Mr. Ramandeep Singh Ahluwalia & Anr vs M/S. Suntime Energy Ltd

(Arising out of judgement and order dated 14.11.2024 passed by National Company Law Tribunal, New Delhi, in I.A. No. 321 of 2023 in Company Petition no. 40/PB/2012)

IN THE MATTER OF:

Ramandeep Singh Ahluwalia & Anr. ...Appellant(s) HOUSE NO. 894, PHASE 3B2, MOHALI - 160059

Versus

Sun Time Energy Ltd. & Ors. ...Respondent(s) E-3, LAJPAT NAGAR - 2, NEW DELHI -110024

Present: For Appellant : Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Palak Kalra, Mr. Arjun Chhibbar, Advocates. For Respondents : Mr. Samar Bansal, Sr. Advocate with Mr. Sailesh Suman, Advocates for R 1 to 3. Mr. Karan Gandhi, Mr. Sikhar Tiwari, Ms. Vidhika Kapoor, Ms. Riya Jain, Advocates for R-7.

JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)

This appeal is filed against an impugned order dated 14.11.2024 passed

by the Ld. NCLT, Principal Bench, New Delhi in IA-321/2023 in CP-40(PB)/2012.

By this application, the appellants sought restoration of their status as

petitioners no. 1 and 2 in the Company Petition No. 40(PB) of 2012. 2

2. As the facts go, the appellants no. 1 and 2 were original petitioners no. 1

and 2 in the Company Petition No. 40(PB) of 2012, filed under Section 397, 398,

402, 403, 235, 237 and 111A of the Companies Act, 1956.

3. During the course of litigation, a settlement agreement dated 19.05.2014

was entered into between the appellants no. 1 and 2 and Respondent No. 3 viz

the brother of appellant no. 1. In view of the settlement dated 19.05.2014, the

appellants no. 1 and 2 filed an application CA No. 122/C-1/2014 praying for

withdrawal of company petition but the said application was dismissed by the

Ld. Company Law Board vide its order dated 29.08.2014 as under:

"ORDER Reply is filed by P-3 which is duly supported by an affidavit. Ld. Counsel for P-3 forcefully argued that the application CA No. 122 for withdrawal of CP No.40(ND)/2012 has been filed by P-1 & 2 in collusion with each other and no compromise between P- 1 & 2 and Respondents has ever taken place.

Shri Arun Saxena, Id Chartered Accountant representing R 8&9 also argued that no compromise has ever taken place with the Respondents Shri Charanjit Singh Ahluwalia, the Patriarch of the family who is present also strongly denied the factum of the compromise.

If a compromise had taken place in such a hotly contested matter it should have been reduced to writing. There is no such mention in the application CA No. 122/C-1/2014. On being asked the Id. Counsel who represents P-1 & 2 only qua the application No. 122/C- 1/2014 states that a settlement document was executed but had not been filed inadvertently. This is beyond contemplation. The Patriarch also stated that R-3 to R-6 & R-8 are out of the country and no compromise had ever taken place.

I am therefore of the considered opinion that collusion between P-1 and P-2 is writ-large in filing CA 122. Even otherwise under sub- rule 5 of Rule-1 of order 23 of the Code of Civil Procedure leave to withdraw cannot be granted to P-1 & P-2 without the consent 3

of P-3. In the result CA No. 122/C-1/2014 is collusive in nature and leave to withdraw the petition is accordingly refused. CA No. 122/C- 1/2014 is disposed."

4. The appellants filed yet another withdrawal application CA No. 184/C-

1/2014 but the same was also dismissed by the Ld. Company Law Board vide

its order dated 18.11.2014 as follows:

"CA No. 184 (C-1)/2014 mentioned by Counsel for P-1 & 2. Counsel for P-1&2 says that P-1 & 2 do not wish to participate and prosecute in the proceedings henceforth before this Board. However, after arguing for a while, the Id. Counsel for the applicant P-1&2 did not press the said application. As a result CA No.184(C-1)/2014 is dismissed as not pressed.

List on 23.12.2014 at 10.30 AM."

5. However, later, the Ld. Company Law Board vide its order dated

19.01.2016 had observed the Company Petition No. 40/ND/2012 shall survive

only qua the petitioner no. 3 as the appellants no. 1 and 2 viz. petitioner no. 1

and 2 have been deleted from the array of parties.

6. It is the submission of the Learned Counsel for appellants no 1 and 2 there

has never been any order passed by the Ld. NCLT qua deletion of appellants no.

1 and 2 from the Company Petition No. 40/ND/2012 and never any amended

memo of parties was filed showing their names being deleted. It is submitted the

appellants were never so deleted and neither their petition was dismissed vide

any order, hence, there was no occasion for seeking liberty to restore the

proceedings qua them, yet the appellants applied for, only because of an order

dated 08.09.2022 passed by Ld. NCLT, which records: - 4

"We do not allow the new counsel to appear for petitioner No.1 and 2 unless he has a valid petition to restore himself on record in view of the order of this Tribunal dated 19.01.2016. The counsel proposing to appear for applicant No.1 and 2 should clarify the position and appear in the proper manner after he is restored back to file. In so far as other cases are concerned, the matter will be listed on 22.09.2022,"

7. It is argued the impugned order completely misread the earlier orders

passed by the Ld. NCLT. Reference was made to L.RM K Narayanan and Another

Vs Pudhuthotam Estates Ltd and others (1992) 74 Comp Case 30 wherein it was

held once a petition is validly presented, it is well open to a shareholder to ask

for substitution and prosecute the proceedings even though such a shareholder

by himself could not have presented a petition under Section 397 for want of

required share qualification. It was argued the court has to only consider

whether the petition was a valid petition at the time of its presentation and that

requirement of share qualification is relevant and material, only at the time of

institution of the petition. Further in Rajamundry Electric Supply Corportion Ltd

Vs A Nageswara Rao & Others (1956) 26 COMP Case 91 it was held even if 13 of

the members who consented to the filing of the application had subsequently to

its presentation, withdrawn their consent, then also such petition would be

maintainable as the validity of the petition is to be adjudged on the facts, as were

at the time of its presentation.

8. Thus, it is the case of the appellants since they validly presented their

petition at the time of filing it, hence by subsequent acts they can't be allowed to

abstain themselves from its proceedings.

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9. It is thus the submission of the appellants no. 1 and 2, the impugned order

passed by the Ld. NCLT, dismissing their restoration application, is bad in law.

10. Heard.

11. Before proceeding further we need to note the reasoning given by the Ld.

NCLT in its impugned order, as under:

"11. It has been expressly observed in the aforesaid order of CLB that Petitioner No. 1 and 2 do not wish to participate and prosecute in the proceedings. On the said date, Ld. Counsel for the Petitioner No. 1 and 2 was also present. There is no further clarity needed on the issue.

12. It transpires from the order sheets that after the said date i.e., 18.11.2014 neither the Petitioner No. 1 and 2 nor the counsel on their behalf have made appearance thereafter and hence in this wake it has been observed on 19.01.2016 by the Ld. Company Law Board that the Petition survives only qua Petitioner No. 3 as the other two Petitioners have been deleted from memo of parties.

13. We are of the view that when the Applicants themselves had consented to stand away from the proceedings meaning thereby that the applicants do not want to prosecute the Company Petition No. 40(ND)/2012 which has been also recorded in order dated 18.11.2014 in presence of their counsel, that the observation that Petition survives only qua Petitioner No. 3 as other two Petitioners have been deleted from array of parties. We find no irregularity or infirmity in the order. We are of the view that Applicants are estopped to contend that there was no occasion for the Ld. Company Law Board to delete Petitioner No. 1 and 2 (Applicants herein) from the memo of parties in CP No. 40(ND)/2012. The statement of the counsel for applicant is binding and has not been refuted. .............

15. From the above order it is clear that irrespective of the question that whether there was any settlement or not, the Applicants themselves had chosen not to prosecute and not participate in CP No. 40(ND)/2012 Further without seeking any liberty to restore the proceedings qua them since 19.01.2016 till the filing of IA-321 of 2023 for any reason whatsoever. Even otherwise, there has been inordinate delay of 7 years in seeking the restoration of name in 6

memo of parties, which cannot be justified. The conduct of Applicant speaks for themselves.

16. Furthermore, basis the alleged settlement, we cannot admit the contentions that there has been violation of the alleged settlement. This can also not be a ground for seeking restoration of proceedings qua Petitioner No. 1 and 2. Hence, we find no legal merit and we are inclined to dismiss the prayers sought in this Application."

12. Now the settlement talked above in the impugned order was entered into

on 19.05.2014. Its salient features are as under: -

"This agreement dated 19th May 2014 between the parties (parties), Sh Ramandeep Singh Ahluwalia s/o Sh Charanjit Singh Ahluwalia, [RSA] a resident of H No 132, Sector 8/A Chandigarh herein after referred to as Party A [PartA], And Sh Sarabjit Singh Ahluwalia s/o Charanjit Singh Ahluwalia [SSA] a resident of 119 Anupam Gardens, Sainik Farm, New Delhi, herein after referred to as Party B (Party B] Agree to and accept to enter into the following binding agreement

1. SSA. Party B holder of a third share in the property H. No 132, Sector & A Chandigarh will sell his part to a third party and agrees to gift the registered value to RSA, Party A, SSA will retain 2 Crores from the proceeds of sale of his share of the house and balance of 3.75 Cr will be gifted to Party A RSA.

2. Party A RSA together with his wife Mrs Ruba Kaur Ahluwalia agree to resign as Directors of the following companies:

1. Sun time Energy Ltd

2. Surya Jyoti Safety Products Ltd

3. Surya Jyoti Devices Pvt Ltd

4. Indo Extrusions Pvt Ltd.

And gift their shares of their holding to Party B and resign as Directors of the aforementioned 4 companies. SSA on the understanding Party B undertakes to exclude Party A and Mrs Ruba Kaur Ahluwalia from any liabilities in their totality of whatever they may be in relation to the above companies on the signing of this agreement.

3. Gurjit Pal Kaur agrees to relinquish her part of the share in Sunrise. EL 649 Phase 9, Mohali to Party A RSA without any consideration of any payment whatsoever.

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4. Following this agreement both parties agree that there shall be no further Civil Litigation and pursue any Criminal allegations and both parties will withdraw from such action, present or past or any matters arising in future in relation to the mentioned agreement.

5. The performance of this agreement shall be in its totality and any default by either party will render this agreement null and void."

13. It is the case of the appellants this settlement was never adhered to by

Respondent No. 3 and its clause 5 (supra) notes the performance of this

agreement shall be in its totality and any default by either party shall render this

agreement null and void. Thus on two counts viz (a) their names were never

deleted from array of parties in the company petition, and (b) the settlement was

never adhered to by Respondent No. 3, hence is null and void; the appellants

have sought to be continued in the array of parties before the Ld. NCLT, to

contest their Company Petition No. 40/(ND)/2012.

14. We have also heard the Learned Counsel for the Respondents as well. He

submits the settlement so far as it relates to the Respondent No. 1 company was

fully implemented. He specifically referred to clause 2 of the Settlement to say

the appellants no. 1 & 2 admittedly held shares in M/s Sun Time Energy Limited

and both were the directors in the said company, but in pursuance to the

settlement above, both had sold their shares in the company to Respondent No.

3 for consideration and then both the appellants no. 1 and 2 had resigned from

the directorship of the company. It was argued from 19.05.2014 till date both

the appellants had no shares in Respondent No. 1 company and sale/purchases

of their shares were rather uploaded on the portal of the ROC/MCA etc. 8

15. Admittedly, per order dated 18.11.2014, the Ld. Company Law Board had

noted the appellants no. 1 and 2 does not wish to participate and prosecute the

proceedings before the Company Law Board and it was only upon objections

raised by someone else, their withdrawal applications were dismissed, as not

pressed. In any case the stand of appellants no. 1 and 2 was absolutely clear;

both never wished to participate in the proceedings and rather did not participate

in it from 2014 till I.A. No. 321/2023 was filed. Admittedly in its order dated

19.01.2016, the Ld. Company Law Board had observed the company petition

survive only qua petitioners no. 3, yet the appellants failed to file any appeal or

clarification against the said order dated 19.01.2016, till 2023.

16. Further, admittedly, the appellants have sold their entire shareholdings in

Respondent No. 1 company for good consideration and thus were no more the

members of the company after 2014 and thus had no locus to continue with this

company petition. Though the Learned Counsel for the appellants had argued

the threshold for filing company petition needs to be seen at the time of filing of

the petition and not thereafter, but the law cited by them was on different facts.

The question here is if during the pendency of company petition, the petitioners

have sold his entire shareholding and does not remain members of the company,

can they continue with such company petition. The answer is given in

Hungerford Investment Trust Ltd. v. Turner Morrison and Co. Ltd., (2008) 142

Comp Case 34 as below

"24. There is no reason to say that the company petition is not maintainable. At the date it was taken out Hungerford satisfied the 9

conditions mentioned in section 399, and hence it was entitled to take out the petition. Only because subsequently it ceased to be a member of the company, in my view, it cannot be said that the company petition is not maintainable. The question is whether any relief can be given to Hungerford. In my view, unless the person taking out the company petition under section 397 continues to be a member of the company, order granting relief under the section cannot be made. If, however, the question whether the person continues to be a member becomes one of the matters in issue in the company petition, in my view, without deciding that question it cannot be held that no relief can be given to the person filing the company petition by making order under section 397.

25. In the present case, the position that emerges from the decisions given by the courts and particularly from the one dated September 29, 2003, is that today there is no scope for anyone to say that Hungerford did not cease to be a member of Turner Morrison, and hence the question whether it ceased to be a member of Turner Morrison can no longer be a matter in issue in the company petition.

26. What emerges from all these is that today there is no scope to give any relief to Hungerford by making an order under section

397. Even if all the prayers are allowed, it will not be benefited in any way. As a result, if it is held that the company petition should be proceeded with for giving a decision on the merits, in my view, it will produce only an academic decision. As is known, no court is to permit litigants to pursue any litigation inviting decision on academic questions.

27. For these reasons, I hold that the company petition should be dismissed. I accordingly allow the application taken out by Turner Morrison and dismiss the company petition. On the facts of the case, I find no reason to make any order for costs: Hence there shall be no order for costs in the case."

17. Now admittedly none of the appellants had challenged the settlement

agreement between the parties and in fact the appellants had moved an

application viz IA No.122/C-1/2014 praying for withdrawal of the company

petition on the basis the appellants have compromised the matter with

Respondent No. 3, but since the appellants require the Ld. Company Law Board 10

to withdraw the entire company petition, hence, per order dated 29.08.2014 it

was not allowed, since Petitioner No.3 was still holding his field.

18. Moreso, it is pertinent to mention IA No.321/2023, which had culminated

into the impugned order, referred to a legal notice dated 25.06.2019 wherein it

was recorded, the appellants have duly resigned as directors from Respondent

No.1 company thereby abiding by the terms of the agreement, by performing and

complying of obligations as per the stipulated clause. Thus, only because of

Clause 3 of the agreement where one Ms Gurjit Pal Kaur w/o Sh Sarabjit Singh

Ahluwalia was to relinquish her part of share in M/s Sunrise, a partnership firm,

the settlement qua the sold shares in Respondent No. 1 Company in the year

2014 cannot be reopened. Once the appellants on 19.05.2014 had transferred

their shares and had filed a share transfer form, duly filed up with the ROC, they

can't be allowed to reagitate this issue again. Admittedly, they sold their shares

not for free, but for consideration.

19. Though the Ld. Counsel for the appellant argued Hungerford (supra) is

not applicable to the facts of the case as it dealt with the sale of shares in an

auction conducted by Tax Authorities; but admittedly the court held the

petitioner therein has been left with no shares, hence to continue with company

petition would be an academic exercise.

20. Thus, in our considered view, it shall be a futile exercise to allow the

appellants no. 1 and 2 to continue with Company Petition No. 40(PB) of 2012;

as agitating their rights in the company affairs would merely be an academic 11

exercise and would rather open new issues, not agitated since 2014. So far other

issues viz inheritance, etc., the appellants shall be at liberty to take recourse to

the appropriate provisions of law, if available.

21. The appeal is disposed of in terms of the above. Pending applications, if

any, are also closed.

[Justice Yogesh Khanna] Member (Judicial)

[Mr. Ajai Das Mehrotra] Member (Technical)

Dated: 26.09.2025 Bm/Manu