The importance of providing a reasonable opportunity of being heard and considering comprehensive detailed replies before taking further action under the Companies Act, 2013.

JUDGMENT

Prathiba M. Singh, J. - This hearing has been done through hybrid mode (physical and virtual hearing).

CM APPL. 12279/2021 (for exemption)

2. Allowed, subject to all just exceptions. Application is disposed of.

WP(C) 4063/2021 & CM APPL. 12278/2021 (for interim relief)

3. The Petitioner, Axis Ispat Private Limited, has filed the present petition seeking quashing of the 37 show cause notices, dated 28th January, 2021, issued against the Petitioner, by the Ministry of Corporate Affairs, Union of India, under various sections of the Companies Act, 2013. A further prayer of the Petitioner is for the quashing of the letter dated 18th March, 2019, vide which, inspection of the books of accounts and other statutory records of the Petitioner company under section 206(5) of the Companies Act, 2013 was sought for by the Ministry of Corporate Affairs.

4. The submission of Mr. Dayan Krishnan, ld. senior counsel appearing for the Petitioner, is that although, under Section 206 of the Companies Act, the Registrar of Companies has the power to call for information, inspection of books, and to conduct an inquiry, however, the Registrar would have to first call upon the Petitioner to give an explanation and also provide them a reasonable opportunity of being heard before the Registrar, before issuing show cause notices. In the present case, however, he submits that, though there was some delay initially by the Petitioner in filing the reply to the findings, a reply had been given. However, he submits that the said reply appears to have not been considered by the Registrar, as is clear from the text of the show cause notices that have been issued to the Petitioner on 28th January 2021. It is further submitted by Mr. Krishnan, ld. Sr. Counsel that the show cause notices had all been issued on the same date and the said notices record that no explanation had been given by the Petitioner. By way of illustration, reliance is placed upon the show cause notice dated 28th January, 2021, issued under section 186(13) of the Companies Act, for violation of section 186 of the Companies Act by the Petitioner, where it is stated that the Petitioners failed to respond to the letter issued against it. The same is annexed at pages 147 and 148 of the paper book.

5. Thus, Mr. Krishnan submits that the Petitioner be allowed to submit a comprehensive reply to the show cause notices and the same be considered before the Registrar of Companies proceeds further, inasmuch as once the prosecution is directed, the Petitioner would be required to face a fullfledged trial.

6. Ms. Nidhi Raman, ld. Counsel, on the other hand, submits that when the preliminary findings/ report were issued on 2nd September, 2019, sufficient time was given to the Petitioner to file the reply. However the Petitioner chose to file a belated reply only in June, 2020, and the same was also considered by the authority and thereafter the show cause notices have been issued against the Petitioner. She further submits that despite the fact that the show cause notices were issued on 28th January, 2021 and time was given to the Petitioner to reply to the same, till date no replies to the show cause notices have been received. Accordingly, she submits that the authorities ought to be permitted to continue to proceed in accordance with law.

7. A perusal of some of the show cause notices which have been issued shows that, there is a doubt as to whether the reply submitted by the Petitioner in June, 2020 has been considered by the ROC while issuing the showcause notices or not. There is no dispute to the fact that the reply to the preliminary findings was submitted belatedly by the Petitioner, however, considering the nature of allegations and the lockdown which ensued in March, 2020 due to the COVID-19 pandemic, the delay, in filing the reply, would by itself not be a reason to not consider the same, considering that the show cause notices have only been issued after six months having passed from the dat