Meghalaya Agrovet Pvt. Ltd. & Anr. Vs. Union of India & Ors. WPA 12368 of 2024
Facts:
1) The petitioner, being a sister concern of the borrower company against which a proceeding has been initiated under Section 212 of the Companies Act, has preferred the present writ petition challenging the investigation.
Issue: Whether the petition can be allowed ?
Arguments:
Petitioner:
1) Counsel for the petitioners contended that since the petitioners’ name finds place in the report filed in connection with the investigation, the petitioners’ rights are also affected. It is contended that the very genesis of the investigation is vitiated for non-compliance of Sections 206 and 207 of the Companies Act 2013.
2) Counsel submitted that provisions of Sections 206, 207 and 208 of the Act and submits that a report under Section 208 of the Act is a culmination of an enquiry initiated by the ROC. It was submitted that Since it is an admitted position that a report was sought from the ROC and that the investigation was assigned under Section 212(1)(a), the compliance of all the rigours stipulated in Section 206 were mandatory.
3) The respondent authorities having flouted the said provisions and having not given any notice to the petitioner and/or AFL at any point of time, it is argued that the entire investigation is vitiated. Section 219 of the Act which envisages the power of Inspector to conduct investigation into the affairs of related companies and contends that the powers under the said provision were exercised since the name of the petitioner company is also depicted in the report filed after the investigation.
Respondent:
1) Counsel submitted that the investigation report misquoted the Section under which the investigation was ordered. It is pointed out that in the parent order dated December 10, 2028, the investigation was directed under Section 212(1), sub-Section (c) and not sub-Section (a) of the Companies Act.
2) Counsel submitted order itself has been misquoted in the report at page 65 thereof, it can very well be construed that the mention of Clause (a) of Section 212(1) in the report was a misnomer and an error. It is argued that since the investigation was directed under Section 212(1)(c) in public interest, the regards of Section 206 to 208 do not apply in the present case at all.
Decision: HC dismissed the petition.
Rationale:
1) It held that Legislature in its wisdom has delineated separate sources which can trigger an investigation under Section 212(1) of the Companies Act, 2013. Sub-Section (1) of Section 212 provides that where the Central Government is of the opinion that it is necessary to investigate into the affair of a company by the SFIO in the circumstances as enumerated thereunder, the Central Government may, by order, assign the investigation into the affairs of the company to the SFIO and its Director may designate such number of inspectors as he may consider necessary for the purpose of such investigation.
2) If the intention of the Legislature was that all circumstances where such opinion shall be formed and an investigation be directed is to be circumscribed by Section 208 or the receipt of a report under Section 208, there would not be any necessity of separately providing for Clause (a) as opposed to other clauses, i.e., Clauses (b), (c) and (d). Superfluity cannot be imputed to the intention of the Legislature. As such, it is clear from the scheme of Section 212(1) itself that the legislature intended to enumerate separate circumstances under which the Government may form an opinion under Section 212 (1), one of them being receipt of a report of the Registrar or Inspector under Section 208.
3) It held that there cannot be any manner of doubt that the investigation was directed not under clause (a), but under clause (c) of Section 212(1) of the Companies Act, 2013. The misquoting of the said section in the report filed after investigation cannot be an appropriate aid in interpreting the parent order, which was the genesis of the investigation itself.
4) It held that For a report of the ROC or an Inspector to come within the ambit of Section 208 of the Companies Act, the same has to be necessarily a culmination of a proceeding initiated under Section 206. Section 212(1)(c), where the opinion formation of the Central Government is in public interest, does not contain any fetter or prior requirement of receipt of a report of the ROC under Section 208 and hence, the rigours of Section 206 do not apply at all. premise of challenge to the said order dated December 10, 2018 is untenable in the eye of law.
6) It held that the provision of filing the report in time is not couched in a negative language to indicate that if it is not filed within such period, it will not be accepted or will be vitiated per se.
Order:
