S.P. Gupta vs International Commenter Ltd

1. S.P. Gupta ...Appellants K-115, Hauz Khas, New Delhi 110017

2. Vipul Gupta K-115, Hauz Khas, New Delhi 110017

3. Kaveen Gupta K-115, Hauz Khas, New Delhi 110017

Vs 1. International Commenter Ltd. 302, Akash Deep Building, 26A, Barakhamba Road New Delhi 110001

2. B.C. Gupta M-138, Greater Kailash, Part II, New Delhi 110048

3. Rajni Gupta M-138, Greater Kailash, Part II, New Delhi 110048

4.Gudiya Gupta M-138, Greater Kailash, Part II, New Delhi 110048

5. Robin Gupta M-138, Greater Kailash, Part II, New Delhi 110048

6. Manisha Gupta M-138, Greater Kailash, Part II, ....Contesting New Delhi 110048 Respondents

-2- 7. Registrar of Companies Delhi & Haryana IFCI Tower, 61, Nehru Place, New Delhi

8. Sheel Gupta K-115, Hauz Khas, New Delhi 110017

9. S.P. Gupta for Janki Devi K-115, Hauz Khas, New Delhi 110017

10. S.P. Gupta for Hari Ram Gupta K-115, Hauz Khas, New Delhi 110017

11. Babita Gupta K-115, Hauz Khas, New Delhi 110017

12. Monisha Gupta K-115, Hauz Khas, New Delhi 110017

13. Isha Metals Pvt. Ltd.

B-219, Vivek Vihar, Delhi.

14. Ujjwal Exports Pvt. Ltd.

D-219, Vivek Vihar, Phase I, ...Proforma New Delhi 110095 Respondents

Present: For Appellants: Mr. Virender Ganda, Sr. Advocate with Mr. Yogesh Jagia, Mr. Nitesh Jain and Mr. Pradeep Dhingra, Advocates. For Respondents: Mr. Rajnish Sinha, Mr. Nikhil Jain and Mr. Yogender, Advocates.

Oral Judgment

06.04.2018: Heard counsel for the appellant and learned counsel for

contesting respondents. Perused Impugned order.

Company Appeal (AT) No. 54 of 2018 -3-

2. It appears that the Company Petition is pending between the parties

since 2010. Counsel for appellant submits that there were various applications

filed in the petition but CA 142/14 was picked up out of turn and decided. It

appears that the parties are connected with different companies and disputes

have arisen between them relating to the different companies and litigations

are pending. In the present matter it appears that the NCLT was moved by

Respondents vide CA 11/18 because of Condonation of Delay Scheme, 2018

and to take benefit of the Scheme the question of getting the accounts audited

and placing the same before AGM was taken up. In Para 1 NCLT recorded how

it was in interest of Justice to take up the application of 2014 and to decide it.

The NCLT has recorded in Para 2 of the impugned order as under:

"2. The urgency in this case is that the Directors of

Respondent no. 1 Company, have been disqualified on

grounds of non-filing of the Annual Returns and Balance

Sheets of the Respondent Company under Section 164(2) of

the Companies Act, 2013 by Registrar of Companies vide their

notice dated 15.09.2017 issued on the website of MCA

disqualifying the applicants namely, Mr. Robin Gupta, Ms.

Rajni Gupta and Ms. Manisha Gupta. A scheme has now been

floated by the MCA to rectify the default of non-filing of

documents under the name "Condonation of Delay Scheme

2018" introduced vide "General Circular no. 16/2017 bearing

F. NO. 02/04/2017-CL-V". This Scheme has been introduced

Company Appeal (AT) No. 54 of 2018 -4-

by the MCA providing opportunity to the defaulting companies

to clear their defaults in filing the documents within the

specified period and seek the benefit of setting aside the

suspension of Directors. Further for the filing of the Financial

Statements and the Annual Returns, the DIN of the

disqualified Directors have been reactivated temporarily till

31st March, 2018."

3. It appears that in the Petition parties have raised disputes before NCLT

regarding the question of removal of auditor of the company. The learned

counsel for the appellant is submitting that in the Company Petition one of the

disputes related to the removal of the auditor and other dispute was regarding

appointment of auditor made by the respondents. It is argued by counsel for

appellant that the question of the Constitution of Board and shareholding were

also in dispute and in such situation the learned NCLT could not have, in

between appointed what is stated to be independent auditor. The learned

counsel for appellants submits that the NCLT should have decided the

Company Petition itself expeditiously. The learned counsel for contesting

respondents submits that the question of shareholding is not in dispute in the

Company Petition. I am not entering into these fields.

4. The learned NCLT has discussed rival allegations of the parties

regarding auditors and considered the prayers in the application. The ld. NCLT

observed in Para 10 and 11 as follows:

Company Appeal (AT) No. 54 of 2018 -5-

"10. Keeping in view the facts and circumstances of the

case, as also the fact that there is no reason to create any

impediment in the Respondents' availing the scheme floated

by the Ministry of Corporate Affairs for filing of the Returns for

the defaulting years, which consequently shall result in

restoration of their DINs, this Bench is of the opinion that it

would be apposite and expedient to direct the financial

statements to be audited by an Independent Auditor for the

purpose of laying it before the shareholders and filing them

with ROC.

11. In view of the facts and circumstances of the case,

this Bench appoints M/s. K.G. Somani and Company, Delight

Cinema Building, Gate no. 2, 3rd Floor, Asaf Ali Road, New

Delhi( Mobile No. 9899904779, 9871098777), as the Statutory

Auditors to audit the accounts for the relevant years. The

Auditor shall conduct the audit in a time bound manner to

ensure that respondents are able to take advantage of scheme

floated."

5. Thus, the NCLT in interest of company, to take advantage of the scheme

proceeded to appoint independent auditor and directed that the audit should

be completed in a time bound manner as the deadline under the scheme was

Company Appeal (AT) No. 54 of 2018 -6-

31st March, 2018, till when DIN had been re-activated. This is basically an

order on interim stage.

6. Against the impugned order the present appeal has been filed and the

learned counsel have made statements as above.

7. The learned counsel for the appellant is further submitting that the

concerned scheme has been extended till 30th April, 2018 and protection has

been given to the Directors till then.

8. The learned counsel for the appellant has tendered across the bar copy of

the order in the Company Petition dated 26th March, 2018 (for the purpose of

identification the document is marked as 'X'). It shows that after the present

impugned order dated 19th January, 2018 was passed, the auditors appointed

have submitted audit report and schedule of AGM had been given. The

appellants appear to have taken up the issue relating to the auditor's report in

the NCLT in view of which order dated 26th March, 2018 has now been passed

by the Principle Bench of the NCLT. The last page of the order of ld. NCLT

dated 26th March, 2018 reads as under:

" It is in the aforesaid facts and circumstances the

submission has been made that in the absence of aforesaid

significant record no audited account could have been

prepared.

Mr. Nidesh Gupta and Mr. Arun Kathpalia, learned Senior

Counsels have sought to controvert the aforesaid factual

position by submitting that in the member register only the

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shareholding could be shown but as a matter of fact it is

investment and therefore, it cannot be regarded as the

shareholding of respective parties. However, it could not be

successfully disputed that the Kolkatta Bench has passed an

order which has attained finality and C.P. No. 38(ND)/ 2016

for rectification of the member register is pending

consideration before this Tribunal.

In view of the above we are prima-facie of the view that the

auditors have mixed up the entries and have prepared the

audited report by taking into consideration pre transfer data.

Accordingly, the adoption of the accounts at the AGM slated

as per the schedule given in the aforesaid Para is stayed till

the next date of hearing.

It is clarified that the stay order would not result in

activation of the DIN pertaining to the Directors of the

Respondent Company as well as of the respondent no.1

company. Resolutions, if any, passed in any of the other items

shall be subject to the final outcome of the present application.

List for arguments on 03.05.2018."

9. Counsel for both sides say that there is typing error in last Para of the

order regarding activation. I need not enter into that part. Fact remains that in

view of these subsequent developments in the litigation, when the auditors

Company Appeal (AT) No. 54 of 2018 -8-

appointed have taken steps in terms of the impugned order dated 19th

January, 2018 and the steps taken by them have further been questioned

before the Principle Bench of NCLT, Delhi and the learned NCLT is seized with

the further developments which have taken place in this prolonged litigation, I

do not think it would be appropriate for me to interfere in the impugned order

and deal with the question whether or not at all the independent auditor

should or should not have been appointed. I do not find it just to interfere in

the discretion exercised by NCLT.

10. For the above reasons no interference is called for. The petition is

disposed accordingly.

(Justice A.I.S. Cheema) Member (Judicial) sh/nn

Company Appeal (AT) No. 54 of 2018