M/S. Bhagyodayam Company Represented ... vs Shri. Fibin Francis

NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI (APPELLATE JURISDICTION) Company Appeal (AT) (CH) No. 04 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant V Shri. George Gomez, Kizhavanaparambil (H), NKS Road, Pachalam PO, Kochi - 682012 ..... Respondent With Company Appeal (AT) (CH) No. 05 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial,NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant V Shri. Fibin Francis, S/o Shri. K.C Francis, Kollassery House, South Chittoor P.O, Kochi - 682027 ..... Respondent

With Company Appeal (AT) (CH) No. 06 / 2023

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 1 of 31 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Shri. Jude Antony, S/o Shri. Benedict PA, Parambaloth [H), KC Joseph Road, Panambilly Nagar PO, Kochi - 682036 ..... Respondent

With Company Appeal (AT) (CH) No. 07 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial,NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant V Shri. Antony Jaison, Kuttikatt (H), Kunnummel West Lane, Boat Jetty Road, Vaduthala, Kochi - 682023 ..... Respondent

With Company Appeal (AT) (CH) No. 12 / 2023

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 2 of 31 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Shri. Brightes Stephen, Kanachakkanat(H), Palamattom Road, Edakochi P.O., Kochi, Kerala - 682036 ..... Respondent

With Company Appeal (AT) (CH) No. 13 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Mrs. Liya Clara, 32 / 1432, Pandiyathuparambil, Pallikkavu Temple Road, Vaduthala - 682023 ..... Respondent

With Company Appeal (AT) (CH) No. 14 / 2023

In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 3 of 31 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Mrs. Hyma Joseph, W/o. Shri. Benedict P A, Parambaloth (H), KC Joesph Road, Panampilly Nagar PO, Kochi - 682036 ..... Respondent

With Company Appeal (AT) (CH) No. 15 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Mrs. Mary Francis, W/o. Shri. K.C. Francis, Kollassery House, South Chittoor P.O, Kochi - 682027 ..... Respondent

With Company Appeal (AT) (CH) No. 16 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 4 of 31 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant V Shri. K.C. Francis, Kollassery House, South Chittoor P.O, Kochi - 682027 ..... Respondent With Company Appeal (AT) (CH) No. 17 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Shri. Paul P. George, Pullayil House, Karingamthuruth, Kongorppilly P.O, Kerala - 683 518 ..... Respondent

With Company Appeal (AT) (CH) No. 18 / 2023

In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT,

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 5 of 31 S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Shri. Nelson Thoris, Ozhivuparambil House, East AIS Road, Vaduthala P.O, Kochi - 682023 ..... Respondent With Company Appeal (AT) (CH) No. 19 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Mrs. Priya Rameshan, Alinkal Parambu, Erattakkulangara Road, Pachalam P.O, Kochi - 682012 ..... Respondent

With Company Appeal (AT) (CH) No. 20 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 6 of 31 V Shri. Nixon T.S., Thachappilly House, Near Valappu Market Elankunnapuzha, Puthuvype, Kochi - 682508 ..... Respondent With Company Appeal (AT) (CH) No. 21 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Shri. Oswin Antony, Vazhappilly House, Pachalam P.O, Kochi - 682012 ..... Respondent With Company Appeal (AT) (CH) No. 22 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant V Shri. Reghunath P.V., Pullipparambil House, Jesus Road, Vaduthala P.O, Kochi - 682023 ..... Respondent

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 7 of 31 With Company Appeal (AT) (CH) No. 23 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Shri. Soy Manuel Mendez, Valiyaparambil House, Golden Street Road, Vaduthala P.O, Kochi - 682023 ..... Respondent

With Company Appeal (AT) (CH) No. 24 / 2023 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Shri. Vijesh V.C., Vettiparambil House, N.K.S.Road, Pachalam P.O, Kochi - 682012 ..... Respondent

With Company Appeal (AT) (CH) No. 25 / 2023

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 8 of 31 In the matter of: M/s. Bhagyodayam Company, Pachalam, Kochi - 682 012 represented by its Administrator Adv. Jinan K.R., aged 67 years, Former District Judge and Former Member Judicial, NCLT, S/o K K. Raman, Residing at Kocheril House, Ochanthurthu P.O., Ernakulam - 682 508 ..... Appellant

V Shri. William James, Valiyaveetil House, Don Bosco Road, Vaduthala P.O, Kochi - 682023 ..... Respondent

Present : For Appellant : Mr. Philip Mathew & Mr. M.A.Shaji, Advocates For Respondent : Mr. B. Ashok Shenoy & Mr. Arjun R. Naik, Advocates No Appearance for Respondent in Comp. App (AT) (CH) Nos. 5, 6, 21& 22/2023

JUDGMENT

(Hybrid Mode)

Per : Justice Sharad Kumar Sharma, Member (Judicial):

1. These are bunch of 18 Company Appeals, which had been preferred

under Section 421 of the Companies Act, 2013, wherein the Appellants in each

of these Company Appeals put challenge to the Impugned Order dated

02.12.2022, which almost happens to be akin in nature in all the Company

Appeals.

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 9 of 31

Besides that, since these Company Appeals engage consideration of a

common question of fact and law, for the purposes of brevity, they are being

decided together.

2. As far as, Company Appeal (AT) (CH) No. 05 / 2023, the Company

Appeal (AT) (CH) No. 06 / 2023, Company Appeal (AT) (CH) No. 21 / 2023 &

Company Appeal (AT) (CH) No. 22 / 2023, the notices have been sent by this

Tribunal, to the respective Respondent and ever since, the institution of these

Company Appeals, none has appeared for the Respondents, despite service of

notice. Hence, these four Appeals are being proceeded exparte.

3. Because of the fact that in each of the Company Appeals, there were

different Interlocutory Applications, which were considered and decided, we

feel it apt to summarily describe each of the Appeals, qua the order, which has

been put to challenge under it:-

(a) Company Appeal (AT) (CH) No. 04 / 2023, it challenges the

Impugned Order dated 02.12.2022, as it has been passed by the learned

Adjudicating Authority in MA (C/ACT)/42/KOB/2022, preferred in

TCP/21/KOB/2019, which was earlier carrying the Number as CP No. 29/2017.

In this Company Appeal, an Application was filed, under Rule 11 to be

read with Rule 102 of the NCLT Rules, 2016, as well as Section 424 (3) of the

Companies Act, 2013, in which the prayer was made for drawing a ``Decree''

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 10 of 31 for recovery of money, which is said to have been illegally diversified, and later

on it stood adjudicated.

4. Consequent to the proceedings drawn by the Appellant in each of these

Company Appeals, the same has been adjudicated upon resulting into, passing

of an order which is under challenge in the instant Appeal.

(b) Challenge in this Appeal being Company Appeal (AT) (CH) No. 05 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/43/KOB/2022 in TCP/21/KOB/2019.

(c) Challenge in this Appeal being Company Appeal (AT) (CH) No. 6 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/44/KOB/2022 in TCP/21/KOB/2019.

(d) Challenge in this Appeal being Company Appeal (AT) (CH) No. 7 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/45/KOB/2022 in TCP/21/KOB/2019.

(e) Challenge in this Appeal being Company Appeal (AT) (CH) No. 12 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/46/KOB/2022 in TCP/21/KOB/2019.

(f) Challenge in this Appeal being Company Appeal (AT) (CH) No. 13 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/47/KOB/2022 in TCP/21/KOB/2019.

(g) Challenge in this Appeal being Company Appeal (AT) (CH) No. 14 / 2023, is to the Impugned Order dated 02.12.2022,as it was passed in MA (C/ACT)/48/KOB/2022 in TCP/21/KOB/2019.

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 11 of 31

(h) Challenge in this Appeal being Company Appeal (AT) (CH) No. 15 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/49/KOB/2022 in TCP/21/KOB/2019.

(i) Challenge in this Appeal being Company Appeal (AT) (CH) No. 16 / 2023, is to the Impugned Order dated 02.12.2022,as it was passed in MA (C/ACT)/50/KOB/2022 in TCP/21/KOB/2019.

(j) Challenge in this Appeal being Company Appeal (AT) (CH) No. 17 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/51/KOB/2022 in TCP/21/KOB/2019.

(k) Challenge in this Appeal being Company Appeal (AT) (CH) No. 18 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/52/KOB/2022 in TCP/21/KOB/2019.

(l) Challenge in this Appeal being Company Appeal (AT) (CH) No. 19 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/53/KOB/2022 in TCP/21/KOB/2019.

(m) Challenge in this Appeal being Company Appeal (AT) (CH) No. 20 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/54/KOB/2022 in TCP/21/KOB/2019.

(n) Challenge in this Appeal being Company Appeal (AT) (CH) No. 21 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/55/KOB/2022 in TCP/21/KOB/2019.

(o) Challenge in this Appeal being Company Appeal (AT) (CH) No. 22 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/56/KOB/2022 in TCP/21/KOB/2019.

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 12 of 31

(p) Challenge in this Appeal being Company Appeal (AT) (CH) No. 23 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/57/KOB/2022 in TCP/21/KOB/2019.

(q) Challenge in this Appeal being Company Appeal (AT) (CH) No. 24 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/58/KOB/2022 in TCP/21/KOB/2019.

(r) Challenge in this Appeal being Company Appeal (AT) (CH) No. 25 / 2023, is to the Impugned Order dated 02.12.2022, as it was passed in MA (C/ACT)/59/KOB/2022 in TCP/21/KOB/2019.

5. As per the brief case of the Appellants, which engages consideration in

bunch of these Company Appeals it is to the effect that, a Company Petition

was filed before learned NCLT, Chennai, in CP No. 29 / 2017, invoking Section

241 to be read with Section 242 of the Companies Act, against M/s.

Bhagyodayam Company and its Board of Directors, alleging thereof various

acts of Oppression and Mismanagement, in which an order was passed on

28/08/2018 by learned NLCT, Chennai, holding thereof that, all the alleged

actions taken by the Board of Directors, in the affairs of the Appellant

Company, were found to be either in violation of the Court Orders or in

violation of the different clauses of the Articles of Association of the said

Company and therefore, it is proper to appoint an Interim Administrator to look

into the affairs of the Company.

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 13 of 31

6. Owing to the above, an Administrator was appointed by consensus for the

purposes of managing the affairs of the Company, with the specific direction

that, the Administrator to be thus appointed will look into the allegations raised

by the Petitioners, including the allegations raised regarding disbursement of

funds from the Company Accounts, to examine the same as to whether the same

has been done in accordance with the stipulations contained under the Articles

of Association of the Company, and to take steps to recover the money thus

disbursed and the properties thus disposed of, in contravention of the provisions

of Articles of Association of the Company and in contravention of orders of

Courts, to recover the losses, if any, thus inflicted upon the Company from the

Directors of the Company i.e. Respondent Nos. 2 to 6 in the Company Petition

i.e. CP No. 29 / 2017 and to conduct elections of the Board of Directors in

accordance with Clause 2b of Articles of Association and to handover the

charge to the Board, once it is elected.

7. Pursuant to this, Justice (Rtd) K. Narayana Kurup (former Acting Chief

Justice of Madras High Court), was appointed as the Administrator for the

Company of the Appellant by learned National Company Law Tribunal,

Chennai, as per its order as contained in CP No. 29 / 2017 rendered on

31.10.2018.

Apart from the mandate to function as an Administrator, he was also

conferred with the powers to take all relevant steps necessary for the purposes

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 14 of 31 of recovering the money, which is alleged to have been illegally diverted from

the accounts of the Company and to recover the sold properties which had been

illegally sold.

8. This Company Petition was initially filed as CP No. 29 / 2017, before the

learned NCLT, Chennai and upon its transfer to learned NCLT, Kochi Bench,

was re-numbered as TCP/21/KOB/2019.

9. The Administrator thus appointed i.e. Justice (Rtd) K. Narayana Kurup

(former Acting Chief Justice of Madras High Court), could not complete the

process, as it was contemplated in the order of appointment of Administrator

dated 31.10.2018, till he demitted his office and in his place Mr. Jinan KR

(former Member (Judicial), NCLT, Kolkata Bench), was appointed as the

Administrator vide Order dated 29.11.2021 and was conferred with the similar

powers as vested with the earlier Administrator to manage the Company and to

take steps for recovery of funds and properties of the Appellant Company said

to be diverted in contravention to the provisions of the Articles of Association

of the said Company.

10. It is the case of the Appellants that, the Order of NCLT dated 31.10.2018

of appointing the Administrator to the Company to manage the Company and

conferring him with the mandate of recovering the funds and properties said to

have been diverted has been affirmed by NCLAT in its Order dated 23.07.2020

in Company Appeal (AT) No. 338 & 349 of 2018 and by Hon'ble Apex Court

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 15 of 31 vide Order dated 19.11.2020 in Civil Appeal No. 2999 of 2020. The ambit of

the exercise of powers of the Administrator as conferred by the Order of learned

NCLT dated 28.08.2018, which stood reiterated by the appointment of the

earlier Administrator on 31.10.2018, is given below:

(a) The Administrator was conferred with Authority to manage the entire

affairs of the Company of the Appellant and to be at the helm of the

affairs of the Company, pertaining to all its routine and vital

managerial decisions, including the vital decisions pertaining to the

financial decisions affecting the Books of Accounts and the Assets of

the Company.

(b) The Administrator thus appointed will look into the allegations raised

by the Appellants and after giving a considerate, thoughtful and

rational perspective will make an effort to resolve the same, within the

limits of his authority.

(c) The Administrator will examine the disbursement of the funds of the

Company and will make all endeavours to ensure that the losses,

which had occurred to the Company may be recouped.

(d) He will return back the money, which was thus received from the

Respondent Nos. 7 to 10 in the CP No. 29 / 2017, on account of

agreements to sale and to bring all the assets of the Company, which

have been illegally sold and also to look into the allegation of

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 16 of 31 diversion of fund of the Companies to M/s. Bhagyodayam Kuries

Private Limited by Respondent No. 2 and others.

(e) He would also take steps to recover the money, which was maliciously

diversified by the Respondent for their own ulterior benefit or vested

interest which were in conflict with the interest of the Company itself.

(f) Lastly, the Administrator would ensure to conduct the Election of the

Board of Directors after complying with the directions as it has been

enumerated in the Order and to handover charge to the Board after it is

duly elected.

11. It is reflected from the documents on record that the Administrator thus

appointed, Shri. Jinan KR, filed an Execution Petition bearing No.

EP/01/KOB/2021 in TCP/21/KOB/2019, under Section 424 (3) of the

Companies Act, 2013 r/w. Order XXI Rule 11 & 11A of C.P.C. before the

learned NCLT, Kochi Bench, along with a report containing report of Auditor

and other details, praying for recovery of Rs.1,39,66,504/- with 12% interest

from Mr. P.A. John and others, to be realised by arrest and detention of the

Respondents with steps for attachment and sale of movable and immovable

properties to be dealt with later, as steps are being taken to collect these details.

12. The proceedings thus drawn by the Administrator were considered by the

learned Adjudicating Authority and the learned Adjudicating Authority, while

taking a decision on the Execution Petition thus submitted by the Administrator,

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 17 of 31 came to the conclusion that, owing to the fact that, since learned NCLT,

Chennai had only directed to recover the appropriate money and property and

there is no such specific order / decree / deemed decree to execute in the instant

EP, the EP cannot be entertained and accordingly dismissed the EP with the

liberty left open for the Petitioner / Administrator to file specific Miscellaneous

Applications, against each of the parties so that, the Tribunal can pass

executable orders amounting to a decree or a deemed decree, after hearing them,

for the purposes of recovery of the amount due to be paid by the concerned

parties who are also the Respondents in the instant Appeals.

13. It is the case of the Appellant, in the instant Company Appeals that, the

Administrator, in compliance to the Order passed on 08.04.2022 in

EP/01/KOB/2021, filed Miscellaneous Applications independently, under Rule

11 r/w. 102 of NCLT Rules and Section 424 (3) of the Companies Act, 2013, as

against each of the Defaulters, who were served with demand notice by the

Administrator to remit money back to the Company, but, failed to do so,

praying for passing of a decree for realisation of the said amount as mentioned

in the respective applications on basis of the demand notice of the

Administrator. However, all these applications, preferred by the Administrator

were dismissed by the learned Tribunal by its Order dated 25.11.2022 with the

observation that all these Applications, would not be maintainable, on the

grounds that practice of drawing a decree in pursuance of Judgment / Order is

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 18 of 31 exclusively followed by Civil Courts, that there is no need to draw a decree

pursuant to an Order passed by learned NCLT as the Order itself has a force

equal to a Decree, that learned NCLT, Chennai, vide its Order dated 28.08.2018

only authorized the Administrator to take steps to recover the amount and not to

recover the amount directly, that the prayer to draw a decree / deemed decree on

basis of the report / demand notice of the Administrator is erroneous, that in

spite of clearly mentioning in its earlier Order dated 08.04.2022, to file

appropriate application to obtain an executable order, the Applicant has filed

these applications to draw a decree against respective Respondents instead of

filing applications for direction to refund the amount and that, it will not be

possible to draw a decree on the strength of demand notice / report of the

Administrator.

14. Let us examine the said controversy in detail. It is seen that each

applications has been framed in such a manner as to pray for drawing a decree

against the respective Respondents herein for recovery of the money, which is

said to have been illegally diversified by the Respondents for their own personal

benefit. In each of the Applications, the Auditor's report and the Demand

Notice issued by the Administrator have been pressed upon, to establish the fact

of wrongful diversion of the Company's funds.

15. When all these Miscellaneous Applications came up for consideration in

Company Petition i.e. TCP/21/KOB/2019, the question, which emerged for

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 19 of 31 consideration was, as to whether at all in a proceedings of Company Petition

TCP/21/KOB/2019, as preferred under Section 241 & 242 of the Companies

Act, alleging an act of Oppression and Mismanagement, the process of recovery

of the amount alleged to have been diverted / diversified could at all be pressed

into by preference of the MAs in pursuant to the Order of 08.04.2022 for

formulation of decree.

16. The learned Adjudicating Authority, after considering the respective MAs

preferred under the aforesaid provisions praying for formulation of a decree

against the Respondents for recovery of the money, came up with the view, that

such type of an Application would not be maintainable, because the concept of

drawing a ``decree'' as defined under the Code of C.P.C., in pursuance to an

order, which was passed under the proceedings held under the Companies Act,

is not a concept, which is contained under the Companies Act, and that, the

decree as defined under Sub-Section (2) of Section 2 of the C.P.C., cannot be

drawn by the learned Adjudicating Authority as prayed for in the respective

Applications.

17. It is the case of the Appellant that, an order which has been passed by the

Tribunal itself, may be treated to be as a decree of a Civil Court. For clarity,

Section 424 (3) of the Companies Act, 2013, is extracted hereunder:

``Section 424:

(3) Any order made by the Tribunal or the Appellate Tribunal may be enforced by that Tribunal in the same manner as if it were a decree Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 20 of 31 made by a court in a suit pending therein, and it shall be lawful for the Tribunal or the Appellate Tribunal to send for execution of its orders to the court within the local limits of whose jurisdiction,--

(a) in the case of an order against a company, the registered office of the company is situate; or

(b) in the case of an order against any other person, the person concerned voluntarily resides or carries on business or personally works for gain.''

18. Under the aforesaid provisions, it is affirmed that, the orders passed by

the Tribunals created under the Companies Act, will have the same

enforceability as that of a decree. But that in itself will not make the orders

passed in the proceedings under the Companies Act, as to be a decree in itself as

defined under Sub-Section (2) of Section 2 of the C.P.C.

19. The controversy which thus stood germinated to be judiciously

considered, was that, as to when an order of a Tribunal or of the Appellate

Tribunal, by virtue of Section 424 (3) of Companies Act, 2013, can be enforced

in the same manner as a decree made by a Civil Court, whether would make the

orders passed by the Tribunals or the Appellate Tribunal, as to be a decree in

itself as defined under Sub-Section (2) of Section 2 of the Code of Civil

Procedure. If the term decree as defined under the C.P.C., which is extracted

hereunder is taken into consideration, it reads as under:-

``(2) "decree" means the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 21 of 31 controversy in the suit and may be either preliminary or final. It shall be deemed to include the rejection of a plaint and the determination of any question within 3[***] section 144, but shall not include--

(a) any adjudication from which an appeal lies as an appeal from an order, or

(b) any order of dismissal for default.

Explanation.-- A decree is preliminary when further proceedings have to be taken before the suit can be completely disposed of. It is final when such adjudication completely disposes of the suit. It may be partly preliminary and partly final;''

20. On its simpliciter interpretation, the decree in itself is not a Judgment, but

rather, it is a formal expression of an adjudication which based on reasons given

in a Judgment, made by the ``Civil Courts'', conclusively determining the

rights and liabilities of the parties in the matters which are in controversy ``in

the Suit'', and can be in the nature of preliminary, final or part preliminary and

part final.

21. We are of the tentative view that even if the orders passed by this

Tribunal or the Appellate Tribunal are made enforceable as per Sub-Section (3)

of Section 424 like a ``Decree'' passed by the Civil Court, this mechanism of its

enforceability in itself will not make the said Order as to be a decree, which has

been passed by the competent Civil Court in a Suit, because, the enforceability

of the Order of a Tribunal as a decree as contemplated under the Companies

Act, it does not include within itself a mechanism of enforceability unlike a

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 22 of 31 decree passed in the Civil Suit which has a mechanism of enforceability under

the provisions contained under Order XXI of C.P.C.

22. The learned Adjudicating Authority has observed that, though Sub-

Section (3) of Section 424, contemplates for an Order passed by the Tribunals

created under the Companies Act to be executed as a decree of a Civil Court,

that in itself will not mean that the orders passed by the Tribunal or Appellate

Tribunal, will in itself take a shape of the decree, which could be permitted to

be formulated, as it was prayed for in the respective Applications preferred

under Rule 11 to be read with Rule 102 of the NCLT Rules, 2016, to be read in

conjunction with the provisions of Order XX Rule 6A & Section 47 of the

C.P.C., and accordingly has taken the view that merely because of the

provisions contained under Sub-Section (3) of Section 424, it does not cast a

judicial liability on the Tribunal to formulate a decree, in the shape of a decree

contemplated under the Civil laws, provided under Order XX of C.P.C.

23. Further, the learned Adjudicating Authority in the Impugned Order of

02.12.2022, has taken a view that, drawing a decree is must only when the

Orders / Judgments passed are falling within the ambit of Judgment under Order

XX Rule 6 & Rule 7 of the C.P.C., which provides for, as to how a decree is to

be formulated and drawn, under the Civil laws, and that mere preference of an

application under Order XX Rule 6A of the C.P.C., which only prescribes for

drawing of a decree, will not confer the power on the Tribunals to formulate a

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 23 of 31 decree to bring it within the ambit of the parameters prescribed to make an

``order'' as a ``decree'' to be falling within the ambit of Sub-Section (2) of

Section 2 of the C.P.C.

24. The learned Tribunal has rightly observed that, if the definition of the

decree contained under Sub-Section (2) of Section 2 is read with Order XX

Rule 6A, is taken into consideration, there are certain pre-conditions which are

to be satisfied to make an Order or a Judgment as a Decree:

(a) That there has to be an adjudication by the Court formulating a

decree, based on determination of issues under Order XIV Rule 3 / 4

of C.P.C., which may not be a situation here, because the adjudication

made by the Tribunals, since have not been made competent to

formulate a decree besides being summary proceedings, they may not

be able to invoke the provisions contained under Order XX Rule 6A.

(b) Secondly, it has to be taken into consideration that, a decree is a

concept which is in vogue under a Civil Law, which is strictly

governed by the proceedings contemplated under the Code of the

Civil Procedure. Since the Tribunals constituted under the Companies

Act, do not regulate their proceedings under the Code of Civil

Procedure, the expression of formulation of a decree under Order XX

Rule 6A to be read with the definition of a decree under Section 2 (2),

may not be attracted for the purposes to be made enforceable by filing

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 24 of 31 of an Application under Rule 11 to be read with Rule 102 of the

NCLT Rules, 2016.

(c) Section 424(3) of the Companies Act, which uses the word ``decree''

is a legislation by ``reference'' and not by ``incorporation'', hence,

orders under Companies Act will never be a decree.

25. Apart from it, there are various other elements, which are required to be

satisfied to make an Order to be a Decree, one of them being that there has had

to be a determination of rights inter se between the two rival parties in a Suit.

The determination thus made has to be in the shape of a conclusive decision

taken with regards to the rival contentions and the rights claimed and these

must have been determined by a formal expression given by the learned

Adjudicating Authority about the rights.

26. Based upon the aforesaid backdrop, the learned NCLT has observed that

the authorization given to the Administrator by the Order of 28.08.2018, to take

all steps to recover the amount, will not amount to a judicial power vested with

the Administrator and that it is only an arrangement made by the Tribunal to

evolve a mechanism for recovery of the amount said to be diversified which

was the subject matter before it and therefore, any determination made by the

Administrator in this regard, for all practical purposes cannot be treated as to be

a determination made by a Civil Court, on basis of which a decree could be

formulated under an Order XX Rule 6A of the C.P.C., to be treated as a decree

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 25 of 31 to be executed as per Order XXI of C.P.C. or under Section 424 (3) of the

Companies Act.

27. The Tribunal has rightly observed that the prayer for drawing of a decree

on the basis of the report of the Administrator itself is a concept which is alien

to the Civil proceedings leading to formulation of a decree.

Hence, the Tribunal has observed that the prayer sought for in the

respective MAs for formulation of a decree may not be possible.

28. The Appellant in the respective Appeals has submitted that these

Applications were filed only on the directions of the Tribunal, as issued vide its

Order dated 08.04.2022 passed in EP/01/KOB/2021. However, it can be seen

that the order passed on 08.04.2022, on the application filed by the Appellant

would not amount to be an obligation on part of the Tribunal to formulate a

decree, once the MAs are filed and rather, it was a direction, which was given to

the Appellant to file appropriate applications seeking executable orders.

29. If the contents of the Application preferred in EP/01/KOB/2021 and

particularly in the context of the relief which was sought for is taken into

consideration, it was exclusively for the purposes of recovery of the amount

determined to be diversified and not for execution of any Order or Judgment

passed by the Tribunal, and it was filed on the basis of non-compliance of the

Demand Notice of the Administrator, rather than on basis of an Order of the

Tribunal. In the circumstances, it is but natural that the Tribunal dismissed the

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 26 of 31 Application EP/01/KOB/2021, by the Order dated 08.04.2022, after assigning

the following reasons:

``10. The Petitioner / Administrator may appraise in writing to this Tribunal, after finding out some persons particularly some borrowers as well as some directors are involved in misappropriation of the fund of the Company. It is only then hearing both the parties, this Tribunal can pass an order which tantamounts to a deemed decree that too through an application as provided under the Rules. Failure on the side of the opposite side, the Petitioner / Administrator can file an Execution Petition to execute the order of this Tribunal under Rule 56 of the NCLT Rules, 2016 in Form NCLT-8.

11. For the aforesaid reasons, particularly there is no such specific order/decree/deemed decree to execute in this EP, this EP cannot be entertained and any orders passed in that. Hence, EP/01/KOB/2021 is dismissed with liberty to the Petitioner to file specific Miscellaneous Applications against each of the parties so that this Tribunal can pass executable orders amounting to a decree/deemed decree after hearing them.''

30. Consequent to the dismissal of the Application EP/01/KOB/2021 in

compliance of the Order dated 08.04.2022, the Appellant filed individual MAs

before the learned Tribunal. Learned Tribunal proceeded to reject the aforesaid

MAs with observations as contained in Para 9 of the said Impugned Order, on

the premise that in the respective Applications, the Appellant has prayed for

formulation of a decree, which the learned Tribunal in the Impugned Order has

held that it is outside the ambit of the powers vested with it to formulate a

decree. The observations made in Para 9 of the said Impugned Order, while

rejecting the Applications is extracted hereunder:

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 27 of 31

``9. On the Applicants side it is requested that if this Tribunal is not inclined to entertain these Applications, the matter may refer to the Hon'ble President, NCLT- Delhi to decide the applications by larger Bench, since this Applications are filed in pursuant to the order of this Tribunal. As discussed above This Tribunal by order dated 08.04.2022 granted liberty to file miscellaneous petitions against each parties to get an executable order. This Tribunal never granted liberty to file an application to draw decree on the strength of demand notice/report of Administrator. The order of this Tribunal dated 08.04.2022 is unambiguous, the applicant filed novel applications by misinterpreting the order of NCLT-Chennai dated 28.08.2018 to draw a decree on the strength of report/demand notice of Administrator instead of filing application to get an order against each of party to refund the amount; hence these applications are liable to be dismissed and there is no merit to refer the matter to the President, NCLT - Delhi.

For the reasons stated above all these applications are DISMISSED.''

31. The learned Tribunal in its earlier Order dated 08.04.2022, had reserved

the liberty for the Appellant to file appropriate Miscellaneous Petitions to

enable the Tribunal to pass executable orders amounting to be a decree /

deemed decree which then can be executed in accordance with the prevalent law

and procedure.

32. In furtherance thereto, the Appellants have filed the respective

Miscellaneous Applications, before the learned NCLT, which has been

dismissed on the premise that, the Application consequently preferred for

formulation of a decree, may not be falling within an ambit and scope of

exercise of powers by the learned NCLT as formulation of a decree under

Order XX is not a power which is vested with the Tribunal, as per law, though,

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 28 of 31 being conscious of the fact that the orders passed by the Tribunals could be

executed as a decree in the light of the provisions contained under Sub-Section

(3) of Section 424 of the Companies Act.

33. Thus, the controversy in all these Appeals is the relief sought in the

respective applications filed by the Appellant which is reproduced hereunder:

``i. It is most humbly prayed that in the interest of justice, this Hon'ble Tribunal may be pleased to pass a decree for realisation of an amount of Rs.58,324/- (Fifty Eight Thousand Three Hundred Twenty Four only) with interest at the rate of 12% per annum from the date of demand till the date of realisation of the amount with costs.

ii. In terms of treating the Miscellaneous Application as one under Order XX, Rule 6A of the Code of Civil Procedure, 1908.''

It appears to us that this formulation of relief, may not itself create an

impediment for the Appellants to get an order executable under the provisions

of Sub-Section (3) of Section 424 of the Companies Act and the Learned

Tribunal instead of rejecting the Applications, should have carved out a

reasonable exception, by modulating the relief, so that it could have facilitated

to bring the lis to an end.

34. As a matter of fact, Courts created under the Statute, have an inherent

power vested in them to modulate the relief so as to meet the ends of justice and

a rigid straight jacketed formula is not to be adopted and applied in a manner to

deceive the very purpose of an earlier adjudication of the controversy between

the parties, owing to the hyper technical view that since prayer was for

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 29 of 31 formulation of decree, which falls outside the ambit of powers vested with the

Tribunal, the applications are liable to be dismissed.

35. The reason taken by the learned Tribunal while passing the Impugned

Order that, no decree could be formulated, as it was prayed for in the

Application would be too rigid a view to be taken, which would be contrary to

the very spirit of an effective decision making process, so to end the Court

proceedings.

36. In that view of the matter, we are of the view that in the Applications thus

preferred by the Appellant in compliance of the Order dated 08.04.2022,

wherever the Appellant has prayed for formulation of a decree, which has been

refused to be formulated by virtue of the Impugned Order, in fact, he has

intended to pray for passing of orders by the Learned Tribunal in pursuance to

the execution of the Order passed under Section 241 & 242 of the Companies

Act.

37. If that be the case, the learned Tribunal should have taken a pragmatic

and logical view, and the word ``decree'' as used in the Application should have

been treated as to be an ``Order'' which was actually intended to be prayed for

execution in accordance with the provisions contained under the Companies

Act.

38. In view of the aforesaid, the relief as sought for by the Appellant in the

Application preferred before the learned Tribunal in compliance of the Order

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 30 of 31 dated 08.04.2022, is reasonably modified to be read as ``to pass an Order'',

which is executable under Sub-Section (3) of Section 424 of the Companies

Act and accordingly, the order passed in favour of the Appellant under Section

241 & 242 of the Companies Act, is directed to be executed as per the

provisions contained under Sub-Section (3) of Section 424 of the Companies

Act.

39. Subject to the aforesaid liberty, leaving it open for the Appellants to file

an appropriate Application for execution of the Order which has been passed

under Sections 241 & 242 of the Companies Act, by filing an appropriate

Application before the learned Tribunal, to execute the same under Sub-Section

(3) of Section 424 of the Companies Act, the Appeals would stand disposed of.

Let the copy of this Order be placed in the order sheet of the respective

Company Appeals.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Jatindranath Swain] Member (Technical) 28/03/2025 SR/MS

Comp. App (AT) (CH) Nos. 4-7, 12-25/2023 Page 31 of 31