No ‘Proof of Receipt’ for Due Acknowledgement of Notice through Registered Post: CESTAT upholds the NCLT Order [Read Order]

The National Company Law Appellate Tribunal (NCLAT) upheld the National Company Law Tribunal (NCLT)order in the absence of ‘Proof of Receipt’ for due acknowledgement of notice through registered post.

The Rathna Textile Mills Private Limited, the appellant challenged the order passed by the National Company Law Tribunal. A Company Petition was filed by the Petitioner Shri V.R.A.R. Ramakrishnan, against the Respondents under Sections 397 and 398, read with Sections 402 and 406 of the Companies Act, 1956, challenging the transfer of Shares effected; allotment of shares and Appointments made by the Board in the year 1995-96.

It was averred that the Company never commenced its business and that the Registrar of Companies (“ROC”) issued a ‘Show Cause Notice’ in the year 1989, under Section 433(c) read with Section 439(e) of the Companies Act, 1956.  It was submitted by the Petitioner that Late Shri. T.S. Rathnasabapathy had sold the machinery of the Company for a less price, on account of which the Petitioner issued a Legal Notice to him on 02/02/1990.  On appeal, the NCLT has allowed the Company Petition.

It was alleged that NCLT had failed to consider Limitation, Forum Shopping, the fact that Share Application Money was used to purchase the asset, the fact that the Petitioner/Respondent had not contributed to the Share Application Money, the fact that a ‘Sale’ was challenged in a Civil Suit and the Company was not operating for past several decades which has a bearing on the alienation, but was not adjudicated upon by the NCLT.

It was evident that Form 32 for removal of the Respondent as Director was filed only on 01/12/2005 and the Petition was filed in April 2008, apart from the fact that the removal is interlinked with the subsequent development and forms a continuous act,  this Tribunal is of the considered view that the Petition is not barred by limitation.

In the absence of any proof that the Notices were actually 'served’ on the Respondents, it is not in dispute that the previous Notices were sent by Late Shri. T.S. Rathnasabapathy by ‘Registered Post Acknowledgement Due’, the two-member bench of  Justice M. Venugopal, Member (Judicial) and Shreesha Merla,  Member (Technical) viewed that the Notices were never served on the Petitioner/Respondent as there are no ‘Proofs of Receipt’, filed by the Appellant, herein. 

The Tribunal upheld the impugned order since there was no illegality or infirmity in the Impugned Order dated and dismissed the appeal.

To Read the full text of the Order CLICK HERE

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