Disposed

L. J. Tanna Shares and Securities Pvt. Ltd. and 2 Ors. v. 63 Moons Technologies Ltd. and 32 Others

Bombay HC6 Jan 2020NMS/729/2019

Case brief

AI extract

What is this about?

Use of company funds for directors’ fees, consultancy charges and operating expenses was disputed. The court permitted directors’ sitting fees and out-of-pocket expenses, withheld consultancy payments for now, and authorised specified recurring expenses subject to disclosure, inspection, absence of objections and equity infusion. The motion was disposed of with liberty to seek further permissions.

What did the court decide?

Directors’ sitting fees and out-of-pocket expenses permitted; specified recurring payments authorised conditionally from infused equity, with liberty to seek permission for remaining expenses.

L. J. Tanna Shares and Securities Pvt. Ltd. and 2 Ors… — Company and Corporate | Bombay HC (2020)

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NMS-729-2019-Corrected Order pursuant to Speaking to the Minutes Order.doc

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Dixit

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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NOTICE OF MOTION NO.729 OF 2019

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SUIT NO.121 OF 2014

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National Spot Exchange Ltd., Mumbai ….Applicant

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In the matter between

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L.J. Tanna Enterprises Pvt. Ltd., Mumbai and Ors. ….Plaintiffs

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V/s.

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63 Moons Technologies Ltd., Mumbai and Ors. ….Defendants

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Mr. Aspi Chinoy, Senior Advocate, with Mr. Vishwanath Iyer, Mr. Merlyn Fernandes and Ms. Pratiksha Agrawal, for the Applicant-Original Defendant No.2.

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Mr. Rohaan Cama, with Mr. Bhushan Shah, Mr. Veer Ashar, Mr. Akash Jain and Mr. Chirag Shah, i/by Mansukhlal & Hiralal & Co., for the Plaintiffs.

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Ms. Gulnar Mistry, with Ms. Namita Shetty, i/by Cyril Amarchand Mangaldas, for Defendant No.1.

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Mr. Subhash Bane, i/by S.B. Legal Associates, for Defendant No.26.

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Ms. Nikita Vardhan, with Mr. Vishal Tiwari, for Defendant No.30.

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Ms. Jyoti Chavan, A.G.P., for Defendant No.33-State.

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CORAM : A.K. MENON, J.

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DATE : 6TH JANUARY 2020.

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P.C. :

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This notice of motion seeks utilization of funds upto Rs.8,20,27,463/towards amounts said to be due and payable by the applicant-original defendant no.2 and as permitted by two orders passed in Writ Petition (Lodging) No.2340 of 2013 on 7th October 2013 and 20th December 2013 and said to be continued vide order dated 6th October 2015. Exhibit-M to the affidavit-in-support annexes particulars of these amounts. Several of these amounts have already been provided for vide orders passed from time to time and on 17th October 2019, totaling to Rs.5,23,30,573/-, as set out in paragraph 16 of that order. Paragraph 18 of the said order records as follows :-

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“18. There are other expenses also claimed such as consultants charges, directors sitting fees and out of pocket / travelling expenses, which form part of another affidavit filed by defendant no.2. These expenses shall be considered by this court on 7th November 2019.”

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The matter has since been taken up for hearing to consider the expenses referred to in the quoted paragraph 18, I have heard counsel for the parties. Mr. Chinoy appearing on behalf of the applicant-original defendant no.2 has, after setting out the background, submitted that the expenses under these three heads are required to be paid. He has invited my attention to the order dated 22nd July 2019 passed in the above matter. He invited my attention to the decision of the Supreme Court in 63 Moons Technologies

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Limited Vs. Union of India1, and submitted that the Supreme Court has recorded an undertaking of the said 63 Moons Technologies Limiteddefendant no.1 herein that it would continue to infuse funds into the applicant-defendant no.2. The undertaking is accepted by the Supreme Court. Mr. Chinoy submits that these amounts would be paid out of equity to be infused. In pursuance thereof, Mr.Chinoy submits that the applicant seek leave of the court to pay over amounts due towards director’s fees and consultant’s fees and out of pocket expenses. On 17th October 2019, the court considered the additional affidavit dated 6th September 2019 filed by Mr. Santosh Dhuri and after being satisfied with the amounts payable, permitted payment under several heads.

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In this respect, reliance is placed by Mr. Chinoy on an additional affidavit dated 18th July 2019 filed in the above motion by one Santosh Dhuri, whereby the deponent discloses that an amount of Rs.9,75,46,200/- was infused by the defendant no.1 through capital infusion in applicantdefendant no.2 and of which a sum of Rs.7,67,02,889/- has been utilized by the applicant towards payment of various amounts, pursuant to orders dated 20th March 2019 and 26th April 2019 and that the balance amount of Rs.2,08,43,311/- and further amounts to be brought in would be utilized by the applicant to make payment of outstanding dues.

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My attention was invited to the additional affidavit of Santosh Dhuri

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1 2019 SCC OnLine 624

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dated 5th September 2019, in particular paragraph 3 in relation to the Directors’ sitting fees and paragraphs 4(i-a), 4(i-b), 4(i-e), 4(ii), 4(iii), 4(iv), 4(v), 4(vi) and 4(vii) to the extent it concerns In-house Consultants, as also Exhibit-B, collectively, forming the copies of the attendance registers of the meetings of the Board of Directors and the committees, in relation to which the sitting fees are sought. Reference is also made to Exhibits D, E, F, G. H, J. K among others in support of the contention that these are the instances, where In-house Consultants had rendered services inter alia to assist the investigating agencies and attending courts and arbitral tribunals to help in recovery of the amounts due.

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This notice of motion is being opposed on behalf of the plaintiffs claiming that there is no justification for seeking payment of monies to the persons named as consultants or for payment of other amounts towards Directors’ sitting fees. That exorbitant amounts are sought to be paid over as director’s fees and consultation charges. On account of out of pocket expenses however, Mr. Cama submitted that he has no objection to the amounts claimed being paid over, as particularized in the additional affidavit dated 5 th September 2019.

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According to Mr. Cama, the consultants were already accused persons and the very same persons, who are alleged to have committed offences, have now been sought to be engaged at much higher remuneration. He submitted

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that it is unbelievable that persons accused of offences could be employed in this fashion as consultants. Specific reference was made to various documents relied upon by the applicant.

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Mr. Cama, therefore, submitted that save and except out of pocket expenses, in relation to which there is no serious challenge, there is no occasion to permit any of the other payments sought in the present application. He relied upon the decisions of the Supreme Court in 63 Moons Technologies Limited (formerly known as Financial Technologies India Ltd.) and Ors. Vs. Union of India and Ors.2; S.P. Chengalvaraya Naidu (Dead) by LRs Vs. Jagannath (Dead) by LRs and Ors.3 to support his submission that courts are meant for imparting justice between the parties and when the parties come to a court, must come with clean hands and even if the process of court is misused, the court should deny relief. He also relies on the orders of this court dated 29th November 2019 in Notice of Motion (Lodging) No.1428 of 2019 and 5th December 2019 in Notice of Motion (Lodging) No.1428 of 2019 in the above suit, whereby some clarifications were issued; the orders passed on 22nd July 2019 and 17th October 2019 in the above suit; and relying upon a communication dated 27th November, 2019 of one Hrudaya Ballava Mohanty addressed to the Sales Tax Officer, Sanpada, Dist. Thane. Mr. Cama submitted that this motion is lacking its merits.

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2 2019 SCC OnLine SC 624

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3 (1994) 1 SCC 1

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Mr. Cama submitted that pursuant to show cause notice dated 11th November 2019, the Sales Tax Officer informed Mr. Mohanty that registration of Hrudaya Ballava Mohanty is liable to be cancelled for nonfiling of returns for six months. Mr. Cama submitted that appointment of these persons is, therefore, highly suspect, not bonafide and only a manner of diverting funds.

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Mr. Cama further submitted that on 29th November, 2019, Notice of Motion (Lodging) No.1428 of 2019 in the above suit was urged and the learned Single Judge had in his order dated 29th November, 2019 observed that, though defendant no.1 had given an undertaking before the Supreme Court to infuse funds for various purposes, but that undertaking will not give any blanket right to the applicant to utilize money received from defendant no.1 without prior permission of this court. Mr. Cama therefore submitted that the order of the Supreme Court permitting utilization of funds to be infused does not mean that the applicant is free to utilize funds without any restrictions, merely because the funds have been infused by defendant no.1.

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In the course of hearing, I called upon the plaintiffs to make submissions on various claims, after seeking inspection of documents. In this behalf, the plaintiffs have contended that inspection of vital records has not been given. I had therefore called upon the applicant to produce before this court the documents that they rely upon in support of their contention that

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the sitting fees of the directors in the meetings of the Board of Directors, Nomination and Remuneration Committee, Legal and Recovery Committee and Audit Committee, were required to be paid. Initially there was some resistance from the applicant, who contended that on the ground of confidentiality, these minutes could not be disclosed. In my view, this approach only leads to suspicion that there were no appropriate records to support the motion; however, at a subsequent hearing, counsel for the applicant agreed to produce those relevant records for the perusal of the court and accordingly the following records were produced :-

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(i) Minutes of the Board Meetings for the period 1st April 2017 to 18th March 2019 in a bound volume.

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(ii) One compilation of minutes of the Board of Directors’ meetings from 11th April 2019 to 29th July 2019. (These minutes were in loose form. According to Mr.Chinoy, these minutes would be put into a bound volume at the end of the year).

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(iii) Certified true copies of the minutes of the Board of Directors’ Meetings, at which the Audit Committee, Nomination and Remuneration Committee and Legal and Recovery Committee were set up.

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(iv) Minutes of the Audit Committee meetings for the period

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5th December 2016 to 23rd January 2019 in a bound

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volume.

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(v) Minutes of the Audit Committee Meetings held on 16 th May 2019 and 29th July 2019.

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(vi) Minutes of the Nomination and Remuneration Committee Meetings for the period 27th October 2016 to 26th November 2018 also in bound volume.

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(vii) Minutes of Nomination and Remuneration Committee Meeting held on 26th April 2019.

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(viii) Minutes of the Legal and Recovery Committee Meetings held on 26th November 2018 and 25th June 2019.

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In the course of hearing I had since suggested that the applicant offers inspection of these documents. The suggestion was accepted, but though the applicant offered inspection of these minutes, Advocates for the plaintiffs made a grievance that only the first pages of the minutes were shown and that the rest of the minutes were not allowed to be inspected. There was a difference of opinion among both sides, because the Advocates for the applicant submitted, on instructions, that all pages were offered for inspection, which the plaintiffs’ Advocates have denied. In view thereof, I

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have in the course of hearing this matter on 19th December 2019, ensured that all the minutes referred to above and more particularly detailed above were offered for inspection to the Advocates for the plaintiffs and they have accordingly taken inspection of all the minutes during the course of hearing in court. The Advocates were, therefore, permitted to take inspection with the consent of the applicant’s Advocate and to respect the confidentiality concerns, no copies were furnished; however, each of these minutes were inspected.

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What I was really concerned with is whether the meetings actually took place and whether the board members attended the same. Prima facie, I am of the view that these are records that appear to be maintained in usual course of business. The plaintiffs were initially provided with the copies of the attendance registers, which appear from pages 1521 to 1543, annexed as Exhibit-B to the additional affidavit dated 5th September 2019 of Santosh Dhuri. The attendance registers recorded the names of the directors, who attended the meetings. The photocopies of the attendance registers of Board of Directors’ meetings, Audit Committee meetings, Nomination and Remuneration Committee meetings and Legal and Recovery Committee meetings are annexed at Exhibit-B to the additional affidavit of Mr. Santosh Dhuri dated 5th September 2019. The description of the attendance registers of these various meetings is as under:-

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Sr	Attendanc	e Registers
. No.	Name of the Committee	Meeting Held On	Time
		16^thOctober 2018	4:00 p.m.
		26^thNovember 2018	2:00 p.m.
		23^rdJanuary 2019	3:00 p.m.
1	Bd f Dit	18^thMarch 2019	6:30 p.m.
	oar o recors	11^thApril 2019	5:00 p.m.
		26^thApril 2019	11:45 a.m.
		16^thMay 2019	3:30 p.m.
		29^thJuly 2019	6:30 p.m.
		16^thOctober 2018	3:30 p.m.
2	Adit Citt Mti	23^rdJanuary 2019	3:30 p.m.
	u ommee eeng	16^thMay 2019	2:30 p.m.
		29^thJuly 2019	5:30 p.m.
		16^thOctober 2018	3:00 p.m.
3	Nomination and Remuneration	26^thNovember 2018	12:30 p.m.
	Committee	26^thApril 2019	11:15 a.m.
		29^thJuly 2019	6:00 p.m.
		26^thNovember 2018	1:00 p.m.
4	Legal and Recovery Committee	25^thJune 2019	5:00 p.m.

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These are required to be verified from the minutes, which the parties have relied upon. On analysis, I find that the record indicate that the following meetings were held :-

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		Sta	tement of Bo	ard of Direct Meeting	ors’ Meetin	gs
Sr. No.	Date of the Meeting	Meeting Scheduled At (In Hrs.)	Meeting Commenced At (In Hrs.)	Concluded At (In Hrs.)	Number of Items Discussed	Members Present
						Dr. Ashok Kumar Nag, Chairman Mr. Niraj Gupta, Director
1	11-05-2018	17:00:00	17:05:00	18:15:00	22	Mr. Subramanya Kusnur, Director Ms. Ujjwala Deshpande, Director
						Leave of absence was given to Mr. Verghese Jacob.
						Dr. Ashok Kumar Nag, Chairman
						Mr. Niraj Gupta, Director
2	19-07-2018	18:00:00	18:05:00	19:30:00	25	Mr. Subramanya Kusnur, Director
						Ms. Ujjwala Deshpande, Director
						Mr. Verghese Jacob, Director
						Dr. Ashok Kumar Nag, Chairman Mr. Niraj Gupta, Director
						Mr. Subramanya Kusnur, Director
3	28-09-2018	11:00:00	11:10:00	13:30:00	13	Ms. Ujjwala Deshpande, Director
						Mr. Verghese Jacob, Director
						Mr. Prakash Chaturvedi, Managing
						Director and CEO
						Dr. Ashok Kumar Nag, Chairman
						Mr. Niraj Gupta, Director
						Mr. Subramanya Kusnur, Director
4	16-10-2018	16:00:00	16:10:00	17:30:00	25	Ms. Ujjwala Deshpande, Director
						Mr. Verghese Jacob, Director
						Mr. Prakash Chaturvedi, Managing Director and CEO

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					Dr. Ashok Kumar Nag, Chairman Mr. Niraj Gupta, Director
5 26-11-2018	14:00:00	14:10:00	15:00:00	18	Mr. Subramanya Kusnur, Director Mr. Verghese Jacob, Director
					Mr. Prakash Chaturvedi, Managing Director and CEO
					Dr. Ashok Kumar Nag, Chairman Mr. Subramanya Kusnur, Director
6 23-01-2019	15:00:00	15:05:00	17:00:00	24	Ms. Ujjwala Deshpande, Director Mr. Prakash Chaturvedi, Managing Director and CEO
					Mr. Vijay Ramakrishnan, Director
					Dr. Ashok Kumar Nag, Chairman Mr. Subramanya Kusnur, Director
7 18-03-2019	18:30:00	18:45:00	19:40:00	13	Ms. Ujjwala Deshpande, Director Mr. Prakash Chaturvedi, Managing Director and CEO
					Mr. Vijay Ramakrishnan, Director
					Dr. Ashok Kumar Nag, Chairman
8 11-04-2019	17:00:00	17:10:00	17:55:00	8	Mr. Subramanya Kusnur, Director
					Ms. Ujjwala Deshpande, Director
					Dr. Ashok Kumar Nag, Chairman Mr. Subramanya Kusnur, Director
9 26-04-2019	11:45:00	11:50:00	12:40:00	17	Ms. Ujjwala Deshpande, Director Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
					Mr. Vijay Ramakrishnan, Director

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						Dr. Ashok Kumar Nag, Chairman Mr. Subramanya Kusnur, Director
10	16-05-2019	15:30:00	15:35:00	16:30:00	30	Ms. Ujjwala Deshpande, Director Mr. Vijay Ramakrishnan, Director
						Mr. Saji Cherian, Managing Director/CEO

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						Dr. Ashok Kumar Nag, Chairman Mr. Subramanya Kusnur, Director
11	29-07-2019	18:30:00	18:35:00	19:30:00	29	Ms. Ujjwala Deshpande, Director Mr. Vijay Ramakrishnan, Director
						Mr. Saji Cherian, Managing Director/CEO

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		Stat	ement of the	Audit Comm	ittee Meetin	gs
Sr. No.	Date of the Meeting	Meeting Scheduled At (In Hrs.)	Meeting Commenced At (In Hrs.)	Meeting Concluded At (In Hrs.)	Number of Items Discussed	Members Present
						Dr. Ashok Kumar Nag, Invitee/Chairman
						Mr. NirajGupta, Member/Director
1	05-12-2016	16:00:00	16:00:00	16:55:00	11	Mr. Subramanya Kusnur, Invitee/Director Mr. Prakash Chaturvedi, Managing Director and CEO
						Mr. S. Rajendran, Member/Director
						Mr. Amarendra Sahoo, Invitee/ Director
						Dr. Ashok Kumar Nag, Invitee/Chairman
						Mr. Niraj Gupta, Member/Director
2	21-04-2017	17:00:00	17:10:00	17:35:00	12	Mr. Subramanya Kusnur, Member/ Director
						Ms. Ujjwala Deshpande, Director
						Mr. Prakash Chaturvedi,
						Invitee/Managing Director and CEO

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					Dr. Ashok Kumar Nag, Member/Chairman
					Mr. Niraj Gupta, Member/Director Mr. Subramanya Kusnur, Member/ Director
3 19-05-2017	16:15:00	16:20:00	17:25:00	13	Ms. Ujjwala Deshpande, Member/Director
					Mr. Verghese Jacob, Member/Director
					Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
					Mr. Amarendra Sahoo, Invitee/
					Director
					Dr. Ashok Kumar Nag, Member/Chairman
					Mr. Niraj Gupta, Member/Director
					Mr. Subramanya Kusnur, Member/ Director
					Ms. Ujjwala Deshpande,
4 22-08-2017	16:30:00	16:35:00	16:55:00	7	Member/Director
					Mr. Verghese Jacob, Member/Director
					Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
					Mr. Amarendra Sahoo, Invitee/
					Director
					Dr. Ashok Kumar Nag, Member/Chairman
					Mr. Niraj Gupta, Member/Director Mr. Subramanya Kusnur, Member/ Director
5 21-11-2017	15:00:00	15:05:00	15:25:00	6	Ms. Ujjwala Deshpande, Member/Director
					Mr. Verghese Jacob, Member/Director
					Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO

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					Dr. Ashok Kumar Nag, Member/Chairman
					Mr. Niraj Gupta, Member/Director Mr. Subramanya Kusnur, Member/ Director
6 09-03-2018	16:00:00	16:05:00	16:28:00	7	Ms. Ujjwala Deshpande, Member/Director
					Mr. Verghese Jacob, Member/Director
					Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO Mr. Amarendra Sahoo, Invitee/ Director
					Mr. Niraj Gupta, Member/Director Dr. Ashok Kumar Nag, Member/Chairman Mr. Subramanya Kusnur, Member/
7 11-05-2018	16:00:00	16:05:00	16:55:00	16	Director
					Ms. Ujjwala Deshpande, Member/Director Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
					Dr. Ashok Kumar Nag, Member/Chairman
					Mr. Niraj Gupta, Member/Director
					Mr. Subramanya Kusnur, Member/ Director
8 19-07-2018	17:30:00	17:35:00	17:55:00	6	Ms. Ujjwala Deshpande, Member/Director
					Mr. Verghese Jacob, Member/Director
					Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO

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						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Niraj Gupta, Member/Director Mr. Subramanya Kusnur, Member/ Director
9	16-10-2018	15:30:00	15:30:00	15:55:00	12	Ms. Ujjwala Deshpande, Member/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Dr. Ashok Kumar Nag, Member/Chairman
						Ms. Ujjwala Deshpande,
10	23-01-2019	15:30:00	15:30:00	16:10:00	9	Member/Director Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO Mr. Vijay Ramakrishnan, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
						Ms. Ujjwala Deshpande, Member/Director
11	16-05-2019	14:30:00	14:35:00	15:25:00	16	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Mr. Vijay Ramakrishnan, Member/Director
						Mr. Saji Cherian, Invitee/ Managing Director/CEO

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12	29-07-2019	17:30:00	17:35:00	17:55:00	7	Dr. Ashok Kumar Nag, Member/Chairman Ms. Ujjwala Deshpande, Member/Director Mr. Vijay Ramakrishnan, Member/Director
						Mr. Saji Cherian, Invitee/ Managing Director/CEO

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Sr. No.	Sta Date of the Meeting	tement of th Meeting Scheduled At (In Hrs.)	e Nomination Meeting Commenced At (In Hrs.)	& Remuner Meeting Concluded At (In Hrs.)	ation Comm Number of Items Discussed	ittee Meetings Members Present
						Mr. Niraj Gupta, Member/Director
						Mr. S. Rajendran, Member/Director
1	27-10-2016	16:00:00	16:00:00	16:30:00	8	Mr. Amarendra Sahoo, Invitee/ Director
						Leave of absence was given to Mr. Verghese Jacob.

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						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Niraj Gupta, Member/Director
						Mr. Subramanya Kusnur,
2	06-03-2017	16:30:00	16:35:00	16:55:00	4	Invitee/Director
						Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Mr. Amarendra Sahoo, Invitee/ Director

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					Dr. Ashok Kumar Nag, Member/Chairman
					Mr. Niraj Gupta, Member/Director
					Mr. Subramanya Kusnur, Invitee/Director
3 19-05-2017	15:30:00	15:40:00	16:10:00	7	Ms. Ujjwala Deshpande, Invitee/Director
					Mr. Verghese Jacob, Member/Director
					Mr. Prakash Chaturvedi,
					Invitee/Managing Director and CEO
					Dr. Ashok Kumar Nag, Member/Chairman
					Mr. Niraj Gupta, Member/Director
					Mr. Subramanya Kusnur,
4 29-06-2017	17:00:00	17:05:00	17:30:00	5	Invitee/Director
					Ms. Ujjwala Deshpande, Invitee/Director
					Mr. Verghese Jacob, Member/Director
					Dr. Ashok Kumar Nag, Member/Chairman
					Mr. Niraj Gupta, Member/Director
					Mr. Subramanya Kusnur,
5 27-09-2017	10:30:00	10:40:00	11:00:00	15	Invitee/Director
					Mr. Verghese Jacob, Member/Director
					Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO

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¶103

						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Niraj Gupta, Member/Director Mr. Subramanya Kusnur, Invitee/Director
6	21-11-2017	15:30:00	15:35:00	15:55:00	4	Ms. Ujjwala Deshpande, Invitee/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Niraj Gupta, Member/Director
7	09-03-2018	15:30:00	15:35:00	15:55:00	5	Mr. Subramanya Kusnur, Invitee/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Niraj Gupta, Member/Director
8	11-05-2018	15:30:00	15:35:00	15:55:00	6	Mr. Subramanya Kusnur, Invitee/Director
						Ms. Ujjwala Deshpande, Invitee/Director

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						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Niraj Gupta, Member/Director
						Mr. Subramanya Kusnur, Invitee/Director
9	19-07-2018	17:00:00	17:05:00	17:25:00	7	Ms. Ujjwala Deshpande, Invitee/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Niraj Gupta, Member/Director
						Mr. Subramanya Kusnur, Invitee/Director
10	16-10-2018	15:00:00	15:05:00	15:30:00	9	Ms. Ujjwala Deshpande, Invitee/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Prakash Chaturvedi,
						Invitee/Managing Director and CEO
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Niraj Gupta, Member/Director Mr. Subramanya Kusnur,
11	26-11-2018	12:30:00	12:35:00	12:55:00	5	Invitee/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO

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¶109

						Mr. Subramanya Kusnur, Member/ Director
12	26-04-2019	11:15:00	11:20:00	11:40:00	6	Ms. Ujjwala Deshpande, Member/Director Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Mr. Vijay Ramakrishnan, Member/Director

¶110

		Statement	of the Legal a	nd Recovery	Committee	Meetings
Sr. No.	Date of the Meeting	Meeting Scheduled At (In Hrs.)	Meeting Commenced At (In Hrs.)	Meeting Concluded At (In Hrs.)	Number of Items Discussed	Members Present
						Dr. Ashok Kumar Nag, Invitee/Chairman
						Mr. Niraj Gupta, Member/Director
1	26-11-2018	13:00:00	13:10:00	13:55:00	11	Mr. Subramanya Kusnur, Member/ Director
						Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Dr. Ashok Kumar Nag, Member/Chairman
2	25-06-2019	17:00:00	17:10:00	18:30:00	4	Mr. Subramanya Kusnur, Member/ Director Ms. Ujjwala Deshpande, Member/Director
						Mr. Vijay Ramakrishnan, Member/Director

¶111

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¶113

Nomination and Remuneration Committee was constituted on 22 nd December 2014. It was re-constituted on 4th November 2015, 26th November 2015, 6th March 2017 and 23rd January 2019.

¶114

The Legal Committee is rechristened as Legal and Recovery Committee. The date of constitution of Legal and Recovery Committee is not available; however, it was re-constituted on 27th January 2015 and 23rd January 2019. True copies of the minutes are produced for verification.

¶115

The Audit Committee was constituted on 12th December 2013/17th January 2014. It was re-constituted on 22nd December 2013, 18th May 2014, 6th March 2017 and 23rd January 2019.

¶116

Certified copies of these minutes are available at hand and have been inspected by the Advocates for the parties.

¶117

The applicants have relied upon their version of appointments and tasks of in-house consultants. It is contended that Mr. Mohanty is stated to be a full-time consultant and is said to be assisting the investigating agency and the High Court Committee for crystallizing the liabilities of the defaulters and that he had attended arbitration proceedings. Reliance is placed on certain sample e-mails.

¶118

As far as Mr. H.B. Mohanty is concerned, reliance is placed on the e-

¶119

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¶121

mails dated 15th November 2018, 6th February 2018, 15th November 2018, 13th February 2019, 1st February 2019, annexed at Exhibit-D to the additional affidavit of Mr. Santosh Dhuri dated 5th September 2019, which indicate that they are requested to attend the office of the Economic Offences Wing on 7 th February 2018, 16th November 2018, 1st February 2019 and 14th February 2019. Further evidence is said to be found in the e-mail dated 23 rd May 2016. Mr. Mohanty’s presence is recorded in the minutes of the meeting of the High Court Committee constituted and held on 18th January 2016. Mohanty is said to have attended also on 12th August 2017 and 23rd October 2018 before the said committee. Mohanty is said to have attended arbitration proceedings pertaining to (i) Lotus Refineries Private Limited on 9th April 2018, 2nd August 2018 and 10th August 2018; (ii) Spin-Cot Textiles Pvt. Ltd. on 22nd December 2016 and 19th May 2017; (iii) NCS Sugars Ltd. on 13th December 2016, 17th December 2016 and 14th January 2017. Mohanty was being paid Rs.19.57 lakhs as annual consultancy fees in 2014-15, which has been increased to Rs.39.60 lakhs in 2019-20. The average increase is said to be of 11.55%. His services were discontinued from 31st May, 2019 and his dues for 9 months remain to be paid.

¶122

As far as Mr. Santosh Mansingh is concerned, reliance is placed on the aforesaid additional affidavit of Mr. Santosh Dhuri dated 5 th September 2019 to state that Santosh Mansingh was heading Clearing and Settlement Department and that since April, 2014, he has been assisting investigating

¶123

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¶125

agencies and forensic auditors appointed by EOW and CBI by explaining trades, ledgers, exchange reports and bank statements. Mansingh is said to have attended office of the investigating agencies 60 days in 2014, 260 days in 2015, 269 days in 2016, 40 days in 2017 and 26 days in 2018. As far as Mansingh is concerned, he was paid Rs.18.89 lakhs in 2014-15, which has been increased to Rs.36 lakhs in 2019-20; an increment of 10.53%.

¶126

In both these cases, the applicant has contended that the plaintiffs’ allegation that Mohanty and Mansingh were removed from services under the directions of Forward Market Commission (FMC) is not correct. Furthermore, Mohanty was not made an accused by EOW is also incorrect. Similarly, Mansingh was also not removed under the directions of the FMC. Mansingh is not an accused and as on date of the affidavit, no court or agency has debarred either Mohanty or Mansingh from serving or entering into any contract to employment.

¶127

As far as Manish Rangari is concerned, he is said to be dealing with queries raised by investigating agencies from time to time; identifying properties of the defaulting members and providing information to investigating agencies. His remuneration was Rs.45 lakhs in the financial year 2011-12, which has been increased to Rs.75 lakhs in the financial year 2018-19; which is a increase of less than 8%. He also co-ordinates with law firms and attends to VAT related issues.

¶128

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¶130

Ms. Shubhra Singh is said to be the Manager in Legal and Secretarial Department being a lawyer and a qualified company secretary. She is now a consultant on a non-exclusive basis, rendering legal services at a remuneration of Rs.27 lakhs in 2017-18 and Rs.24.56 lakhs in 2018-19. She is said to be attending to drafting of pleadings, attending conferences and attending to hearings of the matters before the High Court Committees. Being a qualified company secretary, she also advises and updates the members on company law matters.

¶131

Ms. Annie Joseph is an employee of NSEL between November, 2008 to March 2018. Her last drawn annual salary was Rs.6.52 lakhs. She was handling Patna Branch office work. She has since been acting as a consultant on a reduced annual consultancy fees @ Rs.2.40 lakhs.

¶132

Mr. Surendradas C.V. is a consultant handling VAT matters in Kerala and South India at an annual consultancy fees of Rs.96,000/-. He was not an employee of NSEL during the period when defaults occurred in July-August 2013.

¶133

Mr. Yogesh Borkar was also not associated with NSEL. He was a consultant at the material time. He was consulted since 23 rd January 2017 and assisting the legal recovery team. His annual fees were Rs.8,81,664/-. He is an employee of NSEL now w.e.f. 1st April 2019 at an annual salary of Rs.9.15 lakhs.

¶134

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¶136

As against the applicant’s claim, in a compilation filed on behalf of the plaintiffs, it is contended that the documents included a copy of Company Petition (Complaint) No.19 of 2019 filed by the Serious Fraud Investigation Office against 98 accused persons, wherein Santosh Mansingh, H.B. Mohanty and Manish Rangari are impleaded. The said criminal case is said to be pending and these persons are arraigned as accused nos.12 and 13 and 25. Some of the directors viz. Dr. Ashok Kumar Nag, Mr. Neeraj Gupta and Mr.Verghese Jacob, are also shown as accused nos.15, 16 and 17. The charge is that the Board of Directors, CEO and other accused nos.9 to 17, which include Santosh Mansingh, H.B. Mohanty, A.K. Nag, Neeraj Gupta, Verghese Jacob, and accused nos.23 to 31, which include Manish Rangari, alleged to have entered into criminal conspiracy between the years 2009 and 2013.

¶137

Furthermore, it is believed that Santosh Mansingh and H.B. Mohanty were removed from their assignments and this is an aspect, which is required to be considered whether there is sufficient evidence on record to justify the payments being sought by these two persons. It is a matter of record that on 22nd July, 2019, this court has found that without further documents, no payments to these persons could be justified. The question to be considered is whether payments to In-house Consultants and Directors can be justified on the basis of the documents now on record. The additional affidavit filed by Mr. Santosh Dhuri on 5th September 2019 reveals that there is a large

¶138

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¶140

increase in consultancy fees between 2016 and 2017 from about Rs.23 lakhs in the beginning of the financial year 2016-17 to Rs.36 lakhs in the beginning of the financial year 2019-20. Whereas, between 2014-15 and 2015-16, there is no increase. The theory of average year to year increment does not appear to be justified. Payment of Rs.39.60 lakhs contemplates average payment of Rs.3.30 lakhs per month. The documents now sought to be relied upon do not justify the basis of their engagement. Reference to the two e-mail letters annexed and referred to above cannot be the basis for justification of these amounts. The aforesaid three persons are bound to attend the office of EOW even if they were not consultants. As far as the directors are concerned, the persons for whom remuneration is claimed, it is stated were not directors prior to July, 2013, when the defaults occurred. Participation of Mr. Mohanty in the arbitration proceedings alone does not justify payment of remuneration now sought, so also attendance before EOW cannot justify these payments.

¶141

As far as the criminal complaint pending in the Sessions Court is concerned, these persons are arraigned as accused and are accused of criminal conspiracy. I find that the applicant is failed to place on record sufficient material to enable me to consider permitting those payments. The documents annexed at Exhibits D, E, F and G to the additional affidavit of Mr. Santosh Dhuri dated 5th September 2019, comprising pages 1546 to 1596,

¶142

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¶144

would not, in my view, be sufficient to take a view that is different from the view already expressed by this court on 22nd July 2019. There is no denial of the fact that the said persons are also accused nos.12, 13 and 25 in Company Petition No.19 of 2019/Complaint filed by the Serious Fraud Investigation Office. Apart from the additional affidavit dated 5th September 2019 and a further affidavit dated 6th September 2019 on behalf of the applicant of Santosh Dhuri and the documents annexed thereto, no other documents are forthcoming.

¶145

The relief in the motion seeks permission to utilize Rs.8,20,27,463/towards amounts said to be outstanding and permitted by orders dated 7 th October 2013 and 20th December 2013 passed by the Division Bench of this court in Writ Petition (Lodging) No.2340 of 2013 and subsequently continued vide order dated 6th October 2015 passed in this suit. The schedule of expenses is listed in Exhibit-M to the motion. As per schedule of expenses at Exhibit-M, of these, several amounts have been permitted, except salary of In-house Consultants Rs.81.02 lakhs, Directors’ sitting fees Rs.16 lakhs and out of pocket expenses of Rs.3.77 lakhs as on date of filing this motion, which is 25th February 2019. The orders of the Division Bench referred above do not grant blanket permissions for making payments, as suggested in the motion, because, if that were so, no further orders will be required to be passed. The order dated 20th December 2013 permitting litigation expenses, payment of

¶146

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¶148

statutory dues, amounts for preservation, maintenance and protection of assets and wages and salaries, are not blanket orders.

¶149

As regards the directors’ sitting fees, analysis of the minutes of the meetings of the Board of Directors and minutes of the meetings of the Audit Committee and other committees reveal that meetings of the Board of Directors and the three other committees appear to have been held on diverse dates set out in the following table :-

¶150

			5 thDece	mber 2016
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
						Mr. S. Rajendran, Member/Director
						Dr. Ashok Kumar Nag, Invitee/Chairman
1	Audit Committee Meeting	16:00:00	16:00:00	16:55:00	11	Mr. Subramanya Kusnur, Invitee/Director
						Mr. Amarendra Sahoo, Invitee/ Director
						Mr. Prakash Chaturvedi, Managing Director and CEO

¶151

			21 stA	pril 2017
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Invitee/Chairman
1	Audit Committee Meetin	170000	171000	173500	12	Mr. Subramanya Kusnur, Member/Director
	g	::	::	::		Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Director

¶152

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¶154

			19 thM Meeting	ay 2017	Number of
Sr.No.	Description of the Meetings	Meeting Scheduled at	Commenced at	Meeting Concluded at	Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
	Nii d					Mr. Subramanya Kusnur, Invitee/Director
1	omnaton an Remuneration Committee	15:30:00	15:40:00	16:10:00	7	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Invitee/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Subramanya Kusnur, Member/Director
						Mr. Amarendra Sahoo, Invitee/ Director
2	Audit Committee Meeting	16:15:00	16:20:00	17:25:00	13	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Member/Director
						Mr. Verghese Jacob, Member/Director

¶155

			22 ndAu	gust 2017
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Subramanya Kusnur, Member/Director
1	Adit Citt Mti	163000	163500	165500	7	Mr. Amarendra Sahoo, Invitee/ Director
	u ommee eeng	::	::	::		Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Member/Director
						Mr. Verghese Jacob, Member/Director

¶156

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¶158

			21 stNove	mber 2017
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Subramanya Kusnur, Member/Director
1	Audit Committee Meeting	15:00:00	15:05:00	15:25:00	6	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Member/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
	Niti d					Mr. Subramanya Kusnur, Invitee/Director
2	omnaon an Remuneration Committee	15:30:00	15:35:00	15:55:00	4	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Invitee/Director
						Mr. Verghese Jacob, Member/Director

¶159

			9 thMa	rch 2018
			Meeting		Number of
Sr.No.	Description of the Meetings	Meeting Scheduled at	Commenced at	Meeting Concluded at	Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
1	Nomination and	153000	153500	155500	5	Mr. Subramanya Kusnur, Invitee/Director
	Remuneration Committee	::	::	::		Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Mr. Verghese Jacob, Member/Director
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Subramanya Kusnur, Member/Director
						Mr. Amarendra Sahoo, Invitee/ Director
2	Audit Committee Meeting	16:00:00	16:05:00	16:28:00	7	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Member/Director
						Mr. Verghese Jacob, Member/Director

¶160

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¶162

			11^thM	ay 2018
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
1	Nomination and	153000	153500	155500	6	Dr. Ashok Kumar Nag, Member/Chairman
	Remuneration Committee	::	::	::		Mr. Subramanya Kusnur, Invitee/Director
						Ms. Ujjwala Deshpande, Invitee/Director
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
2	Adit Citt Mti	160000	160500	165500	16	Mr. Subramanya Kusnur, Member/Director
	u ommee eeng	::	::	::		Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Member/Director
						Mr. Niraj Gupta, Director
						Dr. Ashok Kumar Nag, Chairman
	’					Mr. Subramanya Kusnur, Director
3	Board of Directors Meeting	17:00:00	17:05:00	18:15:00	22	Ms. Ujjwala Deshpande, Director
						Leave of absence was given to Mr. Verghese Jacob.

¶163

			19 thJ Meeting	uly, 2018	Number of
Sr.No.	Description of the Meetings	Meeting Scheduled at	Commenced at	Meeting Concluded at	Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
	Niti d					Mr. Subramanya Kusnur, Invitee/Director
1	omnaon an Remuneration Committee	17:00:00	17:05:00	17:25:00	7	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Invitee/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Subramanya Kusnur, Member/Director
2	Audit Committee Meeting	17:30:00	17:35:00	17:55:00	6	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Member/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Niraj Gupta, Director
						Dr. Ashok Kumar Nag, Chairman
3	Board of Directors’ Meeting	18:00:00	18:05:00	19:30:00	25	Mr. Subramanya Kusnur, Director
						Ms. Ujjwala Deshpande, Director
						Mr. Verghese Jacob, Director

¶164

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¶166

			28 thSept	ember 2018
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Mr. Niraj Gupta, Director
						Dr. Ashok Kumar Nag, Chairman
1	Bd f Dit’ Mti	110000	111000	133000	13	Mr. Subramanya Kusnur, Director and CEO
	oar o recors eeng	::	::	::		Mr. Prakash Chaturvedi, Managing Director
						Ms. Ujjwala Deshpande, Director
						Mr. Verghese Jacob, Director

¶167

			16^thOct	ober, 2018
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
	Niti d					Mr. Subramanya Kusnur, Invitee/Director
1	omnaon an Remuneration Committee	15:00:00	15:05:00	15:30:00	9	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Invitee/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Subramanya Kusnur, Member/Director
2	Audit Committee Meeting	15:30:00	15:30:00	15:55:00	12	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Member/Director
						Mr. Verghese Jacob, Member/Director
						Mr. Niraj Gupta, Director
						Dr. Ashok Kumar Nag, Chairman
						Mr. Subramanya Kusnur, Director
3	Board of Directors’ Meeting	16:00:00	16:10:00	17:30:00	25	Mr. Prakash Chaturvedi, Managing Director and CEO
						Ms. Ujjwala Deshpande, Director
						Mr. Verghese Jacob, Director

¶168

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¶170

			26 thNov	ember 2018
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Mr. Niraj Gupta, Member/Director
						Dr. Ashok Kumar Nag, Member/Chairman
1	Nomination and	123000	123500	125500	5	Mr. Subramanya Kusnur, Invitee/Director
	Remuneration Committee	::	::	::		Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Mr. Verghese Jacob, Member/Director
						Mr. Niraj Gupta, Member/Director
	l d					Dr. Ashok Kumar Nag, Invitee/Chairman
2	Lega an Recovery Citt	13:00:00	13:10:00	13:55:00	11	Mr. Subramanya Kusnur, Member/Director
	ommee					Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Mr. Niraj Gupta, Director
						Dr. Ashok Kumar Nag, Chairman
3	Bd f Di’ i	140000	141000	150000	18	Mr. Subramanya Kusnur, Director
	oar o rectors Meetng	::	::	::		Mr. Prakash Chaturvedi, Managing Director and CEO
						Mr. Verghese Jacob, Director

¶171

			23 rdJan	uary 2019
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Dr. Ashok Kumar Nag, Chairman
						Mr. Subramanya Kusnur, Director
1	Board of Directors’ Meeting	15:00:00	15:05:00	17:00:00	24	Mr. Prakash Chaturvedi, Managing Director and CEO
						Ms. Ujjwala Deshpande, Director
						Mr. Vijay Ramakrishnan, Director
						Dr. Ashok Kumar Nag, Member/Chairman
2	Audit Committee Meeting	15:30:00	15:30:00	16:10:00	9	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Member/Director
						Mr. Vijay Ramakrishnan, Member/Director

¶172

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¶174

			18 thM	arch 2019
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Dr. Ashok Kumar Nag, Chairman
						Mr. Subramanya Kusnur, Director
1	Board of Directors’ Meeting	18:30:00	18:45:00	19:40:00	13	Mr. Prakash Chaturvedi, Managing Director and CEO
						Ms. Ujjwala Deshpande, Director
						Mr. Vijay Ramakrishnan, Director

¶175

			11 thA	pril 2019
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Dr. Ashok Kumar Nag, Chairman
1	Board of Directors’ Meeting	17:00:00	17:10:00	17:55:00	8	Mr. Subramanya Kusnur, Director
						Ms. Ujjwala Deshpande, Director

¶176

			26 thA	pril 2019
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Mr. Subramanya Kusnur, Member/Director
1	Nomination and Rti Citt	11:15:00	11:20:00	11:40:00	6	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
	emuneraon ommee					Ms. Ujjwala Deshpande, Member/Director
						Mr. Vijay Ramakrishnan, Member/Director
						Dr. Ashok Kumar Nag, Chairman
						Mr. Subramanya Kusnur, Director
2	Board of Directors’ Meeting	11:45:00	11:50:00	12:40:00	17	Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
						Ms. Ujjwala Deshpande, Director
						Mr. Vijay Ramakrishnan, Director

¶177

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¶179

			16^thM	ay 2019
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Dr. Ashok Kumar Nag, Member/Chairman
						Mr. Prakash Chaturvedi, Invitee/Managing Director and CEO
1	Audit Committee Meeting	14:30:00	14:35:00	15:25:00	16	Ms. Ujjwala Deshpande, Member/Director
						Mr. Vijay Ramakrishnan, Member/Director
						Mr. Saji Cherian, Invitee/ Managing Director/CEO
						Dr. Ashok Kumar Nag, Chairman
						Mr. Subramanya Kusnur, Director
2	Board of Directors’ Meeting	15:30:00	15:35:00	16:30:00	30	Ms. Ujjwala Deshpande, Director
						Mr. Vijay Ramakrishnan, Director
						Mr. Saji Cherian, Managing Director/CEO

¶180

			29^thJ	uly 2019
Sr.No.	Description of the Meetings	Meeting Scheduled at	Meeting Commenced at	Meeting Concluded at	Number of Items Discussed	Members Present
						Dr. Ashok Kumar Nag, Member/Chairman
						Ms. Ujjwala Deshpande, Member/Director
1	Audit Committee Meeting	17:30:00	17:35:00	17:55:00	7	Mr. Vijay Ramakrishnan, Member/Director
						Mr. Saji Cherian, Invitee/ Managing Director/CEO
						Dr. Ashok Kumar Nag, Chairman
						Mr. Subramanya Kusnur, Director
2	Board of Directors’ Meeting	18:30:00	18:35:00	19:30:00	29	Ms. Ujjwala Deshpande, Director
						Mr. Vijay Ramakrishnan, Director
						Mr. Saji Cherian, Managing Director/CEO

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NMS-729-2019-Corrected Order pursuant to Speaking to the Minutes Order.doc

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After this matter was heard on 20th December, 2019 and adjourned on behalf of the applicants, Mr. Iyer makes a request that the contents of the additional affidavit of one Mr. Ramchandra Shintre dated 19th November, 2019 be also considered in support of the relief sought. In a further additional affidavit dated 19th November 2019 of one Ramchandra Shintre, the applicant seeks permission for payment of expenses incurred between 10th August, 2019 and 8th November, 2019, based on the invoices towards food coupons, statutory payments of gratuity, provident fund, professional tax, administration, office expenses, legal fees, salaries of employees. These expenses are totally amounting to Rs.5,56,26,846/-, which are exclusive of the amounts set out in the additional affidavit dated 6 th September, 2019 filed by Mr. Santosh Dhuri, which is duly updated till November 2019, but exclusive of salary upto January 2020 and office rent upto February 2020, as set out in paragraph 12.1 of the said affidavit. The expenses includes salary payable to employees for periods beyond November, 2019, December, 2019 and January, 2020. Similarly office rent for December, 2019, January, 2020 and February, 2020 and further amount towards books and periodicals etc. As regards item nos. 3, 5, 6, 7, 8, 10, 11 and 12 being expenses for food coupons, books and periodicals, courier fees, office expenses, printing and stationery, security service charges, traveling expenses and other expenses, the plaintiffs’ Advocates consent to these amounts being paid from and out of the funds to be infused by way of equity as contemplated in the earlier order

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NMS-729-2019-Corrected Order pursuant to Speaking to the Minutes Order.doc

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in the notice of motion; but, as far as item no.1 – legal expenses, salary and office rent and professional fees, the plaintiffs object to payment of these amounts.

¶187

In view of the consent recorded today in relation to the aforesaid items mentioned in the affidavit of Mr. Shintre dated 19th November, 2019, it is now agreed between the Advocates for the parties, on instructions of their clients, that hereafter all expenses pertaining to food coupons, books and periodical, courier charges, office expenses, printing and stationery expenses, security service charges, travelling expenses and other miscellaneous expenses need not be subject matter of any application to the Court and the plaintiffs consent to payment of such amount subject to the applicant providing the plaintiffs with monthly statement of these expenses, along with copies of supporting documents, on or before 5th of the following month, inspection of originals of all supporting documents will be provided forthwith, on demand from the plaintiffs’ Advocate. If found necessary, inspection shall be sought within two months of statements being furnished. In the event the plaintiffs object on any ground, liberty to apply.

¶188

Scrutiny of the minutes of the meetings of the Board of Directors and the three committees reveal that between 11th May 2018 and 29th July 2019, there were 11 meetings of the Board of Directors. Between 27 th October 2016 and 26th April 2019, there were 12 meetings of the Nomination and

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NMS-729-2019-Corrected Order pursuant to Speaking to the Minutes Order.doc

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Remuneration Committee. The Audit Committee held 12 meetings between 5 th December 2016 and 29th July 2019 and the Legal and Recovery Committee held meetings on 26th November 2018 and 25th June 2019, The duration of the meetings of the Board of Directors varied between 15 minutes - 2 hours 20 minutes, considering the number of subjects and to some extent, relatable to the number of subjects scheduled; the duration of the Audit Committee meetings were between 20 minutes - 40 minutes - 1 hour 5 minutes and; the duration of the Nomination and Remuneration Committee meetings varied between 20 minutes - 30 minutes.

¶192

Considering the overall state of the records, I am of the view that the sitting fees payable to the Directors appear to be payable. At-least, the record indicates that the meetings were held and it is not the case of the plaintiffs that these records have been fudged or manipulated in any manner or otherwise fabricated. True, the plaintiffs have not been given copies of the minutes, which were inspected, on concerns that confidentiality may be breached, but the management of the affairs of the applicant cannot be subject matter of detailed security by the plaintiffs and in my view, there would have been no justification for providing the minutes.

¶193

Prima facie, the applicant has made out a case for payment of these amounts due to the Directors, especially considering the fact that these were the Directors, who were not at the helm when the defaults and objections of

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NMS-729-2019-Corrected Order pursuant to Speaking to the Minutes Order.doc

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the transactions were occurred. As far as the Consultants are concerned, the evidence provided is inadequate to justify those payments. At-least three of the consultants are accused in the complaint filed by the Serious Fraud Investigation Office. The rationale of engagement of very same persons as consultants and that on payment of large amounts has not been justified. The record does not justify these payments as on date.

¶197

Meanwhile it is submitted that the plaintiffs have filed an appeal against the order dated 17th October 2019 and in my view this motion need not be kept pending any longer. Subject to the outcome of the appeal further applications may be permissible and if so advised.

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In view of the above, I pass the following order :-

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(i) Upon consent of the plaintiffs Advocates the applicant is permitted to pay out of pocket expenses specified in the compilation.

¶200

(ii) The Directors’ sitting fees amounting to Rs.33.5 lakhs is permitted to be paid. The amounts said to be payable to In-house Consultants amounting to Rs.164.64 lakhs cannot be paid for now.

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(iii) In view of the plaintiffs’ Advocate’s consent recorded in

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NMS-729-2019-Corrected Order pursuant to Speaking to the Minutes Order.doc

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paragraph 33 above, the applicant is at liberty to provide monthly statements of the expenses towards food coupons, books and periodicals, courier charges, Office expenses, Printing & Stationery, Security Service charges. travelling expenses, out of pocket expenses and those under the heading “Other expenses” and offer inspection of originals of all supporting documents. If no objections are received by the applicants Advocates within seven days of completion such inspection, the applicants may make remittances provided funds by way of equity have been infused. Liberty to apply to both sides in the event of any discrepancies.

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(iv) Liberty to apply for permission to make payments of expenses, which are not allowed thus far, after furnishing best evidence and offering inspection of the relevant records to the plaintiffs.

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(v) Notice of Motion is disposed in the above terms.

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(A.K. MENON, J.)

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L. J. Tanna Shares and Securities Pvt. Ltd. and 2 Ors. v. 63 Moons Technologies Ltd. and 32 Others

Case brief

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L. J. Tanna Shares and Securities Pvt. Ltd. and 2 Ors. v. 63 Moons Technologies Ltd. and 32 Others

Case brief

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What did the court decide?

What the court decided

A compact analysis

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