Corporate Updates 19 July 2014

Case Law: 

Company’s inability to file Form 8 due to MCA online services not accepting the digital signatures of the director who had signed the Form 8 due to his default in some other company. In such a situation can jurisdiction as vested under section 614 be invoked ???

The present Petition is filed with CLB Chennai Bench in the matter of Kotak Mahindra Bank Ltd V/s M/s. Nagarjuna Travels & Hotel Ltd, under section 614 of the Companies Act 1956 read with Regulation 44 of the CLB Regulations 1991, praying CLB Bench to direct the respondent Company and its directors to register a charge under section 125 of the Companies Act, the mortgage created by the respondent No 1 in favour of the petitioner.

Facts of the case:  

  •   Kotak Mahindra Bank (Petitioner Company) sanctioned a short term loan of Rs 50 Crore and working capital demand loan facility of Rs 50 Crores to the Deccan Chronicle Holdings Ltd (DCHL) (Petitioner).
  •      The amount was transferred to the bank account of DCHL.
  • The Board of directors of Nagarjuna Travels & Hotel (Respondent Company) passed a resolution dated 16/07/2012 agreeing to guarantee the payment of the debt of Rs 100 Crores to the petitioner on behalf of DCHL and also agreeing to mortgage its immovable property comprising of land and building to secure the loans under the short term loan facility.
  •   The respondent company filed form 8 for registration of charge created by it duly signed by its director Mr Venkatram Reddy on behalf of Respondent company and M Ramakrishna P Shenoy on behalf of Petitioner company.
  •  Petitioner Company appointed a CS to file Form 8 on MCA website. However the same could not be uploaded at the pre-Scrutiny stage itself with the following remarks “some pre-scrutiny validation have failed, please make the required change and upload the Form again.
  •  On enquiring it was found that the director whose DSC was appended to Form 8 could not be uploaded for registration of charge on the ground that the said director is also a director of another company viz, Open Door Ltd, which is a defaulting company.
  • The Petitioner Company being a secured creditor is an interested person u/s 134 of CA 1956 and therefore entitled to get the charge registered with ROC read with section 125 of the Act.
  •    The Petitioner Company exhausted all the remedies available and issued a notice U/S 614 of the Act calling upon the respondent Company to come forward and comply with the filing of Form 8 within 14 days from the receipt of this notice.
  •     The Notice was duly received by the respondent company but it did not comply with the filing of Form 8.


CLB directed on 12th Day Of March, 2014, that Petitioner company seeking directions from the Bench by invoking jurisdiction as vested under section 614 is completely misplaced.

  •  The company and its officers who has been authorised to file form 8 for creation of charge has complied in creation of charge and in filing of Form 8 with ROC.
  • On the other hand from the pleadings it is seen that the company’s inability to file form 8 is due to MCA online services not accepting the digital signatures of the director who has signed the form 8 due to his default in some other company.
  •   In this case no Directions can be issued against the respondent company as section 614 of the act envisages issues of directions by CLB only against the company and its officers who are in default and not against anyone else.
  •    In view of the above the petition has miserably failed both facts and on law and the petitioner company is not entitled for any relief as prayed for.
  •      The present petition was dismissed with no costs.

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