Topic
Business and corporate legal matters
The NCLAT ruled that orders dismissing contempt petitions are not appealable under Section 19 of the Contempt of Courts Act, 1971, as the provision only permits appeals against orders punishing for contempt. This bars aggrieved parties from challenging dismissal of contempt proceedings before the Appellate Tribunal.
Bombay High Court upholds Official Liquidator's claim to five paintings in Mafatlal Dyes liquidation, rejecting family claimants' objections and appointing art auction expert.
The Delhi High Court stayed a promoter’s termination, holding that dismissal in breach of the shareholders agreement warrants interim relief under Section 9 of the Arbitration Act, 1996, protecting promoter rights pending arbitration.
NCLAT Chennai held that at the first-motion stage of a scheme merger under Sections 230-232 of the Companies Act 2013, tribunals cannot reject the scheme merely because shareholders and creditors have not yet voted; the matter must proceed to their approval. The ruling clarifies that premature tribunal interference undermines the statutory merger process and affects companies seeking amalgamations.
NCLAT quashed NCLT orders directing ED and CBI investigations under Section 213(b) without recording satisfaction of statutory prerequisites or hearing affected parties, holding that procedural safeguards are mandatory before ordering corporate investigations.
Delhi HC ordered a forensic audit of 17 banks to trace assets hidden to evade a foreign arbitral award, holding that any court-issued undertaking overrides statutory transfer freedoms. It sentenced contempt violators to six months’ imprisonment and attached their assets, signalling that attempts to dissipate award-related property will attract rigorous investigation and severe sanctions.
By rejecting the writ, the Delhi High Court clarified that the proper forum for MCA investigations is the place where the substantive corporate dispute arises, reinforcing the nexus test for Article 226 jurisdiction. This guidance applies to companies facing regulatory probes across India.
NCLAT upheld NCLT’s ruling that a 100% share transfer and property transfer were illegal for non-compliance with mandatory deed requirements under Section 56(1) Companies Act. The decision underscores the strict procedural compliance needed for share transfers to be legally valid.
Kerala High Court sets aside an interim injunction order after finding the lower court relied on an incorrect factual assumption about the defendants' directorship in a family-corporate property dispute. The matter is remanded for fresh consideration, reinforcing that interim relief cannot stand on flawed factual premises.
The Kerala High Court has ruled that criminal courts retain the authority to prosecute wrongful withholding of company property under Section 452 of the Companies Act, 2013, rejecting the argument that adjudication is exclusively vested in the Adjudicating Officer post-2020 amendments. This reaffirms the criminal liability of former employees who retain company assets, ensuring that civil disputes do not shield criminal misconduct from prosecution.
NCLAT ruled that fraudulent transactions under Section 242 of the Companies Act can be set aside without the consent of involved parties, reinforcing RBI directions as legally binding. The judgment impacts insolvency proceedings and corporate governance, particularly for NBFCs and group companies engaged in sham lending arrangements.
NCLAT rules that parties in oppression and mismanagement proceedings under Section 242(4) of the Companies Act have an absolute right to file a detailed para-wise reply after remand, reinforcing principles of natural justice. The judgment clarifies that this right cannot be denied even if procedural defects exist, ensuring fair adjudication in corporate disputes.
NCLAT holds that contempt proceedings cannot be sustained if the underlying court order rests on a mistaken factual basis. The ruling clarifies that compliance must be objectively possible-disbursements made prior to the order render contempt inapplicable, offering critical protection to liquidators and parties acting in good faith.
The Madhya Pradesh High Court ruled that a company’s loan for seed farming qualifies as an agricultural purpose under Notification 25.09.2006, entitling it to stamp duty exemption on mortgage deeds-even though the borrower is a corporate entity. This clarifies that corporate structure does not disqualify agricultural financing from statutory exemptions, benefiting agri-entrepreneurs and rural lenders alike.
Bombay High Court rules that GST authorities cannot initiate proceedings under Section 74 CGST Act against a company that ceased to exist post-amalgamation. The judgment clarifies that Section 87 CGST Act does not empower tax authorities to pursue demands against successor entities, quashing a Rs. 42.65 crore demand and reinforcing corporate legal continuity principles.