Divyesh Desai (Liquidator for Precision Fasteners Ltd.) Vs. Deputy Commissioner of Income Tax Circle – NCLT Mumbai Bench
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Hon’ble High Court held that Section 149 (6)(9) and (12) of the Companies Act, 2013 indicate that the independent director or non executive director not being a promoter of or key managerial persons shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently. The documents on record indicate that the the applicants are independent non executive Directors. In the light of the averments made in the complaint, role of independent Directors, documents on record, petitioners cannot be prosecuted for the offences punishable under Section 138 of NI Act by invoking Section 141 of the said Act. The applicants were independent non executive Directors of accused no.1 company. Considering the facts of this case, in exercise of inherent powers of this Court under Section 482 of Cr.P.C., the proceedings against them are required to be quashed. Learned counsel for the respondent–complainant submitted that the trial as against the other accused may be expedited.
In this case, the applicant contends that the Liquidator(respondent) did not possess a valid Authorisation for Assignment as required by the IBBI Regulation as on the date of appointment as the Liquidator, and therefore seeks the removal of the respondent as the Liquidator and to declare all the duties and functions performed as the Liquidator as null and void.
The Adjudicating Authority held that a conjoint reading of Section 33 of IBC, 2016 with Section 16 of the General Clauses Act, 1897 would show that the Authority which has the power to appoint a person, equally has the power to suspend or dismiss that person, in the absence of any specific powers conferred thereto. Thus, by virtue of Section 16 of the General Clauses Act, 1897 it clear that this Adjudicating Authority has the power to dismiss the Liquidator since this Authority is vested with the powers under Section 33 and 34 of IBC, 2016 to appoint a Liquidator. In the absence of the specific provisions under the IBC, 2016 we may resort to Section 276 of the Companies Act, 2013. The Section 276 of the Companies Act, 2013 would manifest the fact that the Liquidator can be removed under some circumstances.
The Adjudicating Authority held that as per the provisions of section 279 of the Companies Act, 2013, no suit or other legal proceedings could be proceeded with, by or against the company under winding up, when an order of winding up against such company has been passed or a provisional Liquidator is appointed, except with the leave of the Tribunal. The section 9 application was filed by the Operational Creditor. However, after the appointment of provisional Liquidator by the Hon’ble Gujarat High Court vide order dated 07.02.2020, the said application could not be proceeded with unless such provisional Liquidator makes an application to proceed with the matter, with the leave of this Tribunal. Since, no such application has been preferred by the provisional Liquidator, the main CP was not maintainable. Hence, we are constraind to recall the order of admission dated 10.03.2021 secured by Respondent No. 1 in relation to the Corporate Debtor.
The NCLT held that the Company Secretary is the Secretary of the Company; the Secretary of the Company is the Secretary of the Company; he is not the Secretary of shareholders. Needless to mention that he is the Watchdog of protecting the Principles of Corporate Governance as well as the collective interest of all the stakeholders so also the Company; of course he is not a blood hound. The era in which the Company Secretary occupied the position of a glorified clerk in Companies has expired consequent upon evolution of corporate governance and the various compliance requirement in a complex regime so as to protect the interest of the company as well as its various stakeholders.
Further, it held that the company can be represented by the Company Secretary since he is a key managerial person under section 2(51) of Companies Act, 2013, officer in default as per sec.2(60) as per companies act 2013 and as per the power given under sec. 205(1)(c) read with Rule 10 clause 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 it is abundantly clear that the Company Secretary can represent before various regulators and other authorities under the Act in connection with discharge of various duties under the Act. The NCLT being a quasi-judicial authority the Company Secretary can very well do the same.
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The Adjudicating Authority observed that it appears that it is undisputed fact that the copy of resolution plan has not been provided to the suspended management. Further the law has been well settled by the Hon’ble Supreme Court in the case of Vijay Kumar Jain Vs. Standard Chartered Bank & Ors. reported in [2019] ibclaw.in 24 SC. In view of the above, the suspended management must be provided with the copy of the resolution plan. However, the resolution professional can take an undertaking from members of the erstwhile Board of Directors to maintain confidentiality. In the present case, the reply of resolution professional to the objection of the suspended management, states about the 4th CoC meeting, wherein the procedure to obtain the data was informed. Hence, the 4th CoC meeting talks about the access to be provided to RA & CoC members and nowhere it talks about the access to be provided to the suspended management.
The NCLAT held that be that as it may, in view of the fact that Section 14 of the Limitation Act, 1963 applies to the Court/Tribunal whether the exclusion of time bonafide in Court/Tribunal without jurisdiction and in the instant Case, Review Application was filed before the NCLT, Division Bench-II, Chennai to review an earlier order in CA/1458/2018 passed on 30.01.2019, by no stretch of imagination, be said to be ‘Tribunal’ possessing no jurisdiction, viewed in that light, the invocation of Section 14 of the Limitation Act, 1963 on behalf of the Applicant/Appellant sans merits. Resultantly, IA/482/2022 Condonation of Delay filed by the Applicant / Appellant in the Instant Company Appeal (AT)(CH) No.40/2022, fails.
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The NCLAT held that it cannot be again said that the Instant Company Appeal on the file of this Tribunal is admittedly filed, with a delay of 65 days, which is more than the permissible limit of 45 days, as envisaged under Section 61 of the Insolvency & Bankruptcy Code, 2016. To be noted, that Condonation of Delay is not a matter of Right or Routine. There is no difference between a Good Cause/Sufficient Cause in Law. The discretion of the Tribunal/Court of Law to condone the delay in a given case is to be exercised by a Tribunal/Court of Law based on sound exercise of prudent discretion and by application of Judicial Mind.
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