Mahendra G. Wadhwani vs M/S Reed Relays & Electronics India Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI Company Appeal (AT) No.337 of 2017 (Arising out of order dated 04.10.2017 passed by the National Company Law Tribunal, Chennai Bench, Chennai in Company Petition No.CP/21/66(1)/CB/2017). In the matter of: Before NCLT Before NCLAT

1. Mr. Mahendra G. Wadhwani, 15, Linking road, Opp Arya Samaj Mandir, Mumbai-400054. Objector Appellant

Versus

1. M/s Reed Relays & Electronics India Ltd, 617/618, Gobachandiram, Kottamadugu Panchayat, Thali Post, Krishnagiri district, Tamil Nadu-635118 Applicant 1st Respondent

2. Securities and Exchange Board of India, 69, 2nd Floor, Regal Building, 16, Sansad Marg, Police Colony, Connaught Place, Respondent No.2 New Delhi-110001.

3. Regional Director, South Region, Ministry of Corporate Affairs, Chennai, 5th floor, Shastri Bhawan, 26, Haddows road, Chennai-600006. Respondent No.3

4. Registrar of Companies, Stock Exchange Building, II Floor, 683, Trichy Road, Ramanathapuram, Sowripalayam, Coimbatore-641005 ...Respondent No.4 Present: For appellant: Shri Virender Ganda, Senior Advocate with Shri Vipul Ganda, Shri Mohit Oommen, Ms Shreya Jain, Advocates and Ms Mamta Rajaji, CS. Shri Delep Goswami, Shri Anirrud Goswami, Advocates and Shri S. Eshwar Sabapathy, PCS for Respondent No.1. Shri Arpan Behl (ELP) and Shri Sahil Khanna, Advocate for Respondent No.2. JUDGMENT

BALVINDER SINGH, MEMBER (TECHNICAL)

1. The present appeal has been preferred under Section 421 of the

Companies Act, 2013 by the appellant against the impugned order

dated 04.10.2017 passed by the National Company Law Tribunal,

Chennai Bench, Chennai (hereinafter referred to as the 'Tribunal') in

Company Petition bearing Company Petition No.21/66(1)/CB/2017nd

1642/2016) wherein the Tribunal has passed an order confirming the

Reduction of Share Capital.

2. The brief facts of the case are that the Respondent No.1 is a company

incorporated under the Companies Act, 1956. Respondent No.1 was a

listed company at Madras Stock Exchange, which was a Regional Stock

Exchange. With the advent of nationwide stock exchanges, trading of

securities in such Regional Stock Exchanges (RSE) started to decline

and Madras Stock Exchange discontinued its operations. To safeguard

the interest of shareholders of such companies, SEBI issued guidelines

in the form of Exit Circulars. With the de-recognition of the Madras

Stock Exchange, the shares of the Respondent No.1 were moved to the

Dissemination Board of National Stock Exchange for delisting of shares

on the derecognized Stock Exchanges under Regulation 28(2) of the Securities and Exchange Board of India (Delisting of Equity Shares)

Regulations, 2009 and thus were out of the control of the Respondent

Company. As per instructions of SEBI on Exit Circular, the Board of

Directors of Respondent No.1 at their meeting held on 13.10.2016

decided to pay off capital of the non-promoter shareholders of the

company by providing an exit to them. Respondent No.1 appointed M/s

P. Pattabiramen and Company as Chartered Accountants to carry out

valuation of the shares of the company. The Chartered Accountant

submitted their report and the value that they presented as per

Discounted Free Cash Flow method of valuation is Rs.107/- per share.

The Company, as per report of Chartered Accountant, decided that the

same value be paid to every share held by non-promoter shareholder of

the company, as a part of the reduction in the share capital of the

company. The company despatched notices, explanatory statement,

resolution for reduction of capital by cancelling 641962 shares out of

1076809 shares and paying a sum of Rs.107/- for each cancelled share

of face value of Rs.10/-each to the shareholders. As the amount paid

per share was more than the face value of the shares, the remaining

amount is to paid from the securities premium account and also from

the general reserves of the company for which a special resolution of

the company was passed in which 89.56% shareholders cast their vote

in favour of the special resolution for reduction of capital. Therefore, the

Respondent No.1 filed an application under Section 66(1) of the

Companies Act, 2013 before the Tribunal praying for reduction of share

capital resolved on by the special resolution.

3. Mr. Dilip Kumar Surana, being a shareholder, alongwith four other

shareholders have filed the objections stating therein that the SEBI

circular dated 10.10.2016 prescribed the procedures for giving exit

opportunity to the public shareholders of the exclusively listed

companies of De-recognised/Non-operational/Existed Stock

Exchanges placed in the Dissemination Board and the Respondent

company did not give such an exist opportunity as per the said circular.

The objector further stated that the Net Asset Value and Discounted

Cash Flow methods were employed to arrive at the value of shares and

the consideration was fixed as per the Discounted Cash Flow method

at Rs.107/- for each share to be cancelled. The objectors contended

that votes of public shareholders and promoters have not been counted

separately which would have shown the defeat of the resolution passed

on the proposed reduction of shares capital. The objector stated that

the valuation of shares has not been done in consultation with the

designated stock exchange and by an independent valuer from the

panel of expert valuers of the designated stock exchange as prescribed

in the SEBI circular dated 10.10.2016. The objector stated that while

determining the value, the present available cash and bank balance,

non-current investment and liabilities was not considered. Therefore,

the valuation of the shares is devoid of merits and therefore, should

stand rejected.

4. After hearing the parties the Tribunal passed the following order:

"23.We confirm the reduction of shares capital of Applicant

company by approving the minutes of Special Resolution

dated 12.12.2016 passed by the shareholders for reduction

of share capital from Rs.1,07,68,090/- consisting of

10,76,809 equity shares of Rs.10/- each fully paid up to

Rs.43,48,470/- consisting of 4,34,847 issued, subscribed

and paid up equity shares of Rs.10/- each, fully paid up by

cancelling 6,41,962 issued, subscribed and paid-up equity

shares of Rs.10/- each, being the shares held by non-

promoter shareholder (as defined in the explanatory

statement) of the 1st Respondent Company, and paying

against the shares cancelled a sum of Rs.107/- per equity

shares of Rs.10/-.

24.In terms of the above, the necessary alteration shall be

made in the Memorandum of Association by reducing the

amount of share capital and of its shares accordingly by the

applicant company. The copy of the altered Memorandum of

Association and minute approved alongwith the order shall

be delivered to the ROC by filing E-form INC-28, within thirty

days of the receipt of copy of the Order. Accordingly, the

Registry shall prepare an Order in FORM No.RSC-6 as per the

National Company Law Tribunal (Procedure for Reduction of

Share Capital of Company) Rules, 2016 and issue to the

applicant."

5. Being aggrieved by the said impugned order the shareholders/objector,

Mr. Mahendra G. Wadhwani has filed the present appeal under Section

421 of the Companies Act, 2013.

6. Notices were issued to the Respondents as per order dated 17.10.2017

of this Appellate Tribunal. The Appellant Tribunal further ordered as

under:

"In the meantime, no payment be made to any of the

shareholders pursuant to the impugned order dated 4th

October, 2017 passed in Company Petition

No.21/66(1)/CB/2017"

7. Learned counsel for the appellant submitted that the SEBI Circular

dated 29th December, 2008 provided that the Exclusively listed

company are required to either seek listing at other stock exchange with

nationwide trading facilities or promoters to provide exit option to the

non-promotor shareholders as per SEBI Delisting Guidelines after

taking shareholders' approval for the same within a time frame to be

specified by SEBI, failing which the companies shall stand delisted

through operation of law.

8. Learned counsel for the appellant further submitted that the SEBI

Circular dated 30th May, 2012 also provides that the Exclusively Listed

Companies which fails to obtain listing, will cease to be a listed

company, will be moved to Dissemination Board.

9. Learned counsel for the appellant next contended that as per SEBI

Circular dated 22.5.2014, Exclusively Listed companies may also opt for voluntary delisting in terms of SEBI (Delisting of Equity Shares)

Regulation, 2009 under Regulation 4 (4) and 23 which, inter alia

provide for determination of value by an independent valuer and the

promoters shall not employ the funds of the company to finance exit

opportunity.

10. Learned counsel for the appellant submitted that the SEBI

Circular dated 17th April, 2015 allows a time line of eighteen months

within which such companies shall obtain listing upon compliances

with the listing requirements of the nationwide stock exchange or to

provide exit opportunity to shareholders.

11. Learned counsel for the appellant states that the combined

reading of the exit circulars reveals that each of the circular is

supplementing each other and not in supersession of each other and

are required to be complied with harmoniously.

12. Learned counsel for the appellant submitted that as per the exit

mechanism prescribed, the fair price of the shares is to be determined

by an independent valuer in the panel of the designated stock exchange

and the promoters shall purchase the shares in the DB at that price.

13. Learned counsel for the appellant stated that the Board of

Directors in its Meeting on 13.10.2016 decided to reduce 641962 equity

shares held by non-promoter/public/majority shares holders and

stated that the Resolution passed in that meeting is illegal.

14. Learned counsel for the appellant further stated that the

promoters used the company funds to purchase the shares of non- promoters/public/majority shareholders and without giving any option

to such shareholders to accept or reject the offer so made.

15. Learned counsel for the appellant stated that they have used the

method of valuation of shares other than that determined by a

registered Merchant Bank. Further the promoters who hold only

40.39% shares as against 59.61% of shares of non-promoters have

enriched themselves by using company funds and not putting their own

funds and became 100% shareholders of the company and the shares

held by non-promoters stood cancelled.

16. Learned counsel for the appellants further stated that the non-

promoters shareholding is being paid at Rs.107 per equity shares as

share price which is much less than the Fair Market Value (to be

determined as per the Exit Circulars and the Delisting Regulations),

shall be liable to pay capital gain tax on the difference of FMV being

much higher to the aforesaid sale consideration of shares and cost of

acquisition. This would lead to an absurd situation of outflow of income

tax more than the sale consideration actually received.

17. Reply on behalf of Respondent No.1 has been filed. Learned

counsel for the Respondent No.1 stated that the present appeal has

been filed by the appellant is an attempt to mislead and misdirect the

Appellate Tribunal. Learned counsel further stated that notice was

issued to Regional Director and three months' time was fixed for filing

objections by all concerned including Regional Director. Respondent

No.1 despatched copy of notice through speed post on 15.3.2017 and

the said notice was also published in newspaper on 15.3.2017. The appellant sent his objection to Regional Director, southern Region vide

letter dated 23.3.2017 with copies to Respondent No.1. It is stated that

the Regional Director did not file his objection upto the statutory time

of three months and the Tribunal has rightly passed the impugned

order dated 04.10.2017. Respondent No.1 further stated that the

appellant is wrongly and mischievously referring to and relying upon

the said Regional Director's time barred affidavit dated 18.9.2017

during the ex parte hearing of this appeal on 17.10.2017. Respondent

No.1 has stated that when the Appellant was aware of the existence of

the affidavit dated 18.9.2017 of Respondent No.3, the appellant also did

not point out/insist on consideration of the said affidavit during the

course of hearing before the Tribunal. Therefore, the appellant is

precluded from raising the same in this appeal.

18. Learned counsel for the Respondent No.1 submitted in his reply

at para 3(L) stated that there is nothing legally wrong in not mentioning

about the Regional Director's affidavit dated 18.9.2017 in the impugned

NCLT judgement and order dated 4th October, 2017. Learned counsel

further submitted that since the Respondent No.3 in his time barred

affidavit dated 18.9.2017 had referred to and incorporated the

objections of the complainants, including those of the appellant, the

Tribunal during the arguments considered all the objections and

examined them on their merit and thereafter rejected the same by a

reasoned order.

19. Learned counsel for the Respondent No.1 stated that the

appellant have not pointed out the correct law and facts before this Appellate Tribunal due to which the Hon'ble Appellate Tribunal has

passed the ex parte order dated 17.10.2017 directing that "no payment

be made to any shareholders pursuant to the impugned order dated 4th

October, 2017 passed by the Tribunal".

20. Learned counsel for the Respondent No.1 that no objections were

received from the creditors, Registrar of Companies and Regional

Director, Southern Region within the three months' time specified for

the purpose. Learned counsel for the Respondent No.1 further stated

that the Tribunal during the arguments considered all the objections

and examined them on their merit and thereafter rejected the same by

a reasoned order. Therefore, the ex parte order dated 17.10.2017.

passed by this Appellate Tribunal on this ground alone deserves to be

set aside and vacated.

21. Learned counsel for the Respondent No.1 has further argued

that the appellant is a habitual litigant and has filed various cases

before appropriate forum against unlisted companies and the Courts

have termed such a litigant as a 'cantankerous litigant' attempting to

frustrate and delay the results of judicial determination. Learned

counsel further argued that when e-voting/ballot papers were

forwarded to the shareholders of the company, the appellant was having

originally 6200 shares but since the company gave exit option the

appellant acquired another 5487 shares during the period 31.12.2016

uptil 24.2.2017 from 6 shareholders even though the shares of the

company were not traded. Learned counsel for the Respondent No.1 has stated that this Appellate Tribunal should take note of this and take

such action as it may deem fit and proper.

22. Learned counsel for the Respondent No.1 submitted that it has

complied all the provisions as laid down in Companies Act, 2013 in

respect of reduction of share capital and further stated that Section 100

of the Companies Act, 2013 nowhere states that the promoters of the

company will have to bring in their own funds, if any shares of non-

promoters are being extinguished or paid off in pursuance to SEBI

mandated exit circular and also because the shares of the company got

delisted from the Madras Stock Exchange. Learned counsel for the

Respondent No.1 further stated that there is nothing unfair or

inequitable in the transactions, therefore, there cannot be any objection

to allowing a company limited by shares to extinguish some of its shares

without dealing in the same manner with all other shares of the same

class.

23. Learned counsel for the Respondent No.1 further submitted that

the said Section nowhere states that the promoters of the company will

have to bring in their own funds, if any shares of non-promoters, are

being extinguished or paid off in pursuance to SEBI mandated exit

regulations and also because the shares of Respondent No.1 got

delisted from the Madras Stock Exchange. Learned counsel further

submits that Special Resolution dated 12.12.2016 was passed for the

purpose and the same was confirmed by the impugned order dated

4.10.2017.

24. Learned counsel for the Respondent No.1 submitted that the

appellant has levelled the allegation of Fraud against it. He further

submitted that mere mention of "fraud" is not sufficient and appellant

has to give the particulars of fraud with dates and time which the

appellant has failed to provide.

25. Learned counsel for the Respondent No.1 submitted that utilising

of Securities Premium Account in paying off shareholders is permissible

under sub-section (1) of Section 52 of the Companies Act, 2013. He

further stated that therefore, the contention of the appellant that the

share premium reserve can be utilized only for "buy back" of shares as

per Section 52(2)(c) is erroneous and untenable. Learned counsel has

relied upon the judgement In re:Nestle India Ltd

(MANU/DE/2751/2008) wherein reference was made to Madras High

Court decision in Parry's Confectionary Ltd (2004) 122 Comp Cas

99.

26. Learned counsel for the Respondent No.1 relied upon the decision

of Hon'ble Supreme Court in G.L. Sultania Vs SEBI (2007-5-SCC 133)

stressing that the Hon'ble Supreme Court has held that the Court does

not act as an expert in valuation of shares which is a technical and

complex problem which can be appropriately left to consideration of

experts in the field of accountancy. Learned counsel further drew the

attention of the Court towards Hon'ble Supreme Court decision in

Hindustan Lever Employees' Union Vs Hindustan Lever Ltd, (1994)

2 SCL 157 (SC) stating that the Hon'ble Supreme Court rejected the

argument that merely because some other method could be resorted to, which could possibly be more favourable to the objector but that alone

cannot militate against granting approval to the scheme propounded by

the company and the Court's obligation is to be satisfied that valuation

was in accordance with law and it was carried out by independent body.

The Court's jurisdiction is not to ascertain with mathematical accuracy

the valuation of shares.

27. Learned counsel for the Respondent No.1 stated that National

Stock Exchange gave its no-objection to the proposal of the Respondent

No.1.

28. Learned counsel appearing on behalf of the Respondent No.2

during the arguments submitted that the Circular dated 10.10.2016 is

applicable retrospectively. Learned counsel drew out attention of said

circular at para 7 which states that "The provisions of this Circular

are applicable to the exclusively listed companies of all de-

recognised/non-operational stock exchanges which are exited/in

the process of exit in terms of exit circular dated May 30, 2012."

29. Respondent No.3 had filed his affidavit before the Tribunal which,

as per the appellant, was not considered by the Tribunal while passing

the impugned order. The appellant has annexed the copy of the

affidavit filed by the Respondent No.3 before the Tribunal. In his

affidavit the Respondent No.3 had stated that the Respondent No.1 had

listed the reasons for the reduction of the shares which is on the basis

of the various SEBI Circulars for the companies delisted from the

Regional Stock Exchanges and kept under the dissemination board. The SEBI Circular has provided exit option to such companies to either

list the shares in any one of the recognised stock exchanges or opt for

the voluntary delisting of their shares under SEBI norms. It is stated

by the Respondent No.3 that the Respondent No.1 proposed to exit the

non-promoter shareholders at a premium of Rs.97/- per share who

forms the majority of the shareholders i.e. 59.61% of the equity shares.

It is next submitted that the company has furnished the voting by the

equity shareholders on the resolutions of the company by e-voting and

also by postal ballot.

30. It is next stated in the report that the Respondent No.3 has

received complaints from the shareholders and the main complaints are

as under:

a) Company has stated that the valuation was done on

Discounted Cash Flow Method(DCF) and Net Assets

Value(NAV) and the company has taken the DCF method of

valuation and has not sent the valuation report alongwith the

notice to the shareholders.

b) The complainants have further stated that a perusal of the

financial statement of 31.3.2016 reflects the book value of

each shares is at Rs.356/- per share without the underlying

assets.

c) The complainants has stated that the non promoter

shareholders are in a majority and after their exit the promoter

shareholders are the sole beneficiaries and the amount of

premium arrived at by the promoter shareholders are unfair.

d) The shareholders has stated that in the voting by evoting and

by postal ballot if the promoter shareholders are removed the

majority shareholders have voted against the scheme. The

scrutinizer should have stated the voting by the promoter and

non-promoter shareholders separately for better appreciation

of the facts.

e) The complainant shareholders have stated that the company

has not done the valuation by an independent valuer selected

from the panel of valuers empanelled by SEBI as per its

Circular dated 10.10.2016 and hence it is against the SEBI

mandated regulations.

f) The complainants has requested that notice of the scheme

may be given to SEBI.

31. Respondent No.3 has given his views/opinion/observation on

each of the complaint. As regards complaint (a) above the Respondent

No.3 has stated that as per SEBI regulations the valuer should only

recommend which valuation should be adopted by the company for the

exit scheme. In this case the valuer states that the company may take

valuation of the shares on the basis of either the DCF method or the

NAV method. Respondent No.3 has stated that the action of the valuer

is incompatible with the SEBI regulations and guidelines. Respondent

No.3 has further stated that as per NAV method the value of the share

is Rs.351/- per share. In the DCF method the valuer has not taken the

Cash and Bank Balance of Rs.22.40 crore, Non current investments of

Rs.49.91 lacs and liabilities of Rs.65.91 lacs. Respondent No.3 further stated that the valuer has himself admitted that if the above figures are

taken for DCF method of valuation then the share valuation shall be an

incremental amount of Rs.207 per equity shares. Respondent No.3 has

questioned the valuation under DCF and stated on oath that the valuer

has done the valuation at the bidding of the Company and not as a

neutral person as is expected of him. Respondent No.3 has stated when

this issue was taken up with the Company, the company replied that

the valuation of DCF method is taken as the company is a going concern

and not otherwise. Therefore, the Respondent No.3 stated that as for

the outgoing shareholders are concerned it is a closing of the company

and hence they should have been paid as per the NAV valuation only

and not as per the valuation arrived at by the DCF method.

32. As regard complaint No.(b), Respondent No.3 have stated that

how the complainants have arrived at this valuation is not clear. But

on the other hand, it is stated that the valuation arrived by the

complainants-shareholders is very close to the value of the shares

valued at NAV method i.e. Rs.351 per share by the company valuer.

Respondent No.3 further stated that complainants -shareholders has

force in their arguments and the company should have considered the

highest valuation arrived at by the valuer for existing non-promoter

shareholders who are in majority. Respondent No.3 further stated that

the company will be having sufficient reserve, after making the above

payment to non promoters, and the beneficiary will be the promoters

and the value of their shares post payment will increase significantly.

33. As regards complaint No.(c), Respondent No.3 has stated that in

view of the complaint No.(b) there is some force in the submission of the

non-promoter shareholders.

34. As regards complaint No.(d), Respondent No.3 has submitted that

as explained in earlier paras there is some force in the submission of

the non-promoter shareholders and the shareholders submission.

35. As regard complaint No.(d), Respondent No.3 has stated that the

scrutinizer should have segregated the voting by the promoters and the

existing non promoter shareholders. The scrutinzer also should have

mentioned clearly as to how many shareholders participated along with

the Number of shares held by each share holder.

36. As regard complaint No.(e), Respondent No.3 has also stated that

if the valuation has not been done by the SEBI empanelled valuers list

then the valuation could not be said to be done as per the SEBI

regulations and for this reason also the scheme of reduction of capital

could not said to be validly offered.

37. As regard complaint No.(f), Respondent No.3 has stated that the

submission of complainant-shareholder is reasonable as the company

is stating that it is exiting the non-promoters as per SEBI circulars,

therefore, provision of Section 66(2) of Companies Act, 2013 requires

that wherever necessary notice to SEBI should also be given.

Respondent No.3 also stressed that it is a fit case for giving notice to

SEBI and SEBI may also be heard.

38. Respondent No.3 further stated that as per SEBI guidelines dated

10.6.2009 Chapter II Clause 4(4) that no promoter shall directly or indirectly employ the funds of the company to finance an exit

opportunity provided under Chapter IV or an acquisition of shares

made pursuant to sub-regulation (3) of the Regulation 23. Respondent

No.3 further stated that on the other hand the promoters are enriching

themselves at the cost of the company i.e. utilising the share premium

account and part of the General Reserve to exit the non-promoters

shareholders. Respondent No.3 further states that as per Chapter IV

clause (5) the shareholders should be given an opportunity in

accordance with Chapter IV, but in the present case it is not voluntary

exit but a compulsory exit of the non-promoter equity shareholders

which is against grain of the SEBI regulations.

39. Respondent No.3 has lastly observed that exit scheme submitted

by the promoter reveals that the promoter shareholders has instead of

following the SEBI guidelines in letter and spirit has flouted the

guidelines with impunity on various aspects and stated that the petition

may be disposed of on merits.

40. We have heard the learned counsel for the parties and perused

the entire record.

41. Learned counsel for both the parties argued on the various

issues/counter issues raised in the appeal. We find that the learned

counsel for the appellant mainly stressed on the issue that the affidavit

dated 18.9.2017 of the Respondent No.3 was not considered by the

Tribunal whereas the Learned counsel for the Respondent No.1 argued

that since the same was not filed within the statutory period, therefore,

the Tribunal was legally right in not taking the same into consideration while passing the impugned order dated 4.10.2017. Therefore, first of

all we will decide this issue.

42. Learned counsel for the appellant has argued that the affidavit

dated 18.9.2017 of the Respondent No.3 which was filed before the

pronouncement of judgement dated 4.10.2017 was not considered by

the Tribunal. Learned counsel further argued if the same would have

been considered by the Tribunal then the order dated 4.10.2017 would

have been different. Learned counsel for the Respondent No.1 argued

that the Respondent No.3 had not filed their objection/affidavit during

the statutory period of three months, therefore, the Tribunal was right

in pronouncing the judgement and there is no illegality in it. Learned

counsel for Respondent No.1 in his summary of arguments dated

23.2.2018 at para 3 submitted that "R1 Company came to know of

RD's aforesaid Report for the first time from the Appeal

Paperbook." On the other hand, the Respondent No.1 in his counter

affidavit at para 3 (L) of preliminary objections has submitted as under:

".....Thus the said affidavit could not have been legally

taken on record by the Hon'ble NCLT Chennai Bench.

Therefore, there was nothing legally wrong in the Hon'ble

NCLT Chennai Bench not mentioning about the Regional

Director's affidavit dated 18.9.2017 in the impugned NCLT

judgement and order dated 4th October, 2017. However, the

Answering Respondent would like to mention that since the

Regional Director (Southern Region) in his time-barred

affidavit dated 18.09.2017 had referred to and incorporated the objections of the complainants, including

those of the appellant, the Hon'ble NCLT, Chennai Bench,

during the arguments considered all the objections and

examined them on their merit and thereafter rejected the

same by a reasoned order....."

43. Going through the impugned Judgement, we do not find that the

important issues as raised by Respondent No.3, Regional Director were

considered and discussed. When affidavit by an important authority

like Respondent No.3 had been filed public interest required to consider

it and not ignore it on technicalities. We need to have that views of

NCLT on the points raised by Respondent No.3.

44. From the above it is clear that the Tribunal has not considered

the observations/opinion given by the Respondent No.3, Regional

Director, Ministry of Corporate Affairs.

45. Respondent No.3 filed his affidavit dated 18.9.2017 either before

20.9.2017 or after 20.9.2017 but the judgement was pronouncement

on 4.10.2017. Therefore, it is clear that the affidavit dated 18.9.2017

was filed before 4.10.2017. It was in the interest of all the parties that

the Tribunal should have given an opportunity to the parties to make

their submissions on the said affidavit complying with the principle of

natural justice. The said affidavit was not considered while

pronouncing the judgement which was filed with the Tribunal before

the pronouncement of judgement on 4.10.2017.

46. In view of the above discussions, we are not giving our

judgement/decision on the other various issues/counter issues raised by the parties in the appeal. The impugned order dated 4.10.2017

passed by the Tribunal is set aside. The matter is remanded back to

the Tribunal to re-hear the matter, NCLT shall take into consideration

the affidavit dated 18.9.2017 of Respondent No.3 and after giving due

opportunity to all the parties to argue on the same, decide the Company

Petition expeditiously in terms of Section 422 of the Companies Act,

2013. Earlier evidence will also be evidence in the cause. The parties

are also given opportunity to argue on the other issues as well before

the Tribunal. No order as to cost.

47. Parties are directed to appear before the NCLT, Chennai Bench,

Chennai on 28th May, 2018 and no separate notice would be necessary.

(Justice A.I.S. Cheema) (Mr. Balvinder Singh) Member (Judicial) Member (Technical)

New Delhi

Dated:17-4-2018