Notices To ED, CBI For Investigating Company Affairs Can Be Issued Only After Hearing Parties: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has ruled that an investigation into a company's affairs cannot be initiated merely because an application has been filed. The tribunal must first satisfy itself that the circumstances required under Section 213(b) of the Companies Act exist. It must also give the affected parties a reasonable opportunity to hear.Judicial Member Justice Sharad Kumar Sharma and Technical Members Arun Baroka and Indevar Pandey were dealing with two...

NCLAT New Delhi Holds SFIO Can File Disgorgement Plea As Union Government's Authorised Representative

The National Company Law Appellate Tribunal (NCLAT) at New Delhi on 25 August affirmed that the Serious Fraud Investigation Office (SFIO) was validly authorised to file disgorgement proceedings before the NCLT on behalf of the Union of India under Section 212(14A) of the Companies Act, 2013. A Bench comprising Officiating Chairperson Justice Yogesh Khanna with Technical Members Ajai Das Mehrotra and Barun Mitra dismissed appeals by BSR & Associates LLP and N. Sampath Ganesh, observing that...

NCLAT Delhi Rejects Plea To Restore 1.35 Lakh Sintex Shares, Says Sec.59 Companies Act Can't Revive Equity

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 21 August dismissed an appeal filed by Titus Babu challenging the cancellation of his 1,35,000 equity shares in Sintex Industries Limited (SIL), observing that an approved Resolution Plan extinguishes pre-existing equity shareholding and binds shareholders and members A Bench of Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha held that Section 59 of the Companies Act, 2013, which...

NCLAT New Delhi Restores Status Quo Over Company Assets Pending Share Valuation And Buyback

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 18 August directed that status quo be maintained in a family dispute over Rukshmani Syntex Pvt. Ltd. until valuation of the appellant's shares is completed. A Bench comprising Judicial Member Justice Sharad Kumar Sharma and Technical Member Indevar Pandey disposed of an appeal filed by Mehul Narayan Thakkar against an order of the Mumbai National Company Law Tribunal (NCLT) and directed the NCLT to appoint a valuer and obtain a...

NCLT Cannot Direct EGM Without Proof Of Impracticability; Requisitioning Member Has Absolute Right: NCLAT Chennai

The National Company Law Appellate Tribunal (NCLAT) at Chennai has set aside an order of the Kochi bench of thr National Company Law Tribunal (NCLT) which had directed convening of an Extraordinary General Meeting (EGM) under Section 98 of the Companies Act, 2013 holding that Section 98 jurisdiction is exceptional and can only be invoked upon proof of “impracticability” in convening a meeting, whereas requisitioning members already have an absolute right under Section 100(4) to convene an EGM...

NCLAT Delhi Sets Aside Transfer Of Assam Medical Corporation Shares For Articles Of Association Breach

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 5 August held that a private company cannot transfer shares without complying with the procedure prescribed under its Articles of Association, including requirements relating to notice, valuation, and existing shareholders' right to purchase the shares before they are offered to outsiders. A Bench comprising Officiating Chairperson Justice Yogesh Khanna and Technical Member Ajai Das Mehrotra set aside the transfer of 117 shares...

NCLAT Admits Appeal Against NCLT Mumbai Order Waiving Membership Requirement For IMPPA Members' Oppression Plea

The National Company Law Appellate Tribunal (NCLAT) has admitted an appeal filed by the Indian Motion Picture Producers Association (IMPPA) against a Mumbai NCLT order. The order had allowed members of the association to pursue an oppression and mismanagement petition after waiving the statutory membership requirement under Section 244 of the Companies Act.The matter was heard by a bench of Judicial Member Justice Sharad Kumar Sharma and Technical Members Arun Baroka and Indevar Pandey. The...

Manipulation Of Statutory Records, Bogus Book Entries To Usurp 100% Shareholding Amount to Oppression: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has recently held that manipulating statutory records to usurp shareholding and stripping a company's assets through bogus book entries amount to continuing acts of oppression and mismanagement under the Companies Act, 2013.A bench of Judicial Member Justice Yogesh Khanna and Technical Member Ajai Das Mehrotra observed that such acts "strike at the root of the corporate structure and ownership" of the company. Dismissing an appeal...

NCLAT Delhi Dismisses Finolex Share Dispute Appeals, Says Subsequent Events Pleadable By Amendment

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 21 July upheld an order permitting amendments to a long pending company petition in the Finolex group share transfer dispute, holding that subsequent developments arising during the pendency of proceedings can be brought on record while leaving the question of limitation open for determination at the final hearing. A Bench comprising Officiating Chairperson Justice Yogesh Khanna and Technical Member Barun Mitra dismissed the...

Auditor Cannot Rely On Undocumented OTS Proposal To Ignore Borrower's Interest Liability: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi on Monday held that a proposed One-Time Settlement (OTS) with lenders cannot justify an auditor issuing a clean audit report by ignoring accrued interest on borrowings classified as non-performing assets (NPAs). It ruled that an undocumented and unapproved OTS proposal cannot form the basis for derecognising a financial liability. "We are of the firm view that the OTS proposal that was never documented, never sanctioned by the bank's...

NCLAT Revives IL&FS Plea To Unwind ₹1,080 Crore SREI Group-Linked Lending Transactions

The National Company Law Appellate Tribunal (NCLAT) at Delhi has revived Infrastructure Leasing & Financial Services Ltd.'s (IL&FS) bid to unwind six lending transactions allegedly structured to bypass the Reserve Bank of India's directions restricting fresh lending to group companies. Setting aside an order of the Mumbai bench of the National Company Law Tribunal (NCLT), the appellate tribunal held that the lower tribunal had wrongly treated Srei Infrastructure Finance Ltd.'s (SIFL)...

Advance Paid For Kerala Trade Centre Space Not A Deposit With Kerala Chamber Of Commerce: NCLAT

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) on 2 June held that an advance of Rs. 30,00,000 paid towards the Kerala Trade Centre project did not constitute a deposit with the Kerala Chamber of Commerce & Industry, but represented only an advance for booking space in a separate entity. Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain dismissed an appeal filed by KM Abdullah, affirming the National Company Law Tribunal (NCLT),...