Supreme Court Annual Digest 2022- Company Law

Companies Act, 1956 - Legislative History with respect to workmen/employee's dues towards the wages/salaries including the amount due and payable towards provident fund, gratuity and pension fund - discussed. (Para 8.2) Sunil Kumar Jain v. Sundaresh Bhatt, 2022 LiveLaw (SC) 382 : AIR 2022 SC 1985 : (2022) 7 SCC 540

Companies Act, 1956; Section 10F - Re­appraisal of entire evidence by the High Court is not permissible - Has to restrict its determination to the purported questions of law arising from the order of CLB. (Para 24) Mahima Datla v. Renuka Datla, 2022 LiveLaw (SC) 479 : (2022) 10 SCC 258

Companies Act, 1956; Section 397 - An order could be made on application made under sub­section (1), if the Court is of the opinion that (i) the Company's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive of any member or members, and; (ii) the facts would justify the making of a winding up order on the ground that it was just and equitable that the Company should be wound up, and; (iii) the winding up order would unfairly prejudice the Petitioners - An application for relief can be brought by any member who complain that the 25 affairs of the Company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members. The intention of the legislature is that majority shareholders who oppress the minority shareholders and conduct the affairs of the company prejudicial to public interest may invoke the jurisdiction of CLB. (Para 39) Mahima Datla v. Renuka Datla, 2022 LiveLaw (SC) 479 : (2022) 10 SCC 258

Companies Act, 2013 - Centre directed to ensure that the term of NCLT members appointed in future is 5 years as per Section 413 - We however direct that in making appointments to the NCLT in the future, the Union Government shall be bound by the statutory provisions embodied in Section 413 of the Companies Act 2013. (Para 27, 28) National Company Law Tribunal Bar Association v. Union of India, 2022 LiveLaw (SC) 665

Companies Act, 2013 - Term of members of National Company Law Tribunal - Section 413- Appointment of persons as members of the NCLT for a period of three years is not contemplated by the provisions of Section 413(1). An administrative notification for appointment has to be consistent with the statute which governs appointments to the Tribunal. (Para 17) National Company Law Tribunal Bar Association v. Union of India, 2022 LiveLaw (SC) 665

Companies Act, 2013 - Advertisement of winding up petition - The power to dispense with any advertisement, is now made available specifically under the statutory regime of 2013. (Para 7) Devas Multimedia v. Antrix Corporation, 2022 LiveLaw (SC) 57 : 2022 (1) SCALE 474

Companies Act, 2013 - Appeal filed by Devas Multimedia challenging the orders passed by the NCLT and NCLAT allowing the winding up on a petition filed by ISRO's commercial arm Antrix Corporation - Dismissed. Devas Multimedia v. Antrix Corporation, 2022 LiveLaw (SC) 57 : 2022 (1) SCALE 474

Companies Act, 2013 - Memorandum of Association - A company’s MOA is its charter and outlines the purpose for which the company has been created. The object clause in an MOA is considered to be representative of the purpose of a company and it is expected that the company will fulfill/attempt to fulfill the objects it has laid out in its MOA. (Para. 52) Consolidated Construction Consortium Ltd. v. Hitro Energy Solutions Pvt. Ltd., 2022 LiveLaw (SC) 129 : (2022) 7 SCC 164

Companies Act, 2013; Section 170 - Companies Act, 1956; Section 394 (1)(a) - Amalgamation - Amalgamation is unlike the winding up of a corporate entity. In the case of amalgamation, the outer shell of the corporate entity is undoubtedly destroyed; it ceases to exist. Yet, in every other sense of the term, the corporate venture continues – enfolded within the new or the existing transferee entity. In other words, the business and the adventure lives on but within a new corporate residence, i.e., the transferee company. It is, therefore, essential to look beyond the mere concept of destruction of corporate entity which brings to an end or terminates any assessment proceedings - Upon amalgamation, the cause of action or the complaint does not per se cease – depending of course, upon the structure and objective of enactment - The quest of legal systems and courts has been to locate if a successor or representative exists in relation to the particular cause or action, upon whom the assets might have devolved or upon whom the liability in the event it is adjudicated, would fall. (Para 18) Principal Commissioner of Income Tax (Central) – 2 v. Mahagun Realtors (P) Ltd; 2022 LiveLaw (SC) 346 : AIR 2022 SC 1672

Companies Act, 2013; Section 188 - Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015; Regulation 23 - Related parties abstained from voting in special resolution which approved a related party transaction - They voted in Extraordinary GM convened for rescinding the said resolution - SAT held the bar of voting as per Section 188 of the Companies Act, 2013 on related parties operated only at the time of entering into a contract or arrangement, i.e., when the resolution dated 15.07.2014 was passed; and therein the said related parties indeed abstained from voting. It found no fault in the said parties voting in the recalling/rescinding of the said resolution - The view, as taken by the Appellate Tribunal, in the given set of facts and circumstances of the present case, appears to be a plausible view of the matter. Securities and Exchange Board of India v. R.T. Agro Pvt. Ltd., 2022 LiveLaw (SC) 424

Companies Act, 2013; Section 196, Schedule V - No person shall be eligible to be a whole­time Director of a Company after attaining the age of 70 years unless such appointment is approved by a special resolution of the Company. (Para 35) Mahima Datla v. Renuka Datla, 2022 LiveLaw (SC) 479 : (2022) 10 SCC 258

Companies Act, 2013; Section 271 - Companies Act, 1956 - Distinguishing features between the 1956 Act and the 2013 Act, with regard to the question of availability of fraud as a ground for the winding up of a company discussed - In contrast to the 1956 Act, the 2013 Act provides 2 different routes for the winding up of a company on the ground of fraud - (i) winding up under clause (c) of Section 271 (directly on the ground of fraud) by any person authorised by the Central Government by notification; or (ii) winding up under clause (e) of Section 271 (on the ground that it is just and equitable to wind up) in terms of Section 224(2)(a) on the basis of a report of investigation under Section 213(b). (Para 6) Devas Multimedia v. Antrix Corporation, 2022 LiveLaw (SC) 57 : 2022 (1) SCALE 474

Companies Act, 2013; Section 271 - If the conduct of the affairs of the company in a fraudulent manner is a continuing process, the right to apply for winding up becomes recurring. (Para 8.22) Devas Multimedia v. Antrix Corporation, 2022 LiveLaw (SC) 57 : 2022 (1) SCALE 474

Company Secretaries Regulations, 1982; Regulation 92(2) - There is a distinction between the absence and the post fallen vacant. Regulation 92(2) shall be applicable only in a case of absence and not in a case where the post of Chairman and/or office bearer has fallen vacant. (Para 4.4) Institute of Company Secretaries of India v. Biman Debnath, 2022 LiveLaw (SC) 945

Company Secretaries Regulations, 1982; Regulations 117(2), 119(2) - Regulation 117(2) shall be applicable in a case where the elected member of the Regional Council has been disqualified on he being found guilty of any professional or other misconduct and awarded penalty of fine. Therefore, in case of a vacation of office as per Regulation 117(2), such post fallen vacant is required to be filled in by election by electing another person from amongst its members to hold the office for the remaining period of a year (Regulation 119(2)). (Para 4.4) Institute of Company Secretaries of India v. Biman Debnath, 2022 LiveLaw (SC) 945