Defaulting Director Can Be Disqualified From All Companies, S.164 Is Reasonable Restriction To Article 19(1)(g): Karnataka High Court

The Karnataka High Court has held that under Section 164 of the Companies Act 2013, an individual can be disqualified from being a Director in a company against which allegations are made, as well as regarding any other company in which the individual is a director against whom no allegations are made.The petitioner directors had argued that they had been disqualified from the company–M/s Vihaan, as regards which allegations have been made, but also as regards any other company, and that they...

Of Profits And People: A Legal Odyssey Between Shareholder Supremacy And Stakeholderism

Professor Joe Badaracco in the documentary titled 'The Corporation' puts forward the idea that a Corporation is composed of a group of individuals who work for a bouquet of goals, the leading one of which is to earn huge sustainable and lawful return for the proprietors. The Civil War coupled with the Industrial Revolution changed the magnitude at which these corporations operated. The Corporations grew more power hungry, and they wanted to free themselves from the constraints which were imposed...

Selective Allotment And New Rights Issue Framework: A Double-Edged Reform

The Securities and Exchange Board of India (SEBI), on 4th March, 2025, introduced the SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2025, which also added a new framework for rights issue. In due course, on March 11, 2025, SEBI issued a circular setting out the timelines for completing various activities involved in rights issues and permitting selective allotment to specific Investors.This article compares the changes made in the rights issue process with the...

Court Must See If Company Is A Threat To Commercial World For Winding Up U/S 433(f) Of Companies Act: Allahabad High Court

The Allahabad High Court has held that for winding up of a company under Section 433(f) of the the Companies Act, the Court must opine that the company is a threat to the commercial world if it remains in existence.Rejecting the application for winding up of a company, Justice Pankaj Bhatia held “To appreciate a case for winding up of a company on the ground that it is just and equitable, it is essential for the Court to form a view that in view of the status of the company, if the company is...

Schrödinger's Cat of Jurisdiction

Is it possible to exist in two states at once, alive and dead, until observed? The thought experiment - 'Schrodinger's cat' offers us the answer to it. On similar lines, jurisdictional boundaries in corporate law often exist in a state of quantum ambiguity, much like Schrödinger's cat—neither fully alive (adjudicatory) nor entirely dead (non-adjudicatory) until the box is opened, that is to say, until a prima facie analysis is run. The Tribunals (National Company Law Tribunal and National...

SAT's Achilles' Heel: The Urgent Case For Contempt Powers

Born from a need for expediting resolutions, tribunals have evolved into an indispensable part of the Judiciary since they represent the hope to satisfy public demand for quick and effective justice. Still, a Tribunal needs respect and adherence to its decisions if it is to be an authoritative judicial body. While tribunals such as the National Company Law Tribunal (“NCLT”) and National Company Law Appellate Tribunal (“NCLAT) wield codified contempt powers to enforce their orders, the...

Pre-Pack Insolvency Resolution: A Solution for MSME Distress? - Examining India's Pre-Pack Schemes And Their Role In Resolving MSME Insolvency

63 million MSMEs employ nearly 115 million individuals, contributing to over 30% of India's GDP. MSMEs in India are also renowned for producing over 6,000 products, a good part of which earns precious forex. When the pandemic struck, there was a need to safeguard these MSMEs from adverse financial conditions. Enter pre-pack insolvency resolution process (PPIRP). The legal-process balanced the interests of stakeholders by ensuring that the company continued its operations and the overall business...

Eligibility Of Suspended Director To Submit A Resolution Plan: Revisiting Hari Babu Thota

Section 29A of the Insolvency and Bankruptcy Code, 2016 (“IBC”), excludes certain classes of persons from submitting a resolution plan in the Corporate Insolvency Resolution Process (“CIRP”) of a Corporate Debtor (“CD”). This includes the promoter or suspended director of a CD[1] among others. The objective of this provision is to inter alia eliminate the risk of an unsuitable person such as a defaulting promoter from submitting a resolution plan and returning to the management of the CD...

Eligibility Of Suspended Director To Submit A Resolution Plan: Revisiting Hari Babu Thota

Section 29A of the Insolvency and Bankruptcy Code, 2016 (“IBC”), excludes certain classes of persons from submitting a resolution plan in the Corporate Insolvency Resolution Process (“CIRP”) of a Corporate Debtor (“CD”). This includes the promoter or suspended director of a CD[1] among others. The objective of this provision is to inter alia eliminate the risk of an unsuitable person such as a defaulting promoter from submitting a resolution plan and returning to the management of the CD...

Roc Hyderabad Imposes Rs. 40,000 Penalty On Sai Silks (Kalamandir) Limited And Directors For Non-Disclosure Of Asset In Rs. 50.94 Million Impairment Loss

The Registrar of Companies, Hyderabad has held imposed a penalty of Rs. 40,000/- on Sai Silks (Kalamandir) Limited and its directors for failure to disclose the nature of the asset associated with an impairment loss of Rs. 50.94 million. IND AS 36 deals with the impairment of assets. This standard requires companies to ensure that their assets are carried at no more than their recoverable amount. If the carrying amount of an asset exceeds its recoverable amount, the asset is considered...

Roc Hyderabad Imposes Rs. 40,000 Penalty On Sai Silks (Kalamandir) Limited And Directors For Non-Disclosure Of Asset In Rs. 50.94 Million Impairment Loss

The Registrar of Companies, Hyderabad has held imposed a penalty of Rs. 40,000/- on Sai Silks (Kalamandir) Limited and its directors for failure to disclose the nature of the asset associated with an impairment loss of Rs. 50.94 million. IND AS 36 deals with the impairment of assets. This standard requires companies to ensure that their assets are carried at no more than their recoverable amount. If the carrying amount of an asset exceeds its recoverable amount, the asset is considered...

A Study On Inherent Power Of NCLT To Recall CIRP

The purpose of Courts is to dispense justice which necessarily means both timely justice and quality justice. The interest of every party has to be taken care of by the court. However, at certain times procedural errors might take place, that need to be rectified, otherwise the whole proceeding will get vitiated.[1] For so doing, it becomes necessary that every court has the power to rectify the wrongs done in the misbelief of facts. These powers are also needed in such situations where...