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IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. DHANDAPANI, J.
India Awake for Transparency Shrishti Crescendo, Chennai - Appellant
Versus
The Secretary Ministry of Corporate Affairs Union of India, New Delhi & Others - Respondent
W.P. Nos. 10235, 10800, 23294 & 24212 Of 2019
Decided On : 04-01-2022
Constitution of India, 1950 - Companies Act, 1956 - Section 8, 25 - Formulation of companies with charitable objects - Petitioner staes it is barred from paying any dividend and that company is operating mainly for public interest and in satisfaction of its purpose, petitioner has been diligently working through its volunteers and escalating matters of significant public interest, more especially violations relating to Coastal Regulation Zone Regulation and Development Control Regulation of Chennai Metropolitan Development Agency in Acquifer Recharge Zone - Petitioner heavily relies upon sub-section (6) to Section 8 and submits that without fulfilment of requirement stated in sub-section (6), status of company and licence granted to a company cannot be cancelled/revoked - Respondents submits that since office of respondent was at Bangalore, computerized system would accept only a filing at South Eastern Region, inspite of fact that petitioner has office in Chennai and petition ought to have been filed at Chennai - Filing at South Eastern Region was, on account of jurisdictional aspect, transferred to file of Southern Region and, contention of petitioner that said filing only on account of collusion between two respondent is wholly without any substance – Held, power is invested with Central Government to cancel licence if affairs of company registered u/s 8 are in any manner violative of objects of company or prejudicial to public interest - Respondent being Regional Director would be oblivious of happenings around company and would be very much in thick of things as to manner in which company is conducted and company and its actions having been ridiculed by Karnataka High Court and very many litigations have been taken against Directors of company relating to siphoning off of funds of companies, which are under scanner of SFIO, which investigation is initiated by Central Government u/s 212 of Companies Act, respondent, being competent authority u/s 8 (6) of Companies Act, 2013, is definitely competent and would be very well aware of happenings around company and its Directors and materials, which are against petitioner, which are within ambit of respondent and in light of various orders passed by High Court and Hon'ble Supreme Court relating to affairs of company, 2nd respondent, applying his judicious mind, being a quash judicial authority, has thought it fit to cancel licence granted to petitioner and merely because mala fide in nature of collusion is attributed between 3rd and 4th respondent in functioning of office of 2nd respondent by petitioner, in absence of any material in support of said collusion, mere allegation cannot partake character of proof to hold that impugned order has been passed against petitioner only to satisfy respondent and to safeguard respondent from litigations initiated by petitioner - Writ petition dismissed.
JUDGMENT :
1. The present petition at the instance of the petitioner assails the impugned order passed by the 2nd respondent in and by which the license issued to the petitioner was revoked/cancelled by the 2nd respondent by virtue of powers provided u/s 8 (6) of the Companies Act.
2. The case of the petitioner, as could be culled out from the affidavit filed in support of the petition is that the petitioner was formed on 6.8.2012 as a not for profit company for charitable purposes as contained u/s 25 of the Companies Act, 1956, presently Section 8 of the Companies Act, 2013. It is the case of the petitioner that it is barred from paying any dividend and that the company is operating mainly for public interest and in satisfaction of its purpose, the petitioner has been diligently working through its volunteers and escalating matters of significant public interest, more especially violations relating to Coastal Regulation Zone Regulation and Development Control Regulation of Chennai Metropolitan Development Agency in the Acquifer Recharge Zone. In this regard, the petitioner had filed six public interest litigations before the Delhi High Court, of which petitions are pending adjudication.
3. It is the further case of the petitioner that having come to its knowledge relating to a large scale fraud involving defalcation of about Rs.50,000 Crores by the 3rd respondent by way of income tax evasion, the petitioner has been pursuing the said issue for retrieving the said amount. It is the averment of the petitioner that the said defalcation had arisen in view of the merger approval obtained by the 3rd respondent from the High Court of Karnataka, on the basis of misrepresentation and collusion with the 4th respondent, then functioning as Registrar of Companies, Karnataka. It is the further averment of the petitioner that unable to bear the pressure mounted on the 3rd respondent by the petitioner, the 3rd respondent, with a view to prevent the petitioner from proceeding any further with its endeavour to unearth fraudulent acts, with the connivance of the 4th respondent, who is functioning as the 2nd respondent, sought to cancel the permission granted to the petitioner u/s 8 of the Companies Act.
4. It is the further case of the petitioner that though the 3rd respondent had prepared all the necessary material to achieve its objective as far back as on 13.11.2017, however, refrained from moving the petition till 2.7.2018, when the 4th respondent took charge of the office of the 2nd respondent and with the help of the 4th respondent occupying the post of the 2nd respondent, in stark violations of principles of natural justice and without affording a reasonable opportunity of hearing and without in any manner adverting to the petitioner's application in the Karnataka High Court relating to the merger issue of the 3rd respondent, passed the impugned order. It is the further averment of the petitioner that the impugned order has been passed without any material whatsoever supporting the said stand of the 3rd respondent and the allegations made by the 3rd respondent does not come within the scope of Section 8 (6) of the Companies Act and the act of the 3rd respondent is a sheer abuse of process of law and that the impugned order is neither in consonance with law nor in consonance with the principle of audi alteram partem and, therefore, the said order deserves to be set aside.
5. Learned counsel appearing for the petitioner, adverting to the sequence of events, submitted that the act of the petitioner in adhering to its mandate on its formation as a company u/s 8 of the Companies Act and unearthing the fraud sought to be perpetrated by the 3rd respondent under the guise of merger of companies, which got the approval of the Karnataka High Court in the year 2014- 2015, moved the petition before the Karnataka High Court by way of a third party public interest litigation in which notice has been ordered in the year 2016 and, thereafter, the order of N
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