Dr. Apurba Kumar Sarma & Ors vs M/S Complete Medical Care & Research ...

(Arising out of Orders dated 05th November, 2019 and 09th January, 2020 passed by National Company Law Tribunal, Guwahati Bench, Guwahati in C.P. (CAA)/07/GB/2019 in CA (CAA)/01/GB/2019.)

IN THE MATTER OF:

1. Dr. Apurba Kumar Sarma, S/o Late Bhabendranath Devsarma, R/O Flat 1C, 9B, Regent Paradise, Bishnu Rabha Path Bhetapara, Beltola, P.S. - Hatigaon, Guwahati - 781028, Assam ...Appellant No. 1

2. Dr. Manoj Kumar Agarwala, S/o Sri Debi Prasad Agarwala, R/O Naveen Residency, Flat No. 201, Plot No. 39 A, Road No. 2, Film Nagar Hyderabad - 500096 ...Appellant No. 2

3. Dr. Hiramoni Sarma, W/o Dr. Apurba Kumar Sarma, R/O Flat 1C, 9B, Regent Paradise, Bishnu Rabha Path Bhetapara, Beltola, P.S. - Hatigaon, Guwahati - 781028, Assam ...Appellant No. 3

4. Dr. Ritu Agarwala, W/o Dr. Manoj Kumar Agarwala, R/O Naveen Residency, Flat No. 201, Plot No. 39 A, Road No. 2, Film Nagar Hyderabad - 500096 ...Appellant No. 4

Versus

1. M/s Complete Medical Care & Research Institute Private Limited A company Incorporated under the Companies Act, 1956 Registered Office: G.S. Road, Bhangagarh, Guwahati-781005, Assam. ...Respondent No. 1 -2-

2. M/s Nemcare Hospitals Private Limited A Company Incorporated under the Companies Act, 1956 Registered Office: GMCH Road, Bhangagarh, Guwahati-781006, Assam. ...Respondent No. 2

3. Dr. Hitesh Baruah Managing Director, M/s Nemcare Hospitals Private Limited GMCH Road, Bhangagarh, Guwahati-781006, Assam. ...Respondent No. 3

4. Ranjan Kumar Deka Director, M/s Nemcare Hospitals Private Limited GMCH Road, Bhangagarh, Guwahati-781006, Assam. ...Respondent No. 4

5. Dr. Mihir Kumar Baruah Director, M/s Nemcare Hospitals Private Limited GMCH Road, Bhangagarh, Guwahati-781006, Assam. ...Respondent No. 5

6. Dharani Dhar Baruah Director, M/s Nemcare Hospitals Private Limited GMCH Road, Bhangagarh, Guwahati-781006, Assam. ...Respondent No. 6

Appellants: Mr. Krishnendu Dutta, Sr. Advocate alongwith Mr. Manish Goswami, Mr. Surajit Bharali and Ms. Mehak Khurana, Advocates. Respondents: Mr. Abhijeet Sinha, Mr. Patita Paban Bishwal, Mr. Saikat Sarkar and Mr. Neeraj Kumar Gupta, Advocates for R-2 to R-6. CS Biman Debnath.

JUDGEMENT

[Per; Shreesha Merla, Member (T)]

1. Aggrieved by the Orders dated 05.11.2019 and 09.01.2020 passed by

the NCLT (National Company Law Tribunal, Guwahati Bench, Guwahati) in

C.P. (CAA)/07/GB/2019 in CA (CAA)/01/GB/2019, the Appellants preferred

Company Appeal (AT) No. 213-214 of 2020 -3-

this Appeal under Section 421 of the Companies Act, 2013 (hereinafter

referred to as the 'Act').

2. The Tribunal has sanctioned the scheme of Amalgamation of M/s.

Complete Medical Care & Research Institute Private Limited (the first

Respondent) and M/s. Nemcare Hospitals Private Limited (the second

Respondent) vide an Order dated 05.11.2019. Subsequently, the Tribunal had

rectified certain typographical errors that have crept in the Order and

pronounced the rectified Order on 09.01.2020. The first and second

Appellants are Directors and Shareholders of the second Respondent,

'Transferee Company' and the 3rd & 4th Appellants are also Shareholders of

the 'Transferee Company'.

3. The first Respondent (hereinafter referred to as the 'Transferor

Company') and the second Respondent (hereinafter referred to as the

'Transferee Company') are promoted by the same promoters, Dr. Hitesh

Baruah, Dr. Mihir Kumar Baruah, Mr. Ranjan Kumar Deka, Mr. Dharani Dhar

Baruah who are arrayed as Respondents No. 3, 4, 5 & 6 and are also the

common Directors and Shareholders of both the 'Transferor Company' and

the 'Transferee Company'.

4. Submissions on behalf of Learned Counsel for the Appellant on

Limitation:

 It is submitted that the Appellants first came to know about the

Impugned Orders dated 05.11.2019 and 09.01.2020 only on

27.06.2020 when the Board Meeting of the 'Transferee Company' was

held; that it was only at this meeting that the 3rd Respondent for the

first time instructed the Company Secretary to take steps for giving

Company Appeal (AT) No. 213-214 of 2020 -4-

effect to the Orders passed by NCLT and submit the necessary papers

to the RoC.

 Prior to the Board Meeting dated 27.06.2020, there were five Board

Meetings of the 'Transferee Company' that were held on 10.01.2020,

06.05.2020, 15.05.2020, 20.05.2020 and 04.06.2020, but the

Impugned Orders were never placed in these previous five Meetings for

the perusal of the Members.

 On account of the lockdown in Assam, the certified copy was applied for

only on 08.08.2020 and received on 12.08.2020 and therefore the

Appeal was filed on 06.11.2020 which is within 90 days from the date

of receipt of the certified copy of the Order.

 The Respondents have specifically pleaded in their Reply that the date

of the knowledge of the Impugned Order by the Appellants is 10.01.2020

and therefore the argument of the Respondents that the Appellants have

knowledge of the Order dated 05.11.2019 from a prior point of time, is

without any basis.

 Even if for arguments sake, even if the Appellants had got knowledge of

the Impugned Order on 10.01.2020, it is still not barred by Limitation,

as the first 45 days period expired on 24.02.2020, and the next 45 days

expired on 09.04.2020. The Hon'ble Supreme Court extended the period

of Limitation, whether condonable or not, with effect from 15.03.2020

which is continuing till the date of filing of the Appeal.

 That the first Appellant was infected with Covid and was admitted in the

hospital from 01.09.2020 to 20.09.2020.

Company Appeal (AT) No. 213-214 of 2020 -5-

5. Learned Sr. Counsel strenuously argued that the Judgement dated

18.09.2020 in 'Sagufa Ahmed & Ors.' Vs. 'Upper Assam Plywood Products

Pvt. Ltd. & Ors.' is not applicable to this case because in 'Sagufa Ahmed &

Ors.' (Supra) the Appeal was admittedly filed after 90 days from their receipt

of the certified copy, that the Judgement was passed in the context of the

previous Order dated 23.03.2020 passed by the Hon'ble Supreme Court and

not subsequent to the Orders dated 18.03.2021 and 27.04.2021 would now

holds the field for all purposes; the Hon'ble Supreme Court in its subsequent

Orders dated 18.03.2021 and 27.04.2021 has specifically used the expression

'outer limits within which the Court or Tribunal can condone the delay', the

use of the aforesaid categorical expression by the Hon'ble Supreme Court

would mean that the outer limit of 45 days under the proviso Section 421(3)

also stood extended with effect from 15.03.2020 and this extension is

continuing in view of the Order dated 27.04.2021 passed by the Hon'ble Apex

Court.

6. In support of his argument, Learned Sr. Counsel placed reliance on the

decision of the Hon'ble Supreme Court in their Orders dated 23.03.2020,

08.03.2021 and 27.04.2021 which read as hereunder:-

"a) In SUO MOTU WRIT PETITION (CIVIL) No(s).

3/2020 Order dated 23.03.2020 filed on 30.04.2021:-

The Hon'ble Court directed to the effect that "it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings.

b) In Suo Motu Writ Petition (Civil) No. 3 of 2020, Order dated 08.03.2021 filed on 30.04.2021:-

The aforesaid writ petition was finally disposed of by the Hon'ble Court on 08.03.2021 wherein a number of Company Appeal (AT) No. 213-214 of 2020 -6-

directions were passed. The Direction No. 3 which is relevant for the instant case reads as follows: "The period from 15.03.3030 till 14.03.2021 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29 A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings."

c) In Miscellaneous Application No. 665/2021 in SMW (C) No. 3/2020, Order dated 27.04.2021 filed on 30.04.2021:-

The Court restored its previous orders dated 23.03.2020 and 08.03.2021 and reiterated the directions passed therein. The Court extended the periods of limitation, whether condonable or not, under any general or special law till further orders."

7. Submission of the Learned Senior Counsel for the Appellants on

merits of the case:

 It is submitted that the Valuation Report dated 07.02.2019 is a

fraudulent document. It is submitted by the Learned Counsel for the

Appellant that the aforesaid Orders have been obtained by the

Respondents by practicing fraud and concealment of material facts,

thereby injuring the interests of the second 'Transferee Company'.

 The Shares Swap Ratio of 113:1 was determined and decided by the

Board of Directors of the 'Transferor Company' in their Meeting dated

03.01.2018 and similar is the position with respect to the 'Transferee

Company' which is dated 02.01.2018 and is therefore more than

obvious that the Shares Swap Ratio was decided without the Valuation

Report and is thus a fraudulent exercise.

Company Appeal (AT) No. 213-214 of 2020 -7-

 A Valuation Report indicates that it is based on the actual Reports of

both the 'Transferor and the Transferee Companies' for the Financial

Year 2017-18 up to 31.03.2018, then a question would arise as to how

the Board of Directors of the respected Companies declared the Shares

Swap Ratio on 03.01.2018 and 02.01.2018.

 Even though the position for Amalgamation before NCLT was filed by

the Respondent on 20.02.2019, the Valuation Report dated 07.02.2019

was not annexed and was only filed after the direction of the NCLT on

08.03.2019.

 There is no Board Resolution appointing M/s. Amlan Bhadra &

Associates which is not a registered valuer, as envisaged in Section 247

and moreover no particulars have been provided in the purported report

as to how the share entitlement ratio was arrived at, thereby

disregarding the methodology in calculating the valuation of each share

of both the Companies, which is contrary to law.

8. Submissions on behalf of Learned Counsel appearing on behalf of

the Respondents:

 Learned Counsel appearing on behalf of the Respondents vehemently

contended that the Appeal was barred by Limitation as the Impugned

Order was passed on 05.11.2019 and rectified on 09.01.2020 and the

prescribed period of Limitation is 45 days from the date of passing of

the Order which expired on 24.02.2020 and the Appellants slept over

the matter and are now resorting to false statements regarding date of

knowledge of the Impugned Orders.

Company Appeal (AT) No. 213-214 of 2020 -8-

 That the first Appellant was present at the Board Meeting dated

10.01.2020, which is one day immediately after the date of the rectified

Impugned Order dated 09.01.2020, the same was discussed in the

Board Meeting held on 10.01.2020 and the Minutes thereof were

circulated in the email dated 18.01.2020.

 The first and second Appellants are Directors in the second Respondent

Company and its their own averment that they were present at the

Shareholder Meetings directed to be held by NCLT, for considering the

scheme of Amalgamation which was held on 14.05.2019 under the

chairmanship of the Advocate appointed by the Hon'ble Tribunal.

 The Learned Counsel further submitted that the Minutes of the said

Shareholders Meeting has been annexed by the Appellants and there is

no mention of any resistance or objection to the said scheme.

 Learned Counsel drew our attention to the Secretarial Standard for

Board Meetings which is prescribed as follows:-

"It is submitted that the Secretarial Standard for Board meetings (SS-1) prescribes as follows - Within fifteen days from the date of the conclusion of the Meeting of the Board or the Committee, the draft Minutes thereof shall be circulated by hand or by speed post or by registered post or by courier or by e- mail or by and other recognized electronic means to all the members of the Board or the Committee, as on the date of the Meeting, for their comments."

 Learned Counsel relied on the Judgements of the Hon'ble Supreme

Court in 'S.P. Chengalvaraya Naidu' Vs. 'Jagannath' (1994 SCC

Vol. I Page 1) and in 'Kuldip Gandotra' Vs. 'Union of India' 136

(2007) DLT 44 (DB) in support of his argument that 'fraud or justice do

not dwell together' and that the Appellants herein have indulged in a

Company Appeal (AT) No. 213-214 of 2020 -9-

fraudulent exercise concealing material facts regarding the knowledge

of the Impugned Orders and hence this Tribunal ought to dismiss the

Application as it is not only devoid of merit but also barred by

Limitation.

Assessment:

9. At the outset, it is relevant to reproduce Section 421(3), which reads as

follows:-

"421. Appeal from orders of Tribunal-

(1) xxx (2) xxx

3) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order of the Tribunal is made available to the person aggrieved and shall be in such form, and accompanied by such fees, as may be prescribed:

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty five days from the date aforesaid, but within a further period not exceeding forty-five days. If it is satisfied that the appellant was prevented by sufficient cause from. filing the appeal within that period."

10. It is an admitted fact that in the first Impugned Order dated 05.11.2019

there were some errors which were rectified by the NCLT on 09.01.2020. It is

the case of the Learned Counsel for the Appellants that though there were five

Board Meetings held on 10.01.2020, 06.05.2020, 15.05.2020, 20.05.2020 and

on 04.06.2020 the Impugned Orders were never discussed and it was only in

the Board Meeting of the 'Transferee Company' held on 27.06.2020 that the

Impugned Orders were first brought to the notice of the Appellants.

11. At this juncture, we find it pertinent to reproduce the relevant portion

of the Minutes of the 5th Meeting of the Board of Directors dated 27.06.2020

Company Appeal (AT) No. 213-214 of 2020 -10-

to ascertain whether the Impugned Orders were in the knowledge of the Board

of Directors prior to 27.06.2020:-

Company Appeal (AT) No. 213-214 of 2020 -11-

(Emphasis Supplied)

12. From the aforenoted Minutes, it is evident that the Appellant with

respect to the correction of the Order dated 05.11.2019 was discussed prior Company Appeal (AT) No. 213-214 of 2020 -12-

to the 5th Meeting; that the Appellant herein Dr. Sarma has clearly noted the

transfer of all the assets and liabilities of the 'Transferor Company' to the

'Transferee Company'; the approval of the scheme of Amalgamation; the

merging of the books of accounts and the authorization of the Managing

Director to write to the RoC to make the necessary corrections in the record of

the Company for enhancing the authorized share capital, necessary to

implement the Order of the Hon'ble NCLT.

13. It is also relevant to mention that the email dated 18.01.2020 filed here

as Annexure B clearly specifies that the draft Minutes of the Board Meeting

held on 10.01.2020 was circulated by Ms. Seema Sharma to the Appellants

herein. It is significant to note that the Rejoinder filed by the Appellants, is

silent about this email. Since, admittedly the Impugned Order dated

05.11.2019 was rectified on 09.01.2020, it is apposite to note whether the

Board Meeting held on 10.01.2020, this matter was brought to the notice of

the Board Members, to ascertain whether they were in the knowledge of the

said Impugned Order:-

"Item No. 5: Order for the Amalgamation of Companies:

The Chairman apprised the board that amalgamation of the Company with M/s CMCRI has been approved by the Hon'ble NCLT and the order has also been issued but because of some typographical error in the order which would have led to difficulty in its implementation a request has been forwarded to the Hon'ble NCLT for its correction. The Board noted the same and then.

'Resolved That the Order for the amalgamation of M/s Nemcare Hospitals Private Limited and M/s. Completer Medical Care and Research Centre Private Limited passed by the Hon'ble NCLT be noted'."

Company Appeal (AT) No. 213-214 of 2020 -13-

14. It is seen from Item No. 5 of the Minutes of the Meeting held on

10.01.2020 and attended by the Appellants herein that the Board Members

were very much in the knowledge that there were some typographical errors

in the Orders and that the request has been made to NCLT for the necessary

correction.

15. The Hon'ble Supreme Court in Civil Appeal Nos. 3007-3008 of 2020

in 'Sagufa Ahmed & Ors.' Vs. 'Upper Assam Plywood Products Pvt. Ltd.

& Ors.' page 20 Annexure C has observed as follows:-

"19. But we do not think that the appellants can take refuge under the above order. What was extended by the above order of this Court was only "the period of limitation" and not the period upto which delay can be condoned in exercise of discretion conferred by the statute. The above order passed by this Court was intended to benefit vigilant litigants who were prevented due to the pandemic and the lockdown, from initiating proceedings within the period of limitation prescribed by general or special law. It is needless to point out that the law of limitation finds its root in two latin maxims, one of which is Vigilantibus Non Dormientibus Jura Subveniunt which means that the law will assist only those who are vigilant about their rights and not those who sleep over them"....

"23. Therefore, the expression "prescribed period"

appearing in Section 4 cannot be construed to mean anything other than the period of limitation. Any period beyond the prescribed period during which the Court or Tribunal has the discretion to allow a person to institute the proceedings, cannot be taken to be "prescribed period.

24. In Assam Urban Water Supply and Sewerage Board Versus Subash Projects and Marketing Limited', this Court dealt with the meaning of the words "prescribed period" in paragraphs 13 and 14 as follows:

13. The crucial words in Section 4 of the 1963 Act are prescribed period". What is the meaning of these words?

14. Section 2(j) of the 1963 Act defines Company Appeal (AT) No. 213-214 of 2020 -14-

"2) period of limitation' which means the period of limitation prescribed for any suit, appeal or application by the Schedule, and 'prescribed period' means the period of limitation computed in accordance with the provisions of this Act.

Section 2(j) of the 1963 Act when read in the context of Section 341(3) of the 1996 Act. It becomes amply clear that the prescribed period for making an application for setting aside arbitral award is three months. The period of 30 days mentioned in proviso that follows sub-section (3) of Section 34 of the 1996 Act is not the period of limitation' and, therefore not prescribed period for the purposes of making the application for setting aside the arbitral award. The period of 30 days beyond three months which the court may extend on sufficient cause being shown under the proviso appended to sub-section (3) of Section 34 of the 1996 Act being not the period of limitation' or, in other words, 'prescribed period'. In our opinion, Section 4 of the 1963 Act is not, at all, attracted to the facts of the present case."

25. Therefore, the appellants cannot claim the benefit of the order passed by this Court on 23.03.2020, for enlarging, even the period up to which delay can be condoned. The second contention is thus untenable. Hence the appeals are liable to be dismissed.

Accordingly. they are dismissed."

16. Section 421(1) provides for a remedy of Appeal to the Appellate Tribunal

against the Order of NCLT. Sub Section 3 of Section 421 prescribed the period

of Limitation for filing an Appeal and the proviso thereunder confirms a limited

discretion upon the Appellate Tribunal to condone the delay. In this case it is

seen from the record that the first Impugned Order approving the Scheme of

Amalgamation is dated 05.11.2019 and only some typographical corrections

Company Appeal (AT) No. 213-214 of 2020 -15-

were made in the Order dated 09.01.2020. It is significant to mention that the

Order dated 09.01.2020 in a joint Petition filed by both the 'Transferor and

the Transferee Companies' in IA 86 of 2019 in C.P. (CAA)/07/GB/2019 only

sought for rectification of the following typographical errors:-

(1) The name of the 'Transferee Company' was wrongly mentioned as "SPBP

Tea Plantation Limited" (i.e. 'Transferee Company') instead of "M/s.

Nemcare Hospitals Pvt. Ltd." at page 9 in sub-para 2.

(2) The word "that" is typed twice in the beginning of sub-para 4 and in the

third line, the word "creditor" is wrongly typed instead of "each" after

the words "113 (One Hundred Thirteen equity shares of Rs. 10/-".

17. Rule 50 of the National Company Law Tribunal Rules, 2016 also

mandates the Registry of the NLCT to send a certified copy of the final Order

to the parties concerned free of cost. However, Rule 50 also enables the

Registry of the NCLT to make available the certified copies with cost as per

schedule of fees in all other cases (meaning thereby 'to persons who are not

parties'). Rule 50 reads as follows:-

"50. Registry to send certified copy. - The Registry shall send a certified copy of final order passed to the parties concerned free of cost and the certified copies may be made available with cost as per the schedule of fees, in all other cases."

In the instant case, the Appellants are silent about the receipt of free

copy. Be that as it may, they chose to apply for a certified copy only on

08.08.2020 and received it on 12.08.2020 and filed this Appeal on 06.11.2020

after 86 days. The ground that the MD was not available for 20 days as he was

infected with Covid, though we consider genuine, does not prevent a Company

comprising other Directors to prefer an Appeal. It is submitted that the Order

dated 19.01.2020 was uploaded on 22.01.2020. 45 days from that date also Company Appeal (AT) No. 213-214 of 2020 -16-

expires on 06.03.2020, prior to the lockdown period. A bare reading of the

Minutes of the Meeting dated 10.01.2020 shows that the Appellants herein

who attended the Meeting were aware that the Impugned Order dated

05.11.2019 passed by NCLT approving the Amalgamation of the 'Transferor

Company' with the 'Transferee Company' have some typographical errors and

that an Application has been made. Therefore, the contention of the Learned

Sr. Counsel that the Impugned Order dated 05.11.2019, though corrected on

09.01.2020 (the issue of correction which was discussed in the Board Meeting

dated 10.01.2020), was never in the knowledge of the Appellants herein in the

five Board Meetings mentioned above, cannot be sustained. We are of the view

that 45 days as contemplated under Section 421(3) of the Companies Act,

2013, is to be counted from 10.01.2020 and the period ends on 24.02.2020

and it is seen from the record that the Appellant herein filed this Appeal only

on 06.11.2020. We are of the view that the Appellants were never vigilant to

exercise their rights and the ratio laid down by the Hon'ble Supreme Court in

'Sagufa Ahmed & Ors.' (Supra) is applicable to the facts of this case.

18. By virtue of the proviso to Section 421(3), this Tribunal is empowered to

condone the delay up to a period of 45 days. The facts of the attendant case

show that the period for which the Learned Counsel is contending that it

would fall within the purview of the Order of the Hon'ble Supreme Court dated

15.03.2020 cannot be accepted as the subject period herein is prior to

15.03.2020 and pertains to the pre-pandemic situation. We are of the

considered view that the Limitation has expired prior to 15.03.2020 and

therefore the question of applicability of the Orders relied upon by the Learned

Counsel for the Appellants do not apply to the facts of this case.

Company Appeal (AT) No. 213-214 of 2020 -17-

19. For all the aforenoted reasons specially keeping in view the fact that

(a) the Scheme of the Amalgamation was discussed and approved on

02.01.2018, had taken effect on 31.03.2018 and the said Scheme was

approved by NCLT way back vide Impugned Order dated 05.11.2019 and that

this Appeal was filed on 06.11.2020, (b) a perusal of the Minutes of the

Meetings of the Board Meetings filed before us do not evidences any objections

raised by the Appellants at that point of time i.e. when the Scheme of

Amalgamation was approved and (c) the period of Limitation prescribed under

Section 421(3) of the Act has lapsed on 24.02.2020 much prior to the

lockdown period/pandemic situation and hence having regard to the facts and

circumstances of the attendant case, we do not see it a fit case, in the interest

of Justice to exercise any discretion empowered under proviso of Section

421(3) and condone the delay in the absence of any 'sufficient cause' and

'substantial reasons'.

20. In the result, this Appeal is dismissed accordingly. No order as to costs.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

NEW DELHI 20th July, 2021

ha

Company Appeal (AT) No. 213-214 of 2020