Concealment Of Earlier Proceedings Disentitles Litigant From Relief: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has dismissed an appeal as lacking merit, primarily because the appellants had concealed material facts relating to earlier proceedings that had already come to an end owing to non-removal of defects.

The bench of Judicial Member Justice Sharad Kumar Sharma and Technical Members Indevar Pandey and Arun Baroka observed,

“Non-disclosure of these two vital facts will have a direct bearing on consideration of the Company Appeal itself on its merits, as against the rejection of the present Intervention Application, as those were the necessary facts which were required to be brought on record by the Appellant, which have not been deliberately disclosed by the Appellant for the reasons best known to him, and this will amount to an intentional concealment.”

The appeal was filed by Abhinandan Complex Private Limited challenging an order of the Guwahati Bench of the National Company Law Tribunal (NCLT) which had rejected their intervention application in pending company proceedings.

The matter arose from oppression and mismanagement issues raised by the appellant against the respondents. The appellants claimed that they had invested approximately Rs 16.71 crore between 2012 and 2014 pursuant to an MoU dated 16 September 2013, which allegedly entitled them to a 33.33% stake in Goldstone Cements Limited.

They alleged that the Jain and More Groups had siphoned funds and orchestrated share allotments in a manner that diluted their shareholding from 33.33% to 1.62%. The appellants further claimed that they were excluded from corporate governance, denied share certificates, and prevented from participating in the 2024 rights issue.

The NCLT rejected the intervention application after finding that the appellants did not satisfy the eligibility requirements prescribed under Section 244 of the Companies Act, 2013 for maintaining proceedings under Sections 241 and 242 relating to oppression and mismanagement.

While examining the appeal, the Tribunal noted that the impugned order itself recorded that the appellants had previously filed an intervention application concerning the same grievances. That earlier application was never accepted and was closed because the appellants failed to rectify defects pointed out by the Registry.

The Tribunal further noted that the appellants had also filed a company petition raising substantially the same grievances, which too was closed to non-removal of defects.

Referring to Rule 28(4) of the NCLT Rules, 2016, the bench observed that where defects are not removed within the prescribed time, the Registrar is empowered to decline registration of the pleading. The bench observed,

“In that eventuality, when the principal Company Petition has been closed in the light of Sub-Rule 4 of Rule 28, the Appellant's right to re-agitate would stand closed, either by way of a Company Petition or even by way of filing any Intervention Application.”

The Tribunal further took note of the appellants' conduct in failing to disclose the existence and fate of the earlier proceedings while filing the appeal. It observed that these were vital facts having a direct bearing on the maintainability and merits of the appeal and that the deliberate omission to disclose those facts amounted to intentional concealment.

Holding that the concealment itself was sufficient to disentitle the appellants from being heard and that the previous proceedings had already attained their legal end, the NCLAT concluded that the appeal was devoid of merit and dismissed it.

For Appellants: Advocates Kaustav Jalukdar, Arani Guha, Madhuri Pandey, Vishesh Kalra, Simran Shadija

For Respondent: Senior Advocate Krishnendu Datta with Advocates Vivek Jhunjhunwala, Pratik Shanu, Randeep Sachdeva, Vivek J.,Pratik Shanu, Prashant Sodhi, Aryan Mishra, Mehul Bacchawat, for R14-20, R22-24, 28-31, 33-41, 43; Advocate Swapna Choukey for R1-R12