Secured creditors (including workmen) from proceeds received upon sale of mortgaged assets by Official Liquidator

CL: Income-tax department does not have a preferential right in matter of payment of dues over right of secured creditors (including workmen) from proceeds received upon sale of mortgaged assets by Official Liquidator
■■■
[2014] 49 taxmann.com 75 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax-II
v.
Official Liquidator of Gujarat Telephone Cables Ltd.
K.J. THAKER, J.
CO. APPLICATION NOS. 245 OF 2012, 525 OF 2008,
286,295 OF 2011 AND 208, 209 & 210 OF 2013
CO. PETITION NO. 253 OF 2008
OFFICIAL LIQUIDATOR REPORT NO. 35 OF 2012
JUNE  30, 2014
Section 326, read with section 327, of the Companies Act, 2013/ Section 529A, read with section 530 of the Companies Act, 1956 and section 178 of the Income-tax Act, 1961 - Winding up - Overriding preferential payments - Whether there is nothing in section 178 of Income-tax Act which, apart from asking liquidator to set aside assets sufficient to meet possible tax liabilities commands liquidator to pay tax dues in preference over all other dues and it does not place tax dues or dues of State/department in a position higher or better than what is conferred by and what is available under Companies Act - Held, yes - Whether order of priority in matter of payment is prescribed by virtue of section 529A, read with section 530 of Companies Act and not in Income-tax Act and obligation which is created under section 178 of Income-tax Act, does not override right of priority and preference created by and under section 529A of Companies Act - Held, yes - Whether when pursuant to sale of mortgaged assets Official Liquidator sought disbursement of sale proceeds to secured creditors and workmen covered within purview of section 529A but income-tax department after relevant date raised a demand for payment of tax dues in respect of gain received, question of restraining liquidator from discharging dues of secured creditors and workmen covered under section 529A would not arise and claim of department could not be sustained - Held, yes [Paras 16, 16.1 & 26]

Where petition alleging oppression and mismanagement was filed to create pressure on respondents to part with some money from them, petition was to be rejected

CL : Where petition alleging oppression and mismanagement was filed to create pressure on respondents to part with some money from them, petition was to be rejected
■■■
[2014] 48 taxmann.com 391 (CLB - New Delhi)
COMPANY LAW BOARD, NEW DELHI BENCH
Bharat Bhushan Agarwal
v.
Jai Mata Foods Ltd.
B.S.V. PRAKASH KUMAR, JUDICIAL MEMBER
C.P. NO. 52 OF 2008
MARCH  28, 2014
Section 241, read with sections 242, 58 and 59 of the Companies Act, 2013/Section 397, read with sections 398 and 111A of the Companies Act, 1956 - Oppression and mismanagement - It appeared that petitioners had set up litigation to pressurise respondents to part with some money - Further, petitioners had no stake in R-1 company at relevant time - Whether they could not invoke jurisdiction under sections 397 and 398 - Held, yes - Whether since, in fact, no prejudice was caused to petitioners, their petition was to be rejected - Held, yes [Paras 38 & 39]

Sunita Bhagat vs. Securities and Exchange Board of India.

2014] 182 Comp Cas  467 (Delhi)

[In the Delhi High Court]

Sunita Bhagat vs. Securities and Exchange Board of India.

Unless directors prove that an offence committed by the Company is without his knowledge or he has exercised all due diligence to prevent the commission of the offence, he is liable for punishment

Brief Facts

The Accord Plantation Ltd. (“Company”) had collected monies from various investors under Collective Investment Scheme (“CIS”). As per Section 12(1B) of the SEBI Act, 1992, which came into force on January 25, 1995, no person shall sponsor or caused to be sponsored or carry on any venture capital fund or CIS, unless it obtains a certificate of registration from the SEBI. Any person carrying out CIS prior to the above-stated period, must provide certain information to the SEBI as well as obtain registration. The Government of India asked the SEBI to form a CIS regulation and conveyed that instruments like agro bonds, plantation bonds, etc. shall be treated as CIS.

One of the objects of the Company is to carry business of agricultural, horticultural, floricultural and forestry related activities. The standard application form and brochure issued to
prospective investors contain names of four persons as directors.

Based on SEBI’s request, the Company provided the information on monies collected under the CIS. While communicating to SEBI, the Company conveyed that it had not floated any CIS and that they were not collecting any additional money under the current scheme. Subsequently, when the Company provided the information, it was observed that the Company had collected additional funds during these periods.

The SEBI notified the CIS regulation in October 1999 and the same was informed to the Company.  In its reply, the Company disclosed that they are not interested in CIS registration and will return the monies to the investors upon maturity. The reply shows that during the period 2001-2004, the Company intended to raise additional funds and pay part of it. As the Company has not registered under the CIS, SEBI had sent the show cause notice.  Upon several communications from the SEBI that the Company was not complying with the CIS regulation and after giving personal hearing to the Company, the SEBI Chairman passed an order directing the Company to pay amount to investors within one month from the date of the order.  During these periods, letters sent to the Company were returned undelivered. After due process of law, SEBI filed compliant before the ACMM, Delhi. ACMM passed an order against the Appellants. As per the said order, Appellants were sentenced for rigorous imprisonment for six months and pay a fine of Rs. 10 lakhs each. If the fine was not paid, then an additional imprisonment of
3 months for punishment as stated above would be applicable.

The appeal is filed by the Appellants against the order of ACMM, Delhi. The main contention of the application is that whether they are liable at the time the provisions of Section 12(1B) and / or CIS regulations were contravened by the Company and were they responsible for the Company’s business?  Further, the SEBI had to also prove that the offence by the Company was committed with the consent or connivance of any of the Appellants or attribute to their negligence.

Judgment and Reasoning:

The Court rejected the application of the Appellants. The Court perused the report of Dave Committee and the judgment in Paramount Bio-Tech Industries Ltd. vs. Union of India [2003] Law Suit (All) 1206; [2004] 120 Comp Case 18 (All) as to activities falling under CIS. The Court has also observed that the Company had not complied with various requirements of CIS regulations. The Court also noted that no receipt of refund of monies to the investors or books of accounts to that effect were produced. The Court also noted from the witness of one of the directors that some of the investors had filed winding up petition against the Company for not refunding their money. The Court also reviewed its judgment in Vishnu Prakash Bajpai vs. Securities and Exchange Board of India [2010] 154 Comp Cas 147 (Delhi) [2010] 2 Crimes 394 (Delhi), that offence is continuous offence under Section 24 of the SEBI Act till the time the Company complies with the CIS regulations.  The Court also looked into events date wise and the position of the directors at that point of time. The Court also observed that till the Company complied with the requirements as to refund of monies to the investors, the offence would continue and thus all the directors during such periods, even though resigned or appointed in between, are liable.

In the matter of Ashika Stock Broking Limited

BEFORE   THE    SECURITIES    APPELLATE    TRIBUNALMUMBAI

Appeal No. 207 of 2013

Date of Decision : 03.04.2014

Ashika StockBroking Limited 1008,10th Floor, RahejaCentre, 214, Nariman Point,

Mumbai – 400 021.

Head Office:

226/1 AJC Bose Road,Trinity,

7th Floor,Kolkata – 700 020.                                                          …Appellant

Versus

1.        Bombay Stock Exchange Ltd.

Floor 25,P.J. Tower, Dalal Street, Mumbai – 400 001.

2.       Indian Clearing Corporation Limited

P.J. Tower,Dalal Street,

Mumbai – 400 001.                                                                 …Respondents

Mr. Kumar Desai, Advocate with Mr. Vinay Chauhan and Mr. K.C. Jacob, Advocates for the Appellant.

Mr.  P.N.  Modi,  Senior  Advocate  with  Mr.  Mahernosh  Humranwala, Ms. Kirtida Chandarana andMs. Smiti Tewari,Advocates for Respondents.

CORAM : JusticeJ.P. Devadhar, Presiding Officer Jog Singh, Member

Per : J.P. Devadhar(Oral)

1.                  This appeal is filed to challengeorder passed by Respondents on October 25, 2013. Since appellant has made a grievance that the impugned order is violative of the principles of natural justice,learned senior counsel for respondents states that the impugned order may be remandedfor passing fresh orderin accordance withlaw.

2.                  Accordingly, impugned order dated October 25, 2013 is quashed and set aside and the matteris restored to the file of respondents. Respondents are directedto pass fresh order on merits and in accordance with law aftergiving personal hearing to the appellantas early as possible and preferably withinfour months from today.

 3.                  Appeal is disposedof in above terms with no order as to costs.

Sd/-

Justice J.P.Devadhar Presiding Officer

Sd/- Jog Singh Member

03.04.2014

Prepared and comparedby:

msb

Source: www.sebi.gov.in

Order Dated 27.03.2014 Regarding the Constitution of the Mumbai Bench on 29th March 2014

                                                                                                                 Tele: 24363667

File No.10/4312005-CLB GOVERNMENT OF INDIA COMPANY LAW BOARD

Paryavaran Bhawan , 3'd ·rloor, B-Biock, C.G.O. Complex, Lod hi Road,

New Delhi - 110003.

Dated:271312014

ORDER

In partial mod ifi cationof !heCompany  Law Board's 01·deror evennumber dated 25/09/2013. the Constitution oftbe Mumbui Bench on 29lhMarch 2014 shal l be as under:

u.   Justice Shri Dilip Raosaheb Deslunukh. Chainuan

b.  Shri AshokKumar Tripathi. Member (Judicial)

2.                  This Order shall be in forceonly for 29m March 2014.

13y order oflhe CompanyLaw Board

.t..-..4.:;---.

(P.K. Malhotra ) Secretary.Company La\\ Board

I.  P.A. toChainnan. Company Law 13oard. New Delhi.

2.                       Hon.blc Members.CompanyLaw Board. Mumbai Bench.

3.                      Bench Officers. Company Law Board. Mumhai Bench.

4.                       Regional Directors, Mumbail Registrars of Companies. M umbai.

5.                      

y

Sr. PI'S to Secretary.Ministry of Corporate Affairs, NewDel hi.

CLB, web site.