LI Network
Published on: December 12, 2023 at 12:22 IST
The Kerala High Court clarified the scope of the National Company Law Tribunal’s (NCLT) authority under Section 274(1) of the Companies Act, highlighting that the NCLT can only instruct the company, not its shareholders, to submit a written statement and objections during winding-up proceedings.
Justice C. Jayachandran issued this directive after examining Section 274(1) of the Companies Act, which outlines the “directions for filing a statement of affairs.”
The NCLT’s Kochi Bench had previously directed the petitioner to furnish a copy of the statement of affairs, subject to a payment of Rs.50,000/-.
Challenging this order, the petitioner relied on Section 274(1) of the Companies Act, arguing that such a directive applies exclusively to the company and not to the petitioner, who merely held a shareholder position in the company.
Upon scrutiny of the statutory provision, the court acknowledged the petitioner’s argument, deeming the impugned direction as ‘per se illegal.’
Consequently, the court set aside the directive and emphasized that winding-up proceedings should proceed in accordance with the law, with the company being directed to produce the statement of affairs if deemed necessary.
The case titled “K.N. Abdul Gafoor v. M/S Kasmisons Builders Pvt. Ltd. & Ors” resulted in the disposal of the case, affirming the petitioner’s stand on the limitations of NCLT directives in such matters.
