National Company Law Appellate Tribunal
Jithendra Parlapalli vs Wirecard India Pvt Ltd And 5 Others on 30 January, 2023
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
Company Appeal (AT) (CH) No. 127 of 2022
Under Section 421 of the Companies Act, 2013
(Arising out of the `Order' dated 16.02.2022 in CP/289/2020), passed by
the `National Company Law Tribunal', Division Bench - I, Chennai)
In the matter of:
Mr. Jithendra Parlapalli,
S/o. P. Padmanabha Reddy,
A1002, Radiance Mandarin Apartment,
No. 1, 200 Feet Radial Road,
Thoraipakkam, Chennai - 600097 ..... Appellant / Applicant
v.
M/s. Wirecard India Private Ltd.
Rep. by its Managing Director,
Unit No. 301 & 302, 4th Floor,
Campus 3B, RMZ,
Millinea Business Park II,
MGR Main Road,
Perungudi - Chennai - 600 096 ..... Respondent No. 1/
Respondents
M/s. Wirecard Sales International
Holding GmbH,
Represented by its
Chief Executive Officer / Liquidator,
Einsteinring 35,
85609 Aschheim,
Germany ..... Respondent No. 2/
Respondents
M/s. Wirecard AG,
Represented by its
Chief Executive Officer / Liquidator,
Einsteinring 35, 85609 Aschheim,
Germany ..... Respondent No. 3/
Respondents
Comp. App (AT) (CH) No. 127 of 2022
Page 1 of 28
Mr. Jayesh Maniyur Pattathuvalapil,
Managing Director,
Wirecard India Pvt. Ltd.
Unit No. 301 & 302, 4th Floor,
Campus 3B, RMZ Millenia
Business Park, II MGR Main Road,
Perungudi, Chennai, TN - 600 096 ..... Respondent No. 4/
Respondents
Ms. Susanne Steidl,
Chief Product Officer,
Wirecard AG, Einsteinring 35,
85609 Aschheim,
Germany ..... Respondent No. 5/
Respondents
Mr. Arne Philipp Matthias,
Former Director,
Wirecard India Pvt. Ltd.,
COO, PXP Financial,
The Corn Mill, Roydon Road,
Stanstead Abbotts,
WARE, SG12 8XL,
United Kingdom ..... Respondent No. 6/
Respondents
Present:
For Appellant : Mr. K.R. Arun Shabari, Advocate
JUDGMENT
(Virtual Mode) Justice M. Venugopal, Member (Judicial):
Comp. App (AT) (CH) No. 127 of 2022:
Heard Mr. K.R. Arun Shabari, Learned Counsel for the Appellant, in instant Comp. App (AT) (CH) No.127 of 2022, at the `Admission' stage itself.
Comp. App (AT) (CH) No. 127 of 2022 Page 2 of 28 Summation of Facts:
2. According to the Learned Counsel for the Appellant, the `Appellant', was initially working at M/s. Wirecard Technologies GmbH at Germany, A `Company' (related to the `2nd and 3rd Respondents). As a matter of fact, when the `2nd and 3rd Respondents', wanted to expand their operations to `India', they set up the `1st Respondent / Company', at Chennai and sent the `Appellant', to India, to spearhead the `Operations', of the `1st Respondent / Company'.
3. The `Appellant', was appointed as the `1st Respondent / Company's Managing Director', on 01.05.2015, as per `Contract of Employment' dated 01.04.2015. Later, he was appointed as an `Additional Director', in the `Board of Directors', in the `1 st Respondent / Company', as per `Board Resolution', dated 15.07.2015. Although, the `Appellant', was appointed as the `Managing Director', of the `1 st Respondent / Company', and a `Director', in the `Board of Directors' of the `Company', he was required to work under, and `Report', before a `Reporting Manager, who in turn, report to the `2nd and 3rd Respondents'.
The `6th Respondent', was the `Appellant's Reporting Manager', at the time of his `Appointment', in the `1st Respondent / Company'. Comp. App (AT) (CH) No. 127 of 2022 Page 3 of 28
4. The `Appellant', while working at the `1st Respondent / Company', noticed that the `Company', had entered into contracts with M/s. Positive Moves (India) Consulting Pvt. Ltd. and M/s. InTandem Advisors LLP through some of the `Directors' in the `Board of Directors' of the `Company', including the `6th Respondent'. The `Appellant', came to know that under these `Contracts', despite, huge monies were paid to the abovementioned `Entities', no services were availed from them and this created suspicion in the mind of the `Appellant' and hence, he enquired about the same, however, he was unable to get any answers from any of his superiors.
5. The Appellant, when working as the `Managing Director' of the `1st Respondent / Company', came to know that the `Company', was endeavouring to evade payment of taxes on numerous occasions, without his knowledge. One such instance which took place, was in relation to a `Project' with `Citibank N.A.', which was internally called as `Project ASLAN'. In fact, the `3rd Respondent' along with few of its `Subsidiaries', had entered into an `Asset Purchase Agreement' (`APA') dated 13.03.2017 with `Citibank N.A.', and `Citibank Overseas Investment Corporation', to purchase certain `Assets' of the `Citibank', which were situated in several countries.
Comp. App (AT) (CH) No. 127 of 2022 Page 4 of 28
6. The `Assets' of `Citibank', situated at different countries were sought to be purchased through the respective `Regional Subsidiaries' of the `3rd Respondent'. The `Assets' of `Citibank', in India were to be purchased by the `1st Respondent', at a price of USD 5,625,000 even though, the actual costs of the `Assets' in India, was USD 21,850,511.
7. The 3rd Respondent, without the Appellant's knowledge, had planned to pay the Balance Sum of USD 16,225,511 to `Citibank', through its Subsidiaries, situated in other Countries, to `evade payment of Taxes, in India'.
8. For this purpose, a `Purchase Price Reallocation Agreement' (`PPRA'), was executed among the Subsidiaries of the 3 rd Respondent. The `Appellant', at the time of execution of this `Agreement', was kept under the belief that the Balance Sum of USD 16,225,511, would be paid to Citibank, through the 1st Respondent, after receiving funds from numerous Subsidiaries of the 3rd Respondent, but, the Balance Sum of USD 16,225,511 was paid through the Subsidiaries of the 3 rd Respondent, situated outside India, directly to Citibank.
9. At a later point of time, the Appellant realised that some of the employees of the `1st Respondent / Company', in the `Accounts Department', the aforesaid transaction with `Citibank', was executed by Comp. App (AT) (CH) No. 127 of 2022 Page 5 of 28 exhibiting the `Value of the Assets', purchased by `1st Respondent / Company', as USD 5,625,000 instead of 21,850,511.
10. Because of the same, the `1st Respondent / Company', had `evaded Taxes in India', to the tune of `several Crores of Rupees', amounting to `Commission of several Offences', under the `Tax Laws of India'.
11. The stand of the Appellant is that, the `1st Respondent / Company', had entered into a `Service Agreement' dated 01.10.2018, with one of the `Subsidiaries' of the 3rd Respondent at Singapore, referred to as `Wirecard Singapore, for receiving certain services at the cost EUROS 5,000,000. But, this `Agreement', was then cancelled through execution of an `undated Cancellation of Intercompany Service Agreement'.
12. Inspite of the same, the services sought from Wirecard Singapore, under the `Service Agreement', were being provided to the `1st Respondent' by Wirecard Singapore, without receiving any amounts. Indeed, the receipt of such services are taxable, under the Central Goods and Services Act, 2017. But, no taxes were paid by the `1st Respondent / Company', towards the same.
13. The Appellant, was used as the face of the 1st Respondent / Company, so that he could fastened with any liabilities which may arise against the 1st Respondent. When, he realised this, began to question his Comp. App (AT) (CH) No. 127 of 2022 Page 6 of 28 superior, and the 3rd Respondent, regarding the same, he was demoted as a `Director', in the `1st Respondent / Company', through a `Board Resolution' dated 14.05.2019, and thereafter he was unlawfully, terminated from that position on 22.10.2019. His `Termination of Employment', is assailed through an `Appeal' in TNSE Appeal No. II of 2020 (on the file of the Labour Commissioner, Chennai).
14. In the interregnum, Wirecard Singapore, was being investigated by the Authorities at Singapore, suspecting the several illegal activities being carried on through the said Company. Subsequently, the 3 rd Respondent, came under an `Independent Special Investigation', by an `Auditing Firm
- KPMG', and that, the 3rd Respondent, had admitted that sum of EURO 1.9 Billion, alleged to exist in the `3rd Respondent's Trust Accounts', did not exist. This was termed as one of the biggest `Accounting Frauds', to take place in Germany, and that the 2nd and 3rd Respondent / Companies, are undergoing the `Process of Liquidation'.
15. Even after the `Appellant's Termination', from the `Employment of the 1st Respondent / Company', he continued to act as a `Director', in the `Board of Directors' of the Company. He realised, that the 1st Respondent / Company, would continue to operate through illegal methods and he filed a Petition, under Section 241 and 242 of the Companies, Act, 2013, Comp. App (AT) (CH) No. 127 of 2022 Page 7 of 28 against the Respondents in CP/289/2020, before the `Tribunal', and he also filed IA/644/2020, praying to waive the requirements under Section 244 of the Companies Act, 2013.
16. The Appellant is / was not a `Shareholder' of the 1st Respondent / Company. However, in the matter of Chiranjeevi Rathnam v. Ramesh, reported in (2017) 6 CTC 568, the Hon'ble Madras High Court, deal with the `aspect of eligibility of a non-member Director of a Company', to approach the National Company Law Tribunal, as per Section 242 of the Companies Act, 2013, wherein at Paragraphs 26 and 28, it is observed as under:
26. ``On applying the Doctrine of Reading Down, an internal aid to construe the word in a statute to give reasonable meaning, so as to give the supposed purpose the word ``member'' referred in Section 241 of the Act, should not be read in isolation or in strict meaning.
The word should be read down along with Section 242 of the Act. Therefore, the phrase `member of the company' in Section 241 mean and include person not only member of the company in strict sense but, also person who ``bears the character of a member'' or ``have substantial interest in the internal affairs of the company ...''
28... If they claim status as Directors of the Company, they carry all trappings / characters of a member of the Company. So, to protect the interest of the Company, the remedy for them is under Section 242 of the Companies Act, 2013. Either way the Civil Court has no jurisdiction to entertain the subject matter of the suit. In the light of Section 430 of the Companies Act, 2013, and the alternate Comp. App (AT) (CH) No. 127 of 2022 Page 8 of 28 redressal forums being adequately provided under the Act, the plaint is not maintainable.''
17. The Appellant's plea is that, since he was still a `Director', in the `Board of Directors' of the `1st Respondent / Company', at that time, he filed the `Company Petition' and `Application / Petition', he was entitled to approach the `Tribunal' (`National Company Law Tribunal'), for seeking remedies, as per Section 241 and 242 of the Companies Act, 2013.
18. In this connection, the Appellant, points out that the `1st Respondent / Company', had removed him from the `Post of Director', in the `Board of Directors' of the Company, as per `General Resolution' dated 28.09.2020 and its Removal, is assailed, before the XIV City Civil Court, Chennai, in O.S.No.3776 of 2020.
Appellant's Contentions:
19. The Learned Counsel for the Appellant submits that the `Tribunal', had committed an error in dismissing the IA/644/2020 (Filed by the `Petitioner / Appellant', under Section 244 of the Companies Act, 2013, in CP/289/2020), through its Order dated 16.02.2022.
20. The Learned Counsel for the Appellant comes out with an argument that a `Director' of the `Company', carries all the characters / Comp. App (AT) (CH) No. 127 of 2022 Page 9 of 28 trappings of a `Member', of a `Company' and he is `barred' as `Director', to file a `Suit', in regard to the matters that fall within the domain of Section 241 and 242 of the Companies Act, 2013.
21. The Learned Counsel for the Appellant takes a stand that the `Tribunal', had committed a grave error in passing the `impugned order' of dismissing the IA / 644 / 2020 in CP/289/2020, by means of an Order dated 16.02.2022, and in fact, the `Tribunal', had failed to take into account of the continuous, illegal acts, committed by the `1st Respondent / Company', in `breach of the Laws of the Land', causing huge losses to the `Exchequer' of the `Country'.
22. The Learned Counsel for the Appellant emphatically points out the `Right' of the `Appellant', to pray for `Reliefs', before the `Civil Courts', are similar to the one's provided, under Section 241 and 242 of the Companies Act, 2013, is barred, and that no person can be left without `remedies', and an `Application', the main `Petition', preferred by the `Appellant', under Sections 241, 242 and 244 of the Companies Act, 2013, are perfectly `maintainable' in `Law'.
23. The Learned Counsel for the Appellant submits that in the teeth of averments made by the `Appellant' in his Petition, the Petition preferred by him, as per Section 241 and 242 of the Companies Act, 2013, may be Comp. App (AT) (CH) No. 127 of 2022 Page 10 of 28 converted into a `Petition', under Section 213 (2) of the Companies Act, 2013, which does not require any qualification(s), for preferring such a `Petition'.
24. The Learned Counsel for the Appellant submits that the `impugned order' of the `Tribunal' dated 16.02.2022 in IA/644/2020 in CP/289/2020, had not taken into account the binding precedents of the decisions of the Hon'ble Supreme Court of India and the Hon'ble High Court of Madras.
25. On behalf of the Appellant, the Learned Counsel points out that the decision in V.M. Rao and Ors. v. Rajeshwari Ramakrishnan & Ors. (1985) SCC Online Mad. 151, in the case of Cyrus Investments Pvt. Ltd. & Anr. V. Tata Sons Ltd. & Ors., vide Company Appeal (AT) Nos. 133 and 139 of 2017, are not applicable to the facts of the present case and this important fact, was failed to be appreciated by the `Tribunal', at the time of passing the `impugned order'.
26. While rounding up, the Learned Counsel for the Appellant contends that the `impugned order' dated 16.02.2022, passed by the `National Company Law Tribunal', Division Bench - I, Chennai, in IA/644/2020 in CP/289/2020, is contrary to the facts of the instant case and `Law', and hence, liable to be set aside by this `Tribunal', to promote `substantial cause of justice'.
Comp. App (AT) (CH) No. 127 of 2022 Page 11 of 28 Member:
27. As per definition, 2 (55) of the Companies Act, 2013 (like Section 41 of the Companies Act, 1956, `any person', can become a `member' of a `company'. In reality, the `Companies Act', does not define the term `person'. But, as per the definition given in the `General Clauses Act, 1897', `a person', shall include, `any company' or `association' or `a body of individuals', whether `incorporated' or `not'.
28. In every case, other than that of the `subscribers', to the `Memorandum of Association', the twin specifications (a) an agreement to become a `Member', and that (b) his name is entered in the `Register of Member', are to be satisfied to enable a person, to exercise the `Rights' of a `Member'. When once, `a person', becomes a `Member', he is `entitled' to `exercise' all the `Rights' of a `Member', till, he ceases to be a `Member', as per the ingredients of the provisions of the Companies Act, 2013.
29. A `Petition', under Section 241 of the Companies Act, 2013, for the `Relief', against an `Oppression' or `Mismanagement', in the conduct of `Affairs' of a `Company', can be maintained by a `person(s)', who are shown as `Members', in the `Register of Company'. If the `persons', who desire to `prefer' a `Petition', are not shown as `Members', either `rightly' Comp. App (AT) (CH) No. 127 of 2022 Page 12 of 28 or `wrongly', then, they are to `rectify', the `Register' first, before bringing a `Petition', as per the decision in Wade Prakash v. Iron Traders (P) Ltd., reported in 1961 31 Compcas 122 (Pun.).
`Shareholder' and `Holder' of a `Share':
30. The term `Shareholder' and `Holder' of a `Share', are employed in the `Companies Act', in same manner, meaning `a person', who holds `Share', in a `Company', and is `Registered', as `Member', in the `Register of Members'. Hence, only `a person', who as a `Shareholder', and his `name' entered on the `Register of Members', is `recognised', for `preferring' an `Application', under `Section 241 of the Companies Act, 2013' (for Relief in cases of Oppression, etc. before the `Tribunal'). Competency:
31. An `Individual', complaining of `acts of Oppression and Mismanagement', must be `qualified', as per Section 244 of the Companies Act, 2013, to raise a `Cause of Action', under Section 241 of the Companies Act, 2013.
Right to Apply under Section 241 of Companies Act, 2013:
32. Section 244 of the Companies Act, 2013, provides `not less than 100 members or not less than one tenth of the total number of its Comp. App (AT) (CH) No. 127 of 2022 Page 13 of 28 members, whichever less, shall be entitled to apply, to the `Tribunal', under Section 241 of the Companies Act, 2013, against the `Company', for redressal of acts of `Oppression' or `Mismanagement' of the `Company'.
Waiver Consideration:
33. To file an `Application' / `Petition' for `Waiver' of `Requirements', under Section 244 of the Companies Act, 2013, the `Tribunal', in a given case, is to see (a) what is the Petitioner's interest in a Company - whether it is `sizeable' / `substantial' (b) whether Section 241 is the correct jurisdiction to deal with the issues made mention of, in the main Petition
(c) whether the case / cause projected, is of `primordial importance', to the `Petitioner(s)' or to any `class of Members' or to the `Company', itself, or in `Public interests', as the case may be.
Locus standi:
34. It is incumbent of an `Applicant / Petitioner', to establish that `he is a Member of a Company', as per Section 2 (55) of the Companies Act, 2013 (Section 41 of the Companies Act, 1956), and further that, he is eligible to prefer an `Application' / `Petition', with the `criteria' specified in Section 244 of the Companies Act, 2013.
Comp. App (AT) (CH) No. 127 of 2022 Page 14 of 28
35. The requirement of a `Share Qualification', is a `relevant factor', and `quite material', to maintain a `Petition', in respect of an `Oppression' or `Mismanagement.
36. An `Individual', whose name, does not `appear', on the `Register of Members', is not a `Member', and has no `Locus', to `Prefer' a `Petition', under Section 244 of the Companies Act, 2013. To put it differently, if `a person', is not a `Member' of a `Company', the question of his alleging `Oppression', does not `arise'.
Glimpse of Companies Act, 2013:
37. Section 206 of the Companies Act, 2013, deals with `Power', to `call for information', `inspect books and conduct enquiries', by the `Registrar of Companies'. Section 207 of the Act, provides for an `inspection' and `enquiry'. Section 208 of the Act 2013, specifies `submission of report', by the `Registrar' / `Inspector' to the `Central Government'. Section 209 of the Act, pertains to `search' and `seizure'. Section 210 of the Act, relates to an `Investigation', into the `Affairs', of a `Company'. Section 211 of the Act, 2013, concerns with an `Establishment' of `Serious Fraud Investigation Office'. Section 212 of the Companies Act, 2013, deals with an `Investigation' into the `Affairs' of the `Company', by `Serious Fraud Investigation Office'. Section 213 of Comp. App (AT) (CH) No. 127 of 2022 Page 15 of 28 the Act, relates to `Investigation', in to `Company's Affairs', in other cases.
38. Section 210 (1) of the Companies Act, 2013, is a `Discretionary Power'. The word `necessary', means what is `indispensable', `needful and essential'. However, the `Power', under Section 210 (2) of the Companies Act, 2013, is an `Obligatory' one.
39. The words `Affairs' ought to be `Investigated', are not defined and in reality, the term `Investigation', contains the `Allusion' / `Suggestion', as the case may be.
40. In case of `Serious Fraud', the `Investigation' into the `Affairs' of a Company, is ordered to be conducted by `SFIO', established by the `Central Government', under Section 211 of the Companies Act, 2013, in the manner as provided under Section 212 of the Companies Act, 2013, there being no corresponding provision in the Companies Act, 1956.
41. Unless, proper grounds exists for an Investigation in to the `Affairs' of a Company, such Investigation will not likely to be undertaken, as per decision in Rohtas Industries Limited v. S.D. Agarwal & Anr. (1969) 3 SCR 108.
Comp. App (AT) (CH) No. 127 of 2022 Page 16 of 28
42. If `Fraud', `Misconduct' or `Misfeasance', is suspected, `Investigation', is considered and the ingredients of Section 213 (b) of the Companies Act, provides `guidance', in this regard.
43. The Companies Act, 2013, does not define the term `Serious Fraud'. However, the explanation of Section 447 of the Companies Act, provides for `Punishment', to `Fraud', definition `Fraud'. Analysis:
44. According to the Petitioner / Appellant (in CP/289/2020, Filed before the `Tribunal), he was appointed as `Managing Director', as per `Employment Agreement' dated 01.04.2015 and he was appointed as an `Additional Director', in the `Board of Directors' of the `1st Respondent / Company', through `Board Resolution' dated 15.07.2015. He was appointed as `Managing Director' of the Company, as per `Resolution' dated 11.01.2017. Later, he was removed from the Post of Managing Director of the Company but was made to continue as a `Director' of the `1st Respondent / Company', through a `Board Resolution' dated 13.05.2019.
45. It is the stand of the Petitioner / Appellant that, he had dedicated about 13 years of his life, for the 3rd Respondent and the 1st Respondent / Company, but he was discarded by the 1st Respondent / Company, Comp. App (AT) (CH) No. 127 of 2022 Page 17 of 28 without any remorse, only for the reason that the Company did not want him to question their suspicious transactions. He had assailed the Termination Order, before the Labour Commissioner, Chennai in TNSE Appeal No. II of 2020, and the same is pending.
46. The `Appellant' / `Petitioner', in his CP/289/2020, among other things, had averred that the `1st Respondent / Company', was in the habit of `entering into suspicious transactions', and also `evading of taxes', and also `engaged in several activities, that are in sheer `violation' of the Companies Act, 2013', as well, and hence, sought for an `appropriate investigations', to be conducted by the `Revenue Authorities', and the `Registrar of Companies', into the `Affairs' of the `Company'.
47. Added further, the `Appellant / Petitioner', had stated that the `1st Respondent / Company', was engaged in such acts of `Oppression', over its `Executives', and `Mismanagement' of the `Company', which are `prejudicial', to the `interest' of the `public'.
48. Also, the Petitioner /Appellant in his main CP/289/2020, had averred about the `Contract' dated 21.08.2017, entered into between the `1st Respondent / Company' and `M/s. Positive Moves (India) Consulting Pvt. Ltd.', the `Contract', entered into between the `1st Respondent / Comp. App (AT) (CH) No. 127 of 2022 Page 18 of 28 Company' and `M/s. InTandem Advisors LLP', losses caused by the `4th Respondent', etc.
49. Not resting with the above, the `Petitioner / Appellant', had mentioned that, he continues to be one of the `Directors', in the `Board of the Directors', in the `1st Respondent / Company', and he was taking part in all the `Meetings' of the `Board of Directors'. Also that, he was `terminated', from the `Post of Director', as per `Letter of Termination' dated 22.10.2019.
50. The pith and substance of the grievance of the `Petitioner / Appellant' in main CP/289/2020 is that, the `1st Respondent / Company', had oppressed him greatly, when he was working with the said Company, as the `Managing Director' and used him only to meet their ends, through suspicious means, etc.
51. The Appellant / Petitioner in the main CP/289/2020 (Before the `Tribunal'), had sought the `relief' of (a) Declaration that the acts of Respondent Nos. 1 to 6 are oppressive to him and prejudicial to the interests of the general public (b) appointing an independent Auditor to conduct a Forensic Investigation of the Financial Assets of the 1 st Respondent / Company and Suspicious Transactions, entered into by the 1st Respondent / Company (c) permitting the Petitioner (Appellant) to Comp. App (AT) (CH) No. 127 of 2022 Page 19 of 28 freely access the Books and Accounts of the 1st Respondent / Company
(d) issuance of Notice to appropriate the Revenue Authorities, for conducting an investigation on the Financial Affairs of the 1 st Respondent / Company, and to take appropriate actions, against the 1 st Respondent / Company (e) issuance of notice to the Registrar of Companies for conducting an investigation into the affairs of the 1st Respondent / Company and to take appropriate actions, against the 1 st Respondent / Company (f) in passing an Order of Permanent injunction from restraining the 1st Respondent / Company from removing the Petitioner (Appellant), from the Board of Directors of the 1st Respondent / Company
(g) in passing an Order of Permanent Injunction, restraining the 1 st Respondent / Company, from taking any adverse actions, against him and / or his wife Mrs. Ying Jin (h) in directing the Respondent Nos. 1 to 6 to pay the costs and expenses, incidental to the Petition.
52. In so far as IA/644/2020 in CP/289/2020 (on the File of the `National Company Law Tribunal', Division Bench - I, Chennai) is concerned, the `Petitioner / Appellant', had inter alia mentioned that the `1st Respondent / Company', was involved in grave mismanagement of the Company as well, which are prejudicial to the interests of public, the `1st Respondent / Company', had evaded payment of appropriate taxes, that were due to be paid to the Government of India, through several Comp. App (AT) (CH) No. 127 of 2022 Page 20 of 28 transactions and it had also aided and abetted other `Entities', to `evade payment of Taxes'. Also that, the `1st Respondent / Company', had entered into several `suspicious contracts', without the knowledge of the `Appellant / Petitioner', and hence, he had filed the `Petition', under Section 241 and 242 of the Companies Act, 2013, with an intention to bring all the aforesaid `unlawful activities' of the `1st Respondent / Company'.
53. The Appellant / Petitioner in IA/644/2020 in CP/289/2020, had also stated that the `1st Respondent / Company', was engaged in several instances of `Oppression', against him and ultimately, had sought `waiving of all the requirements', specified in Clauses (a) and (b) of Section 244 of the Companies Act, 2013, and to permit him to file the main CP/289/2020, as per Section 241 and 242 of the Companies Act, 2013.
54. According to the Petitioner / Appellant, in IA/644/2020 in CP/289/2020, he held the `Post of Managing Director' of the `1st Respondent / Company' from 01.05.2015 to 13.05.2019 and further that, he is currently, the one of the `Directors', in the `Board of Directors' of the `1st Respondent / Company'.
Comp. App (AT) (CH) No. 127 of 2022 Page 21 of 28
55. It is not in dispute that the `Petitioner / Appellant', had preferred an `Appeal', before the `Deputy Commissioner of Labour', Tamilnadu, vide TNSE Appeal No. II of 2020 in December 2019, among other things, claiming compensation, re-instatement of his position and continuity of service in the `1st Respondent / Company', and the same is pending.
56. Before the Learned XIV City Civil Court Judge, Chennai, the `Petitioner / Appellant', as `Plaintiff', had filed a `Suit' in O.S.No.3776 of 2020, passing for the `Judgment and Decree', being passed against the `Defendant Nos. 1 to 3', therein, by seeking (a) declaration that the `Resolution', allegedly passed by the `Shareholders' of the `1st Defendant Company' i.e., the `2nd and 3rd Defendants', in the `Extra-ordinary General Meeting' bearing No. 2 / 2020-21, conducted on 28.09.2020, for the `removal of the Plaintiff', as a `Director', in the `Board of Directors' of the `1st Defendant Company', as null and void, and not binding on the `Plaintiff'. (b) declaration that the `Resolution', allegedly passed by the `Shareholders' of the `1st Defendant Company' i.e., the `2nd and 3rd Defendants' in the `Extra-ordinary General Meeting' bearing No. 2 / 2020-21, conducted on 28.09.2020, authorizing the `4th Defendant' to do all actions necessary, to give effect to the `Resolution', passed for the `removal of the Plaintiff', as null and void and not binding on the `Plaintiff'.
Comp. App (AT) (CH) No. 127 of 2022 Page 22 of 28
57. The `1st Respondent / 1st Defendant' (`Company') in its Written Statement, had averred that the `Plaintiff' (`Petitioner / Appellant' in `Appeal'), was in employment, as an `Engineer', with Wirecard Technologies GmBh (another company in the Wirecard Group of Companies), since 1999 and was employed with the `1st Defendant / Company' (`1st Respondent' in Appeal) from 22.04.2015, based on an `Employment Agreement', entered into with him, by the `1st Defendant' (earlier known as Visa Processing Service (India) Pvt. Ltd.), whereby and whereunder, he was appointed as the `Managing Director' of the `Company'. But, he was unable to handle his duties and was constantly stoking conflict and unable to work in tandem with the Global Management, and inspite of the same, he was accommodated by the `1 st Defendant' (`1st Respondent'). Also that, he went on to take an unexplained prolonged leave of absence of more than six months from work, from 10.04.2019. He had opted not to return to work, to resume duties and was terminated by means of his `Employment Contract', by the `1st Defendant / 1st Respondent / Company'. Moreover, he was removed from the `Directors', on 28.09.2020, in compliance with the prescriptions of extent `Company Law' and `Secretarial Standards'.
58. A mere perusal of the reliefs, made before the Deputy Commissioner of Labour, in TNSE Appeal (filed by the Appellant in Comp. App (AT) (CH) No. 127 of 2022 Page 23 of 28 December 2019), before the `Tribunal' (`National Company Law Tribunal', Chennai) and the `Civil Court', will unerringly point out that the `Appellant / Plaintiff', had sought to present the same factual matters, mainly with a view to secure similar reliefs before `Three Various Forums'.
59. It was deemed fit in the wisdom of the `Shareholders' that the `Plaintiff' (`Appellant / Petitioner'), may be removed from the `Board of Directors' at the earliest, in the interests of the `1st Defendant / 1st Respondent Company', and being an urgent matter, it could not have been delayed, in further, as projected on the side of the `1 st Respondent /1st Defendant Company'.
60. According to the `1st Respondent / Company' (`1st Defendant'), the `Petitioner / Appellant' (`Plaintiff') had not revealed the material facts of his gradual demotion from his positions, with the `1st Respondent / Company'. Further, he is not a `Member', of the `1st Respondent / 1st Defendant / Company', and does not meet the specifications, prescribed under Section 241 and 242 of the Companies Act, 2013.
61. The stance of the 1st Respondent / Company (`1st Defendant') in its Written Statement, before the City Civil Court O.S.No. 3776 of 2020 is that the Plaintiff's (`Petitioner / Appellant') endeavour is to litigate Comp. App (AT) (CH) No. 127 of 2022 Page 24 of 28 against it and `embroil' the `Company', in `Litigation', across the `Three Different Forums', itself, indicative of the Plaintiff's (`Petitioner / Appellant'), intent and `Bona fides'.
62. The `1st Defendant / Company' (`1st Respondent' in `Appeal'), had taken a specific stand, before the City Civil Court in OS No. 3776 of 2020, that the `Petitioner / Appellant' (`Plaintiff') was already removed from his position, as a `Director' in the `1st Respondent's Company', during the `Extra-ordinary General Meeting', that took place on 28.06.2020, and that, the `Petitioner / Appellant' (`Plaintiff'), is not entitled to get any `Relief', as prayed for him, in the Suit.
63. At this juncture, it is not out of place for this `Tribunal', to make a pertinent mention that the fundamental eligibility criteria, laid down in Section 244 of the Companies Act, 2013, a `Complainant', must be a `Member' of a `Company', in relation to which, the `Petition', is to be filed. Therefore, it is latently and patently evident that, only a `Member' of a `Company', can prefer a `Petition', in relation to the `Company'.
64. It cannot be forgotten that a `Directorial Complaint', cannot be a basis for filing a `Petition', under Section 241 & 242 of the Companies Act, 2013, as `complaints', in such a `Petition', should relate to the `Rights', in the `status / capacity' of a `Member'. Comp. App (AT) (CH) No. 127 of 2022 Page 25 of 28
65. In regard to the stand of the `Appellant' that the CP/289/2020, filed by the `Appellant' (under Section 241 and 242 of the Companies Act, 2013), before the `Tribunal', may be converted into a `Petition', under Section 213 (2) of the Companies Act, 2013, it is relevantly pointed out by this `Tribunal' that the `Relief(s)', sought for by the `Appellant', in the main CP/289/2020, deals with several instances of `Oppression' and `Mismanagement', by the `1st Respondent / Company', against him (under Section 241 and 242 of the Companies Act, 2013), (vide Paragraph 16 - Page 111 of the Appellant's Appeal Paper Book - Vol I - vide Diary No.367 dated 04.05.2022). Therefore, the contra plea of the `Appellant', seeking to convert the main CP/289/2020 in to a `Petition', under Section 213 of the Companies Act, 2013, is not `acceded to', by this `Tribunal', in as much as the `Relief of Oppression and Mismanagement', stand on a different footing altogether, in `Law', especially, when the `Appellant', is not a `Member' of the `1st Respondent / Company', and also, against his `removal' and `relief' of Re-instatement', is pending in TNSE No. II of 2020, before the Labour Commissioner, Chennai.
66. In the instant case on hand, the `Appellant', in Comp. App (AT) (CH) No. 127 of 2022, had tacitly admitted that he is / was not a `Shareholder' of the `1st Respondent / Company' (`1st Defendant' in Suit). When that be the fact situation, and as per Section 241 of the Companies Comp. App (AT) (CH) No. 127 of 2022 Page 26 of 28 Act, a `Petition', can be preferred, only by the `Member(s)' of the `Company', and all the more, the `eligibility' of the `Member(s)', who can sustain a `Petition', under Section 241 of the Companies Act, 2013, is prescribed, and when the `Appellant' / `Petitioner', has no `Right' to file a `Petition', under Section 241 of the Companies Act, because of his `ineligibility' (not being a `Shareholder' / `Member' of the `1st Respondent' / `Company'), then, in `Law', he has no `Locus' whatsoever, to seek `waiver of the requirement', in IA/644/2020 in CP/289/2020, enabling him, to `Apply', under Section 241 of the Act. Viewed in that perspective and looking at from any angle, the IA No. 644/2020 in CP/289/2020, filed by the `Petitioner / Appellant' (before the `National Company Law Tribunal', Division Bench - I, Chennai), seeking to `Waive' all the requirements, specified in Clauses (a) and (b) of Section 244 of the Companies Act, 2013, and resultantly, permitting him to prefer a `Petition', as per Section 241 and 242 of the Companies Act, 2013, is `per se', not `Sustainable', in the `eye of Law', as held by this `Tribunal'.
67. In view of the foregoing detailed upshot, on a consideration of the facts and circumstances of the case, and also this `Tribunal', on going through the `impugned order' dated 16.02.2022 in IA No.644/2020 in CP/289/2020, passed by the `National Company Law Tribunal', Division Bench - I, Chennai, in dismissing the `Waiver IA No.644/2020 in Comp. App (AT) (CH) No. 127 of 2022 Page 27 of 28 CP/289/2020', is free from `Legal Errors'. Consequently, the instant `Appeal' fails.
Conclusion:
In fine, Comp. App (AT) (CH) No. 127 of 2022 is dismissed, for the reasons ascribed by this `Tribunal'. No costs.
[Justice M. Venugopal] Member (Judicial) [Shreesha Merla] Member (Technical) 30/01/2023 SR / TM Comp. App (AT) (CH) No. 127 of 2022 Page 28 of 28