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The SC Bench comprising of Justices Indu Malhotra and MR Shah held the observations made by National Company Law Tribunal regarding the sufficiency of satisfaction of one of the conditions u/s 130 of Companies Act is sufficient to pass an order to open the accounts and all the provisions of Section 241/242, Section 211/212 and Section 130 of Companies Act, must be read co-jointly.
In this case, Hari Sankaran v. Union of India, tribunal passed order u/s 130 of Companies Act to re-open and re-cast the financial statements of Infrastructure Leasing & Financial Services Ltd; IC & FS Transport Networks Ltd for last 5 years, which was also affirmed by the Appellate Tribunal (NCLAT).
The Tribunal taking note of the word ‘or’, stated that, (i) the relevant earlier account were prepared in a fraudulent manner; (ii) the affairs of the company were mismanaged during the relevant period casting a doubt on the reliability of the financial statement. The SC held the Tribunal has passed order on being satisfied with the second part of the provision. On fair reading of Section130 of Companies Act, if either of the conditions is satisfied, then the order passed u/s 130 of Companies Act is justified.
The Bench also said the observations made u/s 241/242 of Companies Act is of a relevant observation made u/s 130 of Companies Act, while passing an order. The SC rejected the contention that all 3 sections are in different chapters, different fields and used under different circumstances, thus any observation made must be related only to that provision, wherein the Bench stating all the three Sections i.e. Section 241/242, Section 211/212 and Section 130 of Companies Act, must be read co-jointly. Since, while passing an order under particular provision, that order should have effect of other provisions of the Act, also.
ORDER – Civil Appeal No. 3747 of 2009
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