National Company Law Appellate Tribunal
Ms. Explorers Travels & Tours Pvt. Pvt. ... vs Ms. Punita Khatter on 4 April, 2022
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
COMPANY APPEAL (AT) No.152 of 2021
(Arising out of Order dated 22.11.2021, passed by the National Company
Law Tribunal, Court No. II, Special Bench, New Delhi in CA No. 522 of 2021
in CP No. 3(ND)/2016)
IN THE MATTER OF:
M/s Explorers Travels and Tours Private
Limited,
501, Rectangle 1, D 4, District Centre,
Saket,
New Delhi. ...Appellant
Versus
1. Ms Punita Khatter,
205, Beverly Park,
DLF-Phase II,
Gurgaon 122001
Also at
501 Rectangle 1,
D 4 District Centre,
Saket,
New Delhi 110017 ...Respondent No. 1
2. Global Leisure & Recreations PTE
Limited
A company incorporated as per laws of
Singapore
80 Raffles Place 16-20
UOB Plaza,
048624
Singapore ...Respondent No. 2
3. Mrs Shalini Wadhwa
H-1101, Caitriona Apartments
Ambience Island,
-2-
Behind Leela Hotel,
NH-8 Phase-III Sector 24
Gurgaon 122001
Haryana, India. ...Respondent No. 3
4. Mr. Rakesh Wadhwa,
H-1101, Caitriona Apartments
Ambience Island,
Behind Leela Hotel,
NH-8 Phase-III Sector 24
Gurgaon 122001
Haryana, India. ...Respondent No. 4
For Appellant: Mr. Dhruba Mukherjee, Sr. Advocate with
Ms Tuhin Sinha, Mr Pranay Sarkar,
Advocates.
For Respondent No. 1: Mr. Krishnendu Datta, Sr. Advocate with
Mr. Aditya Bharech, Advocates for R-1.
For Respondent No. 1 in Ms. Punita Khatter, R1 in person.
person:
With
COMPANY APPEAL (AT) No.153 of 2021
(Arising out of Order dated 22.11.2021, passed by the National Company
Law Tribunal, Court No. II, Special Bench, New Delhi in CA No. 522 of 2021
in CP No. 3(ND)/2016)
IN THE MATTER OF:
M/s Global Leisure & Recreations PTE
Ltd
A Company incorporated as per laws of
Singapore
80 Raffles Place 16-20
UOB Plaza,
048624 ...Appellant
Singapore
Versus
1. Ms Punita Khatter,
205, Beverly Park,
Company Appeal (AT) No. 152 of 2021
With
Company Appeal (AT) No. 153 of 2021
-3-
DLF-Phase II,
Gurgaon 122001
Also at
501 Rectangle 1,
D 4 District Centre,
Saket,
New Delhi 110017 ...Respondent No. 1
2. Explorers Travels and Tours Private
Ltd,
501, Rectangle 1, D4, District Centre,
Saket,
New Delhi. ...Respondent No. 2
3. Mrs Shalini Wadhwa
H-1101. Caitriona Apartments
Ambience Island,
Behind Leela Hotel,
NH-8 Phase-III Sector 24
Gurgaon 122001
Haryana, India. ...Respondent No. 3
4. Mr. Rakesh Wadhwa,
H-1101. Caitriona Apartments
Ambience Island,
Behind Leela Hotel,
NH-8 Phase-III Sector 24 ...Respondent No.
Gurgaon 122001 4
Haryana, India.
For Appellant: Mr. Abhijeet Sinha, with Ms. Tuhin
Sinha, Mr Pranay Sarkar, Advocates.
For Respondent No. 1: Mr. Krishnendu Datta, Sr. Advocate with
Mr. Aditya Bharech, Advocates for R-1.
For Respondent No. 1 in Ms. Punita Khatter, R1 in person.
person:
Company Appeal (AT) No. 152 of 2021
With
Company Appeal (AT) No. 153 of 2021
-4-
JUDGEMENT
(Per: Shreesha Merla, Member (T))
1. Aggrieved by the Order dated 22/11/2021 passed by NCLT (National Company Law Tribunal, Court No. II, Special Bench, New Delhi) in CA No. 522 of 2021 in CP No. 3(ND)/2016, 'M/s. Explorers Travels and Tours Private Limited' preferred this Appeal under Section 421 of the Companies Act, 2013, (hereinafter referred to as 'The Act'). The NCLT in the Order Impugned observed as follows:
"Ld. Counsel for the Petitioner submits that the Petitioner holds 35% of the stake in the company. The application has been filed for seeking inspection of the records of the company with the help of an Auditor or any person, to video graph the entire proceedings of the 28th AGM dated 23.11.2021 and appoint an observer to the said meeting. We have heard the Petitioner, and also the Counsel for the Respondent. The Counsel for the Respondent inter alia submitted that some FIRs have been filed in 2016 against the Petitioner, who as the Managing Director of the Company has siphoned off funds and she has not been responding to the investigations taken up by the Police.
In view of the prayers made in the Application and contentions made by the Ld. Counsel for the Applicant, we feel it necessary to appoint an observer for AGM to be held on 23.11.2021. Accordingly, we hereby, appoint Mr. P. Nagesh, Sr. Counsel as an observer to watch the proceedings of the 28th AGM dated 23.11.2021 and submit a report. The appropriate fee of the Observer shall be fixed by the Court on receipt of the report of the Observer. The entire proceeding of the AGM shall be video recorded and produced before this Court. Besides the Petitioner will be entitled to have inspection of any statutory records or any financial statements through a reputed Chartered Accountant or a Company Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -5- Secretary or any other professional and produce such Inspection Report before this Court. The Respondent shall not object to the recording of the proceedings and also to the presence of the observer in the AGM. We hereby restrain the Respondents from proceeding with the Criminal Proceedings lodged with the police until the next date."
2. Submissions of the Appellant:
Learned Counsel strenuously contended that NCLT exceeded its jurisdiction by restraining the Respondents in the Company Petition from proceeding in the Criminal Proceedings lodged with the Police. The first Respondent is a 35% shareholder in the Appellant Company and was the Managing Director from 1995 to 11/04/2016; was running a parallel Company in the name and style of Merrific Travels and Events LLP and was diverting the business of the Appellant Company; on gaining knowledge about the said fraud, the Appellant Company filed CS (Comm.) No. 466 of 2021 before the Hon'ble Delhi High Court which vide Order dated 04/05/2016, inter alia appointed five local Commissioners to inspect and have access to the computers and hard disks used by the first Respondent herein to ascertain whether the Appellants propriety software and database has been downloaded and being used; in this background the first Respondent filed CA No, 522/2021 before the NCLT seeking several directions. As per Prayer (VI) of CA No. 522/2021, the first Respondent sought inspection of all Company data in her capacity as Director for FY 2016-17 being a 35% shareholder. NCLT granted inspection of Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -6- statutory records of any FY which was not even prayed for by the first Respondent. Moreover, having resigned on 09/06/2016, the first Respondent is now retrospectively seeking inspection of the records to which, only Director is entitled as per Section 128(3) of the Companies Act, 2013.
FIRs are pending against the first Respondent, the allegations being that, the first Respondent destroyed the financial records of the Company and removed the records from the Registered Office of the Company and also that she had siphoned off the funds from the Company.
NCLT failed to appreciate that the documents sought for by the first Respondent are forming part of the Criminal Investigation against the Appellant and the same could not have been directed as the law requires that the accused in a Criminal Investigation is not entitled to have any access to any incriminating document.
3. Submissions of the first Respondent:
Being the erstwhile Managing Director and 35% shareholder of the Appellant Company, it is submitted that the first Respondent was constrained to file CP No. 3 (ND)/2016 before the NCLT due to various instances of Oppression and Mismanagement. NCLT passed various Interim Orders on account of their continued mismanagement. Recently, the first Respondent was served with a copy of Notice for an AGM seeking to approve the financials for the year 2016-17. However Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -7- due to various discrepancies and non-grant of inspection, the first Respondent was constrained to file CA 522/2021 inter alia seeking
a) Appointment of observer to the AGM.
b) Videography of AGM.
c) Rectification of Financial.
d) Inspection of the Books of Accounts etc. Pursuant to the Impugned Order, the first Respondent sought inspection of the Company records before the AGM. The Appellant adjourned the AGM sine die on 25/11/2021. The Appellant and its majority shareholder fearing contempt proceedings filed identical Appeals before this Tribunal.
CA 522/2021 was argued at length by both parties and the NCLT in its jurisdiction has given the relevant directions in the Impugned Order, keeping in view the Petition filed under Oppression and Mismanagement. Rule 11 of the NCLT Rules, 2016, empowers the NCLT to make such Orders as may be necessary for meeting ends of justice.
There is no provision in the Act or in the corresponding Rules prohibiting the inspection of record of a party by any opponent. The omission of the word 'Shareholder' in Section 209(4) of the Act, does not prohibit a party in a pending case to inspect the records even if he/she is not a Director. The right of inspection is a statutory right. The Appellant having complied with a part of the Impugned Order by Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -8- not objecting to the videography and the presence of the observer cannot now say that the entire Impugned Order is a nullity. Learned Sr. Counsel contended that this Tribunal has powers to modify the Order instead of setting aside the entire Order. In the light of the contemptuous act, committed by the Appellant, NCLT vide Order dated 03/12/2021 issued contempt Notices to all the contemnors including the Appellant in CP No. 15/2021. No stay was granted thereafter. It is only to wriggle out of the contempt proceedings the Appellant and the majority shareholders are making these feeble attempts to derail the proceedings before the NCLT.
Company Appeal (AT) No. 153 of 2021
4. Aggrieved by the same Impugned Order dated 22/11/2021 passed by NCLT (National Company Law Tribunal, Court No. II, Special Bench, New Delhi) in CA No. 522 of 2021 in CP No. 3(ND)/2016, 'M/s. Global Leisure & Recreations Pte Ltd.' preferred Company Appeal (AT) No. 153 of 2021 on similar grounds.
5. Submissions of the Appellant:
Learned Counsel strenuously contended that the first Respondent was seeking a retrospective inspection of the record in her capacity as a Director for FY 2016-17 though, admittedly, she resigned from the Directorship of the Company on 09/06/2016 itself. NCLT has allowed the Prayer of the inspection in contravention of Section 128(3) of the Act which allows inspection of accounts only by a Director.
Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -9- NCLT granted relief much beyond the Prayer. Similar Applications were preferred and the Bench had refused to entertain the same as the Applications sought the same relief/s as sought for in the main Petition. At no stage, has the first Respondent ever challenged any resolution passed in the AGM/EGM.
Learned Counsel drew our attention to the prayers in the Application in CP No. 3(ND)/2016 filed by the first Respondent seeking to video graph the EGM and AGM and inspection of Accounts and other Financials.
The Hon'ble Delhi High Court vide Order dated 04/05/2016 has observed that the first Respondent was prima facie guilty of siphoning off funds and appointed five Commissioners to conduct the inspection. Learned Counsel contended that the 'appointment of the observer' was completely unwarranted keeping in view the facts and circumstances and the history of this case. NCLT in its Order dated 27/07/2021 noted that instead of taking up the CAs, the main Petition itself should be taken up along with the CAs and the matter was listed on 08/09/2021.
Learned Counsel drew our attention to (Annexure A-9) which is the copy of the email dated 24/11/2021 sent by the first Respondent seeking numerous and voluminous documents which are detailed as hereunder:
Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -10- Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -11- Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -12-
6. Submissions of the Respondent:
In response to these submissions, Learned Sr. Counsel submitted that there are several Interim Orders passed by NCLT in favour of the first Respondent herein.
The issue of removal of the first Respondent as Managing Director is pending adjudication in the main Petition. Learned Sr. Counsel drew our attention to one such Interim Order of the NCLT dated 12/08/2016, in which the Status Quo of the fixed asset was continued till the next date of hearing. Learned Counsel also argued that the first Respondent being a 35% shareholder is entitled to see the records/financials of the Appellant Company.
Counsel for the Respondent relied on the following Judgements in support of his case:
o 'Cosmosteels Private Ltd. & Ors.' Vs. 'Jairam Das Gupta & Ors.', [1987 (1) SCC 215].
o 'M.S.D.C. Radharamanan' Vs. 'M.S.D. Chandrasekara Raja & Anr.', [2008 (6) SCC 750].
o 'Pramod Kumar Mittal' Vs. 'Andhra Steel Corporation Ltd. & Ors.', [[1985] 58 CompCas 772 (Cal)]. o 'Venture India Properties P. Ltd.' Vs. 'Capt. Manmohan Singh Kohli & Ors.', [2011 (123) DRJ 520] Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -13- o 'Rajdhani Roller Flour Mills Pvt. Ltd.' Vs. 'Mangilal Bagri & Ors.', [1991 SCC Online Del 24].
o 'Chandra Kanta Nanawati & Ors.' Vs. 'I.S. Kavadia & Ors.', [1992 (1) WLC 396].
o 'S.P. Chengalvaraya Naidy' Vs. 'Jagnnath', [1994 1 SCC 1]. o 'A. Shanmugam' Vs. 'Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Paripalanai Sangam', [(2012) 6 SCC 430].
Assessment:
7. A brief perusal of the Impugned Order shows that CA 522/2021 was initially taken up on 22/11/2021, one day prior to the 28th AGM scheduled to be held by the Appellant Company. The Application preferred by the first Respondent came up for the first time on 22/11/2021 and no Notice was issued to the Appellant herein who did not have an opportunity to file their Reply/present their case. It is also seen from the Order dated 03/12/2021 that NCLT issued show cause Notice in the Contempt Petition without issuing any Notice in CA 522/2021. It is also evident from the material on record that the relief(s) sought for in CA 522 of 2021 is similar to the relief(s) sought for in the previous Application filed prior to the scheduled date of AGM. At this juncture, this Tribunal finds it relevant to reproduce the Prayer sought for in CA 522 of 2021:
Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -14- Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -15-
8. From the aforenoted reliefs sought for by the first Respondent/Applicant it is evident that some of the Prayers have not been addressed to and that the main Application is still pending before NCLT. NCLT passed an ad Interim Order as the AGM was scheduled to be held on the very next date and appointed Learned Sr. Counsel as an observer and Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -16- allowed the entire proceedings of the AGM to be video recorded. Additionally, the first Respondent was entitled to have inspection of any statutory records and Financial Statements through a reputed Chartered Accountant or Company Secretary and produce the Inspection Report before the Court. It was also directed that the Appellant herein should not object to the record of the proceedings or to the presence of the observer in the AGM. It is an admitted fact that the Notices for the AGM was received on 18th of November and therefore the urgent Application was filed.
9. It is submitted by both the parties that the AGM was not held on 23/11/2021 and was adjourned sine die on 03/12/2021. It is also seen from the material on record that the Appellant filed CS (Comm.) No. 466/2021 before the Hon'ble Delhi High Court, which vide Order dated 04/05/2016 has appointed five local Commissioners to inspect the computers/hard disks of the first Respondent on the ground that the Application herein has made out a prima facie case that the first Respondent has misused her erstwhile fiduciary position as Managing Director and has taken possession of the propriety software and database which was downloaded and is being used by her. It is submitted that the said case is still pending before the Hon'ble Delhi High Court.
10. This Tribunal is of the considered opinion that the observer, apart from observing the proceedings of the AGM and getting the videography executed, had to undertake the inspection of the financial records.
11. Having regard to the chequered history of the case without delving deep into the merits of the matter, this Tribunal, keeping in view the facts Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021 -17- and circumstances of the attendant case on hand, specifically in the light of the fact that the main Application is still pending before the NCLT and only a few relief(s) have been addressed to and the AGM has been adjourned sine die, read together with the fact that the first Respondent who is an Ex- Managing Director, who resigned way back in 2016 is now seeking inspection of records of the subsequent period also in her capacity as a shareholder, we set aside the Impugned Order, and remit the matter back to NCLT to decide the matter giving due opportunity to all parties to complete their pleadings, to the Appellants herein to file their objections and dispose of the case as expeditiously as practicable, but not later than three months from the date of this Order. The Appeals are allowed to the extent indicated above.
12. The Registry is directed to upload the Judgement on the website of this Tribunal and send a copy of this Judgement to NCLT (National Company Law Tribunal, New Delhi) forthwith.
[Justice Anant Bijay Singh] Member (Judicial) [Ms Shreesha Merla] Member (Technical) New Delhi 04th April, 2022 himanshu Company Appeal (AT) No. 152 of 2021 With Company Appeal (AT) No. 153 of 2021