IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF AUGUST 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NO.28430 OF 2019 (GM-RES) BETWEEN:
BHARAT BHUSHAN NARANG AGED ABOUT 63 YEARS SON OF OM PRAKASH NARANG NO.9 NORTH PARK ROAD KUMARA PARK EAST BENGALURU-560001 (BY MR.SRINIVASA RAGHAVAN V, SR. ADV. FOR MR.PRADEEP NAYAK, ADV.) AND:
1. SUDERSHAN KUMAR MANCHANDA AGED ABOUT 68 YEARS SON OF MC MANCHANDA 40 BASAPPA ROAD SHANTI NAGAR BENGALURU-560027 2. MEENU MANCHANDA AGED ABOUT 56 YEARS WIFE OF SUDERSHAN KUMAR MANCHAPPA 40 BASAPPA ROAD SHANTI NAGAR BENGALURU-560027 3. NIKHIL MANCHANDA AGED ABOUT 32 YEARS SON OF SUDERSHAN KUMAR MANCHANDA 6555, SE COUGAR MOUNTAIN VIEW BELLEVUE WA 98006 USA … PETITIONER REPRESENTED BY HIS POWER OF ATTORNEY HOLDER MEENU MANCHANDA 4. S M KANNAPPA AUTOMOBILES PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT 1956 HAVING ITS REGISTERED OFFICE AT NO.2, NEW MENTAL HOSPITAL ROAD BENGALURU-560027 REPRESENTED BY ITS DIRECTOR 5. NAROTHAM C K AGED ABOUT 83 YEARS NO.15 NORTH PARK ROAD KUMARA PARK EAST BENGALURU-560001 6. B MARKANDEYA AGED ABOUT MAJOR SON OF H M BALAKRISHNA NO.39, BALAJI KALYANA MANTAPA 5TH CROSS, 2ND MAIN TEACHERS LAYOUT BENGALURU-560085 7. VAIBHAV NARANG AGED ABOUT 39 SON OF BHARAT NARANG NO.9 NORTH PARK ROAD, KUMARA PARK EAST BENGALURU-560001 … RESPONDENTS (BY MR.ADITYA SONDHI, SR. ADV. FOR MR.NISCHAL DEV, ADV FOR C/R1, 2 & 3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH AND SET ASIDE THE IMPUGNED ORDER DTD:3.7.2019 [ANNEXURE-A] PASSED BY THE NATIONAL COMPANY LAW TRIBUNAL, BENGALURU BENCH ON IA NO.296 OF 2019 FILED BY THE PETITIONER HEREIN IN T.P.NO.39/2016 [FORMERLY C.P.NO.68/2012] AND CONSEQUENTLY ALLOW I.A.NO.296 OF 2019 IN T.P.NO.39/2016 [FOREMERLY C.P.NO.68/2012 [WHICH IS AT ANNEXURE-K]; AND ETC.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Mr.Srinivas Raghavan V., Learned senior counsel Mr.Pradeep Nayak, learned counsel for the petitioner.
Mr.Aditya Sondhi, learned Senior counsel for Mr.Nischal Dev., learned counsel for caveator/respondent Nos.1, 2 and 3.
In this petition under Articles 226 and 227 of the Constitution of India, the petitioner inter alia seeks a writ of certiorari for quashing the impugned order dated 03.07.2019 passed by the National Company Law Tribunal, Bengaluru (hereinafter referred to as 'the Tribunal' for short).
2. Facts giving rise to the filing of the petition briefly stated are that on 03.08.2012 respondent Nos.1 to 3 filed a company petition before the Company Law Board, Chennai under Sections 111, 397 and 398 read with Sections 402 & 406 of the Companies Act, 1956 against the acts of oppression and mismanagement in the respondent No.4-Company. The respondent Nos.1 to 3 inter alia sought a declaration that transfer of 500 shares belonging to them in respondent No.4-Company was malafide and illegal. The petitioner and respondent No.4 on 05.05.2014 filed statement of objections before the Company Law Board. Thereafter, on 10.06.2013, respondent Nos.1 to 3 filed their statement of rejoinder before the Company Law Board. During the course of the proceedings respondent No.4 filed C.A.No.1/2013, by which preliminary objection with regard to limitation and maintainability of company petition was raised. The statement of objections was filed to the aforesaid interlocutory application by respondent Nos.1 to 3.
3. The Company Law Board after hearing both the parties, in C.A.No.1/2013 by an order dated 10.02.2016 observed that it involves question of facts and therefore, C.A.No.1/2013 was directed to be listed for hearing along with company petition for arguments on 23.03.2016. On account of constitution of National Company Law Tribunal on 01.06.2016, the proceedings in company petition were transferred from Company Law Board to National Company Law Tribunal, Bengaluru. The Tribunal heard the counsel for the parties on C.A.No.1/2013 but, recorded a finding that both the counsels were heard on the main matter as well. Being aggrieved, respondent Nos.1 to 3 filed W.P.No.1947/2017. The aforesaid writ petition was disposed of by this Court by an order dated 06.03.2019, by which the order of the Tribunal dated 16.12.2016 was set aside and the Tribunal was directed to hear the parties afresh and all the issues were kept open to the parties to be agitated during the hearing of the company petition. The Tribunal was directed to make an endeavour to dispose of the company petition within six months.
4. The counsel appearing for the petitioner on 11.06.2019 sought time to file additional documents. The Tribunal held that pleadings are complete and posted the matter for final arguments on 20.06.2019. On 18.06.2019, the respondent No.4 filed a memo producing additional documents, whereas the petitioner filed I.A.No.296/2019 to direct the parties to lead evidence. The aforesaid I.A. was dismissed by impugned order dated 03.07.2019. In the aforesaid factual background, the petitioner has approached this court.
5. Learned Senior counsel for the petitioner submitted that the Tribunal is empowered to record evidence and to permit the parties to cross examine the witnesses under Section 424(2)(c) of the Companies Act, 2013 read with Rule 39 of the National Company Law Tribunal Rules, 2016 (hereinafter referred to as 'the Rules’ for short) especially while dealing with questions of title of shares under Rule 17(5) of the Rules. It is further submitted that the discretion ought to have exercised in the circumstance of the case, which involves complex questions of title, which could be established solely by oral evidence and cross examination. It is further submitted that the impugned order passed by the Tribunal is cryptic and is a non speaking order. It is further submitted that refusal to grant and after affording an opportunity to lead evidence amounts to violation of principles of natural justice. Therefore, this writ petition is maintainable. In support of his submissions, learned counsel for the petitioner has placed reliance on decisions of Supreme Court in ‘SHASHI PRAKASH KHEMKA VS. NEPC INDIA LTD., 2019 SCC ONLINE SC 223 and in ‘STATE OF KERALA VS. K.T.SHADULI GROCERY DEALER ETC.’, (1977) 2 SCC 777.
6. On the other hand, learned Senior counsel for the respondent Nos.1 to 3 submitted that the petitioner has an alternative efficacious remedy under Section 421(1) of the Companies Act to approach the Tribunal. It is further submitted that the impugned order does not suffer from any mistake or flaw capricious exercise of authority or arbitrariness. Therefore, no interference is called for. It is further submitted that when the documentary evidence is available on record, it is not necessary for the parties to lead evidence and the court may decide the case merely on the basis of the documents particularly in summary proceedings before the Tribunal. It is further submitted that respondent Nos.1 to 3 have initiated the proceedings and it is their prerogative to prove their case and the petitioner cannot compel the respondent Nos.1 to 3 to lead evidence. It is further submitted that the Interlocutory Application was filed with a view to protract the proceeding. In support of his submissions, learned Senior counsel for respondent has placed reliance on decisions of the High Court of Gauhatti in ‘DIMAPUR TOWN COMMITTEE AND ANR. VS. DEBT RECOVERY TRIBUNAL AND ANR.’, 2002 SCC ONLINE GAU 78.
7. I have considered the submissions made by learned counsel on both the sides and have perused the record. Rules 39 and 43 of the Rules reads as under:
39. Production of Evidence by Affidavit.-
(1) The Tribunal may direct the parties to give evidence, if any, by affidavit.
(2) Notwithstanding anything contained in sub-rule (1), where the Tribunal considers it necessany, in the interest of natural justice, it may order cross -examination of any deponent on the points Of conflict either through information and communication facilities such as video conferencing or otherwise as may be decided by the Tribunal, on an application moved by any party.
(3) Every affidavit to be filed before the Tribunal shall be in Form No. NCLT.7.
43. Power of the Bench to call for further information or evidence. – (1) The Bench may, before passing orders on the petition or application, require the parties or any one Or more Of them, to produce such further documentary or other evidence as it may consider necessary:-
(a) for the purpose of satisfying itself as to the truth ofthe allegations made in the petition or application; or (b) for ascertaining any information which, in the opinion of the Bench, is necessary for the purpose of enabling it to pass orders in the petition or application.
(2) Without prejudice to sub-rule (1), the Bench may, for the purpose of inquiry or investigation, as the case may be, admit such documentary’ and other mode of recordings in electronic form including e- mails, books of accounts, book or paper, written communications, statements, contracts, electronic certificates and such other similar mode Of transactions as may legally be permitted to take into account of those as admissible as evidence under the relevant laws.
(3) Where any party preferring or contesting a petition of oppression and mismanagement raises the issue of forgery or fabrication Of any statutory records, then it shall be at liberty to move an appropriate application for forensic examination and the Bench hearing the matter may, for reasons to be recorded. either allow the application and send the disputed records for opinion of Central Forensic Science Laboratory at the cost of the party alleging fabrication of records, or dismiss such application.
8. Thus, from conjoint reading of aforesaid rules, it is evident that the aforesaid Rule empowers the Tribunal to direct the parties to adduce evidence, if any, by affidavit. In other words, the provisions contained in Rules 39 & 43 of the Rules are enabling provisions and the powers conferred on the Tribunal may be exercised by the Tribunal in the fact situation of the case if in its opinion, the recording of the evidence is necessary. The proceeding before the Tribunal are summary in nature and provisions of the Code of Civil Procedure, 1908 do not apply to the proceeding before the Tribunal. In the instant case, admittedly, respondent Nos.1 to 3 have initiated the proceedings before the Company Law Board, which have been transferred to the Tribunal and the burden is on them to prove their case. The respondent Nos.1 to 3 have produced the documents in support of their case and have not made any application seeking permission to lead evidence. Therefore, the petitioner who is the respondent in the proceeding before the Tribunal cannot seek a direction to the Tribunal to direct the parties to lead evidence. The prayer made in the application reads as under:
For the reasons stated in the accompanying affidavit of the applicant/ respondent No.5 it is humbly prayed that this Hon’ble Tribunal be pleased to direct the parties to lead evidence and consequently be subject to cross examination, to prove all facts and averments alleged in the petition, in the interest of justice and equity.
9. The impugned order therefore, neither suffers from any jurisdictional infirmity nor any error apparent on the face of the record warranting interference of this Court in exercise of its power under Article 226 of the Constitution of India.
10. In view of preceding analysis, I do not find any merit in the writ petition. Ordinarily this court would have granted the liberty to the petitioner to avail of the alternative remedy, however, since the arguments have been addressed on merits, this Court has dealt with the same on merits, in the fact situation of the case, it Is not necessary so to do. The Tribunal is directed to conclude the proceedings as already directed by this Court by an order dated 06.03.2019 expeditiously in accordance with law.
With the aforesaid direction, the petition is disposed of.
Sd/- JUDGE SS