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Judgment
(Hybrid Mode)
Oral Judgment : Justice Sharad Kumar Sharma, Member (Judicial):
Under the Companies Act, the provisions as specifically contained under Section 221 have conferred the power upon NCLT to freeze the Assets of a Company for a period not exceeding 3 years, on a reference from Central Government, during any inquiry or investigation into the affairs of the Company under Chapter 14 of Companies Act, or on a complaint by Members or Creditors, in case it has reasons to believe that the Assets are likely to be utilized in a manner prejudicial to the interests of the Company and its Stakeholders and / or to the public interest. Sub-section (1) of Section 221 is extracted hereunder:
``(1). Where it appears to the Tribunal, on a reference made to it by the Central Government or in connection with any inquiry or investigation into the affairs of a company under this Chapter or on any complaint made by such number of members as specified under sub-section (1) of section 244 or a creditor having one lakh amount outstanding against the company or any other person having a reasonable ground to believe that the removal, transfer or disposal of funds, assets, properties of the company is likely to take place in a manner that is prejudicial to the interests of the company or its shareholders or creditors or in public interest, it may by order direct that such transfer, removal or disposal shall not take place during such period not exceeding three years as may be specified in the order or may take place subject to such conditions and restrictions as the Tribunal may deem fit.’’
In the instant Company Appeal, the Appellant has invoked the provisions contained under Section 421 of the Companies Act, to challenge the impugned order of 24.01.2025, as it was passed by the Ld. NCLT, Chennai, in IA (CA) / 62 (CHE) / 2023 as preferred in CP / 125 (CHE) / 2022, by virtue of which, Ld. NCLT rejected the aforesaid application seeking certain modifications in the order dated 17.11.2022 passed in CP / 125 (CHE) / 2022.
The facts of the case are that in CP / 125 (CHE) / 2022 being a Petition filed by the Respondent SFIO, Ld. NCLT had ordered freezing the accounts of Appellant No. 1 and Sakthi Group of Companies vide its order dated 17.11.2022. The Appellant filed an application IA (CA) / 102 (CHE) / 2022 praying for defreezing of the said Accounts and Ld. NCLT by its order dated 07.03.2023 defreezed the Accounts on the condition that Fixed Deposit be made for a sum equal to the sum existing in each Account as on the date of attachment. The Appellant once again filed another application IA (CA) / 62 (CHE) / 2023 praying for a clarification that the attachment will not apply to Accounts other than Current and Savings Accounts. This prayer was rejected by the impugned order against which the instant Appeal has been filed.
We note that the attachment order was passed on 17.11.2022 and the said time period of 3 years as provided under Section 221(1) of the Companies Act has already lapsed as on date. As a consequence thereto, the very purpose of filing of the Interlocutory Application for seeking clarification has lost its purpose as on today, owing to the implications flowing from the provisions contained under Section 221 of the Companies Act.
Hence, for all practical purposes, owing to the legal implications flowing from Section 221, the instant Company Appeal, challenging the order of rejection of IA (CA) / 62 (CHE) / 2023, which had sought clarification in the order, which was passed on IA (CA) / 102 (CHE) / 2022, as preferred in CP / 125 (CHE) / 2022, has lost its significance and with the efflux of time the Company Appeal (AT) (CH) No. 64 / 2025 has been rendered infructuous and hence, it is accordingly closed. The connected pending Interlocutory Applications, if any, would stand closed.