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Memorial
Memorial
BEFORE THE NATIONAL COMPANY LAW TRIBUNAL, PRINCIPAL BENCH, NEW DELHI
DAEDALUS CAPITAL
CRETE PARTNERS
HOMER …PETITIONERS
V.
ICARUS
MINOTAUR CAPITAL
MINOS VENTURES
AND
V.
ii
TABLE OF CONTENTS
ISSUE 2: WHETHER THERE HAS BEEN MISMANAGEMENT AND OPPRESSION IN THIS CASE? ............ 19
iii
ISSUE 3: WHETHER THE CORPORATE INSOLVENCY PETITION AGAINST TROY MUST BE ADMITTED BY
iv
LIST OF ABBREVIATIONS
& And
¶ Paragraph
Anr. Another
AP Andhra Pradesh
Art. Article
Co. Company
Com Company
HC High Court
Hon’ble Honourable
Ltd. Limited
Mah Maharashtra
Ors. Others
Pvt. Private
SC Supreme Court
v. Versus
Vol. Volume
vi
INDEX OF AUTHORITIES
CASES REFERRED
Hemant D. Vakil v. RDI Print and (1995) 84 Com Cases 838 (CLB
6. 15
Publishing P. Ltd. – N. Delhi)
11. Hasham Investment & Trading Company 2018 SCC OnLine NCLAT 583 12
Pvt. Ltd. & Ors.
vii
Customs
Sangramsinh P. Gaekwad v. Shantadevi P.
20. (2005) 11 SCC 314 12
Gaekwad
Transmission Corporation of AP v.
25. Civil Appeal No. 9597 of 2018 19
Equipment Conductors and Cables Ltd.
viii
STATUTES
The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2018
BOOKS REFERRED
A.K. Majumdar and Dr. G.K. Kapoor, “Company Law and Practice”, 18t ed., 2013, Taxmann
Publication
Dr. S.C. Tripathi, “Modern Company Law”, 5th ed., 2012, Central Law Publications
Gower and Devis, “Principle of Modern Company Law”, 9th Edition (2012) at page 1160
N.K. Jain, Company Law, “Law and practice”, Deep and Deep Publications Pvt. Ltd., 2011
Palmer’s Company Law, 25thed. (2010), Vol. 2 at page 11097
Pollock & Mulla, “The Indian Contract Act”, Vol. 2, 14th ed., 2014
R. R. Penningtonm “Company Law”, 6th ed., 1990
Ramaiyya, “Guide to the Companies Act”, Vol. 2, 18th ed., 2015
JStor
Lexis Nexis Legal
Manupatra Online Resources
SCC Online
ix
LEGAL DICTIONARIES
Garner, Bryan A, Black‟s Law Dictionary, West (Thomson Reuters), United States of
America (9th Ed. 2009)
Jonathan Law And Elizabeth Amartin, Oxford Dictionary Of Law, Oxford University Press,
London (7th ed. 2009)
Justice V R Krishna Iyer, Dr. Justice A R Lakshmanan, Wharton‟s Concise Law Dictionary,
Universal Law Publishing Co., New Delhi (15th ed. 2009)
Justice Y V Chandrachud, R Ramanatha Aiyar Concise Law Dictionary, Lexis Nexis
Butterworths Wadhwa, Nagpur (3rd ed. 2011)
M K Pithisaria, Mukesh Kumar Pithisaria, K J Aiyar Judicial Dictionary, Lexis Nexis
Butterworths Wadhwa, Nagpur (15th ed. 2011)
Mick Woodley, Osborn‟s Concise Law Dictionary, Sweet And Maxwell, London (11th ed.
2009)
STATEMENT OF JURISDICTION
The Petitioners have approached this Hon’ble Tribunal under Sec 241 of the CA 20131 (specifically,
under clause a) for oppression and mismanagement being caused to the Petitioners due to an array of
incidents caused by the majority investors. The Petitioners have also approached the Hon’ble NCLT
under Sec 7 of the IBC 20162 being a petition for insolvency.
The present memorandum sets forth the facts, contentions and arguments on behalf of the
Petitioners in the present matter.
1
Sec 241. Application to Tribunal for relief in cases of oppression, etc. – (1) Any member of a company who complains
that— (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a
manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the
company
2
Sec 7 – Initiation of corporate insolvency resolution process by financial creditor.
xi
STATEMENT OF FACTS
xii
ISSUES RAISED
II. WHETHER THERE HAS BEEN MISMANAGEMENT AND OPPRESSION IN THIS CASE?
III. WHETHER THE CORPORATE INSOLVENCY PETITION AGAINST TROY MUST BE ADMITTED
BY THE NCLT?
xiii
SUMMARY OF ARGUMENTS
The present matters have been filed at the NCLT’s Principal Bench in New Delhi as it is the most
efficacious remedy available to the aggrieved petitioners. The first case is regarding oppression and
mismanagement against the minority investors which has been filed at the NCLT under Sec 241 of
the CA 2013. On the other hand, the petitioner has approached the NCLT for insolvency proceedings
of Troy under Sec 7 of the IBC being a financial creditor.
ISSUE 2: WHETHER THERE HAS BEEN MISMANAGEMENT AND OPPRESSION IN THIS CASE?
The minority investors have approached this Hon’ble Tribunal to seek an action against the various
incidents of oppression and mismanagement. Petitioners have highlighted instances of Inflated
Valuations in the DRHP, Trademark Sold by Icarus is Questionable, Loan given to Troy without
required approvals to prove the claims. Moreover, due to these acts of Icarus and the majority
investors, there is an appeal for Removal of Icarus as Chairman and CEO. Moreover, his lifetime
term of acting as a director has also been challenged being in violation of the CA 2013.
ISSUE 3: WHETHER THE CORPORATE INSOLVENCY PETITION AGAINST TROY MUST BE ADMITTED
BY THE NCLT?
It is humbly submitted befre this Hon’ble Tribunal that the application for insolvency has been
challenged by the RBI by claiming two grounds. In contradiction to both these grounds, the
Petitioners claim that: firstly, the show-cause notice issued by the RBI does not qualify as a “dispute”
because it is not a suit or arbitration proceedings; secondly, Troy is an NBFC but its functions are not
limited to those provided for in the definition of “financial service” and thus it cannot be excluded
from the scope of “corporate debtor” and this matter will fall under the IBC.
xiv
ARGUMENTS ADVANCED
3
Sec. 241(1)(a), Companies Act, 2013
4
SP Jain v. Kalinga Tubes Ltd, AIR 1965 SC 1535
15
Since the required conditions are met in the present case, the petitioners have the requisite
locus standi to file the petition against the company.
5
SP Jain v. Kalinga Tubes Ltd. & Ors., AIR 1965 SC 1535
6
M/s. India Awake for Transparency v. M/s. Hasham Investment & Trading Company Pvt. Ltd. & Ors., 2018
SCC OnLine NCLAT 583
7
Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad, (2005) 11 SCC 314
16
there is no other ‘dispute’ that can bar this petition [1.2.1.] as well as infringement of the
interest of the petitioners [1.2.2.]
8
C.P. No. 45/I&BP/NCLT/MAH/2017
9
Vidhi Bankruptcy Research Programme, “Understanding the Insolvency and Bankruptcy Code, 2016:
Analysing
Developments in Jurisprudence”, Insolvency and Bankruptcy Board of India (IBBI), available at:
https://www.ibbi.gov.in/webadmin/pdf/whatsnew/2019/Jun/190609_UnderstandingtheIBC_Final_2019-06-
09%2018:20:22.pdf (last accessed on 22nd October, 2019)
10
Bankruptcy Law Reform Committee, Report of the Bankruptcy Law Reform Committee, Vol 1 (2015), Para
4.2
11
¶13, Moot Proposition, 8th NLIU National Corporate Law Moot, 2019
12
IDBI Bank Ltd. v. Official Liquidator, 2019 SCC OnLine SC 1371
17
in order to realise the money of the loan which contains there interests of the aggrieved
minority shareholders.
18
ISSUE 2: WHETHER THERE HAS BEEN MISMANAGEMENT AND OPPRESSION IN THIS CASE?
11. It is humbly submitted before this Hon’ble Tribunal that there has been oppression and
management in the instant matter. It is contented by the petitioners that there have been
various instances where the majority shareholders have disregarded the interests of
minority shareholders. Therefore, this invokes the provision of Sec 241(a) of the CA 2013
for correcting this wrong by filing of the present application before the NCLT. As there is
no other equally efficacious remedy available to the aggrieved minority shareholders, 13
this petition must be allowed.
13
Malbar Industrial Co. Ltd. v. Malbar Industrial Co. Ltd., 1986 (59) Com. Cas. 969
14
Keynote Capitals Ltd., In re, (In matters of Pyramid Saimira Theatre Ltd.), WTM/KMA/IVD/280/07/2010
15
¶19, Moot Proposition, 8th NLIU National Corporate Law Moot, 2019
19
looking statements must not be made. Failure in painting a true picture of the company’s
financial standing is a violation of SEBI (ICDR) Regulations, 2018 under Reg. 60 (4). To
establish this case, we would like to place on record that there is a definite ‘material
effect’ on the company’s image by making incorrect statements.16 The Petitioners contend
that by inclusion of the ‘community adjusted EBITDA’, the company has negated all its
expenses and overvalued its financial standing. Therefore, it has violated the law.
16
In the matter of IPO of Onelife Capital Advisors Ltd., WTM/RKA/IVD/ID-10/35/2013
17
¶17, Moot Proposition, 8th NLIU National Corporate Law Moot, 2019
18
Hemant D. Vakil v. RDI Print and Publishing P. Ltd., (1995) 84 Com Cases 838 (CLB – N. Delhi)
19
Enviro-Legal Action v. Union of India & Ors., (2011) 8 SCC 161
20
Sahakari Khand Udyog Mandal Ltd v. Commissioner of Central Excise & Customs, (2005) 3 SCC 738
21
State of Gujarat v. Essar Oil Ltd., (2012) 3 SCC 522
20
Keeping in mind the view taken by the law on this matter, directions must be issued to ensure
that there is full disgorgement of gains of the wrongdoer.22
22
Uddar Gagan Properties v. Sant Singh & Ors., (2016) 11 SCC 378
23
Shanta Prasad Chakraborty v. Madarkhat Tea Co. Pvt. Ltd., 2018 SCC OnLine NCLT 804
24
NarainDas (K.) v. Bristol Grill (P.) Ltd., (1997) 90 Com Cases 79 (CLB - New Delhi)
25
VS Krishnan, 2008 (3) SCC 363, at ¶10
26
Pramod Jain v. SEBI, (2016) 10 SCC 243
21
power for personal gains or ulterior motives.’27 This transaction indicates a lack of
probity and fair dealing in the affairs of a company to the prejudice of some portion of its
members and to public interest,28 therefore, this act of Icarus must be declared unlawful.
27
Mr. R. Prasanth v. UBC Engineers Private Limited & Ors., 2017 SCC OnLine NCLT 968
28
Scottish Co-operative Whole Sale Society Ltd. v. Meyer, (1958) 3 All ER 66 (HL)
29
Cyrus Investment Pvt. Ltd. & Anr. v. Tata Sons Ltd. & Ors., 2017 SCC OnLine NCLAT 46
30
Piankin Kharwar v. Nagina Processors Pvt. Ltd.& Ors., (2018) 208 Comp Cas 721
22
26. It is humbly submitted before this Hon’ble Court that the present corporate insolvency
petition initiated PantheonWorkspace against Troy must be allowed. Icarus had allowed a
loan of INR 3500 crore which is crucial for PantheonWorkspace to improve its financial
status so that it can successfully pass its application for IPO.
27. The Hon’ble Supreme Court in Innoventive Industries v. IDBI Bank31 has explained that
when such an application for insolvency is filed with the NCLT by a financial creditor, it
must only have to deliberate is there is an existing debt or not. The NCLT does not have
to deliberate upon the features of the debt given. Since it is clear from the facts that a loan
as huge as that of INR 3500 crore has been given to Troy, there is an existence of a debt.
This qualifies the instant matter to be admitted by the NCLT.
31
Company Appeal (AT) (Insolvency) No. 1 & 2 of 2017
32
AIR 2017 SC 4532
33
(2018) 17 SCC 662
23
31. In the case of M/s Jindal Saxena Financial Services Pvt. Ltd. V. M/s Mayfair Capital Pvt.
Ltd34 held that the fact that the applicant-respondent is registered as an NBFC would not
be sufficient to assume that all transactions irrespective of their nature and character
would be regarded as activity of a financial service provider.
32. Moreover, the Hon’ble Apex Court has also clarified in Transmission Corporation of AP
v. Equipment Conductors and Cables Ltd.,35 that the NCLT must only have to examine if
there is an ongoing dispute, and not the merits of that dispute, to determine whether
insolvency petition must be admitted by the Tribunal or not. Moreover, it also clarified
that this ‘dispute’ is in terms of a civil suit or an arbitration proceedings. Since a show-
cause notice does not mean either a suit or arbitration proceedings, it cannot be a reason
to invalidate the insolvency proceedings.
34
Company Appeal (AT) (Insolvency) Nos. 32 & 50 of 2018
35
Civil Appeal No. 9597 of 2018
24
36
(2011) 8 SCC 333
37
Randhiraj Thakur v. Jindal Saxena Financial Services Pvt. Ltd. & Anr., Company Appeal (AT) (Insolvency)
Nos. 32 & 50 of 2018
38
¶12, Moot Proposition, 8th NLIU National Corporate Law Moot, 2019
39
Jindal Saxena Financial Services Pvt. Ltd. v. Mayfair Capital Pvt. Ltd., C.P. No. (IB)-84(PB)/2017
40
Bernstein Litowitz Berger & Grossmann LLP v. UOI & Ors., 2014 SCC OnLine Del 4857
25
PRAYER
In the light of the issues raised, arguments advanced and authorities cited, may this Hon’ble
Court be pleased to:
AND/OR
Pass any other relief, that this Hon’ble Tribunal may deem fit and proper in the interest
of justice, equity and good conscience.
For this act of kindness, the Claimant shall duty bound forever pray.
Sd/-
26