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2019 Supreme(Kar) 1112
IN THE HIGH COURT OF KARNATAKA
ALOK ARADHE, J.
Prakash Budoor - Appellant
Versus
Registrar Of Companies Karnataka - Respondent
Writ Petition No. 15872 of 2019, 15873 of 2019, 15874 of 2019, 15875 of 2019
Decided On : 08-07-2019
Jayakumar S. Patil, Adv., S. Vijayshankar, Adv., M.N. Kumar, Adv., K.N. Phanindra, Adv.
Headnote:
Constitution of India,1950 - Articles 226 & 227 - Companies Act, 2013 - Sections 58, 59, 241 and 242 - Rule 10(6) ,Companies (Registration Offices and Fees) Rules, 2014 - Companies Appointment and Qualification of Directors - Quash - Petitioners inter alia seek a writ of prohibition prohibiting respondent from taking any action on basis of complaint lodged by respondent with regard to filings and uploading or any other filing or uploading done by petitioners or by company - Alliance Business School with approval of present board against petitioners- Petitioners also seek a writ of certiorari for quashment of show cause notice –Held, Senior Counsel for petitioners that impugned show cause notice is per se without jurisdiction does not deserve acceptance as issue whether forms in question are defective or incomplete can be adjudicated by Registrar of Companies- Petitioners are well within their rights to raise an objection before Registrar that ingredients Rules are absent and Registrar is even competent to decide issue with regard to jurisdiction as well- Therefore submission that show cause notice is per without jurisdiction is sans substance Registrar of Companies has merely been asked to perform his statutory duties as per case and to take appropriate action- Therefore it cannot be said that impugned show cause notice has been issued at dictates of Ministry of Corporate Affairs- It is pertinent to mention that on previous occasion also Registrar of Companies had issued two notices without any reference to instructions of Ministry of Corporate Affairs- Therefore contention of petitioners that action has been taken on dictates of Ministry of Corporate Affairs does not deserve acceptance case petitioners have not already filed reply to show cause notice they shall do so positively within a period of two weeks from of receipt of certified copy of order passed today and thereupon Registrar of Companies after affording an opportunity of hearing to all necessary parties shall decide objections which may be preferred by petitioners including issue with regard to jurisdiction by a speaking order within two months from date of receipt of objections which may be filed by petitioners bearing in mind interim orders of injunction granted by Civil Courts – Petition disposed
JUDGMENT :
Alok Aradhe, J.
1. Mr.Jayakumar S.Patil, learned Senior counsel for Mr. Shyam Sundar the petitioners.
Mr. S. Vijay Shankar, learned Senior Counsel for Mr. H.K. Srivasthava, learned counsel for respondent No.5.
Mr.M.N.Kumar, learned Central Government Counsel for Respondent Nos.1 to 4.
Mr.K.N.Phanindra, learned Senior Counsel for Ms.Annapoorna S, learned counsel for respondent No.6.
2. The writ petitions are admitted for hearing. With consent of the learned counsel for the parties, the same are heard finally.
3. In these petitions under Articles 226 & 227 of the Constitution of India the petitioners inter alia seek a writ of prohibition, prohibiting respondent Nos.1 to 4 from taking any action on the basis of the complaint lodged by respondent Nos.5 & 6 with regard to filings and uploading of DIR-12, MGT-7 or any other filing or uploading done by the petitioners or by the company viz., Alliance Business School with the approval of the present board, against the petitioners. The petitioners also seek a writ of certiorari for quashment of show cause notice dated 28.03.2019, by which the petitioners have been asked to show cause as to why an action under Rule 10(6) of the Companies (Registration Offices and Fees) Rules, 2014 for invalidating DIR-12 forms filed by the petitioners and revised MGT-7 filed by the petitioners and mark them defective on the basis of the complaints made by respondent Nos.5 and 6 be not taken. In order to appreciate the petitioners grievance, few relevant facts need mention, which are stated hereinafter.
FACTUAL MATRIX
4. Two sisters viz., Shaila Chebbi and Mala Gowda got a Private Limited Company incorporated viz., Alliance Business School in the year 2005. Initially, there were only two shareholders and Directors and both the sisters held 50% share holding each of the company. The said company is incorporated with an object to engage itself into educational activities by running various courses and management studies. It is averred in the writ petition that the petitioners who were renowned educationist supported his sisters who had founded the company. It is also pleaded that elder brother of the sisters viz., respondent No.5 used to stay in United States and was rendered jobless. Thereupon, he returned to India and was accommodated to teach in the educational institutions of the company. The sisters under the supervision of the elders, transferred their share holding in favour of respondent No.5 in the year 2008 under a promise that as and when the shares are demanded, he would return the same. It is also pleaded that by virtue of share holding in his name, respondent No.5 became the Managing Director of the Company and co-opted four of his friends as fellow Directors and nominal shareholders.
5. In the year 2010, the company approached the Government of Karnataka for establishment of a Private University. The State Government thereupon directed the company to convert itself into a Non-Profit Trust Company. Accordingly, the Company was converted into a Non Profit Trust Company. The State Government, thereupon enacted an Act viz., Alliance University Act, 2010 (hereinafter referred to as 'the Act' for short), by which the Company being a sponsoring body was permitted to establish a University. Accordingly, Alliance University was established and respondent No.5 became the first Chancellor of the University by virtue of the provision of the Act, which provided that Managing Director of the Company, would be the Chancellor.
6. It is averred in the writ petition that the respondent No.5 thereafter got engaged into criminal activities and embezzled a sum of Rs.100 Crores. Thereupon the sisters who had founded the University demanded the return of shares. The respondent No.5 with great difficulty returned the share holdings on 04.03.2015 and 05.03.2015 and tendered his resignation. Thus, the constitution of the Management of the company as well as the Board of Directors was changed and the same was duly upl
