National Company Law Appellate Tribunal
Gloster Limited vs Bowreah Jute Mills Private Limited on 28 February, 2023
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH: NEW DELHI
Company Appeal (AT) No. 155 of 2020
[Arising out of Order dated 27th February, 2020 passed by the National
Company Law Tribunal, Kolkata Bench, Kolkata in Miscellaneous
Application No. 948/KB/2019 arising out of CP (CAA) No. 518/KB/2017,
CA (CAA) No. 207/KB/2017]
IN THE MATTER OF:
Gloster Limited
(formerly known as Ketttlewell Bullen &
Company Limited)
A Company within the meaning of the
Companies Act, 2013 and having its
Registered Office at:
21, Strand Road, Kolkata - 700001
West Bengal ...Appellant
Versus
1. Bowreah Jute Mills Private Limited
A company within the meaning of the
Companies Act, 2013 and having its
Registered Office at:
24/1/1 Alipore Road, 3rd Floor,
Kolkata - 700027, West Bengal ...Respondent No.1
2. The Regional Director, Eastern Region
Kolkata having his office at:
Nizam Palace, 2nd MSO Building
2nd Floor, 234/4 AJC Bose Road,
Kolkata - 700020, West Bengal ...Respondent No.2
3. The Registrar of Companies,
West Bengal, having his office at:
Nizam Palace, 2nd MSO Building
2nd Floor, 234/4 AJC Bose Road,
Kolkata - 700020, West Bengal ...Respondent No.3
Present:
For Appellant : Present but appearance not marked.
For Respondent : Mr. Abhrojit Mitra, Sr. Advocate with Mr. D.N.
Sharma, Mr. Anirudha Agarwalla, Mr. Kunal
Chatterjee and Mr. P.C. Sharma, Advocates for R-1
Company Appeal (AT) No. 155 of 2020 1 of 11
J U D G M E N T
(28th February, 2023) KANTHI NARAHARI, MEMBER (TECHNICAL) Preamble:
The Present Appeal is filed by invoking provisions of Section 421 of the Companies Act, 2013 against the order dated 27th February, 2020 passed by the National Company Law Tribunal, Kolkata Bench, Kolkata in Misc.
Application No. 948/KB/2019 arising out of CP (CAA) No. 518/KB/2017, CA (CAA) No. 207/KB/2017 whereby the National Company Law Tribunal (in short 'NCLT') directed the Appellant to amend the schedule of property attached to the Approved scheme removing New Mill Factory Estate from property scheduled and also imposed penalty of Rs. 50,000/-.
Brief Facts:
Appellant's Submissions:
2. The Learned Counsel for the Appellant submitted that aggrieved by the aforesaid order, the Appellant preferred the present Appeal and narrated the brief facts.
3. It is submitted that the Appellant was incorporated as a limited company under the name & style of "Kettlewell Bullen & Company Limited"
in the year 1923 under the Indian Companies Act, 2013.
4. In the year 2017, the respective Board of Directors of the Appellant and M/s Gloster Jute Mills Limited (GJML) propounded a scheme of amalgamation for amalgamation of GJML with the Appellant. As per the scheme of amalgamation the scheme becoming effective and the name of the Company Appeal (AT) No. 155 of 2020 2 of 11 Appellant Company shall be changed from "Kettlewell Bullen & Company Limited" to "Gloster Limited". In pursuance of a joint application filed by the Appellant and GJML the NCLT, Kolkata Bench by an order dated 19.01.2018 passed in CP (CAA) No. 518/KB/2017 sanctioned the scheme of amalgamation for amalgamation of GJML with the Appellant and passed orders for transfer, vesting its assets and properties of GJML to the Appellant. The Tribunal also granted leave to file schedule of assets of the Transferor Companies i.e. GJML within four weeks from the date of the order. The Tribunal further directed the Transferor Company as well as the Transferee Companies i.e. GJML and the Appellant to file certified copy of the order sanctioning the scheme of amalgamation with the Registrar of Companies West Bengal for registration and that the Transferor Company i.e. GJML would stand dissolved without winding up from the date of filing of the certified copy of the order.
5. In pursuance of the order dated 19.01.2018, the Transferor Company i.e. GJML filed before the Tribunal the schedule of assets of its properties. The description of the free hold properties of the Transferor Company in Part-I of the schedule of assets comprised of brief description of the following immovable properties.
a) New Mill Factory area
b) Unit Ananya Factory area
c) Labour colony
d) Hospital area
e) Brickfield area
f) North Mill area Company Appeal (AT) No. 155 of 2020 3 of 11
6. The schedule of assets was appended to the order and as per the order all the properties and rights and powers of the Transferor Company including those mentioned in the schedule of assets would be transferred without further act or deed to the Transferee Company.
7. After dissolution of the Transferor Company in terms of Clause 2.0 of Chapter-3 of the scheme of amalgamation, the Appellant took requisite steps for change of its name from "Kettlewell Bullen & Company Limited" to "Gloster Limited".
8. While matter stood thus, the Respondent herein filed an Application before the NCLT in the month of July, 2019 in M.A. No. 948/KB/2019 for recalling of the order dated 19.01.2018 sanctioning the said scheme of amalgamation and for various other reliefs. The Appellant got impleaded as a party Respondent to the said application.
9. The contention of the Respondent in the said application is that the name of North Mill is owned and possessed by the Respondents i.e. Bowreah Jute Mills Private Limited since the year 2009 and a fraud was perpetrated by including the description of North Mill in the schedule of assets. The Appellant filed its Reply to the said application denying all the allocations.
10. It is submitted that prior to filing of reply affidavit, the Appellant on or about 16.08.2019 filed a Suit being No. 192/2019 in Uluberia Court for ejectment of the Respondent No.1 from the North Mill and duly annexed a copy of the plaint filed in the ejectment suit before the NCLT.
Company Appeal (AT) No. 155 of 2020 4 of 11
11. It is submitted that the application filed by the Respondent herein is not maintainable since the Appellant was not impleaded as a party to the said application. The Tribunal erred in holding that the Appellant is in illegal position of North Mill and the fact is that the Appellant filed title suit for ejectment of the Respondent from the North Mill. The Tribunal failed to consider the fact that the legal title in the North Mill is vested in the Appellant and consequently there was no error in the schedule of assets appended to the amalgamation order. The Respondent has no right or cause of action to seek deletion of the North Mill in the schedule of assets appended to the order dated 19.01.2018 sanctioning the scheme of amalgamation.
12. In view of the reasons as stated above, the Learned Counsel prayed this Bench to allow the Appeal and set aside the impugned order. Respondent's Submissions:
13. The Learned Senior Counsel appearing for the Respondent put fourth his argument in favour of the impugned order passed by the NCLT dated 27.02.2020. He submitted that the Appeal is not maintainable for two reasons; (i) that the Appeal is barred by limitation and (ii) the amended order dated 12.03.2020 passed by the NCLT has not been challenged till date and the said order attained finality. For the aforesaid reasons the present Appeal is liable to be dismissed even without going into the merits of the case.
14. It is submitted that the subject matter of the application is with regard to North Mill including its assets and properties were no longer part of the assets of FGIL (Fort Gloster Industries Limited). When the demerger scheme was sanctioned by the High Court of Calcutta the Jute Division of FGIL stood Company Appeal (AT) No. 155 of 2020 5 of 11 transferred and vested upon the erstwhile Gloster Limited and did not contain any part or portion of the assets or properties of North Mill.
15. It is submitted that the Appellant has admitted the valid transfer of title in the North Mill from FGIL to HMCL (Hooghly Mills Company Limited) and therefore, the Appellant is estopped from challenging the veracity and validity of the sale agreement dated 12.01.2019 between HMCL and the Respondent herein.
16. It is submitted that the Appellant / Petitioners before the NCLT deliberately and despite being fully aware that the North Mill did not belong to the Transferor Company had mischievously and with fraudulent purpose included the details of the assets and properties of the North Mill in the schedule of assets after the scheme was sanctioned on 19.01.2018.
17. It is submitted that the said purported schedule of assets was neither disclosed at the time of hearing before the NCLT nor before the order was passed. The Appellant nor the erstwhile Gloster Limited had any title in respect of North Mill and therefore, the erstwhile Gloster Limited and the Appellant had perpetrated fraud and had mislead the Tribunal by including the North Mill and its assets and properties in Part-I of the schedule of the assets.
18. It is submitted that the contention of the Appellant that due to inadvertence the land comprised in the North Mill was not included in the schedule of assets before the High Court of Calcutta at the time of sanction the demerger scheme is not correct. The fact remains that even before Company Appeal (AT) No. 155 of 2020 6 of 11 demerger scheme of 1992-93 was prepared, the North Mill was no longer remain the assets and properties of FGIL and therefore, it was rightly not mentioned in the schedule of assets which was filed before the High Court of Calcutta after scheme of demerger was sanctioned pursuant to the order dated 31.05.1993.
19. The Learned Senior Counsel further submitted that the Appellant committed breach of Section 230(2) of the Companies Act, 2013 by not disclosing the particulars of litigation relating to the North Mill.
20. In view of the reasons as stated above, the Learned Senior Counsel prayed this Bench to dismiss the Appeal.
Analysis / Appraisal:
21. Heard the Learned Counsel appeared for the respective parties, perused the pleadings and documents. The point for consideration is whether the Appellant has made out any case to allow the Appeal as prayed for.
22. The NCLT vide its order dated 27.02.2020 in an application filed by the Respondent herein in M.A. No. 948/KB/2019 in CP(CAA) No.518/KB/2017 passed the following directions at para 16 of the Impugned Order:
"16. In this case, the Applicant was admittedly not party to the proceeding under Section 230-232 of the Companies Act, 2013 (CP(CAA) No.518/KB/2017). Hence, no mistake can be corrected at its instance. At the same time, we cannot shut our eyes to the fact that the Respondent did not disclose about the material facts about the dispute relating to the title of New Mill estate/property which has been included in the schedule attached to the approved Scheme. The dispute about the Company Appeal (AT) No. 155 of 2020 7 of 11 passing of title is still pending before the Hon'ble High Court, Calcutta in Civil Suit No. 168 of 2009. Hence, in our limited jurisdiction, we direct the Respondent, Gloster Limited, to amend the schedule of property attached to the approved Scheme removing New Mill factory estate from property scheduled, as it is subject to litigation in CS No. 168 of 2009, pending before the Hon'ble High Court, Calcutta. We issue notice under Section 59 of the NCLT Rules, 2016, to the Respondent, Gloster Limited, to show cause as to why penalty of Rs. 50,000/- (Rupees Fifty thousand only) should not be imposed against it for non disclosure of material facts in its Application under Section 230, 232 of the Companies Act, 2013 (CP(CCA) No. 518/KB/2017). It is to be done within two weeks, failing which further necessary orders will be passed."
23. The facts of the case are that the Appellant and Kettlewell Bullen & Company Limited filed a petition under Section 230 to 232 of the Companies Act, 2013 sought a direction from the NCLT sanctioning the scheme of amalgamation and pursuant to the said scheme the Transferor Company i.e. "Kettlewell Bullen & Company Limited" would dissolves without winding up and all the properties assets would transfer to the Transferee Company i.e. the Appellant herein. Further, the petitioners sought leave to the file the schedule of assets of the Transferor Company within four weeks from the date of the order. According to the scheme, all the property, rights and powers of the Transferor Company including those mentioned in the schedule of assets, be transferred without further act or deed to the Transferee Company. All the debts, liabilities and obligations of the Transferor Company be transferred without further act or deed to the Transferee Company.
Company Appeal (AT) No. 155 of 2020 8 of 11
24. In the scheme of amalgamation under the schedule of assets Part-I, the properties were mentioned in a tabular format i.e. A, B, C, D, E. The assets of North Mill area mentioned at F of the tabular column of Part-I.
25. The NCLT vide its order dated 19.01.2018 allowed the application by sanctioned the scheme. It is noteworthy to mention that the Respondent is not party to the said scheme. However, the Respondent filed the application before the NCLT after the scheme was approved seeking directions that the order dated 19.01.2018 passed by the NCLT be recalled and set aside and further sought a direction to the RoC not to give effect the scheme of amalgamation and the schedule of assets appended to the order dated 19.01.2018. Upon contest of the Appellant and after hearing the parties, the NCLT passed the above Impugned Order.
26. The Respondent contended that the Appellant wrongly shown the property of North Mill area in the schedule of assets at Part-I to be its assets. On the contrary, the Respondent contend that the North Mill area is owned by them and they are in possession of the assets through its predecessor i.e. Hooghly Mills Company Limited (HMCL). It is the contention of the Respondent that the North Mill area was originally the property of Fort Gloster Industries Limited (FGIL), on 24.03.1988, the said FGIL executed an agreement for sale of North Mill Factory in favour of HMCL. The said asset was taken out of the scheduled of fixed assets forming part of consolidated balance sheet of the said company and sale consideration was recorded in the books of accounts. The sale deed of the above North Mill could not be executed because the permission to execute the sale deed Company Appeal (AT) No. 155 of 2020 9 of 11 was required to be obtained from the proper authority established under the Urban Land (Celling and Regulations) Act, 1976.
27. From the facts it appears that the HMCL filed Civil Suit for Specific Performance of Contract on the basis of agreement against FGIL. The said suit being CS No. 168 of 2009 is still pending before the High Court of Calcutta wherein the Respondent was substituted as plaintiff on the basis of agreement dated 12.02.2009 (on record). The civil dispute with regard to North Mill Estate is pending for consideration before the Hon'ble High Court of Calcutta. On the other hand, the FGIL has also filed title suit No. 987 of 2015 before the Learned Civil Judge (Junior Division, First Court, Uluberia) for possession of that property against the Respondent.
28. The Respondent strenuously contend that the North Mill property belongs to the Respondent which was lawfully derived from HMCL on the basis of agreement of sale dated 12.01.2009. It is also contended that the Appellant did not disclose regarding the civil dispute pending about the title of the suit property which was wrongly included in the schedule.
29. From the record, it is evident that a Civil Suit No. 168/2009 is pending before the Hon'ble High Court of Calcutta with regard to the dispute passing of title of the suit property i.e. North Mill estate. Further, it is also on record that prior to filing of reply affidavit by the Appellant, the Appellant on or about 16.08.2019 filed a Suit bearing No. 192/2019 in Uluberia Court for ejectment of the Respondent No.1 from the North Mill property.
Company Appeal (AT) No. 155 of 2020 10 of 11
30. From the above facts, it reveals that certain proceedings / suits are pending with regard to claim of title to the North Mill Estate property. The contention of the Respondent that the Appellant did not disclose with regard to the pendency of civil disputes and it is mandatorily to make a disclosure under Section 230(2) of the Companies Act, 2013. Since the Appellant included the North Mill property as the property in the scheme of amalgamation, therefore, all the details with regard to the said property ought to have been disclosed in the scheme. However, the Appellant failed to do so.
31. The NCLT discussed in detail with regard to the North Mill property in the impugned order and arrived at right conclusion by passing the order. Conclusion
32. For the aforesaid reasons this Tribunal is not inclined to interfere with the order passed by the NCLT.
33. Accordingly, the Appeal is dismissed. No order as to costs. Applications, if any, stands disposed of. Interim order if any, stand vacated.
[Justice Anant Bijay Singh] Member (Judicial) [Kanthi Narahari] Member (Technical) pks Company Appeal (AT) No. 155 of 2020 11 of 11