Madras High Court
Wayne Burt Petro Chemicals Private ... vs M/S.Cetex Petro Chemicals Limited on 7 January, 2020
Author: M. Sathyanarayanan
Bench: M. Sathyanarayanan
CRP.Nos.34 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED 07.01.2020
CORAM
THE HONOURABLE MR. JUSTICE M. SATHYANARAYANAN
AND
THE HONOURABLE MRS. JUSTICE R.HEMALTHA
CRP.No.34 of 2020
and C.M.P.No.176 of 2020
1.Wayne Burt Petro Chemicals Private Limited,
rep. By its Senior Manager-Finance
V.K.Sivasubramanian,
A10, SIPCOT Industrial Park,
Irungattukottai, Sriperumbudur Taluk,
Chennai 602 105, Tamil Nadu.
2.Wayne Burt Pte Ltd.,
rep.by its Senior Manager Finance
V.K.Sivasubramanian,
Having its registered Office at
47, Changi North Crescent, Changi
Singapore 738 346.
...Petitioners
Vs
1.M/s.Cetex Petro Chemicals Limited
rep. By its Managing Director,
Mr.Sivagnanam Govindasamy Ilanahai
having its registered office at
Manali, Chennai 600 068.
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CRP.Nos.34 of 2020
2.M/s.Sacred Banyan Infra Private Limited
rep. By its Director,
Mr.Badrinarayan Choudhary
Studio-N, SY No.70, Narne Nagar,
Beside Lanco Hills, Hyderabad 500 049.
3.Mr.Sivagnanam Govindasamy Illanahai
4.Mr.Badrinarayan Choudhary
5.Mr.Vasudevan Ragjavan
.....Respondents in all C.R.P.s
PRAYER:- Civil Revision petition filed under Article 227 of the
Constitution of India to direct the respondents to follow NCLT in
I.A.No.421/2019 in C.P.No.20/2018 on the file of NCLT, Chennai and
forebearing them from in manner proceedings with any conduct meetings /
General Body meeting dated 31.12.2019 or giving effect to any of the
decision or resolution taken by the Board of Directors of the 1 st respondent
company in any manner from removing the petitioners 1 and 2.
For Petitioners : Mrs.V.Bagyalakshmi
For Respondents :Mr.Adeesh Anto for R1 & R3
M/s.Lulu Marian for R2
Mr.S.V.Pravin Rathinam (No appearance)
for R4 & R5
ORDER
[Order of the Court was made by M.SATHYANARAYANAN,J.,] The petitioners filed Company Petition No.20/2018 on the file of the National Company Law Tribunal (NCLT) at Chennai under Section 59 of 2 http://www.judis.nic.in CRP.Nos.34 of 2020 the Companies Act, 2013 read with Sections 241 and 242 of the Companies Act, 2013 and it is relevant to extract the relief sought for by the petitioners in the said petition:
B:Final Relief:
In view of the facts mentioned above, the petitioners respectfully and humbly pray for the following reliefs:
(i) The petitioners humbly pray that this Hon'ble NCLT may be pleased to declare that the acts of the respondents 2 to 5 are oppressive and prejudicial to the interest of the petitioners and the 1st respondent Company.
(ii) The petitioners humbly pray that this Hon'ble NCLT may be pleased to direct the second respondent Company to file Form MBP-4 under Section 89 of the Companies Act 2013 indicating that M/s.Sacred Banyan Infra Private Limited holds the shares of M/s.Wayne Burt Petro Chemicals Private Limited in the company in trust and that the voting rights of such shares will continue to be with M/s.Wanye Burt Petro Chemicals Pvt. Ltd,
(iii) The petitioners humbly pray that this Honble NCLT may be pleased to pass necessary orders directing respondents 2 to 5 to pay a sum of Rs.15,00,000/- as costs of and expenses incidental to this petition.
(iv) The petitioners humbly pray that this Honble NCLT may be pleased to pass necessary orders under Section 59 of the 3 http://www.judis.nic.in CRP.Nos.34 of 2020 Companies Act, 2013 to alter the Register of Members of the first respondent.
(v) The petitioners humbly pray that this Honble NCLT may be pleased to pass such further or other orders as it may deem fit and proper in the circumstances of the case and in the interests of justice and equity and thus render justice.
2. The application for interim relief along with main petition came to hearing on 19.11.2018 before NCLT and having recorded the fact that on account of the understanding between the parties, without prejudice to the rights and contentions, the NCLT having felt that to enable the company to discharge its functioning in usual course, as agreed between the parties, directs the respondents to keep the disputed shareholding of 4.5% (28,50,016) in dispute between the parties in abeyance until further orders with liberty to R1 Company to hold the meeting on 19.11.2018 and also AGM scheduled to be held on 22.11.2018 with a direction to both the parties not to exercise voting right in respect to the disputed shareholding of 4.5%. The interim application was listed for hearing on 01.10.2019 and the NCLT having noted that pleadings have been completed in the main 4 http://www.judis.nic.in CRP.Nos.34 of 2020 C.P.No.20/2018, directed the parties to advance arguments on the next date of hearing with further indication that the petitioner if does not argue the case on the next date of hearing, the interim order shall stand vacated.
3. The petitioner filed I.A.No.421/ in C.P.No.20/2018 praying for the following relief:
1. ''to set aside the induction of the two additional Director pursuant to the resolution passed by the Board of Directors on 01.11.2019 in violation of the order passed by this Honourable Tribunal.
2. To pass a direction that the Board of Directors shall have representation in proportion to the equity shareholding of the petitioners with 47.68% and the respondents with 47.82%.
3. To extend the time for subscription to the rights issue dated 01.11.2019 by a period of 30 days for infusion of entire shortfall of funds Rs.6.5 Cr.
4. Or any other order or orders as this Honourable Tribunal deems fit in the circumstances of the case and thus render justice.''
4. The NCLT, vide order dated 14.10.2019, has granted liberty to the 1st respondent Company to raise debt and equity in accordance with law subject to infusion to funds over 4½ % of disputed shareholding by keeping 5 http://www.judis.nic.in CRP.Nos.34 of 2020 it in abeyance and also to hold Board Meetings with a clarification that this order will supersede the orders dated 26.04.2018 and 19.11.2018 and also recorded the consensus arrived between the parties.
5. The grievance expressed by the learned counsel appearing for the petitioner is that despite such a direction, the 2nd respondent with a malafide intention and in order to misappropriate the major shareholding belong to the petitioner Company, illegally misused the DP share transfer forms and committed fraud, cheating, breach of trust by transferring the share of 4.5% in their name, though the said transfer was directed to be kept in abeyance, vide order dated 19.11.2018 of the NCLT, which had become final. The learned counsel appearing for the petitioner would submit that the petitioner also filed I.A.No.252/2018 in C.P.No.20/2018 to set aside the induction of the two additional Directors, pursuant to the resolution passed by the Board of Directors on 01.11.2019, in violation of the order passed by the Tribunal dated 26.04.2018 and to pass a direction that the Board of Directors shall have representation in proportion to the equity shareholding of the petitioners with 47.68% and the respondents with 47.82%, respectively and 6 http://www.judis.nic.in CRP.Nos.34 of 2020 admittedly, I.A.No.252/2018 as well as I.A.No.421/2019 are kept pending and for want of Presiding Oficer, the matter was originally listed on 04.12.2019 and stands posted to 07.02.2020.
6. The learned counsel appearing for the petitioner would further submit that in the light of the difficulties faced, the petitioner is left with no other option except to move this Court by invoking Article 227 of the Constitution of India and would contend among other things that without valid transfer of 4.5% shares belonging to the petitioner in the 1 st respondent Company in favour of the 2nd respondent, it has no interest, right or authority to publish 16th Annual General Meeting report or conducted Annual General Meeting held on 31.12.2019 and further pointed out that in paragraph no.2.4 of the said Annual report, it has been stated that Rs.28,78,464 shares transferred from Wayne Burt Petro Chemicals Private Limited (Petitioner herein) to Scared Banyan Infra Private Limited through demat and the said transfer is also disputed before NCLT and final order is awaited and hence prays for appropriate orders directing the respondents to follow the order dated 14.10.2019 in I.A.No.421/2019 in C.P.No.20/2018 7 http://www.judis.nic.in CRP.Nos.34 of 2020 on the file of NCLT, Chennai. When the learned counsel appearing for the petitioner made attempts to argue the Civil Revision Petition, this Court has put a specific query as to the maintainablility for the reason that I.A.No.421/2018 in C.P.No.20/2018 is still pending and that apart, in the light of the alternative remedy available under the Insolvency and Bankruptcy Code, 2016, in response to the same, the learned counsel for the petitioner has placed reliance upon the order dated 21.12.2018 in C.R.P.Nos.3278, 4028, 4029 and 4065 of 2017 (Infonet Asia Private Limited Vs. Autocap India Private Limited) and would submit that in similar facts and circumstances, the Civil Revision Petition were numbered and however, the Division Bench of this Court having noted that there is an alternative remedy in the form of appeal, has dismissed the Civil Revision Petition as not maintainable and in the light of the fact that the respondents had committed fraud by not complying with the impugned order passed by the NCLT dated 14.10.2019 in I.A.No.421/2019 in C.P.No.20/2018, the petitioners are left with no other option, except to approach this Court. 8 http://www.judis.nic.in CRP.Nos.34 of 2020
7. This Court has carefully considered the rival submission and also perused the materials placed before it.
8. The Hon'ble Supreme Court of India in the decision in Municipal Corporation of Delhi Vs. Jai Singh and others ( 2010 (9) SCC 385 ) has considered the nature and scope of power under Article 227 of the Constitution of India and it is relevant to extract paragraph no.15:
“The High Court, under Article 227 of the Constitution of India, has the jurisdiction to ensure that all subordinate courts as well as statutoty or quasi-judicial tribunals, exercise the powers vested in them, within the bounds of their authority. The High Court has the power and the jurisdiction to ensure that they act in accordance with the well-established principles of law. The High Court is vested with the powers of superintendence and / or judicial revision, even in matters where no revision or appeal lies to the High Court. The jurisdiction under this article is, in some ways, wider than the power and jurisdiction under Article 226 of the Constitution of India. It is, however, well to remember the well-known adage that greater th power, greater the care and caution in exercise thereof. The High Court is, therefore, 9 http://www.judis.nic.in CRP.Nos.34 of 2020 expected to exercise such wide powers with great care, caution and circumspection. The Exercise of jurisdiction must be within the well-recognised constraints. It cannot be exercised like a 'bull in a china shop' to correct all errors of judgment of a court, or tribunal, acting within the limits of its jurisdiction. This corrrectional jurisdiction can be exercised in cases where orders have been passed in grave dereliction of duty or in flagrant abuse of fundamental principles of law or justice.”
9. The Hon'ble Supreme Court of India in the decision in M/s.Embassy Property Developments Private Limited Vs. State of Karnataka and Others [2019 (17) Scale 37] had dealt with the jurisdiction and powers of the High Court under Section 226 and 227 of the Constitution of India and observed as follows:.
11. It is beyond any pale of doubt that IBC, 2016 is a complete Code in itself. As observed by this Court in Innoventive Industries Limitedv.ICICI Bank,3it is an exhaustive code on the subject matter of insolvency in relation to corporate entities and others. It is also true that IBC, 2016 is a single Unified Umbrella Code, covering the entire gamut of the law relating to insolvency resolution of corporate persons and others in a time bound manner. The code provides a three-tier mechanism namely(i)the 10 http://www.judis.nic.in CRP.Nos.34 of 2020 NCLT, which is the Adjudicating Authority(ii)the NCLAT which is the appellate authority and(iii)this court as the final authority, for dealing with all issues that may arise in relation to the reorganisation and insolvency resolution of corporate persons. In so far as insolvency resolution of corporate debtors and personal guarantors are concerned, any order passed by the NCLT is appealable to NCLAT under Section 61 of the IBC, 2016 and the orders of the NCLAT are amenable to the appellate jurisdiction of this court under Section 62. It is in this context that the action of the State of Karnataka in by-passing the remedy of appeal to NCLAT and the act of the High Court in entertaining the writ petition against the order of the NCLT are being questioned.
15.One of the well recognized exceptions to the self- imposed restraint of the High Courts, in cases where a statutory alternative remedy of appeal is available, is the lack of jurisdiction on the part of the statutory/quasi-judicial authority, against whose order a judicial review is sought. Traditionally, English courts maintained a distinction between cases where a statutory/quasi-judicial authority exercised a jurisdiction not vested in it in law and cases where there was a wrongful exercise of the available jurisdiction. An “error of jurisdiction” was always distinguished from “in excess of jurisdiction”, until the advent of the decision rendered by the House of Lords, by a 11 http://www.judis.nic.in CRP.Nos.34 of 2020 majority of 3:2 in Anisminic Ltd.v.Foreign Compensation Commission.5After acknowledging that a confusion had been created by the observations made in Reg.v. Governor of Brixton Prison, Ex parte Armah6to the effect that if a Tribunal has jurisdiction to go right, it has jurisdiction to go wrong, it was held in Anisminic that the real question was not whether an authority made a wrong decision but whether they enquired into and decided a matter which they had no right to consider.
24. Therefore in so far as the question of exercise of the power conferred by Article 226, despite the availability of a statutory alternative remedy, is concerned, Anisminic cannot be relied upon. The distinction between the lack of jurisdiction and the wrongful exercise of the available jurisdiction, should certainly be taken into account by High Courts, when Article 226 is sought to be invoked bypassing a statutory alternative remedy provided by a special statute.
10. The petitioners in the Civil Revision Petition alleges violation of the undertaking on the part of the respondents, which resulted in a consensus/consent order dated 14.10.2019 in I.A.No.421/2019 in C.P.No.20/2018. In the considered opinion of this Court, grounds raised in 12 http://www.judis.nic.in CRP.Nos.34 of 2020 the Civil Revision Petition as to the alleged fraud / illegality said to have been played by the respondents cannot be adjudicated or decided by this Court in exercise of it' s power under Section 227 of the Constitution of India. Admittedly, I.A.No.421/2019 is still pending and if it is available to the petitioner under law, they are always at liberty to urge the points before the said forum.
11. In the light of the reasons assigned above, this Court is unable to come to the aid of the petitioner.
12. In the result, the Civiil Revision Petition is dismissed at the admission stage itself. No costs. Consequently connected miscellaneous petition is closed.
[M.S.N.,J] [R.H., J]
07.01.2020
Index :Yes/ No
Internet :Yes /No
sk
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CRP.Nos.34 of 2020
M.SATHYANARAYANAN.,J,
and
R.HEMALTHA.,J,
sk
CRP.Nos.34 of 2020
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