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IN THE HIGH COURT OF DELHI
Chandra Dhari Singh, J.
Nitin Rekhan - Appellant
Versus
Union of India - Respondent
W.P. (Crl.) 559 of 2020
Decided On : 15-07-2022
The Companies Act, 2013 does not apply retroactively to transactions predating its enactment, establishing that such past transactions remain governed by earlier legislation.
Headnote:(A) Constitution of India - Article 226 - Code of Criminal Procedure, 1973 - Section 482 - Companies Act, 2013 - Sections 73 and 76A - Request for action against private company for non-allocation of shares and repayment of interest. (Paras 1-3)
(B) Companies Act, 2013 - Definition of 'deposit' - The treatment of share application money as a deposit if not refunded within 60 days. (Paras 7-8)
(C) Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975 - Applicable law for transactions prior to 2014. (Paras 30-31)
(D) Jurisdiction - Scope of writ jurisdiction is limited to public law and does not cover private contractual disputes. (Paras 37-39)
Facts of the case:
The petitioner, a businessman, sought legal action against a private company that failed to allot shares after receiving substantial share application money. Petitioner claimed interest on the amount despite its return.
Findings of Court:
The court ruled that the transaction did not fall under the Companies Act, 2013, and thus no interest was applicable as it was governed by prior legislation.
Issues: The main issues included the applicability of the Companies Act, 2013 to past transactions and whether the share application money constituted a 'deposit.'
Ratio Decidendi: The court determined that since the transaction predated the Companies Act, 2013, the applicable law was the Companies Act, 1956, hence no penal interest was owed.
Result: Petition dismissed.
JUDGMENT
Chandra Dhari Singh, J. The instant Criminal Writ Petition has been filed under Article 226 of the Constitution of India read with Section 482 of Code of Criminal Procedure, 1973 (hereinafter referred to as the "Code") inter alia praying for passing appropriate orders and directions to the Respondent No. 2 to perform their duty in accordance with law and to prosecute Respondents No. 3 to 7 under Sections 73 and 76A of the Companies Act, 2013 and to take appropriate action on the complaint filed by the petitioner.
FACTUAL MATRIX
2. The matter has arisen out of the facts as detailed hereunder:
a. The Petitioner is a businessman by profession whereas the Respondent No.3 is a private limited company engaged in the business of Real Estate.
b. The Petitioner had paid Rs.40,00,000/- (hereinafter referred to as the "amount in question") to the Directors of Respondent No. 3 Company for issuance of shares in the said company on 27th December 2010 by depositing the share application money in A/C No. 5582000100022401 maintained with Karnataka Bank Limited, Karol Bagh.
c. The Respondent No.3 Company failed to allot the shares as promised to the Petitioner and returned the money on 9th February 2018 through RTGS. It is alleged that however, the said Company failed to repay the interest accrued on the amount in question as per Companies (Acceptance of Deposits) Rules, 2014 and Rule 17 of the Companies (Acceptance of Deposits) Rules, 2014.
d. The Petitioner approached the Registrar of Companies (Respondent No.2) by filing an online complaint on 11th December 2018 for non-compliance of the Companies (Acceptance of Deposit) Rules, 2014 by Respondent No.3 Company and for the recovery of the Interest Amount. The Deputy Registrar of Companies, Delhi issued a Show Cause Notice dated 14th May 2019 to the Respondent No.3 Company.
e. Despite the issuance of Show Cause Notice, it is alleged that no action was taken by the Respondent Company on the complaint filed by the Petitioner. The status of the same is currently reflected as "under examination" on the website of the Ministry of Corporate Affairs.
f. The Petitioner has also preferred a private complaint under Section 200 of the Code before the Special Judge, Dwarka Courts, Delhi against Respondent No.3 and others including the Respondents No.1 and 2 for not having taken any action against Respondents No. 3 to 7 as per the law under Section 73 and 76A of the Companies Act, 2013.
g. By way of the instant writ petition, the Petitioner has prayed for passing appropriate orders and direction to the respondent No. 2 to do their duty in accordance with law and to prosecute Respondents No.3 to 7 under Section 73 and 76A of the Companies Act, 2013 and to take appropriate action on the complaint filed by the petitioner.
SUBMISSIONS
3. Learned counsel appearing on behalf of the Petitioner submitted that the Petitioner had paid amount in question to the Directors of Respondent No.3 Company for issuance of shares in the said company on 27th December 2010 by depositing the share application money in A/C No. 5582000100022401 maintained with Karnataka Bank Limited, Karol Bagh. It is submitted that the petitioner has filed a copy of the Bank Statement of February 2018 and that the Petitioner was further issued an Income Tax Notice dated 24th September 2018 thereby confirming the deposit of the said amount as share application money. It is further submitted that despite this, the shares were never allotted.
4. It is further submitted that the Respondent No.7 M/s PVRN & Co., the auditors of Respondent No. 3 Company acting in connivance with the Respondent No. 3 Company and other key managerial persons have been involved in a well-calculated fraud carrying activities in violation of the provisions of the Companies Act, 2013. It is stated that as an illustration and specimen of the fraudulent practices of the Respondent No. 3 Company, the Petitioner has annexed the Balance Sheet of the year 2016-17 of th
