Sections 425, 166 of the Companies Act, 2013 - NCLT Bengaluru Rejects Contempt Plea Against Directors for Running Pre-Existing Jewellery BusinessâNo Wilful Breach of Status Quo Order Found - The NCLT concluded that the complainants failed to establish any violationâmuch less a wilful or deliberate disobedienceâof the Tribunalâs interim status quo order. Since the contemnorsâ business activities predated the order and did not constitute a new competing business, the essential element of contempt, namely wilful disobedience, was not satisfied. Accordingly, the contempt petition was found devoid of merit and was dismissed.
Bombay High Court Affirms Winding Up: Acquittal in Cheque Dishonour Case Under NI Act No Defence Against Admitted Debt - The Bombay High Courtâs decision underscores that a companyâs liability, once admitted through clear documentary evidence such as a demand promissory note and uncontroverted statements of account, cannot be evaded by raising new grounds or technicalities after the initiation of winding up proceedings. An acquittal in criminal proceedings for cheque dishonour under Section 139 of the NI Act does not absolve civil liability, and findings from such proceedings cannot be imported into civil debt disputes. Companies must raise genuine and timely disputes if they wish to contest liability; afterthought objections will not suffice to resist winding up.
Calcutta High Court Holds Auction Purchaser Not Liable for Undisclosed Pre-Sale Municipal Tax Arrears; Corporation's Failure to Disclose Charges Fatal - On the basis of the above findings, the Calcutta High Court directed that the respondent authorities cannot lawfully demand payment of outstanding property tax, penalty, or interest for any period prior to the auction from the petitioner. Any such claim, not previously declared and not forming part of the auction conditions, cannot be enforced against the auction purchaser. The Courtâs directions are actionable in that they require the municipal authorities to process the petitionerâs application for mutation without insisting on clearance of undisclosed pre-auction dues.
Sections 97, 96 of the Companies Act, 2013 - NCLT Rules: Mere Misrepresentation to RoC for AGM Extension Not a Valid Ground for Invoking Section 97âShareholdersâ Petition Dismissed Absent Proof of Fraud - The Tribunal concluded that, in the absence of proven fraud or ill-motive by the respondents, and given that the AGM was held within the period permitted by the RoC, the petitioners could not invoke section 97 merely on the basis of alleged concealment or misrepresentation. Accordingly, the petition was dismissed, reaffirming that the appropriate course of action for such grievances is through statutory remedies provided elsewhere in the Companies Act.
Delhi High Court Further Reduces Compounding Fine for Ex-Directors Not Liable for Non-Filing of Financial Statements - The Delhi High Courtâs decision demonstrates a judicious application of the principles of proportionality and fairness while exercising its discretion under the Companies Act, 1956. The Court has made it clear that directors who have resigned prior to the commission of the offence should not bear the brunt of statutory penalties meant for ongoing officers. The actionable takeaway is that petitioners in similar circumstances should ensure that their resignations are properly documented and communicated to the ROC, as this can form a crucial defense in penalty proceedings for non-compliance occurring after their departure.
Sections 244, 241, of the Companies Act, 2013 - NCLT Kolkata Dismisses Oppression Petition for Lack of Waiver under Section 244 Despite Alleged Fraudulent Shareholding Reduction - In summary, the NCLT Kolkata held that where petitioners lack the requisite shareholding under section 244 on the date of filing a petition under section 241, they must, as a matter of law, file an application seeking waiver of the thresholds prescribed. Failure to do so will result in summary dismissal of the petition on maintainability grounds, regardless of the merits or the gravity of the allegations. The Tribunal clarified that the process for seeking a waiver is not an empty formality but a substantive prerequisite for the exercise of its jurisdiction.
SEBI Imposes âš25 Lakh Penalty on BSE for Preferential Disclosure of Unpublished Price Sensitive Information and Lax Controls under SECC Regulations - Based on the findings and legal framework, SEBI concluded that BSE had violated its obligations under Regulation 39(3) of the SECC Regulations, 2018, and Section 15HB of the SEBI Act, 1992, by facilitating preferential access to UPSI and failing to enforce adequate internal compliance controls. An actionable takeaway for stock exchanges is the urgent necessity to review and reinforce their information dissemination protocols to ensure simultaneous and unrestricted access to all market participants and to conduct regular audits of their compliance mechanisms.
NCLAT Chennai: Dismissal of Contempt Proceedings for Non-Prosecution Set Aside; Delay in Restoration Application Condoned in Share Transfer Dispute - The NCLAT decision makes it clear that contempt proceedings before Tribunals such as the NCLT cannot be dismissed for want of prosecution, as their primary function is to maintain the authority and compliance with the Tribunalâs orders. Even if the original applicant does not pursue the matter, the Tribunal is duty-bound to adjudicate contempt proceedings on their merits. Additionally, where the delay in seeking restoration is reasonably explained and supported by documentary evidence, such delay should be condoned to further the ends of justice.
Sections 241, 242 of the Companies Act, 2013 - NCLT Kochi Dismisses Withdrawal of Oppression Petition Due to Forged Signatures and Liquidatorâs Lack of Authority - The NCLT, Kochi Bench, concluded that (i) a withdrawal application for a company petition must be signed by the same person who filed the original petition or by someone duly authorised thereafter in accordance with law; (ii) a liquidator, once his appointment ceases due to termination of liquidation, cannot act on behalf of the company unless empowered by the appointing authority; and (iii) attempts to withdraw petitions with forged signatures or in contravention of due process will be treated as acts of fraud and abuse of judicial process, warranting dismissal of such applications.
SEBI Allows BGDL Share Trading to Resume with Financial Disclosure Caveat; Preferential Allottees Remain Barred Amid Ongoing PFUTP Probe - In view of the above, SEBIâs considered approach allows the resumption of trading in BGDL shares, subject to the immediate dissemination of critical financial information to the market. However, the core restrictions against BGDLâs management, compliance officer, and the 41 allottees remain unaltered, pending further investigation and final adjudication. Market participants and listed companies must take note of the stringent consequences of engaging in fraudulent preferential allotment and issuing false disclosures. It is incumbent on companies to maintain full transparency and regulatory compliance to avoid severe market restrictions and reputational harm.
Section 241 of the Companies Act, 2013 - NCLT Rejects Oppression Claims: Share Allotment to Petitioner and Procedural Lapses in Director Appointment Not Sufficient for Relief - The National Company Law Tribunal, Chennai, held that, except for the deficiencies in documentation concerning the appointment of new directors, the petitioner failed to establish any substantial case of oppression or mismanagement. The claims regarding share dilution, removal from the board, and related party transactions were found unsubstantiated. Accordingly, the petition was dismissed.
SEBI Grants Open Offer Exemption to Government in Telecom Debt-to-Equity Conversion Amid Financial Distress - On thorough consideration of the facts, SEBI held that the exemption sought by GoI from the open offer requirements under Regulation 3(1) was justified. The acquisition arose from a government-initiated relief package and was in the nature of a debt restructuring, falling within the purview of Regulation 10(1)(i). Accordingly, SEBI allowed the exemption, enabling GoI to acquire the additional equity without triggering mandatory open offer obligations.
SAT Upholds Strict SEBI Interim Measures Against Appellants in Complex Front-Running Case Involving Joint Operations with Notorious Market Manipulator - The Tribunalâs decision affirms SEBIâs authority to impose stringent interim measures in cases involving egregious violations of securities laws, particularly where there is a demonstrable risk of dissipation of ill-gotten gains and a history of association with known market manipulators. Appellants in similar situations should not expect leniency in the quantum of interim deposit, especially where the facts indicate deliberate and repeated contraventions in concert with individuals long barred from the securities market.
BSE Stock Options: SEBI Imposes Penalty for Reversal Trades Creating Artificial VolumesâNon-Response to Show Cause Notice Deemed Admission of Guilt - In the present matter, SEBIâs decision reflects a strict approach towards non-genuine reversal trades that create artificial market volumes. The failure of the noticee to engage with the adjudication proceedingsâby not replying to the show cause notice or attending the hearingâwas treated as an unqualified admission of guilt. Consequently, SEBI exercised its powers under Section 15HA of the SEBI Act to levy a penalty, underscoring the importance of responding to regulatory notices and maintaining genuine trading practices.
Sections 210, 149 of the Companies Act, 2013 - NCLAT Clarifies Right of Independent Directors to Be Heard Before Interim Orders: Ad-Interim Directions Set Aside Pending Objections Under Companies Act - Based on the above analysis, it is actionable that any interim or ad-interim order passed by the Tribunal or Court in the context of company investigations can be challenged by the aggrieved party upon appearance. The Tribunal is under a mandatory obligation to provide a fair opportunity to be heard before confirming or modifying such orders. Appellants or respondents against whom ex parte directions have been issued must proactively file their objections and seek an effective hearing to protect their rights.
Sections 252, 248 of the Companies Act, 2013 - NCLT Orders Restoration of Companyâs Name Struck Off for Technical Non-Compliance with Filing of Form 20A Despite Evidence of Commencement of Business and Share Subscription - The order clarifies that when a company has, in substance, complied with the requirements of Section 10A by receiving share subscription and commencing business, a technical lapse in filing Form 20A does not justify striking off under Section 248(1)(a). Restoration should be granted upon proof of such compliance and an undertaking to complete procedural formalities. Companies in similar situations should promptly regularize such filings and maintain thorough evidence of business activities to support restoration applications.
SAT Clarifies Scope of Set Aside Orders: SEBI Permitted to Reconsider Matter with Additional Documentation Following Review Application - In view of the uncontested review application and in the interest of procedural clarity, the SAT expressly set aside the directions in both impugned orders. The matter is remitted to SEBI for reconsideration, with liberty granted to SEBI to adduce additional documents or materials relevant to the issues previously under appeal.
MP High Court Bars Retrospective Application of Section 447 Companies Act, 2013 in Quashing Criminal Complaint: Abuse of Process Cited - Based on the above analysis, the Madhya Pradesh High Court decisively quashed the criminal complaints, holding that Section 447 of the Companies Act, 2013 cannot be invoked retrospectively to prosecute acts which occurred prior to its introduction. The Courtâs actionable direction is that unless the alleged offence under Section 447 post-dates its enforcement, continuation of criminal proceedings is legally unsustainable and constitutes abuse of process.
Income Tax Departmentâs Bid for Restoration of Struck-Off Company Fails: NCLT Allahabad Rules Department Not âCreditorâ in Absence of Outstanding Demand - Based on the facts and legal position, the Tribunal dismissed the application of the Income Tax Department. The ruling clearly establishes that government authorities, such as the Income Tax Department, cannot be regarded as creditors eligible to seek restoration of a struck-off company under section 252(3) unless there is a clear, outstanding demand or liability owed by the company at the relevant time. Any application for restoration in the absence of such a demand is not maintainable.
Anticipatory Bail Granted by Delhi High Court in Family Share Transfer Dispute Amid Lack of Evidence and Delay in FIR - Having thoroughly scrutinized the FIR, the status report, and the arguments advanced by both parties, the Court found no justification for custodial interrogation in the absence of any pending material evidence or risk of tampering. The applicants were granted anticipatory bail on the condition that they furnish personal bonds of Rs. 1,00,000/- each with two sureties of the same amount, and comply with all investigative requirements as directed by the IO/SHO.
SEBI Cancels AIF Registration Due to Sponsor's Disqualification Under âFit and Proper Personâ Criteria: KSBLâs Failure to Divest Holding in KCL Proves Fatal - SEBIâs decision unequivocally affirms that the âfit and proper personâ requirement is a continuing obligation for all AIFs, their sponsors, managers, and controlling entities. Where any person holding a controlling stake becomes disqualified, immediate remedial action is a regulatory necessity. Failure to divest such disqualified interests within the regulatory timeline will result in the cancellation of registration and cessation of business as an AIF.
NCLT Chennai Imposes Minimum Compounding Fee on Suspended Directors for Delayed AGMs Amid Liquidation Proceedings - In light of the facts that the company was admitted to CIRP and is currently under liquidation, and that the petitioners were suspended from their directorial functions, the Tribunal exercised its discretion to impose only the minimum compounding fee for the delayed holding of AGMs. This approach aligns with the principles of fairness and justice, considering the diminished role and control of the suspended directors during the relevant period.
Bombay High Court Upholds Winding Up of Company for Failing to Refund Security DepositâDefences Deemed Malafide - On the basis of the established facts and prevailing law, the Bombay High Court ruled that the Appellant-Company was liable to refund the security deposit along with interest, and found no bona fide dispute existed regarding the debt. As the defenses raised were neither plausible nor genuine, the companyâs inability to pay its admitted liabilities justified the winding up order under Section 433(e) of the Companies Act, 1956. The appeal was dismissed, affirming the approach and findings of the Company Judge.
Preference Shareholders Denied Right to Initiate Proceedings under Section 55(3) of Companies Act, 2013: NCLAT Chennai Upholds NCLT Order - Given the settled legal position articulated by the NCLAT Principal Bench, the NCLAT Chennai concluded that appeals brought forth by preference shareholdersâsolely in their capacity as suchâare not maintainable under Section 421. The Tribunal affirmed that preference shareholders do not possess enforceable statutory rights under Section 55(3) sufficient to confer them the status of an aggrieved party. Accordingly, the appeal was dismissed, and the NCLT order was upheld.
Gujarat High Court Rules: No Automatic Right of Grandson in Grandfatherâs Property Inherited After 1956; Partition Claims Limited to Valid Coparcenary Property - The Gujarat High Courtâs decision provides unambiguous guidance on the inheritance rights in Hindu families post-1956. The ruling establishes that a grandson cannot claim partition in the property of his grandfather if the property was inherited by the father as his self-acquired property following the commencement of the Hindu Succession Act, 1956. Claims for partition or cancellation of sale deeds after an inordinate delay are not sustainable, being barred by limitation statutes. Assessees must accordingly evaluate the nature and timing of succession to determine the rights of coparceners and the limitations period for legal action.
Section 55 of the Companies Act, 2013 - NCLAT Confirms: Individual Preference Shareholder Cannot Enforce Redemption Rights Under Section 55(3) of Companies Act, 2013 - The NCLAT categorically held that the appellant, being merely a preference shareholder, does not possess any individually enforceable statutory right under Section 55(3) of the Companies Act, 2013, to compel redemption of preference shares. Accordingly, the proceedings at the instance of such a shareholder are not maintainable before the NCLT. This decision reinforces the principle that enforcement of rights under Section 55(3) requires a statutory or contractual basis, neither of which was established in the present case.
Bombay High Court Upholds CLBâs Findings on Shareholder Rights and Board Representation: Aasia Properties Denied Nominee Director Post Amidst Dispute Over Share Transfer Dates and Pre-emption Rights - Based on the above analysis, the High Court held as follows:
The determination that Aasia Properties became a 1/3rd shareholder on 28.01.1983, based on share certificates, stands affirmed.
The CLBâs findings on the absence of fraud or record manipulation are upheld.
The interpretation of Article 38, denying pre-emption rights to Aasia Properties for the 1983 transfer, is correct.
The CLBâs legal error regarding âautomaticâ winding up upon oppression is set aside.
The direction granting nomination of a non-functional director to Aasia Properties is set aside as unsupported by law or fact.
The petition is not barred by limitation.
The CLBâs order is, therefore, set aside to the limited extent of the nominee director direction, and the appeal is disposed of in these terms.
NCLAT Upholds Eligibility Bar Under Section 43(3) of LLP Act, Yet Leaves Door Open for Suo Moto Action by NCLT - The NCLAT has reaffirmed the mandatory nature of the eligibility threshold stipulated under Section 43(3) of the LLP Act, 2008, ruling out the possibility of seeking a waiver by reference to the Companies Act, 2013, in the absence of express incorporation. However, the Tribunal has left open the possibility for the NCLT to exercise suo moto powers under Section 43(1)(a) if a future petition contains adequate material to justify such action. This conclusion calls for strict adherence to the statutory framework of the LLP Act, while simultaneously recognizing the Tribunalâs inherent powers to act in appropriate circumstances when justice so demands.
Kerala High Court Rules in Favour of Auction Buyer: Official Liquidator Liable for Material Misdescription Despite "As Is Where Is" Clause - The Kerala High Court held that the sale in question was fundamentally flawed due to misdescription and the presence of latent defects not discoverable by reasonable inspection. The inclusion of the "as is where is and whatever there is" clause and reliance on the caveat emptor principle did not absolve the Official Liquidator of liability. The applicant was thus entitled to a refund of the amounts deposited towards the sale consideration.
Bombay High Court Upholds Pre-Winding Up Call Option Enforcement, Validates Transfer of 2,34,000 Shares Despite Liquidation Proceedings - Based on the above analysis, the Bombay High Court held that the sale and transfer of 2,34,000 equity shares in favour of the Applicants, executed pursuant to the MOU dated March 1, 2009, and its amendment dated December 23, 2011, stands validated and ratified under Section 536(2) of the Companies Act, 1956. The transaction was found to be completed, irrevocable, and bona fide prior to the commencement of winding up proceedings, and thus, immune from being set aside by the Official Liquidator.