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Judgment
O R D E R
14.08.2025: (ORAL) These appeals are filed against the impugned order dated 09.09.2022 passed by the Ld. NCLT, Cuttack in TP No. 2/CB/2021 (Earlier CP (IB) No. 11/MB/2016) and IA (Companies Act) No. 56/CB/2022.
It is the submission of Learned Counsel for the appellants, the above company petition was filed 05.02.2016 by Respondents No. 1 to 4 under Section 397, 398, 399, 402, 403 and 406 of the Companies Act, 1956, before the Ld. Company Law Board, Mumbai. The petition was taken on file by assigning its number as CP No. 11/ 397-398/CLB/MB/CG/2016. After the constitution of the Ld. NCLT, the case was transferred to Ld. NCLT, Mumbai Bench and thereafter, on constitution of the Cuttack Bench, it was referred to Ld. NCLT, Cuttack Bench.
It is the submission of the Learned Counsel for the appellant during the pendency of the company petition, two applications were filed viz. TA No. 4(CB) 2021 on 04.01.2018 by Respondents No. 1 to 4 seeking to implead Central Bank of India alleging the Appellant company stood as a guarantor to the loan taken by a partnership firm namely M/s Happy Enterprises and the said loan turned NPA, hence the Central Bank of India is a necessary and proper party to these proceedings and to implead thereof.
Further, on 06.01.2018 the Central Bank of India filed yet another TA No. 5/CB/2021 seeking intervention on the ground that the loan to M/s Happy Enterprises was secured by a guarantee given by the appellant company of its property by creating a charge upon the said property and had even executed a guarantee deed. Admittedly, the charge was never registered by Appellant company under Section 77 of the Companies Act.
The replies were filed to these applications denying the mortgage of any property as well as qua the alleged guarantee ever given by the appellant company to the loan granted to M/s Happy Enterprises by the Central Bank of India.
On 16.06.2022, the Ld. NCLT dismissed these two applications holding the Central Bank of India is neither a necessary nor a proper party to the proceedings pending before it, filed under Section 397, 398, 399, 402, 403 and 406 of the Companies Act, 1956.
Thereafter, the proceeding continued and ultimately vide the impugned order, the Ld. NCLT, Cuttack Bench dismissed the company petition aforesaid stating inter alia the allegations of Oppression and Mismanagement against the Appellants and Respondent 5 to 7 (viz the appellants herein) could not be established.
However, the Ld. NCLT took note of the alleged guarantee given by Appellant company to the loan granted by the Central Bank of India to M/s Happy Enterprises and the said guarantee / charge upon the property of Appellant company was deliberately not registered under Section 77 of the Companies Act; hence imposed various penalties upon the appellants.
It is the submission of Learned Counsel for the appellants (a) the Appellant company never gave any such guarantee and the documents relied upon are all forged; (b) there is no evidence on record to show the appellants were ever the partners of M/s Happy Enterprises and (c) no opportunity of being heard was given to the appellants on the issue of penalty under Section 86 as well as 185(4) of the Companies Act, 2013 or under other relevant sections as quoted in the impugned order.
It is the submission of Learned Counsel for the appellants, the Appellant company had already filed a civil suit bearing no. 31A/2015 challenging the alleged guarantee given by the Appellant company to the Central Bank of India and is still pending before the Ld. District Court, Raipur for consideration. Further, the appellants urged the Ld. NCLT in its impugned order wrongly relied upon the documents annexed to TA No. 5/CB/2021 despite the said application was dismissed vide its own order dated 16.06.2022. However during the course of final arguments, without affording any opportunity to the appellants to rebut those documents annexed with T.A. No. 5/CB/2021 of the Central Bank of India, the Ld. NCLT imposed penalties upon the appellants.
It is the submission of the Learned Counsel for the appellants the penalty imposed upon the appellants was without affording any opportunity of being heard to them and it entails / serious consequences per impugned order passed.
Admittedly a Company Appeal (AT) No. 5 of 2023 against the dismissal of Oppression and Mismanagement petition is pending separately, hence in the present order we are not analysing merits of such appeal as it shall be considered separately. However so far the directions given by the Ld. NCLT under Section 86 and 185(4) as well as initiating proceedings under Section 167(1)(d); 167(3) and 439(2) of the Companies Act, 2013, we hereby set aside the same and remand the matter to the Ld. NCLT with a request to decide about penalties (if any) afresh, only after giving due opportunity of being heard to the appellants herein. The parties to appear before the Ld. NCLT on 01.09.2025.
The appeals are thus disposed of. Pending application(s), if any, are also disposed of.