Arpit Agarwal vs Skytech Constructions Pvt Ltd & Ors

Mr. B.P. Singh and Ms Geetanjali Tyagi, Advocates for Respondent.

JUDGEMENT

(24th June, 2020)

Mr Balvinder Singh, Member (Technical)

The present appeal has been filed by the appellant under Section 421

of the Companies Act, 2013 against the judgement dated 20th November, 2018

passed by the National Company Law Tribunal, New Delhi in C.P.

No.234(ND)/2017. The appellant has sought the following relief:

1. Allow the appeal and set-aside the order dated 20.11.2018 passed

by the National Company Law Tribunal in CP No.234(ND)/2017.

2. Direct the National Company Law Tribunal

Either

a) To pass a detailed/reasoned order on merit on all issues raised

in the Company Petition and to adjudicate the matter by giving a

reasonable hearing opportunity to the Appellant based on written

submissions made by the appellant (in Company Petition,

rejoinder, Addl. Evidences and Arguments); and

b) To deliberate and dispose the Interim Application of the Appellant

on merit, filed for cross examination of R-2 to R-4 under Section

424(2) of the Companies Act, 2013 in the interest of justice.

OR

c) To forward the Company Petition File (Petition, Rejoinder,

Additional Evidences, Cross/Summon application and Written

Arguments) to the Special Court to adjudicate whether offense is

Company Appeal (AT) No.37 of 2019 3

established against Respondents under Section 74(3), 75 and 447

of the Companies Act, 2013 and further decision on punishment

as the Special Court may think fit.

3. To pass an order that observations of the National Company Law

Tribunal in Para 8 of the final order that several proceedings are

pending and property was constructed when advance was made are

invalid and devoid of merit.

4. To pass any other order(s) deem fit by this Hon'ble Appellant

Tribunal.

2. The facts of the case are that the appellant booked a flat with

Respondent No.1 and gave Rs.48.99 lakhs in June and July, 2012 against

booking of Unit No.G-402 on 4th floor in Skytech Matrott Project, Sector 76,

Noida. The receipts of the said amount were duly given by 1st respondent. The

appellant stated that substantial amount being 95% of the cost of the property

had been deposited, However, by virtue of the clauses of BBA, the developer

retained the authority over the property and they did not give any lien of the

property or interest of the property. The appellant stated that he tried to

contact 1st respondent many times in relation to the progress of the property,

the respondent did not contact him but started threatening him with the sole

objective that the appellant to stop asking the status of the funds deposited

by him.

3. The appellant stated that the respondents have played a fraud with him

and taken the deposit and filed company petition before the NCLT, New Delhi

on 01.09.2017 and sought the following relief:-

Company Appeal (AT) No.37 of 2019 4

i) To admit the application and pass an order that the advance deposited

by the Petitioner to Respondent No1 company comes under the

definition of 'deposit' as stated in the Section 2(31) of the Companies

Act, 2013 read with the Rule 2(c)(xii) of the Companies (Acceptance of

Deposits) Rules, 2014.

ii) To impose fine on Respondent No.1 for an amount of ten crore rupees

and punish the defaulting Directors (Respondents 2 and 3) with

imprisonment of seven years alongwith the fine of Rs. two crore rupees

on each Director in accordance with the Section 74(3) of the Companies

Act, 2013.

iii) To pass an order that deposits had been accepted by Respondents 1

with the intent to defraud the depositor and for fraudulent purposes

and hence, to pass orders against the Respondents 2, 3 and 4 as the

Tribunal deem fit in the circumstances of the case in accordance with

the Section 75(1) of the Companies Act, 2013 read with the Section 447

of the Act.

iv) To pass order that the status of the petitioner is a 'Depositor' as

defined in the Rule 2(d) of the Companies (Acceptance of Deposits)

Rules, 2014 and to pass an order to allow the Petitioner to file any

further suit, proceedings or other action under Section 75(2) including

but not limited to further approach Competent Authorities i.e. Reserve

Bank of India, National Company law Tribunal, SEBI etc under the

provisions other than those mentioned herein this petition.

v)To cause a public announcement/advertisement so that other

depositors who have paid advance to the Respondent 2 under the

Company Appeal (AT) No.37 of 2019 5

definition of deposits in the Companies Act 2013 can also seek justice

against the Respondent 1 and its Directors.

vi) To allow losses and damages for an amount of Rs.2 Crores, to

compensate the actual loss and sufferings of the Petitioner, to be

recovered from the Respondents in accordance with the Section 75(1).

vii) That such further orders be passed as the Tribunal deem fit in the

circumstances of the case.

4. The appellant stated that he also had filed complaint under Section 21

of the Consumer Protection Act, 1986 before the National Consumer Disputes

Redressal Commission, New Delhi on 19.6.2015.

5. Respondent filed their reply and stated that the money given against a

real estate is not included in the term of 'Deposit' as per Rule 2(c)xii) of the

Companies) Rules, 2014. Respondent stated that the appellant has filed a

case before the National Consumer Disputes Redressal Commission and

similar relief has been sought. Respondent stated that criminal case has been

filed by 1st respondent against the appellant and the petition filed by the

appellant is counterblast to the said case and other cases. Respondents stated

that the appellant was offered possession of the flat vide letter dated 5.8.2015

(Annexure 5 of Reply) and email dated 17.7.2017 (Page 148 of documents filed

by respondents) but the appellant did not come forward to take the

possession.

5. After hearing the parties the NCLT delivered the judgement dated

20.11.2018. The relevant portion of the judgement is as under:

"8. Without going into the legal issues raised herein whether the

amount advanced against the property which has already been

Company Appeal (AT) No.37 of 2019 6

constructed at the time of making advance payment by the

petitioner and having been appropriated by R-1 against the

property agreed to be sold and whether the same constitutes a

deposit, we find that there are numerous proceedings pending as

against the parties initiated by each other consideration by this

Tribunal will result only in multiplicity of proceedings as between

before various forums which is required to be eschewed and in the

said circumstances this petition is dismissed but without cost."

6. Being aggrieved by the said judgement, the appellant has filed the

present appeal.

7. The appellant has stated that he had advanced his hard earned life

savings of Rs.48.99 lakhs to 1st respondent in June and July, 2012 for an

immovable property. The appellant stated that 2nd and 3rd respondents had

induced the appellant to pay advance with the intent of defrauding the

amount and based on fraudulent representation that complete property

alongwith approvals and clearances shall be delivered by March, 2013 and

that property is in a pure residential complex. Appellant stated that false

property complex layout was shown to him and actual lay out had a large

commercial sub-complex also. Appellant stated that respondents had started

other project by incorporating 5th Respondent and utilised his funds.

Appellant stated that the property was never delivered to him.

8. Appellant stated that Companies Act, 2013 does not allow a Private

company to accept or hold deposit from public. Appellant stated that since

specific conditions defined in the Deposit Rules for transaction by companies

Company Appeal (AT) No.37 of 2019 7

against immovable property are not met, therefore, the appellant's advance is

Deposit under Section 2(31) of the Companies Ac, 2013. Appellant stated that

allegations under Section 2(31), 74(3), 75 and 447 of the Companies Act, 2013

were duly supported by numerous legal averments, evidences and facts which

were not considered by NCLT. Appellant stated that even if few facts in the

pendency of the case before NCDRC and company petition at NCLT are

common, dismissal of petition is against the principle/law defined by the Apex

Court in various judgements that civil and criminal remedy can be sought

separately. Appellant stated that pendency of case at NCDRC has no conflict

with Company Petition as appellant had sought punishment under Company

Law for offense on appellant's deposit in the Company Petition against 1st

respondent and accused directors 2nd to 3rd respondent. Lastly the appellant

prayed that the appeal may be allowed and judgement dated 20.11.2018 be

set aside and detailed/reasoned order on merit on all issues raised in the

company petition and to adjudicate the matter by giving a reasonable hearing

opportunity to appellant or the company petition file be forwarded to Special

Court to adjudicate whether offense is established against Respondent under

Section 74(3), 75 and 447 of the company Act, 2013 and further decision on

punishment as the Special Court may think fit etc.

9. Appellant stated that the observations of the NCLT that numerous cases

are pending is invalid and stated that only NCDRC matter is pending.

Appellant stated that the observations of the NCLT that NCLT and NCDRC are

on same cause of action is legally invalid. Appellant further stated that the

remarks of NCLT at para 8 that property was already constructed when

booked and advance adjusted against property are invalid as these remarks

Company Appeal (AT) No.37 of 2019 8

made without considering on record material placed by appellant and against

the natural justice.

10. In reply, the Respondent has stated that the appellant booked a flat in

the project of 1st respondent. Respondent stated that is incorrect that the

respondents played a fraud with the appellant. Respondent stated that it is

wrong that false property complex layout was shown to the appellant and

actual lay out had a large commercial sub-complex. Respondent stated that

it is wrong that Respondents had started another project by incorporating 5th

Respondent. Respondent stated that the instalment of appellant were paid

by Bank and the same were used for further construction of the project, in

which the appellant had booked the flat. Respondent stated that the

construction work was got delayed for about 10 months due to farmers'

agitation and intervention of National Green Tribunal. Respondent stated

that there was no contention of the appellant before the NCLT that since

specific condition defined in the Deposit Rules for transaction by companies

against immovable property are not met, appellant's advance is deposit under

Section 2(31) of the Companies Act, 2013. Respondent stated that the

respondent have lawfully complied by all the provisions of Companies Act,

2013 and the Rules of the Companies (Acceptance of Deposits) Rules, 2014.

Respondent stated that the appellant has been asked to take over the

possession of the property. Respondent stated that the appellant is in the

habit of filing cases against the respondent and the numerous cases are

pending between the parties.

Company Appeal (AT) No.37 of 2019 9

11. Respondent stated that the appellant filed a criminal complaint with

SHO, Sector 71, Noida on 28.02.2015 against the respondent thereby levelling

various charges including not handing over the possession. The police after

proper investigation and inquiry found the allegations to be baseless and

fabricated and submitted final opinion in all complaints. Lastly Respondent

stated that the NCLT has rightly dismissed the petition and stated that the

appeal may be dismissed.

12. Respondent stated that the appellant has filed a Complaint under

Section 21 of the Consumer Protection Act, 1956 and the appellant cannot

avail another remedy for similar cause of action. Respondent staed that

Hon'ble Supreme Court of India in the case of Steel Authority of India Ltd,

Bhilai Steel Plant, Bhilai Vs CERC & Others 2014 SCC Online APTEL held

that "We hold on principle that the Appeal is not maintainable when the Review

is pending before the Regulatory Commission on the same issues".

Respondent stated that when the case is pending before the NCDRC, New

Delhi, the appellant cannot be allowed to agitate the same before this Tribunal

on the same cause of action. Respondent stated that the NCLT has rightly

dismissed the petition.

13. Rejoinder have been filed by the appellant who reiterated the contents

of the appeal and the company petition.

14. We have heard the parties and perused the regard.

15. Before we proceed further we may put on record that at the time of

hearing firstly both the parties were given an opportunity to settle the matter

Company Appeal (AT) No.37 of 2019 10

out of court. But both the parties stated before the Appellate Tribunal that

they could not reach to a settlement due to one reason or other.

16. Further we find from the record that the FIR has been lodged by 3rd

respondent on 26.3.2015 with SHO PS Saraswati Vihar and DCP Ashok Vihar.

FIR has also been lodged on 20.5.2015 by 3rd Respondent with PS Netaji

Subhash Chandra Place. We also note that appellant filed a criminal

complaint with SHO, Sector 71, Noida on 28.02.2015 against the respondent

thereby levelling various charges including not handing over the possession.

We have also gone through the order dated 18.9.2017 (Page 70 of appeal)

passed by Hon'ble Supreme Court of India. In this order the Hon'ble Supreme

Court has allowed the Respondent to move to National Consumer Disputes

Redressal Commission. The relevant portion of the order is as under:-

"The special leave petitions are allowed to be withdrawn without

prejudice to the remedy of moving to the National Consumer Disputes

Redressal Commission."

A criminal complaint as per Chapter XIV & under Section 190/200 Cr PC has

been filed on 18.3.2015 by the 1st Respondent before the Hon'ble Court of

ACMM, Rohini Court, Delhi against the appellant. We also note that the

complaint filed on 19.06.2015 before the NCDRC is still pending. On going

through the above records, we find that all these complaints and FIR has been

filed by parties against each other prior to filing of Petition before NCLT on

1.9.2017.

17. Appellant argued and stressed that the Respondent had received

advance/deposit as per Section 2(31) of the Companies Act, 2013 read with

Rule 2(c)(xii)(b) of the Companies (Acceptance of Deposits)Rules, 2013 in

Company Appeal (AT) No.37 of 2019 11

consideration for immovable property (Flat) under an agreement or

arrangement, however, it fraudulently not adjusted the advance against the

property in terms of the Agreement or arrangement. Appellant further argued

that 1st Respondent and its directors failed to secure necessary approvals and

permissions in terms of the Agreement to deal in the properties for which the

money was taken. Appellant further argued that 1st Respondent is a private

limited company, not allowed to undertake any deposit in terms of Section 73

and 74 of the Companies Act, 2013 and the 1st respondent has breached the

law i.e. Section 73 and 74 of the Companies Act, 2013 by accepting the deposit

form the appellant.

18. Respondent argued that there was no contention of the appellant before

the NCLT that since specific condition defined in the Deposit Rules for

transaction by companies against immovable property are not met,

appellant's advance is deposit under Section 2(31) of the Companies Act,

2013. Respondent argued that the respondent have lawfully complied by all

the provisions of Companies Act, 2013 and the Rules of the Companies

(Acceptance of Deposits) Rules, 2014. Respondent argued that the appellant

has been asked to take over the possession of the property. Respondent

stated that the appellant is in the habit of filing cases against the respondent

and the numerous cases are pending between the parties. Respondent argued

that they have obtained necessary approvals and permissions in terms of the

Agreement to deal in the properties for which the money was taken.

Respondent further argued that the appellant had paid the amount against

booking of flat and the possession has been offered to him and the amount

has been utilized in constructing the flats. Respondent further argued that

Company Appeal (AT) No.37 of 2019 12

they have not breached the law i.e. Section 73 and 74 of the Companies Act,

2013.

19. We have heard the parties on this issue. We note that the appellant

had raised this issue in his Company Petition stating that he had advanced

against immovable property is Public Deposit under Section 2(31) of the

Companies Act, 2013O and his main contention was that the advance against

immovable property is deposit and such deposit was given to 1st Respondent

based on fraudulent representations of 2nd and 3rd Respondent as their sole

intent was to defraud the appellant. The appellant had prayed that the

Respondents may be punished under Section 74(3) under the Companies Act,

2013. Definition of 'Deposit' is given in Section 2(31) of the Companies Act,

2013 which is as follows:-

"(31)'Deposit' includes any receipt of money by way of deposit or

loan or in any other form by a Company, but does not include such

categories of amount as may be prescribed in consultation with

the Reserve Bank of India."

The appellant had also raised the contention that the Respondents may be

punished under Section 74(3) of the Companies Act, 2013. We also note that

the Respondent had stated that the money paid towards the allotment of flat

does not come under the purview of definition of 'Deposit' as given under

Section 2(31) of the Companies Act, 2013 read with Sections 74(3), 75(1) and

Section 447 of the Companies Act, 2013 and further as the term defined under

rule 2(c)(xii) of the Companies (Acceptance of Deposits) Rules, 2014.

Company Appeal (AT) No.37 of 2019 13

20. On going through the impugned order we find that the appellant has

raised the issue of 'deposit' in its Company Petition. But this issue has not

been determined by the NCLT. Such determination will requiring looking into

the facts and the nature of the transactions which may call for more

submissions to be examined to arrive at a conclusion. In absence of such

exercise having not been done by NCLT, we are unable to express our opinion

on this issue. Therefore, we remit the matter back to NCLT to decide whether

the advance received by the Respondent against allotment of flat is 'deposit'

in terms of Section 2(31) of Companies Act, 2013 read with the Rule 2(c)(xii)

of the Companies (Acceptance and Deposits) Rules, 2014 and whether the

Tribunal has the jurisdiction under the Companies Act, 2013.

21. In view of the aforegoing discussions and observations, the appeal is

disposed off by directing NCLT to rehear the matter on the above issue and

dispose off the petition as per law.

(Justice Jarat Kumar Jain) Member (Judicial)

(Mr. Balvinder Singh) Member (Technical)

(Dr. Ashok Kumar Mishra) Member (Technical) New Delhi bm

Company Appeal (AT) No.37 of 2019