Kanthi Narahari JUDGMENT
S.J. Mukhopadhaya, J. (Chairperson)
1. The Union of India moved a Petition under Section 401/397/398 r/w Section 408 of the Companies Act, 1956 (now Section 241(2) r/w Section 242 of the Companies Act, 2013). It also sought relief under Section 388B of the Companies Act, 1956 for appointment of the Government Nominated Directors and the control of the affairs and management of the Company Megacity Bangalore Developers & Builders Limited (MBDBL).
2. The National Company Law Tribunal (hereinafter referred to as the 'Tribunal') by impugned order dated 14th March, 2019 came to a considered opinion that Union of India made out a case so as to interfere in the affairs of the Company with suitable orders so as to protect the property of the Company; to protect the interest of stakeholders of the Company and to ensure that the Company follow statutory compliances etc. The Tribunal also formed opinion that the existing management should not be continued and should be replaced by the New Directors to be nominated by the Union of India as per law. In the result, the following directions was issued:-
"18. In the result, C.P. No. 02 of 2014 (T.P. No. 300 of 2017) is disposed of with following directions:
a. We hereby declared that the Respondent Nos. 2 to 5 are hereby ceased to be the Directors of the R-1 Company and they are debarred from taking/involving any action with regard to the affairs of Company with immediate effect. Consequently, Union of India is permitted to appoint Directors to R-1 Company M/s. Megacity Bangalore Developers & Builders Limited as expeditiously as possible.
b. No order as to costs"
3. Appellants, Shareholders of the Company have challenged the decision aforesaid on the ground that the Tribunal misdirected itself by granting the relief under Section 388B of the Companies Act, 1956.
4. The learned Counsel for the Appellants submitted that in absence of corresponding provision to Section 388B in the new Companies Act, 2013, no such relief can be granted, since it was clearly not the intention of the statute to vest powers on the Government to replace the Board of Directors.
5. According to the Appellants, the effect of the savings clause contained in Section 465 of the Companies Act, 2013 r/w Section 6 of the General Clauses Act, 1897, is that once the Companies Act, 1956 stood repealed, the Tribunal cannot grant relief under a provision, which stood repealed.
6. It was further submitted that the Tribunal failed to give any reason or finding with respect to specific roles attributed to the Appellant Nos. 1-4 to hold that they are not fit to hold office of Director or any other office.
7. Further, according to the Appellants, in absence of shareholders' complaint, the Tribunal cannot accept the Respondent No. 1's report overlooking the fact that the Company Petition was filed on the basis of conjecture and suspicion. It was further submitted that the decision of the Hon'ble High Court of Karnataka at Bengaluru in criminal proceedings and other matters, which was pending before the Company Law Board, Chennai Bench has been ignored.
8. It appears that Central Government through Ministry of Corporate Affairs on the basis of the report of the Registrar of Companies, Karnataka referred to non-filing of the statutory returns for the year 2006-07 and consequently depriving legitimate rights of the Members. It is not in dispute that the matter was investigated by the Serious Fraud Investigation Office (SFIO), which filed rep........