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2016 Supreme(Del) 2177
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAJMI WAZIRI, J.
Amaan Sachdev & Ors. - Appellants
Versus
Fahed Abdulrahman Ali Alkhamiri & Ors. - Respondents
CO.A.(SB) 39/2013
Decided On : 02-06-2016
Ms. Manmeet Kaur, Mr. Yashvardhan Bandi & Mr. Manan Chaddha, Advs.
Mr. U.K. Chaudhary, Sr. Advocate with Mr. Naveen Dahiya & Mr. Himanshu Vij., Advocates
Section 235 of the Companies Act requires a prima facie evidence of fraudulent or unlawful activities to warrant an investigation, and the threshold of 10% voting power must be met.
Headnote:
Companies Act - Investigation of Company Affairs - Section 235 - [FACT OF THE CASE] The appellants, holding 100% voting power, alleged irregularities in the respondent company's affairs and sought an investigation under section 235 of the Companies Act. The CLB rejected the petition, stating that the facts were apparent from the company's balance sheet and no new information would be revealed through an investigation. [FINDING OF THE COURT] The court found that the appellants did not meet the 10% voting power threshold required under section 235, and the impugned order was upheld. [ISSUES] The main issues were the appellants' eligibility to seek an investigation under section 235 and the sufficiency of the alleged irregularities to warrant an investigation. [RATIO DECIDENDI] The court held that section 235 requires a prima facie evidence of fraudulent or unlawful activities, and the facts disclosed did not warrant an investigation. The court also emphasized the need for new material or data to justify an investigation. [FINAL DECISION] The appeal was dismissed as without merit.
Najmi Waziri, J.
1. This Company Appeal, preferred under section 10F of the Companies Act, 1956, (hereinafter referred to as the “Companies Act”) impugns the order dated 03.07.2013 in Company Petition No. 26 (ND) of 2013 passed by the Company Law Board, Northern Region Branch, New Delhi (hereinafter referred to as the “CLB”). The impugned order rejected, on merits, the appellants prayer for an investigation into the Respondent No. 12-company under section 235 of the Companies Act.
2. It was the appellants case before the CLB that Mr. Amaan Sachdev and Mr. Aneel Sachdev held a total of 10,000 equity shares of Rs. 10 each, they held 100% of the total voting power of the Respondent No. 12-company thus the petition under section 235 was maintainable; they claimed to have noticed several irregularities in the affairs and day-to-day running of the respondent No. 12-company; that the respondents had carried out various E-form filings with the ROC without obtaining proper approval from the Board of Directors and shareholders of the company. These alleged irregularities included:
i. Holding meetings without the requisite period of notice required by law.
ii. Increasing the share capital of the company from Rs.1,00,000/- to Rs.1,40,00,000/- through an Extraordinary General Meeting convened without the permission of the appellants, who were shareholders at the time, and thereby reducing the shareholding of the appellants from 100% to 0.73%.
iii. Appointing respondent Nos. 1 and 2 as directors of the company and not providing an explanatory statement for the same.
iv. Forcing appellant Nos. 2 and 3 to resign from the Board of Directors without their consent.
v. Allotting shares of the company to companies based in Kuwait.
vi. Fraudulently changing the registered address of the company three times.
vii. Filing irregular balance sheets from 2005 to 2011.
3. The appellants contend that an investigation under section 235 of the Companies Act ought to be carried out to ascertain the truth behind these alleged unscrupulous activities of the respondents section 235 reads as follows:
“235. Investigation of the affairs of a company.
(1) The Central Government may, where a report has been made by the Registrar under sub- section (6) of section 234, or under sub- section (7) of that section, read with sub- section (6) thereof, appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct.
(2) Where-
(a) in the case of a company having a share capital, an application has been received from not less than two hundred members or from members holding not less than one- tenth of the total voting power therein, and
(b) in the case of a company having no share capital, an application has been received from not less than one- fifth of persons on the company' s register of members, the Company Law Board may, after giving the parties an opportunity of being heard, by order, declare that the affairs of the company ought to be investigated by an inspector or inspectors, and on such a declaration being made, the Central Government shall appoint one or more competent persons as inspectors to investigate the affairs of the company and to report thereon in such manner as the Central Government may direct.”
4. The appellants therefore filed a petition under section 235 of the Companies Act before the CLB. Vide the impugned order dated 03.07.2013, the CLB reasoned as under:
“6. After going through the contents of the Petition, replies, rejoinders and arguments (oral and written), prima facie, it is clear that the Petitioners were initially the shareholders with 100% voting power in the company. However, the petitioners have alleged that Respondent No.1 has filed E-form with the ROC for the appointment of R-2 as Executive Director, resignation of Petitioner No.2 and 3 from the post of Director; increase in the authorized capital from Rs.1 lakh to Rs.1.40 crores, allotment o
