Notable Company Law Judgments by High Courts: April 01-15
My minimum threshold for doing a monthly Company Law roundup is at least four good judgments, where “good” is highly subjective. But, I miss a few; that’s also to do with the breadth of the topic I intend to cover. While compiling judgments for April, I got five decisions in the first half. Therefore the monthly roundup is now fortnightly, at least for this edition.
What catches the eye is that a few Petitioners still have to approach the High Court to obtain what appears as relief in purely procedural matters. Obviously, there may be more to such issues than what appears in the Order. But a lay reader will go by what appears in the same.
Here are the notable decisions from the fortnight.
1. RoC’s lack of response = party cannot “discharge” its “Charge” registration responsibility
A Company seeking to register two Charge(s) did all it could to do the same. But technical glitches continued, and it seems the RoC’s response wasn’t satisfactory. The RoC returned the first form without indicating the details to be resubmitted. ?
After examining a Rule requiring the RoC to decide on a form within thirty days, the High Court directed the authority to register the second Charge within four weeks. Plus, because of the unexplained delay, the High Court directed the RoC to pay costs of Rs 25,000/-.
2. CA 1956 and CLB matters are still on the docket
A party filed a Sec. 10F (CA 1956) Appeal against the decision of the Company Law Board refusing to implead a Nominee Director in an Oppression and Mismanagement case (“O&M case”).
Behind all this are family disputes, misunderstandings and other tribulations. The question before the High Court was whether “a Nominee Director whose nomination was later withdrawn due to lack of support from the Nominating party can be impleaded in an O&M case?”.
Upholding the CLB’s refusal to implead the Nominee Director on various factual grounds, the High Court dismissed the Appeal.
?3.???Intellectual Property + Company Name Registration = A sureshot cocktail for litigation
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The Regional Director, MCA, vide a Sec. 16(1) (b) ?Order, restrained Petitioner from using the impugned text in its Corporate Title/ Name and removing it. Aggrieved, Petitioner filed this Appeal.
The High Court partially allowed the Appeal observing that the RD’s Order “does not demonstrate …. application of mind for there are no reasons recorded by way of consideration of the contentions of both the petitioner and the [third] respondent.”
Seems the relief may be temporary, as it has more to do with technical reasons than purely legal ones.
4.???Law of Crimes and Company Law
?The facts of this case are straightforward.
a)???Company failed to file its Annual Return for the year ending March 31, 2017.
b)???A Show Cause notice was issued in September 2018. ??
c)???RoC contended that the Annual Return is still not filed, and prosecution was initiated. Hence this is a continuing offence. ????????
d)???Petitioner argued they paid the penalty (not the same amount as imposed by RoC) and filed the Balance Sheet and Annual Return.
e)???Any continuation of prosecution would amount to double jeopardy. Alternatively, they are entitled to the benefits of decriminalizing offences under the Companies Amendment Act 2020.
After analyzing the factual matrix and the legal position, the High Court concluded that “The petitioners are entitled to the benefit of the Companies Amendment Act 2019 and the Companies Amendment Act 2020, which further changes or mollifies the rigour of punishment for the lapses” (punctuation supplied/ edited)
That’s all, folks, for now. One interesting Delhi High Court decision on Paid Up Capital that I have deliberately missed in this edition will be taken up in the next edition.
Till then, keep reading.
MMKC, PCS HYDERABAD, INDIA
1 年Marvelous Mr Rohit Jain, Thanks for your efforts to compile this
Practising Company Secretary | Consulting Editor | Author of Books on Related Party Transactions, Securities Laws | Faculty for Corporate Laws | Interests: ESG, Corp. Governance
1 年Excellent Rohit Ji, very helpful compilation !
Practice Development (Strategy, Communications & LegalOps) | Nishith Desai Associates
1 年So helpful, Rohit. Thanks for sharing.