Union of India VS CA.Ramaiah Nataraja CP 69 of 2021
Facts:
1) Application is filed on 26.08.2021 under Section 140 of the Companies Act, 2013 by the Union of India authorised by Ministry of Corporate Affairs and represented by the Registrar of Company, Karnataka against the Respondent shall not be eligible to be appointed as a statutory auditor of any company for a period of five years from the date of the order by this Hon’ble Tribunal.
Issue: Whether the application can be allowed ?
Argument:
Respondent:
1) Counsel submitted that filed the statement of objections vide diary no.1603 on 18.04.2022 whereby he contends that he has already resigned from the post of Auditor with effect from 23.08.2018 and the requisite Form to this effect was filed by the said Company on 14.01.2019. Thus, in light of the decision taken by R-1, the petition under Section 140(5) is not maintainable.
2) It was submitted that Company under liquidation by virtue of the order passed by this Hon’ble Tribunal is not arrayed as a party being represented by the Official Liquidator. It was submitted that company is carrying on business under Hospitality Sector conducting tours to different locations with food and accommodation and the company had collected such membership fees with the intention to provide the above said services and the same was non-refundable or there was no scope to repay/provide interest or profit on such fees. The same cannot be termed as deposits under the provisions of Section 76 and 76A of the Companies Act, 2013.
Decision: NCLT allowed the application.
Rationale:
1) It held that In so far as the appropriation of advance is concerned, it is observed that the advance received by the company has to be allocated or appropriated against identified or specified goods or services within 365 days of acceptance. It is not necessary for the company to actually deliver the goods or services within 365 days.
2) It held that amount collected by the company in the garb of membership fee does not have to do with anything related to the expenditure incurred during the tour and only the amount over and above the service fee which is taken from the members before the tour is incurred to meet the additional cost of the tour. In fact it is also observed that 73% of the total amount created from the generation of membership fee is reverted back to the members and the company only utilizes 23% of the total membership fee amount. Therefore, the same falls under the category of deposit as the membership fee is not utilized for providing any goods or services and is in fact remitted to the same accounts/members without any interest.
Order:
