Joint Settlement Petition Was to Be Allowed Where Matter Relating to Siphoning of Funds Was Settled Between Parties | SC

Case Details: Pratik Jayesh Vira Vs Sunshine Housing and Infrastructure (P.) Ltd. - [2024] 158 taxmann.com 372 (SC)

Judiciary and Counsel Details

• • Abhay Manohar Sapre & Indu Malhotra, JJ.
  • Rana Mukherjee, Sr. Adv. Amit Dhingra, Rahul Narayanan & Suryaveer Berry, Advs. for the Petitioner.
  • Sumit Attri, Vikash Kumar Jha, Samir Malik, Ravi Prakash & Chandra Prakash, Advs. for the Respondent.

Facts of the Case

In the instant case, the NCLT passed an order giving effect to a special resolution passed in the Extraordinary General Meeting (EoGM) of the respondent company for taking a loan from the financial institutions.

Concerning the allegation against the respondent regarding the siphoning of funds of the company, the NCLT also ordered the registry to provide an inspection of the financials of the company to the appellant.

The Appellant challenged the said order on grounds that it was the duty of AA to enquire itself or to direct a Forensic inquiry into the siphoning of funds. However, when the matter was taken up before NCLAT, a prayer was made by the appellant to adjourn the appeal on the ground that the parties were negotiating to settle the dispute.

However there was nothing on record to suggest that any negotiation had taken place, therefore, the plea of the appellant was rejected by the NCLAT. The NCLAT further held that since the said resolution had not been stayed by AA, an AA order also shows that no prayer was made by any of the parties to stay the resolution.

Thus, the decision taken vide resolution passed by EOGM was to be given effect, and the appeal against the order of AA was to be dismissed. NCLAT was also of the view that orders passed by AA or observations made by NCLAT would not come in the way of parties to settle disputes.

Supreme Court Held

On appeal, the Supreme Court observed that the dispute had been settled between the parties and joint applications for settlement on behalf of these parties had been filed along with affidavits.

The Supreme Court also held that the prayer was made for the disposal of the instant appeal in terms of said compromise and the prayer made in joint applications was accepted. Accordingly, the appeals were to be disposed of.