Special bench of the Hon’ble National Company Law Tribunal, Bengaluru (NCLT), while deciding an application under section 213 of the Companies Act, 2013, held that investigation into the affairs of a company under liquidation can be held under section 213 of The Companies Act, 2013.
Buyers of real estate units in one of its projects developed by a company, filed a petition under sections 213 and 221 of the Companies Act, 2013 r/w Rules 11 and 74 of the National Company Law Tribunal Rules, 2016 seeking a direction for investigation into the affairs of the respondent company, alleging fraudulent sales of property, by the respondent Company.
It was alleged that the company, despite having the right to sale only 82216.30 sq. ft., has sold an area of 2,43,037 sq. ft. which was almost 3 times the area which the company was entitled to sell. It was further alleged that by the fraudulent sale(s), it was apparent that affairs of company had been conducted to commit fraud and cheating with buyers. There was also an allegation of siphoning of funds arising from these sale(s), by promoters of company, and thus, there was urgent need to conduct enquiry into affairs of company to track funds diverted from the company.
The respondent company did not raise any objections to the allegation but contended the petition on the ground that company, vide an order of the NCLT in another proceeding had been ordered to be liquidated and Resolution Professional has been appointed as Liquidator, and liquidation process of company was in progress, therefore, petitioner could not seek to circumvent liquidation process and try to initiate parallel investigative proceedings against company
The Hon’ble Tribunal on this issue took note of the decision of Hon’ble National Company Law Appellate Tribunal, (NCLT) in Vijay Pal Garg & Ors. Vs. Pooja Bahry in Company Appeal (AT) (Insolvency) No.949 of 2019 wherein it was held that so long as the Company is not liquidated it continues to exist and therefore the NCLT can recommend to the Central Government to get the affairs of the Company investigated.
The Hon’ble Tribunal, hence, allowed the said petition and while reiterating the decision of Hon’ble NCLAT held that investigation under Section 213 of the Companies Act, 2013 is possible in respect of the Company which is undergoing the process of liquidation.
Tahera Iqbal v. Vikram Structures (P.) Ltd
[2024] 163 taxmann.com 431 (NCLT-Beng.) (SB)
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