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2024 Supreme(Online)(NCLAT) 917
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Barun Mitra (Member (Technical)) ,
Cadillac Infotech Pvt. Ltd. – Appellant
Versus
Airwil JKM Infrastructure Pvt. Ltd – Respondent
1611/ND/2024 COMPANY APPEAL(AT)(INS)
Disqualification of a Director under Section 164(2) of the Companies Act does not extend to sister companies, affirming the authority to file Section 7 Applications.
Headnote:(A) Companies Act, 2013 - Sections 164(2) and 167(1) - Disqualification of Directors - The Adjudicating Authority ruled that disqualification under Section 164(2) does not extend to non-defaulting sister companies, thus allowing the Financial Creditor to proceed with the Section 7 Application. (Paras 3, 18, 21)
(B) Authority of Signatory - The court found that the Director of the Financial Creditor had the authority to file the Section 7 Application despite disqualification claims based on the status of a sister company. (Paras 5, 21)
Facts of the case:
The Appeals arise from Orders rejecting applications to dismiss Section 7 petitions filed by a Financial Creditor against a Corporate Debtor, with claims of disqualification of the Director due to the status of a sister company. (Paras 1, 3)
Findings of Court:
The court upheld the Adjudicating Authority's decision, confirming the Director's authority to file the Application and dismissing claims of disqualification. (Paras 21, 22)
Issues: The main issues were whether the disqualification under Section 164(2) applies to directors of sister companies and the authority of the Director to file the Section 7 Application. (Paras 5, 18)
Ratio Decidendi: The court ruled that disqualification under Section 164(2) does not extend to sister companies and affirmed the validity of the Director's authority to sign the Section 7 Application. (Paras 21, 22)
Result: Appeals dismissed.
J U D G M E N T
ASHOK BHUSHAN, J.
By these two Appeals between the same Parties, Orders dated 13.06.2022 passed by the Learned Adjudicating Authority (National Company Law Tribunal, Court – V, New Delhi Bench) in I.A. No. 5670(ND)/2023 in C.P. (IB) No. 211(ND)/2022 and in I.A. No. 5682(ND)/2023, in C.P. (IB) No. 210(ND)/2022 has been challenged.
2. Both the Appeals arises out of similar facts and grounds hence, they have been heard together and are being decided by this common Judgment. It shall be sufficient to refer to the pleadings in Comp. App. (AT) (Ins.) No.
1610/2024, for deciding both the Appeals.
3. Brief facts of the case necessary to be noticed for deciding the Appeals are:
i. A Section 7 Application was filed by JKM Infrastructure Private Limited, the Respondent herein against the Appellant on which C.P. (IB) No.211(ND)/2022 was registered. The total amount of debt claimed in the Part IV of the Application was ₹5,73,75,000/- as on 01.03.2022.
ii. Application was filed by the Financial Creditor on 04.03.2022. The Application under Section 7 was through Authorised Representative, Vinod Sachdeva, one of the Directors of the Financial Creditor.
iii. Similarly, Section 7 Application was filed by the Financial Creditor against the Appellant on which C.P. (IB) No. 210(ND)/2022 was registered in which Application in Part IV, the amount of debt claimed was ₹26,56,25,000/- as on 01.03.2022. Application under Section 7 was filed by the Financial Creditor through its Authorised Representative, Mr. Vinod Sachdeva Director of the Financial Creditor.
The Application under Section 7 was filed on 04.03.2022.
iv. The Corporate Debtor filed an Application on 11.10.2023 being I.A. No.
5670(ND)/2023, in C.P. (IB) No. 211(ND)/2022, seeking dismissal of the Company Petition on the ground that Vinod Sachdeva, the Authorised Signatory of the Section 7 Application has no authority to file Section 7 Application, he being disqualified as Director of a Sister Company Airwill JKM Infracon Pvt. Ltd. (Airwill Infracon or Infracon Company) is also to be treated to be disqualified in filing an Application on behalf of the Financial Creditor.
v. The Corporate Debtor has filed the Reply in Section 7 Application dated
24.02.2023 and after about 7 months, filed the I.A. No. 5670(ND)/2023, praying for dismissal of the Application on the ground that Authorised Signatory was not competent to file the Application.
vi. The pleading in I.A.5670/2023 by the Corporate Debtor was with regard to sister concern of the Financial Creditor, namely Airwill JKM Infrastructure Pvt. Ltd. It was pleaded that sister concern of the Financial Creditor, namely Airwill Infracon had been struck off from the Register of Company since 08.08.2018, in terms of Section 248 of the Companies Act 2013 (hereinafter referred to as ‘The Act’). Vinod Kumar Sachdeva, Authorised Signatory of Financial Creditor was also Director of the Airwill Infracon. Vinod Kumar Sachdeva, even after being disqualified, was signing and verifying the Affidavits. It was pleaded that in light of proviso to Section 167(1)(a) of the Act, Vinod Kumar Sachdeva was disqualified and could not have signed the Affidavit in light of the automatic vacation of his Office as Director of all Companies.
vii. Application I.A.5670/2023 was opposed by the Financial Creditor and a Reply was filed to the Application. It was pleaded that Vinod Sachdeva does not lack authority to sign the Section 7 Application on behalf of the Financial Creditor. It was pleaded that striking of the Infracon Company was under Section 248(1)(c) and not on account of non-filing of balance sheets, the disqualification as envisaged under Section 164(2)(a) read with proviso to Section 167(1)(a) could not come into play.
viii. Adjudicating Authority heard the Parties on the IA and by the Impugned Order rejected the IA5670(ND)/2023 Adjudicating Authority held that disqualification under Section 164(2) shall extend only to the defaulting Company, i.e., Airwill Infracon a
