DEVAS MULTIMEDIA PRIVATE LTD. versus ANTRIX CORPORATION LTD. & ANR on 17 January 2022

DEVAS MULTIMEDIA PRIVATE LTD.

v.

ANTRIX CORPORATION LTD. & ANR.

(Civil Appeal No.5766 of 2021)

JANUARY 17, 2022

[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]

Company Law – Winding up of a company – Fraud as aground for winding up – Distinguishing features between CompaniesAct, 1956 and Companies Act, 2013, with regard to question ofavailability of fraud as a ground for winding up of a company –Discussed – Held: The main departure of the Companies Act, 2013from the statutory regime of the Companies Act, 1956, is the specificinclusion of fraud, directly as one of the circumstances in which acompany could be wound up – s.271 of the 2013 Act lists out thecircumstances in which a company may be wound up – Fraud hasnow directly become (under the 2013 regime), one of thecircumstances in which a company could be wound up, though italso continues to be a ground indirectly, u/s 224(2) r/w section 213[as it was under Section 439(1) (f) r/w sections 243 and 237(b) ofthe 1956 Act] – Companies Act, 2013 – s.271 – Companies Act,1956.

Company Law – Winding up of a company – Fraud as aground for winding up – Petition u/s.271(c) of the Companies Act,2013 – Advertisement of the company petition – Breach of – Onfacts, petition for winding up was never advertised nor even orderedto be advertised, either upon admission of the petition or anytimethereafter – Contention of appellants that this vitiated the wholeproceedings – Held: Sub-sections (1) and (2) of s.468 of the 2013Act empower the Central Government to make Rules providing forall matters relating to winding up of companies – In exercise of thepowers so conferred, the Companies (Winding up) Rules, 2020 wereissued – Since requirement to advertise a petition for winding up isstipulated in rr. 5 and 7 of the Companies (Winding up) Rules, 2020,what is prescribed in r.35 of the NCLT Rules 2016 would covereven petitions for winding up – Sub-rule (5) of r.35 makes it clearthat even in cases where direction of the Tribunal as regards

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Aadvertisement has not been complied with, the Tribunal has an option(i) either to dismiss the petition; or (ii) to give such further directionsas it may think fit – Sub-rule (6) of r.35 confers power upon theTribunal even to dispense with any advertisement – Thus, what wasnot specifically available in black and white, under the 1956

statutory regime, namely the power to dispense with anyBadvertisement, is now made available specifically under the statutoryregime of 2013 – In the case at hand, the company in liquidationdid not have any creditors or customers who had dealings with thecompany – There were no stakeholders prejudiced by failure ofNCLT to order publication of advertisement of the petition – ThisCwas not a case where the company was sought to be wound up onground of inability to pay debts or on just and equitable ground –This was a case of fraud and all stakeholders were fully aware ofthe winding up proceedings – Therefore, failure of the Tribunal toorder publication of an advertisement did not render the entireproceedings unlawful – Companies Act, 2013 – s.271(c) and 468 –DCompanies Act, 1956 – Companies (Winding up) Rules, 2020 – rr.5and 7 – National Company Law Tribunal Rules, 2016 – r.35.

Company Law – Winding up of a company – Petition u/s.271(c) of the Companies Act, 2013 – Challenged, for being barredby limitation – Held: Limitation is not always akin to a lightedEmatchstick to a train of gun powder – The date of commencementof the period need not necessarily be static – The date ofcommencement may keep changing depending upon the acts ofomission and commission on the part of the party against whom theaction is initiated – If the conduct of the affairs of the company inFa fraudulent manner is a continuing process, the right to applybecomes recurring – In the case at hand, fraud and corruptionwere discovered only later and by the time the discovery was made,the attempts to reap the fruits of fraud had reached the pinnacle –These attempts continue even till date and this falls squarely withins.271(c) – Therefore, the contention that the petition was barred byGlimitation was rightly rejected by the Tribunal – Companies Act,2013.

Company Law – Winding up of a company – Fraud as aground for winding up – Petition under s.271(c) of the CompaniesAct, 2013 – Challenge to – On ground of estoppel from pleadingH

fraud and seeking winding up – Held: In the case at hand, whatwas alleged in the petition for winding up were, (i) formation of thecompany for fraudulent or unlawful purpose; (ii) fraud in theconduct of the affairs of the company; and (iii) fraud on the part ofthe persons who were involved in the formation and/or in themanagement of affairs of the company – The fraud relatable to theagreement in question, was only one facet of the whole scheme ofthings – What is covered by s.271(c) of the Companies Act, 2013 isa fraud that goes beyond what lies in the realm of contract or in therealm of the penal provisions of the Companies Act, 2013 – Hencethe contention of estoppel from pleading fraud, was rightly rejectedby the Tribunal – Companies Act, 2013 – s.271(c).

Company Law – Winding up of a company – Fraud as aground for winding up – Petition under s.271(c) of the CompaniesAct, 2013 – Order of winding up passed by Tribunal – Challenge to– On ground of violation of the principles of natural justice due todenial of permission for cross examination – Tribunal justified itsaction of omission to permit cross-examination holding that the casedid not require any oral evidence – Held, on facts, the Tribunal wasright in rejecting the request for cross-examination – A party allegingthe non-existence of something, cannot be called upon to prove thenon-existence – It is the party who asserts the existence or whochallenges the assertion of non existence, who is liable to prove theexistence of the same – In the case on hand, Antrix asserted thatDevas offered services which were non-existent, through a devicewhich was not available and that even the so-called intellectualproperty rights over the device were not available – Therefore, Antrixcannot lead evidence to show the non-existence or non-availabilityof those things, either by oral evidence or by subjecting their officialsto cross-examination by Devas – Devas never produced before theTribunals any device nor did they demonstrate the availability toDevas services – All that Devas wanted was, the cross-examinationof the officials of Antrix – Any amount of cross-examination of theofficials of Antrix could not have established the existence ofsomething that was disputed by Antrix – Also, it is clear from thetime-line of events that the application for cross-examination wasmoved by Devas after conclusion of the arguments on the side ofAntrix in the main petition itself, and that too after the unsuccessfulattempt made by one of its shareholders to assail the constitutional AB

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Avalidity of the statutory provisions – Therefore, the Tribunal wasright in rejecting the request for cross-examination.

Company Law – Winding up of a company – Fraud as aground for winding up – Petition under s.271(c) of the CompaniesAct, 2013 – Locus standi of the shareholders – Held: There is noBscope either in the Act or in the Rules for impleadment of anyshareholder as a respondent to the winding up petition – Theobjecting shareholders had an effective hearing before NCLT –Though their appeal was rejected by NCLAT on ground ofmaintainability, their arguments for opposing the winding up, whichwere just the same as that of the company, had been considered –CTherefore, the objection that opportunity was not given to theshareholders, is just theoretical, when in fact they were heard –Companies (Winding Up) Rules, 2020 – r.3(1) – Companies Act,2013.

Company Law – Winding up of a company – Fraud as aDground for winding up – Petition under s.271(c) of the CompaniesAct, 2013 – Order of winding up passed by Tribunal – Challenge to – On ground of erroneous and perverse findings and incorrectstandard of proof – Held: On facts, there is no perversity in thefindings recorded by both the Tribunals – These findings wereEactually borne out by documents, none of which was challenged asfabricated or inadmissible – Appellants cannot take advantage ofthe use of an inappropriate expression by NCLAT – Detailed findingsrecorded by Tribunal show that they were final and not prima facie– Merely because NCLAT used an erroneous expression thosefindings cannot become prima facie.F

Company Law – Appeal against order of NCLT confirmed byNCLAT before Supreme Court – Re-appreciation of evidence – Ifpermissible – Held: When two forums namely NCLT and NCLAThave recorded concurrent findings on facts, it is not open to theSupreme Court to re-appreciate evidence.G

Company Law – Winding up of a company – Fraud as aground for winding up – Petition u/s.271(c) of the Companies Act,2013 – Contention that the petition u/s.271(c) should have beenpreceded, at least by a report from the Serious Fraud InvestigationOffice, which has now gained statutory status u/s.211 of the H

Companies Act, 2013 – Held: The contention is un-acceptable, inview of the fact that under the 2013 Act there are two differentroutes for winding up of a company on allegations of fraud – Oneis u/s.271(c) and the other is under the just and equitable clause ins.271(e), read with s.224(2) and s.213(b) – It is only in the secondcategory of cases that the report of the investigation should precedea petition for winding up – Companies Act, 2013 – Companies Act,1956.

Company Law – Winding up of a company – Fraud as aground for winding up – Relevance of motive – Held: If as a matterof fact, fraud as projected, stands established, the motive behindthe victim of fraud, coming up with a petition for winding up, is ofno relevance – A product of fraud is in conflict with the publicpolicy of any country including India – The basic notions of moralityand justice are always in conflict with fraud and hence motive behindthe action brought by the victim of fraud can never stand as animpediment.

Dismissing the appeals, the Court

Conclusion

Dismissing the appeals, the Court

HELD: 1. The Companies Act, 1956 spoke about twocategories of winding up, namely, (i) winding up by the Tribunal;and (ii) voluntary winding up. The circumstances in which acompany could be wound up by the Court, were enlisted in Section433 of the 1956 Act. This Section contained a list of ninecircumstances in which a company may be wound up. Fraud (i)either in the formation of the company or (ii) in the conduct ofaffairs of the company or (iii) on the part of persons concerned inthe formation of or the management of its affairs, was not one ofthe circum- stances stipulated in Section 433 of 1956 Act. ThoughSection 433 of the 1956 Act did not include fraud as one of thecircumstances in which a company may be wound up, there wasstill an indirect reference to fraud. Section 439(1) of the 1956 Actprovided a list of seven persons who were entitled to file anapplication for the winding up of a company. Under clause (f) ofsub- section (1) of Section 439, an application for winding up shallbe presented by “any person authorized by the CentralGovernment in their behalf” in a case falling under Section 243.[Para 6.1, 6.2][310-D-F]

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A2. A combined reading of Sections 439(1)(f), 243 and 237(b)of the 1956 Act shows that, (i) fraud in the formation of thecompany; (ii) fraud in the conduct of affairs of the company; and(iii) fraud on the part of the persons engaged in the formation orconduct of the affairs of the company, though not listed as someof the circumstances under Section 433 of the 1956 Act, wereBstill available for the winding up of the company, even under the1956 Act. But there were 3 requirements to be satisfied. Theyare: (i) the perpetration of one or the other types of fraudmentioned above are reflected in a report of investigation; (ii)the petition under these provisions is to be filed only by a personCauthorised by the Central Government; and (iii) the petitionshould be premised on the ground that it is just and equitable towind up the company. But the mandate of Section 243 (a) of theCompanies Act, 1956 to take recourse, in cases of fraud, to justand equitable ground, was little incongruous. This is due to thereason that under Section 443(2), the court may refuse to makeDan order of winding up, on just and equitable ground, if someother remedy was available to the persons seeking winding up.Therefore, despite the fact that fraud was available, albeitindirectly, as a circumstance for the winding up of a company,even under the 1956 Act, its link to just and equitable clause wasElittle problematic because of section 443(2). [Para 6.5, 6.13][312-F-G; 315-B]

3. Coming to the 2013 Act, provisions similar to sub-clauses(i) and (ii) of clause (b) of section 237 of the 1956 Act, are to befound in sub-clauses (i) and (ii) of clause (b) of section 213 of the F2013 Act. They employ the same language for the purpose ofordering an investigation into the affairs of a company. But undersection 237 of the 1956 Act, the power to order investigationwas with the central Government, while it is with the Tribunalunder Section 213 of the 2013 Act. Section 224(2) of the 2013

Act is similar to Section 243 of the 1956 Act as it enables theGCentral Government to authorize any person to file a petition forwinding up, on the basis of the report of any investigation. Hereagain, the petition for winding up on the basis of the report ofsuch investigation, is to be on just and equitable ground by virtueof clause (a) of sub-section (2) of Section 224, which is similar toH

clause (a) of Section 243. The main departure of the 2013 Actfrom the statutory regime of the 1956 Act, is the specific inclusionof fraud, directly as one of the circumstances in which a companycould be wound up. Section 271 of the 2013 Act lists out thecircumstances in which a company may be wound up. What wereclauses (a), (g), (h) and (i) of Section 433 of 1956 Act have nowbecome clauses (a), (b), (d) and (e) of Section 271 of the 2013Act, though not in the same order. In addition, (i) conduct of theaffairs of the company in a fraudulent manner; (ii) formation ofthe company for fraudulent or unlawful purpose; and (iii) personsconcerned in the formation or management of its affairs beingguilty of fraud, misfeasance or misconduct, have now beenincluded in clause (c) of Section 271, as some of the circumstancesin which a company could be wound up. In other words, fraud hasnow directly become (under the 2013 regime), one of thecircumstances in which a company could be wound up, though italso continues to be a ground indirectly, under section 224(2)read with section 213 [as it was under Section 439(1) (f) readwith sections 243 and 237(b) of the 1956 Act].[Para 6.14,6.15][315-E-H; 316-A-C]

4. Just as Section 439(1) of the 1956 Act provided a list ofpersons by whom an application for winding up may be filed,Section 272(1) of the 2013 Act also provides a list of persons bywhom a petition for winding up may be filed. What is common toboth Section 439(1) of the 1956 Act and Section 272(1) of the2013 Act, is that a petition for winding up may be filed by: (i) thecompany; (ii) any contributory; (iii) the Registrar; and (iv) anyperson authorized by the Central Government in that behalf. BothSection 439(1) of the 1956 Act and Section 272(1) of the 2013Act use two important expressions, in relation to the personscompetent to file a petition for winding up and the procedure tobe followed. They are, (i) authorization; and (ii) sanction. Thecircumstances in which an ‘authorization’ has to be granted andthe circumstances in which a sanction has to be granted, aredifferent. Similarly, the grant of sanction should be preceded byan opportunity of hearing, but the issue of authorization does notrequire any prior opportunity to the company to make arepresentation. It is evident that the second proviso to sub-section AB

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A(5) of section 439 of the 1956 Act became the first proviso tosub-section (3) of Section 272 of the 2013 Act and sub-section(6) of Section 439 became the second proviso to sub-section (3)of Section 272. They respectively prescribe, (i) that for presentinga petition for winding up, the Registrar requires previous sanctionof the Central Government; and (ii) that before granting sanction,Bthe Central Government should give a reasonable opportunityto the company to make a representation. Thus, in effect, thedistinction between the procedure to be followed by the Registrarand the procedure to be followed by “any other person authorisedby the Central Government”, for presenting a petition for windingCup, is maintained as such. If the petition is to be filed by theRegistrar, it should be preceded by 2 things namely, (i) a sanction;and (ii) an opportunity to the company to object. If the petition isto be filed by “any other person”, there is only one requirementnamely that of authorization by the Central Government bynotification. [Para 6.18, 6.19, 6.20, 6.21][317-E-H; 318-E-H; 319-DA]

5. Coming to the rules framed under the 2013 Act,Sub-sections (1) and (2) of Section 468 of the 2013 Act empowerthe Central Government to make Rules providing for all mattersrelating to winding up of companies. In exercise of the powers soEconferred, the Central Government has issued a set of Rulesknown as the Companies (Winding up) Rules, 2020. Rules 5 and7 of these Rules speak about advertisement. The essence of Rule5 is to provide an opportunity of being heard to the companysought to be wound up, even before directions as to theFadvertisement of the petition are given. The last limb of Rule 5speaks about the discretion vested in the Tribunal to direct noticeto be given to the company and to give an opportunity of beingheard before giving any directions as to the advertisement of thepetition. This last limb of Rule 5 provides the clue about thepurpose of advertisement. [Para 7.7, 7.10][321-H; 322-A, 323-GD-E]

6. One way of looking at the requirement of anadvertisement is that it provides an opportunity to all thestakeholders such as (i) creditors; (ii) workers; (iii) suppliers;(iv) customers; and (v) the general public, either to support orH

oppose the proceedings for winding up. There is also anotherway of looking at the object of issuing an advertisement of thepetition for winding up. The advertisement serves as a warning/notice or red alert to all those dealing with the company so thatthey know that there could be an element of risk in dealing withthe company. [Para 7.11][323-F]

7. After all, the winding up of a company is like the insolvencyof an individual. The advertisement of the petition for windingup, not merely serves as an opportunity to support or opposewinding up, but also harms the reputation of the company andsends shock waves in the stock market, if it is a listed companyor among the stakeholders who have dealings with the company.This is why an opportunity of being heard is contemplated in Rule5 of the Companies (Winding up) Rules, 2020, before orderingthe advertisement of the petition. [Para 7.12][323-G-H]

8. The way in which the requirement of advertisement hasbeen viewed by Courts is that advertisement causes more harmto the company than the benefit that it brings to the company.Hence the argument of the appellant in this case that the failureto advertise the petition was prejudicial to their interest, goescontrary to one of the important purposes of the advertisementand the chilling effect that it is supposed to have on the company.[Para 7.14][324-E-F]

9. Even in a case where the Court took a view thatadvertisement is mandatory, not only in view of the prescriptioncontained in the Rules, but also in view of the specific orderpassed by the Company Court at the time of admission, directingthe publication of the advertisement in specified newspapers, thisCourt did not see the failure to publish an advertisement assomething that would lead to the automatic dismissal of thepetition for winding up. This is for the reason that theadvertisement of a petition for winding up is perceived to besomething that worked at cross purposes, sometimes beneficialto several stakeholders as it provides an opportunity of hearingto them and sometimes as a measure of harassment of thecompany. There are cases where the companies themselves have A

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Aopposed the advertisement of the petition on the ground that thesame would harm their reputation and cripple their commercialactivities. There are also cases where the failure to advertisehas led to some of the creditors not having any notice of theproceedings and thereby suffering prejudice. [Para 7.21][330-C- F]B

10. Rule 35 of the National Company Law Tribunal Rules,2016 deals with advertisement of petitions. It may be seen fromSub-rule (1) of Rule 35 that the procedure laid down in Rule 35 isapplicable to cases “where any application, petition or referenceis required to be advertised.” The requirement to advertise aCpetition for winding up does not flow out of the statute, but flowsout of the Rules. Since the requirement to advertise a petitionfor winding up is stipulated in Rules 5 and 7 of the Companies(Winding up) Rules, 2020, what is prescribed in Rule 35 wouldcover even petitions for winding up. If so understood, Sub-rulesD(5) and (6) of Rule 35 of the NCLT Rules 2016 would throw lightupon the controversy on hand. Sub-rule (5) makes it clear thateven in cases where the direction of the Tribunal as regardsadvertisement has not been complied with, the Tribunal has anoption (i) either to dismiss the petition; or (ii) to give such furtherdirections as it may think fit. Sub-rule (6) confers power upon theETribunal even to dispense with any advertisement. In other words,what was not specifically available in black and white, under the1956 statutory regime, namely the power to dispense with anyadvertisement, is now made available specifically under thestatutory regime of 2013. [Paras 7.25, 7.26, 7.27, 7.28 andF7.29][331-G; 333-B-E]

11. In the case at hand, the company in liquidation does nothave any creditors or customers who have dealings with thecompany. In other words, there are no stakeholders who areprejudiced by the failure of NCLT to order the publication ofGadvertisement of the petition. This is not a case where thecompany is sought to be wound up on the ground of inability topay debts or on just and equitable ground. This is a case of fraudand all stakeholders are fully aware of the proceedings and theyhave even shown extreme urgency in enforcing an ICC Arbitrationaward and 2 BIT awards, before the conclusion of the winding upH

proceedings. Therefore, one is unable to sustain the argumentthat the failure of the Tribunal to order the publication of anadvertisement rendered the entire proceedings unlawful. [Para7.30][334-B; C-D]

12. Limitation is not always akin to a lighted matchstick toa train of gun powder. The date of commencement of the periodneed not necessarily be static. The date of commencement maykeep changing depending upon the acts of omission andcommission on the part of the party against whom the action isinitiated. These acts of omission and commission constitute thebundle of facts, which determine the question whether an actionis barred by limitation or not. [Para 8.21][344-A; 345-A-B]

13. The contours of fraud as delineated in Section 271(c) ofthe Companies Act, 2013 cover three aspects namely, (i) the affairsof the company being conducted in a fraudulent manner; (ii) thecompany was formed for fraudulent and unlawful purpose; and(iii) the persons concerned in the formation and management ofits affairs have been guilty of fraud, misfeasance or misconduct inconnection therewith. A singular act of omission or commissionmay constitute fraud and even a series of acts may constitutefraud. A fraudulent act may be different from the fraudulent mannerin which an act is performed. The words “the conduct of the affairsof a company in a fraudulent manner” indicate that the processwas a continuing one. If the conduct of the affairs of the companyin a fraudulent manner is a continuing process, the right to applybecomes recurring. [Para 8.22][345-B-E]

14. In the case at hand, fraud and corruption werediscovered only later and by the time the discovery was made,the attempts to reap the fruits of fraud had reached the pinnacle.These attempts continue even till date and this falls squarelywithin Section 271(c). Therefore, the contention that the petitionwas barred by limitation was rightly rejected by the Tribunal andthere is no reason to take a different view. [Para 8.23][345-F-G]

National Textile Workers’ Union v. P.R. Ramakrishnan& Ors.(1983) 1 SCC 228 : [1983] 1 SCR 922;StandardChartered Bank v. Andhra Bank Financial Services Ltd.

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and Ors. (2006) 6 SCC 94 : [2006] 2 Suppl. SCR 1and Jignesh Shah and Anr. v. Union of India and Anr.(2019) 10 SCC 750 : [2019] 12 SCR 678 –distinguished.

V. Ravi Kumar v. State, Rep. by Inspector of Police,District Crime Branch, Salem & Ors. (2019) 14 SCC568: [2018] 14 SCR 828 – held inapplicable.

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IDBI Bank Ltd. v. the Official Liquidator(2020) 15 SCC517 – relied on.

National Conduits (P) Ltd. v. S.S. Arora AIR 1968 SCC279; Cotton Corporation of India Limited v. UnitedIndustrial Bank Ltd. & Ors.(1983) 4 SCC 625 : [1983]3 SCR 962;Sesh Nath Singh v. Baidyabati SheoraphuliCo-operative Bank Ltd(2021) 7 SCC 313;Laxmi PatSurana v. Union Bank of India(2021) 8 SCC 481; AssetDReconstruction company v. Bishal Jaiswal(2021) 6 SCC366;and Svenska Handelsbanken v. Indian ChargeChrome and Ors.(1994) 1 SCC 502 : [1993] 3 Suppl.SCR 323 – referred to.

IDBI Bank Ltd. v. the Official Liquidator 2013 (6) CTCE40;Pradeep D. Kothari v. IDBI Bank Ltd.2018 (1) CTC136;T. Narayanan v. The Official Liquidator,2012 (1)MLJ 59and Bengal Silk Mills Co. v. Ismail GolamHossain Ariff AIR 1962 Cal 115 – referred to.

Ebrahimi v. Westbourne Galleries Ltd.(1972) 2 WLR1289and Re Medical Battery Co. (1894) 1 Ch. 444and Re Walter L. Jacob & Co. Ltd.89 5 BCC 244 –referred to.

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Halsbury’s Laws of England (4th Edition) paragraph1463 Para 359, Vol. XVI,Fifth Edition (2017) ofHalsbury’s Laws of England – referred to.G

Case Law Reference

DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIXCORPORATION LTD. & ANR.

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CIVIL APPELLATE JURISDICTION : Civil Appeal No.5766of 2021.

From the Judgment and Order dated 08.09.2021 of the NationalCompany Law Appellate Tribunal at Chennai in Company Appeal (AT)(CH) No.17 of 2021.

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Civil Appeal No.5906 of 2021.

Mukul Rohatgi, Arvind P. Datar, Sr. Advs., Ms. Anuradha Dutt,Ms. B. Vijayalakshmi Menon, Pawan Sharma, Ms. Priyanka MP,Chaitanya Kaushik, Ambar Bhushan, Haaris Fazili, Kunal Dutt, Advs.for the Appellant.

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N. Venkataraman, Balbir Singh, ASGs, Ankur Talwar, Rajat Nair,P. V. Yogeswaran, Chinmayee Chandra, Arvind Kumar Sharma, AjayBhargava, Ms. Vanita Bhargava, Ms. Maithili Moondra, Ms. TrishalaTrivedi, Arvind Ray, Ms. Vansha Sethi for M/s Khaitan & Co., NamanTandon, Ms. Surbhi Singh, Samarvir Singh, Sagarica Kaul, Ms. MonicaBenjamin, K. Gurumurthy, Prahlad Singh, Advs. for the Respondents.

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The Judgment of the Court was delivered by

V. RAMASUBRAMANIAN, J.

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1. Challenging an order of winding up passed by the NationalCompany Law Tribunal under Section 271(c) of the Companies Act,2013 (for short the 2013 Act), which was confirmed by the NationalCompany Law Appellate Tribunal on appeals, the company in liquidation,namely, Devas Multimedia Private Limited, through its ex-Director has H

Acome up with an appeal in Civil Appeal No.5766 of 2021 and one of theshareholders of the company in liquidation, namely, Devas EmployeesMauritius Private Limited (hereinafter referred to as DEMPL) has comeup with another appeal in CA No.5906 of 2021.

2. We have heard Shri Mukul Rohtagi, learned senior counselBappearing for the company in liquidation, Shri Arvind P. Datar, learnedsenior counsel appearing for the shareholder-appellant, Shri N.Venkataraman, learned Additional Solicitor General appearing forRespondent No. 1 herein, which is the company which moved the Tribunalfor winding up the company in liquidation and Shri Balbir Singh, learnedAdditional Solicitor General appearing for the Union of India.C

3. Brief Background

3.1The first respondent in these appeals, namely, Antrix CorporationLimited (hereinafter referred to as Antrix), incorporated on 28.09.1992under the Companies Act, 1956, is the commercial arm of the IndianDSpace Research Organisation (ISRO for short) which is wholly ownedby the Government of India and coming under the administrative controlof the Department of Space.

3.2 On 28.07.2003, Antrix entered into a Memorandum ofUnderstanding with Forge Advisors, LLC, a Virginia Corporation. TheEintent, as spelt out in the MOU, was to make both parties become “strongand vital partners in evaluating and implementing major new satelliteapplications across diverse sectors including agriculture, education,media and telecommunications”. Apart from other things, the MOUcontemplated Forge Advisors to provide a broad array of advisoryservices that included near-term tactical projects in the areas of sales,Fmarketing, business development, strategic partnership negotiations andother related business areas and long term projects in the areas ofcorporate strategy, market opportunity assessment, business casedevelopment for new services, launch of new application services etc.

3.3On 22.03.2004, Forge Advisors made a presentation proposingGan Indian joint venture, to launch what came to be known as “DEVAS”(Digitally Enhanced Video and Audio Services). It was projected in thesaid proposal that DEVAS platform will be capable of delivering multimediaand information services via satellite to mobile devices tailored to theneeds of various market segments such as (i)consumer segment,comprising of entertainment and information services to digital multimediaH

consoles in cars and vehicles; (ii)commercial segment, comprising ofhigh value information services to Commercial Information Devices incommercial transport vehicles; and (iii)social segment, comprising ofDevelopmental Information Services to Rural Information kiosks inunderserved areas.

3.4The presentation dated 22.03.2004 was followed by a proposaldated 15.04.2004. The proposal was to form “a strategic partnershipto launch DEVAS, a new service that delivers video, multimediaand information services via satellite to mobile receivers in vehiclesand mobile phones across India”. The proposal dated 15.04.2004indicated that DEVAS was conceived as a new National Service,expected to be launched by the end of 2006, that would deliver video,multimedia and information services via satellite to mobile receivers invehicles and mobile phones across India[1]. The proposal contemplatedthe formation of a joint venture and an obligation on the part of ISROand Antrix to invest in one operational S-Band satellite with a groundspace segment to be leased to the joint venture. In return, ISRO andAntrix were to receive lease payments of USD 11 million annually for aperiod of 15 years.

3.5 The concept of DEVAS, as indicated in the penultimateparagraph of the Executive Summary of the proposal dated 15.04.2004,was based upon the evolution and performance of similar services inother markets such as XM Radio and Sirius Radio in the United Statesand Mobile Broadcasting Corporation’s multimedia services via satellitein Korea and Japan.

3.6It appears that pursuant to the aforesaid proposal, severalmeetings were held between the representatives of Forge and ISRO/Antrix and a Committee headed by one Dr. K.N. Shankara, Director ofSAC (Space Application Centre) was constituted to examine the proposal.

3.7 On 17.12.2004 Devas Multimedia Private Limited, (hereinafterreferred to as ‘Devas’ or the ‘company in liquidation’) was incorporatedas a private company under the Companies Act, 1956. Immediatelythereafter, Antrix entered into an Agreement with the said company on28.01.2005. The Agreement was titled as “Agreement for the lease ofspace segment capacity on ISRO/Antrix S-Band spacecraft byDEVAS”. The preamble of the Agreement stated that Devas was 1 Paragraph 1 of the Executive Summary of the Proposal dated 15.04.2004

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Adeveloping a platform capable of delivering multimedia and informationservices via satellite and terrestrial system to mobile receivers, tailoredto the needs of various market segments and that Devas had, therefore,requested Antrix, space segment capacity for the purpose of offering S-DMB service, a new digital multimedia and information service, includingbut not limited to audio and video content and information interactiveBservices, across India that will be delivered via satellite and terrestrialsystem via fixed, portable mobile receivers including mobile phones, mobilevideo/audio receivers for vehicles etc.. What was to be leased out byAntrix to Devas was 5 numbers of C X S transponders each of 8.1 MHzcapacity and 5 numbers of S X C transponders each of 2.7 MHz capacityCon the Primary Satellite 1 (PS1). The leased capacity was agreed to bedelivered by Antrix to Devas from a fully operational and ready PS-1within 30 months of the agreement, with a further grace period of sixmonths.

3.8Article 7 of the Agreement contained provisions for theDtermination of the Agreement by either of the parties, with certainconsequences to one or the other, depending upon the circumstancesunder which termination was made.

3.9It appears that Devas obtained approvals from ForeignInvestment Promotion Board (FIPB) during the period May 2006 toESeptember 2009. Pursuant to those approvals, Devas actually broughtinto India, an investment of about INR 579 crores.

3.10Devas also obtained an Internet Service Provider (ISP)License from the Department of Telecommunications on 02.05.2008.Devas then obtained permission from the Department ofFTelecommunications on 31.03.2009 for providing Internet ProtocolTelevision (IPTV) Services within the scope of the terms and conditionsof ISP license. Devas claims to have conducted experiments on theemerging technologies for satellite and terrestrial system in September2009.

G3.11However the Agreement dated 28.01.2005 was terminatedby Antrix by a Communication dated 25.02.2011, in accordance withArticle 7(c) of the Agreement, which provides for termination on theground of force majeure. It was stated in the said letter that theGovernment of India had taken a policy decision not to provide orbitalslots in S-Band for commercial activities.H

3.12 This termination led to Devas initiating a commercialarbitration in India before the ICC Arbitral Tribunal. Independently, theMauritius investors initiated a BIT arbitration under the India-MauritiusBilateral Investment Treaty and the German Company by name DeutscheTelecom, initiated a BIT arbitration under the India-Germany BIT. ICCArbitral Tribunal passed an Award on 14.09.2015 directing Antrix to payDevas, a sum of USD 562.5 million with simple interest @ 18% p.a.The Government of India suffered similar awards in the other 2 BITArbitral proceedings also.

3.13In the meantime, the Central Bureau of Investigation (CBI)filed a First Information Report on 16.03.2015, against the company inliquidation namely Devas, as well as the officers of Devas and Antrix,for offences under Section 420 read with Section 120B of IPC andSection 13(1)(d) read with Section 13(2) of the Prevention of CorruptionAct, 1988. It was followed by a charge-sheet filed on 11.08.2016 and asupplementary charge-sheet on 08.01.2019. Similarly the EnforcementDirectorate filed a report in ECIR No.12/BGZO/2015.

3.14Therefore, Antrix made a request to the Ministry of CorporateAffairs, Government of India, on 14.01.2021 seeking authorization toinitiate proceedings under Section 271(c) of the 2013 Act for winding upDevas. Authorisation was given on 18.01.2021, on the basis of whichAntrix filed a petition before the National Company Law Tribunal,Bengaluru Bench on 18.01.2021 for the winding up of Devas.

3.15On 19.01.2021, NCLT passed a reasoned order, after hearingthe counsel for Devas, admitting the company petition and appointingthe Official Liquidator attached to the High Court of Karnataka atBangalore, as the provisional liquidator.

3.16Against the said order of NCLT admitting the companypetition, DEMPL filed an appeal, but the same was disposed of by theNCLAT with a direction to DEMPL to seek impleadment before NCLTand raise all objections.

3.17DEMPL simultaneously filed a writ petition in W.P. No. 6191of 2021 before the Karnataka High Court challenging the constitutionalvalidity of Section 272(1)(e) of the Companies Act, 2013 and praying forquashing the authorization dated 18.01.2021 granted by the Ministry ofCorporate Affairs to Antrix to initiate proceedings for winding up Devas.The High Court dismissed the Writ Petition on 28.04.2021 and also imposed A

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Acosts of Rs.5,00,000/-on DEMPL on the ground that they were guilty ofabuse of process of law.

3.18By a final order dated 25.05.2021, NCLT directed the windingup of Devas. Aggrieved by the order of winding up, Devas filed oneappeal and the shareholder-DEMPL filed another appeal before NCLAT.BThese appeals having been dismissed by NCLAT by an Order dated08.09.2021, the ex-Director of the company as well as the shareholder are on appeal before us.

4. Grounds of Attack:

4.1The Company in liquidation, which is the appellant in one appeal,Cassails the impugned orders of NCLT and NCLAT broadly on thefollowing grounds:-

(i) breach of the mandatory requirement of advertisementbefore ordering winding up;

(ii) winding up petition barred by limitation; D

(iii) Antrix estopped from pleading fraud;

(iv) violation of the principles of natural justice due to the denial of permission for cross examination.

(v) erroneous findings of fact;

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(vi) application of incorrect standard of proof on the questionof fraud;

(vii) erroneous conclusions regarding the consequences of fraud,assuming that fraud was established;F4.2 DEMPL, which is the appellant in the second appeal beforeus and which holds 3.48% of the issued equity share capital of theCompany in liquidation, assails the impugned orders broadly on thefollowing grounds:-

(i) The question of locus of a small shareholder to opposeGwinding up has been decided by both Tribunals contrary tolaw;

(ii) Findings recorded against shareholders on the question offraud, have been so recorded without making them a partyand without giving them an opportunity of hearing;H

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(iii) Inapplicability of the theory of useless formality to mandatoryrequirements such as advertisements before orderingwinding up.

5. Defence

5.1The impugned orders are sought to be defended by Shri N.Venkataraman, learned Additional Solicitor General appearing for Antrix,broadly on the following grounds:- B

(i) Detailed findings recorded by the Tribunal on 8 differenttypes of fraud committed by Devas, both in the formationof the Company and in the manner in which the affairs ofCthe Company were carried out, which cannot be assailed inan appeal under Section 423 of the Companies Act, 2013.

(ii) The Agreement dated 28.01.2005 entered into betweenAntrix and Devas spoke about three components, namely,DEVAS[2] Technology, DEVAS services and DEVAS device,none of which existed either on the date of formation ofDevas or on the date of execution of the Agreement or onthe date of termination of the Agreement and not even onthe date of winding up of the company.

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(iii) Violation of SATCOM policy, manipulation of minutes ofmeetings and the misleading Cabinet Note.

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(iv) Shocking nature of the financial fraud.

5.2Shri Balbir Singh, learned Additional Solicitor General appearingfor the Union of India defended the impugned orders broadly on thefollowing grounds:

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(i) The requirement of an advertisement before winding up isredundant in a petition under Section 271(c).

(ii) The question of fraud has to be addressed from the broadparameters laid down, not only in Section 17 of the IndianContract Act, 1872, but also in Section 447 read with Section7 of the Companies Act, 2013 and keeping in mind thedistinction between fraud, fraudulent manner, fraudulentpurpose and unlawful purpose.

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2 Wherever there is a reference to the company in liquidation, we have used the lowercaseof the letters in the word ‘Devas’ and wherever there is a reference to the technologyand services offered by Devas, we have used the capital letters in the word ‘DEVAS’

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A(iii)The attempt of Devas to challenge the constitutional validityof Section 271(c) and its failure.

(iv) The case on hand not falling under the category of caseswhere cross-examination was necessary.

6. Fraud as a ground for winding up and the differenceBbetween 1956 Act and 2013 Act Before we proceed to consider the specific grounds of challengeto the impugned order, it is necessary to see the contours of Section 271(c) of the Companies Act, 2013, as it is stated by the learned counsel onboth sides (i) that this is a new addition to the Companies Act; and (ii)Cthat this is the first case of winding up on the ground of fraud. Therefore,a comparison of the provisions of 2013 Act with those of the 1956 Actmay serve us better.

6.1The Companies Act, 1956 spoke about two categories of windingup, namely,(i) winding up by the Tribunal; and (ii) voluntary winding up.DThe circumstances in which a company could be wound up by the Court,were enlisted in Section 433 of the 1956 Act. This Section contained alist of nine circumstances in which a company may be wound up. Fraud(i) either in the formation of the company or (ii) in the conduct ofaffairs of the company or (iii) on the part of persons concerned inEthe formation of or the management of its affairs, was not one ofthe circumstances stipulated in Section 433 of 1956 Act.

6.2Though Section 433 of the 1956 Act did not include fraud asone of the circumstances in which a company may be wound up, therewas still an indirect reference to fraud. Section 439(1) of the 1956 ActFprovided a list of seven persons who were entitled to file an applicationfor the winding up of a company. Under clause (f) of sub-section (1) ofSection 439, an application for winding up shall be presented by “anyperson authorized by the Central Government in their behalf” in acase falling under Section 243.

6.3Section 243 of the 1956 Act empowered the CentralGGovernment to cause a petition for winding up to be presented, in casescovered by sub-clause (i) or sub clause (ii) of Clause (b) of Section 237.Section 243 of the 1956 Act read as follows:- “243. Application for winding up of company or an orderunder section 397 or 398. - If any such company or other bodyH

corporate is liable to be wound up under this Act and it appears tothe Central Government from any such report as aforesaid that itis expedient so to do by reason of any such circumstances as arereferred to in sub-clause (i) or (ii) of clause (b) of section 237, theCentral Government may, unless the company, or body corporateis already being wound up by the Tribunal, cause to be presentedto the Tribunal by any person authorised by the CentralGovernment in this behalf –

(a) a petition for the winding up of the company, or bodycorporate on the ground that it is just and equitable that itshould be wound up ; (b)an application for an order under section 397 or 398,

(c) both a petition and an application as aforesaid.”

6.4 Section 243 forms part of a set of provisions from Sections235 to 251 in Chapter I of Part VI of the Act. This cluster of provisionsfrom Sections 235 to 251 is grouped under the Heading “Investigation”.Section 235(1) empowers the Central Government to order aninvestigation into the affairs of the company whenever a Report hasbeen made by the Registrar under Section 234. Independent ofSection235(1), Central Government is empowered also under Section 237to order an investigation, if, in its opinion or in the opinion of theCompany Law Board (i) the business of the company is beingconducted for a fraudulent or unlawful purpose or (ii) the companywas formed for any fraudulent or unlawful purpose or (iii) personsconcerned in the formation of the company or the management ofits affairs have in connection therewith, are guilty of fraud. Section237 of the 1956 Act reads as follows:- “237. Investigation of company’s affairs in other cases. -Without prejudice to its powers under section 235, the CentralGovernment –

(a) shall appoint one or more competent persons as inspectorsto investigate the affairs of a company and to report thereonin such manner as the Central Government may direct, if –

(i) the company, by special resolution ; or

(ii) the Court, by order,

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Adeclares that the affairs of the company ought to beinvestigated by an inspector appointed by the CentralGovernment ; and (b)may do so in its opinion or in the opinion of the Tribunal,there are circumstances suggesting –

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(i) that the business of the company is being conductedwith intent to defraud its creditors, members or anyother persons, or otherwise for a fraudulent orunlawful purpose or in a manner oppressive of anyof its members, or that the company was formed forany fraudulent or unlawful purpose; C

(ii) that persons concerned in the formation of thecompany or the management of its affairs have inconnection therewith been guilty of fraud,misfeasance or other misconduct towards thecompany or towards any of its members ; or D

(iii) that the members of the company have not been givenall the information with respect to its affairs whichthey might reasonably expect, including informationrelating to the calculation of the commission payableto a managing or other director, or the manager, ofthe company.”

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6.5 Thus a combined reading of Sections 439(1)(f), 243 and 237(b)of the 1956 Act shows that, (i) fraud in the formation of the company;(ii) fraud in the conduct of affairs of the company; and (iii) fraud on theFpart of the persons engaged in the formation or conduct of the affairs ofthe company, though not listed as some of the circumstances under Section433 of the 1956 Act, were still available for the winding up of the company,even under the 1956 Act. But there were 3 requirements to be satisfied.They are: (i) the perpetration of one or the other types of fraud mentionedabove are reflected in a report of investigation; (ii) the petition underGthese provisions is to be filed only by a person authorised by the CentralGovernment; and (iii) the petition should be premised on the ground thatit is just and equitable to wind up the company.

6.6What is interesting to observe from section 243 (a) is that apetition for winding up in terms of Section 439(1)(f) of the 1956HAct, read with Section 237(b)(i) and (ii), has to be on “just and equitable” ground. Clause (a) of Section 243 of the 1956 Act, enabledthe Central Government (if upon receipt of a report about the existenceof the circumstances referred to in Section 237(b)(i) and (ii), it appearsto the Central Government that it is expedient to do so), to authorize anyperson to present a petition for the winding up of a company, not directlyon the ground of fraud but actually on the ground that it is just andequitable that the company should be wound up.

6.7It must be noted that just and equitable clause has severalfacets. The origin of just and equitable clause in Company law, is traceableto the law of partnership, which developed “the conceptions of probity,good faith and mutual confidence[3]”. The principle behind just andequitable clause, in the words of the House of Lords is that “equityalways does enable the Court to subject the exercise of legal rightsto equitable considerations”. In other words, equitable considerationsget superimposed on statutorily governed legal rights under this clause.

6.8It is well settled that the words “just and equitable” in thelegislation specifying the grounds for winding up by the Court, are not tobe read as being ejusdem generis with the preceding words of theenactment. They are not to be cut down by the formation of categoriesor headings under which cases must be brought if the enactment is toapply[4]. But apart from cases, (i) where there is something in the historyof the company or in the relationship between the shareholders; or (ii)where there is functional deadlock of a paralysing kind; or (iii) wherethere is justifiable lack of confidence, which may give rise to a petitionfor winding up on just and equitable clause, there have also been othercases at least before the Courts in England, some of which are listed inparagraph 360 of Volume 16 of the Fifth Edition (2017) of the Halsbury’sLaws of England. Two of them are (i) where the company is a bubblecompany; and (ii) where the company is fraudulent in its inception andcarries on at a loss without a capital of its own.

6.9But traditionally, fraud committed by a company on outsidersor the fact that the company acted dishonestly to outsiders, was not aground for winding up in English Law. A useful reference may be madein this regard to Re Medical Battery Co.[5], where a question relating toinvestigation through public examination came up. It was held therein 3 Ebrahimi vs. Westbourne Galleries Ltd.; (1972) 2 WLR 1289

4 Para 359, Vol. XVI, Fifth Edition (2017) of Halsbury’s Laws of England.

5 (1894) 1 Ch. 444

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Athat the relevant provision was not intended to apply to a case where thecharges were about the commitment of fraud in the course of businesswith the outside world and not connected in any way with the promotionor formation of the company.

6.10But the law has not remained static even in England. TheBInsolvency Act, 1986 was amended in England through the CompaniesAct, 1989 to incorporate Section 124-A. Under Section 124-A of theInsolvency Act, 1986, (i)the Secretary of State may seek the windingup of a company if he thinks that it is expedient in the public interestto wind up the company and (ii) if the court thinks it just and equitableto do so. Such winding up may be based upon, (i) the reports of someCinvestigations under the Companies Act itself; or (ii) a report under theFinancial Services and Markets Act; or (iii) any information under theCriminal Justice Act, 1987.

6.11In Re Walter L. Jacob & Co. Ltd.[6], the Court of Appeal(Civil Division) was concerned with a case, where the Secretary ofDState, after examining the books of the company in question, formed anopinion that the company should be wound up in public interest. Therefore,he filed a petition under Section 447 of the Companies Act, 1985 forwinding up on just and equitable ground under Section 122(1)(g) of theInsolvency Act, 1986. The High Court dismissed the petition. WhileEreversing the decision and ordering the winding up, the Court of Appealheld that the Court’s task in the case of petitions for winding up in publicinterest, is to carry out a balancing exercise, having regard to all thecircumstances as disclosed by the totality of the evidence. One of thearguments raised in that case was that the company sought to be woundup did well and that all clients to whom the company owed money exceptFone, had settled the matter with the company. While rejecting the saidargument, the Court of Appeal emphasised that the Parliament hadrecognised the need for the general public to be protected against theactivities of unscrupulous persons who deal in securities.

6.12Thus, there was a shift even in the English Law, from theGconservative view that fraud committed by the company upon outsiderswas not available as a ground for winding up. However, winding up onthe ground of public interest was also linked to just and equitable clausein England. This is perhaps why the law even in India, for the winding up of a company on the ground of fraud, was also linked to just and equitableclause under the 1956 Act.

6.13But the mandate of Section 243 (a) of the Companies Act,1956 to take recourse, in cases of fraud, to just and equitable ground,was little incongruous. This is due to the reason that under Section 443(2),the court may refuse to make an order of winding up, on just and equitableground, if some other remedy was available to the persons seekingwinding up. Section 443(2) of the 1956 Act reads as follows:- “443. Powers of tribunal on hearing petition xxxxxxxxxxxxxxx

(2) Where the petition is presented on the ground that it is just andequitable that the company should be wound up, the Tribunal mayrefuse to make an order of winding up, if it is of the opinion thatsome other remedy is available to the petitioners and that they areacting unreasonably in seeking to have the company wound upinstead of pursuing that other remedy.”

Therefore, despite the fact that fraud was available, albeitindirectly, as a circumstance for the winding up of a company, evenunder the 1956 Act, its link to just and equitable clause was littleproblematic because of section 443(2).

6.14Coming to the 2013 Act, provisions similar to sub-clauses (i)and (ii) of clause (b) of section 237 of the 1956 Act, are to be found insub-clauses (i) and (ii) of clause (b) of section 213 of the 2013 Act.They employ the same language for the purpose of ordering aninvestigation into the affairs of a company. But under section 237 of the1956 Act, the power to order investigation was with the centralGovernment, while it is with the Tribunal under Section 213 of the 2013Act. Section 224 (2) of the 2013 Act is similar to Section 243 of the 1956Act as it enables the Central Government to authorize any person to filea petition for winding up, on the basis of the report of any investigation.Here again, the petition for winding up on the basis of the report of suchinvestigation, is to be on just and equitable ground by virtue of clause (a)of sub-section (2) of Section 224, which is similar to clause (a) of Section243.

6.15The main departure of the 2013 Act from the statutory regimeof the 1956 Act, is the specific inclusion of fraud, directly as one of the A

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Acircumstances in which a company could be wound up. Section 271 ofthe 2013 Act lists out the circumstances in which a company may bewound up. What were clauses (a), (g), (h) and (i) of Section 433 of 1956Act have now become clauses (a), (b), (d) and (e) of Section 271 of the2013 Act, though not in the same order. In addition, (i) conduct of theaffairs of the company in a fraudulent manner; (ii) formation of theBcompany for fraudulent or unlawful purpose; and (iii) persons concernedin the formation or management of its affairs being guilty of fraud,misfeasance or misconduct, have now been included in clause (c) ofSection 271, as some of the circumstances in which a company could bewound up. In other words, fraud has now directly become (under theC2013 regime), one of the circumstances in which a company could bewound up, though it also continues to be a ground indirectly, under section224(2) read with section 213 [as it was under Section 439(1)(f) readwith sections 243 and 237(b) of the 1956 Act] .

6.16As a matter of fact, Section 271(1) of the 2013 Act, as it wasDoriginally enacted, included the inability of a company to pay its debts asone of the grounds for winding up. Therefore, the deeming provisionwhich was there in Section 434 of the 1956 Act found a place as sub-section (2) of Section 271 of the 2013 Act. But by the Insolvency andBankruptcy Code, 2016 (Act 31 of 2016), “inability to pay debts” hasbeen deleted from Section 271. As a consequence, the deeming provisionEin sub-section (2) of Section 271 also stands deleted. In fact, section 271of the 2013 Act (along with sections 270 and 272) got amended evenbefore they were notified under Section 1 (3) of the Act to come intoforce.

6.17In other words, Section 271 as it originally stood in the 2013FAct, listed six circumstances in which a company may be wound up.Inability to pay debts was one of those six circumstances. But by Act 31of 2016, ‘inability to pay debts’ got deleted from the list of circumstances[7].Section 271 of the 2013 Act, as it now stands after 2016, reads as follows:

“271. Circumstances in which company may be wound upGby Tribunal— A company may, on a petition under section 272,be wound up by the Tribunal,—

(a) if the company has, by special resolution, resolved that thecompany be wound up by the Tribunal; 7 Now the inability of a company to pay its debts is a ground for initiation of CIRP. IfHCIRP fails, winding up can be resorted to.

(b) if the company has acted against the interests of thesovereignty and integrity of India, the security of the State,friendly relations with foreign States, public order, decencyor morality;

(c) if on an application made by the Registrar or any otherperson authorised by the Central Government by notificationunder this Act, the Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manneror the company was formed for fraudulent and unlawfulpurpose or the persons concerned in the formation ormanagement of its affairs have been guilty of fraud,misfeasance or misconduct in connection therewith and thatit is proper that the company be wound up; (d) if the company has made a default in filing with the Registrarits financial statements or annual returns for immediatelypreceding five consecutive financial years; or (e)if the Tribunal is of the opinion that it is just and equitablethat the company should be wound up.”

6.18Just as Section 439(1) of the 1956 Act provided a list ofpersons by whom an application for winding up may be filed, Section272(1) of the 2013 Act also provides a list of persons by whom a petitionfor winding up may be filed. What is common to both Section 439(1) ofthe 1956 Act and Section 272(1) of the 2013 Act, is that a petition forwinding up may be filed by: (i) the company; (ii) any contributory; (iii)the Registrar; and (iv) any person authorized by the Central Governmentin that behalf.

6.19Both Section 439(1) of the 1956 Act and Section 272(1) ofthe 2013 Act use two important expressions, in relation to the personscompetent to file a petition for winding up and the procedure to befollowed. They are, (i) authorization; and (ii) sanction. The circumstancesin which an ‘authorization’ has to be granted and the circumstances inwhich a sanction has to be granted, are different. Similarly, the grant ofsanction should be preceded by an opportunity of hearing, but the issueof authorization does not require any prior opportunity to the company tomake a representation. Sub-sections (5) and (6) of section 439 of the1956 Act and sub-section (3) of section 272 of the 2013 Act are presentedin a table for easy reference:

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6.20Itmay be seen from the above table that the second provisoto sub-section (5) of section 439 of the 1956 Act became the first provisoto sub-section (3) of Section 272 of the 2013 Act and sub-section (6) ofSection 439 became the second proviso to sub-section (3) of SectionF272. They respectively prescribe, (i) that for presenting a petition forwinding up, the Registrar requires previous sanction of the CentralGovernment; and (ii) that before granting sanction, the CentralGovernment should give a reasonable opportunity to the company tomake a representation.

G6.21 Thus, in effect, the distinction between the procedure to befollowed by the Registrar and the procedure to be followed by “anyother person authorised by the Central Government”, for presenting apetition for winding up, is maintained as such. If the petition is to be filedby the Registrar, it should be preceded by 2 things namely, (i) a sanction;and (ii) an opportunity to the company to object. If the petition is to beH

filed by “any other person”, there is only one requirement namely that ofauthorization by the Central Government by notification.

6.22Theabovediscussion would show that in contrast to the1956 Act, the 2013 Act provides 2 different routes for the winding up ofa company on the ground of fraud. They are:

(i) winding up under clause (c) of Section 271 (directly on theground of fraud) by any person authorised by the CentralGovernment by notification; or

(ii) winding up under clause (e) of Section 271 (on the groundthat it is just and equitable to wind up) in terms of Section224(2)(a) on the basis of a report of investigation under Section213(b).

6.23If the second route is taken, then the power of the Tribunalto order winding up, may perhaps stand circumscribed by sub-section(2) of Section 273 which states that where a petition is presented on justand equitable ground, the Tribunal may refuse to make an order of windingup, if it is of the opinion that some other remedy is available to thepetitioners and that they are acting unreasonably in seeking to have thecompany wound up instead of pursuing the other remedy. But the questionwhether such a restriction could be applied to cases of fraud, establishedby reports of investigation, may have to be tested in appropriate cases.

6.24Having seen the distinguishing features between the 1956Act and the 2013 Act, with regard to the question of availability of fraudas a ground for the winding up of a company, let us now take up forconsideration, the grounds of attack to the impugned orders one afteranother.

7. Advertisement of the Company Petition

Admittedly, the petition for winding up, in this case, was neveradvertised nor even ordered to be advertised, either upon the admissionof the petition or anytime thereafter. It is therefore contended by theappellants that the failure to comply with this requirement which ismandatory, vitiates the whole proceedings.

7.1Under the 1956 Act regime, the mode of proceedings to beheld for winding up of a company, was prescribed by the Companies(Court) Rules, 1959 issued in exercise of the powers conferred by sub-sections (1) and (2) of Section 643 of the 1956 Act. Rule 10 of these A

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A1959 Rules prescribed that all applications under the Act, unless otherwiseprovided by the Rules or permitted by the Judge, shall be made (i) eitherby a petition; or (ii) by a Judge’s summons. Rule 11(a) contains a list ofabout 23 types of applications under the Act, which shall be made byway of petition. Rule 11(b) states that all applications other than thosecovered by Rule 11(a), shall be made by a Judge’s summons.

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7.2After making a distinction between (i) applications to be madeby way of a petition; and (ii) applications to be made by way of a Judge’ssummons in Rule 11, the Companies (Court) Rules, 1959 speaks aboutadvertisement in Rules 23 and 24. Rules 23 and 24 of the Companies(Court) Rules, 1959 read as follows:- C

“23.Summons for direction - (a) Where a petition is presentedunder paragraphs (1), (3), (4), (22) and (23) of Rule 11, anapplication shall, in every case, be made by summons to the Judgein Chambers for directions as to the advertisement of the petition,the notices to be served and the proceedings to be taken. Exceptwhere, in any particular case, a different form is prescribed bythese rules, such summons shall be in Form No. 4. (b) Thesummons shall be posted for hearing before the Judge in Chambersat the next Chamber sittings, and the Judge may make such ordersthereon and may give such directions as may seem to himappropriate. (c) No summons for directions shall be necessary inthe case of other petitions, but the petition shall, upon admission,be placed before the Judge in Chambers for fixing the date ofhearing and directions as to the advertisement of the petition andthe notices to be served, and such other directions as may benecessary.

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24. Advertisement of petition - (1) Where any petition isrequired to be advertised, it shall, unless the Judge otherwise orders,or these rules otherwise provide, be advertised not less thanfourteen days before the date fixed for hearing, in one issue ofthe Official Gazette of the State or the Union Territory concerned,and in one issue each of a daily newspaper in the English languageand a daily newspaper in the regional language circulating in theState or the Union Territory concerned, as may be fixed by theJudge. (2) Except in the case of a petition to wind-up a companythe Judge may, if he thinks fit, dispense with any advertisementrequired by these rules.”

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7.3As could be seen from Rule 23, the summons for directions asto advertisement of the petition, dealt with by Rule 23, correlates only to5 out of the 23 items listed in Rule 11(a). These 5 items mentioned inRule 23, are those found in serial Nos.1, 3, 4, 22 and 23 of Rule 11(a). Apetition for winding up falls under item No.15 of Rule 11(a). Therefore, Rule 23 has no application to a petition for winding up.

7.4Rule 24 deals with advertisement of a petition. But Rule 24(1)begins with the words “where any petition is required to be advertised”.Therefore, Rule 24 will also have no application unless there is any provisionin the Act or the Rules which require the petition to be advertised.

7.5Part III of the 1959 Rules contains special provisions relatingto proceedings for winding up. This part comprises of Rules 95 to 338.Rule 95 requires a petition for winding up to be in Form No.45, 46 or 47.Rule 96 speaks about admission of petition and directions as toadvertisement. It reads as follows:- “96. Admission of petition and directions as toadvertisement - Upon the filing of the petition, it shall be postedbefore the Judge in Chambers for admission of the petition andfixing a date for the hearing thereof and for directions as to theadvertisements to be published and the persons, if any, upon whomcopies of the petition are to be served. The Judge may, if he thinksfit, direct notice to be given to the company before giving directionsas to the advertisement of the petition.”

Rule 99 deals with advertisement and it reads as follows:- “99. Advertisement of petition - Subject to any directions ofthe Court, the petition shall be advertised within the time and inthe manner provided by rule 24 of these rules. The advertisementshall be in Form No. 48.”

7.6It must be remembered that Chapter II of Part VII of the1956 Act, did not contain a provision in itself, requiring the advertisementof a petition for winding up. But Section 643(1) read with Clause (i) ofSub-section (2) of Section 643 of the 1956 Act delegated to the Rulemaking power of the Central Government, the power to prescribe themode of proceedings to be held for the winding up of a company by theCourt. Therefore it is the Rules that speak about advertisement.

7.7Coming to therules framedunder the2013 Act, Sub-sections(1) and (2) of Section 468 of the 2013 Act empower the CentralGovernment to make Rules providing for all matters relating to winding A

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Aup of companies. In exercise of the powers so conferred, the CentralGovernment has issued a set of Rules known as the Companies (Windingup) Rules, 2020. Rules 5 and 7 of these Rules speak about advertisement.These Rules read as follows:

“5. Admission of petitioner and directions as toBadvertisement.- Upon filing of the petition, it shall be postedbefore the Tribunal for admission of the petition and fixing a datefor the hearing thereof and for appropriate directions as to theadvertisements to be published and the persons, if any, upon whomcopies of the petition are to be served, and where the petition hasbeen filed by a person other than the company, the Tribunal may,Cif it thinks fit, direct notice to be given to the company and give anopportunity of being heard, before giving directions as to theadvertisement of the petition, if any, and the petitioner shall bearall costs of the advertisement.

7. Advertisement of petition.- Subject to any directions of theDTribunal, notice of the petition shall be advertised not less thanfourteen days before the date fixed for hearing in any dailynewspaper in English and vernacular language widely circulatedin the State or Union territory in which the registered office of thecompany is situated, and the advertisement shall be in Form WIN6.”

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7.8 In view of the language employed in Rule 7 of the 2020 Rules,it is contended by Shri Arvind P. Datar, learned senior counsel appearingfor DEMPL, that there is no option available to NCLT but to order theadvertisement of the petition. Rule 7 begins with the words “subject toany directions of the Tribunal, notice of the petition shall beFadvertised”. These words, in the contention of the learned senior counselfor DEMPL, indicate the availability of a limited elbow space to theTribunal to issue directions about the newspaper in which theadvertisement is to be issued and the particular edition (State, Regionalor National Edition) in which the advertisement shall be published. InGother words, his contention is that ordering the publication of anadvertisement is mandatory, but smaller things such as the particularnewspaper, particular edition etc., are left to the discretion of the Tribunalto be exercised in the form of directions.

7.9Before we test the correctness of the above argument, it mayHbe necessary to look at the anatomy of Rule 5 which prescribes the procedure to be followed by the Tribunal, upon the filing of a petition forwinding up. The step-by-step procedure prescribed in Rule 5 is asfollows:-

(1) The petition should first be posted before the Tribunal foradmission.

(2) The purpose of posting the petition for admission is three-fold, namely, (i) fixing a date for hearing of the petition; (ii)issuing appropriate directions as to the advertisement to bepublished; and (iii) indicating the persons upon whom the copiesof the petition are to be served.

(3) On the date when the petition is posted for admission, theTribunal may direct notice to be given to the company andalso provide an opportunity of being heard before givingdirections as to the advertisement of the petition.

7.10The essence of Rule 5 is to provide an opportunity of beingheard to the company sought to be wound up, even before directions asto the advertisement of the petition are given. The last limb of Rule 5speaks about the discretion vested in the Tribunal to direct notice to begiven to the company and to give an opportunity of being heard beforegiving any directions as to the advertisement of the petition. This lastlimb of Rule 5 provides the clue about the purpose of advertisement.

7.11One way of looking at the requirement of an advertisementis that it provides an opportunity to all the stakeholders such as (i)creditors; (ii) workers; (iii) suppliers; (iv) customers; and (v) the generalpublic, either to support or oppose the proceedings for winding up. Thereis also another way of looking at the object of issuing an advertisementof the petition for winding up. The advertisement serves as a warning/notice or red alert to all those dealing with the company so that theyknow that there could be an element of risk in dealing with the company.

7.12After all, the winding up of a company is like the insolvencyof an individual. The advertisement of the petition for winding up, notmerely serves as an opportunity to support or oppose winding up, butalso harms the reputation of the company and sends shock waves in thestock market, if it is a listed company or among the stakeholders whohave dealings with the company. This is why an opportunity of beingheard is contemplated in Rule 5, before ordering the advertisement of A

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Athe petition. This is exactly the reason why this Court held in NationalConduits (P) Ltd. vs. S.S. Arora[8] as follows:- “xxxxxxxxxxxxxxx The view taken by the High Court that the Court must, as soon asthe petition is admitted, advertise the petition is contrary to theBplain terms of Rule 96. Such a view, if accepted, would makethe Court an instrument, in possible cases, of harassmentand even of blackmail, for once a petition is advertised, thebusiness of the Company is bound to suffer serious lossand injury.”

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7.13The decision is National Conduits (P) Ltd. (supra) wasfollowed in Cotton Corporation of India Limited vs. United IndustrialBank Ltd. & Ors.[9] In fact, the argument of the companies sought to bewound up in Cotton Corporation of India Limited (supra)was that“the presentation of winding up petition coupled with advertisementDthereof in newspapers, has certain serious consequences on thestatus, standing, financial viability and stability and operationalefficiency of the company.” While dispelling the apprehensions soexpressed, this Court relied upon the decision in National Conduits (P)Ltd. (supra) to say that the apprehensions stood removed by taking aview that advertisement is not automatic.

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7.14Therefore, the way in which the requirement of advertisementhas been viewed by Courts is that advertisement causes more harm tothe company than the benefit that it brings to the company. Hence theargument of the appellant in this case that the failure to advertise thepetition was prejudicial to their interest, goes contrary to one of theFimportant purposes of the advertisement and the chilling effect that it issupposed to have on the company.

7.15It is no doubt true that in National Conduits, this Court wasconcerned with an appeal arising out of an order of the Delhi High Court,holding that once a petition is admitted to file, the Court is bound forthwithGto advertise the petition. Interestingly, such an order was challenged bythe Company itself on the ground that advertisement was prejudicial tothem. While considering the challenge, in terms of Rule 24(2), this Courtheld in National Conduits (in paragraph 4) that a petition for winding up 8 AIR 1968 SC 279

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DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIXCORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

cannot be placed for hearing before the Court, unless the petition isadvertised.

7.16In IDBI Bank Ltd. vs. the Official Liquidator[10], authoredby one of us (VRS, J.) as a Company Judge in the High Court ofJudicature at Madras, it was held that Rule 99 of the 1959 Rules makesit mandatory for an advertisement to be issued and that Rule 24(2) doesnot confer any power even upon the Company Court to dispense withany advertisement, in the proceedings for winding up. It was also pointedout in IDBI Bank Ltd. (supra) that Rule 100(2) which prohibits thewithdrawal of a winding up petition before the date fixed in theadvertisement for the hearing of the parties, also provided a clue aboutthe mandatory nature of the requirement to advertise. In the aforesaiddecision, Rule 101 which provides for the substitution of a creditor orcontributory in the place of the original petitioner, upon his failure toadvertise, was also taken note of. Rule 101 of the Companies (Court)Rules, 1959 reads as follows:

“Rule 101. Substitution of creditor or contributory fororiginal petitioner. – Where a petitioner. –

(1) is not entitled to present a petition, or

(2) fails to advertise his petition within the time prescribed bythese rules or by order of court or such extended time as thecourt may allow, or

(3) consents to withdraw the petition, or to allow it to be dismissed,or the hearing to be adjourned or fails to appear in support of hispetition when it is called on in court on the day originally fixed forthe hearing thereof, or any day to which the hearing has beenadjourned, or

(4) if appearing, does not apply for an order in terms of the prayerof his petition or where in the opinion of the court there is other sufficient causefor an order being made under this rule, the court may, upon suchterms as it may think just, substitute as petitioner any creditor orcontributory who, in the opinion of the court, would have a right topresent a petition, and who is desirous of prosecuting the petition.”

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A7.17In the light of the aforesaid Rule 101 also, it was held inIDBI Bank Ltd., that the requirement of advertisement was mandatory.While coming to the said conclusion, the Madras High Court also tooknote of the difference of opinion in this regard between the High Courtsof Allahabad and Gujarat on the one hand and the High Court of Delhion the other hand, with respect to the power of the Court to dispenseBwith the publication of advertisement in the official Gazette. Paragraphs53 to 55 of the decision of the Madras High Court in IDBI Bank Ltd. isreproduced for easy reference as follows:- A

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“53. In U.P. Twiga Fiberglass Ltd vs. Parekh Marketing Pvt.Ltd{1986 (59) CC 886}, a Division Bench of the Allahabad HighCourt considered on appeal, a question, among others, as towhether the non-publication of the advertisement in the Gazettewould be violative of Rule 24. In that case, the Company Judgeordered the publication of advertisements in one English Dailyand one Vernacular Daily, but not in the Gazette. The DivisionBench of the Allahabad High Court held that Rule 24(1) containsa rider “unless the Judge otherwise orders” and that Rule 99 alsospeaks about “subject to any directions of the Court”. A similarview with regard to the power of the Company Court to dispensewith the publication of advertisement in the Government Gazettewas taken by a Division Bench of the Gujarat High Courtin Plastisac P. Ltd vs. Gujarat Lease Finance Ltd{2000 (101)CC 334 (Guj.)}. But a Division Bench of the Delhi High Courtdisagreed with the views expressed by the Allahabad and GujaratHigh Courts, with regard to the power of the Company Court todispense with the publication of advertisement in the OfficialGazette. In Lt. Col. R.K.Saxena vs. Imperial ForestryCorporation{2001 (107) CC 401 (Del.)}, a Division Bench of theDelhi High Court, after a careful consideration of Rules 96, 99and 24 held that “the publication of the advertisement of a petitionfor winding up is mandatory, even in respect of the OfficialGazette”. On the scope of the discretion conferred by Rule 99,the Delhi High Court held that the discretion is limited only to theextent of deciding at what stage the petition is to be advertised.The contention that the Company Court has inherent powers byvirtue of Rule 9 even to dispense with the requirement of Rule 24,was also rejected by the Delhi High Court on the ground that “if astatute requires a thing to be done in a particular manner, it shallbe done in that manner or not at all”.

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54. Though there was a difference of opinion between theAllahabad and Gujarat High Courts on the one hand and the DelhiHigh Court on the other hand, with regard to the power to dispensewith the publication of advertisement in the Official Gazette, allthese Courts were unanimous in their opinion at least with regardto the mandatory nature of the requirement of publication ofadvertisements, in one English Daily and one Vernacular Daily asordered by the Company Judge. Therefore, it is clear thatpublication of advertisements is mandatory. Irrespective of whetherthe Court has any discretion to dispense with the publication inthe Gazette or not, the publication of advertisements at least innewspapers is mandatory and the failure of the petitioning creditorto comply with this requirement despite a positive order to thateffect, is fatal to his petition.

55. In Falcon Gulf Ceramics Ltd vs. Industrial DesignsBureau {1996 (86) CC 207 (Raj.)}, a Division Bench of theRajasthan High Court set aside an order of winding up passed bythe Company Court, on the sole ground that the winding up orderwas not preceded by an advertisement. The Division Bench ofthe Rajasthan High Court held in that case that advertisement ofa petition was imperative in view of the provisions of Rule 96read with Rule 99. For holding so, the Division Bench of theRajasthan High Court relied upon paragraph 1463 of Halsbury’sLaws of England (4th Edition), which stated that non-compliancewith these provisions is a ground on which the Court shall rejectthe petition. After citing the relevant passage from the decision ofthe Supreme Court in National Conduits, the Division Bench heldin para 16 of its decision that in the absence of advertisement andadmission, the petition for winding up was bound to be rejected.”

7.18 However, when the decision of the Company Judge in IDBIBank Ltd. was assailed in an intra-court appeal, the Division bench ofthe Madras High Court held in Pradeep D. Kothari vs. IDBI BankLtd.[11] as follows:

“31. Therefore, to our minds, two aspects would arise forconsideration given the fact and circumstances obtaining in theinstant case. First, if, winding up is not advertised, by the originalpetitioner as directed, can the Court direct the PL to advertise the AB

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Apetition, having regard to the fact that the proceedings are interalia for the benefit of creditors at large and not one single creditor?

31.1. The answer to this poser, to our minds, has to be in affirmativeas there is no bar in the Rules which prohibits a PL from advertisingBthe Company Petition in such like circumstances, though, ordinarily,in practice, Company Petitions are advertised by the petitionerwho institutes the action. As alluded to above, the Rules do notbar the Company Court from directing the PL to advertise thepetition. The reason, why we hold this view is plainly this,that, while, advertisement of the petition is compulsory asCwinding up proceedings are proceedings in rem andtherefore should receive the widest of publicity enablingall stakeholders to have notice of the proceedings, there isno such stipulation in the Rules that once, the winding uppetition is admitted by a Court, it can in no circumstancesDmove forward, unless an advertisement is taken out by theoriginal petitioner or a suitable substituent who fulfills thequalifications provided in Rule 101(4).”

7.19 But the Judgment of the Company Judge of the Madras HighCourt in IDBI Bank Ltd. and the Judgment of the Division Bench inEPradeep D. Kothari, arose out of proceedings for winding up, in whicha specific order directing the publication of the advertisement had beenmade by the Company Court at the time of admission. However, thesaid direction was omitted to be complied with, by the petitioning creditor.Therefore, the crucial question that fell for consideration in that casewas as to how a company Judge should proceed, in circumstances whereFthe petitioning creditor loses interest in prosecuting the petition furtherand abandons the proceedings without carrying out the advertisement.This question assumed significance in the light of the fact that the failureof one petitioning creditor cannot result in serious prejudice to a wholebody of creditors, in a proceedings in rem.

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7.20 The above decision of the Division Bench of the MadrasHigh Court in Pradeep D. Kothari was assailed before this Court. Whileupholding the decision of the Division Bench, in its decision in IDBIBank Ltd. vs. the Official Liquidator[12], this Court held as follows:

“14.3. Against this backdrop, the crucial question that arises forour consideration is whether a winding up petition can be dismissedsolely on the ground lack of a prosecuting creditor under Rule101, or whether the Company Court has the power to direct thepublication of an advertisement by the Liquidator of the company,especially in cases where other unsatisfied creditors still remain.For answering this question, it is important to bear in mindthat winding proceedings are proceedings in rem and havean impact on the rights of people, in general. Thus, it ismandatory to advertise such proceedings so as to ensurethat they receive the widest possible publicity and allrelevant stakeholders have adequate notice. This implies thatin a situation where the petitioning creditor fails to advertise thepetition and no other creditor or contributory comes forward toprosecute it, Rule 101 should not be read in a manner that absolutelybars the continuation of a winding up petition. This is particularlyso when there are unsatisfied creditors who should have beengiven an opportunity to prosecute the petition, but were deprivedof the same due to the failure to advertise. Indeed, Rule 101 isonly limited to instances where the petitioning creditor fails toadvertise the petition. However, there is nothing in the languageof Rule 24, 96 or 99 to indicate that only such petitioning creditorcan advertise the petition. In our considered opinion, given theabsence of a specific provision mandating that the petition canonly be advertised by the petitioning creditor, the Company Courthas the discretion to direct the publishing of an advertisement tosecure the interest of other creditors. In such situations, the windingup proceedings cannot be dismissed, as it would frustrate the veryobjective of securing the interest of all creditors.

14.4. In the light of this discussion, we find that it would be unjustto dismiss the winding up petition in the instant case solely on theground that there is no other person willing to substitute the originalcreditor in terms of Rule 101. Here, due to the lack ofadvertisement of the winding petitions, it appears that the securedcreditors of KOFL were constrained to approach the DRT forrecovery of their dues by filling OAs Nos. 139 of 2001, 978 of2000 and 14 of 2002. Further, upon learning of the decision of theCompany Judge dated 04.10.2013, dismissing the winding uppetition, one of the secured creditors (SBI) also approached the AB

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330SUPREME COURT REPORTS

[2022] 11 S.C.R.

ADRT to secure its interest. Based on this, vide order dated13.12.2013, the DRT had directed that the amount to be returnedto KOFL be attached so that the banks have an opportunity torecover their dues from KOFL. This clearly goes on to show thatthe secured creditors of KOFL were relevant stakeholders whowere affected by the non-advertising of the winding-up petition.BThey should have been called upon to indicate whether they wouldwant to step into the shoes of the petitioning creditors as per Rule101.”

7.21 Thus even in a case where the Court took a view thatadvertisement is mandatory, not only in view of the prescription containedCin the Rules, but also in view of the specific order passed by the CompanyCourt at the time of admission, directing the publication of theadvertisement in specified newspapers, this Court did not see the failureto publish an advertisement as something that would lead to the automaticdismissal of the petition for winding up. This is for the reason that theDadvertisement of a petition for winding up is perceived to be somethingthat worked at cross purposes, sometimes beneficial to severalstakeholders as it provides an opportunity of hearing to them andsometimes as a measure of harassment of the company. There are caseswhere the companies themselves have opposed the advertisement ofthe petition on the ground that the same would harm their reputation andEcripple their commercial activities. There are also cases where the failureto advertise has led to some of the creditors not having any notice of theproceedings and thereby suffering prejudice. This is why another Benchof the Madras High Court held in T. Narayanan vs. the OfficialLiquidator[13], after taking note of the decision in National Conduits, asFfollows:

“38. Assuming that the mandatory requirement was not compliedwith, the question falling for consideration is, can the non-compliance of procedural mandatory requirement would ipso factovitiate the winding up order and stall further proceedings?. TheGnext question falling for consideration is ‘can the non-compliance of a procedural mandatory requirement be aground to set aside the winding up order after three years,especially when the appellant had the opportunity of fightingout the litigation in the earlier round?’

13 2012 (1) MLJ 59H

39. The purpose of advertisement is to give an opportunity to thecreditors/debtors/Company to put forth their case before the Court.Assuming that the procedural mandatory requirement wasnot complied with, in our considered view, it cannot be aground to set aside the winding up order after three years.As rightly contended by the learned Senior Counsel for theOfficial Liquidator, to sustain the allegations of violation ofprinciples of natural justice, one must establish prejudice.When fairness is shown and if the facts and circumstancesindicate that the Company/contributory were put on noticeand that no prejudice was caused to them, the Company/contributory cannot complain of any procedural irregularity.”

7.22 We may also have to take note of one more aspect. TheCompanies Act, 2013 mandates the constitution of a National CompanyLaw Tribunal and a National Company Law Appellate Tribunal to exerciseand discharge such powers and functions as may be conferred upon itby or under the Act. Section 424(1) makes it clear (i) that the Tribunaland the Appellate Tribunal shall not be bound by the procedure laid downin the Code of Civil Procedure, 1908, but shall be guided by the principlesof natural justice; and (ii) that subject to the other provisions of the Actand of any rules made thereunder, the Tribunal and the Appellate Tribunalshall have power to regulate their own procedure.

7.23 While Section 468(1)of the 2013 Act empowersthe CentralGovernment to make Rules consistent with the Code of Civil Procedure,providing for all matters relating to winding up, Section 469(1) empowersthe Central Government generally to make Rules for carrying out theprovisions of the Act.

7.24In exercise of the powers conferred by Sections 468 and469, the Central Government issued the Companies (Winding Up) Rules2020. Similarly, the Central Government issued another set of Rulescalled the National Company Law Tribunal Rules, 2016 (for short “NCLTRules 2016”) in exercise of the powers conferred by Section 469.

7.25Rule 35 of the National Company Law Tribunal Rules, 2016deals with advertisement of petitions. It reads as follows:- “35. Advertisement detailing petition.- (1) Where anyapplication, petition or reference is required to be advertised, itshall, unless the Tribunal otherwise orders, or these rules otherwise A

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provide, be advertised in Form NCLT-3A, not less than fourteendays before the date fixed for hearing, at least once in a vernacularnewspaper in the principal vernacular language of the district inwhich the registered office of the company is situate, and at leastonce in English language in an English newspaper circulating inthat district.

(2) Every such advertisement shall state;- (a)the date on which the application, petition or reference waspresented; (b)the name and address of the applicant, petitioner and hisauthorised representative, if any;

(c) the nature and substance of application, petition orreference; (d)the date fixed for hearing; (e)a statement to the effect that any person whose interest islikely to be affected by the proposed petition or who intendseither to oppose or support the petition or reference at thehearing shall send a notice of his intention to the concernedBench and the petitioner or his authorised representative, ifany, indicating the nature of interest and grounds ofopposition so as to reach him not later than two days previousto the day fixed for hearing.

(3) Where the advertisement is being given by the company, thenthe same may also be placed on the website of the company, ifany.

(4) An affidavit shall be filed to the Tribunal, not less than threedays before the date fixed for hearing, stating whether the petitionhas been advertised in accordance with this rule and whether thenotices, if any, have been duly served upon the persons requiredto be served:

Provided that the affidavit shall be accompanied with suchproof of advertisement or of the service, as may be available.

(5) Where the requirements of this rule or the direction of theTribunal, as regards the advertisement and service of petition, are not complied with, the Tribunal may either dismiss the petition orgive such further directions as it thinks fit.

(6) The Tribunal may, if it thinks fit, and upon an application beingmade by the party, may dispense with any advertisement requiredto be published under this rule.”

7.26 It may be seen from Sub-rule (1) of Rule 35 that the procedurelaid down in Rule 35 is applicable to cases “where any application,petition or reference is required to be advertised.”

7.27The requirement to advertise a petition for winding up doesnot flow out of the statute, but flows out of the Rules. Since therequirement to advertise a petition for winding up is stipulated in Rules 5and 7 of the Companies (Winding up) Rules, 2020, what is prescribed inRule 35 would cover even petitions for winding up.

7.28If so understood, Sub-rules (5) and (6) of Rule 35 of theNCLT Rules 2016 would throw light upon the controversy on hand.Sub-rule (5) makes it clear that even in cases where the direction of theTribunal as regards advertisement has not been complied with, the Tribunalhas an option (i) either to dismiss the petition; or (ii) to give such furtherdirections as it may think fit. Sub-rule (6) confers power upon the Tribunaleven to dispense with any advertisement.

7.29In other words, what was not specifically available in blackand white, under the 1956 statutory regime, namely the power to dispensewith any advertisement, is now made available specifically under thestatutory regime of 2013.

7.30In the case on hand, the company in liquidation wasincorporated on 17.12.2004, the Memorandum of Association of theCompany was subscribed to by two persons by name D. Venugopal andM. Umesh. They subscribed to 9000 equity shares and 1000 equity sharesrespectively @ Rs.10 per share. Subsequently six individuals by nameRamachandran Vishwanathan, Paresh Shah Natwarlal, James Fox, MGChandrasekar, Abhishek Jain and L Clarence Irving were issued withequity shares on 31.12.2005. Thereafter, two corporate entities, namely,Columbus Capital Devas (Mauritius) Ltd. and the Telecom DevasMauritius Ltd., were issued Optionally Convertible Preference Sharesand equity shares. Subsequently, two other companies by name DeutscheTelecom Asia Plc. Ltd. and Devas Employees Mauritius Pvt. Ltd. wereissued with equity shares. All these shareholders are aware of the winding A

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Aup proceedings and the proceedings are fought tooth and nail by oneshareholder DEMPL through Mr. Ramachandran Vishwanathan whowas also a shareholder. Another individual shareholder by name MGChandrasekar has filed one of the above appeals as the ex-director ofthe company in liquidation. Admittedly, the company in liquidation doesnot have any creditors or customers who have dealings with the company.BIn other words, there are no stakeholders who are prejudiced by thefailure of NCLT to order the publication of advertisement of the petition.Though technically the Tribunal may not be correct in invoking “uselessformality theory” in cases of this nature, we can certainly apply thetest of prejudice, especially in the light of the serious nature of theCallegations of fraud, on the basis of which the company is sought to bewound up. This is not a case where the company is sought to be woundup on the ground of inability to pay debts or on just and equitable ground.This is a case of fraud and all stakeholders are fully aware of theproceedings and they have even shown extreme urgency in enforcingan ICC Arbitration award and 2 BIT awards, before the conclusion ofDthe winding up proceedings. Therefore, we are unable to sustain theargument that the failure of the Tribunal to order the publication of anadvertisement rendered the entire proceedings unlawful.

7.31The Companies (Winding Up) Rules, 2020 contain a list ofForms in which all the proceedings before the Tribunal are to be couched.EWhile FORM WIN 1 prescribes the format of a petition for winding upby a person other than the company and Forms WIN 2, WIN 3 etc.,prescribe the formats of certain other things, FORM WIN 11 prescribesthe format of a winding up order. The National Company Law Tribunalis obliged under Rule 17(1) of the Companies (Winding Up) Rules 2020,Fto prepare the order for winding up in FORM WIN 11 with such variationsas may be necessary. On the basis of the contents of FORM WIN 11, itwas argued by the learned counsel for the appellants that paper publicationof the advertisement of the winding up petition is mandatory.

7.32FORM WIN 11 reads as follows:-

GFORM WIN 11

[See rule 17(1)]

Before The National Company Law Tribunal Bench At……………………………

In The Matter of——Ltd (Give The Name of The Company)

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(Company incorporated under Companies Act,……………….. )

Company Petition No…../20……..

……………….‘Petitioner

Before the Hon’ble Mr. ——-

Dated…………

Winding up Order

Upon the petition of…………….. presented on the day of……….20 , upon hearing Shri ……………representative for the petitionerShri representative for the creditors (or contributors) supportingthe petition, Shri……………………….. representative for thecreditors (or contributors) opposing the petition, andShri………………… representative for the company, uponreading the said petition, the affidavit of A.B., filed the………………….day of……………... 20 verifying the saidpetition, the affidavit of x.y., filed the ....... day of…………… 20..... the (state or union territory) paper publication of theadvertisement of the said petition this Tribunal doth order:

*(1) That the said company be wound up by this Tribunal underthe provisions of the Companies Act, 2013; and

(2) That the provisional liquidator or Company Liquidator as thecase may be as liquidator of the company aforesaid forthwithtake charge of all the property effects actionable claims and booksand papers of the said company; **(3) That the provisional liquidator or Company Liquidator shallcause a sealed copy of this order to be served on the company bypre’paid registered post;

(4) That the petitioner do advertise within fourteen daysfrom this date a notice in the prescribed form of the makingof this order in one issue (each) of. .. (here enter thenewspaper or newspapers in which the order is to beadvertised);

(5) That the said petitioner do serve a certified copy of this orderon the Registrar of Companies not later than one month from thisdate; and

(6) That the cost of the said petition shall be paid out of the assetsof the said company.

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ADated this …...... day ….... 20.

(By the Tribunal)

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*Where the company ordered to be wound up is a BankingBCompany or an Insurance Company add at the end of clause (1)“and the Banking Companies Act, 1949' or ‘and the InsuranceAct 1938" as the case may be.

** To be inserted only where the company is not the petitioner.

7.33 The above FORM WIN 11 contains a reference toCadvertisement, in two places. In the first place, it is found in the preambleportion of the format, beginning with the words “upon the petition…..”.In the second place, a reference to advertisement is found in paragraph4 of FORM WIN 11. While the advertisement referred to in the preambleof FORM WIN 11, obviously relates to the advertisement of the petition,Dthe advertisement referred to in paragraph 4 of WIN 11 relates to theadvertisement of the making of the order of winding up. It is needless tosay that the advertisement of the petition for winding up is differentfrom the advertisement of an order of winding up.

7.34In so far as the advertisement of the order of winding up isconcerned, Rules 19 and 20 occupy the field. Rules 19 and 20 of theECompanies (Winding Up) Rules, 2020 read as follows:- “19. Directions on making winding up order. - At the time ofmaking the winding up order or at any time thereafter the Tribunalshall give directions to the petitioner as to the advertisement ofthe order and the persons if any on whom the order shall be servedFand the persons if any to whom notice shall be given of the furtherproceedings in the liquidation and such further directions as maybe necessary.

20. Advertisement of order. - Save as otherwise ordered bythe Tribunal the order for the winding up of a company by theGTribunal shall within fourteen days of the date of the order beadvertised by the petitioner in a newspaper in the English languageand a newspaper in vernacular language widely circulating in theState or the Union territory where the registered office of thecompany is situated and shall be served by the petitioner upon

such person if any and in such manner as the Tribunal may directand the advertisement shall be in Form WIN 14".

7.35 Rule 19 mandates the Tribunal, at the time of making ofthe winding up order or any time thereafter to give directions to thepetitioner as to the advertisement of the order. This is why paragraph 4of FORM WIN 11 forms part of the operative portion of the FORM.

7.36In so far as the reference to advertisement contained in thepreamble of FORM WIN 11 is concerned, it is merely one of the severalitems that the Tribunal may take into account for passing a winding uporder. The items mentioned in the preamble of FORM WIN 11 are, (i)the petition for winding up; (ii) the hearing of the representative for thepetitioner; (iii) the hearing of the representative for the creditors orcontributories supporting the petition; (iv) the hearing of the representativefor the creditors or contributories opposing the petition; (v) the hearingof the representative of the company; (vi) the affidavits; and (vii) thepaper publication of the advertisement of the petition.

7.37Thus the preamble merely contains a list of several mattersthat may be taken into account by the Tribunal before passing an orderof winding up. All those items need not necessarily be present in allcases. For instance, there may be cases where the petition may not besupported by all creditors or contributories. There may also be caseswhere the petition may not be opposed by all creditors or contributories.However, there is a mention in the preamble about the hearing of therepresentatives of creditors supporting or opposing the winding up petition.Therefore, we cannot hold that merely because something is mentionedin the preamble of Form WIN-11, it becomes mandatory.

8. LIMITATION

8.1 The second ground on which the impugned orders are assailed,is that the petition under Section 271(c) was hopelessly barred bylimitation. Section 433 of the Companies Act, 2013 makes the provisionsof the Limitation Act, 1963 applicable to proceedings or appeals beforethe Tribunal or the Appellate Tribunal as the case may be. Therefore, itis the contention of the learned senior counsel for the appellants thatArticle 137 of the Schedule to the Limitation Act, which prescribes aperiod of limitation of 3 years for any application for which no period isprescribed elsewhere, is applicable to the case on hand. The period of 3years so prescribed, according to the learned Senior Counsel for the A

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Aappellants, in cases of fraud, would start running from the date stipulatedin Section 17 of the Limitation Act, 1963. Section 17 reads as follows:

“17. Effect of fraud or mistake.—(1)Where, in the case ofany suit or application for which a period of limitation is prescribedby this Act,—

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(a) the suit or application is based upon the fraud of thedefendant or respondent or his agent; or (b)the knowledge of the right or title on which a suit orapplication is founded is concealed by the fraud ofany such person as aforesaid; C

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(c) the suit or application is for relief from theconsequences of a mistake; or (d)where any document necessary to establish the rightof the plaintiff or applicant has been fraudulentlyconcealed from him, D

the period of limitation shall not begin to run until plaintiff or applicanthas discovered the fraud or the mistake or could, with reasonablediligence, have discovered it; or in the case of a concealeddocument, until the plaintiff or the applicant first had the means ofproducing the concealed document or compelling its production:

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Provided that nothing in this section shall enable any suit tobe instituted or application to be made to recover or enforce anycharge against, or set aside any transaction affecting, any propertywhich—

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(i) in the case of fraud, has been purchased for valuableconsideration by a person who was not a party to thefraud and did not at the time of the purchase know,or have reason to believe, that any fraud had beencommitted, or G

(ii) in the case of mistake, has been purchased forvaluable consideration subsequently to the transactionin which the mistake was made, by a person who didnot know, or have reason to believe, that the mistakehad been made, or H

(iii) in the case of a concealed document, has beenpurchased for valuable consideration by a person whowas not a party to the concealment and, did not atthe time of purchase know, or have reason to believe,that the document had been concealed.

(2) Where a judgment-debtor has, by fraud or force, preventedthe execution of a decree or order within the period of limitation,the court may, on the application of the judgment-creditor madeafter the expiry of the said period extend the period for executionof the decree or order: Provided that such application is madewithin one year from the date of the discovery of the fraud or thecessation of force, as the case may be.”

8.2The argument of Shri Mukul Rohatgi, learned Senior Counselfor the appellant is that even assuming that the so called fraud wasincapable of being discovered with due diligence, limitation would startrunning at least from the date of actual discovery of the fraud. The dateof actual discovery of fraud cannot be postponed beyond 11.08.2016,which was the date on which a charge sheet was filed in the criminalcase, by the CBI before the Special Court. Therefore, it is the contentionof the learned senior counsel for the appellants that the petition for windingup ought to have been filed at least on or before 10.08.2019. However,Antrix applied to the Government of India only on 14.01.2021 for thegrant of authorisation. The authorisation was issued on 18.01.2021 andthe petition for winding up was filed on 18.01.2021 (the same day).Therefore, placing heavy reliance upon the decision of the three memberBench of this Court in Jignesh Shah and Anr. vs. Union of India andAnr.[14], it is contended on behalf of the appellant that the petition forwinding up should have been thrown out on the ground of limitation,even if we take the date of filing of the charge-sheet alone as the date ofknowledge of the alleged fraud.

8.3Before we consider the aforesaid contentions independently,it will be useful to take note of the manner in which the National CompanyLaw Appellate Tribunal dealt with the question of limitation and decidedthe same against the appellants.

8.4The Member (Technical) of NCLAT, in his separate butconcurring opinion, dealt with the question of limitation, from paragraphs 14 (2019) 10 SCC 750

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A2 to 13. In sum and substance, the Member (T) of NCLAT held (i) thatthe fraud alleged by Antrix was not a singular act which was transaction-specific; (ii) that the petition for winding up was based upon a series ofacts of fraud, unearthed over a long period of time; (iii) that though theCBI filed a first charge-sheet on 11.08.2016, a supplementary charge-sheet was filed on 8.01.2019; (iv) that a complaint was lodged under theBPrevention of Money Laundering Act, 2002 alleging financial frauds,only on 24.12.2018; and (v) that in cases of this nature, the date ofdiscovery of the first act of fraud among a series of acts of fraud, cannotbe taken to be the date on which the right to apply accrued in terms ofArticle 137 of the Schedule to the Limitation Act, 1963.C8.5The above view taken by NCLAT is a plausible view anddoes not suffer from any perversity. The above view cannot be said tobe completely contrary to law. However, we will independently dealwith this issue, so that the myth of limitation is demystified.

8.6The various provisions of the Companies Act, 2013,Dunfortunately came into force on various dates, in view of the leveragegranted under Section 1(3) to the Central Government to appoint differentdates for different provisions to come into force. Section 270 providingfor the winding up by the Tribunal, Section 271 prescribing thecircumstances in which a company may be wound up by the TribunalEand Section 272 stipulating the requirements of a petition for winding up,as they were originally enacted in the Companies Act, 2013, never cameinto force, since no notification under Section 1(3) of the Act was issuedin respect of these three provisions.

8.7However, the Insolvency and Bankruptcy Code, 2016 (ActF31 of 2016) received the assent of the President on 28.05.2016. Section255 of this Code declared that the Companies Act, 2013 shall standamended in the manner specified in the 11[th] Schedule to the Code. Theexisting provisions of Sections 270 to 272 of the Companies Act, 2013were replaced by the 11[th] Schedule read with Section 255 of IBC. Section255 of IBC came into force on 15.11.2016 vide S.O 3453(E) datedG15.11.2016. Consequently the 11[th] Schedule containing amendments tothe Companies Act, 2013 also came into force on 15.11.2016. Sections270, 271 and 272 as they stand today, resultantly came into force on15.11.2016.

8.8In contrast, the provisions of Sections 4 to 32 of IBC cameHinto force on 1.12.2016 vide S.O 3594(E) dated 30.11.2016. The provisions relating to Corporate Insolvency Resolution Process are found in Sections6 to 32 of IBC 2016. Sections 7, 9 and 10 of IBC 2016 provide for theinitiation of Corporate Insolvency Resolution Process, respectively bythe financial creditor, the operational creditor and the corporate applicant.

8.9Section 434 of the Companies Act, 2013, as it was originallyenacted, provided for transfer of certain proceedings pending beforevarious forums on the date of coming into force of the Act. Clause (c) ofSub-section (1) of Section 434 provided for the transfer of the windingup proceedings to the Tribunal, with a mandate to the Tribunal to proceedto deal with those proceedings from the stage before their transfer. IBC2016, through the 11[th] Schedule, substituted a new provision in Section434. Though the newly incorporated Section 434 also provided underClause (c) of Sub-section (1) for the transfer of winding up proceedingsfrom the High Court to the Tribunal, such transfer was made subject tocertain restrictions. One of those restrictions was that only thoseproceedings relating to winding up which are at a stage as may beprescribed by the Central Government, which may be transferred to theTribunal. This restriction is found in the first proviso to Section 434(1).

8.10Therefore, the Central Government issued a set of Rulesknown as the Companies (Transfer of Pending Proceedings) Rules, 2016.These Rules (except Rule 4 which relates to voluntary winding up) cameinto force with effect from 15.12.2016. Rule 5 of these Rules prescribesthe stage at which alone, a petition for winding up under Section 433(e)of the 1956 Act could be transferred to NCLT. Similarly Rule 6 prescribesthe stage at which the petitions for winding up filed under Clauses (a)and (f) of Section 433 of the 1956 Act could be transferred.

8.11 What is important to note from the above discussion is

(i) that while Sections 270 to 272 of the Companies Act, 2013came into force on 15.11.2016, Sections 7, 9 and 10 of IBCcame into force on 1.12.2016 and the Rules relating totransfer proceedings came into force on 15.12.2016; and

(ii) what is provided for under the Companies (Transfer ofPending Proceedings) Rules, 2016 read with Section 434of the Companies Act, 2013 and Section 239 of the IBC2016 is the transfer of only three categories of petitions forwinding up, namely, those that fall under clauses (a), (e)and (f) of Section 433 of the 1956 Act.

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A8.12Keeping in mind the above statutory scheme, let us now seewhat happened in Jignesh Shah (supra), on which heavy reliance isplaced. In Jignesh Shah, a suit for specific performance of an agreementwith an alternative claim for damages, was filed by IL&FS, on 19.06.2013,on the ground that the cause of action, namely, the refusal to honour thecommitment under the agreement arose on 16.08.2012. After more thanBtwo years of the date of the institution of the suit and after more thanthree years of the date mentioned in the plaint as the date of arising ofthe cause of action, the plaintiff in the suit issued a statutory noticeunder Sections 433 and 434 of the 1956 Act, on 3.11.2015. After receiptof the reply from the defendant, a petition for winding up was filed byCthe plaintiff in the suit, against the defendant, on 21.10.2016 before theBombay High Court under Section 433(e) of the 1956 Act. This petitionfor winding up was transferred by the High Court of Bombay to theNCLT, by an order dated 1.02.2017, in terms of Section 434 of theCompanies Act, 2013 read with Rule 5 of the Companies (Transfer ofPending proceedings) Rules, 2016. NCLT treated the petition for windingDup as a petition for corporate insolvency resolution under Section 7 ofIBC by a financial creditor and ordered the admission of the petition.The order of admission was unsuccessfully challenged before theNCLAT, whereafter, the matter landed up before this Court. The viewtaken by NCLAT was that since Section 7 of IBC 2016 came into forceEon 1.12.2016, the winding up petition was within the period of limitation.It was this view of NCLAT which was put to test before this Court inJignesh Shah.8.13In essence, Jignesh Shah was one under Section 433(e) ofthe 1956 Act which related to inability of a company to pay its debts.FTherefore, unless the debt was a legally recoverable debt, on the dateon which a petition for winding up was filed, no petition for winding upwas maintainable. If a suit for recovery of such a debt was already timebarred, it is incongruous to say that a petition for winding up wasmaintainable in respect of such a debt. Therefore, the test applied in Jignesh Shah was not new but what was so obvious. In fact, on theGdate on which a petition for winding up was filed on the file of the BombayHigh Court in Jignesh Shah, the civil suit for enforcement of the contractwith an alternative claim for damages was pending. If the plaintiff hadwaited for a decree in the suit and thereafter moved a petition for windingup on the basis of the decree, Section 434(1)(b) of the Companies Act,H1956 would have come into play and the winding up petition could not have been held in Jignesh Shah to have been time barred. Since theplaintiff in the suit moved an application for winding up even during thependency of the suit, limitation had to be naturally counted on the basisof the original cause of action mentioned in the civil suit, with referenceto Section 434(1)(a).

8.14As we have seen earlier, Section 434 of the 2013 Act readwith the Companies (Transfer of Pending Proceedings) Rules, 2016 applyonly in respect of three types of proceedings for winding up, namely, (i)proceedings on the ground of inability to pay the debts, covered by Clause(e) of Section 433 of the 1956 Act; (ii) proceedings initiated by thecompany itself by a special resolution covered by Clause (a) of Section433; and (iii) proceedings on just and equitable ground covered by clause(f) of Section 433.

8.15As we have seen in Chapter 6 above, fraud was not includedin Section 433 of the 1956 Act as one of the nine circumstances in whicha company may be wound up. Under the 1956 statutory regime, a petitionfor winding up, even if triggered on the basis of an investigation reportunder section 237(b) read with section 243 and Section 439(1)(f), wasrequired to be only on just and equitable ground under Section 433(f).Therefore, on the date on which IBC came into force, if a petition forwinding up was pending under section 433 (e) or (f), it was liable to betransferred to NCLT by virtue of Section 434 of the 2013 Act read withthe Companies (Transfer of Pending Proceedings) Rules, 2016.

8.16But under the Companies Act, 2013, three different types offraud are included in Section 271(c), as the circumstances for windingup a company. Such a winding up is independent of just and equitableground. Therefore, the parameters applicable to winding up on the groundof inability to pay debts or on just and equitable ground may not beapplied blind fold to a case of fraud.

8.17Antrix, which initiated the proceedings for winding up, is neithera financial creditor nor an operational creditor nor a corporate applicant.This is why Antrix have not and could not have gone for insolvencyresolution process, under the IBC, but taken recourse to Section 271(c)of the Companies Act, 2013. Hence the ratio in Jignesh Shah, asapplicable to debts, whose recovery in any case should not have beentime barred on the date of initiation of the proceedings for winding up/insolvency resolution process, cannot have any application to the caseon hand.

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A8.18It is fundamental to the law of limitation that limitationextinguishes the remedy and not the right. If the remedy of filing a civilsuit for the recovery of a debt stands extinguished by the Law ofLimitation, the creditor cannot make use of Section 433(e) of theCompanies Act, 1956. This is the premise on which this Court decidedJignesh Shah.B

8.19After Jignesh Shah, this court was concerned with theapplication of sections 14 and 18 of the Limitation Act, 1963 in differentcases. In Sesh Nath Singh v. Baidyabati Sheoraphuli Co-operativeBank Ltd[15] , this Court held that Sections 14 and 18 will apply to casesfiled under section 7 or 9 of IBC. Again in Laxmi Pat Surana vs UnionCBank of India[16], this Court held :”Section 18 of the Limitation Actwould come into play every time when the principal borrower and/or the corporate guarantor (corporate debtor), as the case may be,acknowledge their liability to pay the debt. Such acknowledgement,however, must be before the expiration of the prescribed period ofDlimitation including the fresh period of limitation due toacknowledgement of the debt, from time to time, for institution ofthe proceedings under Section 7 of the Code.”

8.20Thereafter, the question whether the entries made in thebalance sheets of a corporate debtor would amount to acknowledgementEof a liability under section 18 of the Limitation Act came up forconsideration in Asset Reconstruction company vs Bishal Jaiswal[17].After referring to the judgment of the Calcutta High Court in BengalSilk Mills Co. v. Ismail Golam Hossain Ariff[18], this Court held in BishalJaiswal(i)that“though the filing of a balance sheet is by compulsionof law, the acknowledgement of a debt is not necessarily so; and (ii)Fthat the entries made in the balance sheets would amount toacknowledgement of liability depending upon whether such an entryqua any particular creditor is unequivocal or has been entered intowith caveats in the form of notes that are annexed to or formingpart of such financial statements”

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8.21The above decisions show that limitation is not always akinto a lighted matchstick to a train of gun powder. The date of15 (2021) 7 SCC 31316 (2021) 8 SCC 48117 (2021) 6 SCC 36618 AIR 1962 Cal 115H

commencement of the period need not necessarily be static. The date ofcommencement may keep changing depending upon the acts of omissionand commission on the part of the party against whom the action isinitiated. These acts of omission and commission constitute the bundleof facts, which determine the question whether an action is barred bylimitation or not.

8.22As we have pointed out elsewhere, the contours of fraud asdelineated in Section 271(c) of the Companies Act, 2013 cover threeaspects namely, (i) the affairs of the company being conducted in afraudulent manner; (ii) the company was formed for fraudulent andunlawful purpose; and (iii) the persons concerned in the formation andmanagement of its affairs have been guilty of fraud, misfeasance ormisconduct in connection therewith. As rightly pointed out by the Tribunal,a singular act of omission or commission may constitute fraud and evena series of acts may constitute fraud. A fraudulent act may be differentfrom the fraudulent manner in which an act is performed. The words“the conduct of the affairs of a company in a fraudulent manner”indicate that the process was a continuing one. If the conduct of theaffairs of the company in a fraudulent manner is a continuing process,the right to apply becomes recurring.

8.23We must keep in mind the fact that apart from the persons incharge of the management of the affairs of the company in liquidation,the officials of Antrix as well as the officials of the Department of Spaceare now facing prosecution not only for offences under Section 420read with Section 120B of the Indian Penal Code, but also for offencesunder the Prevention of Corruption Act, 1988 and the Prevention ofMoney Laundering Act. The termination of the Contract on 25.02.2011,was not triggered by an allegation of fraud and corruption. Fraud andcorruption were discovered only later and by the time the discovery wasmade, the attempts to reap the fruits of fraud had reached the pinnacle.These attempts continue even till date and this falls squarely within Section271(c). Therefore, the contention that the petition was barred by limitationwas rightly rejected by the Tribunal and we have no reason to take adifferent view.

9. ESTOPPEL

9.1The nextground of attack to the impugned orders is that Antrixis estopped from pleading fraud and seeking winding up of Devas, in A

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Aview of the fact, (i) that the letter of termination dated 25.02.2011, of theAgreement dated 28.01.2005 was not on the ground of fraud but byinvoking the force majeure clause; (ii) that in the proceedings beforethe arbitral Tribunals, no allegation of fraud was ever raised; and (iii)that the Auditor’s reports of Antrix for all these years, contained astatement that no fraud was committed on Antrix.B

9.2The contention of the appellants is that under Section 19 ofthe Indian Contract Act, 1872, an agreement vitiated by fraud is not voidbut only voidable at the option of the party who is a victim and thattherefore the failure of Antrix, (i) to terminate the contract on the groundof fraud and/or (ii) to set up fraud as a defence to the arbitral proceedingsCoperated as estoppel. In addition, the Auditor’s statements in the AnnualReports, that no fraud was committed on Antrix, would give rise to avalid plea of estoppel.

9.3Factually, the appellants are right in pointing out that theAgreement dated 28.01.2005 was terminated by a letter dated 25.02.2011Donly by invoking the force majeure clause and that fraud was not set upas a defence in the arbitral proceedings. The appellants are also factuallycorrect in pointing out from the Auditor’s reports of Antrix dated15.09.2012, 19.07.2016, 24.07.2017, 19.06.2020 etc., that there was acertification by the auditors to the effect that no fraud on or by theEcompany has been noticed or reported during the course of the audit. Inthe Annexure to the Auditor’s report dated 15.09.2012, the Auditorshave stated:- “According to the information and explanations given to us inthe course of our audit, we report that no fraud on or by theFCompany has been noticed or reported during the course ofour audit.”

9.4Similarly, in the Annual Report dated 19.07.2016, for 2015-16,it was reported by the Auditors as follows:- “To the best of our knowledge and belief and according to theGinformation and explanations given to us, we report that nocase of fraud has been committed on or by the Company or byits officers or employees during the year.”

9.5A statement similar to the one extracted above, also finds aplace in the Auditor’s report dated 24.07.2017, forming part of the AnnualHReport 2016-17.

9.6Even in Annexure-B Report dated 19.06.2020, the Auditorshave given a statement as follows:- “Fraud by company or its officers and employees According to the information and explanation given to us, thereare no frauds reported by the company or any fraud has beennoticed or reported during the year. Accordingly, the provisions ofclause 3(x) of the said order are not applicable.”

9.7Under Clause (xxi) of paragraph 4 of the Companies (Auditor’sReport) Order, 2003, issued in exercise of the powers conferred bySection 227 (4A) of the Companies Act, 1956, there is a prescriptionthat the Auditor’s Report should contain a statement as to whether anyfraud on or by the company has been noticed or reported during the yearand if so, the nature and the amount involved.

9.8But the question is as to whether all the above would lead toan inference of estoppel against Antrix. The fact that the Agreementdated 28.01.2005 was not terminated on the ground of fraud, throughthe letter dated 25.02.2011, cannot take the appellants anywhere. Theearliest First Information Report for the offences under Section 420read with Section 120B of the IPC was filed by the CBI only on16.03.2015. The officers of Antrix as well as officials of the Governmentwere also implicated in the FIR for offences under the Prevention ofCorruption act, 1988. Therefore, the appellants cannot set up a plea ofestoppel on the ground that the termination of the Agreement in the year2011 was not on the ground of fraud, when the discovery of fraud itselfwas many years later.

9.9For the very same reason, the failure of Antrix to plead fraudin the ICC arbitration proceedings, cannot also operate as estoppel. Thearbitral proceedings commenced in the year 2013 and the award itselfwas passed on 14.09.2015. Antrix cannot be expected to plead fraud inthe arbitral proceedings, even before the discovery of fraud.

9.10The Chartered Accountants/Auditors are not experts eitherin Criminal Law or in the technology that formed the subject matter ofthe Agreement between Antrix and Devas. The statement of CharteredAccountants are always qualified with certain riders such as “accordingto the information and explanations given to us in the course of ouraudit” or “to the best of our knowledge and belief and according tothe information and explanations given to us”.

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A9.11In fact, the Companies (Auditor’s Report) Order, 2015 whichwas superseded by another order in 2016 was issued by the CentralGovernment in exercise of the power conferred by Section 143(11) ofthe Companies Act, 2013. Section 143(12) obliges the Auditor to reportto the Central Government, if he has reason to believe that an offence offraud of a particular dimension was being committed in the company byBits officers or employees. Sub-section (13) of Section 143 also providesimmunity to the Auditors for furnishing a report to the Central Government,if it is done in good faith. Sub-section (12) & (13) of Section 143 read asfollows:- “143. Powers and duties of auditors and auditing standards.-xxxxxxxxxxxx C

(12) Notwithstanding anything contained in this section, if anauditor of a company in the course of the performance of hisduties as auditor, has reason to believe that an offence of fraudDinvolving such amount or amounts as may be prescribed, is beingor has been committed in the company by its officers or employees,the auditor shall report the matter to the Central Government withinsuch time and in such manner as may be prescribed:

Provided that in case of a fraud involving lesser than theEspecified amount, the auditor shall report the matter to the auditcommittee constituted under section 177 or to the Board in othercases within such time and in such manner as may be prescribed:

Provided further that the companies, whose auditors havereported frauds under this sub-section to the audit committee orFthe Board but not reported to the Central Government, shall disclosethe details about such frauds in the Board’s report in such manneras may be prescribed.

(13) No duty to which an auditor of a company may be subjectto shall be regarded as having been contravened by reason of hisreporting the matter referred to in sub-section (12) if it is done inGgood faith.”

9.12 If the auditors of a company fail to make a report in terms ofSection 143(12), despite having knowledge about the fraud, they maybecome liable for penal consequences under Section 448 read withSection 447 of the Companies Act, 2013. But the failure of the auditorsH

to make a report as required by Section 143(12) or as required by theorder issued under Section 143(11), cannot operate as estoppel againstthe company. The auditor’s report can neither be taken as gospel truthnor act as estoppel against the company. The statement in the auditor’sreport, is as per the information given to them or as per the informationculled out to the best of their ability.

9.13 The reliance placed upon Section 19 of the Indian ContractAct, 1872 to raise the plea of estoppel may not wholly be correct. Section19 of the Indian Contract Act, deals with only one type of fraud namely,a fraud perpetrated on a party to secure his consent to an agreement.Section 19 begins with the words “when consent to an agreement iscaused by coercion, fraud…..”. Frauds other than those used to inducethe consent of a party to an agreement, are not covered by Section 19.In fact, the definition of fraud under Section 17 is also confined only tocertain acts committed by a party to a contract. There are cases wherea party may perpetrate a fraud either upon non-contracting parties orupon the Government or even upon the courts. The principle that fraudvitiates all solemn acts, will itself be rendered nugatory, if theunderstanding of fraud is confined only to the realm of contract.

9.14In the case on hand, the fraud alleged by Antrix is not solelyon the ground that their consent to the Agreement dated 28.01.2005 wasvitiated by fraud. What is alleged in the petition for winding up are, (i)formation of the company for fraudulent or unlawful purpose; (ii) fraudin the conduct of the affairs of the company; and (iii) fraud on the partof the persons who were involved in the formation and/or in themanagement of affairs of the company. The fraud relatable to theagreement, is only one facet of the whole scheme of things. Therefore,we have to go beyond section 19 of the Contract Act.

9.15In fact, the Explanation (i) under Section 447 of the companiesAct, 2013 also defines fraud, but for the purposes of Section 447. Whatis covered by Section 271(c) of the Companies Act, 2013 is a fraud thatgoes beyond what lies in the realm of contract or in the realm of thepenal provisions of the Companies Act, 2013. Hence the contention thatAntrix was estopped from pleading fraud, was rightly rejected by theTribunal and we see no reason to taken a different view.

10. Refusal to permit cross-examination

10.1 Another ground of attack by the appellants to the impugnedorders is that the foundation for the allegation of fraud was the averment A

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Athat Devas offered to provide goods and services which were non-existentboth on the date of execution of the agreement and on the date of itstermination and that Devas was also incapable and did not have thenecessary permission/approvals to provide such device/services.Contending that the question of existence/availability of the technologyhas become a contentious issue with both parties filing several affidavits,BDevas filed an application before NCLT seeking permission to cross-examine the officials of Antrix. This application was taken up along withthe main company petition. While ordering winding up, by a final Orderdated 25.05.2021, NCLT justified its action by holding that the case didnot require any oral evidence. Therefore, in the memorandum of groundsCof appeal before NCLAT, the appellants raised a specific ground thatthe omission on the part of the Tribunal to afford an opportunity of cross-examination, vitiated the final outcome. But NCLAT upheld the viewtaken by NCLT.

10.2Therefore, it is contended on behalf of the appellants that (i)Dallegations of fraud, as a rule, warrant a full-fledged trial and proof; (ii)that in the light of the specific bar of jurisdiction of Civil Courts underSection 430 of the Companies Act, 2013, NCLT was obliged to scan theallegations of fraud very carefully, by allowing parties to lead evidenceand cross-examine the witnesses; (iii) that the Tribunal is conferredwith the same powers as are vested in a Civil Court under the Code ofECivil Procedure, 1908, in respect of the summoning and enforcing of theattendance of any person and examining him on oath, under Section424(2) of the Companies Act, 2013; (iv) that Rules 52 and 135 of theNational Company Law Tribunal Rules, 2016 make it clear that theTribunal has the power to summon the appearance of any witness, cross-Fexamine him on oath and even issue commission for the examination ofwitnesses; and (v) that the Tribunals committed a gross error of law inrecording findings on serious allegation of frauds, solely on the basis ofaffidavits and documents. Reliance is placed in this regard by the learnedsenior counsel for the appellants, on the decisions of this Court in StandardChartered Bank vs. Andhra Bank Financial Services Ltd. and Ors.[19];GSvenska Handelsbanken vs. Indian Charge Chrome and Ors.[20] andV. Ravi Kumar vs. State, Rep. by Inspector of Police, District CrimeBranch, Salem & Ors.[21]

19 (2006) 6 SCC 9420 (1994) 1 SCC 502H21 (2019) 14 SCC 568

10.3At the outset we should point out that the decision in SvenskaHandelsbanken (supra) arose out of an interim order of injunctiongranted in a civil suit. The principle of law laid down in the said decisionthat mere pleadings cannot make out a case of fraud, is an off-shoot ofthe time tested principle that pleadings cannot take the place of proof.Insofar as the decision in Standard Chartered Bank (supra) isconcerned, the same arose out of proceedings before the special Court.One of those proceedings was under Section 111 of the Companies Act,1956 which was “somewhat summary in nature”. Therefore it was inthat context that this Court held that when a seriously disputed questionof title arises, the Company Court should relegate the parties to a civilsuit. But having admitted that under Section 430 of the Companies Act,the jurisdiction of the Civil Court is barred, it is not open to the appellantsto rely upon this decision to say that the parties could be relegated to acivil court.

10.4Similarly the decision in V. Ravi Kumar (supra), arose out ofcriminal proceedings under Section 482 Cr.P.C for quashing the secondcomplaint, after the withdrawal of the first complaint. The High Courtquashed the criminal complaint and while setting aside the order of theHigh Court, this Court held that the allegations of fraud and cheating,which prima facie constitute offences under Section 420 IPC, have tobe established through evidence at the time of trial.

10.5Thus the decisions relied upon by the appellants to drivehome the point that the Tribunal must have permitted cross-examination,have no relevance to the case on hand. However, dehors those decisionsrelied upon by the appellants, let us see whether the omission of NCLTto permit cross-examination was fatal.

10.6The Tribunal classified the allegations made by Antrix intoeight categories. In sum and substance, they revolve around, (i) theoffer of a non-existent technology; (ii) misrepresentation about thepossession of intellectual property rights over a device; (iii) violation ofSATCOM policy; (iv) securing of an experimental licence fraudulently;(v) manipulation of the minutes; and (vi) the trail of money brought inthrough FIPB approvals.

10.7All the averments forming the foundation of the allegationsof fraud, from the point of view of the Indian Evidence Act, would fallunder only two categories, namely, (i) positive assertions requiring personsmaking those assertions to prove them; and (ii) negative assertions.

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A10.8A party alleging the non-existence of something, cannot becalled upon to prove the non-existence. It is the party who asserts theexistence or who challenges the assertion of non existence, who is liableto prove the existence of the same.

10.9In the case on hand, Antrix asserted that Devas offeredBservices which were non-existent, through a device which was notavailable and that even the so-called intellectual property rights over thedevice were not available. Therefore, obviously Antrix cannot leadevidence to show the non-existence or non-availability of those things,either by oral evidence or by subjecting their officials to cross-examinationby Devas. Devas never produced before the Tribunals any device norCdid they demonstrate the availability to Devas services. All that Devaswanted was, the cross-examination of the officials of Antrix. Any amountof cross-examination of the officials of Antrix could not have establishedthe existence of something that was disputed by Antrix.

10.10 It is also interesting to note that the application for cross-Dexamination was moved by Devas on 5.5.2021, after arguments in themain petition itself had commenced on 30.04.2021 and concluded on3.05.2021 on the side of Antrix. The list of dates filed by Shri N.Venkataraman, Additional Solicitor General shows that on 19.01.2021,NCLT ordered the admission of the company petition and appointed aEprovisional liquidator. In fact this order was passed after hearing objectionsof the company. As against the order of admission, DEMPL filed anappeal before NCLAT. But the same was dismissed by NCLAT on11.02.2021, with liberty to the DEMPL to file an application forimpleadment. DEMPL filed an application for impleadment on 2.03.3021.They also filed a writ petition before the High Court of KarnatakaFchallenging the authorisation given by Central Government to Antrix, aswell as the constitutional validity of Section 272(1)(e) read with Section272(3) of the Companies Act, 2013. After hearing extensive argumentsover several dates, the High Court of Karnataka dismissed the writpetition by an Order dated 28.04.2021 with costs of Rs.5,00,000/- forGabuse of process of law. It was only thereafter that the company petitionwas taken up by NCLT and arguments on behalf of Antrix was heardand concluded on 30.04.2021 and 3.05.2021.

10.11 When the company petition was adjourned to 5.05.2021 forarguments on behalf of Devas, a two-pronged strategy was adopted byHDevas. The first was to make DEMPL file a writ appeal before the Division Bench of the High Court of Karnataka against the order of thelearned Single Judge upholding the constitutional validity of the aforesaidprovisions. Simultaneously, Devas filed an application on 5.05.2021 tocross-examine the Managing Director and Finance Director of Antrix.However, Devas also continued their arguments in the main companypetition and concluded the same on 10.05.2021. On 10.05.2021, NCLTreserved the judgment.

10.12 Incidentally, it must be pointed out that the writ appeal filedby the DEMPL came up for hearing before the Division Bench of theHigh Court of Karnataka on 12.05.2021. The Division Bench directedthe matter to be listed on 19.05.2021 with a condition that the costs asawarded by the learned Single Judge should be paid on or before thesaid date.

10.13 On 25.05.2021, the NCLT passed final orders, after whichDEMPL withdrew the writ appeal on 27.05.2021.

10.14 It is clear from the above time-line of events that theapplication for cross-examination was moved by Devas after conclusionof the arguments on the side of Antrix in the main petition itself, and thattoo after the unsuccessful attempt made by one of its shareholders toassail the constitutional validity of the statutory provisions. Therefore,the Tribunal was right in rejecting the request for cross-examination.

11. LOCUS STANDI OF THE SHAREHOLDERS

11.1The next ground of attack to the impugned orders is thatdespite the petition for winding up containing specific allegations of fraudas against the shareholders of Devas, NCLT did not give any opportunityto the shareholders. Even the application for impleadment filed byDEMPL which is one of the shareholders, pursuant to the leave grantedby NCLAT, was taken up along with the main company petition andeventually rejected along with the main company petition. Therefore,DEMPL filed an independent appeal before NCLAT. Unfortunately, theMember (Judicial) of NCLAT dismissed the appeal, as not maintainable,on the ground (i) that the rights of the shareholders are confined to theelection of Directors, voting in the meetings of the company, distributionof dividends and the distribution of surplus upon liquidation; and (ii) thatthe company in liquidation itself, through its ex-Director, has independentlyfiled an appeal as an aggrieved person.

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A11.2Therefore, relying upon the decision of this Court in NationalTextile Workers’ Union vs. P.R. Ramakrishnan & Ors.[22], it iscontended that it would be contrary to every recognised principle of fairjudicial procedure and violative of the rule of audi alteram partem whichconstitutes one of the basic principles of natural justice, to deny to theshareholders, the right to be heard before an order prejudicially affectingBtheir interest was passed.

11.3It is true that the petition for winding up was filed underSection 271(c) alleging (i) that the affairs of the company have beenconducted in a fraudulent manner; (ii) that the company was formed forfraudulent and unlawful purpose; and (iii) that the persons concerned inCthe formation or management of its affairs have been guilty of fraud.But there is no scope either in the Act or in the Rules for the impleadmentof any shareholder as a respondent to the petition for winding up. Rule3(1) of Companies (Winding Up) Rules 2020 requires a petition forwinding up to be in Form WIN 1 or Form WIN 2. A look at these formsDwould indicate that there is no provision for making any one, as therespondent in the petition. Therefore, the question of impleading anyshareholder at the time when the petition for winding up was filed, didnot arise.

11.4Interestingly, Antrix sought the authorisation under SectionE272(1)(e) on 14.01.2021 and the Central Government grantedauthorisation on 18.01.2021. On the very same day, the petition for windingup was filed. When the petition was taken up by NCLT on 19.01.2021for the first time, Devas Multimedia Private Limited, which is the companyin liquidation appeared through counsel and opposed the petition andalso sought sufficient time to file reply. Therefore, NCLT did not have toFgo through the formality of ordering notice before admission, as a batteryof counsel appeared for Devas, raised preliminary objections and alsosought time to file response. The Tribunal passed a detailed order dated19.01.2021 admitting the company petition and appointing a provisionalliquidator even while granting time to the company to file its reply. Inparagraph 5 of the detailed order dated 19.01.2021, the preliminaryGsubmissions made by the company in liquidation against the admission ofthe company petition, are recorded.

11.5The order dated 19.01.2021 admitting the company petitionbecame the subject matter of an appeal before NCLAT at the instance H22 (1983) 1 SCC 228

of the company in liquidation. Therefore, on 8.02.2021 when the companypetition came up for hearing, it was adjourned to 16.02.2021 and,thereafter, to 2.03.2021. On 2.03.2021, DEMPL which is a shareholderfiled a petition for impleadment. It is true that this application was notindependently dealt with and disposed of at that stage. However, theobjections of DEMPL to the main company petition were just the sameas the objections of the company in liquidation. Despite the fact that aprovisional liquidator has been appointed on 19.02.2021 itself, the ex-Director of the company in liquidation was permitted to file objections tothe main company petition and also argue the same fully.

11.6After the conclusion of the arguments on the part of Antrixto the main company petition, DEMPL even moved a writ petitionchallenging the constitutional validity of Section 272(1)(e) and theauthorisation issued to Antrix. The writ petition was dismissed with costsand the writ appeal was withdrawn.

11.7It will be clear from the above sequence of events that (i)despite NCLT not disposing of the impleadment petition before passingfinal orders; and (ii) despite NCLT dismissing the impleadment petitionalong with the main company petition, their objections to the maincompany petition have been dealt, along with the objections of the ex-Director of the company in liquidation. In other words, the objectingshareholder had an effective hearing before NCLT. Though their appealwas rejected by NCLAT on the ground of maintainability, their argumentsfor opposing the winding up, which were just the same as that of thecompany, have been considered. Therefore, the objection that anopportunity was not given to the shareholders, is just theoretical, when infact they were heard.

11.8It is true that in National Textile Workers’ Union (supra),this Court took the law relating to locus standi by a leap forward. But asseen from the facts of the said case, the petition for winding up wastriggered by one group of shareholders, both on the ground that companywas unable to pay its debts and on the ground that it is just and equitableto wind up the company. The company Judge before whom the windingup petition came up, granted an ex-parte injunction restraining companyfrom borrowing any moneys and from alienating and/orcreating anycharge or encumbranceover any of the assets of the company.As aconsequence, the Employees’ Cooperative Stores, stopped issuing anyprovisions or supplies to the workmen. The workmen were also prevented AB

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Afrom enjoying the benefits under the ESI scheme. The wages payablefor the following month itself became doubtful. Faced with the suddenthreat to their livelihood, the workers’ Unions sought to impleadthemselves as party to the winding up proceeding. Therefore, the decisionrendered in National Textile Workers’ Union’s case has to beunderstood in the context in which it was rendered.B

11.9It is true that the dismissal of the appeal filed by DEMPL, byNCLAT on the ground of maintainability may not be correct. Section421(1) of the Companies Act, 2013 enables “any person aggrieved byan order of the Tribunal”, to file an appeal. To say that DEMPL cannotbe taken to be a person aggrieved, may be far-fetched. But on that soleCground, the impugned order cannot be set aside.

11.10 We have seen from the memorandum of grounds of appealfiled by DEMPL before NCLAT and the memorandum of grounds ofappeal filed by DEMPL before this Court that their objections to thepetition for winding up are just the same as those of the ex-Director ofDthe company in liquidation. In fact, before us, the ex-Director of thecompany in liquidation was represented by Shri Mukul Rohtagi, learnedsenior counsel and DEMPL was represented by Shri Arvind P. Datar,learned senior counsel. While the learned senior counsel for the companyin liquidation occupied the crease only for limited number of overs, theElearned senior counsel appearing for DEMPL took the entireresponsibility on his shoulders and played a very long innings. Therefore,it is not possible for us to set aside the order of winding up, on the soleground that the shareholders application for impleadment as well as theappeal were rejected wrongly.

F11.11 Before leaving the discussion on this ground of attack, wemust also take note of one submission made by Shri N. Venkataraman,learned Additional Solicitor General. According to him, all the shareholdersof Devas are arrayed as accused by the CBI in the criminal cases. Butthe CBI has not even been able to serve summons on them. Therefore,persons who are ducking/ avoiding summons in the criminal prosecution,Gcannot be heard to contend that they must have been heard in the petitionfor winding up. Taking advantage of their citizenship/residence abroad,these shareholders are prosecuting proceedings for the enforcement of(i) ICC Arbitral Tribunal Award in India; and (ii) BIT Awards overseas,even while making it impossible for CBI to serve summons on them for H

the past five years. It is not open to such persons to raise the bogey offailure to afford an opportunity.12. FINDINGS ERRONEOUS AND PERVERSE AND THESTANDARD OF PROOF APPLIED INCORRECT

12.1 The next ground of attack to the impugned orders is that thefindings recorded by the NCLT which were approved by NCLAT werecompletely perverse and erroneous and that the Tribunals applied acompletely incorrect standard of proof. In any case, the findings wererecorded to be only prima facie, which is not sufficient to order thewinding up of the company.

12.2In order to test the correctness of the above contention, it isnecessary to take note of the averments on which Antrix built their casefor winding up, the response of Devas to the averments, the findingsrecorded by NCLT and the findings recorded by NCLAT.

12.3Briefly stated, the averments made by Antrix in their petitionfor winding up were, (i) that Devas was incorporated as a private limitedcompany, on 17.12.2004, with an authorised share capital of Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each; (ii) that within a fewweeks of incorporation, an Agreement dated 28.01.2005 was enteredinto between the company and Antrix, as a result of a fraudulent andcriminal conspiracy between the persons in management of the affairsof the company and the officials of Antrix/Government of India, to awarda lease of scarce and valuable S-band spectrum, without obtainingnecessary approvals and without following applicable norms andprocedures; (iii) that the persons in-charge of the formation as well asthe management of the affairs of Devas did not possess the necessarytechnical know-how or the intellectual property rights for the provisionof what was claimed as “Devas Services”, either at the time of signingof the agreement or even till date; (iv)that despite not being in possessionof either the technology or the device, the company was pushing Antrixand the Government of India to launch the satellite; (v) that as part ofthe conspiracy, the Agreement dated 28.01.2005 was terminated by Antrixby a letter dated 25.02.2011 by invoking the forcemajeure clause; (vi)that it made things easy for Devas to initiate an arbitration before theICC Arbitral Tribunal, apart from the initiation of the two BIT Arbitrationsby the shareholders of Devas, (vii) that when the criminal conspiracy,fraud and corrupt practices came to light, an FIR was lodged by the CBI

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Aon 16.03.2015; (viii) that a charge-sheet was filed by CBI on 11.08.2016,both against the persons responsible for the formation and managementof the affairs of the company in liquidation, as well as the officials ofAntrix and Government of India; (ix) that a supplementary charge-sheetwas filed on 08.01.2019; (x) that a complaint was also registered underthe Prevention of Money Laundering Act, 2002 on 24.12.2018; (xi) thatBthe company which was formed with an authorized share capital Rs.1,00,000/- in December, 2004, managed to secure a contract for a statedconsideration of an “up-front capacity reservation fee” in the region ofUS, $ 20 million per satellite, apart from annual license fee of around US$ 9 million per satellite; (xii) that the execution of such a contract andCthe award of a public largesse of such a huge magnitude was not throughany public auction but by private negotiations held by the officials ofAntrix with Forge Advisors of USA, (xiii) that after securing the contract,the company was able to sell its equity shares as well as OCP shares ata huge premium to foreign investors; (xiv) that equity shares of a facevalue of Rs. 10/- were sold at the rate of Rs. 1.26 lakhs per share; (xv)Dthat interestingly, DT Germany which invested Rs. 430 crores throughDT Asia obtained only 19% share holding, while four Mauritius investorsobtained 37% share holding by investing Rs. 150 crores; (xvi) thatexperimental licences were obtained by Devas by manipulating theminutes of the meetings; (xvii) that FIPB approvals were secured forEthe stated purpose of providing Internet services, though the agreementwas for rendering a hybrid service known as Satellite based DigitalMultimedia Broadcasting Services (SDMB Services, for short); (xviii)that the fact that such a hybrid technology was not in existence at thattime was suppressed from FIPB as well as other authorities; (xix) thatafter showcasing the inflow into India, of investment to the tune of Rs.F579 crores, the company siphoned out of India, a sum of Rs. 75 croresfor creating a wholly owned subsidiary in USA, a sum of Rs. 180 crorestowards payment for business support services and sum of Rs. 233 crorestoward litigation services; (xx) that a sum of Rs. 92 crores alone waskept in India out of which Rs. 21 crores was by way of Fixed DepositsGand a sum of Rs. 59 crores was paid to Antrix towards up-front capacityfee; (xxi) that some of the then officials of Antrix and the Governmentof India were parties to the fraudulent and unlawful purpose for whichDevas was created and the fraudulent manner in which the affairs ofthe company had been conducted; (xxii) that the persons includinginvestors and the share-holders concerned in the formation and theH

management of its affairs have been guilty of fraud, corrupt practicesand money laundering and that therefore the company was liable to bewound up.

12.4 On the basis of the pleadings, the documents produced andthe submissions made, NCLT recorded the following findings namely,(i) that the incorporation of Devas was with fraudulent intention to grabthe prestigious contract in question, in connivance and collusion with thethen officials of Antrix; (ii) that it is not in dispute that at the time ofentering into the contract, Devas did not have the technology,infrastructure or experience to perform their obligations under theAgreement; (iii) that one of the subscribers to the Memorandum ofAssociation of the company in liquidation was an Auditor by name ShriM. Umesh, whose Article Clerk by name Gururaj was the one signedthe Agreement; (iv) that the Executive Director of Antrix who signedthe Agreement of behalf of Antrix is one of accused in the criminalcases; (v) that the incorporation of Devas was with fraudulent motiveand unlawful object, to bring money into India and divert it by dubiousmethods; (vi) that even after the termination of the Agreement, Devaswas not carrying on any business operations; (vii) that the objective ofDevas was hardly to do any business except grabbing Primary Satellite-I (PS-I) and Primary Satellite-II (PS-II), and that therefore therequirements of Section 271(c) stand satisfied.

12.5The order of the Appellate Tribunal is in two parts; the firstauthored by Member (Judicial), and the second authored by Member(Technical). The Member (Judicial) noted, (i) that the company inliquidation failed to establish either the existence of technology or theownership of intellectual property rights over the stated technology; (ii)that even according to the affidavit of Shri M. G. Chandrashekar, Devashad ample time to develop Devas Technology, meaning thereby that itsnon-existence at that time was admitted; (iii) that the company did nothave a single approval, permission or licence to render Devas servicesutilising Devas technology; (iv) that the approval of the Space Commissionfor building a satellite for Devas, was secured only after finalisation ofcommercial terms but without apprising the Space Commission of thesame; (v) that even in the cabinet note, prepared by the Department ofSpace on 17.11.2005 a full picture was not recorded; (vi) that there wasa contravention of the SATCOM Policy; (vii) that though the originalminutes of the meeting required Devas to secure a spectrum licence A

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Afrom Wireless Planning Committee (WPC), after appearing before theapex committee with requisite technical details, the minutes of themeetings were manipulated later as though the company was exemptedfrom the requirement; (viii) that after objections about the manipulations,the original minutes of the meeting came to be restored, on 20.11.2009,but this happened only after the grant of experimental licence onB07.05.2009; (ix) that in any case the experimental licence was to establishWireless Telegraph Station in India under the India Telegraph Act, 1885,without which experimental trials could not have been conducted; (x)that Devas obtained IPTV licence as part of ISP licence, which hasnothing to do with what was offered as DEVAS services; (xi) that theCagreement dated 28.01.2005 made no reference of IPTV; (xii) thatundeniably, Devas services cannot be provided with ISP licences; (xiii)that after bringing an amount of Rs 579 crores into India, a major portionwas taken out of India; (xiv) that the only business activity carried on byDevas was to provide ISP services in a particular locality in Bangalorefor a few residents and that too for a short duration, which made DevasDearn a revenue of Rs. 80,000/; (xv) that the diversion of Rs. 489 croresand Rs. 58 crores for non ISP purposes is violative of ISP licence, whichcomes squarely within the ambit of Section 271(c); (xvi) that Devasfraudulently approached FIPB through the ISP route to avoid scrutinyby Department of Space; (xvii) that the investors of Devas actuallyEbecame shareholders and they also had their nominees on the Board ofDevas; (xviii) that therefore these persons were also guilty of the conductof the affairs of Devas in the manner stated; (xix) that the ShareSubscription Agreement dated 06.03.2006 entered into with the investorscontains a recital as though appropriate licences have been validly issuedor assigned to the company, though in fact the only licence namely ISPFlicence was obtained much later on 02.05.2008 and (xx) that thereforethe formation of the company and the conduct of the affairs of thecompany were fraudulent and the persons concerned therewith werealso guilty of fraud.

12.6In his independent but concurrent opinion the MemberG(Technical) of NCLAT classified the items of fraud into eight categories.He first found that the company was formed and the Agreement wasentered into with the stated object of providing a bouquet of services,which were non-existent. The second category of fraud dealt with bythe Member (Technical) related to the misrepresentation in theHAgreement. The third category of fraud concerned the violation of SATCOM Policy. The fourth category was actually an extension of thethird category which related to SATCOM Policy. The fifth categorywas about suppression and misrepresentation in obtaining the approvalof the cabinet. The sixth category of fraud revolved around the ISPlicence dated 02.05.2008, of which IPTV licence was a part, but whichhad nothing to do with Devas Services. The seventh category related tothe fraudulent manner in which experimental licence was obtained andthe eighth category related to FIPB approvals and money trail. TheMember (Technical) found the formation of company, the conduct ofthe affairs of the company and those persons concerned in the formationand conduct of management of its affairs to be guilty of fraud.

Issues

12.7 Technically speaking, the appeal before us which is underSection 423 of the Companies Act, 2013, is only on a question of law.When two forums namely NCLT and NCLAT have recorded concurrentfindings on facts, it is not open to this Court to re-appreciate evidence.Realising this constraint, the learned Senior Counsel for the Appellantsought to project the case as one of perversity of findings. But we do notfind any perversity in the findings recorded by both the Tribunals. Thesefindings are actually borne out by documents, none of which is challengedas fabricated or inadmissible. Though it is sufficient for us to stop at this,let us go a little deeper to find out whether there was any perversity inthe findings recorded by the Tribunals and whether such findings couldnot have been reached by any reasonable standards.

12.8The following undisputed facts emerge from the documentsplaced before the Tribunal. The authenticity of these documents werenever in question or denied:

(i) An agreement of a huge magnitude, for leasing out fivenumbers of C X S transponders each of 8.1 MHz capacityand five numbers of S X C transponders each of 2.7 MHzcapacity on the Primary Satellite-I (PS-I), was surprisinglyand shockingly entered into by Antrix with Devas, withoutsame being preceded by any auction/tender process. Itappears from the letter dated 27.09.2004 sent by DEVASLLC, USA to Shri K.R. Sridhara Murty, Executive Directorof Antrix with copies to Dr. G. Madhavan Nair, Chairman,ISRO and others that Shri Ramachandran Viswanathan,met the then Chairman of ISRO and other officials inBangalore in April-2003 and they met once again in AB

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Washington D.C. during the visit of the then Chairman ofISRO. These meetings, which were not preceded by anyinvitation to the public for any Expression of Interest,culminated in a Memorandum of Understanding dated28.07.2003. Though it is not clear where the MoU wassigned, there are indications that it was signed overseas; B

(ii) It must be noted here that a one man Committee comprisingof Dr. B.N. Suresh, former Member of the SpaceCommission and Director of Indian Institute of SpaceScience and Technology, was constituted on 8.12.2009, longafter the commencement of the commercial relationship,to look comprehensively into all aspects of the contract,both commercial and technical. According to the Reportsubmitted by him in May-2010, it was Forge Advisors, USAwhich made a presentation in March-2003, on technologyaspects of digital multimedia services to Antrix/ISRO,followed by a presentation in May-2003 purportedly to thetop management of Antrix/ ISRO. The MoU was signedthereafter; C

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(iii) But the documents filed by the appellants themselves showthat a power point presentation was made by Forge LLCEon 22.03.2004, proposing an Indian joint venture to launchwhat came to be known as DEVAS (which perhapsultimately turned out to be ASURAS[23]). It was claimed inthe said proposal that DEVAS platform will be capable ofdelivering multimedia and information services via satelliteto mobile devices tailored to the needs of various marketFsegments such as consumer segment, commercial segmentand social segment. This presentation dated 22.03.2004 wasfollowed by a proposal dated 15.04.2004, about which wehave made a brief mention in paragraph 3.4 above. Thisproposal obliged ISRO/Antrix to invest in one operationalGS-band Satellite with a ground space segment to be leasedto a joint venture between Forge and Antrix. What was tobe reserved for the joint venture was 97% of the space.The consideration receivable by ISRO/ Antrix upon such alease, was to be US $ 11 million annually for a period of 15

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H23 According to Hindu Mythology, Devas are demigods and Asuras are demons years. At least at this stage the proposal to invest in anoperational S-band satellite and the lease of nearly the entirespace of such satellite to a joint venture, should have cometo the public domain, to see, (a) if the technology existed;and (b) if the proposal was commercially viable. But it wasnot done;

(iv) On 14.05.2004, a Committee headed by one Dr. K.N.Shankara, Director, Space Applications Centre wasconstituted purportedly to examine the technical feasibility,risk management including possibilities of alternate uses ofspace segment, financial and market aspects and timeschedule. According to the Report submitted by thisCommittee, DEVAS was conceived as a new nationalservice expected to be launched by the end of 2006 thatwould deliver video, multimedia and information servicesvia high powered satellite to mobile receivers in vehiclesand mobile phones across India. The catch here lies in thefact that while it was possible to deliver some of theseservices via terrestrial mode, it was not possible at thatpoint of time to provide this bouquet of services via satellite.Even today satellite phones are beyond the reach of acommon man. Mobile receivers or devices which can simplyreceive audio and video content are different from mobilephones, which are capable of providing a two waycommunication. The technology for providing the servicesthrough mobile phones was not in existence at that time,which is why the proposal made by Forge Advisors includedan expectation that such a service may be launched by theend of 2006. It was with this expectation/promise that anAgreement was entered into on 28.01.2005 but this so-callednew national service was never launched as promised in2006. The launch of the services was not linked to theprovision of a S-band satellite by Antrix, at least at the timewhen negotiations took place;

(v) Admittedly, FIPB (Foreign Investment Promotion Board)approvals taken by Devas during the period May-2006 toSeptember-2009 were on the basis of the ISP (InternetService Provider) license secured from the Department of A

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Telecommunications on 02.05.2008 and IPTV (InternetProtocol Television) services license obtained on 31.03.2009;

(vi) Therefore, the finding of the Tribunal, (a) that a publiclargesse was doled out in favour of Devas, in contraventionof the public policy in India; (b) that Devas enticed Antrix/BISRO to enter into an MoU followed by an Agreement bypromising to provide something that was not in existence atthat time and which did not come into existence even later;(c) that the licenses and approvals were for completelydifferent services; and (d) that the services offered werenot within the scope of SATCOM Policy etc. are actuallyCborne out by records;

(vii) There is no denial of the fact that Devas offered a bouquetof services known as (a) Devas Services through a devicecalled (b) Devas device in a hybrid mode of transmission,which is a combination of satellite and terrestrialDtransmissions, and which is called (c) Devas Technologybut none of which existed at the relevant point of time oreven thereafter;

(viii) Devas did not even hold necessary intellectual property rightsin this regard though they claimed to have applied; E

(ix) That the formation of the company, namely, DevasMultimedia Private Limited was for a fraudulent andunlawful purpose is borne out by the fact that the companywas incorporated in December-2004, as a result ofpreliminary meetings held at Bangalore in March-2003 andFin USA in May-2003, followed by the signing of the MoUon 28.07.2003, the presentation made on 22.03.2004 andthe discussions held thereafter. The ground work was clearlydone during the period from March-2003 to December-2004before the company was formally incorporated. Immediatelyafter incorporation, the Agreement dated 28.01.2005 wasGsigned. Therefore, the first ingredient of Section 271(c) ofthe Companies Act, 2013, namely, the formation of thecompany for a fraudulent and unlawful purpose was clearlymade out;

(x) The kind of licenses obtained such as ISP and IPTV licensesHand the object for which FIPB approvals were taken but showcased as those sufficient for fulfilling the obligationsunder the Agreement dated 28.01.2005 demonstrated thatthe affairs of the company were conducted in a fraudulentmanner. This is fortified by the fact that a total amount ofRs.579 crores was brought in, but almost 85% of the saidamount was siphoned out of India, partly towardsestablishment of a subsidiary in the US, partly towardsbusiness support services and partly towards litigationexpenses. We do not know if the amount of Rs.233 crorestaken out of India towards litigation services, also becamea part of the investment in a more productive venture,namely, arbitration. The manner in which a misleading notewas put to the cabinet and the manner in which the minutesof the meeting of TAG sub-committee were manipulated,highlighted by the Tribunal, also shows that the affairs ofthe company were conducted in a fraudulent manner. Thus,the second limb of Section 271(c), namely, the conduct ofthe affairs of the company in a fraudulent manner, also stoodestablished.

(xi) SATCOM Policy perceived telecommunication andbroadcasting services to be independent of each other andalso mutually exclusive. Therefore, a combination of bothwas not permitted by law. It is especially so since nodeliberation took place with the Ministry of Information andBroadcasting. Moreover, unless ICC allocates spacesegment, to a private player, the same becomes unlawful.This is why the conduct of the affairs of the companybecame unlawful;

(xii) That the officials of the Department of Space and Antrixwere in collusion and that it was a case of fence eating thecrop (and also allowing others to eat the crop), by joininghands with third parties, is borne out by the fact that theNote of the 104[th] Space Commission did not contain areference to the Agreement. The Cabinet Note dated17.11.2005 prepared after ten months of signing of theAgreement, did not make a mention about Devas or theAgreement, but proceeded on the basis as though ISROreceived several Expressions of Interest. These materials AB

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Ashow the complicity of the officials to allow Devas to haveunjust enrichment;

(xiii) It is on record that the minutes of the meeting of the SubCommittee dated 06.01.2009 were manipulated and theexperimental licence was granted on 07.05.2009. Onlythereafter, the original minutes were restored on 20.11.2009Band that too after protest.

(xiv) Admittedly, every one of the investors procured shares ofthe company in liquidation and each shareholder had arepresentative in the board of directors. Since the boardcontrolled the company, the directors were guilty of theCconduct of the affairs of the company in a fraudulentmanner. Since each shareholder had a representative in theboard, the shareholders had to take the blame for themisdeeds of the directors;

(xv) Additionally, the shareholders were fully aware of the factDthat the application for approval dated 02.02.2006 to theFIPB was for ISP services. But they entered into a ShareSubscription Agreement on 06.03.2006 for Devas services.The Share Subscription Agreement discloses that they wereaware of the false statements contained in the Agreementdated 28.01.2005. Therefore, the shareholders, who nowEwant to reap the fruits of a tree, fraudulently planted andunlawfully nurtured, cannot feign ignorance and escape theallegations of fraud.

12.9An argument was advanced by the learned senior counselfor the appellants, on the basis of a statement contained in the order ofFNCLAT that the allegations are prima facie made out, that a companycannot be ordered to be wound up on the basis of prima facie findings.The standard of proof required for winding up of a company cannot beprima facie.

12.10But we do not think that the appellants can take advantageof the use of an inappropriate expression by NCLAT. The detailed findingsGrecorded by the Tribunal show that they are final and not prima facie.Merely because NCLAT used an erroneous expression those findingscannot become prima facie.

13. Miscellenous Grounds

13.1Apart from the above main grounds of attack, which weHhave dealt in extenso, the learned senior counsel for the appellants also made a few supplementary submissions. One of them was that a lisbetween two private parties cannot become the subject matter of a petitionunder Section 271(c). But this argument is to be rejected outright, inview of the fact that the claims of Devas and its shareholders are alsoon the property of the Government of India. The space segment in thesatellite proposed to be launched by the Government of India, is theproperty of the Government of India. In fact, the shareholders havesecured two awards against the Republic of India under BIT. Therefore,it is neither a lis between two private parties nor a private lis between aprivate party and a public authority. It is a case of fraud of a hugemagnitude which cannot be brushed under the carpet, as a private lis.

13.2Another contention raised on behalf of the appellants is thatthe petition under Section 271(c) should have been preceded, at least bya report from the Serious Fraud Investigation Office, which has nowgained statutory status under Section 211 of the Companies Act, 2013.But this contention is un-acceptable, in view of the fact that under the2013 Act there are two different routes for winding up of a company onallegations of fraud. One is under Section 271(c) and the other is underthe just and equitable clause in Section 271(e), read with Section 224(2)and Section 213(b). What was Section 439(1)(f) read with Section 243and Section 237(b) of the 1956 Act, have now taken a new avatarunder Section 224(2) read with Section 213(b). It is only in the secondcategory of cases that the report of the investigation should precede apetition for winding up.

13.3Yet another contention raised on behalf of the appellants isthat the criminal complaint filed for the offences punishable under Section420 read with Section 120B IPC, has not yet been taken to its logicalend. Therefore, it is contended that in case the officials of Antrix andshareholders of Devas are acquitted after trial, the clock cannot be putback, if the company is now wound up. Attractive as it may seem at firstblush, this contention cannot hold water, if scrutinised a little deeper. Thestandard of proof required in a criminal case is different from the standardof proof required in the proceedings before NCLT. The outcome of oneneed not depend upon the outcome of the other, as the consequencesare civil under the Companies Act, 2013 and penal in the criminalproceedings. Moreover, this argument can be reversed like the handleof a dagger. What if the company is allowed to continue to exist and alsoenforce the arbitration awards for amounts totalling to tens of thousandsof crores of Indian Rupees (The ICC award is stated to be for INR

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A10,000 crores and the 2 BIT awards are stated to be for INR 5,000crores) and eventually the Criminal Court finds all shareholders guilty offraud? The answer to this question would be abhorring.

13.4Lastly, it was contended that the actual motive behind Antrixseeking the winding up of Devas, is to deprive Devas, of the benefits ofBan unanimous award passed by the ICC Arbitral tribunal presided overby a former Chief Justice of India and the two BIT awards and thatsuch attempts on the part of a corporate entity wholly owned by theGovernment of India would send a wrong message to internationalinvestors.

13.5We do not find any merit in the above submission. If as aCmatter of fact, fraud as projected by Antrix, stands established, the motivebehind the victim of fraud, coming up with a petition for winding up, is ofno relevance. If the seeds of the commercial relationship between Antrixand Devas were a product of fraud perpetrated by Devas, every part ofthe plant that grew out of those seeds, such as the Agreement, theDdisputes, arbitral awards etc., are all infected with the poison of fraud. Aproduct of fraud is in conflict with the public policy of any countryincluding India. The basic notions of morality and justice are always inconflict with fraud and hence the motive behind the action brought bythe victim of fraud can never stand as an impediment.

13.6We do not know if the action of Antrix in seeking the windingEup of Devas may send a wrong message, to the community of investors.But allowing Devas and its shareholders to reap the benefits of theirfraudulent action, may nevertheless send another wrong message namelythat by adopting fraudulent means and by bringing into India an investmentin a sum of INR 579 crores, the investors can hope to get tens ofFthousands of crores of rupees, even after siphoning off INR 488 crores.

14. Conclusion

Therefore, in fine, we find all the grounds of attack to theconcurrent orders of the NCLT and NCLAT to be unsustainable.Therefore, the appeals are dismissed. However, without any order as toGcosts.

Bibhuti Bhushan Bose(Assisted by : Mahendra Yadav, LCRA)

Appeals dismissed.

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