Karnataka High Court
Shri Prakash Budoor vs The Registrar Of Companies Karnataka on 8 July, 2019
Author: Alok Aradhe
Bench: Alok Aradhe
1
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF JULY 2019
BEFORE
THE HON'BLE MR. JUSTICE ALOK ARADHE
WRIT PETITION NOs.15872-875 OF 2019 (GM-RES)
BETWEEN:
1. SHRI PRAKASH BUDOOR
S/O SHRI B SIDDAPPA
AGED ABOUT 39 YEARS
OCCUPATION: DIRECTOR
M/S ALLIANCE BUSINESS SCHOOL
NO.100, 34TH MAIN, 2ND CROSS
DOLLARS SCHEME BTM I STAGE
BANGALORE-560068
2. SMT SHAILA CHEBBI GOVIND
W/O SHRI G B CHEBBI
AGED ABOUT 56 YEARS
M/S ALLIANCE BUSINESS SCHOOL
NO 100 34TH MAIN 2ND CROSS
DOLLARS SCHEME BTM I STAGE
BANGALORE-560068
3. SMT MALA MADIKERI SRINIVAS GOUDA
W/O DR SRINIVASA GOUDA
AGED ABOUT 54 YEARS
OCCUPATION: DIRECTOR
M/S ALLIANCE BUSINESS SCHOOL
NO.100 34TH MAIN 2ND CROSS
DOLLARS SCHEME BTM I STAGE
BANGALORE-560068
4. SHRI ABHAY GOVIND CHEBBI
S/O SHRI B G CHEBBI
AGED ABOUT 30 YEARS
OCCUPATION: DIRECTOR
M/S ALLIANCE BUSINESS SCHOOL
NO.100 34TH MAIN 2ND CROSS
2
DOLLARS SCHEME BTM I STAGE
BANGALORE-560068
... PETITIONERS
(BY MR. JAYAKUMAR S PATIL, SR. COUNSEL FOR
MR. M S SHYAM SUNDAR, ADV.)
AND:
1. THE REGISTRAR OF COMPANIES KARNATAKA
(MINISTRY OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA)
E WING 2ND FLOOR KENDRIYA SADAN
KORAMANGALA BANGALORE-560034
2. THE REGIONAL DIRECTOR
SOUTH EASTERN REGION (SER)
MINISTRY OF CORPORATE AFFAIRS
3RD FLOOR CORPORATE BHAVAN
BANDLAGUDA
NAGOLE TATTINNARAM VILLAGE
HAYAT NAGAR MANDAL
RANGA REDDY DISTRICT
HYDERABAD-500068
3. THE DIRECTOR GENERAL OF
CORPORATE AFFAIRS
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE D.G. CORPORATE AFFAIRS
KOTA HOUSE ANNEXE NO.1
SHAJAHAN ROAD
NEW DELHI-110011
4. THE MINISTRY OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA A WING
SHASTRI BHAWAN
RAJENDRA PRASAD ROAD
NEW DELHI-110001
REPRESENTED BY ITS PRINCIPAL SECRETARY
5. MR MADHUKAR G ANGUR
AGED ABOUT 62 YEARS
NO 1128 12ST A CROSS
14TH MAIN HSR 3RD SECTOR
HSR LAYOUT BDA COMPLEX
BANGALORE-560012
3
6.MS PRIYANKA B S
AGED ABOUT 30 YEARS
KUKKESRI NO 1128 14TH MAIN
21ST A CROSS HSR LAYOUT 3RD SECTOR
BANGALORE-560012
... RESPONDENTS
(BY MR. S VIJAYSHANKAR, SR. COUNSEL FOR
MR. H K SRIVASTHAVA, ADV. FOR R5,
MR.M N KUMAR, CGC FOR R1 TO R4
MR. K N PHANINDRA, SR. COUNSEL FOR
MS. ANNAPOORNA S, ADV. FOR R6 )
----
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
DIRECTION PROHIBITING THE R-1 TO 4 FROM TAKING ANY
ACTION UNDER THE COMPANY'S ACT 2013 OR ANY RULES MADE
THERE UNDER ON THE BASIS OF THE COMPLAINTS LODGED BY
THE R-5 AND 6 CONCERNING THE FILINGS AND UPLOADINGS
DONE BY WAY OF DIR-12 OR MGT-7 OR ANY OTHER FILING OR
UPLOADING/S DONE BY OR FOR THE PETITIONER OR BY THE
COMPANY M/S. ALLIANCE BUSINESS SCHOOL UNDER THE
APPROVAL OF THE PRESENT BOARD CONSISTING OF THE
PETITIONER.
THESE WRIT PETITIONS COMING ON FOR ORDERS THIS
DAY, THE COURT MADE THE FOLLOWING:-
ORDER
Mr.Jayakumar S.Patil, learned Senior counsel for Mr. Shyam Sundar the petitioners.
Mr. S. Vijay Shankar, learned Senior Counsel for Mr. H.K. Srivasthava, learned counsel for respondent No.5.
4
Mr.M.N.Kumar, learned Central Government Counsel for Respondent Nos.1 to 4.
Mr.K.N.Phanindra, learned Senior Counsel for Ms.Annapoorna S, learned counsel for respondent No.6.
2. The writ petitions are admitted for hearing. With consent of the learned counsel for the parties, the same are heard finally.
3. In these petitions under Articles 226 & 227 of the Constitution of India the petitioners inter alia seek a writ of prohibition, prohibiting respondent Nos.1 to 4 from taking any action on the basis of the complaint lodged by respondent Nos.5 & 6 with regard to filings and uploading of DIR-12, MGT-7 or any other filing or uploading done by the petitioners or by the company viz., Alliance Business School with the approval of the present board, against the petitioners. The petitioners also seek a writ of certiorari for quashment of show cause notice dated 28.03.2019, by which the petitioners have been asked to show cause as to why an action 5 under Rule 10(6) of the Companies (Registration Offices and Fees) Rules, 2014 for invalidating DIR-12 forms filed by the petitioners and revised MGT-7 filed by the petitioners and mark them defective on the basis of the complaints made by respondent Nos.5 and 6 be not taken. In order to appreciate the petitioners grievance, few relevant facts need mention, which are stated hereinafter.
FACTUAL MATRIX
4. Two sisters viz., Shaila Chebbi and Mala Gowda got a Private Limited Company incorporated viz., Alliance Business School in the year 2005. Initially, there were only two shareholders and Directors and both the sisters held 50% share holding each of the company. The said company is incorporated with an object to engage itself into educational activities by running various courses and management studies. It is averred in the writ petition that the petitioners who were renowned educationist supported his sisters who 6 had founded the company. It is also pleaded that elder brother of the sisters viz., respondent No.5 used to stay in United States and was rendered jobless. Thereupon, he returned to India and was accommodated to teach in the educational institutions of the company. The sisters under the supervision of the elders, transferred their share holding in favour of respondent No.5 in the year 2008 under a promise that as and when the shares are demanded, he would return the same. It is also pleaded that by virtue of share holding in his name, respondent No.5 became the Managing Director of the Company and co-opted four of his friends as fellow Directors and nominal shareholders.
5. In the year 2010, the company approached the Government of Karnataka for establishment of a Private University. The State Government thereupon directed the company to convert itself into a Non-Profit Trust Company. Accordingly, the Company was converted into a Non Profit Trust Company. The State Government, thereupon enacted an Act viz., Alliance 7 University Act, 2010 (hereinafter referred to as 'the Act' for short), by which the Company being a sponsoring body was permitted to establish a University. Accordingly, Alliance University was established and respondent No.5 became the first Chancellor of the University by virtue of the provision of the Act, which provided that Managing Director of the Company, would be the Chancellor.
6. It is averred in the writ petition that the respondent No.5 thereafter got engaged into criminal activities and embezzled a sum of Rs.100 Crores. Thereupon the sisters who had founded the University demanded the return of shares. The respondent No.5 with great difficulty returned the share holdings on 04.03.2015 and 05.03.2015 and tendered his resignation. Thus, the constitution of the Management of the company as well as the Board of Directors was changed and the same was duly uploaded with records of Registrar of Companies. On 07.04.2016, respondent 8 No.5 was removed from the post of Chancellor of the University as respondent No.5 was involved in a criminal case. Thereafter, the petitioners became the Managing Director of the Company as well as the Chancellor of the University.
7. Thereafter, the suit viz., O.S.No.5148/2017 was filed against respondent No.5 and his associates from interfering with the orders of injunction, in which order of injunctions were passed against respondent No.5 and his associates. The aforesaid order was upheld by this court in Miscellaneous First Appeal viz., MFA No.8545/2017. The respondent No.5 also filed a case before the National Company Law Tribunal and made complaints to the Ministry of Corporate Affairs and Registrar of Companies alleging fraud. It is the case of respondent No.5 that certain documents relating to company and his resignation have been forged by the petitioners. Thereupon a notice dated 28.03.2019 issued under Rule 10(6) of the Companies (Registration, 9 Offices and Fees) Rules, 2014 (hereinafter referred to as 'the Rules' for short) has been issued by the Registrar of Companies, by which the petitioners have been called upon to explain as to why the proposed action under Rule 10(6) of the Rules being not taken to invalidate five DIR-12 and MGT-7 and mark them as defective. In the aforesaid factual background, the petitioners have approached this Court.
SUBMISSIONS:
8. Learned Senior Counsel for the petitioners submitted that in the impugned show cause notice, ingredients of Rule 10(6) are conspicuously absent and therefore, initiation of proceeding under Rule 10(6) of the Rules is per se without jurisdiction. It is further submitted that the show cause notice is wholly without jurisdiction and the same has been issued with premeditation. It is also submitted that impugned show cause notice, in the instant case, is a mere empty formality and the Registrar of Companies who is acting on the dictates of higher officers, has already prejudged 10 the issues. It is also urged that when a statute confers a power on authority to do a certain thing in a certain way, the same should be done in that way or not at all and a writ of prohibition would lie when an inferior tribunal or an executive authority exercising quasi judicial powers exceeds its jurisdiction. In support of aforesaid submissions, reliance has been placed on decisions of Supreme Court in the case of 'COMMISSIONER OF POLICE, BOMBAY VS.
GORDHANDAS BHANJI', AIR 1952 SC 16, 'M/S EAST INDIA COMMERCIAL COMPANY LTD.
CALCUTTA AND ANOTHER VS. COLLECTOR OF
CUSTOM', AIR 1962 SC 1893, 'WHIRLPOOL
CORPORATION VS. REGISTRAR OF TRADEMARKS MUMBAI & OTHERS', (1998) 8 SCC 1, 'BABU VERGHESE AND OTHERS VS. BAR COUNCIL OF KERALA AND OTHERS', (1999) 3 SCC 422, 'M/S MOTHER CARE (INDIA) LIMITED (IN LIQUIDATION) REP. BY THE OFFICIAL LIQUIDATOR, BANGALORE VS. PROF 11 P.RAMASWAMY P.AIYAR', ILR 2004 KAR 1081, 'SIEMENS LTD. VS. STATE OF MAHARASHTRA AND OTHERS', (2006) 12 SCC 33, 'ORYX FISHERIES PRIVATE LIMITED VS. UNION OF INDIA AND OTHERS, (2010) 13 SCC 427, and 'STATE OF MADHYA PRADESH AND OTHERS VS. SANJAY NAGAYACH AND OTHERS', (2013) 7 SCC 25.
9. Learned Senior counsel for respondent No.5 pointed out that by a communication dated 13.03.2019, no direction has been issued to the Registrar of Companies and the impugned show cause notice dated 28.03.2019 has been issued in utter disregard to the instructions issued by the Ministry of Corporate Affairs. It is further submitted that the impugned show cause notice does not suffer from any infirmity and Registrar alone under the provisions of the Companies Act, 2013 has the authority to issue the impugned notice. Therefore, the Registrar has jurisdiction to issue the 12 impugned notice. In support of aforesaid submission, decision of Supreme Court in 'SMT.UJJAM BAI VS. STATE OF U.P. AND ANOTHER', AIR 1962 SC 1621, 'HARPAL SINGH VS. STATE OF PUNJAB', (2007) 13 SCC 387 and the decision of the Supreme Court in 'STATE OF UTTAR PRADESH VS. SHRI BRAHM DATT SHARMA AND ANOTHER', AIR 1987 SC 943. It is further pointed out that in the reply, which was submitted by the petitioners to the earlier show cause notice, no objection with regard to jurisdiction was taken. It is further submitted that show cause notice issued by Registrar of Companies was challenged in civil suit, which was withdrawn on 05.05.2017.
10. It is also submitted that the powers given to the Registrar under Rule 10(6) of the Rules are statutory in nature and the show cause notices neither suffer from any inherent lack of jurisdiction nor the same are premeditated. It is also argued that the show cause notices have not been issued acting on the 13 dictates of the Ministry of Corporate Affairs. It is also submitted that the petitioners have an alternate and efficacious remedy under Sections 58, 59, 241 and 242 of the Companies Act, 2013. It is also pointed out that the petitioners had filed a writ petition viz., W.P.No.52446/2017 for quashment of the proceedings before the National Company Law Tribunal, which was initiated by respondent No.5 . However, the aforesaid writ petition was withdrawn by the petitioner on 20.11.2017. Lastly, it is urged that the jurisdiction of the civil courts with regard to the disputes under the Companies Act, 2013 is barred. In support of aforesaid submissions, reliance has been placed on decisions of the Supreme Court in the case of 'STANDARD CHARTERED BANK AND OTHERS VS. DIRECTORATE OF ENFORCEMENT AND OTHERS', (2006) 4 SCC 278, 'NIVEDITA SHARMA VS. CELLULAR OPERATORS ASSOCIATION OF INDIA AND OTHERS', (2011) 14 SCC 337 and decisions of this Court in 'SHASHI PRAKASH KEMKA (DEAD) 14 THROUGH LRS AND ANOTHER VS. NEPC MICON (NOW CALLED NEPC INDIA LTD.) AND OTHERS, CIVIL APPEAL NOS.1965-66/2014', and 'SUDHIR ANGUR AND OTHERS VS. REGISTRAR OF COMPANIES AND OTHERS', W.P.NO.52446/2017 AND CONNECTED CASES.
11. Learned Senior Counsel for respondent No.6 while adopting the submissions made by Learned Senior Counsel for respondent No.5 submitted that respondent No.5 was in judicial custody for a period from 05.02.2016 till 03.03.2016. The petitioners filed O.S.No.1094/2016, in which an ad-interim order of injunction was granted on 06.02.2016 and thereafter, a meeting of the Board was convened on 11.02.2016, in which resolution was passed. It is further pointed out that after passing of the resolution; the aforesaid civil suit was withdrawn. Learned Senior Counsel has also invited the attention of this court to Section 168(1) of the Companies Act, 2013 and Rule 16 of the Companies 15 Appointment and Qualification of Directors Rules, 2014. It is further submitted that as required by the aforesaid provision resignation in Form viz., DIR-11 was never submitted and the petitioners did not respond to the show cause notice dated 05.05.2017. Mr.A.S.Ponanna, Learned Senior Counsel has adopted the submissions made by Learned Senior Counsel for respondent Nos.5 and 6 and has submitted that the Registrar alone can decide the dispute.
12. Learned counsel for Registrar of Companies submitted that no writ of prohibition can be issued for discharging the statutory function and no case is made out for quashment of show cause notice. It is further submitted that statutory functions have been cast upon the Registrar and they are not adjudicatory in nature. It is also submitted that the Ministry of Corporate Affairs has asked the petitioners to perform the statutory duties only and no directions have been issued to the Registrar of Companies. Learned counsel has also 16 invited the attention of this Court to para 31 of statement of objections filed on behalf of Registrar of Companies.
13. By way of rejoinder reply, Learned Senior Counsel for the petitioners submitted that the contents of the impugned notice do not call upon the petitioners to rectify any defect, therefore, do not fall within the purview of Rule 10(6) of the Rules. It is argued that allegations of fraud and forgery cannot be examined by Registrar of Companies and he should take an action in the matter as per the order of injunction passed by the Trial Court or stay his hands off. It is also pointed out that the dispute between the parties is being adjudicated before the civil court. Learned Senior Counsel has also produced copy of Form DIR-12 and has submitted that if documents mentioned therein are not annexed, then only it can be said to be incomplete. It is also submitted that the decision relied upon by the learned counsel for the petitioner in SHASHI PRAKASH 17 KEMKA supra has no application to the fact situation of the case and the civil suit is maintainable. It is also urged that the civil suit filed by the petitioner is maintainable.
LEGAL PRINCIPLES:
14. Before proceeding further, it is apposite to take note of certain well settled legal principles. The expression 'jurisdiction' has a well settled legal connotation. It means authority to bear or determine the controversy. The concept of jurisdiction is the power to hear and determine the cause. The Supreme Court in 'ANOWER HUSSAIN VS. AJOY KUMAR', AIR 1965 SC 1651 has held that the expression 'jurisdiction' does not mean power to do or order the act impugned, but generally the authority of Judicial Officer to act in the matter. It has been held that expression 'jurisdiction' means the entitlement to enter upon the enquiry in question [See:'M.L.SETHI VS. R.P.KAPUR', AIR 1972 SC 2379]. The Supreme Court while dealing with the expression 'jurisdiction' in celebrated case of 18 'A.R.ANTULAY VS. R.S.NAYAK', AIR 1988 SC 1531 held that jurisdiction is the authority or power of the court to deal with the matter and make an order carrying the binding force.
15. The scope of interference with regard to show cause notices is well settled by catena of decisions of the Supreme Court. If a show cause notice is issued under a statutory provision, the courts should be reluctant to interfere with the notice at that stage unless the notice is shown to have been issued palpably without any authority of law. [See: 'STATE OF UTTAR PRADESH VS. BRAHMA DUTTA SHARMA AND ANOTHER', AIR 1987 SC 943]. It has further been held that unless show cause notice is ex facie a nullity or is totally without jurisdiction i.e., where the commencement of the proceeding itself is unauthorized, at that stage, it should be shown that authority had no power or jurisdiction to enter upon enquiry and in all other cases, the party must respond to the show cause 19 notice. [See:'EXEUCTIVE ENGINEER, BIHAR HOUSING BOARD VS. RAMESH KUMAR SINGH', (1996) 1 SCC 327]. In 'UNION OF INDIA VS.
HINDUSTAN DEVELOPMENT CORPORATION LTD.,', (1998) 9 SCC 576, it has been that where the show cause notice requires investigation of facts, the Court should not interfere and the matter should be decided by the authorities. It has been held where the authority lacks jurisdiction, show cause notice can be quashed.
[See:'UNION OF INDIA VS. HINDALCO INDUSTRIES', (2003) 5 SCC 194]. Similar view has been taken in 'DIVISIONAL FOREST OFFICER VS. M.RAMLINGA REDDY', (2007) 9 SCC 286 and 'UNION OF INDIA VS. VICO LABORATORIES', (2007) 13 SCC 270. It has further been held that High Court should be extremely circumspect while dealing with a writ petition, in which a challenge is made to the show cause notice. [See:'COMMISSIONER OF CUSTOMS VS. COVAI RAJA AND METALS (INDIA) (P) LTD.,', (2018) 2 SCC 398].
20RELEVANT STATUTORY PROVISIONS :
16. At this stage, certain relevant statutory provisions, which have a material bearing on the controversy involved in this petition may be noticed. Section 58 of the Companies Act, 2013 provides that if a Private Limited Company by shares refuses, to register the transfer of or transmission by operation of law or right to any securities or interest of the members in a company, it shall send notice of the refusal to the transferor and the transferee, and the transferee may appeal to the Tribunal against the refusal. Section 59 of the Act deals with rectification of registration of members. Chapter XVI of the Act deals with prevention of oppression and mismanagement. Section 241 provides for an application to the tribunal in cases of relief to the oppression etc., whereas, Section 242 of the Act deals with powers of the Tribunal. In exercise of powers conferred under Sections 396, 398, 399, 403 and 404 read with Section 469 of the Act, the Central 21 Government has framed the Rules, which have come into force with effect from 01.04.2014 viz., the Companies (Registration Offices and Fees) Rules, 2014. Rule 2(l) defines the expression 'straight through process' to mean the process, in which e-form is approved through system without manual interruption.
17. Rule 5 of the Rules deals with powers and duties of the Registrar, whereas, Rule 8 of the Rules deals with authentication of the documents. Rule 10(6) of the Rules, which is relevant for the purposes of the controversy involved in the petition reads as under:
In case the Registrar finds any e-form or document filed under Straight Through Process as defective or incomplete in any respect, at any time suo motu or on receipt of information or complaint from any source at any time, he shall treat the e-form or document as defective in the electronic registry and shall also issue a notice pointing out the defects or incompleteness in thee- Form or document at the last intimated e-22
mail address of the person or the company which has filed the document, calling upon the person or company to file the e-form or document afresh along with fee and additional fee, as applicable at the time of actual re-filing, after rectifying the defects or incompleteness within a period of thirty days from the date of the notice.
ANALYSIS:
18. After having noticed the well settled legal propositions and the relevant statutory provisions, the facts of the case in hand may be examined. It is pertinent to note that Registrar of Companies had issued a show cause notice on 07.05.2015 inter alia on the ground that the office of the Registrar of Companies has received the credible information that certain persons have fraudulently obtained Digital Signature Certificate in the name of Madhukar G Angur by submitting forged documents and have used the same for appointing Mr.Abhay Govind Chebby and Mr.Prakash Siddappa as Directors of Alliance Business School with 23 effect from 04.03.2015. The petitioners were therefore; advised to submit the explanation as to why the three DIR-12 Forms referred to in the show cause notice should not be marked invalid. The petitioners on receipt of the aforesaid notice submitted a reply on 02.06.2015, the relevant extract of which reads as under:
"We understand that there are certain technical issues with respect to the following three e-form No.DIR-12s filed on MCA PORTAL ON 13.04.2015.
1. SRN No.C49752926 in respect of e-form No.DIR-12 filed on 13.04.2015.
2. SRN No.C49762115 in respect of e-form No.DIR-12 filed on 13.04.2015.
3. SRN No.C49762644 in respect of e-form No.DIR-12 filed on 13.04.2015.
Therefore, in the larger interest of all, we hereby give our consent for marking the above referred three SRN Nos. as "INVALID"."24
On the basis of the aforesaid reply, the aforesaid DIR-12 forms were invalidated by the Registrar on 08.06.2015 and 09.06.2015. Thereafter, another notice was sent by the Registrar of Companies on 05.05.2017, which was based on the complaint made by respondent No.5. By the aforesaid show cause notice, the petitioners were informed that the office of the Registrar of Companies has received two complaints dated 25.4.2016 and 26.04.2016 from respondent No.5 for invalidating DIR-12 forms and to mark them as defective. The petitioners were asked to offer an explanation within 15 days, failing which suitable action shall be taken. However, the petitioners did not respond to the aforesaid notice and instead filed O.S.No.4202/2016.
19. The respondent No.5 thereafter again made complaints on 25.03.2015, 20.04.2015, 28.04.2015, 08.02.2016, 14.03.2016, 25.04.2016, 26.04.2016, 24.05.2016, 20.07.2016, 18.08.2016, 02.11.2016, 25 26.10.2017, 23.08.2018 and 08.09.2018 to Registrar of Companies. Thereafter show cause notice was issued on 28.03.2019 inter alia on the ground that the petitioners have fraudulently changed the Directorship of the company by using fabricated and forged documents including fraudulently obtaining forged Digital Signature and have used the same to include their names as Directors of Companies. The petitioners were called upon to explain within 15 days as to why the action under Rule 10(6) of the Rules being not taken to invalidate five DIR-12 and MGT-7 and mark them as defective. It is pertinent to note that the petitioners did not challenge the earlier show cause notices dated 07.05.2015 and 05.05.2017. In fact, the show cause notice dated 05.05.2017 has not been challenged by the petitioners even till today.
20. The Registrar of Companies is vested with power under Rule 10 of the Rules to issue the impugned show cause notice. The show cause notice cannot be 26 said to be per se without jurisdiction as Registrar of Companies has the power to determine the questions raised in the show cause notice. The show cause notice also does not appear to have been issued with any premeditation as Ministry of Corporate Affairs has directed the Registrar of Companies to perform his statutory duties. It is pertinent to note that since, 2015 the respondent No.5 has been making complaints. However, no effective action in the matter has been taken by the Registrar of Companies nearly for a period of four years. In other words, he has failed to perform his statutory duties. In any case, the Registrar of Companies is vested with the authority to issue the notice and has to administer the provisions of the Act and the Rules. The Registrar of Companies is entitled to enter upon the enquiry in question initiated under Rule 10 of the Rules. He cannot be restrained from discharging his statutory functions. The impugned show cause notice cannot be said to be ex facie nullity or totally without jurisdiction and the commencement of 27 the proceeding by the Registrar cannot be said to be unauthorized. The Supreme Court in the case of COMMISSIONER OF CUSTOMS supra has held that High Court should be extremely circumspect while dealing with a writ petition, in which challenge is made to a show cause notice. The petitioners in the fact situation of the case are required to respond to the show cause notice issued to them and after adjudication are at liberty to take recourse to such remedy as may be available to them in law.
21. So far as submission made by Learned Senior Counsel for the petitioners that impugned show cause notice is per se without jurisdiction does not deserve acceptance, as the issue whether the forms in question are defective or incomplete can be adjudicated by the Registrar of Companies. The petitioners are well within their rights to raise an objection before the Registrar that ingredients of Rule 10(6) of the Rules are absent and the Registrar is even competent to decide the issue 28 with regard to jurisdiction as well. Therefore, the submission that show cause notice is per se without jurisdiction is sans substance. The impugned show cause notice though makes a reference to the Ministry and the Regional Director and refers to the communication dated 13.03.2019. Therefore, it is necessary to quote the relevant extract of the communication dated 13.03.2019:
"Accordingly, as directed by the
Ministry, you are advised to take
appropriate action to mark the e-forms DIR-12 (5 Nos.) and MGT-7 filed during February 2016 to April 2016 as defective and to rectify the irregular filing made in the MCA portal as per the case."
22. Thus, it is evident that the Registrar of Companies has merely been asked to perform his statutory duties as per the case and to take appropriate action. Therefore, it cannot be said that the impugned show cause notice has been issued at the dictates of the Ministry of Corporate Affairs. It is pertinent to mention, 29 that on previous occasion also the Registrar of Companies had issued two notices dated 07.05.2015 and 05.05.2017 without any reference to the instructions of the Ministry of Corporate Affairs. Therefore, the contention of the petitioners that the action has been taken on the dictates of Ministry of Corporate Affairs does not deserve acceptance.
23. So far as submission made by learned counsel for the respondents that the civil suit filed by the petitioners is not maintainable is concerned, the same need not be gone into in this proceeding, which deals essentially with the validity of the show cause notice issued to the petitioners under Rule 10 of the Rules and it will be open to the respondents to raise the aforesaid issue in the civil suits, if so advised.
24. In view of preceding analysis, no case for interference is made out at this stage. In case, the petitioners have not already filed reply to the show cause notice, they shall do so positively within a period 30 of two weeks from the date of receipt of certified copy of the order passed today and thereupon the Registrar of Companies after affording an opportunity of hearing to all necessary parties shall decide the objections, which may be preferred by the petitioners including the issue with regard to the jurisdiction by a speaking order within two months from the date of receipt of objections, which may be filed by the petitioners bearing in mind the interim orders of injunction granted by the Civil Courts. It is made clear that this court has not expressed any opinion on the merits of the case.
Accordingly, the petitions are disposed of.
Sd/-
JUDGE SS