Registrar Of Companies vs Bhagyodayam Company

(Arising out of the Order dated 11.03.2020 in IA/29/KOB/2020 in TCP/21/KOB/2019 passed by the Hon'ble National Company Law Tribunal, Kochi Bench)

In the matter of:

The Registrar of Companies, Kerala ..Appellant

Vs Bhagyodayam Company & 12 Ors. ..Respondents

Present:

For Appellant : Mr. Avinash Krishnan Ravi, Advocate

ORDER

(VIRTUAL MODE)

24.02.2022 Heard the Learned Counsel Mr. Avinash Krishnan Ravi

appearing for the Appellant and the instant 'Appeal' is disposed of at the

Admission stage itself.

2. According to the Learned Counsel for the Appellant, the 1st

Respondent/Company filed the 'Statutory Returns' viz., Annual Returns and

'Financial Statements' upto the 'Financial Year ended 31.03.2017' and that

the total number of 'Promotors'/'Members of the Company' are '57' (Fifty

Seven) and that the net worth of the 'Company' is Rs. 1,23,87,566.43 and the

turnover was of Rs. 15,49,421/-, as per the latest 'Annual Returns' for the

Financial Year ended on 31.03.2017, filed by the 'Company'.

Company Appeal (AT)(CH) No. 11 of 2022 Page 1 of 12

3. It is represented on behalf of the Appellant that in CP No. 29/2017, was

filed by Alexander Correya, Henry Peter and V R Jude Jose (R2 to R4) before

the National Company Law Tribunal, Chennai Bench against 1st Respondent/

Bhagyodayam Company & Ors. and the Petitioners therein had alleged

numerous 'acts' of 'Oppression and Mismanagement' of the affairs of the 1st

Respondent/Company by the then Managing Director V J Paul Joseph.

4. It is brought to the fore that the 'Tribunal', on 28.08.2018 had passed

order inter alia to the effect that 'since the company is incorporated for

charitable purpose, the affairs of the Company are to be put on right track so

that the object of the charity could be saved. Therefore, it is proper to appoint

an Interim Administrator to look into the affairs of the Company'.

5. The Learned Counsel for the Appellant points out that the National

Company Law Tribunal, Chennai on 31.10.2018 had appointed Hon'ble Mr.

Justice Narayana Kurup (Retd.) as an 'Administrator' superseding the 'Board'

in existence, to carry on the 'Functions' of the 'Company' until further orders.

Moreover, with the formations of the 'National Company Law Tribunal, Kochi

Bench', the case was transferred to the said Bench and the petition was

renumbered as TCP/21/KOB/2019.

6. The Learned Counsel for the Appellant proceeds to point out that the

Hon'ble Administrator' submitted an 'Interim Application' before the 'Tribunal'

Kochi Bench and in I.A. No. 29/KOB/2020, it was mentioned that, in order

to comply with the directions of the 'National Company Law Tribunal,

Chennai', the 'Hon'ble Administrator' had requested the then Managing

Director, to make available all the 'Documents' required for the purpose of

Company Appeal (AT)(CH) No. 11 of 2022 Page 2 of 12 complying with the directions of the 'Tribunal' Chennai and that despite

several requests and even after the directions of the 'National Company Law

Appellant Tribunal', New Delhi, and the Hon'ble 'Tribunal', the Respondent

Nos. 4 to 8 had not bothered to submit the required documents to the 'Hon'ble

Administrator'.

7. It is the version of the Appellant that the 'Hon'ble 'Administrator',

because of the fact that the then 'Managing Director' and 'other Directors'

were not cooperating with him, he appointed Sri Babu A Kallivayalil, Kochi,

Chartered Accountant' firm, to review the available 'Books of Accounts' and

other available Records in the 'Registered Office of the Company', with a view

to identify the statutory compliance, apparent diversion of funds, and other

irregularities etc. In fact, an 'Inventory' of the available 'Books of Accounts'

and Records in the Registered Office of the Company, in the presence of

'Hon'ble Administrator' and 'Staff of the Company' was done and after

reviewing the available 'Books of Accounts' and Records in the Registered

Office of the Company, a 'Preliminary Report' was submitted by the 'Chartered

Account' listing out the irregularities noticed, to the 'Hon'ble Administrator'

and the same was placed before the 'Tribunal, Kochi Bench, Kerala'.

8. Advancing his argument, the Learned Counsel for the Appellant brings

it to the notice of this 'Tribunal' that in the 'Interim Application' filed by the

Administrator, the 'National Company Law Tribunal' Kochi Bench had passed

the impugned order dated 11.03.2020 in I.A. No. 29/KOB/2020 in TCP No.

21/KOB/2019, directing 'Serious Fraud Investigation Office', Chennai to

investigate the affairs of the 1st Respondent/ Bhagyodayam Company and

Company Appeal (AT)(CH) No. 11 of 2022 Page 3 of 12 submit a 'Report', within two months before the 'Tribunal' and that Mr. Babu

A Kallivayalil was appointed as an 'Auditor' of the 1st Respondent/Company

by the 'Tribunal'.

9. Assailing the validity, correctness, propriety and the legality of the

'impugned order' dated 11.03.2020 passed by the National Company Law

Tribunal, Kochi Bench in I.A. No. 29/KOB/2020 in TCP No. 21/KOB/2019,

the Learned Counsel for the Appellant contends that the 'Impugned Order' is

bad in law, because of the fact that the 'Tribunal', without considering the

ingredients of Sections 210 & 212 of the Companies Act, 2013 and also not

taking note of the 'Judgment of the National Company Law Appellate

Tribunal, New Delhi', had passed the same, which requires interference in the

hands of this 'Tribunal' in 'Appeal'.

10. The Learned Counsel for the Appellant projects an argument that only

the 'Central Government' is authorised to accord 'sanction' to initiate an

'Investigation' against the 'Company and its Officers', who are in 'Default' as

per section 210(2)(3) of the Companies Act, 2013. In this connection, the

Learned Counsel for the Appellant refers to the Judgment of this 'Appellate

Tribunal' dated 02.12.2019 (3 Member Bench) in Union of India, Through

Serious Fraud Investigation Office (SFIO) v. Maharashtra Tourism

Development Corporation & Anr. [vide Company Appeal (AT)(INS) No.

964/2019 with Company Appeal (AT)(INS) No. 965/2019] wherein it was held

that an 'Adjudicating Authority' was not competent to straightway direct any

investigation to be conducted by the 'Serious Fraud Investigation Office'.

However, the 'Adjudicating Authority' being empowered to pass an order

Company Appeal (AT)(CH) No. 11 of 2022 Page 4 of 12 under Section 213 of the Companies Act, 2013, it is always open to the

'Adjudicating Authority'/'Tribunal' to issue a Notice in regard to the aforesaid

Charges to the Promoters and others (including) Union of India Through SFIO

and after following the procedure laid down in Section 213 of the Companies

Act, 2013, if a prima facie is made out, it can refer the matter to the 'Central

Government', for investigation by the 'Inspector' or 'Inspectors' and on such

investigation if any actionable material is made out and if the 'Central

Government' feels that the matter requires an 'Investigation' through 'SFIO' it

can proceed in accordance with the provision.

11. The Learned Counsel for the Appellant adverts to the Division Bench

Judgement of the Hon'ble High Court of Delhi reported in 2018 SCC online

Del 13052: (2019) 256 DLT 493 (DB) wherein it was observed and held that

as per Section 211 of the Companies Act, 2013, the 'Central Government' has

the power to direct the investigation by the 'Serious Fraud Investigation

Office'. This is further clear from Section 212(1) of the Companies Act, 2013

that the Investigation by the 'Serious Fraud Investigation Office' is conducted

at the instance of the 'Central Government' and that the 'Investigation' is

conducted where the 'Central Government' is of the opinion that it is

necessary to conduct an 'Investigation' into the affairs of the Company and it

also specifically enumerates the case under which such an 'Investigation' can

be ordered etc.

12. The Learned Counsel for the Appellant urges before this 'Tribunal' that

the 'impugned order' dated 11.03.2020 was passed without hearing the

'Central Government'/Primary Competent Authority and added further, the

Company Appeal (AT)(CH) No. 11 of 2022 Page 5 of 12 'Impugned Order' had granted more relief than what was envisaged in I.A. No.

29/KOB/20 in TCP/21/KOB/2019.

13. While rounding up, the Learned Counsel for the Appellant prays for

allowing the instant 'Appeal' by setting aside the 'impugned order' passed by

the 'Tribunal', to secure the ends of justice.

14. It is relevantly pointed out that IA No. 29/KOB/2020 in

TCP/21/KOB/2019, the 'Administrator' of 1st Respondent/ Bhagyodayam

Company had sought for (1) a direction for an Order being issued to the

Respondent No. 13 (ROC Kerala & Lakshadweep) herein or other Competent

Authority to investigate the instances of the non-compliances and violation of

the provisions of the Companies Act, 2013 and also contravention of the MOA

and AOA, (2) in directing the Respondent No. 13 to prosecute the Offenders

and take appropriate action Section 439(2) of the Companies Act, 2013, (3) to

appoint an 'Auditor' of the Company from Annexure- A2 list.

15. The Learned Counsel for the Appellant points out that on 25.06.2020,

the 'Ministry of Corporate Affairs', Headquarters, after obtaining the legal

advice had instructed the 'Appellant' to file an 'Appeal' against the impugned

order dated 11.03.2020 in I.A. No. 29/KOB/2020 in TCP/21/KOB/2019 and

to furnish a Report to be placed before the 'Internal Committee' appraising it,

of the facts to take 'considered view' in regard to the desirability of 'SFIO

Investigation'.

16. According to the Learned Counsel for the Appellant, the request of the

'Regional Director', Southern Region, Chennai, in November-December, 2020,

to modify the instruction for an 'Appeal' into one of a 'Review Petition' in order

Company Appeal (AT)(CH) No. 11 of 2022 Page 6 of 12 to avoid travel to Delhi, during Pandemic was not acceded to. Further,

because of the establishment of National Company Law Appellate Tribunal,

at Chennai, the instant 'Appal' came to be filed.

17. To be noted, Section 210 of the Companies Act, 2013 deals with

'Investigation into affairs of Company'. Section 211 of the Companies Act,

2013 speaks of 'establishment of Serious Fraud Investigation Office. Section

212 of the Companies Act, 2013 pertains to 'Investigation into affairs of

Company by 'Serious Fraud Investigation Office'. Section 213 of the

Companies Act, 2013 'Investigation into Company's Affairs in other cases'.

18. It must be borne in mind that in terms of Section 210(2) and (3) of the

Companies Act, 2013, the 'Central Government'/Competent Authority is

authorised to sanction to commence an investigation against the Companies

and its Officers, who had committed Default. The Settled Law is that an

'Adjudicating Authority' is not empowered to order an Investigation in a

straightway manner, to be carried out by the 'Serious Fraud Investigation

Office'.

19. Section 214 of the Companies Act, 2013 deals with 'Security for

Payment of Costs and Expenses of Investigation'. Section 216 of the

Companies Act, 2013 relates to 'Investigation of Ownership of Company'.

Section 420 of the Companies Act, 2013, runs as under:

(1) "The Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit.

Company Appeal (AT)(CH) No. 11 of 2022 Page 7 of 12 (2) The Tribunal may, at any time within two years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it, and shall make such amendment, if the mistake is brought to its notice by the parties:

Provided that no such amendment shall be made in respect of any order against which an appeal has been preferred under this Act.

(3) The Tribunal shall send a copy of every order passed under this section to all the parties concerned."

20. Section 421(1) of the Companies Act, 2013 enjoins that 'Any person

aggrieved by an order of the 'Tribunal' may prefer an 'Appeal' to the 'Appellate

Tribunal'. An 'error apparent on the face of the proceedings' is an error based

on clear ignorance or overlooking the existing provisions of Law, as opined by

this 'Tribunal'. At this stage, this 'Tribunal' worth recalls and recollects the

decision of the Hon'ble Supreme Court in T.C. Basappa v. T. Nagappa, AIR

1954 Supreme Court 440 wherein it is held that 'such an error is a patent

error' and not a mere 'wrong decision'.

21. Further, in the decision of Hon'ble Supreme Court in Hari Vishnu

Kamath v. Ahmad Ishaque, reported in 1995 1 SCR 1104 wherein it is

held that 'it is essential that it should be something more than a mere error;

it must be one which must be manifest on the face of record'.

22. What is an error 'apparent on the face of record' cannot be defined

precisely or exhaustively, there being an element of indefiniteness inherent in

Company Appeal (AT)(CH) No. 11 of 2022 Page 8 of 12 its very nature and it must be left to be decided judiciously, on the facts of

each case.

23. It is to be remembered that the Companies Act, 2013 does not clothe

the 'Tribunal' to 'Review its own order and Judgment'. But Section 420(2) of

the Companies Act, 2013 is empowering the 'Tribunal' to act any time within

two years from the date of the order in order to rectify any mistake apparent

from the record, amend any order passed by it and to make such amendment,

if a mistake is brought to its notice by the Litigants/Stakeholder.

Undoubtedly, a 'Tribunal' has no inherent power of review as per Civil

Procedure Code. However, the 'Tribunal' has the requisite power to set

right/rectify any mistake apparent from record and to amend an order

accordingly, as per decision APC Credit Rating (P) Ltd. v. Registrar of

Companies, NCT New Delhi reported in (2017) 205 Comp Cas 492 at pages

494 & 495.

24. The power of 'Review' is not an 'Inherent Power' and Rule 11 of the

National Company Law Rule, 2016 cannot be pressed into service.

Furthermore, there is no express provision that showers 'Power of Review'

upon the National Company Law Tribunal either in an express fashion or by

means of necessary implications, as the case made be.

25. As far as the present case is concerned, even though the 'Appellant' has

preferred the instant Company Appeal (AT)(CH) 11 of 2022 before this

'Tribunal', as against the 'impugned order dated 11.03.2020 in IA No.

29/KOB/2020 in TCP/21/KOB/2019, under Section 421 of the Companies

Act, 2013, since the 'Central Government' has established the Serious Fraud

Company Appeal (AT)(CH) No. 11 of 2022 Page 9 of 12 Investigation Office to investigate fraud relating to a Company and that the

'Central Government' is to assign the investigation into affairs of a Company

by 'Serious Fraud Investigation Office' and its 'Director' may designate such

numbers of Inspectors, as he may consider necessary, for the purpose of such

investigation vide Section 212 of the Companies Act, 2013 by following the

procedure under Section 213 of the Companies Act, 2013, in stricto sense of

the term, 'Union of the India through Serious Fraud Investigate Office' is an

'Aggrieved Person' against the 'impugned order' dated 11.03.2020 in IA No.

29/KOB/2020 in TCP/21/KOB/2019 proper and competent authority to

prefer an 'Appeal' and not the 'Appellant'/Registrar of Companies, Kerala,

(notwithstanding the fact that Section 421(1) of the Companies Act, 2013

speaks of 'Any person aggrieved by an order of the 'Tribunal' may prefer an

'Appeal to the 'Appellate Tribunal'.

26. Really speaking, the words 'Any person aggrieved by the order of the

'Tribunal' occurring in Section 421(1) of the Companies Act, 2013 mean only

a Person who has suffered a legal grievance. In this regard, this 'Tribunal'

aptly points out in Company Appeal (AT)(INS) No. 964 of 2019, the Appellant

is 'Union of India, through 'Serious Fraud Investigation Office' (SFIO) v.

Maharashtra Tourism Development Corporation and Anr. Besides this, the

Administrator of the 1st Respondent/M/s Bhagyodayam Company who filed

IA No. 29/KOB/2020 in TCP 21/KOB/2019 on the file of 'National Company

Law Tribunal', Kochi Bench has not preferred the 'Appeal'.

Company Appeal (AT)(CH) No. 11 of 2022 Page 10 of 12

27. When the Prime Grievance of the 'Appellant' is that the 'impugned

Order' dated 11.03.2020 in IA No. 29/KOB/2020 in TCP 21/KOB/2019 on

the file of the 'National Company Law Tribunal', Kochi Bench that the said

Order was passed without hearing the 'Central Government' being the

'Primary Competent Authority' then, the 'Central Government'/Union of India

(through Serious Fraud Investigation Office) ought to have preferred the

'Appeal' against the 'impugned order' dated 11.03.2020. However, such

recourse has not been resorted to. Viewed in that perspective, this 'Tribunal'

unresistingly comes to a consequent conclusion that the Appellant/Registrar

of Companies, Kerala is not the proper and competent person to prefer the

instant Company Appeal (AT)(CH) No. 11 of 2022. Per contra, the 'Central

Government (Union of India, through Serious Fraud Investigating Office) is

the appropriate person/Primary Authority to prefer an 'Appeal', as an

'Aggrieved Person', as per Section 421(1) of the Companies Act, 2013.

Therefore, the 'Appeal' as framed and filed by the 'Appellant' is per se not

maintainable in the eye of law, it is an 'otiose' one and it fails.

28. In view of the foregoing detailed discussions and reasons, the instant

Company App (AT)(CH) No. 11/2022 is dismissed. No costs. I.A. No.

114/2022 is closed. It is made quite clear that the dismissal of the instant

Company Appeal (AT)(CH) No. 11/2022 will not preclude the 'Central

Government' (Union of India through Serious Fraud Investigation Office) in

assailing the impugned order dated 11.03.2020 in IA No. 29/KOB/2020 in

TCP 21/KOB/2019, passed by the National Company Law Tribunal, Kochi

Company Appeal (AT)(CH) No. 11 of 2022 Page 11 of 12 Bench, Kerala before the 'Competent Forum', of course in the manner known

to Law and in accordance with Law, if it so desires/advised.

(Justice M. Venugopal) Member(Judicial)

(Kanthi Narahari) Member (Technical) AKC/MD

Company Appeal (AT)(CH) No. 11 of 2022 Page 12 of 12