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2025 DIGILAW 664 (KER)

RAJKUMAR GUPTA v. RBG ENTERPRISES PRIVATE LIMITED

2025-03-20

BASANT BALAJI

body2025
JUDGMENT : (BASANT BALAJI, J.) This Original Petition is filed for the following reliefs: “a)Call for records in EP/01/KOB/2024 before the Hon'ble National Company Tribunal, Kochi Bench; b) Quash Exhibit P-11 and P-14 Orders passed by the Hon'ble National Company Law Tribunal, Kochi Bench in EP/01/KOB/2024; c)Issue appropriate directions to the Hon'ble National Company Law Tribunal, Kochi Bench, to proceed with the final hearing and expeditiously dispose of EP/01/KOB/2024 within a time frame deemed appropriate by this Hon'ble Court: d) Grant such other reliefs that this Hon'ble Court deem fit to grant under the facts and circumstances of the case;” 2. Respondent Nos.3 and 4 filed CP/114/KOB/2019, CP/119/KOB/2019 and CP/125/KOB/2019 before the National Company Law Tribunal (NCLT), Kochi bench, alleging mismanagement and related party transactions in the company managed by the petitioners. The company petitions were disposed on 31.12.2021 as follows: “55. After analysing the issue framed, we are of the opinion that the Related Party Transactions done by the Respondents are contrary to the provisions of law and in breach of the Articles of Association of the Respondent Company and, therefore, the said Related Party Transactions are hereby declared as invalid and all the proceedings which have been done in violation of the Articles of Associations are also hereby declared as invalid. The other reliefs in these petitions are consequential reliefs. Since we have declared that the action of the Respondents are illegal, we are not ordering any investigation into the Respondent Companies affairs and imposing any penalty on the Respondents for non-compliance of the rules/articles of the Company. 56. The Company Petition No. 114/KOB/2019, Company Petition No. 119/KOB/2019 and Company Petition No.125/KOB/2019 stands disposed of with the aforesaid orders. 57. All the Interlocutory Applications pending in the aforesaid three cases stand disposed of.” 3. Petitioners in the company petitions filed Review Application/02/KOB/2022 to review Ext.P2. The Tribunal, by Ext.P3 dated 16.3.2022, reviewed the order dated 31.12.2021 as follows: “31. Thus, considering the above and the findings in the common order dated 31.12.2021, and with a view to ensure clarity in the order dated 31.12.2021 and to ensure its operability, the present Application is disposed of enumerating the consequential reliefs granted to applicants as stated in Para 55 of the Order to be as follows. 1. Thus, considering the above and the findings in the common order dated 31.12.2021, and with a view to ensure clarity in the order dated 31.12.2021 and to ensure its operability, the present Application is disposed of enumerating the consequential reliefs granted to applicants as stated in Para 55 of the Order to be as follows. 1. The 2nd and 3rd respondents (ie, Mr Rajkumar Gupta and Mr Vishnukant Gupta) have vacated office as directors of the 1 st Respondent Companies (ie, Mssrs RBG Enterprises Private Limited, Mssrs RBG Trading Corporation Private Limited and Mssrs RBG Retail Private Limited) in accordance with Sections 167(1)(c) and 167(1)(d)of the Act with effect from. 31.12.2021; II. The 2 nd and 3 rd respondents are not fit and proper persons to hold the office of Director or any other office connected with the conduct and management of any company as contemplated under section 242(4A) of the Act with effect from 31.12.2021; III. On a consideration of the documents filed by the Respondent pursuant to the directions of this Hon'ble Tribunal on 28.07.2021 and 12.08.2021, the affirmation of the 3 rd Respondent (ie, Mr Vishnukant Gupta) to the Review Petition, the reliefs sought for in IA/195/KOB/2021 shall stand allowed. The Registry is directed to take necessary action forthwith; IV. In view of our finding that the 2nd and 3rd respondent have failed to comply with the provisions of Act governing related party transactions (including Section 184 and 188), they shall stand disqualified as Directors of the 1 st respondent Companies having regard to section 164(1)(g) of the Act with effect from 31.12.2021; V. Mrs. Sulochana Gupta (DIN 02233110) and Mr Radha Ballabh Gupta (DIN-00643069) shall stand appointed as Directors of the 1 st respondent Companies with immediate effect; VI. Mrs. Sulochana Gupta (DIN 02233110) and Mr Radha Ballabh Gupta (DIN-00643069) are hereby directed to convene the Annual General Meetings of the lst respondent Companies in CP/114/KOB/2019, CP/119/KOB/2019& CP/125/KOB/2019 for the years FY 2015-2016 till date and to table the financial statements of the 1 st respondent Companies for consideration of the shareholders; VII. The 2 and 3rd respondent, and their spouses, Mrs Ritu Gupta and Mrs Anika Gupta are hereby directed to refund all amounts drawn illegally by them through related party transactions including remuneration, as disclosed in the financial statements from FY 2015-16 till date, within 30 days from the date of this order. VIII. The 2 and 3rd respondent, and their spouses, Mrs Ritu Gupta and Mrs Anika Gupta are hereby directed to refund all amounts drawn illegally by them through related party transactions including remuneration, as disclosed in the financial statements from FY 2015-16 till date, within 30 days from the date of this order. VIII. The Registrar of Companies, Kerala is directed to notify the change in the Board of Directors of the 1 st respondent Companies (ie, Mssrs RBG Enterprises Private Limited, Mssrs RBG Trading Corporation Private Limited and Mssrs RBG Retail Private Limited) within a period of three working days from today; IX. The Bankers of the 1 st respondent Companies are hereby directed to immediately change the signatories to the bank accounts based on the mandate signed by Mrs. Sulochana Gupta (DIN-02233110) and Mr Radha Ballabh Gupta(DIN -00643069); X. The above directions shall apply in respect of all other Company Petitions, CP/125/KOB/2019; i.e., CP/119/KOB/2019 XI. The Registry is also directed to immediately forward a copy of this order to the Registrar of Companies, Kerala for compliance. 32. With the above said directions, the present Application stand disposed of.” Aggrieved by the order in Ext.P3, petitioners, along with the 1 st respondent herein, filed a Company Appeal (AT) (CH) No.31 of 2022 before the National Company Law Appellate Tribunal (NCLAT), Chennai. 4. Respondent Nos.1 to 3 in the original company petition also filed Company Appeal Nos.18, 19 and 20 of 2022 before NCLAT, Chennai. The NCLAT heard all 4 appeals together, and the appeal preferred against the orders in CP/114/KOB/2019 and connected cases dated 31.12.2021 was allowed and was remitted to the NCLT, Kochi. Company Appeal No.31 of 2022 filed against the order passed in Review Petition was also allowed, setting aside the said order, which reads as follows: “44. The NCLAT heard all 4 appeals together, and the appeal preferred against the orders in CP/114/KOB/2019 and connected cases dated 31.12.2021 was allowed and was remitted to the NCLT, Kochi. Company Appeal No.31 of 2022 filed against the order passed in Review Petition was also allowed, setting aside the said order, which reads as follows: “44. Keeping in view that this "Tribunal' has found no error in the Common Impugned Order dated 31.12.2021 and has confirmed the findings of the NCLT with respect to 'Related Party Transactions', but at the same time it is noted that there was no specific findings of Oppression and Mismanagement', by the 'NCLT', the directions given in the "Review Application', are set aside to secure the ends of justice', and the matters are remanded back to the 'NCLT/ Tribunal' to hear the matter afresh on the limited point of whether the acts committed by the 'Appellant' herein fall within the ambit of Oppression COURT and Mismanagement', and then, pass a reasoned speaking order', by adverting to the points raised and to grant appropriate relief, as deemed fit in the matter, based on the facts and circumstances of the case, which float on the surface, of course, within the four parameters of 'Law'. 5. Against the order of remand in C.A.Nos.18, 19 and 20 of 2022, petitioners filed Civil Appeal Nos.4277-4279/2023 before the Hon’ble Supreme Court of India. Respondents also filed C.A.Nos.4586-4589 of 2023. On 21.07.2023, the apex court passed Ext.P5 order and taking note of the fact that the fact relates to a family dispute, a senior Advocate was appointed as a mediator in the matter. The mediator filed a report on 22.11.2023 seeking time for the completion of the mediation. On 14.05.2024, the mediator reported that the mediation was terminated at the instance of the 2 nd respondent. On 12.08.2024, the apex court admitted the case for hearing and posted for consideration of interim reliefs. On 17.09.2024, the Hon’ble Supreme Court passed Ext.P6 order, which reads as follows: “Leave has already been granted. Order for remand contained in paragraph 44 will remain stayed till final disposal of the appeal.” 6. The petitioners allege that, on the basis of the order dated 16.3.2022 in Review Appeal No.2 of 2022, the administration and management of 3 companies, which were under the petitioners' control since its inspection, were taken over by the 2 nd respondent herein. 7. The petitioners allege that, on the basis of the order dated 16.3.2022 in Review Appeal No.2 of 2022, the administration and management of 3 companies, which were under the petitioners' control since its inspection, were taken over by the 2 nd respondent herein. 7. As on date of passing of Ext.P3, the petitioners were the only Directors in the 1 st respondent company and they were ousted by the operation of Ext.P3 order. Subsequently, 2 persons were made as Directors, who appointed other 3 as additional Directors. To show that the petitioners were the Directors as on the date of the order of the Review, i.e., on 16.03.2022, the petitioners have produced the master data as Ext.P7. To prove that others were appointed as Directors pursuant to the order in Review, Ext.P8 is produced. To implement the order of NCLAT dated 27.04.2023, which set aside the order of the Review, petitioners filed an Execution Petition (EP/1/KOB/2024) under section 424(3) of the Insolvency and Bankruptcy Code, 2016, read with Rule 56 of the National Company Law Tribunal Rules, 2016. Two other Execution Petitions, i.e., E.P. 2 and 3 /KOB/2024, were also filed with respect to RBG Trading and RBG Retail. 8. On 06.12.2025, when the EPs came up for consideration before the Tribunal, an order was passed to keep the execution petition awaiting the order of the Hon’ble Supreme Court of India. The petitioner was directed to serve notice along with a copy of the petition to respondent Nos.3 to 7 and to file an affidavit of service and reply within 2 weeks and rejoinder, if any, within a week thereafter. Respondent Nos.1 and 2 filed Ext.P12 and P13 counters to E.P.No.1/KOB/2024. On 23.01.2025, when the E.P. came up for consideration again, the same was adjourned, taking note of the fact that an appeal is pending before the Hon’ble Supreme Court and directed listing of the case for further consideration on 28.03.2025. 9. The petitioners' grievance is that when the NCLAT set aside the review order and remanded it back to NCLT, the status quo as on 15.03.2022, has to be restored. For the first time, the petitioners were ousted from the Directorships of the first respondent company through Ext.P3. 10. The senior counsel for the petitioners submits that the apex court has only stayed the order of remand contained in paragraph No.44 of the NCLAT order till the disposal. For the first time, the petitioners were ousted from the Directorships of the first respondent company through Ext.P3. 10. The senior counsel for the petitioners submits that the apex court has only stayed the order of remand contained in paragraph No.44 of the NCLAT order till the disposal. Therefore, once the Review order ceases and the remand alone is stayed, the status quo as on date prior to passing of Ext.P3 has to be restored and for that purpose the Execution Petition is filed. Since there is no blanket stay by the Hon’ble Supreme Court, the Execution Petition has to be taken to a logical conclusion by NCLT. But the Tribunal is reluctant to do so, in view of the pendency of the Civil Appeal before the Hon’ble Supreme Court. Therefore, this Original Petition is filed for disposal of EP/01/KOB/24, within a time frame. 11. The Registry was directed to obtain a report from the NCLT on the present status of EP/01/KOB/24 and the time required for disposal. 12. The Deputy Registrar of the Tribunal has informed through a letter dated 19.03.20.25 that EP/01/KOB/24 is pending before the Tribunal, and pleading is not complete in the matter. Since an Appeal is pending and progressing before the Hon’ble Supreme Court as Civil Appeal No.4277- 4279/2023, the Tribunal is awaiting the decision. Therefore, the Tribunal is not in a position to report the time required for disposal of the E.P. 13. NCLAT has set aside the order of NCLT in Review Appeal No.2/KOB/22, and the Hon’ble Supreme Court has only stayed the order of remand in para 44 of NCLAT. Hence, the Tribunal cannot wait till the final orders in Civil Appeal are passed, as there is no stay other than one passed in Ext.P6. The Tribunal is bound to take up EP/01/KOB/24, and, if pleadings are complete, dispose of the same within a time frame. It is seen that the respondent Nos.1 and 2 have already filed reply to E.P. It is discernible from Ext.P14 that the reply affidavits by respondent Nos.1 and 2 are lying in defect with the Registry and no other respondents have filed reply affidavit. The E.P. is now listed for consideration to 28.3.2025. It is seen that the respondent Nos.1 and 2 have already filed reply to E.P. It is discernible from Ext.P14 that the reply affidavits by respondent Nos.1 and 2 are lying in defect with the Registry and no other respondents have filed reply affidavit. The E.P. is now listed for consideration to 28.3.2025. Therefore, taking into consideration all these aspects of the case and the fact that the apex court has only stayed the operation of remand, I deem it appropriate to direct the NCLT, Kochi bench, to direct respondents to complete the pleading in EP/01/KOB/24, within a time frame and dispose of the same within 2 months after the completion of the pleadings. The O.P.(C) is disposed of as above.