Alchemist Healthcare Ltd & Anr vs Ministry Of Corporate Affairs & ...
2020 Latest Caselaw 2221 Del

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*              IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                          Decided on : 22.07.2020

+                CONT. CAS(C) 610/2019 & CM APPL. 43304/2019


        ALCHEMIST HEALTHCARE LTD. & ANR. .......Petitioners

                                Through:   Mr. Rajiv Nayyar, Sr. Adv.with
                                           Mr. Saurabh Seth,
                                           Ms. Sonia Dube,
                                           Mr. Shatadru Chakraborty and
                                           Mr. Anurag Singh, Advs.
                                versus
        MINISTRY OF CORPORATE AFFAIRS & ORS.......Respondents

                                Through:   Mr. Jasmeet Singh, CGSC with
                                           Mr. Srivats Kaushal and
                                           Ms. Tejaswini, Advs.


        CORAM:
        HON'BLE MR. JUSTICE A.K. CHAWLA

                                ORDER

A.K.CHAWLA, J.

By the present order, the Court proceeds to dispose of the

contempt petition being Cont. Case (C) No. 610/2019 as also CM No.

Cont.Case (C) No.610/2019 Page 1 43304/2019 filed by applicants - the petitioners under Order VI Rule 17

CPC seeking to amend the contempt petition.

2. At the onset, it would be apposite to note that the court has not

yet issued notice either of the contempt petition or the misc. application

filed seeking amendment thereof. Here itself, it would also be appropriate

to note that the contempt petition was originally placed before the

Division Bench along with CM No. 16956/2019 filed in LPA No.

189/2019.

3. The contempt petition preferred by Alchemist Healthcare Ltd.

in short Healthcare and one of its Directors is founded on the allegations

of willful disobedience / violation of the orders passed by the Division

Bench in LPA 189/2019 Alchemist Infra Reality Ltd. Vs. Union of India

& Ors. on 18.03.2019 & 10.04.2019. It would therefore be necessary to

advert to the origin of the proceedings culminating into LPA 189/2019 -

the orders passed where-under, are the basis to maintain the instant

petition.

4. It emerges from the record that on the receipt of the complaints

- which raised issues with regard to the affairs of Alchemist Infra Reality

Ltd. in short Infra Realty and its Directors, the Ministry of Corporate

Cont.Case (C) No.610/2019 Page 2 Affairs o/o Registrar of Companies in short ROC invoked the provisions

of Section 234 (1) & (7) of the Companies Act, 1956 and vide letter

dated 27.03.2012 called upon Infra Realty to furnish information,

documents and the explanation sought there-under, failing which, penal

action under the relevant provisions of the Act, 1956 was to follow. Infra

Realty on the receipt of such communication sought a few opportunities

to comply with the command so given by ROC. It appears on account of

failure to comply within the time granted, the ROC proceeded to pass an

order under Section 234(3A) of the Act, 1956 and thereby, Infra Realty

and its defaulting Directors were called upon to show cause as to why no

prosecution be launched against them. On this, Infra Realty and one of its

Directors namely, N. Madhav Kumar preferred W.P.(C) 7529/2012 inter

alia assailing the letter dated 27.03.2012 and the order dated 14.09.2012.

While issuing notice thereof, the Court reserved liberty to ROC to

proceed with the process commenced with the caveat that no order will

be passed resulting in the initiation of prosecution till the next date of

hearing. Later, it emerges, Serious Fraud Investigation Office, Ministry

of Corporate Affairs in short SFIO proceeded to investigate the affairs of

Infra Realty under Section 235 of the Act,1956 having passed an order

Cont.Case (C) No.610/2019 Page 3 dated 05.11.2012 and issued letter/notice dated 14.12.2012. It resulted

into filing of another W.P.(C) 8065/2012 by Infra Realty. Issuing notice

thereof on 21.12.2012, the Court directed for the operation of the order

dated 14.12.2012 to remain stayed for the present. The foregoing two

writ petitions being W.P.(C) 7529/2012 and W.P.(C) 8065/2012 came to

be disposed of by the Ld. Single Judge vide a common order dated

07.02.2019. In and by virtue thereof, the orders dated 27.03.2012 and

05.11.2012 passed under Section 235 of the Act, 1956 and another order

dated 14.12.2012 passed under Section 234(7) of the Act,1956 were set

aside inter alia with the directions to the ROC to treat the subject writ

petitions as the representations and afford an opportunity of hearing to

Infra Reality and then, pass order. Infra Realty challenged the said order

dated 07.02.2019 passed by the Ld. Single Judge by way of LPA

189/2019 to the extent it related to the disposal of W.P.(C) 8065/2012. In

doing so, it however impleaded Alchemist Life Sciences Ltd.; Alchemist

Township India Ltd.; Alchemist Ltd.; Alchemist Holdings Ltd.; Netedge

Technosoft Private Ltd.; Alchemist Capital Ltd.; Alchemist Hotels &

Resorts Ltd. and N. Madhav Kumar as the pro forma respondent nos.5 to

13. In this appeal, Infra Realty also prayed for the issuance of a writ of

Cont.Case (C) No.610/2019 Page 4 mandamus to the respondents to proceed, if required, against Infra

Realty and/or its group under the provisions of the Act, 1956 only and

prohibit them from proceeding further with the investigation under the

provisions of the Companies Act, 2013 in short the Act, 2013. The

Division Bench disposed off the said LPA 189/2019 vide order

18.03.2019 clarifying and directing that the inquiry be held in pursuance

of the directions issued by the ld. Single Judge strictly in compliance

with the provisions contemplated under the Act, 1956 with the liberty

reserved to the parties to raise all objections as may be permissible with

the statutory authority causing an inquiry into the Act, 1956. It appears

that after the disposal of the LPA 189/2019, a CM No.16956/2019 came

to be filed before the Division Bench on account of summons issued by

SFIO to Alchemist Ltd. and Alchemist Hotels & Resorts Ltd. under the

provisions of the Act, 2013. Issuing notice thereof, the Division Bench

ordered for any coercive steps in terms of the order dated 18.03.2019 and

the summons dated 20.03.2019 to be kept in abeyance, simultaneously

however, directing that in case the respondent nos. 1 to 4 wish to proceed

strictly in accordance with the directions issued by it on 18.03.2019, they

may do so. In this background, the instant contempt petition has come to

Cont.Case (C) No.610/2019 Page 5 be filed by Healthcare and one of its Directors alleging wilful and

deliberate disobedience / violation of the orders dated 18.03.19 &

10.04.2019 passed by the Division Bench in LPA 189/19. In this

contempt petition, Healthcare has also prayed for restraining the

respondent Nos. 1 to 3 to give effect to or take any action or further

action under the orders/summons dated 06.12.2018; 02.05.2019; and,

13.06.2019 & so on, either against Healthcare or the other companies

arrayed as the pro forma respondents - its purported group companies

except under the Act,1956. Vide order dated 31.07.2019, the Division

Bench disposed off the CM No. 16956/2019 in view of the submission

made on behalf of the petitioner that a contempt petition was already

filed. In other words, it was not pressed. In this backdrop, the Division

Bench directed the instant contempt petition to be listed before the

appropriate Bench and was so taken up by this Bench along-with CM

Appln. No.43304/2019-under Order VI Rule 17 CPC.

5. According to Healthcare, the orders dated 18.03.2019 &

10.04.2019 passed by the Division Bench cannot be restricted in their

applicability to Infra Realty alone. Such a plea proceeds on the premise

that the investigations initiated by SFIO - which resulted into filing of the

Cont.Case (C) No.610/2019 Page 6 writ petitions by Infra Realty and the LPA emanating there-from and in

which the orders dated 18.03.2019 & 10.04.2019 came to be passed,

pertained not only to Infra Realty but its group companies as well. To

lend support to such plea, Healthcare refers to the factum of the summons

dated 21.12.2018 issued by SFIO to Alchemist Capital Limited;

Alchemist Township India Limited; Alchemist Life Sciences Limited;

and, Netedge Technosoft Private Limited being on record before the

Division Bench, when the orders dated 18.03.2019 & 10.04.2019 came to

be passed. As a sequel to such pleas and the submissions, Healthcare

seeks to impugn the summons dated 13.06.2019 issued to it by SFIO to

carry out the investigations into its affairs under Sec. 212 of the

Companies Act, 2013 and prays for restraining the respondent nos. 1 to 3

- (i) Ministry of Corporate Affairs; (ii) Director, SFIO; and, (iii) I.O.

SFIO from initiating or continuing any action against it or its Directors or

its purported group companies - pro forma respondents namely, (i)

Alchemist Township India Limited; (ii) Alchemist Limited; (iii)

Alchemist Holdings Limited; (iv) Alchemist Realty Limited; (v) Netedge

Technology Pvt. Ltd.; (vi) Alchemist Capital Ltd.; (vii) Alchemist Infra

Realty Ltd.; and, (viii) Alchemist Hotels & Resorts Ltd.

Cont.Case (C) No.610/2019 Page 7

6. In the submissions of Mr. Nayyar, ld. Senior Counsel for the

petitioners, the investigations initiated against Infra Realty under the

provisions of the Act,1956 take into its sweep the other companies of

Alchemist group and that the order dated 18.03.2019 passed by the

Division Bench was also in that direction and therefore, the summons

dated 13.06.2019 issued by SFIO to Healthcare and its purported group

companies under the provisions of the Act, 2013 were bad in law and

contemptuous. According to Mr. Nayyar, the pro forma respondent

companies in LPA 189/2019 being the group companies, any

investigation and/or action against them had to be initiated and / or

prosecuted only under the provisions one enactment i.e. the Act,1956 and

therefore, the issuance of summons dated 21.12.2018 & 13.06.2019 by

SFIO to the companies other than Infra Realty was not only illegal but

invited action for contempt as it happened in spite of the orders passed by

the Division Bench on 18.03.2019 read in conjunction with the order

dated 10.04.2019. In his submissions, the order dated 10.04.2019 passed

by the Division Bench made it clear that the subject orders were passed

in favour of group companies and not Infra Realty alone. Thus, according

to Mr. Nayyar, besides passing of the corrective orders, contempt action

Cont.Case (C) No.610/2019 Page 8 was required to be initiated as against the respondent nos.1 to 3. In

support of such submissions, reliance is placed on Century Flour Mills

Ltd. Vs. S. Suppiah & Ors. AIR 1975 Mad. 270; and, Delhi

Development Authority Vs. Skipper Construction Company (P) Ltd.

AIR 1996 S.C. 2005.

7. In the submissions of Mr. Jasmeet Singh, ld. CGSC, any of the

orders passed in the writ petitions culminating into LPA 189/20 and the

orders passed there-under, relate to Infra Realty and none else. Mr. Singh

submits that the order dated 07.02.2019 passed by the ld. Single Judge

granted liberty to initiate penal proceedings as against Infra Realty only

and not against any other company and that, the affairs of the other

companies of Alchemist group were neither a subject matter of W.P.(C)

7529/2012 or W.P.(C) 8065/2012 nor could be a subject matter of LPA

189/2019 arising there-from. As for order dated 18.03.2019 passed by the

ROC which happened on the same day the Division Bench passed the

order, it stood withdrawn and that, another order dated 07.05.2019 had

come to be passed u/s 234 of the Act,1956. In the given factual

conspectus, in his submissions, the issuance of summons dated

20.03.2019 to Alchemist Hotel Resorts Ltd. & Alchemist Limited could

Cont.Case (C) No.610/2019 Page 9 not be faulted with on any account whatsoever. Also, in his submissions,

Union of India had passed order dated 06.12.2018 directing

investigations into the affairs of the companies of the Alchemist Group

named therein and that, it did not pertain to Infra Realty inasmuch as the

investigations against Infra Realty could not be carried forward on

account of the interim orders passed by the Court - which concluded with

the passing of the order dated 07.02.2019 and that, by impleading a few

of the purported group companies of Alchemist Group as pro forma

respondents in the LPA No.189/2019 preferred against the order dated

07.02.2019, a malicious attempt was made to drag the matter into

unnecessary controversy where there existed none. Mr. Singh canvasses

that neither the writ Court nor the Division Bench in the LPA issued any

direction relating to the instant petitioners or any other company of the

Alchemist Group and therefore, the contempt petition was wholly

misconceived. In the written submissions filed, it also comes to be stated

that the present petitioners and the other Alchemist Group Companies

have since filed a W.P.(C) No.2385/2020 seeking similar reliefs and it is

manifest that even as per the own understanding of the petitioners, the

instant proceedings were not maintainable. The contempt petition is thus

Cont.Case (C) No.610/2019 Page 10 sought to be dismissed outrightly with costs. In support of such

submissions, reliance is placed on i) ER K Arumugam v V.Balakrishnan

& Ors; MANU/SC/0149/2019 and ii) Rajasthan Rajya Vidhyut

Prasaran Nigam Ltd. v. Rajasthan Rajya Vidhyut Mandal Sewa Nivrat

Karamchari Sangh; 2008 SCC Online Raj 149.

8. LPA No.189/2019 was preferred by Infra Realty inasmuch as

Infra Realty was the petitioner in both the writ petitions being W.P.(C)

No.7529/2012 and W.P.(C) No.8065/201. In these two writ petitions

preferred by Infra Realty the challenge was extended to the orders passed

by ROC / SFIO in the year 2012. It emerges from the record that the

instant petitioner No.1 - Healthcare, as per the certificate of incorporation

filed along with the petition, was incorporated on 29.01.2016. Equally to

note, Healthcare was not even a pro forma respondent in the LPA. In this

background, can Healthcare maintain the contempt petition and seek

issuance of injunction orders merely on the premise of being one of the

group companies of Alchemist group, is the first and foremost

consideration before the court.

Cont.Case (C) No.610/2019 Page 11

9. The learned Single Judge disposed of the two writ petitions

preferred by Infra Realty vide a common order dated 07.02.2019 with the

observations and directions, as under:

"7. A plain reading of sub section (7) of Section 234 of the Act indicates that the Registrar can make an order calling upon the petitioner company to furnish any information or explanation on the matter specified in the order, provided that he has received a representation that the business of the company is being carried on in fraud of its creditors, or otherwise for fraudulent or unlawful purpose. He is further required to give that company opportunity to be heard and thereafter, by a written order call for information or explanation with regard to the specified matters.

8. Admittedly, in the present case, the petitioner company was not afforded any opportunity to be heard prior to issuance of order dated 27.03.2012. The decision in the case of The Coimbatore Spinning and Weaving Co.Ltd. (supra) also does not support the view that no hearing is required to be afforded to the company prior to passing an order under Section 234(7) of the Act. In that case, the Court had noted that, in fact, the company had been heard through advocates, albeit, at least two days subsequent to the order. Thus, the requirement of affording a company an opportunity for being heard was duly complied with. Similarly in the case of Hardicon Ltd. (supra), the Coordinate Bench of this Court had expressly held that before an order under Section 234(7) of the Act is passed, the petitioner company should have been given an opportunity to be heard.

9. Having stated the above, this Court cannot be oblivious of the fact that there are serious allegations Cont.Case (C) No.610/2019 Page 12 against the petitioner company and several complaints were received. The petitioner company has been duly informed of the allegations that it had accepted money from public for allotment of land / plot / development of infrastructure and had failed to discharge its obligations. It is also alleged that the money collected by the petitioner company amounted to the petitioner company floating a collective investment scheme.

10. Mr.Wadhwa, learned Senior Counsel appearing for the petitioners also conceded that the petitioner company would have no objection if an opportunity of hearing is afforded to the petitioner company in terms of the decision of this Court in Hardicon Ltd. (Supra).

11. The aforesaid course commends to this Court. Accordingly, the impugned order dated 27.03.2012 is set aside. It is directed that the present petitions will be treated as a representation by the Registrar of Companies, who shall afford the petitioner company an opportunity of being heard. The petitioner company will appear before the Registrar of Companies through its authorized representative on 22.02.2019 at 2 pm and if required, on subsequent dates fixed by the Registrar. After hearing the parties, the Registrar may pass an order calling upon the petitioner company to submit the information as required. The Registrar shall also consider the petitioner company's contention as to whether provisions of Section 234 (1) of the Act is applicable.

12. It is clarified that if any such order is passed, the petitioner company shall furnish all information within the period as specified by the Registrar. Needless to state if such information not provided, the Registrar is at liberty to initiate such penal proceedings as provided in the Act or the Companies Act, 2013.

Cont.Case (C) No.610/2019 Page 13

13. Since, it is not disputed that the order dated 05.11.2012 directing investigation of the affairs of the petitioner company under Section 235 of the Act and the order dated 14.12.2012 appointing inspectors also follow from the orders passed under Section 234 (7) of the Act, the said orders are also set aside. This would not preclude respondent No.1 from directing investigation of the affairs of the petitioner company either on the report submitted by the Registrar or in Public Interest.

14. The petitions are disposed of. All pending applications also stand disposed of."

A bare perusal of the foregoing order of the writ court would

show that any of the actions initiated either by ROC or SFIO were for the

business of Infra Realty being carried on in fraud of its creditors, or

otherwise for fraudulent or unlawful purpose and taking note thereof, the

learned Single Judge noted that there were serious allegations against the

petitioner Company i.e. Infra Realty. It is Infra Realty only which

preferred LPA No. 189/2019 to the limited extent of disposal of W.P.(C)

No. 8065/2012 vide the common order dated 07.12.2019 and that came to

be disposed of by the Division Bench vide order dated 18.03.2019, as

under:

"Having heard the learned counsel for the parties, we find that in the order passed by the learned writ Cont.Case (C) No.610/2019 Page 14 Court the direction issued is to cause an inquiry in the matter and proceed in accordance with law on the ground that before taking the impugned action petitioners were not heard.

Our attention is invited by Mr.Rajiv Nayar, learned Senior Advocate to the provisions of sub- Section 16 of Section 213 of the Companies Act, 2013 which reads as under:

"(16) Notwithstanding anything contained in this Act, any investigation or other action taken or initiated by Serious Fraud Investigation Office under the provisions of the Companies Act, 1956 (1 of 1956) shall continue to be proceeded with under that Act as if this Act had not been passed."

According to Mr.Rajiv Nayar, learned Senior Advocate, by virtue of the aforesaid provision the inquiry or investigation into the matter has to be in accordance with the provisions of Sections 234 and 235 of the Companies Act, 1956 and not in accordance to the rules or procedure prescribed in the Companies Act, 2013. We see much force in the aforesaid contention.

We, therefore, clarify and direct that an inquiry be held in pursuance to the directions issued by the learned writ Court strictly in compliance with the provisions contemplated under the Companies Act, 1956. The parties may raise all objections as may be permissible with the statutory authority causing an inquiry into the matter under the Companies Act, 1956 in pursuance to the communication or the complaints received.

Cont.Case (C) No.610/2019 Page 15 In view of the above, the appeal and the pending application stand disposed of."

The foregoing order, there is no doubt to say, equally related to

Infra Realty and none else. It does not even remotely suggest that it had

any bearing for the pro forma respondents which came to be arrayed in

the LPA as respondent Nos.5 to 13 without leave of the court or the said

respondents having sought to be impleaded in the proceedings as the

necessary parties- being the related parties or to say, the group

companies of Infra Realty.

10. Quite strangely, after the disposal of the LPA in the foregoing

terms, a CM No. 16956/2015 came to be filed before the Division Bench

on account of summons issued by SFIO to Alchemist Ltd. and Alchemist

Hotels & Resorts Ltd. under the provisions of the Act 2013 which

application the applicants did not press and was disposed of as such by

the Division Bench vide its order dated 31.07.2019. In other words, the

filing of such application was inconsequential but for distracting the court

proceedings inasmuch as on the filing of such application and the

Cont.Case (C) No.610/2019 Page 16 issuance of notice thereof by the Division Bench on 10.04.2019, the

following order was passed:

" CM No.16956/2019 (for directions)

Issue Notice.

Mr.Jasmeet Singh, CGSC for respondent No.1 to 4 accepts notice.

Prima facie a perusal of the summons issued vide Annexure A-2 with this application dated 20.03.2019 shows that it is not in accordance with the directions issued by us on 18.03.2019 which reads as under: -

"Having heard the learned counsel for the parties, we find that in the order passed by the learned writ Court the direction issued is to cause an inquiry in the matter and proceed in accordance with law on the ground that before taking the impugned action petitioners were not heard.

Our attention is invited by Mr.Rajiv Nayar, learned Senior Advocate to the provisions of sub-Section 16 of Section 213 of the Companies Act, 2013 which reads as under:

"(16) Notwithstanding anything contained in this Act, any investigation or other action taken or initiated by the Serious Fraud Investigation Officer under the provisions of the Companies Act, 1956 (1 of 1956) shall continue to Cont.Case (C) No.610/2019 Page 17 be proceeded with under that Act as if this Act had not been passed."

According to Mr.Rajiv Nayar, learned Senior Advocate, by virtue of the aforesaid provision the inquiry or investigation into the matter has to be in accordance with the provisions of the Sections 234 and 235 of the Companies Act, 1956 and not in accordance to the rules or procedure prescribed in the Companies Act, 2013. We see much force in the aforesaid contention.

We, therefore, clarify and direct that an inquiry be held in pursuance to the direction issued by the learned writ Court strictly in compliance with the provisions contemplated under the Companies Act, 1956. The parties may raise all objections as may be permissible with the statutory authority causing an inquiry into the matter under the Companies Act, 1956 in pursuance to the communication or the complaints received.

In view of the above, the appeal and the pending application stand disposed of."

Summons dated 20.03.2019 issued by the respondents speaks about action taken in accordance with the Companies Act, 2013. Respondent Nos. 1 to 4 to clarify the position within two weeks.

List on 17th July, 2019.

Cont.Case (C) No.610/2019 Page 18 In the meanwhile, any coercive steps in terms of order dated 18.03.2019 (Annexure A-1) and summons dated 20.03.2019 (Annexure A-2) issued by the respondents shall be kept in abeyance. However in case the respondent Nos. 1 to 4 wish to proceed strictly in accordance with the directions issued by us on 18.03.2019, they may do so."

Assuming, the foregoing order dated 10.04.2019 passed by the

Division Bench took into its scope Healthcare as a group company of

Infra Realty, though, it is not so, the restraint order was to apply against

taking any coercive steps, which, mere issuance of summons would not

imply.

11. Seen from any angle, not even an iota of substance emerges

from the record to say that any act of the respondent Nos.1 to 3 invites

any order prayed for. The judgments relied upon by the petitioners are of

no avail. It would suffice to say, the initiation of contempt proceedings

depends on the facts and circumstances of a given case and that, it is to

be exercised in the discretion of the court where required, founded on the

well established principles of law.

12. There is no doubt in the mind of the court that the instant petition

preferred by Healthcare and one of its Directors is a calculative attempt

to involve the respondent No.1 to 3 in unnecessary litigation in an overt

Cont.Case (C) No.610/2019 Page 19 attempt to overawe them in discharge of their statutory obligations and

thereby, draw an undue advantage. Suffice it would be to observe, the

serious allegations for the business of Infra Realty being carried on in

fraud of its creditors, or otherwise for fraudulent or unlawful purpose -

which were sought to be initiated way back in the year 2012, continue to

remain at its infancy stage with the courts being clogged with vexatious

proceedings.

13. In view of the foregoing, the contempt petition along with CM

No. 43304/2019 is dismissed with costs of Rs.5,00,000/- (Five Lacs) out

of which Rs. 2,50,000/- shall be deposited with Delhi High Court

Advocates Welfare Trust and the remaining Rs.2,50,000/- to be deposited

with PM CARES Fund, within four weeks from today. In the event, the

costs are not so deposited, the Registry shall list the matter before Court

within one week of the expiry of the time granted.

A.K.CHAWLA, J.

JULY, 22, 2020/dm




Cont.Case (C) No.610/2019                                           Page 20