Corporate Law Daily – Editorial Team
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Khivraj Motors (P.) Ltd. v. Deputy Registrar of Companies - [2022] 138 taxmann.com 165 (HC - Madras)
In the instant case, the respondent filed the complaint against the petitioners under Section 205C read with Section 629A of the Companies Act, 1956 alleging that as per the balance sheet of the petitioner company for the F.Y. ended 31.03.2013, there was an unpaid dividend amount lying of Rs.10,00,000/-. Whereas, section 205 C of the companies Act 1956 required that this amount should be credited to the “Investors Education and Protection Fund”. ?
Further, as per the Investors Education and Protection Fund Rules, 2012 every company was mandated to identify the unclaimed dividend amount within a period of 90 days after holding of AGM or the date on which AGM ought to have been held till the completion of the period of seven years. Further, the company was required to separately furnish each year a statement of information through E Form- 5 INV, and get it uploaded on its own website and on the MCA. ?
However, petitioners failed to file E form 5 INV as per the rule. Thereafter, a show cause notice (SCN) was issued on 21.07.2014, however, no reply was received from the petitioners. Therefore, petitioners were held liable to be prosecuted for the aforesaid offence.
Learned counsel for the petitioner submitted that the show cause notice dated 21.07.2014 was silent as to the period and as to which of the amounts mentioned under Section 205 C of the Companies Act 1956 was not credited to the Investors Education and Protection Fund. It was also noted that no complaint regarding the unpaid dividend was received from any shareholder of the company. Therefore, the complaint is liable to be quashed. ?
The High Court held that though the amounts referred under Section 205C were held liable to be credited to the Investors Education and Protection Fund. However, the show cause notice was not specific about which one among these amounts was liable to be credited to the Fund. In so far as the petitioner's company, the allegation against the petitioners was that the unpaid dividend amount of Rs.10,00,000/- for the period ending 31.3.2013 was not uploaded on the website. Then, the show cause notice was expected to refer only to that particular default committed by the petitioners. ?
Further, the reproduction of part of Section 205C of the Companies Act, 1956 cannot be appreciated. There was substance in the submission of the learned counsel for the petitioner company that because of this ambiguous nature of show cause notice, petitioners were not able to give a proper reply. Therefore, due to this faulty show cause notice, the complaint was liable to be quashed. Further, launching prosecution without considering the company's reply to show cause notice amounts to non-application of mind. That was also a ground for quashing the complaint. ?
The MCA has issued guidelines for funding research studies on corporate governance. The primary objective of the scheme is to better utilise the repository of corporate sector data available with the MCA 21, explore and expand the scope of utilization of the MCA-21 Database, formulate research studies. ?
Further, the scope of research studies includes: ?
(a) Integration of MCA 21 Database with other databases, ?
(b) Data Characterization,
(c) Network Analytics,
(d) Related Party Transactions,
(e) Corporate Governance Index,
(f) Use of MCA 21 database to study financial statements of bankrupt firms to develop a model for prediction of probability bankruptcy in firms,
(g) Use of AI tools and Machine learning for analysis of topics like insolvency forecast & financial stress analysis in different sectors,
(h) Utilization of XBRL format,
(i) Auditor’s role, Accounting Standards and their monitoring with respect to compliance by firms and their congruence with the global financial landscape etc. ?
The Government has notified the list of sections of the CA, the CWA, and the CS (Amendment) Act, 2022 which will be effective from the 10th day of May 2022. The key provisions include setting up of a coordination committee, reduction in the number of consecutive terms for council members, Finances of Council, increase in the period of disqualification of a member of the institute from contesting the election, enhancement in the imposition of the fine for falsely claiming to be a member of the institute, extend the scope of the term ‘Professional or other Misconduct’ etc. ?
Introduction ?
The debate regarding the enforcement of arbitration over other laws has been going on for a score and six years in our country. In various cases, the courts have come across the issue as to whether an arbitration clause bars proceedings under a specific act or not. A basic principle of law is that a specific statute prevails over a general one. However, the courts in our country have laid much emphasis on arbitration as an alternate form of dispute redressal mechanism and have time and again chosen arbitration over litigation as a legal recourse. ?
Further, availability of multiple fora for dispute resolution has burdened the courts with the question of which statute shall prevail over the other. For the consumers of real estate industry, remedies exist in the form of Real Estate Regulatory Authority, National Company Law Tribunal, Consumer Courts, Civil Courts and ADR mechanisms in form of arbitration. As regards, enforcement of arbitration in an ongoing litigation process specifically, its applicability depends much on the stage of litigation. ?
Therefore, before addressing the issue of applicability of arbitration in real estate disputes and a resultant bar on proceedings under the Real Estate (Regulation and Development) Act, 2016, it is imperative that the judicial pronouncements examining arbitration vis-à-vis other statutes be discussed.
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