CS NEWS Connecting Statutes 2016

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1 CS NEWS Connecting Statutes 2016 J Sundharesan & Associates Governance & Compliance Advisors 63/1, Makam Plaza, 3rd Floor, West Wing, 3rd Main Road, 18th Cross, Malleshwaram, Bengaluru Phone: / 39, Cell: The year of Innovation. To conform or perform Initiative by J Sundharesan

2 Filing of Annual Return (MGT-7) CS NEWS INSIDE! Corporate Development Judicial Dharam Vir & Aditya Umang Vir V. Jaiprakash Associates Ltd [CCI] Singer India Ltd V. Chander Mohan Chadha & Ors[Sc] From the Government Date of coming into force of certain sections of the Companies Act, 2013 Relaxation of additional fees for filing Form IEPF-1 Date of coming into force of certain sections of the Companies Act, 2013 Save our Earth Jamshedpur s Plastic Roads initiative is a lesson for all Countries. BOARD ANATOMY book authored by J. Sundharesan is now available at amazon.in 2

3 Filing of Annual Return (MGT-7) Section 92 (1) of the Companies Act, 2013: Every company shall prepare an annual return in e-form MGT-7 comprising of particulars as they stood at the close of the financial year. The e-form MGT-7 shall contain the details as follows: 1. The registered office, principal business activities, particulars of its holding, subsidiary and associate companies; 2. The details of shares, debentures and other securities and shareholding pattern; 3. The indebtedness; 4. The details of members and debenture-holders along with changes therein since the close of the previous financial year 5. The details of promoters, directors, key managerial personnel along with changes therein since the close of the previous financial year; 6. The Meetings of members or a class thereof, Board and its various committees along with attendance details; 7. Remuneration of directors and key managerial personnel; 8. Penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment; 9. Matters relating to certification of compliances, disclosures as may be prescribed; 10. Shareholding pattern of the company; and such other matters as required in the form. As per Rule 11 (1) of the Companies (Management and Administration) Rules, 2014, the following is required to be complied with: 1. Every company shall prepare its annual return in e-form MGT The annual return, filed by a listed company or a company having paid-up share capital of ten crore rupees or more or turnover of fifty crore rupees or more, shall be certified by a Company Secretary in practice and the certificate shall be in Form No. MGT-8. The attachments to e-form MGT-7 are: 1. List of Shareholders, Debenture holders; 2. Approval letter for extension of AGM; if applicable; 3. Copy of MGT-8; if applicable 4. Optional Attachment(s), if any 3

4 Due Date for filing this form (Without additional fees): Every company shall file with the Registrar a copy of the Annual Return (MGT-7), within 60 days from the date of Annual General Meeting or where no annual general meeting is held in any year within sixty days from the date on which the annual general meeting should have been held, together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed. Extract of Annual Return: 1. The extract of the annual return to be attached with the Board s Report shall be in Form No. MGT A copy of the annual return shall be filed with the Registrar with such fee as may be specified for the purpose. Penalty for non-compliance: 1. If a company fails to file its annual return before the expiry of 300 days from the date of Annual General Meeting, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakhs rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both. 2. If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees. 4

5 Corporate Development Judicial CASE LAW Dharam Vir & Aditya Umang Vir V. Jaiprakash Associates Ltd [CCI] DECIDED ON September 14, 2016 LEGISLATION Competition Act, 2002 BRIEF FACTS Competition Act, integrated township- non-delivery of possession of flats even after 5 years- escalation in the price- whether constitutes abuse of dominance and adopting anti competition agreement- Held, Yes. Facts: The Informants have, on , jointly applied for allotment of one apartment at Crescent Court at Jaypee Greens, Greater Noida, a project of the OP. They even paid the consideration in full. Yet the OP did not complete the construction and deliver possession of the flat. The informant have further alleged that the terms and conditions of the application form containing Standard Terms and Conditions of Allotment of One Estate Home/ Villa/ Townhome/ Apartment/ Sea Court/ Sun Court/ Crescent Court are unfair and abusive in nature in terms of Section 4 of the Act. Some of the clauses which are unfair, one sided and loaded in favour of the Opposite Party are Clause 2.2, Clause 2.4, Clause 4.3, Clause 5.7, Clause 7.2 and Clause 7.3. The Informants have submitted that the agreement does not contain a proportionate liability clause to fasten commensurate penalty/charge on the Opposite Party for breach in discharge of its obligations. Based on the above averments and allegations, the Informants have filed the instant information seeking various reliefs as detailed in the prayer clause of the information. Decision: Investigation by DG ordered by majority decision. Reason: The Commission has perused the material available on record besides hearing the learned counsel for the parties. In the present case, the Informants have essentially alleged abuse of dominant position by the Opposite Party. The land on which the said project is being developed has been transferred to the OP by local authorities as part of the concession agreement that was entered into for development of Yamuna Expressway. The said land has been transferred with mixed use rights by the authority for real estate development and the entire land is located at a single location spread over 452 acres which is known as Jaypee Greens, Greater Noida. It is observed that the OP has various residential options within Jaypee Greens, Greater Noida being offered to the buyers at various price bands. OP has advertised the said residential project by mentioning all the aforementioned facilities as part of the said project indicating that what is offered is not a standalone apartment. The Commission observes that as the said residential 5

6 project and all the aforementioned facilities are being developed by the OP, and as the said residential project and the amenities mentioned above are being offered together, it indicates that the services offered by the OP are not only different but are neither interchangeable nor substitutable with the services of a real estate developer offering a standalone apartment in a project. In sum, residential units in an integrated township are not substitutable with residential units in a cooperative society or a group housing scheme or any other residential units built in standalone projects as such residential projects do not include all the facilities that an integrated township offers. In such a scenario, a consumer who opts to buy a residential unit in an integrated township will not prefer a residential unit elsewhere. The distinguishing and intrinsic characteristics of Integrated Township make the residential units located in such townships a distinct relevant product which is not substitutable with residential units in other standalone residential projects/towers. Accordingly, the Commission is of the prima facie view the relevant product market is provision of services for development and sale of residential/ dwelling units in integrated townships. The relevant geographic market, therefore, seems to be Noida and Greater Noida. Hence, prima facie, the relevant market in the present case appears to be provision of services for development and sale of residential/ dwelling units in integrated townships in Noida and Greater Noida. At this stage, it would be appropriate to refer to the case of Sunil Bansal etc. v. Jaiprakash Associates Ltd. etc., Case Nos. 72 of 2011, 16, 34 and 53 of 2012, and 45 of 2013 (Jaypee cases) decided by the commission vide its final order passed on The Commission through its majority order held the relevant market as the market for provision of services for development and sale of residential apartments in Noida and Greater Noida regions. While delineating the relevant market, it was opined by the Commission that integrated township was not a distinct product market as it was an evolving concept and at this stage of development of markets, it could not be said with certitude that integrated township constituted a separate product market from standalone residential projects. The Commission has carefully examined the decision rendered in Jaypee cases. After bestowing thoughtful consideration, the Commission is of the considered opinion that the relevant market was not determined in the majority order correctly. With due deference to the majority decision, the Commission disagrees with the reasoning adopted therein. For the reasons given in the minority order and the observations made hereinabove in this order, the Commission is of the prima facie opinion that the relevant market in the present matter would be provision of services for development and sale of residential/ dwelling units in integrated townships in Noida and Greater Noida. In the relevant market defined supra, the minority order in Japyee cases, on the basis of number of dwelling units, financial resources and land resources as well as vertical integration, found the OP to enjoy a dominant position. For the reasons given in the said order, the Commission is also of prima facie opinion that the OP is in a dominant position in the relevant market in the present case as well. On a careful perusal of the various terms as detailed above, prima facie, it appears that the above clauses are unfair, onerous, one-sided and tilted favorably towards the Opposite Party and call for a detailed investigation. Accordingly, the Commission holds that prima facie the Opposite Party appears to have contravened the provisions of Section 4 of the Act. Resultantly, the Director General (DG) is directed to cause an investigation to be made into the matter and to complete the investigation within a period of 60 days from receipt of this order. 6

7 CASE LAW Singer India Ltd V. Chander Mohan Chadha & Ors [SC] DECIDED ON August 13, 2004 LEGISLATION Companies Act, 1956 BRIEF FACTS Companies Act, 1956 read with Delhi Rent Control Act- shop let out to American company- the company merged with Indian company- landlord initiated eviction proceedings on the ground of sub-letting- contested that the transfer was due to merger which is by operation of law- whether Tenable-Held, No. Facts: Respondent landlord let out one Shop to M/s. Singer Sewing Machine Company, incorporated under the laws of the State of New Jersey, USA, (hereinafter referred to as American Company ), vide a registered lease deed dated In the year 1982, the landlord filed an eviction petition on the ground, inter alia, that the American Company, without obtaining any written consent from the landlord, had parted with the possession of the premises in dispute in favour of Indian Sewing Machine Company Limited, and it was the said company which was in exclusive possession of the premises and thereby it was liable for eviction in view of Section 14(1)(b) of the Delhi Rent Control Act (hereinafter referred to as the Act ). The eviction petition was contested by the appellant on the ground inter alia, that a direction was issued to the American Company to reduce its share capital to 40 per cent in order to carry on business in India in view of Section 29 of Foreign Exchange Regulation Act, 1973 (hereinafter referred to as FERA ). Accordingly, Company petition was filed by the Indian company before the Bombay High Court under which a scheme of amalgamation was sanctioned whereby the undertaking in India of the American Company was amalgamated with the Indian Company. It was submitted that the Indian Company is no other entity except the legal substitute of the American Company and in substance there is no case of sub tenancy. The Additional Rent Controller, Delhi dismissed the eviction petition, but this was reversed by the Rent Control Tribunal in the appeal preferred by the landlord and eviction petition was allowed. The Second Appeal preferred by the appellant was dismissed by the High Court. During the pendency of the appeal before the Rent Control Tribunal, the name of M/s. Indian Sewing Machine Company was changed as Singer India Limited which is the appellant herein. Decision: Appeal Dismissed Reason: The effect of parting of possession of the tenanted premises as a result of sanction of scheme of amalgamation of companies under Section 394 of the Companies Act by the High Court has also been considered in two decisions of this Court. In M/s. General Radio and Appliances Co. Ltd and others v. M.A. Khader 1986 (2) SCC 656, which is a decision by a bench of three learned Judges, the premises had been let out to M/s. General Radio and Appliances Co. Ltd. On account of a scheme of amalgamation sanctioned by the High Court, all property, rights and powers of every description including tenancy right, held by M/s. General Radio and Appliances Co. Ltd. had been blended with M/s. National Ekco Radio & Engineering Co. Ltd. Thereafter the landlord instituted proceedings for eviction on the ground 7

8 of unauthorized sub-letting. It was held that the order of amalgamation was made by the High Court on the basis of the petition filed by the transferor company in the Company Petition and, therefore, it cannot be said that this is an involuntary transfer effected by the order of the Court. It was further held that appellant No. 1 Company was no longer in existence in the eyes of law and it had effaced itself for all practical purposes. The appellant No. 2 Company i.e., the Transferee Company, was not a tenant in respect of the suit premises and it was appellant No. 1 Company which had transferred possession of the suit premises in favour of the appellant No. 2 Company. The Court further took the view that under the relevant Act, there was no express provision that in case of any involuntary transfer or transfer of the tenancy right by virtue of a scheme of amalgamation sanctioned by the High Court, such a transfer will not come within the purview of Section 10(ii) (a) of Andhra Pradesh Building (Lease, Rent and Eviction) Control Act. On this finding, it was held that the appellant was liable for eviction. Cox & Kings Ltd. & Anr v. Chander Malhotra 1997 (2) SCC 687 is also a decision by a bench of three learned Judges and arose out of proceedings for eviction under Section 14(1)(b) of Delhi Rent Control Act. Here, the premises were given on lease to Cox & Kings (AGENTS) Limited, a company incorporated under the United Kingdom Companies Act (for short, Foreign Company ). A petition for eviction was of sub-letting to Cox & Kings Limited, a company registered under the Indian Companies Act (for short an Indian Company ). It was urged that the transfer of leasehold interest from the Foreign Company to the Indian Company was by compulsion, it was an involuntary one and, therefore, it was not a case of sub- letting within the meaning of Section 14(1) (b) of the Act. It was held that under FERA, there was no compulsion that the premises demised to the Foreign Company should be continued or given to the Indian Company. On the other hand, under the agreement executed between the Foreign Company and the Indian Company, incidental to the assignment of the business as a growing concern, the Foreign Company also assigned the monthly and other tenancies and all rented premises of the assignor in India to the Indian Company. The Court, accordingly, concluded that though by operation of FERA the Foreign Company had wound up its business, but under the agreement it had assigned the leasehold interest in the demised premises to the Indian Company which was carrying on the same business in the tenanted premises without obtaining the written consent of the landlord and, therefore, it was a clear case of sub-letting. These cases clearly hold that even if there is an order of a Court sanctioning the scheme of amalgamation under the Companies Act where under the leases, rights of tenancy or occupancy of the Transferor Company get vested in and become the property of the Transferee Company, it would make no difference in so far as the applicability of Section 14(1)(b) is concerned, as the Act does not make any exception in favour of a lessee who may have adopted such a course of action in order to secure compliance of law. It was next contended that on amalgamation Singer Sewing Machine Company (American Company) merged into Indian Sewing Machine Company (Indian Company) shedding its corporate shell, but for all practical purposes remained alive and thriving as part of the larger whole. He has submitted that this Court should lift the corporate veil and see who are the directors and shareholders of the Transferee Company and who are in real control of the affairs of the said company and if it is done it will be evident there has been no sub-letting or parting with possession by the American Company. It is not open to the 8

9 Company to ask for unveiling its own cloak and examine as to who are the directors and shareholders and who are in reality controlling the affairs of the Company. This is not the case of the appellant nor could it possibly be that the corporate character is employed for the purpose of committing illegality or defrauding others. It is not open to the appellant to contend that for the purpose of FERA, the American Company has effaced itself and has ceased to exist but for the purpose of Delhi Rent Control Act, it is still in existence. Therefore, it is not possible to hold that it is the American Company which is still in existence and is in possession of the premises in question. On the contrary, the inescapable conclusion is that it is the Indian Company which is in occupation and is carrying on business in the premises in question rendering the appellant liable for eviction. 9

10 From the Government Date of coming into force of certain sections of the Companies Act, 2013 [Issued by the Ministry of Corporate Affairs vide F. No. A-45011/14/2016- Ad-IV, Published in the G.O.I. Extraordinary, Part-II, Section-3(ii), dated ] In exercise of the powers conferred by sub-section (3) of section 1 of the Companies Act, 20l3 (18 of 20l3), the Central Government hereby appoints 9th September, 2016 as the date on which the provisions of section 227, clause (b) of sub-section (1) of section 242, clauses (c) and (g) of sub-section (2) of section 242, section 246 and sections 337 to 341 (to the extent of their applicability for section 246), of the said Act shall come into force. Relaxation of additional fees for filing Form IEPF-1 [Issued by the Ministry of Corporate Affairs vide General Circular No 10/2016, dated ] 1. The Ministry had deployed the V2R2 version of MCA21 on 28th March, Consequently, the Form 1- INV as prescribed under the Companies Act, 1956 was not available for filing on the MCA21 portal since 25th March, In view of this and deployment of the new Form IEPF-1 (which replaces earlier Form 1-INV) after the notification of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 [IEPF (AATR) Rules] with effect from 7th September, 2016, it is clarified that companies that have not filed the requisite information in Form 1INV can now file the information in Form IEPF-1. Further, as a onetime measure, for companies with due date for filing of the form 1-INV falling between the period 25th March 2016 to 6th September, 2016, the companies may file the form IEPF- 1 without additional fees on or before This issue with the approval of the Competent Authority. Date of coming into force of certain sections of the Companies Act, 2013 [Issued by the Ministry of Corporate Affairs vide Folio No: F. No. 5/27/2013- IEPF (Part), dated ] In exercise of the powers conferred by sub-section (3) of section 1 of the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints 7th September, 2016 as the date on which the provisions of section 124, sub-sections (1) to (4), (6) [with respect to the manner of administration of the Investor Education and Protection Fund] and (8) to (11) of section 125 of the said Act shall come into force. 10

11 SAVE OUR ENVIRONMENT JAMSHEDPUR S PLASTIC ROADS INITIATIVE IS A LESSON FOR ALL COUNTRIES Disposal of waste plastic is no longer a problem in the steel city with Jamshedpur Utility and Services Company (JUSCO) using bitumen technology on waste plastic, ranging from polybags to biscuit packets, for constructing roads. JUSCO, a 100 per cent subsidiary company of Tata Steel which maintains and provides municipal services in Tata command area of the city, has constructed kms road in the steel city as well as Tata Steel Works besides widening 22 roads using the environment-friendly technology of utilizing waste plastic. Claiming that there is no maintenance cost involved for the first five years, Anand, who is an environment engineer, said that for every stretch of such one km long and four-metre-wide road, one tonne of bitumen costing Rs 50,000/- is saved. The use of bitumen has been reduced by 7 per cent ever since JUSCO began using waste plastic in road construction work, he said, adding that the quality and longevity of roads made of waste plasticaggregate-bitumen was two times better than bitumen road. Besides being water resistant, it has better binding property, higher softening point, can withstand high temperature and higher load, has lower penetration value, costs less as compared to bitumen road and has no toxic gas emission, Dandpat said. Due to the JUSCO initiative, the city will now have strong, durable, eco-friendly roads which will also relieve the residents from the sight of heaps of plastic waste. Source: Disclaimer: Views and other contents expressed or provided by the contributors are their own and the firm does not accept any responsibility. The firm is not in any way responsible for the result of any action taken on the basis of the contents published in this newsletter. All rights are reserved. For Private ******* circulation only J Sundharesan ****** 11