WP/21340/2019 of Laxmi Ventures India Limited, Vs Union of India, on 31 December 2020

Relief

ORDER:

The petitioner prays for a writ of mandamus directing the respondents 2 to 4 to treat Tedesara unit of M/s. Laxmi Ventures India Limited (Company) as an independent entity, in terms of the interim order dated 26.04.2012 passed by the High Court of Bombay and direct the 2[nd]respondent/Tobacco Board to issue registration to M/s. Laxmi Ventures India Limited unit situated at Tedesara for the year 2020, for the categories applied, but not limited to the categories mentioned below, for all the subsequent years as and when application is made, till the disposal of appeal pending before the High Court of Bombay.

(i) Processor of Virginia Tobacco (ii)Exporter of Tobacco Products (ii)Exporter of Tobacco Products

(iii) Dealer in Tobacco (iv)Manufacturer of Virginia Tobacco (iv)Manufacturer of Virginia Tobacco

2. The petitioner’s case succinctly is thus:

(a) The affidavit holder is the Director of the petitioner Company, whose registered office is at Mumbai. The Company has shareholders of two groups i.e., petitioner’s group and Anil Agarwal’s group. Disputes arose between them in and around 2000. The petitioner’s group filed Company Petition (CP) No.7/2002 before the Company Law Board (CLB), New Delhi. In its interim order, the CLB permitted the petitioner’s group to independently manage Bhilai unit of the Company to the exclusion of Anil Agarwal’s group. The CP was dismissed on 06.01.2012. Aggrieved, the petitioner filed Company Appeal No.11/2012 wherein he filed Company Application (CA) No.10/2012 before the High Court of Judicature at Bombay. An interim workable order was passed in the said CA allowing the petitioner to work at Bhilai unit with a direction to other group not to interfere.

(b) The Bhilai unit of the petitioner Company has two manufacturing units, one at Tedesara village, Rajnandgaon District and another at Industrial Area, Nandi Road, Bhilai and the Bhilai unit was closed during the year 2002. Tedesara unit was engaged in manufacturing cigarettes and processing tobacco until 2012. Till 2012, the petitioner was processing Virginia tobacco after getting registration from respondent No.2. After 2014, there was no tobacco processing.

(c) While so, the petitioner applied for registration to Tedesara unit for processing Virginia tobacco. However, the petitioner came to know that Anil Agarwal wrote a letter dated 13.03.2018 to the Tobacco Board objecting to issue registration to the petitioner on the ground that the petitioner was no longer a Director, thereby violating the interim consent order dated 26.04.2012 passed by the Hon’ble High Court of Bombay. Basing on the said untenable letter, the Tobacco Board rejected the petitioner’s application vide its letter dated 04.10.2019 on a flimsy ground that the application in Form No.13 seeking registration for M/s. Laxmi Ventures India Limited has not been filed by a person duly authorized by the Company, as the name of the petitioner is not present in the list of Directors. The name of the petitioner i.e., Sunil Agarwal as Director is not present in the Ministry of Corporate Affairs portal, since he was illegally removed from the Directorship and the said issue is pending before the High Court of Bombay and as such, the 2[nd] respondent cannot refuse to renew the registration on that ground. The refusal is against the spirit of the interim order dated 26.04.2012 which clearly states that the unit would be managed/controlled exclusively by the petitioner without the interruption by Anil Agarwal.

Hence, the writ petition.

3. Respondent Nos.2 to 4 filed counter and opposed the writ petition inter alia contending thus:

(a) As per the Company/LLP Master Data published by the Ministry of Corporate Affairs, Government of India, Mr. Sunil Agarwal i.e., the writ petitioner is not a Director. As per the Government website, the following persons are only the Directors:

1. Anil Laxminarayan Agarwal

2. Sandeep Agarwal

3. Chitra Anil Agarwal

4. Akash Anil Agarwal

Contrary to above, Sri Sunil Agarwal produced a true copy of the extract of Minutes of Board Meeting dated 09.03.2019 at Tedesara vide his letter dated 13.03.2019 resolving that Sri Sunil Agarwal, Director, Bhilai unit, is authorised to apply for registration with the Tobacco Board. The other members present in the Board Meeting were not at all Directors of the Company. Hence, the Tobacco Board vide its letter dated 04.04.2019 advised Sri Sunil Agarwal to explain the discrepancy regarding the list of Directors of the Company as appearing in the official website and also the extract of minutes of Board Meeting submitted by him. Sri Sunil Agarwal was also advised to submit Form DIR-12 acknowledgment filed by MCA as proof of his being the Director of the Company but he failed to submit the aforesaid documents.

(b) In the interim order of the Hon’ble High Court of Bombay, there is no explicit direction to the Tobacco Board that Bhilai unit shall be given registration as a separate entity. The same was informed to the writ petitioner.

(c) The Tobacco Board has been granting registration as manufacturer of Tobacco to the Company as a legal entity and not to its manufacturing units. As per the relevant provisions of the Tobacco Board Act, 1975, Company means any body corporate and includes a firm or other association of individuals. It requires that the Company is a legal entity properly registered under the Companies Act, 1956. The Bhilai unit is not a Company and is not a legal person and as such, it is not eligible for grant of registration as a Company. Sri Sunil Agarwal is not a Director of the Company and the Board cannot sue either the unit or Sri Sunil Agarwal in case of any offence is committed under the Tobacco Board Act. Therefore, the unit and Sri Sunil Agarwal are not eligible for grant of registration as trader under the Tobacco Board Act. Since 2003 onwards, the Tobacco Board has been granting registration to the Company only on the application made by the authorized signatory/Directors of the Company. Only in 2018, the registration was renewed on the application of Sri Sunil Agarwal by omission and this has been corrected in 2019.

(d) The Tobacco Board received a letter dated 13.03.2018 from the Company and another letter dated 12.03.2018 from Sri Akash Agarwal stating that Sri Sunil Agarwal is a habitual offender and has committed many malpractices, and that he was not the Director of the Company, as he resigned on 14.01.2000 and in that regard, Form-32 was already filed before ROC on 07.04.2000. Later Sri Akash Agarwal has addressed another letter dated 18.06.2018 and communicated his objections for grant of registration to Sri Sunil Agarwal. Considering all these, the Tobacco Board vide its letter dated 04.10.2019 stated that the application in Form-13 seeking registration to the Company has not been filed by a person duly authorized by the Company, as the name of Sri Sunil Agarwal was not present in the list of Directors/signatories as per the official website and thus rejected the application, since the Board cannot grant registration to one individual unit. The respondents thus prayed to dismiss the writ petition.

4. It should be noted that as per the order in I.A.No.5/2020, Akash Agarwal, who is the Director of M/s. Laxmi Ventures India Limited, is permitted to be impleaded as 5[th] respondent in the writ petition.

5. Heard the arguments of Sri Atchutuni Rama Mohan Rao, learned counsel for petitioner, and learned Assistant Solicitor General of India representing 1[st] respondent, Sri J.V.Prasad, Standing Counsel for the respondents 2 to 4 and Sri Duvva Pavan Kumar, counsel for respondent No.5.

6. The point for consideration is whether there are merits in the writ petition to allow?

7. Point:The main plank of the argument of learned counsel for petitioner is that by virtue of the interim order passed by the High Court of Bombay the petitioner was permitted to run Tedesara Unit (Bhilai) independently and hence, he is entitled to apply to the Tobacco Board for registration, treating Tedesara unit as an independent unit. He thus prayed to allow the writ petition and a direction be issued to the respondents 2 to 4 to treat Tedesara Unit of Laxmi Ventures India Limited as an independent entity and to issue registration.

8. In oppugnation, Standing Counsel for the respondents 2 to 4 while opposing the writ petition would argue that the petitioner is not a Director of Laxmi Ventures India Limited as his name is not appeared in the official website. To that effect, the Tobacco Board issued a letter dated 04.04.2019 and advised him to submit Form DIR-12 to show that he is one of the Directors of the company, but he failed to submit. It is further contended that the Tobacco Board would grant registration as manufacturer of Tobacco to a company as a whole as a legal entity but not its manufacturing unit as in the case of Tedesara unit. He would vehemently argue that the Bhilai unit will not fulfil the definition of Company and it is not a legal person either and hence, it is not eligible for grant of registration. The Board received letter from 5[th] respondent raising objection against the petitioner’s apply for registration. Therefore, the 2[nd] respondent refused to issue registration to the petitioner. He thus prayed to dismiss the writ petition.

9. Learned counsel for the respondent No.5 while opposing the writ petition and adopting the arguments of the Standing Counsel for the respondents 2 to 4, further argued that the writ petitioner was only a minority shareholder of the company Laxmi Ventures India Limited and later he resigned on 14.01.2000 which was accepted and updated by the Registrar of Companies. The writ petitioner has no right to continue in the capacity of a Director. He filed C.P. No.7/2002 before the CLB, Principal Bench, Delhi which was dismissed. Aggrieved, he filed appeal in CA.No.11/2012 before the High Court of Bombay which is pending adjudication. While admitting that an interim order was passed, he would however contend that the scope and amplitude of the said order is only limited to the extent that he can only operate Tedesara unit of Bhilai. By that count he cannot treat the said unit as an independent one to apply for a separate registration. No where in the interim order it was stated that he should be treated as Director. Hence, the writ petition is liable to be dismissed.

Conclusion

10. As can be seen, admittedly the writ petitioner earlier filed C.P.No.7/2002 before the CLB to declare that his removal from the Directorship is null and void. The said petition was ultimately dismissed. Aggrieved by the said order, the petitioner filed appeal in C.A.No.11/2012 before the High Court of Bombay. In the said appeal, he filed Company Application No.10/2012 wherein the High Court passed the following order on 26.04.2012:

Heard the Learned Advocates appearing for the parties and the following order is passed as a workable order by consent and without prejudice to any of the rights and contentions of the parties:-

(i) The Appellants shall continue to work at the Bhilai unit and the Respondents shall not interfere with the same save and except that the nominee of the Respondents Mr. Rakesh Mourya (G.M. Technical) shall be posted at the Bhilai Unit, as Observer, who will only make a note of the day to day activities carried out at the said Unit pertaining to production and compliance of the statutory provisions by the said Unit. However, the information noted by the the Respondents shall not interfere with the same save and except that the nominee of the Respondents Mr. Rakesh Mourya (G.M. Technical) shall be posted at the Bhilai Unit, as Observer, who will only make a note of the day to day activities carried out at the said Unit pertaining to production and compliance of the statutory provisions by the said Unit. However, the information noted by the nominee shall not be used by the Company before any authorities and shall be produced before this Court on the next date of hearing.

(ii) The Appellants shall maintain accounts and shall produce the same before this Court on the next date of hearing along with the books of accounts and bank records from the year 2002 onwards. the same before this Court on the next date of hearing along with the books of accounts and bank records from the year 2002 onwards.

(iii) The Company Application is accordingly disposed of.

(iv) Place the Company Petition for hearing and final disposal on 6[th] July, 2012. on 6[th] July, 2012.

By virtue of the above interim workable order, admittedly the petitioner has been looking after Bhilai unit. Now the claim of the petitioner is that on the strength of aforesaid order he can treat the Bhilai unit as an independent unit and he can apply for registration for manufacture of tobacco products and the respondents 2 to 4 shall not refuse to issue registration, which would amount to infraction of the interim order.

11. As rightly argued by the learned counsel for the respondents, the interim order only depicts that the appellants therein shall continue to work at Bhilai unit and the respondents therein shall not be interfered with the same except that of posting their nominee as Observer. In the interim order, it is not specifically mentioned whether the writ petitioner, who is one of the appellants therein, shall be treated as Director of M/s. Laxmi Ventures India Limited and whether he can treat the Bhilai unit as an independent unit and apply to 2[nd] respondent for registration. In that view of the matter, this Court cannot grant the relief as sought for in the writ petition. Accordingly, the Writ Petition is dismissed. However, this order will not preclude the petitioner from approaching the Hon’ble High Court of Bombay to seek clarification in the interim order in Company Application No.10/2012 as to whether by virtue of the said order he can be regarded as Director of Laxmi Ventures India Limited and whether he can treat the Bhilai unit as independent unit and apply to 2[nd] respondent for registration. No costs.

As a sequel, interlocutory applications, if any, pending for consideration shall stand closed.

__________________________

U. DURGA PRASAD RAO, J

31.12.2020 CBS/MVA