Amendments Require Leave: NCLAT's Clarification On Company Petitions

Amendments Require Leave: NCLAT's Clarification On Company Petitions

Introduction

The National Company Law Appellate Tribunal (NCLAT) comprising a bench of Justice Ashok Bhushan (Chairperson) and Technical Member Barun Mitra delivered a crucial judgment in the case of Deloitte Haskins and Sells LLP vs. Union of India, emphasizing the importance of procedural compliance in company law proceedings.

Factual Background

A company petition was filed by the Union of India against IL&FS and its subsidiaries, including Deloitte Haskins and Sells LLP, under Sections 241 and 242 of the Companies Act, 2013. Among other things, the petition asked for an examination into the companies' operations. The Union of India filed an amendment application, which the NCLT granted permission to alter. Then, without submitting a new application, the Union of India appended a new plea section (e) to the petition.

Procedural Background

The appellant challenged the addition of prayer clause (e), contending that the Union of India couldn't amend the petition without filing a fresh application and obtaining leave from the court. The NCLT rejected Deloitte's application, prompting the company to appeal to the NCLAT.

Issues Involved

1. Amendment of Pleadings: Whether the Union of India can add a new prayer clause to the company petition without filing a fresh application and obtaining leave from the court.

2. Procedural Compliance: Whether the NCLT's order allowing the amendment is valid.

Contentions of the Parties

Appellant’s Contentions: Deloitte Haskins and Sells LLP argued that the Union of India cannot add a new prayer clause without filing a fresh application and obtaining leave from the court. They contended that the NCLT's order allowing the amendment is erroneous and should be set aside. The appellant emphasized that any amendment to pleadings requires leave of the court, and the respondent's actions were in contravention of this principle.

Respondent’s Contentions: The Union of India, on the other hand, argued that prayer clause (e) is covered under prayer clauses (c) and (d), which were already allowed by the NCLT. They contended that they can add prayer clause (e) without filing a fresh application, as it is a mere expansion of the existing prayers. The Union of India submitted that the NCLT's order allowing the amendment was valid and should be upheld.

Reasoning and Analysis

The NCLAT scrutinized the Union of India's actions and held that adding a new prayer clause (e) without filing a fresh application was impermissible. The tribunal emphasized that any amendment to pleadings requires leave of the court, and the Union of India failed to obtain such leave for the specific prayer clause (e). The NCLAT rejected the Union of India's contention that prayer (e) was covered under prayer (c) and (d), holding that each prayer clause requires specific consideration and approval. The tribunal's analysis underscored the importance of adhering to procedural requirements in company law proceedings.

Final Decision

In its final decision, the NCLAT set aside the NCLT's order allowing the amendment, holding that the Union of India cannot add prayer clause (e) without filing a fresh application and obtaining leave from the court. The tribunal directed the Union of India to delete prayer clause (e) from the company petition and allowed the Union of India to file a fresh application for amendment of prayers, which will be considered by the NCLT in accordance with law.

Law Settled

The NCLAT sets aside the impugned order dated 22.07.2024 and directed the respondent to remove clause (e). However, the tribunal clarified that the respondent shall not be precluded from filing a fresh application for amendment of prayers. The decision emphasizes the importance of procedural compliance in company law proceedings, highlighting that amendments to pleadings require leave of the court. The judgment provides clarity on the procedural requirements for amending pleadings in company petitions.

In this case the appellant was represented by Mr. Krishnendu Datta, Sr. Advocate with Ms. Prachi Dhanani, Ms. Rohini Jaiswal, Mr. Raushan Kumar, Ms. Anu Shrivastava, Mr. Anand Varma, Ms. Apoorva Pandey, Mr. Ayush Gupta, Ms. Preeti Singh, Ms. Radhika Gautam, Ms. Shreya Garg, Mr. Arun Kathpalia, Sr. Advocate with Ms. Aayushi S. Khazanchi, Mr. Vinayak Chawla, Ms. Diksha Gupta, Ms. Pooja Deepak, Advocates. Meanwhile the respondent was represented by Mr. Aditya Sikka, Mr. Meghav Gupta, Mr. Digvijay Singh, Ms. Onshi Jhakhar, Ms. Yaganshi Singh, Mr. Himanshu Gupta, Mr. Rohan S. Nandy, Advocates.