Ms. Explorers Travels & Tours Pvt. Pvt. ... vs Ms. Punita Khatter

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI COMPANY APPEAL (AT) No.152 of 2021 (Arising out of Order dated 22.11.2021, passed by the National Company Law Tribunal, Court No. II, Special Bench, New Delhi in CA No. 522 of 2021 in CP No. 3(ND)/2016)

IN THE MATTER OF:

M/s Explorers Travels and Tours Private Limited, 501, Rectangle 1, D 4, District Centre, Saket, New Delhi. ...Appellant

Versus

1. Ms Punita Khatter, 205, Beverly Park, DLF-Phase II, Gurgaon 122001

Also at

501 Rectangle 1, D 4 District Centre, Saket, New Delhi 110017 ...Respondent No. 1

2. Global Leisure & Recreations PTE Limited A company incorporated as per laws of Singapore 80 Raffles Place 16-20 UOB Plaza, 048624 Singapore ...Respondent No. 2

3. Mrs Shalini Wadhwa H-1101, Caitriona Apartments Ambience Island, -2-

Behind Leela Hotel, NH-8 Phase-III Sector 24 Gurgaon 122001 Haryana, India. ...Respondent No. 3

4. Mr. Rakesh Wadhwa, H-1101, Caitriona Apartments Ambience Island, Behind Leela Hotel, NH-8 Phase-III Sector 24 Gurgaon 122001 Haryana, India. ...Respondent No. 4

For Appellant: Mr. Dhruba Mukherjee, Sr. Advocate with Ms Tuhin Sinha, Mr Pranay Sarkar, Advocates.

For Respondent No. 1: Mr. Krishnendu Datta, Sr. Advocate with Mr. Aditya Bharech, Advocates for R-1.

For Respondent No. 1 in Ms. Punita Khatter, R1 in person. person:

With COMPANY APPEAL (AT) No.153 of 2021 (Arising out of Order dated 22.11.2021, passed by the National Company Law Tribunal, Court No. II, Special Bench, New Delhi in CA No. 522 of 2021 in CP No. 3(ND)/2016)

IN THE MATTER OF:

M/s Global Leisure & Recreations PTE Ltd A Company incorporated as per laws of Singapore 80 Raffles Place 16-20 UOB Plaza, 048624 ...Appellant Singapore

Versus

1. Ms Punita Khatter, 205, Beverly Park,

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DLF-Phase II, Gurgaon 122001

Also at

501 Rectangle 1, D 4 District Centre, Saket, New Delhi 110017 ...Respondent No. 1

2. Explorers Travels and Tours Private Ltd, 501, Rectangle 1, D4, District Centre, Saket, New Delhi. ...Respondent No. 2

3. Mrs Shalini Wadhwa H-1101. Caitriona Apartments Ambience Island, Behind Leela Hotel, NH-8 Phase-III Sector 24 Gurgaon 122001 Haryana, India. ...Respondent No. 3

4. Mr. Rakesh Wadhwa, H-1101. Caitriona Apartments Ambience Island, Behind Leela Hotel, NH-8 Phase-III Sector 24 ...Respondent No. Gurgaon 122001 4 Haryana, India.

For Appellant: Mr. Abhijeet Sinha, with Ms. Tuhin Sinha, Mr Pranay Sarkar, Advocates.

For Respondent No. 1: Mr. Krishnendu Datta, Sr. Advocate with Mr. Aditya Bharech, Advocates for R-1.

For Respondent No. 1 in Ms. Punita Khatter, R1 in person. person:

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JUDGEMENT

(Per: Shreesha Merla, Member (T))

1. Aggrieved by the Order dated 22/11/2021 passed by NCLT (National

Company Law Tribunal, Court No. II, Special Bench, New Delhi) in CA No.

522 of 2021 in CP No. 3(ND)/2016, 'M/s. Explorers Travels and Tours Private

Limited' preferred this Appeal under Section 421 of the Companies Act,

2013, (hereinafter referred to as 'The Act'). The NCLT in the Order Impugned

observed as follows:

"Ld. Counsel for the Petitioner submits that the Petitioner holds 35% of the stake in the company. The application has been filed for seeking inspection of the records of the company with the help of an Auditor or any person, to video graph the entire proceedings of the 28th AGM dated 23.11.2021 and appoint an observer to the said meeting. We have heard the Petitioner, and also the Counsel for the Respondent. The Counsel for the Respondent inter alia submitted that some FIRs have been filed in 2016 against the Petitioner, who as the Managing Director of the Company has siphoned off funds and she has not been responding to the investigations taken up by the Police.

In view of the prayers made in the Application and contentions made by the Ld. Counsel for the Applicant, we feel it necessary to appoint an observer for AGM to be held on 23.11.2021. Accordingly, we hereby, appoint Mr. P. Nagesh, Sr. Counsel as an observer to watch the proceedings of the 28th AGM dated 23.11.2021 and submit a report. The appropriate fee of the Observer shall be fixed by the Court on receipt of the report of the Observer.

The entire proceeding of the AGM shall be video recorded and produced before this Court. Besides the Petitioner will be entitled to have inspection of any statutory records or any financial statements through a reputed Chartered Accountant or a Company

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Secretary or any other professional and produce such Inspection Report before this Court. The Respondent shall not object to the recording of the proceedings and also to the presence of the observer in the AGM. We hereby restrain the Respondents from proceeding with the Criminal Proceedings lodged with the police until the next date."

2. Submissions of the Appellant:

 Learned Counsel strenuously contended that NCLT exceeded its

jurisdiction by restraining the Respondents in the Company Petition

from proceeding in the Criminal Proceedings lodged with the Police.

 The first Respondent is a 35% shareholder in the Appellant Company

and was the Managing Director from 1995 to 11/04/2016; was

running a parallel Company in the name and style of Merrific Travels

and Events LLP and was diverting the business of the Appellant

Company; on gaining knowledge about the said fraud, the Appellant

Company filed CS (Comm.) No. 466 of 2021 before the Hon'ble Delhi

High Court which vide Order dated 04/05/2016, inter alia appointed

five local Commissioners to inspect and have access to the computers

and hard disks used by the first Respondent herein to ascertain

whether the Appellants propriety software and database has been

downloaded and being used; in this background the first Respondent

filed CA No, 522/2021 before the NCLT seeking several directions.

 As per Prayer (VI) of CA No. 522/2021, the first Respondent sought

inspection of all Company data in her capacity as Director for FY

2016-17 being a 35% shareholder. NCLT granted inspection of

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statutory records of any FY which was not even prayed for by the first

Respondent. Moreover, having resigned on 09/06/2016, the first

Respondent is now retrospectively seeking inspection of the records to

which, only Director is entitled as per Section 128(3) of the Companies

Act, 2013.

 FIRs are pending against the first Respondent, the allegations being

that, the first Respondent destroyed the financial records of the

Company and removed the records from the Registered Office of the

Company and also that she had siphoned off the funds from the

Company.

 NCLT failed to appreciate that the documents sought for by the first

Respondent are forming part of the Criminal Investigation against the

Appellant and the same could not have been directed as the law

requires that the accused in a Criminal Investigation is not entitled to

have any access to any incriminating document.

3. Submissions of the first Respondent:

 Being the erstwhile Managing Director and 35% shareholder of the

Appellant Company, it is submitted that the first Respondent was

constrained to file CP No. 3 (ND)/2016 before the NCLT due to various

instances of Oppression and Mismanagement. NCLT passed various

Interim Orders on account of their continued mismanagement.

Recently, the first Respondent was served with a copy of Notice for an

AGM seeking to approve the financials for the year 2016-17. However

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due to various discrepancies and non-grant of inspection, the first

Respondent was constrained to file CA 522/2021 inter alia seeking

a) Appointment of observer to the AGM.

b) Videography of AGM.

c) Rectification of Financial.

d) Inspection of the Books of Accounts etc.

 Pursuant to the Impugned Order, the first Respondent sought

inspection of the Company records before the AGM. The Appellant

adjourned the AGM sine die on 25/11/2021. The Appellant and its

majority shareholder fearing contempt proceedings filed identical

Appeals before this Tribunal.

 CA 522/2021 was argued at length by both parties and the NCLT in

its jurisdiction has given the relevant directions in the Impugned

Order, keeping in view the Petition filed under Oppression and

Mismanagement. Rule 11 of the NCLT Rules, 2016, empowers the

NCLT to make such Orders as may be necessary for meeting ends of

justice.

 There is no provision in the Act or in the corresponding Rules

prohibiting the inspection of record of a party by any opponent. The

omission of the word 'Shareholder' in Section 209(4) of the Act, does

not prohibit a party in a pending case to inspect the records even if

he/she is not a Director. The right of inspection is a statutory right.

The Appellant having complied with a part of the Impugned Order by

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not objecting to the videography and the presence of the observer

cannot now say that the entire Impugned Order is a nullity.

 Learned Sr. Counsel contended that this Tribunal has powers to

modify the Order instead of setting aside the entire Order. In the light

of the contemptuous act, committed by the Appellant, NCLT vide

Order dated 03/12/2021 issued contempt Notices to all the

contemnors including the Appellant in CP No. 15/2021. No stay was

granted thereafter. It is only to wriggle out of the contempt

proceedings the Appellant and the majority shareholders are making

these feeble attempts to derail the proceedings before the NCLT.

Company Appeal (AT) No. 153 of 2021

4. Aggrieved by the same Impugned Order dated 22/11/2021 passed by

NCLT (National Company Law Tribunal, Court No. II, Special Bench, New

Delhi) in CA No. 522 of 2021 in CP No. 3(ND)/2016, 'M/s. Global Leisure &

Recreations Pte Ltd.' preferred Company Appeal (AT) No. 153 of 2021 on

similar grounds.

5. Submissions of the Appellant:

 Learned Counsel strenuously contended that the first Respondent was

seeking a retrospective inspection of the record in her capacity as a

Director for FY 2016-17 though, admittedly, she resigned from the

Directorship of the Company on 09/06/2016 itself. NCLT has allowed

the Prayer of the inspection in contravention of Section 128(3) of the

Act which allows inspection of accounts only by a Director.

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 NCLT granted relief much beyond the Prayer. Similar Applications

were preferred and the Bench had refused to entertain the same as

the Applications sought the same relief/s as sought for in the main

Petition. At no stage, has the first Respondent ever challenged any

resolution passed in the AGM/EGM.

 Learned Counsel drew our attention to the prayers in the Application

in CP No. 3(ND)/2016 filed by the first Respondent seeking to video

graph the EGM and AGM and inspection of Accounts and other

Financials.

 The Hon'ble Delhi High Court vide Order dated 04/05/2016 has

observed that the first Respondent was prima facie guilty of siphoning

off funds and appointed five Commissioners to conduct the inspection.

Learned Counsel contended that the 'appointment of the observer' was

completely unwarranted keeping in view the facts and circumstances

and the history of this case. NCLT in its Order dated 27/07/2021

noted that instead of taking up the CAs, the main Petition itself

should be taken up along with the CAs and the matter was listed on

08/09/2021.

 Learned Counsel drew our attention to (Annexure A-9) which is the

copy of the email dated 24/11/2021 sent by the first Respondent

seeking numerous and voluminous documents which are detailed as

hereunder:

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6. Submissions of the Respondent:

 In response to these submissions, Learned Sr. Counsel submitted that

there are several Interim Orders passed by NCLT in favour of the first

Respondent herein.

 The issue of removal of the first Respondent as Managing Director is

pending adjudication in the main Petition.

 Learned Sr. Counsel drew our attention to one such Interim Order of

the NCLT dated 12/08/2016, in which the Status Quo of the fixed

asset was continued till the next date of hearing.

 Learned Counsel also argued that the first Respondent being a 35%

shareholder is entitled to see the records/financials of the Appellant

Company.

 Counsel for the Respondent relied on the following Judgements in

support of his case:

o 'Cosmosteels Private Ltd. & Ors.' Vs. 'Jairam Das Gupta & Ors.',

[1987 (1) SCC 215].

o 'M.S.D.C. Radharamanan' Vs. 'M.S.D. Chandrasekara Raja &

Anr.', [2008 (6) SCC 750].

o 'Pramod Kumar Mittal' Vs. 'Andhra Steel Corporation Ltd. & Ors.',

[[1985] 58 CompCas 772 (Cal)]. o 'Venture India Properties P. Ltd.' Vs. 'Capt. Manmohan Singh

Kohli & Ors.', [2011 (123) DRJ 520]

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o 'Rajdhani Roller Flour Mills Pvt. Ltd.' Vs. 'Mangilal Bagri & Ors.',

[1991 SCC Online Del 24].

o 'Chandra Kanta Nanawati & Ors.' Vs. 'I.S. Kavadia & Ors.',

[1992 (1) WLC 396].

o 'S.P. Chengalvaraya Naidy' Vs. 'Jagnnath', [1994 1 SCC 1].

o 'A. Shanmugam' Vs. 'Ariya Kshatriya Rajakula Vamsathu

Madalaya Nandhavana Paripalanai Sangam', [(2012) 6 SCC

430].

Assessment:

7. A brief perusal of the Impugned Order shows that CA 522/2021 was

initially taken up on 22/11/2021, one day prior to the 28th AGM scheduled

to be held by the Appellant Company. The Application preferred by the first

Respondent came up for the first time on 22/11/2021 and no Notice was

issued to the Appellant herein who did not have an opportunity to file their

Reply/present their case. It is also seen from the Order dated 03/12/2021

that NCLT issued show cause Notice in the Contempt Petition without

issuing any Notice in CA 522/2021. It is also evident from the material on

record that the relief(s) sought for in CA 522 of 2021 is similar to the relief(s)

sought for in the previous Application filed prior to the scheduled date of

AGM. At this juncture, this Tribunal finds it relevant to reproduce the

Prayer sought for in CA 522 of 2021:

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8. From the aforenoted reliefs sought for by the first

Respondent/Applicant it is evident that some of the Prayers have not been

addressed to and that the main Application is still pending before NCLT.

NCLT passed an ad Interim Order as the AGM was scheduled to be held on

the very next date and appointed Learned Sr. Counsel as an observer and

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allowed the entire proceedings of the AGM to be video recorded. Additionally,

the first Respondent was entitled to have inspection of any statutory records

and Financial Statements through a reputed Chartered Accountant or

Company Secretary and produce the Inspection Report before the Court. It

was also directed that the Appellant herein should not object to the record of

the proceedings or to the presence of the observer in the AGM. It is an

admitted fact that the Notices for the AGM was received on 18th of November

and therefore the urgent Application was filed.

9. It is submitted by both the parties that the AGM was not held on

23/11/2021 and was adjourned sine die on 03/12/2021. It is also seen

from the material on record that the Appellant filed CS (Comm.) No.

466/2021 before the Hon'ble Delhi High Court, which vide Order dated

04/05/2016 has appointed five local Commissioners to inspect the

computers/hard disks of the first Respondent on the ground that the

Application herein has made out a prima facie case that the first Respondent

has misused her erstwhile fiduciary position as Managing Director and has

taken possession of the propriety software and database which was

downloaded and is being used by her. It is submitted that the said case is

still pending before the Hon'ble Delhi High Court.

10. This Tribunal is of the considered opinion that the observer, apart

from observing the proceedings of the AGM and getting the videography

executed, had to undertake the inspection of the financial records.

11. Having regard to the chequered history of the case without delving

deep into the merits of the matter, this Tribunal, keeping in view the facts

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and circumstances of the attendant case on hand, specifically in the light of

the fact that the main Application is still pending before the NCLT and only

a few relief(s) have been addressed to and the AGM has been adjourned sine

die, read together with the fact that the first Respondent who is an Ex-

Managing Director, who resigned way back in 2016 is now seeking

inspection of records of the subsequent period also in her capacity as a

shareholder, we set aside the Impugned Order, and remit the matter back to

NCLT to decide the matter giving due opportunity to all parties to complete

their pleadings, to the Appellants herein to file their objections and dispose

of the case as expeditiously as practicable, but not later than three months

from the date of this Order. The Appeals are allowed to the extent indicated

above.

12. The Registry is directed to upload the Judgement on the website of

this Tribunal and send a copy of this Judgement to NCLT (National

Company Law Tribunal, New Delhi) forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms Shreesha Merla] Member (Technical) New Delhi 04th April, 2022

himanshu

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