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Judgment
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This appeal is filed against an impugned order dated 17.08.2023 passed in IA (Comp Act) No.204/2022 in CP No.119/ND/2022. The impugned order is passed on IA No.204/2022, challenging maintainability. The main issue raised in the Company Petition is qua jurisdiction of the Ld. NCLT to deal with such company petition.
The Ld. NCLT disposed of the IA No.204/2022 as follows:-
Analysis and Findings:
We have heard the Ld. Counsel appearing for both parties from time to time and also perused the documents on record.
We find it relevant to mention that the Disability of foreign companies to file suits and maintain actions in India w.r.t. to Section 599 of the Companies Act, 1956 (Section 393 of the Companies Act, 2013) creates only partial disability for defaulting foreign companies but does not bar the jurisdiction of Indian Courts. The same was confronted in the judgment of Framroze Rustomji Paymaster v. British Burmah Petroleum Co. Ltd, (1976) 46 Comp Cas 587 (Bom). The mandate of Section 393 is that Section 393 of the Companies Act, 2013 seeks to provide that any failure by a company to comply with the provisions of the Chapter relating to companies incorporated outside India shall not affect the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in respect thereof. However, the company will not be entitled to bring any suit, claim, set- off, etc., until it has complied with the provisions of this Chapter. Further, in an appeal from the decision in Partap Singh v. Bank of America, (1976) 46 Comp Case 532, the Hon’ble Bombay High Court held that since the foreign corporation (the Bank of America) had a place of business within the jurisdiction of the Court here, it can be sued here and that the fact that a decree passed by a Court in India might not be recognised in or by foreign Courts is not a fact that could deprive the Court here of its jurisdiction. Effect of non-compliance with Sections 592-597 clearly embark that a foreign company that fails to comply with the provisions of Sections 592-597 of the Companies Act, 1956 (Sections 380, 381, 382 and 383 of Companies Act, 2013) will not be entitled to bring any suit, claim any set-off, make any counter-claim or institute any legal proceedings in respect of any contract, dealings or transactions. This disqualification will continue till the company makes good the default.
We observed that when the matter was taken for maintainability of this application, the Applicants have also not satisfied/ failed to prove this Tribunal regarding the entitlement of the Applicants to file this application vide documentary evidence.
However, even on merits, we find that the present Application filed by the Applicants suffers from gross infirmities and the Applicants have miserably failed to satisfy this Tribunal on the maintainability of the main Company Petition i.e., CP-119(ND)/2022.
Hence, we are of the opinion that the Applicants are well within the jurisdiction of this Tribunal as Late Dr. Virender Kumar Chopra was used to cater to the business of the Company from India through electronic mode or other modes available at that time preceding.
In view of the above, we are of the considered view that this Tribunal has jurisdiction to hear the main Company Petition i.e., CP119(ND)/2022 against the Applicant and the Respondents.
It is the submission of the learned counsel for the appellant that the appellants are the companies incorporated in the Republic of Maldives and appellants do not have a place of business in India. It was argued the company petition was filed by Respondent No.1 herein under Section 379, 228 and 213(b) of the Companies Act, 2013, seeking a) original record of the appellant companies; b) investigation into the affairs of the appellant company ; and c) securing ownership/shareholding of Respondent No.1’s late husband. It was argued these provisions are only applicable to the foreign company as are defined under Section 2 (42) of the Companies Act, 2013.
The appellant filed the maintainability application on the ground they are not the foreign companies under the provisions of Companies Act, 2013 and, therefore, are not amenable to the jurisdiction of Ld. NCLT. It was argued their IA No.204/2022 viz maintainability application was dismissed despite the fact the appellants do not have any place of business nor conduct any business activities in India and as such the exercise of jurisdiction was wholly illegal.
It was argued Section 379 of the Companies Act, 2013 is applicable only to the foreign companies where 50% share capital is held by Indian persons, entities or companies and as such the appellant donot fall within the ambit of Section 379 of the Act. We have perused the impugned order. This argument of Section 379 has since been rejected by the Ld.NCLT on the premise of Section 393 of the Companies Act, 2013.
Now the issue raised before us as to if the appellants are doing any business in India or not. The learned counsel for the appellant submits the appellants companies are not doing any business in India and neither it has any place of business in India. However, during the course of hearing an affidavit has been filed by the Respondent alongwith various documents viz email and correspondence etc wherein the Respondent is trying to show the family companies of the deceased shareholder have been dealing with appellant companies; providing them with the clients in tourism business and have filed various correspondence in this regard. Of course, such correspondence have been denied by the appellants herein and it is submitted by appellants even if such correspondence(s) are to be considered then also it would not prove the appellants have been doing business in India.
These documents have been filed for the first time before this Tribunal and it would be appropriate if the matter is remanded to the Ld. NCLT on the issue as to if the appellants has any place of business and/or was conducting any business activity in India in any other manner. Let the documents in this regard be filed by the Respondents before the Ld. NCLT with a liberty to the appellants herein to rebut such documents. It would rather enable the appellants to demateralise if they are not the foreign companies as are described in Section 2(42) of the Companies Act, 2013 or not. Section 2(42) is as under:
Section 2: Definition (42) “foreign company” means any company or body corporate incorporated outside India which—
has a place of business in India whether by itself or through an agent, physically or through electronic mode; and
conducts any business activity in India in any other manner;
8 Thus we set aside the impugned order being silent on the issue above and IA No.204/2022 is restored with liberty to both the parties to file their documents and the issue as to if the appellants are not the foreign companies as are defined under Section 2(42) of the Companies Act, 2013, be decided afresh by the Ld. NCLT
With these observations and opportunity to both the parties, we dispose of this appeal.
IAs No.4208 to 4210 of 2023 are also disposed of.