compound the offence under Section 441(1) of the Companies Act, 2013.
• ROC forwarded the representation along with his report to the Tribunal.
• After hearing the parties the NCLT Kolkata Bench (Tribunal) allowed the compounding
application subject to payment of compounding fees of Rs. 50,000/-.
• Being aggrieved with this order ROC has filed this Appeal saying that the minimum fine
prescribed for the offence is more than 50,000, Hence the compounding fees of 50,000 is not
appropriate.
• The issue for consideration is, whether Tribunal can impose the compounding fees, less than
minimum fine prescribed for the offence under the Act.
Decision: The compounding fees has to be more than or equal to the minimum fine prescribed under the Act.
Reason: • The Respondent has contravened the provisions of 165(1) of the Companies Act, 2013 which is
punishable under Section 165 of the Companies Act, 2013.
• the NCLAT held that the NCLT, Kolkata Bench has failed to notice the minimum fine prescribed
under Section 165 of the Companies Act, 2013 which was applicable at relevant time.
• Accordingly, NCLAT imposed minimum fine at the rate of 5000 rupees for every day for the
period 01.04.2015 to 21.02.2016 i.e. 272 days, which came to 13,60,000.
 D10. S. P. Velumani & Anr. vs. Magnum Spinning
Mills India Pvt. Ltd. & Ors. (NCLAT)
Brief • The Appellant filed a case contending that bogus transactions and siphoning of funds is taking
facts: place in the company and filled a company petition in NCLT, Chennai for oppression and
mismanagement.
• After having heard the parties the NCLT, Chennai Bench dismissed the case stating that the acts
complained of are not falling within the purview of Oppression and mismanagement.
• Being aggrieved by the said order of the NCLT the appellant has filed the present appeal to
NCLAT.
• The contention of the Appellant that during the financial year 2017-18, an amount of Rs.
48,41,801/- has been written off as bad debts, and the details as to identity of the party,
whether related party or otherwise is not disclosed.
Decision: The NCLAT upheld the decision of the NCLT, Chennai bench that decision of the Board of Directors
to write off the bad debt is a commercial decision, which does not warrant any judicial
interference.
Reason: • NCLT has rightly put its reliance on Judgement of NCLAT in Upper India Steel Manufacturing and
Engineering Co. Ltd. & Ors. Vs. Gurlal Singh Grewal & Ors. where it was held that cheque signing
power is solely a business decision and cannot be interfered.
• Similarly, decision of the Board of Directors to write off the bad debt is a commercial decision,
which does not warrant any judicial interference.
 D11. Late Mona Aggarwal through her Legal heir Mr. Vijay Kumar Aggarwal & Anr. vs.
Ghaziabad Engg. Company Ltd. & Ors. (NCLAT)
Brief • Facts of the case are irrelevant.
facts: • The question for consideration is that during the pendency of winding up petition the name of the
company has been struck off under Section 248 of the Companies Act 2013. In such circumstances
whether the NCLT can proceed with winding up petition or not?
• NCLT rejected the petition for winding up with liberty to the petitioner to file a fresh petition for
winding up as and when the Respondent company is revived.
• Being aggrieved with this order the Appellants have filed this appeal.
Decision: NCLAT held that even after removal of the name of the company from the register of companies
the NCLT can proceed with the petition for winding up under Companies Act, 2013.
Reason: • The NCLAT observed that from sub-section (8) of Section 248, it is clear that Section 248 in no
manner will affect the powers of the Tribunal to wind up the company, the name of which has
been struck off from the register of companies.
• Therefore, even after removal of the name of the company from the register of companies the
NCLT can proceed with the petition for winding up under Section 271 of the Companies Act, 2013.
• Hence, order of NCLT is not sustainable in law and is hereby set aside and the matter is remitted
back to NCLT, New Delhi for deciding the winding up petition on merit as per law.
 D12. Bank of Baroda vs.
Aban Offshore Limited (NCLAT)
Brief • The appellants being preference shareholders have filed an application to NCLT for redemption
facts: of preference shares under section 55(3) or section 245.
• NCLT, Chennai Bench (Tribunal) has dismissed the application of Appellant solely on the ground
that the Appellant being preferential shareholders has no locus standi to file application for
redemption of shares under Section 55(3) of the Companies Act, 2013 or even under Section
245 of the Companies Act, 2013.
• Aggrieved by the order of NCLT, The appellants have filed an appeal to NCLAT.
• The legal question involved is, whether there is any remedy under law available to preference
shareholders for filing application for redemption of preference shares?
Decision: NCLAT held that Preference shareholders are not remediless for redemption of preference shares,
they can file an application under Section 55(3) of the Companies Act, 2013 or alternatively they
may also file application under Section 245 of the Companies Act, 2013 as a class action suit.
Reason: • The intention of the legislature while promulgating Section 55 of the Companies Act, 2013 was to
compulsorily provide for redemption of preference shares by doing away with the issue of
irredeemable preference shares. Therefore, even though there is no specific provision stipulated
under the Companies Act, 2013 through which relief can be sought by preference shareholders in
case of non-redemption, as the intention of the legislature being clear and absolute, Tribunal’s
inherent power can be invoked to get an appropriate relief by an aggrieved preference
shareholder(s).
• Alternatively, preference shareholders coming within the definition of ‘member(s)’ under Section
2(55) read with Section 88 of the Companies Act, 2013, may file a petition under Section 245 of
the said Act, as a class action suit, being aggrieved by the conduct of affairs of the company.
• Hence, the order of the NCLT is set aside. The matter is remitted back to NCLT, Chennai Bench to
decide the application as per law.
 D13. Joint Commissioner of Income Tax, Mumbai vs.
Reliance Jio Infocomm Ltd. & Ors. (NCLAT)
Brief • Reliance Jio Infocomm Limited’, ‘Jio Digital Fibre Private Limited’ and ‘Reliance Jio Infratel Private
facts: Limited’ moved joint petition under Sections 230-232 of the Companies Act, 2013, seeking sanction
of the Composite Scheme of Arrangement amongst ‘Reliance Jio Infocomm Limited’ and ‘Jio Digital
Fibre Private Limited’ and ‘Reliance Jio Infratel Private Limited’ and their respective shareholders
and Creditors.
• The scheme was approved by NCLT.
• The appellants have made an appeal against the scheme to NCLAT.
• According to the Appellants, by way of the composite scheme, there is an indirect release of assets
by the demerged company to its shareholders which is used to avoid dividend distribution tax which
would have otherwise been attracted to tax liability.
• In simple language, the legal issue involved is whether the scheme of Compromise or arrangement
may result in reduction of tax liability will furnish a basis for challenging the validity of the same?
Decision NCLAT held that mere fact that a Scheme of Compromise or Arrangement may result in reduction of
:
tax liability does not furnish a basis for challenging the validity of the same.
Reason: • The NCLAT, held that without placing any evidence before the Tribunal, it was not open to the
income tax department to hold that the composite scheme of arrangement amongst the petitioner
companies and their respective shareholders and creditors is giving undue favour to the
shareholders of the company and also the overall scheme of arrangement results into tax avoidance.
• The NCLAT observed that mere fact that a scheme may result in reduction of tax liability does not
furnish a basis for challenging the validity of the same.
• Thus, NCLAT upheld the decision of NCLT, Ahmedabad bench and in view of the liberty given to the
Income Tax Department decided not to interfere with the Scheme of Arrangement as approved by
the Tribunal and dismissed the appeals filed.
 D14. Registrar of Companies, Kerala vs.
Ayoli Abdulla (NCLAT)
Brief • NCLT, Chennai Bench has restored the name of the company of respondent, and has waived the
facts: additional fee in filing of balance sheet and Annual Return for the Respondent to file all the
pending statutory returns viz., Balance Sheets and Annual Returns under Section 403 of the
Companies Act, 2013 etc.
• The Appellant i.e. Registrar of Companies, Kerala has preferred the Appeal and the Appellant has
no objection in restoring the name of the company as ordered by the said NCLT but the
Appellant is aggrieved by waiver of the additional fee.
• So the question involved is whether NCLT has power to waive additional fees levied on
defaulted statutory documents?
Decision: NCLT per se has no power to waive the filing fee & additional fee.
Reason: • The NCLAT set aside the order passed by the NCLT, Chennai Bench to the extent of waival of
additional fee for filing of Balance Sheet and Annual Return and held that NCLT per se has no
power to waive the filing fee & additional fee.
• The Registrar of Companies, Kerala is directed to charge minimum additional fee.
• The Respondent is directed to file all the pending statutory returns viz., Balance Sheet and
Annual Return with filing fee and additional fee within a period of 30 days from the date of
receipt of this order and RoC, Kerala is directed to accept the same with minimum additional
fee.
 D15. Regional Director, Southern Region and Ors. vs.
Real Image LLP and Ors. (NCLAT)
Brief • M/s. Real Image LLP with M/s. Qube Cinema Technologies Pvt.Ltd. and their respective partners,
facts: shareholders and creditors moved joint company petition under Section 230 to 232 of the
Companies Act, 2013, for merger of the LLP into the private company.
• NCLT further found that as per Section 394(4)(b) of companies Act, 1956, LLP can be merged into
company but there is no such provision in the Companies Act, 2013. However, explanation of
sub-section (2) of Section 234 of the Companies Act 2013 permits a foreign LLP to merge with an
Indian company, then it would be wrong to presume that the Companies Act, 2013 prohibits of a
merger of an Indian LLP with an Indian company. Thus, there does not appear any express legal
bar to allow merger of an Indian LLP with an Indian company.
• Therefore, NCLT allowed the merger.
• Being aggrieved the appellants have filed the present appeal to NCLAT.
Decision: If an Indian Limited Liability Partnership (‘LLP’) is proposed to be merged into an Indian company
then firstly, the LLP has to apply for registration under Section 366 of the Companies Act, 2013.
Reason: • It is apparent that as per Section 232 of the Companies Act, 2013, a company or companies can
be merged or amalgamated into another company or companies.
• The Companies Act, 2013 has taken care of merger of LLP into company. In this regard Section
366 of the Companies Act, 2013 provides that for the purpose of section 232, the word company
includes any partnership firm, limited liability partnership, cooperative society, society or any
other business entity which has applied for registration under this section.
• It means that LLP can apply for registration and once the LLP is registered as company then the
company can be merged in another company as per Section 232 of the Companies Act, 2013.
• The NCLAT held that the order passed by NCLT, Chennai Bench is not sustainable in law and thus,
set aside, which is allowing the merger of an Indian LLP with an Indian company without such
registration.
 D15. Regional Director, Southern Region and Ors. vs.
Real Image LLP and Ors. (NCLAT)
Brief • M/s. Real Image LLP with M/s. Qube Cinema Technologies Pvt.Ltd. and their respective partners,
facts: shareholders and creditors moved joint company petition under Section 230 to 232 of the
Companies Act, 2013, for merger of the LLP into the private company.
• NCLT further found that as per Section 394(4)(b) of companies Act, 1956, LLP can be merged into
company but there is no such provision in the Companies Act, 2013. However, explanation of
sub-section (2) of Section 234 of the Companies Act 2013 permits a foreign LLP to merge with an
Indian company, then it would be wrong to presume that the Companies Act, 2013 prohibits of a
merger of an Indian LLP with an Indian company. Thus, there does not appear any express legal
bar to allow merger of an Indian LLP with an Indian company.
• Therefore, NCLT allowed the merger.
• Being aggrieved the appellants have filed the present appeal to NCLAT.
Decision: If an Indian Limited Liability Partnership (‘LLP’) is proposed to be merged into an Indian company
then firstly, the LLP has to apply for registration under Section 366 of the Companies Act, 2013.
Reason: • It is apparent that as per Section 232 of the Companies Act, 2013, a company or companies can
be merged or amalgamated into another company or companies.
• The Companies Act, 2013 has taken care of merger of LLP into company. In this regard Section
366 of the Companies Act, 2013 provides that for the purpose of section 232, the word company
includes any partnership firm, limited liability partnership, cooperative society, society or any
other business entity which has applied for registration under this section.
• It means that LLP can apply for registration and once the LLP is registered as company then the
company can be merged in another company as per Section 232 of the Companies Act, 2013.
• The NCLAT held that the order passed by NCLT, Chennai Bench is not sustainable in law and thus,
set aside, which is allowing the merger of an Indian LLP with an Indian company without such
registration.
 D16. G. Vasudevan vs.
Union of India (Madras, HC)
Brief • Petition filed under Article 226 of the Constitution of India to declare the “Proviso” in Section 167(1)(a)
facts: of the Companies Act 2013, as inserted vide the Companies (Amendment) Act 2017 as ultra vires the
Articles 14, 19(1)(g) of the Constitution of India and declare illegal and null and void.
Section 167 (1)(a):
“(i) in clause (a), the following proviso shall be inserted, namely: — “Provided that where he incurs
disqualification under sub-section (2) of section 164, the office of the director shall become vacant in all
the companies, other than the company which is in default under that sub-section.”;
• The primary issue in this case relates to whether or not the proviso to Section 167(1)(a) was without
justification
• irrationally mandating the vacating of Directorship in other companies while not providing for the
same in the
• defaulting company ?
Decision: Section 167(1)(a) is constitutionally valid. The writ petition is dismissed.
Reason: • The Madras High Court held that this proviso can be justified on two grounds.
• Firstly, it has been reiterated that the exclusion of Directors from vacating their posts in the defaulting
company while doing so in all other companies where they hold Directorship has been done in order to
prevent the anomalous situation wherein the post of Director in a company remains vacant in
perpetuity.
• Secondly, the underlying object behind the proviso to Section 167(1)(a) is seen to be the same as that
of Section 164(2) both of which exist in the interest of transparency and probity (honesty) in
governance.
• Owing to these justifications, the Court thus holds that the proviso to Section 167(1)(a) is neither
manifestly arbitrary nor does it offend any of the fundamental rights guaranteed under the
Constitution of India.
• Thus, the writ petition is dismissed.
 D17. Mukut Pathak & Ors. vs.
Union of India & Anr. (Delhi HC)
Brief • The petitioners were directors in various companies and were disqualified from being appointed/
facts: reappointed
• as directors for a period of five years u/s 164(2)(a), for default on the part of their concerned
companies, in filing of the annual returns and financial statements for the financial year 2014-2016.
• The said list of directors, who were disqualified, was published in 2017. The petitioners challenged the
list of disqualified directors, for defaults, pertaining to the financial years 2012-2014 and 2013-2015
before the High Court.
Issues
A. Whether the provisions of Section 164(2)(a) are retrospective?
B. Whether a prior notice and an opportunity of being heard was required to be given before publishing
the list of the disqualified directors?
C. Whether the directors of a company are disqualified from being re-appointed as directors in other
non-defaulting companies in which they were directors at the time of incurring the disqualification?
Decision: Penalty u/s 164(2) of Companies Act not to apply retrospectively and other issues were also clearly
answered.
Reason: A. It was held that the provisions of Section 164(2) would apply prospectively and not retrospectively. It
is a well settled law, that no statute should be construed to apply retrospectively, unless expressly
provided.
B. Section 164(2) merely sets out the conditions, which if not complied with, would disqualify a person
from being reappointed or appointed as a director. Thus, if any director is not complying with the
condition, he will automatically be disqualified, no opportunity of being heard is required in such case.
C. Lastly, Section 164(2) provides that no person who is or has been a director of company that has
defaulted u/s 164(2) shall be eligible to be re-appointed as a director of ‘that company’ or appointed
in any ‘other company’.
 D18. Jindal Steel and Power Limited vs.
Arun Kumar Jagatramka and Ors. (NCLAT)
Brief • ‘Corporate Insolvency Resolution Process’ was initiated against the company.
facts: • In absence of any ‘Resolution Plan’, the Adjudicating Authority passed order of ‘Liquidation’ after the
expiry of 270 days.
• In the meantime, Mr. Arun Kumar Jagatramka (Promoter) moved an application under Sections 230 to 232
of the Companies Act, 2013 before the NCLT, Kolkata for Compromise and Arrangement between erstwhile
Promoters and the Creditors.
• NCLT approved the Scheme.
• An unsecured creditor of the Corporate Debtor has preferred Appeal to NCLAT against the Scheme
approved.
• The two legal issues involved are: -
i. Whether in a liquidation proceeding under Insolvency and Bankruptcy Code, 2016 the Scheme for
Compromise and Arrangement can be made in terms of Sections 230 to 232 of the Companies Act,
2013?
ii. If so permissible, whether the Promoter is eligible to file application for Compromise and Arrangement,
while he is ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016 to submit a
‘Resolution Plan’?
Decision: During the Liquidation proceeding under Insolvency and Bankruptcy Code, 2016 a petition under Section
230 to 232 of the Companies Act, 2013 is maintainable, but a promoter can not file a petition under Section
230 to 232 during the liquidation.
Reason: • The NCLAT observed that during the liquidation process, step required to be taken for its revival and
continuance of the ‘Corporate Debtor’ by protecting the ‘Corporate Debtor’ from its management and
from a death by liquidation. During a Liquidation proceeding under Insolvency and Bankruptcy Code,
2016, a petition under Section 230 to 232 of the Companies Act, 2013 is maintainable.
• But, The ‘Corporate Debtor’ is to be saved from its own management, the Promoters, who are ineligible
under Section 29A of Insolvency and Bankruptcy Code, 2016, are not entitled to file application for
Compromise and Arrangement in their favour under Section 230 to 232 of the Companies Act, 2013.
• Accordingly, the order of NCLT is set aside.
 D19. M/s Ind-Swift Limited vs.
Registrar of Companies (Punjab & Chandigarh) (NCLAT)
Brief • Appellant is a Listed company, it had accepted deposits since 2002 and regularly paid back till
facts: 28.02.2013. In 2013, it started facing liquidity problems and incurred losses.
• The Appellant company filed application before CLB and obtained relief under the erstwhile
Companies Act, 1956 and got instalments fixed to repay deposits.
• Appellant again sought re-fixing of periods, instalments and rate of interest from NCLT, New
Delhi bench under Section 74 of the Companies Act, 2013.
• NCLT rejected the application. Hence an appeal to NCLAT.
Decision: The Appellant had at the time of first grant of time got relief of huge extension by CLB and that
there was no reason to accept the plea for further extension.
Reason: • The NCLAT observed that the NCLT considered that the Appellant had at the time of first grant of
time got relief of huge extension and that there was no reason to accept the plea for further
extension.
• Considering these provisions, it appears that Section 74(1)(b) was attracted and when it appears
from record that the Appellant defaulted, the penal provisions would get attracted.
• Thus, when once a scheme had been got settled, from CLB, default on the part of the Appellant
would attract penal provisions.
 D20. S. Gopakumar Nair & Anr. vs.
Obo Bettermann India Pvt. Ltd. (NCLAT)
Brief • The Appellants held 100% shares in Cape Electric India Pvt. Ltd. (“CEIPL”). Subsequently, OBO
facts: Bettermann Holdings GMBH Ltd. (“OBO Germany”) acquired 76% of the shares in CEIPL, pursuant to a
shareholder’s agreement entered into with the appellants.
• Over the course of time, the name of CEIPL was changed to OBO Bettermann India Pvt. Ltd. (“OBO
India”) and the shareholding of the appellant was reduced to 0.36% in OBO India.
• OBO Germany made attempts to buy out the equity shares of the appellants, being in control of OBO
India, issued notice u/s 236 of the Companies Act, to buy the shares of the appellants in spite of their
resistance.
• A petition was filed before the NCLT u/s 241, which was held as not maintainable.
• Aggrieved by the order, an appeal was filed before the NCLAT.
Decision: To give a notice under section 236 for compulsory acquisition of shares of minority, merely holding 90%
or more is not enough, other requirement of section 236 also needs to be complied.
Reason: • Section 236(1) reads as follows:
• In the event of an acquirer, or a person acting in concert with such acquirer, becoming registered
holder of ninety per cent. or more of the issued equity share capital of a company, or in the event of
any person or group of persons becoming ninety per cent. majority or holding ninety per cent. of the
issued equity share capital of a company, by virtue of an amalgamation, share exchange, conversion of
securities or for any other reason, such acquirer, person or group of persons, as the case may be, shall
notify the company of their intention to buy the remaining equity shares.
• NCLAT held that Section 236 could be invoked only in case of amalgamation, share exchange and
conversion of securities and for any other reasons. It was observed that the words “for any other
reasons” does not cover the given case.
• Hence, the majority holders can not give notice u/s 236 to acquire the shares of minority, Accordingly,
appeal allowed.
 D21. CADS Software India Pvt. Ltd. and Ors vs.
Mr. K.K. Jagadish & Ors. (NCLAT)
Brief • Mr. KK was removed as Director of the Appellant Company pursuant to the Management losing
facts: confidence in him. Mr. KK filed a Petition against the company alleging Oppression and
mismanagement and also claiming compensation for loss of office.
• The Appellants pleaded that the Petition is filed with the ulterior motive of extracting Rs.10 crores
from the Company.
• The NCLT held that in terms of Section 202(3) of the Companies Act, upon removal, the Managing
Director of a company would be entitled to receive remuneration which he would have earned if
had been in office for the remainder of his term or for three years, whichever is shorter.
• Being aggrieved by the impugned order the Appellants have preferred this appeal.
• The question involved is, whether a person removed from the post of Managing Director is eligible
for compensation, when he is removed due to the reason of loss of confidence?
Decision: Managing Director in this case is eligible for compensation for loss of office as removal of director
due to loss of confidence does not appear in Companies Act as a ground of removing.
Reason: • Mr. KK was removed from the company, Upon removal as Managing Director, he is entitled to
compensation for loss of office as per Section 202 of the Companies Act, 2013.
• The arguments for not paying compensation by the Appellant was that the director was removed
due to loss of confidence. The Tribunal held that the term loss of confidence does not appear in the
Companies Act and accordingly, the NCLT Chennai bench has rightly given his findings and arrived at
to give compensation of Rs.105 lakhs (calculated at the rate of Rs.35 lakhs p.a. for three years)
together with interest @ 10% from the date of removal of the 1st Respondent as Managing
Director plus other benefits as already offered, till the date of payment by the company/other
respondents.
• Hence, the Appeal is accordingly dismissed.
 D22. Shashi Prakash Khemka Through LRs. and Anr.
vs. Nepc Micon & Ors.
Brief • A special leave petition was filed before the Supreme Court by the appellant to resolve the
facts: subject matter of dispute in the exercise of power u/s 111-A of the erstwhile Companies Act,
1956.
• In simple terms the question involved is whether issue related to transfer of shares would be
adjudicated by the Civil Courts or by the Company Law Board?
Decision: Power to deal with issues pertaining to rectification of register of members, is with NCLT, and not
the civil courts.
Reason : • Legal developments had a direct effect on the present case as Companies Act, 2013 had been
amended which provided for the power of rectification of the Register u/s 59 of the Companies
Act, 2013 and conferred such powers on the NCLT.
• A reference was also made to Section 430 of the Companies Act, 2013 which completely barred
the jurisdiction of the civil courts in matters in respect of which the power had been conferred
on the NCLT.
• Hence, it was held that the appropriate course of action would be before the NCLT under the
Companies Act, 2013.
 D23. Karn Gupta vs.
Union of India & Anr.
Brief • Karn Gupta was a director of a company from where he resigned.
facts: • Post his resignation, the company did not file the required documents (FS, AR) under companies
Act due to which the directors were disqualified under section 164(2), Surprisingly the name of
karn Gupta also appeared in the list of disqualified directors.
• The company also defaulted in filing the form of his resignation to ROC.
• Hence, it is submitted by the Petitioner that he had resigned from the directorship of the
company in question, so he would not incur a disqualification under Section 164 of the
Companies Act, 2013.
Decision: If the director has resigned before the actual default, but the company fails to inform ROC about
his resignation, the director will not be disqualified.
Reason: • Delhi High Court held that the disqualification of the petitioner as notified in the impugned list
as disqualification of the petitioner as a director of the company and the resultant prohibition
under Section 164(2)(a) of the Companies Act, 2013 by virtue of the petitioner’s name featuring
in the lists dated 6.09.2017 and 12.09.2017 is hereby set aside and quashed.
• The Registrar of Companies is directed to ensure that its records are properly rectified to delete
the name of the petitioner from the lists.
 D24. Rishima SA Investments LLC vs. Registrar of
Companies, West Bengal & Ors. (Calcutta HC)
Brief • The petitioner files a case at the HC (as NCLT was not notified uptill then) against the decision of
facts: the Registrar of Companies, West Bengal striking off the name of Rama Inn Private Limited from
the Register maintained in respect of companies.
• Petitioner submits that, no reasons have been ascribed by the Registrar why the name of the
company was struck off.
• The Respondent submits that, the Petitioner has no locus standi to file the writ petition. He
submits that, the Petitioner is neither the company itself nor is a member or creditor of the
company. The petitioner is, therefore, not entitled to challenge a decision of the Registrar of
companies taken under Section 560 of the Act of 1956.
Decision: A person other than member or creditor can also challenge the ‘Striking’ off the Company Name
through a writ petition.
Reason: • The Calcutta High Court held that the petitioner is not the company nor its member or creditor
& it is not the person named in Section 560(6) of the erstwhile Companies Act, 1956. He does
not have the statutory right to apply under Section 560(6) of the erstwhile Companies Act, 1956
but there is a remedy for every violation of a right. The constitutional right under Article 226 of
the Constitution of India, cannot be taken away by statute. Such a person can approach a regular
Civil Court or apply under Article 226 of the Constitution of India for redressal of his grievances
in respect of a decision of the Registrar of Companies striking off the name of a company.
• The court got into the facts and observed that a company having a paid up capital of
Rs.50,00,000/-, inventories of Rs.50,51,500/-, holding shares worth Rs.13,84,61,540/- and
entering into tripartite agreement to carry on hotel business cannot be said to be without
business or being inoperative since incorporation.
• The decision of the Registrar of Companies to strike off is set aside and restoration ordered.
Additional Cases for

Securities Law

(D26 –D39)
 D26: ICICI Bank Limited vs.
SEBI (SAT)
Brief • SEBI has ordered a penalty in 2019 for Rs. 5 lakh each on the appellant for violation of the
facts:
Securities Contracts (Regulation) Act, 1956 and SEBI (Prohibition of Insider Trading) Regulations,
1992.
• The violation relates to the year 2010.
• Appeal has been preferred to SAT against this order, on the ground that for a violation of 2010,
the show cause notice was issued in 2018, and order was made in 2019, there has been huge
delay on the part of SEBI.
Decision: Merely the delay on part of SEBI to issue show cause notice and to order penalty does not
invalidate the proceedings, but in this case considering the delay the penalty was modified.
(Reduced)
Reason: • The charge against the appellant is one trading day’s delay in disclosure, but the delay on the
part of SEBI to show cause is 2955 days from the date of the event (and about 2130 days from
the date of the preliminary investigation report), which is too wide a gap to be ignored.
• Though there are laches (lack of diligence), but merely the delay on the part of SEBI will not
invalidate the proceedings but definitely the penalty amount of Rs. 10 lakh imposed on the
appellant cannot be sustained and deserves to be substituted by a lesser penalty.
• SAT modify the penalty imposed on the appellant to only a warning which will meet the ends of
justice in the given facts and circumstances of the matter. Appeal is thereby partly allowed.
 D 27: India Ratings and Research Private Ltd. vs.
SEBI (SAT)
Brief • The Adjudicating Officer has imposed a penalty of Rs.25 lakhs upon the Appellant for violating
facts: the Code of Conduct to the Securities and Exchange Board of India (Credit Rating Agencies)
Regulations, 1999.
• Later, SEBI issued a second show cause notice, as in their opinion the order of the Adjudicating
Officer was not in the interest of the securities market.
• Appeal has been filed by the appellants praying that proceedings initiated by SEBI pursuant to
the second show cause notice, should be stayed, as the penalty has been already imposed by
the adjudicating authority of SEBI.
Decision: SEBI can call for and examine records of any proceedings if it considers the orders passed by the
adjudicating officer is erroneous and not in the interests of securities markets.
After making inquiry, SEBI may modify the penalty imposed.
Reason: • “Under Section 15-I(3), the SEBI can call for and examine records of proceedings if it considers
the orders passed by the adjudicating officer erroneous and not in the interests of securities
markets. After examining the matter, the SEBI can enhance the quantum of penalty imposed.”
• SAT directed that the proceedings in pursuance to the second show cause notice will continue
and SEBI will pass appropriate orders after giving an opportunity of hearing to the Appellant
either through physical hearing or through video conferencing.
• Appeal, dismissed.
 D28: Dr. Udayant Malhoutra vs.
SEBI (SAT)
Brief • The appellant is the Chief Executive Officer and Managing Director of a listed company known as
facts: Dynamatic Technologies Limited (‘DTL’) which is engaged in the manufacturing of aerospace,
automotive and engineered products.
• The appellant has been the Managing Director since 1989. The charge against the appellant is,
that he had sold 51,000 shares of the company having inside knowledge of the price sensitive
information, namely, the unaudited financial results of the quarter ending September 30, 2016.
• It was alleged that the financial results were approved by the Board of Directors on November
11, 2016 whereupon the price of the scrips of the company drastically went down.
• It was alleged that the appellant had inside information of the price sensitive information and,
being a connected person had sold the shares and thus made a notional gain or averted a
notional loss.
• SEBI passed an ex-parte order to deposit a sum of Rs. 2,66,59,215/-plus interest till date totaling
Rs.3,83,16,230.73 in an Escrow Account towards notional loss allegedly avoided by him by using
unpublished price sensitive information and further directed that the bank accounts / demat
accounts of the appellant shall remain frozen till such time the amount is not deposited.
• Appeal is filed against this order to SAT, the question involved is can SEBI pass an ex-parte order
where there is merely a prima-facie case.
Decision: There is no doubt that SEBI has the power to pass an interim order and that in extreme urgent
cases SEBI can pass an ex-parte interim order but such powers can only be exercised sparingly
(rarely/infrequently) and only in extreme urgent matters.
Reason: • In the instant case, SAT do not find any case of extreme urgency which warranted the respondent
to pass an ex-parte interim order only on arriving at the prima-facie case that the appellant was
an insider as defined in the SEBI (Prohibition of Insider Trading) Regulations, 2015.
• The appeal is allowed.
 D29: Indus Weir Industries Limited (Appellant) vs.
SEBI (SAT)
Brief • Appellant Company mobilized funds through issuance of Redeemable Preference Shares (“RPS”)
facts: during 2010-11 to 2013-14. Admittedly, the appellant collected an amount of Rs. 33,39,86,230/-
from 32,454 investors during this period of 4 years.
• This appeal has been filed challenging the order of the The number of investors from whom
money was collected by the appellant through issuance of RPS exceeded 49 in each of the 4
years, by doing so, the appellant has violated Regulation 4(2) and 16 of the Issue and Listing
Regulations, 2013.
• This act of collecting funds from more than 49 investors is tantamount to a deemed public issue
which has been done without following the procedure as stipulated by the regulations for such
public issue and listing, and hence the violations.
• Adjudicating Officer of SEBI ordered a penalty of Rs. 1,00,00,000/- for the violation.
• Appeal to SAT has been filed against the order of AO.
Decision: Penalty imposed by SEBI on violating SEBI (Issue and Listing of Non-Convertible Redeemable
Preference Shares) Regulations, 2013, further reduced by SAT to meet the end of justice in the
matter.
Reason: • While upholding the order on merits (agreeing with SEBI that the appellants have violated the
provision), SAT reduce the amount of penalty imposed on the appellant from Rs. 1 crore to Rs.
50 lakh.
• Appellant is directed to pay the penalty of Rs. 50 lakh to SEBI within a period of 4 weeks from
the date of this order. In the event, the appellant fails to deposit the penalty within the
stipulated period of 4 weeks SEBI is at liberty to recover the amount of Rs. 50 lakh along with
interest @ 12% p.a..
• Appeal is partly allowed.
 D30: Mr. Mahendra Girdharilal vs.
NSE, SEBI and T. Stanes And Company Limited (SAT)
Brief • The scrips of T. Stanes And Company Limited were listed in the Madras Stock Exchange.
facts: • The said Stock Exchange surrendered its recognition due to non-fulfillment of the criteria stipulated
by SEBI.
• As a result, the Company’s share was placed in the Dissemination Board of the NSE with effect from
December 1, 2014. A circular in this regard was issued by the Company dated December 2, 2014 to
its shareholders intimating that they can avail the limited facility of buying and selling their shares
on the Dissemination Board of the NSE.
• SEBI issues a circular that if a company complies with the requirement of NSE, then it can be listed
at NSE, otherwise the company has to give an exit opportunity through buyback and then it will be
removed from Dissemination Board of the NSE.
• The company offered to buyback, the shareholders did not respond much to it, Subsequently, it was
delisted from the Dissemination Board of the NSE.
• The appellant (shareholder of the delisted company) being aggrieved by the order, to be removed
from the Dissemination Board has filed the present appeal praying for the quashing of the order
and further praying that a direction should be issued to bring back the Company on the
Dissemination Board of NSE.
Decision: Where the buy-back offer is made with the intention to provide an exit opportunity to the existing
shareholders at a fair price, the stock exchange is correct to remove the company from the
Dissemination Board of the stock exchange.
Reason: • SAT finds that SEBI issued a circular dated July 25, 2017 permitting the Company to buyback the
shares so as to provide an exit to the public shareholders.
• In view of the said circular SAT do not find any illegality being made in the buy-back of the shares by
the Company. In the light of the aforesaid, SAT do not see any illegality in the order of NSE dated
July 2, 2018 removing T. Stanes And Company Limited Company from the Dissemination Board. The
appeal fails and is dismissed.
 D31: Synergy Cosmetics (Exim) Limited vs.
BSE Limited (SAT)
Brief • The respondent BSE Limited issued an order compulsorily delisting the securities of the
facts: appellant company and ordered the company to give exit opportunity at 9.07.
• The appellant being aggrieved by the computation of the fair value of the shares at Rs. 9.07 per
equity share has filed the appeal.
• There is a delay of 73 days in filing the appeal.
• It has been urged that the reason for the delay is that the appellant company has its registered
office at Ahmedabad, in Gujarat and it took them some time to find a specialized lawyer dealing
in securities market. Thereafter, it took some time to collect, compile as well as collate various
documents as required by the advocate. It was also urged that the appellant is in financial
difficulties and that they had to pool the resources to file the appeal which also took time.
• The present appeal was filed along with an application for condoning the delay.
Decision: The company delayed in filing the appeal because of the reason that it took time to find a
specialized lawyer in securities market and also took time to pool resources to file the appeal.
SAT finds this to be sufficient cause to file an appeal.
Reason: • SAT is of the opinion that sufficient cause has been explained by the appellant which is adequate
as well as satisfactory and, therefore, SAT of the opinion, that the delay of 73 days in filing the
appeal should be condoned
 D32: Nicer Green Housing Infrastructure Developers Ltd. & Ors. vs.
SEBI (SAT)
Brief • The Nicer Green Housing Infrastructure Developers Ltd., is engaged in the business of acquiring
facts: agricultural land and developing the same for the purpose of re-sale.
• SEBI found that the activity fell within the ambit of “Collective Investment Scheme”.
• SEBI restraining the appellant and its directors from collecting any money from the investors or
to launch or to carry out any investments schemes. SEBI further directed to refund the money
collected under its scheme to the investors and thereafter wind up the company.
• The appellants being aggrieved by the said order filed an Appeal before the Securities Appellate
Tribunal wherein the appellants contended that they are ready and willing to comply with the
order passed by SEBI contending that out of an amount of Rs. 31.71 crore collected the
appellants have already refunded Rs. 27.48 crore and that the appellants are ready and willing
to refund the balance amount in a time bound manner.
Decision: In the absence of any evidence that the appellants had refunded and that they are ready and
willing to pay the balance amount to investors in a time bound manner, SAT is of the opinion that
there is no infirmity in the order passed by SEBI disposing of their representations.
Reason: • SAT finds that no proof has been filed either before SEBI or even before this Tribunal to show
that the appellants had refunded a sum of Rs. 27.48 crore and that they are ready and willing to
pay the balance amount in a time bound manner.
• In the absence of any evidence being filed, SAT dismissed the appeal.
 D33: M/s Sungold Capital Limited case (SEBI)
Issue: • The respective acquirers after acquiring shares of Sungold Capital Limited (“Target
Company”) beyond the threshold of acquisition have failed to make an open offer in terms
of Regulation 10 and 11(1) of SAST Regulations, 1997.
• SAST Regulations, 1997 has been replaced by SAST Regulations, 2011.
• Regulation 35(2)(b) of SAST Regulations, 2011,provides that all obligations incurred under
the SAST Regulations, 1997, including the obligation to make an open offer, shall remain
unaffected as if the repealed regulations has never been repealed.
• Therefore, the obligations to make open offer, incurred by the acquirers/PAC’s under SAST
Regulations, 1997, are saved and can be enforced against them by virtue of Regulation 35 of
SAST Regulations, 2011.
• SEBI directed acquirers/PAC’s of the target company to make a public announcement of a
open offer for acquiring shares of Sungold Capital Ltd., within a period of 45 days from the
date when this order comes into force, in accordance with SAST Regulations, 1997.
• The acquirers/PAC’s shall along with the offer price, pay interest at the rate of 10% per
annum for delay in making of open offer.
Takeaway: If an acquirer has triggered an open offer obligation under SAST Regulation, 1997, and has not
given the open offer, meanwhile SAST Regulation 1997 has been replaced with SAST
Regulation 2011, SEBI held that even after SAST Regulation 2011 has been notified, still the
pending offers will be given as per SAST 1997.
 D34: Ricoh India Limited case (SEBI)
Case: • Amalendu Mukhergee, traded through the account of Fourth Dimension Solutions Limited
(“FDSL”) in the scrip of Ricoh India Limited (“Ricoh”) while in possession of UPSI.
• He traded through the account of FDSL from August 14, 2014 to November 17, 2015.
• While trading so, the Noticee made a wrongful gain of Rs.1,13,56,118/- in the account of
FDSL. Similarly, the Noticee wrongfully avoided a loss of Rs.1,16,77,892/- in the account of
FDSL.
• SEBI directed Fourth Dimension Solutions Limited (FDSL) Managing Director Amalendu
Mukherjee to disgorge an amount worth over INR2,30,34,010/- for insider trading in the
scrip of Ricoh India Ltd. The amount has to be paid along with 12 per cent interest within 45
days. In addition, Amalendu Mukherjee has been restrained from accessing securities
markets for a period of seven years.
No Takeaway
 D35: Vishal Vijay Shah case (SEBI)
Case: • It is observed that the Vishal Vijay Shah (“Noticee”), a registered Stock Broker had received
funds in the client and settlement bank accounts from third parties in cash and had made
payments to third parties on behalf of clients.
• Under the SEBI Circulars, a responsibility has been cast on the Stock Broker to ensure that
payments are received directly from the respective clients and not from third parties.
• The BSE had earlier conducted inspection of the Noticee and upon a consideration of the
BSE Inspection Reports in light of the Inspection Report, it is observed that the violations
committed by the Noticee in the instant proceedings are repetitive in nature.
• The Noticee had violated the aforementioned provisions of the Stock Brokers Regulations
and aforementioned SEBI Circulars. Having regard to the facts and circumstances of the
instant proceedings, SEBI ordered that the Certificate of Registration of the Noticee be
suspended for a period of one year.
Takeaway: • The objective of opening and maintaining a separate account for the clients’ securities is to
segregate and identify them separately and to prevent its use by the Stock Broker for any
purpose.
• The payments should be received directly from the respective clients and not from third
parties.
• The debiting of any client’s account for transactions which are not related to that client
defeats the very purpose of maintaining client’s account separately.
 D36: M/s Beckons Industries Limited case (SEBI)
Case: • In this case, it is established that Beckons Industries Limited (“Noticee”) by employing
fraudulent arrangement with regard to subscription of GDRs had acted in a manner which is
fraudulent and deceptive, thereby detrimental to the interest of investors in the Indian
securities market.
• It is also established that Beckons had deliberately and actively concealed the true and
material facts and made false and misleading disclosures and also made misrepresentation
of facts to the stock exchange and investors in its shares.
• Such acts on the part of the Listed Company cannot be viewed leniently.
• SEBI imposed monetary penalty of Rs. 10,00,00,000/- on Beckons Industries Limited under
15HA of the SEBI Act alleging that the company issued the GDRs in a fraudulent way and also
made misleading disclosure to the stock exchanges that “it had successfully closed its Global
Depository Receipts issue..” and thereby violated the provisions of section 12A (a),(b) and (c)
of SEBI Act read with Regulation 3 (a) (b) (c) (d), 4 (1), 4 (2) (f) (k) (r) of SEBI (Prohibition of
Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
No Takeaway
 D37: Mr. Gurmeet Singh (“Noticee-1”), Mr. I.S. Sukhija (“Noticee-2”) and Mr. H. S. Anand (“Noticee-3”) in
the matter of Beckons Industries Limited case (SEBI)
Case: • In this case, it is established that Mr. Gurmeet Singh (“Noticee-1”) and Mr. I.S. Sukhija
(“Noticee-2”) by employing fraudulent arrangement with regard to subscription of GDRs had
acted in a manner which is fraudulent and deceptive, thereby detrimental to the interest of
investors in the Indian securities market.
• Such a conduct by a listed company erodes the trust and confidence of investors and also
threatens the integrity of the securities market. Therefore, such defaults need to be dealt
with strictly to protect the interest of investors in the securities market.
• It was alleged that the Noticees violated the provisions of section 12A (a), (b) and (c) of
Securities and Exchange Board of India Act, 1992 read with regulations 3(a), (b), (c), (d) and
4(1) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities
Market) Regulations, 2003.
• In this regard, SEBI imposed monetary penalty of Rs. 1 crore on Mr. Gurmeet Singh and Rs.
20 lakh on Mr. I.S. Sukhija, directors of Beckons Industries Limited for employed fraudulent
arrangement with regard to subscription of GDRs and had acted in a manner which was
fraudulent and deceptive, thereby detrimental to the interest of investor.
No Takeaway
 D38: M/s Ashlar Commodities Private Limited case (SEBI)
Case: • Ashlar Commodities Private Limited (‘Noticee”) was indulged in execution of alleged non
genuine trades. It was observed from the trade log of the Noticee that it had traded in 530
unique contracts in the Stock Options segment of BSE during the relevant period, in which it
has allegedly entered into non genuine trades in 528 contracts wherein it executed a total of
1154 trades out of which 1151 trades were allegedly non genuine trades which had resulted
into creation of artificial volume of total 2,87,13,000 units in the given 528 contracts.
• It is further observed that the Noticee, by executing non genuine trades during the relevant
period, registered a positive close out difference of ₹ 8,06,09,700.
• The trades entered by the Noticee were reversed on the same day within few minutes with
same counterparty at a substantial price difference without any basis for significant change
in the contract price which indicates that these trades were artificial and non-genuine in
nature.
• Taking into consideration all the facts and circumstances of the case, SEBI imposed monetary
penalty of Rs. 84 lakh on Ashlar Commodities Private Limited under section 15HA of the SEBI
Act for market abuse and fraudulent practices as such trades had created a misleading
appearance of trading in the scrip.
No Takeaway
 D 39: Adjudication Order in respect of Mr. B Renganathan (‘Noticee’) in the matter of Edelweiss Financial
Services Ltd. case (SEBI)
Case: • SEBI, upon receipt of examination report from National Stock Exchange (NSE), conducted
investigation in the dealings in the scrip of Edelweiss Financial Services Ltd. to examine the
violation, if any, of the provisions of SEBI (Prohibition of Insider Trading) Regulations, 2015
• It is observed that Mr. B Renganathan (‘Noticee’) was the compliance officer and Company
Secretary of EFSL.
• During the course of investigation, it was observed by SEBI that Ecap Equities Limited
(‘Ecap’), a wholly owned subsidiary of EFSL, had acquired Alternative Investment Market
Advisors Private Limited (‘AIMIN’), a fintech company, on April 05, 2017 by entering into a
share purchase agreement (SPA). The same was disclosed by EFSL to NSE and BSE on the
same day. Despite that, the Noticee, being the compliance officer of the company, failed to
close the trading window during the period of January 25, 2017 to April 05, 2017.
• By his failure to close the trading window during this period, it is alleged that the Noticee has
violated the Minimum Standards for Code under PIT Regulations, 2015.
• In view of this, adjudication proceedings were initiated against the Noticee under the
provisions of section 15HB of the ‘SEBI Act’.
• After taking into consideration the facts and circumstances of the case, Adjudicating Officer
imposed a penalty of Rs. 5,00,000/- (Rupees Five Lakh only) on the Noticee. The Noticee
shall remit / pay the said amount of penalty within 45 days of receipt of this order.
No Takeaway
Additional Cases for

Insolvency Law

(D40)
 D40: GEORGE VINCI THOMAS vs.
CAPEDGE CONSULTING PVT. LTD. & ORS (NCLAT)
Brief • The ‘Operational Creditor’ entered into four consultancy agreements with the ‘Corporate
facts: Debtor’. It was claimed that the ‘debt’ arose on account of dues of supply of services rendered
which was unpaid.
• The Corporate Debtor appeared before the Adjudicating Authority and the case put up by the
‘Corporate Debtor’ is that the service of ‘Operational Creditor’ were indeed taken by the
‘Corporate Debtor’ by way of the agreements which are claimed to be executed.
• The NCLT admitted the application filed by the operational creditor.
• Against this, the present appeal has been filed saying that NCLT can not admit the case as there
is an existing dispute.
Decision: Merely asking for further information on the services rendered by the operational creditor to
corporate debtor can not be considered as existence of dispute, Hence application for CIRP can be
filed.
Reason: • On perusal, we found that the corporate debtor is merely asking for further information on the
services rendered by the operational creditor for each of the invoices raised and this certainly
can not be considered as an existence of dispute.
• It is clear that the Corporate Debtor has not raised any dispute relating to debt nor raised any
dispute relating to quality of service of goods
• Thus we do not find any reason to interfere in the order of NCLT. There is no substance in the
appeal, the appeal is accordingly dismissed.
Additional Cases for

Competition Law

(D41-D47)
 D41: Cartelisation in Industrial and Automotive Bearings-Suo Motu Case (CCI)
Brief • The case was initiated on the basis of a lesser penalty application received by the CCI by
facts: Schaeffler. In the said application, it was disclosed that Schaeffler, along with four other
companies, namely ABC Bearings Limited (‘ABC Bearings’), National Engineering Industries Ltd.
(‘NEIL’), SKF India Ltd. (‘SKF’) and Tata Steel Ltd., Bearing Division (‘Tata Bearing’), was involved
in cartelisation in the domestic industrial and automotive bearings market from 2009 to 2014.
• The Commission passed an order dated 17.08.2017 under Section 26(1) of the Act, forming a
prima facie view of contravention of the provisions of Section 3(1) read with Section 3(3)(a) of
the Act by the abovementioned companies and hence, referred the matter to the Director
General for investigation.
• During pendency of investigation, NEIL approached CCI by filing a lesser penalty application.
• The DG found cartelisation amongst the four companies namely NEIL, Schaeffler, SKF and Tata
Bearing in contravention of the provisions of the Act.
• The DG concluded that the competitors met and shared confidential information with an intent
to achieve higher profits. The parties, NEI, Schaeffler, Tata and SKF attended two in-person
meetings and had telephonic conversations on various occasions to determine the prices of the
bearings being sold to the original equipment manufacturers.
Decision: Evidences clearly proved a cartel of automotive bearings in India.
Reason: • The CCI found this evidence to be enough to establish a cartel the Competition Act. The CCI
finally concluded that once agreements are established under Section 3(3) of the Competition
Act, it would be presumed to have caused an Appreciable Adverse Effect on Competition (AAEC)
within India.
• Considering all relevant factors, the CCI directed NEIL, Schaeffler, SKF and Tata Bearing, and their
respective officials who were found liable, to cease and desist in future from indulging into
practices which have been found to be in contravention of the provisions of the Act and
penalized accordingly.
 D42: Travel Agents Association of India vs.
Department of Expenditure, Ministry of Finance and Ors (CCI)
Brief • An information has been filed by Travel Agents Association of India, under section 19(1)(a) of the
facts: Competition Act, 2002 against Department of Expenditure, Government of India, Balmer Lawrie & Co. Ltd.
and Ashok Travels and Tours alleging contravention of the provisions of Sections 3(4) and 3(1)of the Act.
• TAAI, company incorporated under the Companies Act, 1956, is an association of travel agents with the
primary objective to protect the interests of the travel and tourism industry and promote its orderly
growth and development.
• Balmer Lawrie is a Government Company under the Ministry of Petroleum and Natural Gas, Government
of India. Balmer Lawrie is stated to be one of the two exclusive travel agents which has been approved by
DOE.
• Ashok Travels is one of the divisions of the India Tourism Development Corporation, a Government of India
undertaking. Ashok Travels is stated to be one of the largest travel and tour operators in India providing
other travel related services. Ashok Travels is the other travel agent approved by DOE.
• On 24.03.2006, an office memorandum was issued by DOE by which, it was stipulated that while utilizing
air transport and the services of travel agents for booking air tickets, Government employees have to
exclusively utilize the services of either Balmer Lawrie or Ashok Travels.
Decisio DOE issuing circular that government employees have to use specified service provider for travel is not
n: violating any provision of competition law.
Reason: • CCI held that DOE cannot be regarded as an ‘enterprise’ in terms of Section 2(h) of the Act especially in
relation to circulars, which is nothing but government policy.
• CCI also noted that there does not seem to be any vertical relationship between DOE and Balmer Lawrie
and Ashok Travels.
• Lastly, the Commission also observed that Office Memorandums and subsequent circulars are not in the
nature of agreement pertaining to an economic activity but are internal administrative decision of the
Government to deal with a particular agency in the matter of securing air tickets. Such policy decisions of
the Government emanating through circulars cannot be termed as an ‘agreement’ under the provisions of
the Act and consequently, are not the kind of ‘agreement’ envisaged under Section 3(1) of the Act.
• Accordingly, the case closed.
 D43: RH Agro Private Limited vs.
State Bank of India and Ors (CCI)
Brief • An Information was filed alleging that the State Bank of India (‘SBI’), M/s Patanjali Ayurveda
facts: Group and International Traders had entered into a collusive arrangement under Section 3 of the
Act, in respect of the e-auction conducted by SBI, to recover the outstanding dues from the
Informant.
• An allegation was also made that SBI and its officials were abusing their dominant position
under Section 4 of the Act.
• The allegations against SBI were with respect to its auction process for selling the assets for
recovering money from its debtor.
Decision: CCI observes that a bank acting as per the remedies available to it under the SARFAESI Act for
recovery cannot be termed as a dominant entity when it acts in accordance with provision
thereof as it is acting in recovery of its funds/money in order to mitigate losses in such
transaction (where account has been declared NPA).
Reason: • CCI held that the conduct of a secured creditor in effecting sale of an asset secured to it, through
an auction process could not be examined under the provision of Section 3(3)(d) of the Act.
• Regarding the allegation of violation of Section 4 of the Competition Act, 2002, the CCI observed
that a bank acting under the provisions of the SARFAESI Act attempting to recover the
outstanding amount in the event of default by the borrower/ guarantor could not be termed as
a dominant entity.
• Accordingly, on 14.05.2020, the Commission found no prima facie case as an auction/transaction
initiated by a bank/ financial institutions as a secured creditor for the purpose of recovery in
terms of provisions of the SARFAESI Act would not amount to violation of the provisions of the
Competition Act, 2002.
 D44: Karnataka Film Chamber & Commerce and other associations vs.
Competition Commission of India (Karnataka HC)
Brief • Writ petitions were filed in Hon’ble Karnataka High Court by Karnataka Film Chamber &
facts: Commerce and other associations.
• The subject matter of the petition was orders passed by the Commission in case numbers
wherein Commission had found the acts and conducts of Karnataka Film Chamber & Commerce
and other associations to be in contravention of the provisions of Section 3 of the Competition
Act, 2002.
• The petitioners had prayed for issuing writ of prohibition or any other appropriate writ or
direction and prohibit the Commission from exercising its jurisdiction under the Competition
Act, 2002.
• Hon’ble Karnataka High Court, in its order dated 02.01.2020 ruled that it is an undisputed fact
that the Competition Act is in force. Hence, no writ of prohibition can be issued against statutory
commission from exercising its jurisdiction, and the writ petitions were accordingly dismissed.
Decision: No writ of prohibition can be issued against statutory commission from exercising its jurisdiction
Reason: • Hon’ble Karnataka High Court, ruled that it is an undisputed fact that the Competition Act is in
force. Hence, no writ of prohibition can be issued against statutory commission from exercising
its jurisdiction, and the writ petitions were accordingly dismissed.

A writ of prohibition is a writ directing a subordinate to stop doing something the

law prohibits. This writ is often issued by a superior court to the lower court
directing it not to proceed with a case which does not fall under its jurisdiction
 D45: Uttarakhand Agricultural Produce Marketing Board Vs.
CCI & Ors. (NCLAT)
Brief • CCI had ordered investigation into the alleged arbitrary procurement of IMFL brands by
facts: Uttarakhand Agricultural Produce Marketing Board (UAPMB), Garhwal Mandal Vikas Nigam Ltd.
(GMVNL), Kumaun Mandal Vikas Nigam Ltd. (KMVNL) thereby contravening the provisions of
Section 4 of the Act.
• The DG noted that UAPMB being the sole procurer of alcoholic beverages in the State of
Uttarakhand, having 100 percent market share and having undisputed dominance, deliberately
ignored the relevance of different brands of alcoholic beverages. Thus, the DG found UAPMB to
have contravened the provisions of Section 4(2)(c) read with Section 4(2)(b)(i) of the Act.
• However, no finding of contravention was given against GMVNL & KMVNL. CCI vide impugned order
dated 30.08.2018, after detailed discussion, issued a show cause notice to GMVNL & KMVNL as to
why their conduct should not be held to be in contravention of Section 4 of the Act.
• Aggrieved by the same, an appeal was filed before the NCLAT.
Decisio Appeal against CCI orders not maintainable if the orders are not passed under sections specifically
n: enumerated in Section 53A of the Competition Act, 2002.
Reason • Hon’ble NCLAT held that it is clear from the impugned order that CCI issued show cause notice to
: GMVNL & KMVNL to show cause as to why their conduct should not be held to be in contravention
of the provisions of Section 4(2)(b) (i) and 4(2)(c) read with Section 4(1) of the Act.
• No specific finding had been given by the CCI against UAPMB. Further, the NCLAT observed that it
was also clarified by the CCI in its order that nothing stated therein shall tantamount to a final
expression of opinion on the merits of the case and the final view would be taken after considering
the replies and arguments of the parties and the material on record.
• It was held by NCLAT that the show cause notice did not amount to passing of an order under
Section 27 of the Act and thereby the appeal under Section 53B read with Section 53A was not
maintainable.
 D46: CADD Systems and Services Pvt. Ltd. vs
CCI (Delhi HC)
Brief • Competition Commission of India (‘CCI’) ordered investigation into alleged cartelization in a
facts: tender floated by Pune Municipal Corporation (‘PMC’) for conducting trees census within the
PMC jurisdiction area, using GIS and GPS Technology.
• CCI, passed two separate orders where vide first order the final hearing in the case was
adjourned and vide the subsequent order, after hearing the detailed arguments, the matter was
reserved for judgment.
• The said two orders were challenged before the Hon’ble High court of Delhi on the ground that
these orders were passed in absence of a Judicial Member and therefore, were in contravention
of the law laid down by the Division Bench of this Court in the judgment dated 10.04.2019 in
Mahindra & Mahindra Ltd. & Ors v. CCI &Anr.; whereby the CCI and Central Government were
directed to ensure the presence and participation of a Judicial Member at all times while passing
adjudicatory orders by the CCI and that these orders being adjudicatory in nature required the
presence of a Judicial Member to be mandatory as per the law.
Decision: The absence of a Judicial Member did not preclude CCI from performing its adjudicatory function
until such time the Judicial Member was appointed by the Central Government
Reason: • Delhi High held that the absence of a Judicial Member did not preclude CCI from performing its
adjudicatory function until such time the Judicial Member was appointed by the Central
Government.
• It was also noted by the court that no act or proceedings of CCI would be invalid by reason of
any vacancy or any defect in its constitution by virtue of the provisions of Section 15 of the Act.
 D47: Competition Commission of India Vs.
JCB India Ltd. and Ors (SC)
Brief • CCI ordered an investigation into an alleged abuse of dominant position by JCB.
facts: • Pursuant to the same, raid was carried out by the DG in the JCB premises and all incriminating
documents, hard drives and laptops found by the inspecting team during the course of the raid
were seized.
• A writ petition before the Delhi High Court was filed for setting aside of the search and seizure
conducted by the DG. The Single Judge Bench of Delhi High Court, vide order dated 02nd June
2016 stayed the investigation restraining DG from acting on the seized material for any purpose
whatsoever till the next date of hearing.
• CCI filed an SLP in the Supreme Court against the order of the Delhi High Court.
Decision: DG has the right to search and seizure under 240A of Companies Act read with Section 41(3) of
Competition Act.
Reason: • The Supreme Court observed that the provisions of Section 240A of the Companies Act, 1956 do
not merely relate to an authorization for a search but extend to the authorization of a seizure as
well. Unless the seizure were to be authorized, a mere search by itself will not be sufficient for
the purposes of investigation.
• By virtue of Section 240A read with Section 41(3) of the Competition Act, DG was authorised to
conduct search and seizures.
• The Apex court vacated the stay stating that the blanket restraint which had been imposed by
the Delhi High Court on the DG from acting on the seized material for any purpose whatsoever
was not warranted. The appeal was allowed.
Additional Cases for

Interpretation of Law

(D48)
 D48: STATE OF M.P. & ANR. vs.
M.P. TRANSPORT WORKERS FEDERATION (SC)
Brief • The provisions of the Madhya Pradesh Labour Laws (Amendment) and Misc. Provisions Act, 2002
facts: (for short ‘the Amendment’) gives the jurisdiction to criminal courts to try certain labour matters.
• The rationale was stated to be that the Labour Courts were already burdened and thus, did not
have time to adjudicate even the disputes arising out of the Industrial Disputes Act, 1947 and the
M.P. Industrial Relations Act, 1960.
• On the other hand, the parties opposing the said Amendment contends that the object of shifting
the trial of criminal cases relating to labour disputes to Labour Courts had been conferred by
Legislation for promoting industrial harmony.
• In terms of an elaborate judgment of over fifty pages this Amendment was struck down primarily
on the ground that Article 21 gave a right for speedy justice and the Amendment in a way took
away this right of speedy justice.
• This issue has landed to SC now.
Decision: SC agreed with the wisdom of the Legislature, that the process would be better served by
maintaining the regular criminal Courts as a forum for adjudication of such labour disputes which
have a criminal aspect, accordingly the amendment has been upheld.
Reason: • The SC seeks to bring the challenge within the window of Article 21 of the Constitution of India,
under the right to speedy trial.
• Actually what has been done is that the cases which ought to have been tried by the regular
criminal Courts were sought to be transferred to the Labour Courts by the Amendment of 1981 and
only that process was sought to be reversed by the Amendment of 2002.
• Thus, in the wisdom of the Legislature, the process would be better served by maintaining the
regular criminal Courts as a forum for adjudication of such disputes which have a criminal aspect
and SC held that, it is not the function of this Court to test the wisdom of the Legislature.
• Accordingly the order is set aside and the provisions of Madhya Pradesh Labour Laws (Amendment)
& Misc. Provisions Act, 2002 are upheld.