Whether allotment of shares on preferential basis by way of private placement, in pursuant to an Order passed under Section 241-242 of the Companies Act, 2013 requires adherence to Section 62(1)(c) read with the Companies Act (Share capital and Debentures) Rules, 2014 – Vijaya Hospitality and Resorts Ltd. Vs. Tony P.A – NCLAT Chennai
Hon’ble NCLAT Chennai held that:
(i) As per Sections 242(5) and 242(6) of the Companies Act, only such Orders which specifically provide for alteration to Memorandum of Association would be deemed to have been passed in accordance with Law and the Company accordingly needs to take steps to put the Order into effect.
(ii) Merely because the direction given by NCLT does not specifically mention the fulfilment of mandatory requirements of Section 62(1)(c), it cannot be said that those Provisions need not be complied with as it has not been specifically mentioned in the directions and the same has been confirmed by both NCLAT and the Hon’ble Apex Court.
(iii) Even if NCLT has directed allotment of shares under Section 241 and 242 of the Act, the procedural requirements in respect of such allotment, has to be met.
(iv) Though Rule 11 of the NCLT Rules, 2016 gives inherent power, but power under this Section cannot be used ‘dehors’ the statutory Provisions of Law.
(v) Allotment of shares leading to alteration in the Register of Members can be challenged before the NCLT under Section 59 of the Act.
(vi) NCLT has the power to direct the concerned authorities to rectify the Register of Member even by cancelling their allotted shares.