Petition seeking quashing of the 37 show cause notices issued against the Petitioner, by MCA

Axis Ispat Private Limited filed a petition with the Delhi High Court to quash 37 show cause notices issued by the Ministry of Corporate Affairs (MCA). The company also sought to quash a letter from the MCA requesting an inspection of its records. The petitioner argued that the MCA failed to provide an opportunity to be heard before issuing the notices, despite the company having submitted a reply.

IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 7th April, 2021

W.P.(C) 4063/2021
AXIS ISPAT PRIVATE LIMITED ..... Petitioner

Through: Mr. Dayan Krishnan, Sr. Advocate
with Mr. Vikas Mehta, Mr. Shakeel
Ahmad and Mr. Apoorv Khator,
Advocates

versus

UNION OF INDIA & ORS. ..... Respondents

Through: Ms. Nidhi Raman, CGSC for
Respondent nos.1 to 3
(M: 9891088658)

CORAM:
JUSTICE PRATHIBA M. SINGH

O R D E R
07.04.2021

Prathiba M. Singh, J.(Oral)

1. This hearing has been done through hybrid mode (physical and virtual hearing).

CM APPL. 12279/2021 (for exemption)

2. Allowed, subject to all just exceptions. Application is disposed of. WP(C) 4063/2021 & CM APPL. 12278/2021 (for interim relief)

3. The Petitioner, Axis Ispat Private Limited, has filed the present petition seeking quashing of the 37 show cause notices, dated 28th January, 2021, issued against the Petitioner, by the Ministry of Corporate Affairs, Union of India, under various sections of the Companies Act, 2013. A further prayer of the Petitioner is for the quashing of the letter dated 18th March, 2019, vide which, inspection of the books of accounts and other statutory records of the Petitioner company under section 206(5) of the Companies Act, 2013 was sought for by the Ministry of Corporate Affairs.

4. The submission of Mr. Dayan Krishnan, ld. senior counsel appearing for the Petitioner, is that although, under Section 206 of the Companies Act, the Registrar of Companies has the power to call for information, inspection of books, and to conduct an inquiry, however, the Registrar would have to first call upon the Petitioner to give an explanation and also provide them a reasonable opportunity of being heard before the Registrar, before issuing show cause notices. In the present case, however, he submits that, though there was some delay initially by the Petitioner in filing the reply to the findings, a reply had been given. However, he submits that the said reply appears to have not been considered by the Registrar, as is clear from the text of the show cause notices that have been issued to the Petitioner on 28th January 2021. It is further submitted by Mr. Krishnan, ld. Sr. Counsel that the show cause notices had all been issued on the same date and the said notices record that no explanation had been given by the Petitioner. By way of illustration, reliance is placed upon the show cause notice dated 28th January, 2021, issued under section 186(13) of the Companies Act, for violation of section 186 of the Companies Act by the Petitioner, where it is stated that the Petitioners failed to respond to the letter issued against it. The same is annexed at pages 147 and 148 of the paper book.

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