National Company Law Appellate Tribunal
Rajeev Vidhyadharan Alias Rajeev ... vs Pj Mathews on 18 October, 2022
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
CHENNAI BENCH
Company Appeal (AT) (CH) No. 86 of 2022
&
I.A. Nos. 747 & 748 of 2022
[Arising out of Order dated 06.06.2022 passed by the
Tribunal/National Company Law Tribunal, Kochi Bench in
CP/21/KOB/2020]
IN THE MATTER OF:
1. Mr. Rajeev Vidyadharan @ Rajeev Anchal,
Guruchandrika, Snehapuram, Santhigiri.
P.O., Koliyakode Village, Keezthonnakkal,
Thiruvananthapuram, Kerala, Pin-695589
Email: [email protected] ...Appellant No. 1
2. Padmajan Rajeev
12/600 (18/799), Guruchandrika,
Santhigiri.P.O., Pothencode,
Thiruvananthapuram, Kerala, Pin-695589.
Email: [email protected] ...Appellant No. 2
3. Gargi Rajeev
12/600 (18/799), Guruchandrika,
Santhigiri.P.O., Pothencode,
Thiruvananthapuram, Kerala, Pin-695589.
Email: [email protected] ...Appellant No. 3
Padmam Mavilaveedu Sahadevan @ Shaji
4. Rajeev
12/600 (18/799), Guruchandrika,
Santhigiri.P.O., Pothencode,
Thiruvananthapuram, Kerala, Pin-695589.
Email: [email protected] ...Appellant No. 4
5. M/s. Guruchandrika Builders & Property
(P) Ltd.,
CIN:U70101KL2010PTC026835,
Represented by its Managing Director,
Mr. Rajeev Vidyadharan alias
Rajeev Anchal, having its registered office
at Jatayu Earth's Center,
Chadayamangalam,
Kollam District, Kerala-691534, ...Appellant No. 5
Email: [email protected]
6. Jatayupara Adventure Tourism (P) Ltd.,
CIN: U63040KL2014PTC035795,
Represented by its Managing Director,
Padmajan Rajeev,
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 1 of 35
Having its registered office at Jatayu
Earth's Center, Chadayamangalam
Kollam District, Kerala-691534. ...Appellant No. 6
Email: [email protected]
7. Guruchandrika Studios Private Limited,
CIN: U74999KL2017PTC051110,
Anugraham, T.C.15-601, Plot No. 51,
Udarasiromani Road, Vellayambalam,
Thiruvananthapuram, Kerala-695010,
Represented by its Managing Director,
Rajeev Vidyadharan @ Rajeev Anchal
Email: [email protected] ...Appellant No. 7
8. Unique Caves (P) Ltd.,
CIN: U63040KL2012PTC030706
Jatayu Earth's Center,
Chadayamangalam,
Kollam District, Kerala-691534,
Represented by its Managing Director,
Rajeev Vidyadharan @ Rajev Anchal
Email: [email protected] ...Appellant No. 8
Versus
1. P.J. Mathews
Nedumchira Thottathil,
Adichanalloor. P.O., Kollam- 691573,
Email: [email protected] ...Respondent No.1
2. Davidson Vattupparampil George,
Vattupparampil House, Mammoodu. P.O.,
Changanassery, Kottayam, Kerala-
686553,
Email: [email protected] ...Respondent No.2
3. Panicker Praveen Raj Gopi
7A, Royal Heights, Opposite N.S.S
College, NF Gate Road, Tripunithra,
Ernakulam, Kerala-682301,
Email: [email protected] ...Respondent No.3
4. Jayalal Balarajan
Kurathathusseril House, Pathiyoor. P.O
Bhagavathipadi, Alappuzha, Kerala-
690552,
Email: [email protected] ...Respondent No.4
5. Dennis Lavin Noronha
B-5, Marve Queen-1, 1st Floor,
Kharodi, Near Jurassic Park Restaurant,
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 2 of 35
Marve Road, Malad West, Mumbai-
400095,
Holders,
Email: [email protected] ...Respondent No.5
6. Jones Mathews
Nedumchira Thottathil,
Adichanalloor. P.O., Kollam-691573,
Email: [email protected] ...Respondent No.6
7. Juanita Joseph Thoduparambil
7/11, Assisi Nagar, P.L.Lokhande Marg,
Chembur, Mumbai- 400043,
Email: [email protected] ...Respondent No.7
8. Lalkumar Somarajan
APD No. 5A, Cordial Casilda,
Kochulloor, Medical College. P.O.,
Ulloor, Kerala-695011,
Email: [email protected] ...Respondent No.8
9. Jatayupara Tourism (P) Ltd.
CIN: U63040KL2014TC037707,
Jatayu Earth's Center Jatayu Junction,
Chadayamangalam, Kollam, Kerala-
691534,
Represented by its Director,
Mr. Vasu Jaya Prakash
Email: [email protected] ...Respondent No.9
10 Jatayu Sculpture & Museum Private
Limited
U63040KL2014PTC035795,
Having its registered office at Jatayu
Earth's Center,
Chadayamangalam, Kollam District,
Kerala- 691534,
Represented by its Director,
Ms. Usha B Pillai
Email: [email protected] ...Respondent No.10
11 P.R. Narayanan Nair
Gokulam A-18, Tennis Club Enclave
Kowdiar, Thiruvananthapuram-695003,
Email: [email protected] ...Respondent No.11
12 The State of Kerala
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 3 of 35
Represented by the, Chief Secretary,
Government Secretariat,
Thiruvananthapuram,
Pin-695001,
Email: [email protected] ...Respondent No.12
13 Director, Eco- Tourism
Department of Tourism,
Government of Kerala, Park View,
Thiruvannathapuram, Kerala,
Pin-695033,
Email: [email protected] ...Respondent No.13
14 Prince Ravi
Chartered Accountant,
GSPU & Associates, T.C12/1443(2), First
Floor,
SyamScion, PMG-law College Road, Vikas
Bhavan. P.O. Thiruvananthapuram-
695033
Email: [email protected] ...Respondent No.14
15 Sajee P. Nair
Sreesankaram, First Floor, KRA 74
Opp. Kaithamukku. P.O., Athanilane,
Thiruvananthapuram, Kerala 695024,
Email: [email protected] ...Respondent No.15
16 Rajeev Bhaskaran
Thulasi Bhavan, Chadayamangalam,
Kollam, Pin- 691534, Kerala,
Email:
[email protected] ...Respondent No.16
17 Krishnan Koodacheri
Sree Krishna House, Cherusseri Nagar,
Pallikulam, Chirakkal.P.O., Kannur-
670001,
Email: [email protected] ...Respondent No.17
18 Vasu Jayaprakash
Ariyannoor House, Kaitha South,
Kannamangalam, Chettikulangara,
Mavelikkara, Alappuzha-690106, Kerala,
Email: [email protected] ...Respondent No.18
19 Ajit Kumar Balaraman
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 4 of 35
4B 29 Unity Apartment, BAF Hira Nagar,
Kharodi Marve Road, Near Fire Station,
Malad (West), Mumbai- 400095 M.H
Email: [email protected] ...Respondent No.19
20 Ajay Balaraman
4B 29 Unity Apartment, BAF Hira Nagar,
Kharodi Marve Road, Near Fire Station,
Malad (West), Mumbai- 400095 M.H ...Respondent No.20
21 Haridas Krishnankutty
Rarath House Peruvemba. P.O.,
Palakkad, Kerala, India-678531,
Email: [email protected] ...Respondent No.21
22 Mathew Pandakasalail Thomas,
Pandakasala, Kampamkodu Vayakkal.
P.O.,
Valakam, Kollam-691532, Kerala, India,
Email: [email protected] ...Respondent No.22
23 C. Mohanan Pillai
S/o K. Chandrasekharan Pillai,
Krishna Priya, Podiyattuvila.P.O.,
Valakom, Kollam-691532 ...Respondent No.23
Present:
For Appellants : Mr. P.H. Arvindh Pandian, Senior Advocate.
For M/s. V. Ajakumar & Associates.
For Respondents : Mr. Bijoy P. Pulipra, Advocate for 1 to 8.
J U D G M E N T
(Virtual Mode) (18.10.2022) NARESH SALECHA, MEMBER (TECHNICAL) The present `Appeal' is filed against the 'Impugned Order' dated 06.06.2022, passed in CP/21/KOB/2020 by the 'Tribunal' (`National Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 5 of 35 Company Law Tribunal', Kochi Bench), whereby, the ''Tribunal' gave order dated 06.06.2022 under the Companies Act, 2013.
Brief Facts:
2. The present `Appeal' is preferred by the Appellants under Section 421 of the Companies Act, 20l3, against the 'Impugned Order' dated 06.06.2022 in CP/2l/KOB/2022 of the 'Tribunal' by the Respondent Nos. 2 to 7, 9 to 10 therein / Appellant Nos. 1 to 8 herein.
3. An exclusive right to run the Jatayupara Tourism Project, situated on Government Land by the State of Kerala has been granted in favour of the 'Appellants' on Build, Operate and Transfer Contract basis. To prevent the termination of the contract by the `State of Kerala', the `Appellants' terminated the commercial sub contracts for operational rights and financing of the project with the 9th Respondent company herein when they have committed allegedly breach of the condition stipulated in parent contract. The Board of the 9th Respondent convened a Board Meeting wherein one of Directors, the 1 st Respondent herein was deputed to institute petition before the 'Tribunal'. Simultaneously another Director, the 18 th Respondent instituted Arbitration proceedings. Consequently CP/ 2l/KOB/2022 and AR/15/2021 were instituted and are pending before the 'Tribunal' and before the Hon'ble Justice Udayabhanu, appointed by the High Court of Kerala for Companies Act, 2013, Case and Arbitration Case, respectively.
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 6 of 35
4. The Respondents in the meantime, filed an Application for appointment of an 'Inspector' and after appointment of the 'Inspector' by the 'Tribunal', the said 'Inspector' filed a 'Report'. During hearing, the Tribunal relying on the 'Report' of the 'Inspector', passed the 'Impugned Order' dated 06.06.2022 and directed the 'Appellants' to:
"deposit the daily collection of the Respondent Companies in a separate Bank account/ Escrow Account from 7/6/2022 and that the said collection should not be utilised till further orders from this Tribunal"
5. It has been alleged that the 'Impugned Order' was in violation of the principles of natural justice and was passed in the course of daily proceedings, without hearing the `State of Kerala', who is the owner of the project. The 'Impugned Order' was passed relying on the 'Report' of the 'Inspector' whose very appointment was under challenge before the 'Tribunal' itself.
6. It has been brought out that the survival of the project is in jeopardy as the order does not even allow utilisation of the daily collection for the payment of salaries of employees working in the project.
7. Aggrieved by the 'Impugned Order' dated 06.06.2022, the 'Appellants' have filed the present appeal.
Appellant's Submissions:
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 7 of 35
8. The Learned Counsel for the Appellants assailed the 'Impugned Order' and elaborated details of the case. The Learned Counsel for the Appellants stated that as a matter of fact, Respondents 1 to 8 are shareholders only in the 9th Respondent Company and do not hold any shares in Appellant Nos. 5 to 8 companies. The Learned Counsel for the Appellants mentioned that at best the 'Impugned Order' could have been confined to 9th Respondent, whereas the 'Impugned Order' contained directive against the Appellant Nos. 5 to 8. The Learned Counsel for the Appellants challenged the locus of the 'Respondents' against the Appellant Nos. 5 to 8 and therefore the 'Respondents' were not entitled for any reliefs against the said 'Appellants'.
9. The Learned Counsel for the Appellants brought out that as per Sections 241 and 244 of the Companies Act 2013, the aggrieved party need to be a member of a company with minimum requisites number of members as required under Section 244(a) of the Companies Act, 2013. The Learned Counsel emphasised that since the Respondents are not members of Appellant Companies 5 to 8 and hence are not entitled to claim any relief under Section 241 and 242 of the Companies Act, 2013 against such companies.
10. The Learned Counsel for the Appellants also alleged that the 'Tribunal' vide its 'Impugned Order' has granted the Respondents, the final reliefs sought by them in the Company Petition in the form of an interim relief.
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 8 of 35
11. The Learned Counsel for the Appellants brought out that the 'Respondents', though, have filed the Company Petition under Sections 241 and 242 of the Companies Act, 2013 and not under Section 210 and 213 of the Act, have sought final reliefs under Sections 210 and 213 of the Act. The 'Tribunal' without appreciating their fact granted the interim reliefs to the Respondents. The Learned Counsel for the Appellants further stated that the provisions under Chapter XIV of the Companies Act, 2013 makes it clear that the 'Tribunal' does not have any powers to appoint an 'Inspector' rather it can only direct the Central Government to appoint 'Inspector' to investigate into the affairs of the Company.
12. The Learned Counsel for the Appellants also pointed out that the 'Tribunal' has failed to note that the order passed by the Arbitral Tribunal dated 11.04.2022 is prior to the 'Impugned Order' dated 06.06.2022 and the said Arbitral Award protects the interest of the Respondents sufficiently and the daily collections of Appellant 5 are under the direct supervision of Arbitral Tribunal. The operative portion of the Arbitral award as under :-
"39. As to the reliefs sought for, it has to be noted admittedly the respondent is in possession of the project and is operating the same also since the date of termination and opening of the project after the government permitted all such destinations to open after substantial decrease in Covid-19 pandemic. As already mentioned any order that stalls the functioning of the project would not be appropriate in the circumstances.
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 9 of 35 Hence regarding the selling of entry tickets and admitting the visitors, only direction that can be given is that the tickets are to be sold exclusively through the web portal www,jatayuearthscentre.in of the respondent and as requested the receipts are to be routed to the current account of the respondent i.e 007805300010880. A detailed statement of the data as to the sale of tickets is to be provided on a monthly basis, would serve the purpose. The bank is to favourably consider the above suggestion and see that the ticket collection through web portal of the respondent is routed to the current account of the respondent by providing necessary adjustments with respect to Ext. P38 loan agreement stipulation, if direction in this regard by this Arbitral Tribunal is permissible. If the bank authorities are not inclined to act as suggested, the respondent may negotiate with the bank. 1f the same does not succeed, the respondent may negotiate with other financial institutions and make alternate arrangements so as to avoid Ext. P39 SARFAESI proceedings against the claimants as well as the respondents and see that the loan account is closed.
40. It is also ordered that the respondent will furnish detailed account of the ticket collections on a monthly basis before this Tribunal with copy to the respondent. The respondent will also file an affidavit containing the details of the ticket collections since taking over management and operation of the project after Ext. P12 termination notice till date.
41. The respondents are also directed not to cause any damage or destruction to the fixed assets in the project Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 10 of 35 area which was operated by the claimant before Ext.P12 termination. As it is in the interest of the respondent as well to see that the assets are well maintained, the constitution of a supervisory machinery appears unnecessary and hence the above prayer is allowed only in part.
42. The prayer to order to produce Registers, Books of Accounts etc., we find that such a direction is uncalled for at the present stage.
43. The prayer for an order directing the respondents from obstructing the Directors, Staff etc. from entering the registered office, is allowed. The respondent is restrained from obstructing Directors and Staff of the claimant company from entering the registered office of the company. The prayer to permit the staf of the respondents to take care of the assets and to see that no person enter without a legal entry ticket is not required at this juncture as it will result in needless interference in the operation of the project.
The I.A is disposed of with the above directions"
13. The Learned Counsel for the Appellants stated that the subject of termination of a commercial contract is outside the purview of the 'Tribunal', hence the application before the 'Tribunal' itself was not maintainable. Hence, the 'Appellants' had requested the 'Tribunal' to hear first the maintainability issue as a preliminary issue, however the Tribunal clubbed maintainability issue along with the main company petition. Aggrieved by this, the 'Appellants' filed W.P(C) 22116/2022 before the Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 11 of 35 Hon'ble High Court of Kerala under Article 227 of the Constitution of India and vide order dated 11.7.2022 the Hon'ble High Court of Kerala directed the 'Tribunal' to dispose of the petitions challenging maintainability.
14. The Learned Counsel for the Appellants pointed out that the 'Tribunal' wrongly recorded that the Appellants have availed many adjournments in the matter, whereas, the Appellants were always willing to cooperate.
15. The Learned Counsel for the Appellants further pointed out that without providing a reasonable opportunity to file objections, the 'Tribunal' granted interim reliefs against the principles of natural justice.
16. The Learned Counsel for the Appellants brought out that the 'Tribunal', has appointed Mr. Ravish Kumar, Chartered Accountant, as the 'Inspector' vide order dated 12.12.2021 in C.A.No.36/KOB/2021 in IA/198/KOB/2020 in CP/21/KOB/2020, utilising its power under Section 426 of the Companies Act, 2013.
17. The Learned Counsel for the Appellants assailed the action of 'Tribunal', who based on the Inspector's report and the case records, had issued a direction under Section 221 of the Companies Act, directing the 'Respondents' therein/ 'Appellant' herein to deposit the Daily Collection including Appellant Nos. 5 to 8, in a separate Bank Account/ Escrow Account from07.06.2022 and that the said collection should not be utilized until further orders of the 'Tribunal'. The Appellants challenged the report of the 'Inspector' in CA/21/KOB/2022before 'Tribunal', however the said Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 12 of 35 CA was dismissed by 'Tribunal' on 22.06.2022. The Appellants have preferred an appeal against the order of 'Tribunal' before this Tribunal.
18. The Learned Counsel for the Appellants stated that unless the merits of the main petition were examined, appointment of an 'Inspector' by exercising powers under Section 426 was not proper and desirable by the 'Tribunal'. The Learned Counsel for the Appellants mentioned that they had challenged the maintainability of the Company Petition before the 'Tribunal' in CA/10/KOB/2021 and CA/89/KOB/2021 and no orders were passed by the 'Tribunal' in both the said applications. The 'Appellants' moved before Hon'ble High Court of Kerala to quash the company petition pending before 'Tribunal' and the Hon'ble High Court of Kerala passed order dated 11.07.2022 directing the 'Tribunal' to consider the same on priority. The Learned Counsel for the Appellants stated that the question of maintainability is yet to be decided by the 'Tribunal'.
19. The Learned Counsel for the Appellants further stated that the 'Tribunal' has read section 426 with section 221 of the Companies Act, 2013and passed the 'Impugned Order'. The Learned Counsel for the Appellant further stated that issue of oppression and mismanagement has been raised only against the 9thRespondent herein in the main CP/21/KOB/2020 although, admittedly, other companies have been added as Respondents therein, and therefore the 'Tribunal' erred in directing all the Respondent companies therein to deposit their Daily collections in a separate Bank Account/ Escrow Account.
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 13 of 35
20. The Learned Counsel for the Appellant also briefed this Appellate Tribunal that the debt claimed by Respondents 1 to 8 of Rs.3 Crores is secured by the residential house belonging to the 1stAppellant, for which SARFAESI proceedings have been already initiated and hence there was no need for present 'Impugned Order'.
21. The Learned Counsel for the Appellants concluded stating that the 'Impugned Order' dated 06.06.2022 was passed without considering ground realities without opportunity to the Appellants of being heard and without considering the ill-effect on the entire project. The Learned Counsel for the Appellants also stated that the 5th Appellant is in precarious financial conditions and finding difficult to pay the salaries of the employees and for the daily upkeep of the project.
22. The Learned Counsel for the Appellants emphatically requested to set aside the 'Impugned Order'.
Respondent's Submissions:
23. The Learned Counsel for the Respondent Nos. 1 to 8 described broad facts of the case. The Learned Counsel also mentioned that the 'Tribunal' has heard all the arguments and after getting convinced passed the 'Impugned Order' in the interest of justice. The Learned Counsel for the Respondents assailed the Company Appeal being devoid of any merits which deserve to be set aside.
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 14 of 35
24. The Learned Counsel for the Respondent Nos. 1 to 8 stated that the Appellant No. 1 had issue prospectuses/Offer Letters in 9th Respondent Company and raised Rs. 25.58 Crores by the issuance of Convertible Preference shares and Redeemable Preference Shares to nearly 150 investors. The prospectus/offer letters issued by the 9thRespondent Company clearly mentioned the objective of raising funds was to build and operate the Jatayu Project. The total cost of the project was stated to be Rs25 Crores in the prospectus/offer letters.
25. The Learned Counsel for the Respondents stated that they sought specific reliefs in the IA/198/KOB/2022 in CP/21/KOB/2020 filed under Section 221 of the Companies Act read with Rule 32 of the National Company Law Tribunal Rules,2016 to put an end to the oppressive actions and continuous fund siphoning by the 'Appellants'. One of the prayers sought for in the above I.A.is as follows:
"c. To pass an order under Section 221 of the Companies Act, 2013 to freeze the removal, transfer or disposal of funds, assets, and properties of the Respondent No I, till the approval of shareholders of Respondent No I under Section 188 and approval of Board of directors of Respondent No I undersection180 of the CompaniesAct,20I3 is obtained."
26. The 'Tribunal' had passed an order to file the names of three reliable persons, with mutual consent, in the form of a Memo, from which one can be appointed as the Inspector to identify and list out the Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 15 of 35 assets of the 'Jatayupara Tourism Private Limited' installed at the 'Jatayu Project'.
27. However, Appellants l to 4 had not cooperated with Respondents 1 to 8 to identify the panel of 'Inspectors', with the sole intent to delay the appointment of the 'Inspector'. Being aggrieved by the untenable actions of the Appellants, Respondent Nos. 1 to 8 had subsequently filed CA/36/KOB/2021 in IA/198/KOB/2021 with the 'Tribunal' to identify and appoint an inspector from its own panel. Based on the contentions of Respondent Nos. 1 to 8 in CA/36/KOB/2021in IA/198/KOB/2021 and after hearing both sides and perusing the whole records, the 'Tribunal' appointed Ravish Kumar, an independent Chartered Accountant, as Inspector to identify the usage of assets and to list out the assets of Respondent no. 9 installed at Jatayupara Project and report the variation of the same with the list of assets reflected in the latest Audited Financial Statement.
28. The 'Tribunal' passed the 'Impugned Order' dated 06.06.2022 based on the contents of the Inspector's Report and also based on the prayers of the IA/198/KOB/2022 in CP/21/KOB/2020. The Learned Counsel for the Respondents pleaded strongly that the 'Impugned Order' dated 06.06.2022 is purely in nature of temporarily measure to prevent siphoning of money before final Company Petition is decided by the 'Tribunal'.
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 16 of 35
29. The Learned Counsel for the Respondents brought out that the 'Tribunal' was compelled to pass an interim orders dated 07.03.2022, 22.04.2022 and 25.05.2022 giving directions to the ' Appellants' to cooperate with the 'Inspector' for the completion of the 'Inspection Report' which depict conduct of the 'Appellants'.
30. The Learned Counsel for the Respondents stated that the 'Inspector' had submitted his report dated 20.04.2022, which revealed several oppressive acts of the 'Appellants' along with fund syphoning in the 9th Respondent Company.
31. The Learned Counsel for the Respondents stated that the average daily collection of 9th Respondent company is very high and the said entire collection remains unaccounted in the books of the Company.
32. The Learned Counsel for the Respondents 1 to 8 are Petitioners in Main Company Petition CP/21/KOB/2020, which is pending adjudication before the 'Tribunal'. The CP 21/KOB/2020 was filed by Respondent 1 to 8 against severe oppression and mismanagement actions carried out by Appellants No. l to 4 in the 9th Respondent Company, which includes diversion of the funds in violation of the provisions of Section 185 and 186 of the Companies Act, 2013 to other Appellant Companies (which are in full and absolute control of the 1st Appellant and his close relatives) allotment of shares in violation of section 62 of the Companies Act, 2013 escalation of the cost of the Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 17 of 35 project of the company, siphoning off the funds of the 9th Respondent Company etc.
33. The Learned Counsel for the Respondents stated that the 'Tribunal' after perusing the contents of the inspector's report for violations, had ordered for freezing the funds of the concerned Companies, which was one of the prayers of the Respondents herein in IA/l98/KOB/2021, to protect the assets of the 9th Respondent Company from further syphoning and diversion and therefore plea of the 'Appellants' that the 'Tribunal' should have confined due to 9th Respondent is not correct.
34. The Learned Counsel for the Respondents also assailed conduct of 'Appellants' stating that despite specific direction of the 'Tribunal' was to open a separate Bank Account /Escrow Account, the Appellants had opened an Account with the Sub-Treasury, Government of Kerala, to avoid the Online collection of the ticketing revenue and to divert the daily collections of the Project with intent to defraud 'Respondents'.
35. The Learned Counsel for the Respondents stated that the Investors, as well as the Government, are losing their share of there venue.
36. The Learned Counsel for the Respondents stated that the entire assets of 9th Respondent Company were created and raised by the hard- earned investments of 150 investors, including Respondents No.1-8, at Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 18 of 35 various stages. 9th Respondent Company had, under the signature of 1st Appellant, availed a Term loan from Dhanlaxmi Bank Limited, Chadayamangalam Branch, Kollam, Kerala of Rs. 3 Crore by mortgaging the assets of Respondent No 9 for investing in its own business activities and for meeting day to day expenditure. The Audited financial statements of clearly depict the details of the assets owned by their respective companies. However, Appellants are continuously raising the contention that the assets created in the Jatayu Project belong to 5th Appellant. The Learned Counsel for the Respondents stated that the form CHG-I filed by 9th Respondent under the signature of Appellant No. 1 for availing the loan by collateralising the assets of Respondent No 9 in Jatayu Project and hence, it is evident that the assets in the Jatayu Project belong to 9th Respondent.
37. The Learned Counsel for the Respondents also stated that the1stAppellant had availed a loan of Rupees Three crores from 'M/s Dhanlaxmi Bank Ltd, Chadayamangalam Branch', which turned out to be a Non- Performing Asset (NPA). The 1st Appellant is a Co-obligant and Co-Borrower for the said loan facility and even though Appellants have been collecting the entire ticketing revenue from the Jayatu Project since 13.10.2020, they had not deposited any money to repay the loan account due to which NPA still continue.
38. The Learned Counsel for the Respondents stated that Ravish Kumar, an independent Chartered Accountant, the 'Inspector' appointed Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 19 of 35 by the 'Tribunal', had submitted a detailed report pointing out at several oppressive acts of the 'Appellants' and had brought out the entire fraudulent scheme designed by them to deceive the Respondents 1 to 8 and other fellow shareholders of the Respondent No 9.
39. The Learned Counsel for the Respondents stated that the 'Appellants' had exhausted all the remedies available to challenge to appointment of the 'Inspector' including approaching the High Court of Kerala by filing a writ petition which was not entertained and only directed the 'Tribunal', to hear the maintainability petitions on priority.
40. The Learned Counsel for the Respondents further stated that the 'Appellants' have not approached this Appellate Tribunal with clean hands as entire ticketing revenue is being collected in cash and not through Online mode to the Bank account of the 9th Respondent as per orders of the 'Tribunal'.
41. The Learned Counsel for the Respondents finally concluded his arguments stating that the Shareholders had already lost their entire capital investment and will get a further jolt if the 'Impugned Order' dated 06.06,2022 is set aside. The Learned Counsel for the Respondents, therefore, urged this Appellate Tribunal to dismiss the appeal.
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 20 of 35 Findings
42. Heard Learned Counsel for the Appellant and the Respondents and also perused record made available to us.
43. It is a case of the Appellant that the 'Tribunal' have appointed the 'Inspector' exercising the power contained in Section 426 of the Companies Act, 2013 without having jurisdiction. It is further the case of the 'Appellants' that no opportunity was given before passing the 'Impugned Order' based on Inspector's Report despite request from the 'Appellants' for two weeks period for filing the documents. The issue regarding maintainability itself was challenged by the 'Appellants' which is yet to be decided by the 'Tribunal'. During hearing it has been brought to notice of this Tribunal that vide 'Impugned Order', the existence of the project is in jeopardy as 'Appellants' are not allowed to withdraw from the 'Revenue Collection' being deposited in nominated account and therefore, it is extremely difficult for the 'Appellants' to make the salary payments and to meet daily operational expenses.
44. From the averment made during hearing as well as from the records available following important orders of the 'Tribunal' having brought to the notice of this Appellate Tribunal. It will be worthwhile to look into these orders before examining the issues raised in the present appeal. Some of the significant orders are as under:-
(a) It has been brought to the notice of this Tribunal that the appointment of the 'Inspector' was made on 12.12.2021, pursuant to an Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 21 of 35 order in CA/36/KOB/2021, the 'Inspector' allegedly got non-
cooperation from the 'Appellants' evident from the following observations made by the 'Tribunal' in daily orders. In the daily order dated 07.03.2022, the 'Tribunal' had stated the following.
"Shri Ravish Kumar submitted that the information furnished during his inspection and on examination of the available documents furnished is inadequate as all the projects are under the same premises without any demarcation and the available office space is only 66 sq. ft. He also submitted that the Original Statutory Registers, Fixed Assets Registers, Minutes Books etc have not been received from the Company Officials. According to Shri Ravish Kumar in order to find the utilization of assets and variations with respect to the latest Audited Financial Statements of the Company, all associated companies have to produce for his inspection such further hooks of account and explanation."
[emphasis supplied]
(b) This Appellate Tribunal also note from the averments that in the daily order dated 22.04.2022, the 'Tribunal' had stated the following:
"Shri Ravish Kumar has filed an IA seeking certain directions from this Tribunal and also prayed 60 days more to submit his report.
On hearing the submissions of Shri Ravish Kumar, this Tribunal vide Order dated 07.03,2022 had given the following directions:
Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 22 of 35 Respondent Nos 1,6,7,8,9 and 10 Companies In CP/21/KOB/2020 are directed to allow Shri Ravish Kumar to inspect all books, statutory records and data of the group of Companies.
All Directors, Officers and employees of R-1, R6, R7, R8, R9 and R1O Companies in the CP/21/KOB/2020 are directed to co-operate with Shri Ravish Kumar and make available all such documents records, books/or inspection of Shri Ravish Kumar.
Shri Ravish Kumar is directed to submit his report on or before 10.04 2022 positively. "
··Respondents are also directed to co-operate with Shri Ravish Kumar as directed under (i) and (ii) above".
[emphasis supplied]
(c) Further, this Appellate Tribunal observed that in the daily order dated 25.05.2022the 'Tribunal' had stated the following:
"Shri Ravish Kumar K, Inspector appeared through VC and stated that he has already filed the report, but could not come toa conclusion due to the non- cooperation of respondents and non-availability of whole records from them.
According to him. the respondents have not provided him the relevant books of accounts, bank statements and Fixed asset registers of the Respondent Companies.··"
[emphasis supplied] Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 23 of 35
(d) This Tribunal taken a note of following short 'Impugned Order' passed by the 'Tribunal' dated 06.06.2022 which is as herein under:
"Learned counsel for the petitioners Shri Bijoy P. Pulipra appeared through VC. Learned counsel for R1 Smt. Sabeela CB, learned counsel for R2, R7, R9 & R10 Shri A Ajakumar, learned counsel for RB & R16 Shri Saji Varghese, learned counsel R11, R18 to R20 Shri Vinod V Luka, learned counsel for R12 and R13 Shri Arun Chandy, and learned counsel for R17, R21 and R23 Shri Mohan Pulickkal appeared through VC. None appeared for other respondents.
Shri Ajakumar sought two weeks time to file Objection to the Report of Shri Ravish Kumar, Inspector appointed by this Tribunal.
Shri Bijoy Pulipra submitted that the respondents are enjoying the revenue income of around Rs.2,50,000/- per day generated through the Investments made by the Petitioners and that is why respondents are deliberately dragging the matter unnecessarily.
It appears from records that the respondents have availed many adjournments in this matter under one pretext or other.
On hearing both sides and on thorough perusal of the whole case records including the report of the Inspector appointed by this Tribunal, this Tribunal hereby directs the Respondents to deposit the Daily Collection of the Respondent Companies in a separate Bank Account/ Escrow Account from 07.06.2022 and Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 24 of 35 that the said collection should not be utilised until further orders of this Tribunal.
Registry is directed to issue copy of this Order to the learned counsel of both parties through e-mail immediately.
List on 22.06.2022 for hearing. There shall be no adjournment in this matter."
[emphasis supplied]
45. At this juncture it is also pertinent to refer to various sections of the Companies Act, 2013 which has been referred both by the 'Appellants' and the 'Respondents'. The relevant provisions of the Companies Act, 2013 are as under which pertain to the present appeal before this Appellate Tribunal:-
"CHAPTER XIV INSPECTION, INQUIRY AND INVESTIGATION
210.Investigation into affairs of company.-- (1) Where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company,--
(a) on the receipt of a report of the Registrar or inspector under section 208; (b) on intimation of a special resolution passed by a company that the affairs of the company ought to be investigated; or (c) in public interest, it may order an investigation into the affairs of the company. (2) Where an order is passed by a court or the Tribunal in any proceedings before it that the affairs of a company ought to be investigated, the Central Government shall order an investigation into the affairs of that company. (3) For the purposes of this section, the Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 25 of 35 Central Government may appoint one or more persons as inspectors to investigate into the affairs of the company and to report thereon in such manner as the Central Government may direct
213. Investigation into company's affairs in other cases.-- The Tribunal may,-- (a) on an application made by-- (i) not less than one hundred members or members holding not less than one-tenth of the total voting power, in the case of a company having a share capital; or (ii) not less than one-fifth of the persons on the company's register of members, in the case of a company having no share capital, and supported by such evidence as may be necessary for the purpose of showing that the applicants have good reasons for seeking an order for conducting an investigation into the affairs of the company; or (b) on an application made to it by any other person or otherwise, if it is satisfied that there are circumstances suggesting that-- (i) the business of the company is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to any of its members or that the company was formed for any fraudulent or unlawful purpose; (ii) persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or (iii) the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 26 of 35 payable to a managing or other director, or the manager, of the company, order, after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of the company ought to be investigated by an inspector or inspectors appointed by the Central Government and where such an order is passed, the Central Government shall appoint one or more competent persons as inspectors to investigate into the affairs of the company in respect of such matters and to report thereupon to it in such manner as the Central Government may direct: Provided that if after investigation it is proved that--
(i) the business of the company is being conducted with intent to defraud its creditors, members or any other persons or otherwise for a fraudulent or unlawful purpose, or that the company was formed for any fraudulent or unlawful purpose; or
(ii) any person concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, then, every officer of the company who is in default and the person or persons concerned in the formation of the company or the management of its affairs shall be punishable for fraud in the manner as provided in section 447.
CHAPTER XVI
PREVENTION OF OPPRESSION AND
MISMANAGEMENT
241. Application to Tribunal for relief in cases of oppression, etc.-- (1) Any member of a company who complains that-- (a) the affairs of the company have been or are being conducted in a manner prejudicial to Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 27 of 35 public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. (2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter.
244. Right to apply under section 241.-- (1) The following members of a company shall have the right to apply under section 241, namely:-- (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one- tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 28 of 35 their shares; (b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members: Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241. Explanation.--For the purposes of this sub-section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member. (2) Where any members of a company are entitled to make an application under subsection (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them.
CHAPTER XXVII
NATIONAL COMPANY LAW TRIBUNAL AND
APPELLATE TRIBUNAL
426. The Tribunal or the Appellate Tribunal may, by general or special order, direct, subject to such conditions, if any, as may be specified in the order, any of its officers or employees or any other person authorized by it to inquire into any matter connected with any proceeding or, as the case may be, appeal before it and to report to it in such manner as may be specified in the order."
46. This Appellate Tribunal has seen the record including the Petition made by the 'Respondents' herein before the 'Tribunal' and sought for 22 relief along with 9 interim relief under caption 'Prayer' and 'interim orders prayed for', respectively. In the 'prayers'/ 'interim prayers' Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 29 of 35 specific request was made under Section 210, 213, 216, 219, 447, 448, 449, 450 of the Companies Act, 2013.
47. Shri Ravish Kumaran independent Chartered Accountant was appointed as 'Inspector' on 12.12.2021 in terms of the Companies Act, 2013 in CA 36/KOB/2021 in IA/198/KOB/2020 in CP/21/KOB/2020
48. It is also observed that Chapter XIV (containing Section 206 to
229) pertain to 'Inspection, Enquiry and Investigation' whereas Chapter XVI (containing Section 241 to 246) pertain to 'Preventions of Oppression and Mismanagement' and Chapter XXVII (containing Section 407 to 434) pertain to National Company Law Tribunal and National Company Law Appellate Tribunal.
49. As regard contentions of Appellants that in order to initiate proceeding under Section 241 minimum requisites number as prescribed under Section 244(1) is necessary, it is seen that proviso to Section 244(1)(b) gives power to Tribunal to waive or any requirement specified in clause (a) or clause (b) so as to enable the members to apply under Section 241.
50. From the perusal of above legal position of the Companies Act, 2013 this Appellate Tribunal do hold that prima-facie the 'Tribunal' had sufficient powers to appoint the 'Inspector' and therefore we do not find any error on this aspect. Incidentally, it is noted that opportunity was given to both 'Appellants' and 'Respondents' to give the memo of names to appoint inspector. However, due to non-response from the Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 30 of 35 'Appellants', the 'Tribunal' appointed on request of the 'Respondents' herein 'Shri Ravish Kumar' as an 'Inspector'.
51. As regard the contention of the 'Appellants' that no opportunity was given to them of being heard and they were denied two weeks period to file objection to report of Shri Ravish Kumar- Inspector appointed by the 'Tribunal', this Appellate Tribunal note form the 'Impugned Order' that the 'Respondents' therein/ 'Appellants' herein have availed many adjournments in the matter under one pretext or other. We have also noted from the averments made by the 'Respondents' that the 'Appellants' were collecting revenue in cash and which remain unaccounted for even after the 'Tribunal' order dated 06.06.2022 to deposit in dedicated bank/ Escrow Account and to collect revenue through online mode the same has not been done in letter and spirit. Therefore, this Appellate Tribunal do not find any error in the Impugned Order with reference to this aspect especially keeping in view that this is only interim measure subject to final CP which is yet to be disposed by the 'Tribunal' along with I.A filed by the Appellant on maintainability issue.
52. This Appellate Tribunal noted from averments made before us that in response to the 'Impugned Order' dated 06.06.2022, an Affidavit was filed by the Appellants with the 'Tribunal' stating that the 'Appellants' have complied with the Tribunal's order dated 06.06.2022 and have opened a Treasury Savings Bank Account with the Government Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 31 of 35 Treasury, Chadayamangalam Branch bearing Account Number TSB 799010100350226 on 16.06. 2022 for depositing the daily collections from the date of the order. It is also noted that the 'Appellants' had challenged the power of the 'Tribunal' to appoint an inspector in the said Petition but, the 'Tribunal' rejected the said petition vide order dated 22.06.2022 by stating that the Appellants had not challenged the appointment of Inspector at the appropriate time.
53. As regard, averments of the 'Appellants' regarding that the 'Tribunal' should have confined only to 9 th Respondent and not to Appellant Nos. 5 to 8, this Tribunal carefully noted from the arguments of the Learned Counsel for the Respondents that Appellant Nos. 1 to 4 are family members being father, mother, son and daughter and Appellant No. 5 is a company created by them. Other Appellants company namely, Appellants 6, 7 and 8 are owned and controlled by the 1st Appellant and his close relatives. It has also been made out by the Respondents that through inter corporate loans, investments etc. Appellants were alleged to be diverting and syphoning of money to other associated companies. In view of this, one of the prayer by the Appellant therein/ Respondent herein to cover all such associated companies to present 'Oppression & Mismanagement' actions of the 'Appellants' and similar request was made by the Inspector who wanted the final statements and other details of the Appellant companies to arrive at right conclusion. The 'Tribunal', therefore, gave the ruling Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 32 of 35 accordingly in his 'Impugned Order'. Therefore, this Appellate Tribunal hold that the 'Tribunal' has not erred on this aspect.
54. It has been brought to the notice of this Appellate Tribunal that though the specific direction of the Hon'ble Tribunal was to open a separate Bank Account /Escrow Account, the Appellants had opened an Account with the Sub-Treasury, Government of Kerala, which is against the specific directions of the 'Tribunal'. The depositing of money in the Treasury Account has been allegedly done to avoid the Online collection of the ticketing revenue and to divert the daily collections of the Project. It has further been alleged that due to the said reason, the Investors, as well as the Government, are losing their share of the revenue and therefore having adverse impact on public interest.
55. It has been brought to the notice of this Appellate Tribunal that the wilful acts of the Appellants had resulted in the breach of the essence of the Interim Order dated 06.06.2022 passed by the 'Tribunal' in CP/21/KOB/2020 and thereby, the 'Appellants' had committed civil contempt on the 'Tribunal' as provided under section 11 and 12 of the Contempt Court Act,1971 read with Section 425 of the Companies Act, 2013 and being aggrieved by the contempt actions of the Appellants, Respondents1to 8 had filed a contempt petition before the 'Tribunal'.
56. Incidentally, it is seen that the `Arbitral Tribunal' had passed an interim order dated 11.04.2022 directing the `Appellants' to collect the money through online modes and deposit the daily collection to a Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 33 of 35 separate Bank Account, however, the Appellants made an appeal against the order of the Arbitral Tribunal and the same is now pending before the Commercial Court.
57. This `Tribunal' notes from the averments made before though the pleadings on CP/21/KOB/2020 was complete and the 'Tribunal', was ready to commence the final arguments on required of the Appellants the 'Tribunal' vide dailyorderdated05.08.2022permitted the Appellants to file the additional documents. The 'Appellants' allegedly some newly introduced documents, vide IA/82/KOB/2022and the 'Respondents' also filed the reply to the same, which had resulted in the delay, in `Adjudication' of `Hearing', the Maintainability Petitions, yet not been `determined' by the 'Tribunal'.
58. As regards the plea that the existence of the Company will be at `Stake' since the 'Tribunal' by the 'Impugned Order', has prohibited from withdrawal of any money from revenue collection. This `Appellate Tribunal' will like to take this fact in to consideration that without regular cash flow available, it would be difficult for the concerned Company to pay Salary and other Operational Expenses. However, looking to various averments made and keeping in mind the 'Report' of independent Inspector appointed by the 'Tribunal' as per Companies Act, 2013 who has pointed out several irregularities by the 'Appellants', it may not be advisable to intervene at this stage. It is also taken into consideration that the matter was listed for final hearing on Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 34 of 35 22.06.2022, however, due to 'Additional Documentation' as per request of the 'Appellants' and further litigation, including present Appeal before this `Appellate Tribunal', the original CP/21/KOB/2020, filed before the 'Tribunal' has not been concluded.
59. Conscious of 'Rights and Obligations' along with convenience of both the `Parties', it will be suffice to advise the 'Tribunal' to decide the `Original Petition' bearing CP/21/KOB/2020 and any other `Interlocutory Applications', within a period of four weeks from the date of receipt of copy of this Judgment.
60. In fine, the Company Appeal (AT) (CH) No. 86 of 2022 is disposed of. No order as to costs. The connected pending 'Interlocutory Applications', if any, are Closed.
[Justice M. Venugopal] Member (Judicial) [Naresh Salecha] Member (Technical) Simran Company Appeal (AT) (CH) No. 86 of 2022 & I.A Nos. 747 & 748 of 2022 35 of 35