S.P. Perumal vs Ramaswami & Ors

IN THE MATTER OF: Before NCLT Before NCLAT

S.P. Perumal Mr. Sell Thevar, R/o 9/28M, Sakthi Nagar, Siruvani Main road, Kalampalayam Post, Coimbatore, Tamil Nadu 4th Respondent Appellant

Vs

01.V. Ramasamy S/o Veerappagounder, R/o Komarayanur Village, Bhavani Taluk, Erode Distt. Tamil Nadu. 1st Petitioner 1st Respondent

02.V.Kuppusamy S/o Veerappagounder, R/o Komarayanur Village, Bhavani Taluk, Erode Distt Tamil Nadu 2nd Petitioner 2nd Respondent

03.S. Muthusamy S/o Sellappa Gounder, R/o Mettur Saminathapuram Post, Erode Distt Tamil Nadu through POA V Ramasamy 3rd Petitioner 3rd Respondent

04.M. Sakthivel S/o Muthusamy R/o Mettur Saminathapuram Post, Company Appeal (AT) No.263 of 2018 2

Erode Distt Tamil Nadu through POA V Ramasamy 4th Petitioner 4th Respondent

05.R. Sellammal, W/o Lata Ramasamy, R/o Mettur Saminathapuram Post, Erode Distt Tamil Nadu through POA V Ramasamy 5th Petitioner 5th Respondent

06.Mrs N. Rukumani W/o Late P Nallappa Gounder R/o Chinnamuthu Main Street, Edaiyankattu Valasu, Erode, Tamil Nadu through POA holder V Ramasamy. 6th Petitioner 6th Respondent

07.Mrs C. Kannammal, W/o Mr.Chinnasamy, R/o 17, Karuppanasamy Koll II Street, Erode Distt Tamil Nadu Through POA V Ramasamy 7th Petitioner 7th Respondent

08.Mrs E. Kanchana Devi, W/o Mr. L.E. Elango R/o Patel Road, Erode Distt Tamil Nadu Through POA holder V Ramasamy 8th Petitioner 8th Respondent

09.K.M. Viswanathan, S/o Late Marappagounder R/o 5/98, Karukkampalayam, Unjalur Post, Erode Distt Tamil Nadu Through POA holder V Kuppusamy 9th Petitioner 9th Respondent

10.Mr. V. M. Ponnusamy S/o Late Marappagounder,

Company Appeal (AT) No.263 of 2018 3

R/o 50, Theppakulam Street, Verapanchatram, Erode Distt, Tamil Nadu Through POA holder V Kuppusamy 10th Petitioner 10th Respondent

11.Mrs C. Sasikala Devi W/o K Chinnusamy R/o 31, Patel Road, Erode Distt Tamil Nadu Through POA holder V Kuppusamy. 11th Petitioner 11th Respondent

12.Mr C Kandasamy S/o Late Chennimalai Gounder R/o Semmandampalayam Vadamugam Vellode Village, Perundurai R.S. Post, Perundurai Taluk Erode Distt Tamil Nadu Through POA holder V. Kuppusamy. 12th Petitioner 12th Respondent

For Appellant:- Mr. Sriram. P, Mr. Sarath S. Janardanan, Advocates. Respondents: - Ms Malavika Jayanth and Mr. Sureshan. P, Advocates.

JUDGEMENT

This appeal is filed by original Respondent No.4 of TCP No.29/2016 (C.P.

No.78 of 2008) which was before the National Company Law Tribunal, Chennai

Bench, Chennai (NCLT in short) and which was filed by the present respondents

(original petitioners) complaining of oppression and mismanagement. The

company concerned is Raji Feeds Private Ltd-(Original Respondent No.1). A copy

of the Company Petition at Annexure-8 shows that there were total 29 respondents

in the company petition. Only Respondent No.4 on being aggrieved by the

Company Appeal (AT) No.263 of 2018 4

impugned order has filed this appeal without making the other respondents party

to this appeal except arraying the original petitioners.

2. I have heard the learned counsel for the appellant, and, learned counsel for

respondents who has appeared for all except Respondent No.6 and 10. Learned

counsel stated that Respondent No.6 and 10 of this appeal, who were original

petitioners have expired. The Learned counsel for the appellant did not dispute

the statement at the time of argument.

3. The impugned order is dated 12th March, 2018. The appeal has been filed

based on certified copy which has the stamp of certification dated14th March,

2018. The appellant claimed in para 6 of the Appeal that he came to know of the

impugned order only on 02.07.2018. The impugned order shows that the original

Respondents No.1 to 4, 6, 7, 9 to 10, 12 to 22 and 23 to 29 earlier appeared in the

NCLT but thereafter they remained absent and were proceeded against ex parte on

19.9.2016. Thus the appellant has claimed that he had been proceeded against

ex parte and he came to know of the impugned order on 2.7.2018. However, the

appellant himself has relied on copy which is certified on14th March, 2018, I thus

do not accept the bald statement of the appellant that he came to know about the

impugned order only on 2.7.2018. At the time of arguments the counsel submitted

that the appellant had come to know of the impugned order in June, 2018. He

was unable to show pleading on that count. Now as is noticed from the appeal,

the appellant claims that he came to know only 2.7.2018 which cannot be

accepted. The appeal was presented on 6.7.2018 in this Appellate Tribunal. By

this time about 113 days had been consumed by the appellant if the certified copy

is seen. Under Section 421 of the Companies Act, 2013, ("Act" in brief), the appeal

has to be filed within 45 days from the date on which the copy of the order of the

Company Appeal (AT) No.263 of 2018 5

Tribunal is made available to the person aggrieved. The Proviso to sub-section (3)

states that the Tribunal may entertain an appeal after the expiry of the said period

of forty five days from the date aforesaid, but within a further period not exceeding

45 days, if it is satisfied that the appellant was prevented by sufficient cause from

filing the appeal within that period. Proviso of Section 421 of the Act are quite

clear. After the first 45 days which is period given to file the appeal, the next 45

days would require sufficient cause to be shown. This Appellate tribunal has no

power to condone beyond this second slab of time. In the present matter the appeal

has been presented much beyond the period of 90 days and I am not required to

go into the question whether there was sufficient cause for delay. The appeal is

clearly time barred and is required to be dismissed on this ground itself.

4. However, before passing the dismissal order, I am recording my views and

findings with regard to the grounds raised in the appeal in support of which

submissions have been made by the learned counsel for the parties, in case at any

future point of time it becomes necessary to have the views of this Appellate

Tribunal.

5. It has been argued by the learned counsel for the appellant that the original

Respondent No.4 (appellant) had been proceeded against ex parte on 19.9.2016 as

the impugned order itself shows. The counsel argued that the appellant has a

right to be heard on merit and there were serious allegations in the Company

Petition against the present appellant and he needs to be given another chance to

be heard on merits and the impugned order needs to be set aside and to give liberty

to the appellant to put up case in NCLT. The counsel was asked to show as to

what are grounds made out to seek setting aside of the ex parte order. When I

Company Appeal (AT) No.263 of 2018 6

wanted to see as to what happened for NCLT to proceed ex-parte, the counsel was

unable to show even copy of the order dated 19.9.2016 which is referred to in the

impugned order, as no copy of the said order has been filed. The counsel argued

that the appellant had handed over all his documents to an Advocate he had

engaged for appearing in the NCLT. The Advocate for appellant submitted that in

NCLT junior of that Advocate had filed Vakalatnama but that Advocate himself did

not appear. The counsel was unable to show any steps taken by the appellant to

contact his said Advocate or follow up with his Advocate regarding the matter

which was pending. The learned counsel for the appellant submitted that

appellant has mentioned in the appeal as a ground para 9(c) that the appellant

had entrusted the papers but further dates and information were not shared with

him by the Advocate. The learned counsel for the appellant submitted that the

Advocate to whom the papers were entrusted has now become a Judge of the High

Court and thus his client has instructed him not to disclose the name of the

advocate. It has been argued that the appellant was unable to get back the papers

entrusted to the Advocate and the appellant has various grounds and documents

to be raised but the appellant is unable to show the same for want of documents.

Ground 9(e) of the appeal claims that the petitioner (should be appellant) has more

ground and more documents than can be raised in this appellate stag to be raised

in the Tribunal in Chennai. The grounds claim that the appellant should be given

opportunity to place his case before the Appellate Tribunal or set aside the

impugned order and allow him to place the same before this Tribunal. This

Tribunal has not stopped appellant from putting up his case and filing documents

and raising grounds. Appellant on his own has not put up grounds and documents

to show why the ex-parte proceeding should be interfered with. What I find from

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the record and on considering the arguments of the learned counsel for appellant

and also the respondent is that the appellant except for taking a vague stand in

pleading is not disclosing anything other than making oral submission without

material that he had entrusted his papers to an Advocate, name of which also he

does not want to disclose and does not want to disclose any action taken to get

back the papers and with such vague stand the appellant is trying to make me

believe that he has got grounds to raise and documents to show in his favour

which also he will disclose only in NCLT, and so I should set aside the impugned

order. I find that the appellant does not make out any real ground which would

justify setting aside of the ex parte proceeding. The impugned order shows that it

was a matter which was pending earlier before Company Law Board and then

before the NCLT from 2008 till 2018 when the impugned order was passed. There

is no material to show that in such period of almost a decade the appellant made

any effort to bring on record of NCLT what case he wants to put up or that he be

give a chance. It is very easy to blame an Advocate (whose name is also not

disclosed) and saying that the Advocate did not do anything and did not inform

the appellant. It is also the duty of the client (appellant here) that the client should

follow up at the Tribunal/Court and keep in touch and contact the Advocate to

know the progress in his matter.

6. Thus I do not find that even prima facie case is made out by the appellant

that he has good case and grounds for setting aside ex parte orders.

7. Learned counsel for the appellant claimed that there were serious allegations

against him in the Company Petition. Perusal of the impugned order does show

that the respondents-original petitioners had filed the Company Petition making

Company Appeal (AT) No.263 of 2018 8

serious allegations against the erstwhile Managing Director and Director and

claimed that they had handed over blank letterhead papers signed by them as

security given to officials of M/s Godrej Agrovet Ltd to which company the original

respondent company M/s Raji Feeds Pvt Ltd owed some dues. The impugned order

shows that the NCLT considered the company petition which had been filed by the

shareholders and also considered the report which was called by Company Law

Board from Mr I.S. Venkatesh partner with K.S.G. Subramanyam & Co, Chartered

Accountants appointed Commissioner. The Commissioner was appointed on

27.7.2011 to investigate into the ownership and shareholding of the company and

to file report. NCLT considered the report. It also considered counter statement

filed by original respondent No.2 and 3 (Annexure A-9). These original respondents

No.2 and 3, it appears, were erstwhile Managing Director and Director. It also

considered the counter statement filed by Respondent No.29 (Appeal Page 158)

and kept in view the material which was before NCLT and concluded in para 32 of

the impugned order as under:-

"From the above, it is clearly established that the Respondent

Nos 4 to 29 have never contributed to the capital of the 1st

respondent company. They have allotted shares of the 1st

Respondent Company to themselves and became the Directors by

excluding the actual shareholders by forging the documents on

the letter head papers of the 1st respondent company, which

were given as blank for keeping with the Respondent Nos.4 and

5, as security for dues owed by the 1st respondent company to

them. The Respondents have also violated the Order dated

19.02.2008 passed by then CLB by which the status quo

Company Appeal (AT) No.263 of 2018 9

regarding the shareholding pattern was ordered to be

maintained till further orders."

8. I do not find any force in the arguments of the learned counsel for appellant

that the impugned order should be set aside and chance be given to the appellant

to go back to NCLT so as to raise grounds and filing documents (What are those

documents? Even that is not disclosed) because the allegations are serious. The

allegations were serious in the company petition itself. If the appellant had defence

to make, nothing prevented him from contesting the petition which was pending

for almost 10 years. Admittedly the appellant had taken over the Management of

the company from erstwhile Directors and inspite of the impugned order this

position is admittedly continuing. Having caught hold of the management of the

company for so many years he is holding on. When the petition was filed he

appeared and later failed to contest. He preferred to keep silent for almost a

decade. When impugned order is passed he gets a copy and does not still take

steps. When impugned order becomes final, he files a time barred appeal. He has

no equity to stand on. I do not find that such appellant should be given any

sympathy to protract and prolong the litigation. He just wants to continue to hold

on to management of the company without a shread of any legally recognizable

document to support directorship or shares.

9. Even if it was to be accepted for a moment that the appellant handed over

his documents to the Advocate for defending him in NCLT, looking to the manner

in which filings are done before ROC, nothing prevented the appellant from getting

the necessary certified copies from the office of the ROC to prima facie show as to

how he came to be put in charge of the management of the affairs of the company.

The appointment of the directors are required to be confirmed in the General Body

Company Appeal (AT) No.263 of 2018 10

Meeting. If shares are transferred, there is procedure prescribed for the same.

Nothing is shown how original shareholders transferred shares. In the present

matter what the NCLT has found from the filing done was that the shareholders

as seen from the AGM of 25.9.1997 were simply replaced by fresh list of

shareholders as shown in the AGM of 30.9.1998. The respondents-original

petitioners claim that they had never transferred any shares of theirs. If the

appellant was serious he could have got the concerned documents from ROC. As

the appellant has been holding on to the management of the company he is unable

to give the excuse that the company is not sharing documents with him. As such

the appellant has conveniently taken a lame excuse that all his papers are with

Advocate and that he has become a Judge and he cannot get them. I do not find

any substance in the submissions made by the appellants' counsel and the

grounds which are being raised so as to interfere in the impugned order.

ORDER

10.(A) For the above reasons the appeal is dismissed on the ground of same being

time barred. Even if the merits were to be considered, for reasons recorded there

is no substance. Respondents are free to get orders of NCLT acted upon

(B). The appellant from his own funds shall pay costs of Rs.50,000/- to each of

the Respondents No.1 to 5, 7 to 9, 11 and 12.

(Justice A.I.S. Cheema) Member (Judicial) New Delhi

Dated:08-01-2019

Company Appeal (AT) No.263 of 2018