Legal Reference Library

In Berger Paints India Ltd. Vs. C.I.T., Delhi-V,  the short question before the Supreme Court was  whether “premium” collected by the appellant-Company on its subscribed share capital is “capital employed in the business of the Company” within the meaning of Section 35D of the Act so as to enable the Company to claim deduction of the said amount as prescribed under Section 35D of the Act? While dismissing the appeal the Hon'ble court held that as rightly pointed out by the learned Attorney General appearing for the Revenue, the Companies Act provides in its Schedule V- Part II (Section 159) a Form of Annual Return, which is required to be furnished by the Company having share capital every year. Column III of this Form, which deals with capital structure of the company, provides the break up of “issued shares capital break up“. This column does not include in it the “premium amount collected by the company from its shareholders on its issued share capital“. This is indi...

The Bombay High Court in Mr Sanjay Sadanand Varrier v/s M/s Power Horse India Pvt.Ltd. has held that a winding up petition filed by an employee under Section 439 r/w sections 433(e) and 434 of the Companies Act, 1956, as a creditor based on the claim of recovery of his unpaid salary and wages is maintainable. A division bench of Justice SC Dharmadhikari and Justice BP Colabawalla was hearing a company petition placed before them by the Chief Justice after a single judge in this matter took a different view from the one taken by another single judge in the case of Mumbai Labour Union vs M/s Indo French Time Industries Ltd. Petitioner Sanjay Varrier contended that from October 2009 till his resignation in March 2012, the respondent company did not pay him salary. Failing to reply .to the statutory notice sent by the petitioner under S. 434 of the Companies Act, the winding up petition was filed. While the respondent company relied on the decision of a single judge of the high court i...

Applying the principles laid down by the Supreme Court in M/s Madhusudan Gordhandas & Co. vs Madhu Woollen Industries Pvt ltd, the division bench of Chief Justice Manjula Chellur and Justice MS Sonak has held that once the debt owed by a debtor company is established as undisputed then the court shall wind up the particular company. This was held while the bench was hearing an appeal against an order dated June 28, 2016 by the Company judge admitting the winding up petition against the appellant company and ordering the advertisement thereof in accordance with provisions of the Companies Act, 1956 and the Companies Court Rules, 1959. Although there is no dispute that the appellant company owes the respondent an amount of Rs.90.90 crores, the appellant company has contended that the respondents owe them Rs.152.57 crores in damages on “account of certain acts of omission and commission on part of the respondents.”  Zal Adhyarujina argued on behalf of the appellant c...

On December 7, 2016, a notification was issued by the Central Government, through the Corporate Ministry, it stated- All petitions relating to winding up under clause (e) of Section 433 pending before High Courts, and which have not been served on the Respondent as required by Rule 26 of the Companies (Court) Rules, 1959, stand transferred to the appropriate Bench of the National Company Law Tribunal (“NCLT”) exercising territorial jurisdiction over the mater. In light of the above notification, Neelkamal Realtors contended before the High Court that the winding up petitions filed against it, ought to be transferred to the National Company Law Tribunal. Whereas the petitioners argued that since the petition has been served to the respondents under Rule 26, the transfer notification did not apply to them and the Bombay High Court retains its jurisdiction over them. Since the issue pertains to a particular notification that may potentially decide the fate of many petitions filed before t...

In Pramod Jain Vs. Securities and Exchange Board of India,  the question before the Hon'ble Supreme Court of India was :- (i) To what extent is the timeline laid down under the Takeover Regulations required to be adhered to and effect of delay by SEBI in the present case? (ii) To what extent unilateral action of the target company in dealing with the property of the company after a hostile public offer is made furnish cause of action to the acquirers to withdraw the public offer and whether in the present case, decision not permitting withdrawal of public offer is justified? The Hon'ble court held that :- i) The withdrawal has to be dealt with under Regulation 27, as held by this Court. The general principle is that public offer once made cannot be withdrawn. Exception to the rule is the specified situations under the Regulation as laid down by this Court in above decisions particularly in Nirma Industries Limited (Supra). In the present case, though SEBI was not ...

In Tin Plate Dealers Association Pvt. Ltd. Vs. Satish Chandra Sanwalka, the Hon'ble Supreme Court held that under  Section 87(2) of the Companies Act, 1956, except in situations where dividends have not been paid, holders of preference shares do not have a right to vote except in matters which directly affects the rights attached to the preference shares.

The Supreme Court of India in M/s Madura Coats Limited v M/s Modi Rubber Limited has ruled that provisions of Sick Industrial Companies (Special Provisions) Act, 1985 would prevail over the provisions of the companies act. The M/s. Madura Coats Limited was aggrieved by the impugned judgment and order dated 20/05/04 of the Division Bench of the High Court of Allahabad which allowed the Special Appeal of the M/s. Modi Rubber Ltd, staying the proceedings before the Company Court consequent upon a winding up order passed against the respondent .The stay was granted till a final decision was taken on the reference made by respondent to the Board for Industrial and Financial Reconstruction. Dismissing the appeal Justice Madan B Lokur held:”it is quite clear that different situations can arise in the process of winding up a company under the Companies Act but whatever be the situation, whenever a reference is made to the Board of Industrial and Financial Reconstruction under Sec...

Introduction       The Delhi High Court in its recent judgement, ( Rajeev Saumitra vs. Neetu Singh & Ors) , examined the scope of Section 166 of the Companies Act, 2013 ( Directors’ Duties ), expanded the current understanding of shareholders’ obligations and opened the doors to derivative suits, hitherto largely unknown to Indian shareholders.         Facts       n    The plaintiff and the defendant are shareholders of Paramount Coaching Centre Private Limited ( Paramount ), each holding 50% of the share capital of Paramount. They are also directors of Paramount. n  The defendant has incorporated two other companies that carry out businesses competing with Paramount, in relation to which she solicited the employees and existing clientele of Paramount. In order to promote the activities of the companies incorporated by her, the defendant also made undu...

In Pegasus Assets Reconstruction P. Ltd. ..Appellant vs M/s. Haryana Concast Limited & Anr. ...Respondents This matter raised a common issue of law: Whether a Company Court, directly or through an Official Liquidator, can wield any control in respect of sale of a secured asset by a secured creditor in exercise of powers available to such creditor under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity the SARFAESI Act), arises in all these matters which have been heard together and shall be governed by this common judgment. The rival contention and case laws were noted for framing the main question of law in the following words : - Whether the Company Court enjoys jurisdiction to issue supervisory direction to a securitization company/ secured creditor in connection with a company in liquidation or under winding up in the face of Section 13 of the SARFAESI Act or securitization company opting to stand outsi...

Bombay High Court: Declaring the judgment of Harsha Nitin Kokate v. The Saraswat Cooperative Bank Ltd, 2010 SCC OnLine Bom 615  to be per incuriam, a bench comprising of G.S. Patel, J has held that legal heirs and not the nominees will get the ownership rights of share certificates. The Court declared the earlier judgment to be per incuriam, which means it had been wrongly decided and does not have to be followed. In the Kokate judgment,the Court had mistakenly concluded that once a nomination is made, the securities in question automatically get transferred in the name of the nominee upon the death of the holder of the shares and not to the legal heirs. The Court had considered the provisions of Section 109A of the Companies Act, 1956, and Bye-Law 9.11 under the Depositories Act and held that they do not displace the law of succession. The Court also discussed the purpose of nomination under Section 39 of the Insurance Act and various Supreme Court cases where it has been laid d...

1. Is a dispute brought before the Company Law Board invoking the provisions of Sections 397, 398 and 402 of the Companies Act, 1956 at all referable to a private tribunal, viz., an arbitral panel for resolution? Does a decision of a foreign court on the question of whether a dispute is covered by an arbitration agreement bind the Company Law Board? These are among the questions of law canvassed in this group of appeals. List of Authorities & Decisions Referred/Cited 1. Haryana Telecom Ltd v Sterlite Industries (India) Ltd, (1999) 5 SCC 688. 2. Bennett Coleman & Co. v Union of India & Ors., 1977 (47) Comp Cas 92 3. Manavendra Chitnis & Anr. v Leela Chitnis Studios P. Ltd. & Ors., 1985 (58) Comp Cas 113 4. Surendra Kumar Dhawan & Anr. v R. Vir & Ors., [1977] 47 Comp Cas 276 (Delhi) 5. O.P. Gupta v Shiv General Finance (P.) Ltd. & Ors., [1977] 47 Comp Cas 279 (Delhi) 6. Das Lagerway Wind Turbines Ltd. v Cynosure Investments P. Ltd., [2009] 147 Com...

Calcutta High Court Calcutta High Court Uniworth Textiles Limited vs Asset Reconstruction Company ... on 12 September, 2012 Author: Sanjib Banerjee ACO No. 161 of 2012 APO No. 325 of 2012 IN THE HIGH COURT AT CALCUTTA CIVIL APPELLATE JURISDICTION UNIWORTH TEXTILES LIMITED -Versus- ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED For the Appellant: Mr S. N. Mookerjee, Sr Adv., Mr Debanshu Basak, Adv., Ms Manju Bhuteria, Adv. For the Respondent: Mr S. P. Sarkar, Sr Adv., Ms Tirtha Dey, Adv., Ms Suruchi Agarwal, Adv. Hearing concluded on: September 6, 2012. BEFORE The Hon'ble Justice SANJIB BANERJEE Date: September 12, 2012. SANJIB BANERJEE, J. : - The authority of the Company Law Board (CLB) to receive a stand-alone petition under Section 247(1A) of the Companies Act, 1956 has been called into question in this appeal under Section 10F of the Act. Indeed, the interpretation hinges on the purport of the expression "in the course of any proceedings b...