Companies Act, 1956

Companies Act, 1956 , Section 630 - Civil court has, in spite of there being no bona fide dispute, issued an order of temporary injunction in respect of the disputed property - In such a case, the pendency of the civil suit and any interim relief’s granted therein would not bar criminal prosecution under Section 630 - Companies Act, 2013, Section 452. 2020 SCeJ 34 - Download

Companies Act, 1956 , Section 630 - Whether an order could be made under Section 630(2) prior to final disposal of the complaint under Section 630(1)? - Where the Magistrate has found that prima facie the company has a right to possession of the disputed property, he may grant interlocutory relief under Section 630(2) prior to conclusion of the trial under Section 630(1) - Section 630 has to be given a liberal interpretation so as to facilitate expeditious recovery of the company's property - Given that the primary object of Section 630 is to provide a speedy mechanism for restoration of wrongfully withheld property to companies, we find that the provision should be construed as far as possible to facilitate a remedy in favour of the aggrieved company and to prevent the wrongful retention of the property for an unduly long period by the accused - Companies Act, 2013, Section 452. 2020 SCeJ 34 - Download

Companies Act, 1956, Section 630 - The term 'property of the company' has to be construed widely having regard to the beneficial object of the Section - Companies Act, 2013, Section 452 2020 SCeJ 34 - Download

Companies Act, 1956 - Section 630 - The term 'property of the company' has to be construed widely having regard to the beneficial object of the Section - High Court has gone against the spirit of the provision, by strictly interpreting Section 630 to mean that the appellant company must have title by way of ownership to the disputed property and that the accused should have been in possession of the flat as a perquisite of his service - Section 630 nowhere requires that the company should have title to the property - The emphasis is on whether the accused has obtained wrongful possession of the property which defeats the company's lawful right of exclusive possession, even though the property as such may not belong to the company but to a third-party landlord or licensor, as enunciated by this Court in Baldev Krishna Sahi vs. Shipping Corporation of India Limited, (1987) 4 SCC 361, Atul Mathur vs. Atul Kalra, (1989) 4 SCC 514 - Companies Act, 2013, Section 452. 2020 SCeJ 34 - Download

Companies Act, 1956 (1 of 1956) S. 10 - Delay of 142 days in filing the appeal - Where certain period has been specified in the special Act limiting powers of the Court to condone the delay, the same would amount express exclusion of Section 5 of the Limitation Act within the meaning of Section 29(2) of the Limitation Act - Appeal filed beyond the maximum period prescribed in the special statutes will be barred by limitation - It cannot be disputed that the Companies Act is a special statute within the meaning of Section 29(2) of the Limitation Act - Section 14 of the Limitation Act has no application in appeals. (179) P.L.R.
Companies Act, 1956 (1 of 1956) S. 22 - It has been proved that the appellant Company got itself incorporated with the name "M/s Vardhaman Crop Nutrients Private Limited", which was identical to the already incorporated respondent Company; that "VARDHAMAN" was already registered trade mark of the respondent Company; and that both the companies are dealing in the same business - On the basis of these facts, inference could have been drawn that the act of the appellant Company was undesirable. (180) P.L.R.
Companies Act, 1956 (1 of 1956) S. 22 - Provision further provides that acquiescence with regard to use of trade mark by another company must be for a continuous period of five years - Only in that situation, proprietor of the registered trade mark company is debarred from taking action against the defaulting company - Because of this bar, limitation of five years has been provided under the proviso to Section 22 of the Companies Act - The alleged acquiescence is well within that period of five years - Plea of waiver/acquiescence taken by the appellant-company has been rightly rejected - Trade Market Act, 1999 Section 33. (180) P.L.R.
Companies Act, 1956 (1 of 1956) S. 22 - Scope - Remedy under Section 22 of the Companies Act was not barred once the respondent Company had taken remedy of common civil law - Both these remedies, one under Section 22 of the Companies Act, and the other under the common civil law, operate in different fields. (180) P.L.R.
Companies Act, 1956 (1 of 1956) S. 391(2), 394 - Companies (Court) Rules, 1959, Rules 67 to 87 - Scheme of Arrangement - Considering the approval accorded by the shareholders and creditors of the petitioner companies to the proposed Scheme of Arrangement and the affidavit filed by the Regional Director, Northern Region, not raising any objection to the proposed Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement - Consequently, sanction is hereby granted to the Scheme of Arrangement under Sections 391 and 394 read with Sections 100 to 103 of the Companies Act, 1956 - Regional Director prays that costs of at least Rs.1,00,000/- should be paid by the petitioners keeping in view the fact that the matter has involved examination of extensive records and also prioritized hearings - Petitioners shall deposit a sum of Rs. 1,00,000/- by way of costs with the Common Pool Fund of the Official Liquidator. (183) P.L.R. (Del.)
Companies Act, 1956 (1 of 1956) S. 394 - Scheme of Arrangement/Amalgmation - Composite scheme involving different companies and different aspects having no relations inter-se<D> - If a composite petition is to be filed, it should be arrangement between two or more companies not different arrangements involving different companies - No doubt, the Court will not examine the business principles or commercial wisdom of the members of the companies at the time of sanctioning of scheme, but still compliance of procedural requirement is within the domain and this would fall in that - It is the duty of the Company Court to ensure presentation of correct facts, numbers, figures before the members and the creditors of the company - The companies have different causes of actions and may have to approach the Court independently. QH Talbros Limited Demerged Company Transfer Company (183) P.L.R.
Companies Act, 1956 (1 of 1956) S. 397, 398 - Board can even terminate, set aside or modify any agreement between the company and the managing director, director, manager or any other person and can even delete or modify any Article of the company - The other respondents impleaded in the petition filed before the Board besides the company, namely, Perpetual, are certainly the necessary parties - The principles of holding and subsidiary company are applicable in a case where the affairs of the company are to be gone into, as it can be stretched only upto a subsidiary company. (179) P.L.R.
Companies Act, 1956 (1 of 1956) S. 397, 398 - Provisions of the Sections 397 and 398 of the Act provide for a remedy to the members of a company to file a complaint to the Board regarding oppression and mismanagement of the company - Section 399 of the Act provides eligibility conditions for maintaining such an application - In terms thereof, in case of a company having share capital, such an application can be maintained by not less than 100 members or not less than 1/10th of total members of the Company, whichever is less, or any member(s) holding not less than 1/10th of the issued share capital of the Company - In case of a Company not having a share capital, not less than 1/5th of the total members - Notice of the application is required to be given by the Board to the Central Government - Under Section 401 of the Act, even the Central Government can also apply to the Board for an order under Sections 397 and 398 of the Act. (179) P.L.R.
Companies Act, 1956 (1 of 1956) S. 405 - Scope - Provides that even on an application filed by the managing director, director, manager or any other person which includes a juristic entity, he can be impleaded as a respondent in pending petition under Sections 397-398 of the Act - Hence, it cannot be accepted that in a petition under Sections 397-398 of the Act only the company namely whose affairs are to be gone into, can be the respondent and none else. (179) P.L.R.
Companies Act, 1956 (1 of 1956) S. 433(1)(a) - Winding up of a company - Considering the finding in the pending litigation initiated by the petitioner regarding recovery of the amount, non payment of which has been alleged in the present petition, prima facie , establishes that the debt cannot be said to be an admitted one - Offer of the respondent-company paying subject to decision in the pending litigation and non-acceptance when offered by the respondent company to the petitioner; further the respondent company being functional, in my opinion, it is not a fit case where the petition deserves to be admitted. (178) P.L.R.
Companies Act, 1956 (1 of 1956) S. 433(e), 434, 439 - Application filed by Consortium of Banks for being impleaded as respondent in the petition deserves to be rejected as it does not have any right of hearing before admission of the petition. (182) P.L.R.
Companies Act, 1956 (1 of 1956) S. 433(e), 434, 439 - Application filed by the applicants workers' union of the Company - They have a right to be heard before winding up petition is admitted and an order for its advertisement is passed - They have been conferred this right even after the petition is admitted. (182) P.L.R.
Companies Act, 1956 (1 of 1956) S. 433(e), 434, 439 - Company (Court) Rules, Rule 3 - Impleadment of party - Act and the Rules framed thereunder are complete code - They do not provide for impleadment of a party in a winding up petition - All what has been envisaged is filing of objection under Rule 3 of the Rules - Once a manner has been provided for doing a thing in the statute or the Rules, all other procedures are barred - In the application filed by the bank, the prayer is for impleadment as a respondent - The language of the Rules and the order, in which these have been provided in the Rules, show that right to file objection has been conferred on any of the affected party only after admission of the petition - Prior to that, it is only the company, which is to be heard. (182) P.L.R.
Companies Act, 1956 (1 of 1956) S. 433(e), 434, 439 - Once the liability in the present case is admitted, as the bonds had become due for redemption, no payment having been made thereafter to the bondholders who did not opt for its conversion into equity, the inescapable conclusion in case the locus of the petitioner to file the petition is accepted, is that the company is unable to pay its debt, hence, the petition deserves to be admitted. (182) P.L.R.
Companies Act, 1956 (1 of 1956) S. 433(e), 434, 439 - Respondent-company is coming out of red as it has started generating operating profits - Not in dispute that publication of citation of admission of petition inviting objections has large ramifications - When a unit is working and giving direct source of livelihood to more than 6,000 employees, giving indirect to many more and its assets are more than its liability, in my opinion, even if the debt is admitted, it would not be in larger public interest to admit a petition and initiate the process for winding up as the same will adversely affect its business and creditworthiness, which will not be in the benefit of either of the party - It suffered losses on account of recession and also apparently on account of non-availability of liquid funds as was claimed that in terms of the exercise being done for Corporate Debt Restructuring Scheme, some of the non-core assets were to be sold to pay of the creditors - Such an opportunity deserves to be afforded to the respondent company - It will not be in the fitness of things to give unceremonial burial to the respondent-company. (182) P.L.R.
Companies Act, 1956 (1 of 1956) S. 433(e) - Where the licence agreement which provided that even if the agreement is terminated before its expiry, still the amount for the entire period will have to be paid by the respondent company - Whether amount mentioned in an agreement for unexpired period of lock-in period can be termed to be an admitted debt or in the form of damages? - Winding up of the respondent company is being sought on the ground that liquidated damages as mentioned in the business agreement have not been paid - The petitioner company has not been able to show that the same is on account of pre-estimated genuine damages, rather the amount as has been mentioned establishes that it is a kind of penalty and a penal stipulation cannot be enforced in the absence of any proof of actual loss, which a party to the contract is bound to make good to the other party - Amount of damages claimed cannot be said to be admitted debt on account of which the respondent company can be directed to be wound up. (182) P.L.R.
Companies Act, 1956 (1 of 1956) S. 434(1)(a)(b) - Winding up of the respondent company - Admitted debt - Respondent company invited quotation from the petitioner for supply of PVC conduit pipe manufacturing plant - The erection and commissioning was to be done at site by the team of experts of the petitioner - Raising, inter alia, the issues that the plant supplied was technically defective, hence, there was no question of successful trial run - The main part of the plant (extruder) was old but was supplied as new one - Clearly established the fact that the parts earlier supplied or not were not upto the mark - Prima facie, establishes the fact that there was some dispute about the liability and successful commissioning of the plant - In the aforesaid circumstances, even if in the accounts book of the respondent-company certain amount has been shown in the credit of the petitioner's account, will not make it an admitted debt, as whatever has been shown in the account was in terms of the bill raised by the petitioner and the payment made against that hence, it cannot be opined that liability was undisputed and the defence raised by the respondent-company was sham - No ground is made out for admission of the petition. (179) P.L.R.
Companies Act, 1956 (1 of 1956) S. 439 - Provides that a secured creditor, holder of any debenture, whether or not any trustee or trustees have been appointed, and trustee for holders of debentures shall be deemed to be a creditor within the meaning of clause (b) of sub-section (1), which provides that winding up petition can be filed by any creditor or creditors of the company - The petitioner in the present case is a trustee of the bond holders, hence, entitled to maintain the petition. (182) P.L.R.
Companies Act, 1956 (1 of 1956) S. 446 - Suit is not against any company - Main contesting parties are neither directors of any company nor as on date have any right, title or interest in the company which is under liquidation - Application for rejection of plaint - Dismissed - Order upheld - Civil Procedure Code, 1908 (V of 1908) Order 7, Rule 11. (178) P.L.R.
Company - Decree against - Execution against Directors - There is yet another strong reason why the petitioner ought not to be permitted to bring the argument of non-enforcement against the Director of the Company - If the decree-holder was seeking for enforcement of the decree against the assets of the Managing Director, the person that could be aggrieved can be the Managing Director and not the company - Significantly, the Managing Director himself had not preferred the revision petition - The company cannot be said to be aggrieved against the decision rendered against the Managing Director - The revision is by a person who cannot even be treated as a aggrieved person - If the petitioner is literally pleading the brief for the Managing Director, it vindicates the contention of the decree-holder that there exists no difference between the two and the petitioner company was not different from the Managing Director of the company itself. (182) P.L.R.