Notable Company Law Judgments by High Courts: December 2022

With the shifting of statutory jurisdiction to NCLTs and the Appellate Tribunal, tracking recent developments in Company Law matters has become more complex. However, as reiterated by High Courts, the Sec. 430 ouster is limited to only matters of a certain kind. In other words, an extensive set of disputes retain their civil nature and hence are outside the purview of NCLT’s powers, adjudicative only by the High Courts. An indicative list includes the determination of rights and titles in shares, intertwined matters having a character of shareholding disputes connected with other complex facts, disputes relating to allotment or registration of shares, appeals against criminal prosecutions etc.?

Tracking NCLT company law judgments is difficult for many reasons—bandwidth crunch on my side, the multitude of decisions and the possibility of the matter going for appeals. Comparatively and relatively, there is a lesser chance of certain High Court matters (either due to the triviality of the issue, lack of high stakes being involved, parties giving up etc.) going for further appeal. I say this with more intuition and less empirical data, so I risk being proved wrong. So be it.

Here are a few critical High Court judgments from December 2022. Again, the word “important” is highly subjective, and here it means what I deem important…. I begin by providing the citation, case description and forum name. Since I download these for later, I cannot add the links, and you’ll have to download them individually. In addition, some judgments otherwise significant are excluded due to peculiar reasons.?

Judgments

1.????Forum: Madras High Court

Citation: Crl. O.P.No.2735 of 2017 and Crl.M.P.Nos.1933 and 1934 of 2017

Case title: B. Kannan v. Registrar of Companies

Petitioner sought quashing of the complaint filed for offences under Sec. 165 r/w Sec. 165(6) of the Companies Act 2013. The allegation was that the Petitioner’s Directorships exceeded the statutory limit of 20 companies. The strength of Petitioner’s arguments rested on two points. First, some Companies were stuck off and hence can’t be included in the count of twenty. Secondly, the penalty for violation of Sections 161(1) and 165(1)(3),(5) of the Act would only be under Section 450 only.

As the Parliament passed an Amendment Act in 2020 to decriminalize many offences, the High Court held that the matter must be withdrawn from prosecution and sent to the Adjudication Authority (do not confuse this with the A.A. of I.B.C.) ?appointed under Sec. 454.

2.????Forum: Madras High Court

Citation: W.P.No.34289 of 2022

Case title: A. Cader Buhari v. Regional Director, M.C.A.; Registrar of Companies, Tamil Nadu and five other respondents

The Petitioner is a shareholder in some respondent Companies who’ve filed for fast-track demerger with the Regional Director, M.C.A. Petitioner contends that his consent was not taken. Therefore, representation was not heard by the R.D./RoC. In response, the High Court, vide a simple Order directed the Respondents to consider the representation.

?3.????Forum: Calcutta High Court

Citation: WPA 26944 of 2022

Case title: M/s A. Chowdhury Construction Private Limited & Anr. v. Union of India & Ors.

High Court directed the Ministry of Corporate Affairs to resolve an anomaly faced by the Petitioner Company as it could not upload C.H.G. –1 form on the M.C.A. Portal. The recurring error message faced by the Petitioner was “creation/modification of charge is not allowed beyond 120 days from the date of creation/modification of charge”, despite the higher limit in Rule 3 of the Companies (Registration of Charges) Rules, 2014.

?4.????Forum: Karnataka High Court

Case title: Rekha Gopi v. Union of India and Others

Citation: W.P .51774 OF 2019 (GM-RES)

?High Court provided relief to the Petitioner, a Director. It directed the RoC to take note of her representation seeking the removal of the disqualification record from the M.C.A. website by passing necessary orders, subject to other requirements. That’s because her disqualification period was now over.

?5.????Forum: Madras High Court

Citation: W.P.(MD)No.27498 of 2022 and W.M.P(MD)No.21596 of 2022

?Apprehending that the Petitioners – Members of a Body Corporate – will not be allowed to attend a meeting due to some actions taken by them, they approached the High Court. Unfortunately, the background matter is too dense to be discussed here. Therefore, based on an undertaking from the Respondents, the High Court disposed off the matters with further specific directions.

6.????Forum: Calcutta High Court

Citation: C.R.R. No.706 of 2021

Case Title: Diamond City North Resident Association and others v. Registrar of Companies, Kolkata

In this brief Order, the Calcutta High Court disposed of a Criminal Revisional Application by setting aside an Order relating to the issuance of summons by the Special Court Judge. That comes after the Petitioner challenged the continuation of proceedings before a Special Court. The contention is that certain materials were collected while preparing the Inspection Report but was not presented before the Special Court.

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