Gloster Limited vs Bowreah Jute Mills Private Limited

[Arising out of Order dated 27th February, 2020 passed by the National Company Law Tribunal, Kolkata Bench, Kolkata in Miscellaneous Application No. 948/KB/2019 arising out of CP (CAA) No. 518/KB/2017, CA (CAA) No. 207/KB/2017]

IN THE MATTER OF: Gloster Limited (formerly known as Ketttlewell Bullen & Company Limited) A Company within the meaning of the Companies Act, 2013 and having its Registered Office at: 21, Strand Road, Kolkata - 700001 West Bengal ...Appellant

Versus

1. Bowreah Jute Mills Private Limited A company within the meaning of the Companies Act, 2013 and having its Registered Office at: 24/1/1 Alipore Road, 3rd Floor, Kolkata - 700027, West Bengal ...Respondent No.1

2. The Regional Director, Eastern Region Kolkata having his office at: Nizam Palace, 2nd MSO Building 2nd Floor, 234/4 AJC Bose Road, Kolkata - 700020, West Bengal ...Respondent No.2

3. The Registrar of Companies, West Bengal, having his office at: Nizam Palace, 2nd MSO Building 2nd Floor, 234/4 AJC Bose Road, Kolkata - 700020, West Bengal ...Respondent No.3

Present: For Appellant : Present but appearance not marked.

For Respondent : Mr. Abhrojit Mitra, Sr. Advocate with Mr. D.N. Sharma, Mr. Anirudha Agarwalla, Mr. Kunal Chatterjee and Mr. P.C. Sharma, Advocates for R-1

Company Appeal (AT) No. 155 of 2020 1 of 11

(28th February, 2023)

KANTHI NARAHARI, MEMBER (TECHNICAL)

Preamble:

The Present Appeal is filed by invoking provisions of Section 421 of the

Companies Act, 2013 against the order dated 27th February, 2020 passed by

the National Company Law Tribunal, Kolkata Bench, Kolkata in Misc.

Application No. 948/KB/2019 arising out of CP (CAA) No. 518/KB/2017, CA

(CAA) No. 207/KB/2017 whereby the National Company Law Tribunal (in

short 'NCLT') directed the Appellant to amend the schedule of property

attached to the Approved scheme removing New Mill Factory Estate from

property scheduled and also imposed penalty of Rs. 50,000/-.

Brief Facts:

Appellant's Submissions:

2. The Learned Counsel for the Appellant submitted that aggrieved by the

aforesaid order, the Appellant preferred the present Appeal and narrated the

brief facts.

3. It is submitted that the Appellant was incorporated as a limited

company under the name & style of "Kettlewell Bullen & Company Limited"

in the year 1923 under the Indian Companies Act, 2013.

4. In the year 2017, the respective Board of Directors of the Appellant and

M/s Gloster Jute Mills Limited (GJML) propounded a scheme of

amalgamation for amalgamation of GJML with the Appellant. As per the

scheme of amalgamation the scheme becoming effective and the name of the Company Appeal (AT) No. 155 of 2020 2 of 11 Appellant Company shall be changed from "Kettlewell Bullen & Company

Limited" to "Gloster Limited". In pursuance of a joint application filed by the

Appellant and GJML the NCLT, Kolkata Bench by an order dated 19.01.2018

passed in CP (CAA) No. 518/KB/2017 sanctioned the scheme of

amalgamation for amalgamation of GJML with the Appellant and passed

orders for transfer, vesting its assets and properties of GJML to the Appellant.

The Tribunal also granted leave to file schedule of assets of the Transferor

Companies i.e. GJML within four weeks from the date of the order. The

Tribunal further directed the Transferor Company as well as the Transferee

Companies i.e. GJML and the Appellant to file certified copy of the order

sanctioning the scheme of amalgamation with the Registrar of Companies

West Bengal for registration and that the Transferor Company i.e. GJML

would stand dissolved without winding up from the date of filing of the

certified copy of the order.

5. In pursuance of the order dated 19.01.2018, the Transferor Company

i.e. GJML filed before the Tribunal the schedule of assets of its properties. The

description of the free hold properties of the Transferor Company in Part-I of

the schedule of assets comprised of brief description of the following

immovable properties.

a) New Mill Factory area

b) Unit Ananya Factory area

c) Labour colony

d) Hospital area

e) Brickfield area

f) North Mill area

Company Appeal (AT) No. 155 of 2020 3 of 11

6. The schedule of assets was appended to the order and as per the order

all the properties and rights and powers of the Transferor Company including

those mentioned in the schedule of assets would be transferred without

further act or deed to the Transferee Company.

7. After dissolution of the Transferor Company in terms of Clause 2.0 of

Chapter-3 of the scheme of amalgamation, the Appellant took requisite steps

for change of its name from "Kettlewell Bullen & Company Limited" to "Gloster

Limited".

8. While matter stood thus, the Respondent herein filed an Application

before the NCLT in the month of July, 2019 in M.A. No. 948/KB/2019 for

recalling of the order dated 19.01.2018 sanctioning the said scheme of

amalgamation and for various other reliefs. The Appellant got impleaded as a

party Respondent to the said application.

9. The contention of the Respondent in the said application is that the

name of North Mill is owned and possessed by the Respondents i.e. Bowreah

Jute Mills Private Limited since the year 2009 and a fraud was perpetrated by

including the description of North Mill in the schedule of assets. The Appellant

filed its Reply to the said application denying all the allocations.

10. It is submitted that prior to filing of reply affidavit, the Appellant on or

about 16.08.2019 filed a Suit being No. 192/2019 in Uluberia Court for

ejectment of the Respondent No.1 from the North Mill and duly annexed a

copy of the plaint filed in the ejectment suit before the NCLT.

Company Appeal (AT) No. 155 of 2020 4 of 11

11. It is submitted that the application filed by the Respondent herein is

not maintainable since the Appellant was not impleaded as a party to the said

application. The Tribunal erred in holding that the Appellant is in illegal

position of North Mill and the fact is that the Appellant filed title suit for

ejectment of the Respondent from the North Mill. The Tribunal failed to

consider the fact that the legal title in the North Mill is vested in the Appellant

and consequently there was no error in the schedule of assets appended to

the amalgamation order. The Respondent has no right or cause of action to

seek deletion of the North Mill in the schedule of assets appended to the order

dated 19.01.2018 sanctioning the scheme of amalgamation.

12. In view of the reasons as stated above, the Learned Counsel prayed this

Bench to allow the Appeal and set aside the impugned order.

Respondent's Submissions:

13. The Learned Senior Counsel appearing for the Respondent put fourth

his argument in favour of the impugned order passed by the NCLT dated

27.02.2020. He submitted that the Appeal is not maintainable for two

reasons; (i) that the Appeal is barred by limitation and (ii) the amended order

dated 12.03.2020 passed by the NCLT has not been challenged till date and

the said order attained finality. For the aforesaid reasons the present Appeal

is liable to be dismissed even without going into the merits of the case.

14. It is submitted that the subject matter of the application is with regard

to North Mill including its assets and properties were no longer part of the

assets of FGIL (Fort Gloster Industries Limited). When the demerger scheme

was sanctioned by the High Court of Calcutta the Jute Division of FGIL stood

Company Appeal (AT) No. 155 of 2020 5 of 11 transferred and vested upon the erstwhile Gloster Limited and did not contain

any part or portion of the assets or properties of North Mill.

15. It is submitted that the Appellant has admitted the valid transfer of title

in the North Mill from FGIL to HMCL (Hooghly Mills Company Limited) and

therefore, the Appellant is estopped from challenging the veracity and validity

of the sale agreement dated 12.01.2019 between HMCL and the Respondent

herein.

16. It is submitted that the Appellant / Petitioners before the NCLT

deliberately and despite being fully aware that the North Mill did not belong

to the Transferor Company had mischievously and with fraudulent purpose

included the details of the assets and properties of the North Mill in the

schedule of assets after the scheme was sanctioned on 19.01.2018.

17. It is submitted that the said purported schedule of assets was neither

disclosed at the time of hearing before the NCLT nor before the order was

passed. The Appellant nor the erstwhile Gloster Limited had any title in

respect of North Mill and therefore, the erstwhile Gloster Limited and the

Appellant had perpetrated fraud and had mislead the Tribunal by including

the North Mill and its assets and properties in Part-I of the schedule of the

assets.

18. It is submitted that the contention of the Appellant that due to

inadvertence the land comprised in the North Mill was not included in the

schedule of assets before the High Court of Calcutta at the time of sanction

the demerger scheme is not correct. The fact remains that even before

Company Appeal (AT) No. 155 of 2020 6 of 11 demerger scheme of 1992-93 was prepared, the North Mill was no longer

remain the assets and properties of FGIL and therefore, it was rightly not

mentioned in the schedule of assets which was filed before the High Court of

Calcutta after scheme of demerger was sanctioned pursuant to the order

dated 31.05.1993.

19. The Learned Senior Counsel further submitted that the Appellant

committed breach of Section 230(2) of the Companies Act, 2013 by not

disclosing the particulars of litigation relating to the North Mill.

20. In view of the reasons as stated above, the Learned Senior Counsel

prayed this Bench to dismiss the Appeal.

Analysis / Appraisal:

21. Heard the Learned Counsel appeared for the respective parties, perused

the pleadings and documents. The point for consideration is whether the

Appellant has made out any case to allow the Appeal as prayed for.

22. The NCLT vide its order dated 27.02.2020 in an application filed by the

Respondent herein in M.A. No. 948/KB/2019 in CP(CAA) No.518/KB/2017

passed the following directions at para 16 of the Impugned Order:

"16. In this case, the Applicant was admittedly not party to the proceeding under Section 230-232 of the Companies Act, 2013 (CP(CAA) No.518/KB/2017). Hence, no mistake can be corrected at its instance. At the same time, we cannot shut our eyes to the fact that the Respondent did not disclose about the material facts about the dispute relating to the title of New Mill estate/property which has been included in the schedule attached to the approved Scheme. The dispute about the

Company Appeal (AT) No. 155 of 2020 7 of 11 passing of title is still pending before the Hon'ble High Court, Calcutta in Civil Suit No. 168 of 2009. Hence, in our limited jurisdiction, we direct the Respondent, Gloster Limited, to amend the schedule of property attached to the approved Scheme removing New Mill factory estate from property scheduled, as it is subject to litigation in CS No. 168 of 2009, pending before the Hon'ble High Court, Calcutta. We issue notice under Section 59 of the NCLT Rules, 2016, to the Respondent, Gloster Limited, to show cause as to why penalty of Rs. 50,000/- (Rupees Fifty thousand only) should not be imposed against it for non disclosure of material facts in its Application under Section 230, 232 of the Companies Act, 2013 (CP(CCA) No. 518/KB/2017). It is to be done within two weeks, failing which further necessary orders will be passed."

23. The facts of the case are that the Appellant and Kettlewell Bullen &

Company Limited filed a petition under Section 230 to 232 of the Companies

Act, 2013 sought a direction from the NCLT sanctioning the scheme of

amalgamation and pursuant to the said scheme the Transferor Company i.e.

"Kettlewell Bullen & Company Limited" would dissolves without winding up and

all the properties assets would transfer to the Transferee Company i.e. the

Appellant herein. Further, the petitioners sought leave to the file the schedule

of assets of the Transferor Company within four weeks from the date of the order.

According to the scheme, all the property, rights and powers of the Transferor

Company including those mentioned in the schedule of assets, be transferred

without further act or deed to the Transferee Company. All the debts, liabilities

and obligations of the Transferor Company be transferred without further act or

deed to the Transferee Company.

Company Appeal (AT) No. 155 of 2020 8 of 11

24. In the scheme of amalgamation under the schedule of assets Part-I, the

properties were mentioned in a tabular format i.e. A, B, C, D, E. The assets of

North Mill area mentioned at F of the tabular column of Part-I.

25. The NCLT vide its order dated 19.01.2018 allowed the application by

sanctioned the scheme. It is noteworthy to mention that the Respondent is not

party to the said scheme. However, the Respondent filed the application before

the NCLT after the scheme was approved seeking directions that the order dated

19.01.2018 passed by the NCLT be recalled and set aside and further sought a

direction to the RoC not to give effect the scheme of amalgamation and the

schedule of assets appended to the order dated 19.01.2018. Upon contest of the

Appellant and after hearing the parties, the NCLT passed the above Impugned

Order.

26. The Respondent contended that the Appellant wrongly shown the property

of North Mill area in the schedule of assets at Part-I to be its assets. On the

contrary, the Respondent contend that the North Mill area is owned by them and

they are in possession of the assets through its predecessor i.e. Hooghly Mills

Company Limited (HMCL). It is the contention of the Respondent that the North

Mill area was originally the property of Fort Gloster Industries Limited (FGIL), on

24.03.1988, the said FGIL executed an agreement for sale of North Mill Factory

in favour of HMCL. The said asset was taken out of the scheduled of fixed assets

forming part of consolidated balance sheet of the said company and sale

consideration was recorded in the books of accounts. The sale deed of the above

North Mill could not be executed because the permission to execute the sale deed

Company Appeal (AT) No. 155 of 2020 9 of 11 was required to be obtained from the proper authority established under the

Urban Land (Celling and Regulations) Act, 1976.

27. From the facts it appears that the HMCL filed Civil Suit for Specific

Performance of Contract on the basis of agreement against FGIL. The said suit

being CS No. 168 of 2009 is still pending before the High Court of Calcutta

wherein the Respondent was substituted as plaintiff on the basis of agreement

dated 12.02.2009 (on record). The civil dispute with regard to North Mill Estate

is pending for consideration before the Hon'ble High Court of Calcutta. On the

other hand, the FGIL has also filed title suit No. 987 of 2015 before the Learned

Civil Judge (Junior Division, First Court, Uluberia) for possession of that

property against the Respondent.

28. The Respondent strenuously contend that the North Mill property belongs

to the Respondent which was lawfully derived from HMCL on the basis of

agreement of sale dated 12.01.2009. It is also contended that the Appellant did

not disclose regarding the civil dispute pending about the title of the suit property

which was wrongly included in the schedule.

29. From the record, it is evident that a Civil Suit No. 168/2009 is pending

before the Hon'ble High Court of Calcutta with regard to the dispute passing of

title of the suit property i.e. North Mill estate. Further, it is also on record that

prior to filing of reply affidavit by the Appellant, the Appellant on or about

16.08.2019 filed a Suit bearing No. 192/2019 in Uluberia Court for ejectment of

the Respondent No.1 from the North Mill property.

Company Appeal (AT) No. 155 of 2020 10 of 11

30. From the above facts, it reveals that certain proceedings / suits are

pending with regard to claim of title to the North Mill Estate property. The

contention of the Respondent that the Appellant did not disclose with regard to

the pendency of civil disputes and it is mandatorily to make a disclosure under

Section 230(2) of the Companies Act, 2013. Since the Appellant included the

North Mill property as the property in the scheme of amalgamation, therefore,

all the details with regard to the said property ought to have been disclosed in

the scheme. However, the Appellant failed to do so.

31. The NCLT discussed in detail with regard to the North Mill property in the

impugned order and arrived at right conclusion by passing the order.

Conclusion

32. For the aforesaid reasons this Tribunal is not inclined to interfere with

the order passed by the NCLT.

33. Accordingly, the Appeal is dismissed. No order as to costs. Applications, if

any, stands disposed of. Interim order if any, stand vacated.

[Justice Anant Bijay Singh] Member (Judicial)

[Kanthi Narahari] Member (Technical) pks

Company Appeal (AT) No. 155 of 2020 11 of 11