Holding

Fraud is a specific ground for winding up under s.271(c) of the Companies Act, 2013; the tribunal may dispense with advertisement; the limitation period does not bar the petition as fraud is a continuing cause; estoppel does not apply; cross‑examination was not required; shareholders cannot be impleaded; thus the winding‑up order stands.

Summary

The Supreme Court examined the winding‑up petition filed by Antrix Corporation against Devas Multimedia Private Ltd under section 271(c) of the Companies Act, 2013, alleging fraud in the formation and conduct of the company. The petition was never advertised, and the petitioners challenged the order on grounds of lack of advertisement, limitation, estoppel, denial of cross‑examination, shareholders' locus standi, and alleged erroneous findings. The Court held that the 2013 Act expressly makes fraud a specific ground for winding up, that the tribunal may dispense with advertisement under the applicable rules, and that the limitation period does not bar the petition because fraud is a continuing cause. It further ruled that estoppel does not apply, cross‑examination was unnecessary, and shareholders cannot be impleaded in such proceedings. Consequently, the winding‑up order and the findings of the NCLT and NCLAT were upheld.

Issues considered

Whether fraud is a specific ground for winding up under the Companies Act, 2013 and how it differs from the 1956 Act.
Whether failure to advertise the winding‑up petition under the Companies (Winding up) Rules, 2020 and NCLT Rules, 2016 invalidates the proceedings.
Whether the petition under section 271(c) is barred by the limitation period.
Whether Antrix is estopped from pleading fraud after earlier conduct.
Whether denial of cross‑examination violates principles of natural justice.
Whether shareholders have locus standi to oppose the winding up and can be impleaded.
Whether the Tribunal’s findings are perverse or based on an incorrect standard of proof.
Whether a report from the Serious Fraud Investigation Office is required before filing a petition under section 271(c).

Legislation cited

Companies Act, 1956s. 237(b), s. 243, s. 433, s. 439(1)(f)
Companies Act, 2013s. 143(12), s. 143(13), s. 213, s. 224(2), s. 271(c), s. 272(1), s. 468, s. 469
Companies (Winding up) Rules, 2020s. 5, s. 7
Indian Contract Act, 1872s. 19
Insolvency and Bankruptcy Code, 2016s. 11th Schedule, s. 255
Limitation Act, 1963s. 17, s. Article 137 (Schedule)
National Company Law Tribunal Rules, 2016s. 35

Subjects

winding upfraudCompanies Act 2013advertisement requirementlimitation periodestoppelcross‑examinationshareholder locus standiNCLTNCLAT

Judgment

[2022] 11 S.C.R. 291 291

DEVAS MULTIMEDIA PRIVATE LTD. A
v.
ANTRIX CORPORATION LTD. & ANR.
(Civil Appeal No.5766 of 2021)
JANUARY 17, 2022 B
[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]
Company Law – Winding up of a company – Fraud as a
ground for winding up – Distinguishing features between Companies
Act, 1956 and Companies Act, 2013, with regard to question of
C
availability of fraud as a ground for winding up of a company –
Discussed – Held: The main departure of the Companies Act, 2013
from the statutory regime of the Companies Act, 1956, is the specific
inclusion of fraud, directly as one of the circumstances in which a
company could be wound up – s.271 of the 2013 Act lists out the
circumstances in which a company may be wound up – Fraud has D
now directly become (under the 2013 regime), one of the
circumstances in which a company could be wound up, though it
also continues to be a ground indirectly, u/s 224(2) r/w section 213
[as it was under Section 439(1) (f) r/w sections 243 and 237(b) of
the 1956 Act] – Companies Act, 2013 – s.271 – Companies Act,
E
1956.
Company Law – Winding up of a company – Fraud as a
ground for winding up – Petition u/s.271(c) of the Companies Act,
2013 – Advertisement of the company petition – Breach of – On
facts, petition for winding up was never advertised nor even ordered
F
to be advertised, either upon admission of the petition or anytime
thereafter – Contention of appellants that this vitiated the whole
proceedings – Held: Sub-sections (1) and (2) of s.468 of the 2013
Act empower the Central Government to make Rules providing for
all matters relating to winding up of companies – In exercise of the
powers so conferred, the Companies (Winding up) Rules, 2020 were G
issued – Since requirement to advertise a petition for winding up is
stipulated in rr. 5 and 7 of the Companies (Winding up) Rules, 2020,
what is prescribed in r.35 of the NCLT Rules 2016 would cover
even petitions for winding up – Sub-rule (5) of r.35 makes it clear
that even in cases where direction of the Tribunal as regards
H
291
292 SUPREME COURT REPORTS [2022] 11 S.C.R.

A advertisement has not been complied with, the Tribunal has an option
(i) either to dismiss the petition; or (ii) to give such further directions
as it may think fit – Sub-rule (6) of r.35 confers power upon the
Tribunal even to dispense with any advertisement – Thus, what was
not specifically available in black and white, under the 1956
statutory regime, namely the power to dispense with any
B
advertisement, is now made available specifically under the statutory
regime of 2013 – In the case at hand, the company in liquidation
did not have any creditors or customers who had dealings with the
company – There were no stakeholders prejudiced by failure of
NCLT to order publication of advertisement of the petition – This
C was not a case where the company was sought to be wound up on
ground of inability to pay debts or on just and equitable ground –
This was a case of fraud and all stakeholders were fully aware of
the winding up proceedings – Therefore, failure of the Tribunal to
order publication of an advertisement did not render the entire
proceedings unlawful – Companies Act, 2013 – s.271(c) and 468 –
D
Companies Act, 1956 – Companies (Winding up) Rules, 2020 – rr.5
and 7 – National Company Law Tribunal Rules, 2016 – r.35.
Company Law – Winding up of a company – Petition u/
s.271(c) of the Companies Act, 2013 – Challenged, for being barred
by limitation – Held: Limitation is not always akin to a lighted
E matchstick to a train of gun powder – The date of commencement
of the period need not necessarily be static – The date of
commencement may keep changing depending upon the acts of
omission and commission on the part of the party against whom the
action is initiated – If the conduct of the affairs of the company in
F a fraudulent manner is a continuing process, the right to apply
becomes recurring – In the case at hand, fraud and corruption
were discovered only later and by the time the discovery was made,
the attempts to reap the fruits of fraud had reached the pinnacle –
These attempts continue even till date and this falls squarely within
s.271(c) – Therefore, the contention that the petition was barred by
G limitation was rightly rejected by the Tribunal – Companies Act,
2013.
Company Law – Winding up of a company – Fraud as a
ground for winding up – Petition under s.271(c) of the Companies
Act, 2013 – Challenge to – On ground of estoppel from pleading
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 293
CORPORATION LTD. & ANR.

fraud and seeking winding up – Held: In the case at hand, what A
was alleged in the petition for winding up were, (i) formation of the
company for fraudulent or unlawful purpose; (ii) fraud in the
conduct of the affairs of the company; and (iii) fraud on the part of
the persons who were involved in the formation and/or in the
management of affairs of the company – The fraud relatable to the
B
agreement in question, was only one facet of the whole scheme of
things – What is covered by s.271(c) of the Companies Act, 2013 is
a fraud that goes beyond what lies in the realm of contract or in the
realm of the penal provisions of the Companies Act, 2013 – Hence
the contention of estoppel from pleading fraud, was rightly rejected
by the Tribunal – Companies Act, 2013 – s.271(c). C
Company Law – Winding up of a company – Fraud as a
ground for winding up – Petition under s.271(c) of the Companies
Act, 2013 – Order of winding up passed by Tribunal – Challenge to
– On ground of violation of the principles of natural justice due to
denial of permission for cross examination – Tribunal justified its D
action of omission to permit cross-examination holding that the case
did not require any oral evidence – Held, on facts, the Tribunal was
right in rejecting the request for cross-examination – A party alleging
the non-existence of something, cannot be called upon to prove the
non-existence – It is the party who asserts the existence or who
challenges the assertion of non existence, who is liable to prove the E
existence of the same – In the case on hand, Antrix asserted that
Devas offered services which were non-existent, through a device
which was not available and that even the so-called intellectual
property rights over the device were not available – Therefore, Antrix
cannot lead evidence to show the non-existence or non-availability F
of those things, either by oral evidence or by subjecting their officials
to cross-examination by Devas – Devas never produced before the
Tribunals any device nor did they demonstrate the availability to
Devas services – All that Devas wanted was, the cross-examination
of the officials of Antrix – Any amount of cross-examination of the
officials of Antrix could not have established the existence of G
something that was disputed by Antrix – Also, it is clear from the
time-line of events that the application for cross-examination was
moved by Devas after conclusion of the arguments on the side of
Antrix in the main petition itself, and that too after the unsuccessful
attempt made by one of its shareholders to assail the constitutional H
294 SUPREME COURT REPORTS [2022] 11 S.C.R.

A validity of the statutory provisions – Therefore, the Tribunal was
right in rejecting the request for cross-examination.
Company Law – Winding up of a company – Fraud as a
ground for winding up – Petition under s.271(c) of the Companies
Act, 2013 – Locus standi of the shareholders – Held: There is no
B scope either in the Act or in the Rules for impleadment of any
shareholder as a respondent to the winding up petition – The
objecting shareholders had an effective hearing before NCLT –
Though their appeal was rejected by NCLAT on ground of
maintainability, their arguments for opposing the winding up, which
were just the same as that of the company, had been considered –
C Therefore, the objection that opportunity was not given to the
shareholders, is just theoretical, when in fact they were heard –
Companies (Winding Up) Rules, 2020 – r.3(1) – Companies Act,
2013.
Company Law – Winding up of a company – Fraud as a
D ground for winding up – Petition under s.271(c) of the Companies
Act, 2013 – Order of winding up passed by Tribunal – Challenge to
– On ground of erroneous and perverse findings and incorrect
standard of proof – Held: On facts, there is no perversity in the
findings recorded by both the Tribunals – These findings were
E actually borne out by documents, none of which was challenged as
fabricated or inadmissible – Appellants cannot take advantage of
the use of an inappropriate expression by NCLAT – Detailed findings
recorded by Tribunal show that they were final and not prima facie
– Merely because NCLAT used an erroneous expression those
findings cannot become prima facie.
F
Company Law – Appeal against order of NCLT confirmed by
NCLAT before Supreme Court – Re-appreciation of evidence – If
permissible – Held: When two forums namely NCLT and NCLAT
have recorded concurrent findings on facts, it is not open to the
Supreme Court to re-appreciate evidence.
G
Company Law – Winding up of a company – Fraud as a
ground for winding up – Petition u/s.271(c) of the Companies Act,
2013 – Contention that the petition u/s.271(c) should have been
preceded, at least by a report from the Serious Fraud Investigation
Office, which has now gained statutory status u/s.211 of the
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 295
CORPORATION LTD. & ANR.

Companies Act, 2013 – Held: The contention is un-acceptable, in A
view of the fact that under the 2013 Act there are two different
routes for winding up of a company on allegations of fraud – One
is u/s.271(c) and the other is under the just and equitable clause in
s.271(e), read with s.224(2) and s.213(b) – It is only in the second
category of cases that the report of the investigation should precede
B
a petition for winding up – Companies Act, 2013 – Companies Act,
1956.
Company Law – Winding up of a company – Fraud as a
ground for winding up – Relevance of motive – Held: If as a matter
of fact, fraud as projected, stands established, the motive behind
the victim of fraud, coming up with a petition for winding up, is of C
no relevance – A product of fraud is in conflict with the public
policy of any country including India – The basic notions of morality
and justice are always in conflict with fraud and hence motive behind
the action brought by the victim of fraud can never stand as an
impediment. D
Dismissing the appeals, the Court
HELD: 1. The Companies Act, 1956 spoke about two
categories of winding up, namely, (i) winding up by the Tribunal;
and (ii) voluntary winding up. The circumstances in which a
company could be wound up by the Court, were enlisted in Section E
433 of the 1956 Act. This Section contained a list of nine
circumstances in which a company may be wound up. Fraud (i)
either in the formation of the company or (ii) in the conduct of
affairs of the company or (iii) on the part of persons concerned in
the formation of or the management of its affairs, was not one of F
the circum- stances stipulated in Section 433 of 1956 Act. Though
Section 433 of the 1956 Act did not include fraud as one of the
circumstances in which a company may be wound up, there was
still an indirect reference to fraud. Section 439(1) of the 1956 Act
provided a list of seven persons who were entitled to file an
application for the winding up of a company. Under clause (f) of G
sub- section (1) of Section 439, an application for winding up shall
be presented by “any person authorized by the Central
Government in their behalf” in a case falling under Section 243.
[Para 6.1, 6.2][310-D-F]
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296 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 2. A combined reading of Sections 439(1)(f), 243 and 237(b)
of the 1956 Act shows that, (i) fraud in the formation of the
company; (ii) fraud in the conduct of affairs of the company; and
(iii) fraud on the part of the persons engaged in the formation or
conduct of the affairs of the company, though not listed as some
of the circumstances under Section 433 of the 1956 Act, were
B
still available for the winding up of the company, even under the
1956 Act. But there were 3 requirements to be satisfied. They
are: (i) the perpetration of one or the other types of fraud
mentioned above are reflected in a report of investigation; (ii)
the petition under these provisions is to be filed only by a person
C authorised by the Central Government; and (iii) the petition
should be premised on the ground that it is just and equitable to
wind up the company. But the mandate of Section 243 (a) of the
Companies Act, 1956 to take recourse, in cases of fraud, to just
and equitable ground, was little incongruous. This is due to the
reason that under Section 443(2), the court may refuse to make
D
an order of winding up, on just and equitable ground, if some
other remedy was available to the persons seeking winding up.
Therefore, despite the fact that fraud was available, albeit
indirectly, as a circumstance for the winding up of a company,
even under the 1956 Act, its link to just and equitable clause was
E little problematic because of section 443(2). [Para 6.5, 6.13][312-
F-G; 315-B]
3. Coming to the 2013 Act, provisions similar to sub-clauses
(i) and (ii) of clause (b) of section 237 of the 1956 Act, are to be
found in sub-clauses (i) and (ii) of clause (b) of section 213 of the
F 2013 Act. They employ the same language for the purpose of
ordering an investigation into the affairs of a company. But under
section 237 of the 1956 Act, the power to order investigation
was with the central Government, while it is with the Tribunal
under Section 213 of the 2013 Act. Section 224(2) of the 2013
Act is similar to Section 243 of the 1956 Act as it enables the
G Central Government to authorize any person to file a petition for
winding up, on the basis of the report of any investigation. Here
again, the petition for winding up on the basis of the report of
such investigation, is to be on just and equitable ground by virtue
of clause (a) of sub-section (2) of Section 224, which is similar to
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DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 297
CORPORATION LTD. & ANR.

clause (a) of Section 243. The main departure of the 2013 Act A
from the statutory regime of the 1956 Act, is the specific inclusion
of fraud, directly as one of the circumstances in which a company
could be wound up. Section 271 of the 2013 Act lists out the
circumstances in which a company may be wound up. What were
clauses (a), (g), (h) and (i) of Section 433 of 1956 Act have now
B
become clauses (a), (b), (d) and (e) of Section 271 of the 2013
Act, though not in the same order. In addition, (i) conduct of the
affairs of the company in a fraudulent manner; (ii) formation of
the company for fraudulent or unlawful purpose; and (iii) persons
concerned in the formation or management of its affairs being
guilty of fraud, misfeasance or misconduct, have now been C
included in clause (c) of Section 271, as some of the circumstances
in which a company could be wound up. In other words, fraud has
now directly become (under the 2013 regime), one of the
circumstances in which a company could be wound up, though it
also continues to be a ground indirectly, under section 224(2)
D
read with section 213 [as it was under Section 439(1) (f) read
with sections 243 and 237(b) of the 1956 Act].[Para 6.14,
6.15][315-E-H; 316-A-C]
4. Just as Section 439(1) of the 1956 Act provided a list of
persons by whom an application for winding up may be filed,
Section 272(1) of the 2013 Act also provides a list of persons by E
whom a petition for winding up may be filed. What is common to
both Section 439(1) of the 1956 Act and Section 272(1) of the
2013 Act, is that a petition for winding up may be filed by: (i) the
company; (ii) any contributory; (iii) the Registrar; and (iv) any
person authorized by the Central Government in that behalf. Both F
Section 439(1) of the 1956 Act and Section 272(1) of the 2013
Act use two important expressions, in relation to the persons
competent to file a petition for winding up and the procedure to
be followed. They are, (i) authorization; and (ii) sanction. The
circumstances in which an ‘authorization’ has to be granted and
the circumstances in which a sanction has to be granted, are G
different. Similarly, the grant of sanction should be preceded by
an opportunity of hearing, but the issue of authorization does not
require any prior opportunity to the company to make a
representation. It is evident that the second proviso to sub-section
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298 SUPREME COURT REPORTS [2022] 11 S.C.R.

A (5) of section 439 of the 1956 Act became the first proviso to
sub-section (3) of Section 272 of the 2013 Act and sub-section
(6) of Section 439 became the second proviso to sub-section (3)
of Section 272. They respectively prescribe, (i) that for presenting
a petition for winding up, the Registrar requires previous sanction
of the Central Government; and (ii) that before granting sanction,
B
the Central Government should give a reasonable opportunity
to the company to make a representation. Thus, in effect, the
distinction between the procedure to be followed by the Registrar
and the procedure to be followed by “any other person authorised
by the Central Government”, for presenting a petition for winding
C up, is maintained as such. If the petition is to be filed by the
Registrar, it should be preceded by 2 things namely, (i) a sanction;
and (ii) an opportunity to the company to object. If the petition is
to be filed by “any other person”, there is only one requirement
namely that of authorization by the Central Government by
notification. [Para 6.18, 6.19, 6.20, 6.21][317-E-H; 318-E-H; 319-
D
A]
5. Coming to the rules framed under the 2013 Act,
Sub-sections (1) and (2) of Section 468 of the 2013 Act empower
the Central Government to make Rules providing for all matters
relating to winding up of companies. In exercise of the powers so
E conferred, the Central Government has issued a set of Rules
known as the Companies (Winding up) Rules, 2020. Rules 5 and
7 of these Rules speak about advertisement. The essence of Rule
5 is to provide an opportunity of being heard to the company
sought to be wound up, even before directions as to the
F advertisement of the petition are given. The last limb of Rule 5
speaks about the discretion vested in the Tribunal to direct notice
to be given to the company and to give an opportunity of being
heard before giving any directions as to the advertisement of the
petition. This last limb of Rule 5 provides the clue about the
purpose of advertisement. [Para 7.7, 7.10][321-H; 322-A, 323-
G D-E]
6. One way of looking at the requirement of an
advertisement is that it provides an opportunity to all the
stakeholders such as (i) creditors; (ii) workers; (iii) suppliers;
(iv) customers; and (v) the general public, either to support or
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 299
CORPORATION LTD. & ANR.

oppose the proceedings for winding up. There is also another A
way of looking at the object of issuing an advertisement of the
petition for winding up. The advertisement serves as a warning/
notice or red alert to all those dealing with the company so that
they know that there could be an element of risk in dealing with
the company. [Para 7.11][323-F]
B
7. After all, the winding up of a company is like the insolvency
of an individual. The advertisement of the petition for winding
up, not merely serves as an opportunity to support or oppose
winding up, but also harms the reputation of the company and
sends shock waves in the stock market, if it is a listed company
or among the stakeholders who have dealings with the company. C
This is why an opportunity of being heard is contemplated in Rule
5 of the Companies (Winding up) Rules, 2020, before ordering
the advertisement of the petition. [Para 7.12][323-G-H]
8. The way in which the requirement of advertisement has
been viewed by Courts is that advertisement causes more harm D
to the company than the benefit that it brings to the company.
Hence the argument of the appellant in this case that the failure
to advertise the petition was prejudicial to their interest, goes
contrary to one of the important purposes of the advertisement
and the chilling effect that it is supposed to have on the company. E
[Para 7.14][324-E-F]
9. Even in a case where the Court took a view that
advertisement is mandatory, not only in view of the prescription
contained in the Rules, but also in view of the specific order
passed by the Company Court at the time of admission, directing F
the publication of the advertisement in specified newspapers, this
Court did not see the failure to publish an advertisement as
something that would lead to the automatic dismissal of the
petition for winding up. This is for the reason that the
advertisement of a petition for winding up is perceived to be
something that worked at cross purposes, sometimes beneficial G
to several stakeholders as it provides an opportunity of hearing
to them and sometimes as a measure of harassment of the
company. There are cases where the companies themselves have

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300 SUPREME COURT REPORTS [2022] 11 S.C.R.

A opposed the advertisement of the petition on the ground that the
same would harm their reputation and cripple their commercial
activities. There are also cases where the failure to advertise
has led to some of the creditors not having any notice of the
proceedings and thereby suffering prejudice. [Para 7.21][330-C-
F]
B
10. Rule 35 of the National Company Law Tribunal Rules,
2016 deals with advertisement of petitions. It may be seen from
Sub-rule (1) of Rule 35 that the procedure laid down in Rule 35 is
applicable to cases “where any application, petition or reference
is required to be advertised.” The requirement to advertise a
C petition for winding up does not flow out of the statute, but flows
out of the Rules. Since the requirement to advertise a petition
for winding up is stipulated in Rules 5 and 7 of the Companies
(Winding up) Rules, 2020, what is prescribed in Rule 35 would
cover even petitions for winding up. If so understood, Sub-rules
D (5) and (6) of Rule 35 of the NCLT Rules 2016 would throw light
upon the controversy on hand. Sub-rule (5) makes it clear that
even in cases where the direction of the Tribunal as regards
advertisement has not been complied with, the Tribunal has an
option (i) either to dismiss the petition; or (ii) to give such further
directions as it may think fit. Sub-rule (6) confers power upon the
E Tribunal even to dispense with any advertisement. In other words,
what was not specifically available in black and white, under the
1956 statutory regime, namely the power to dispense with any
advertisement, is now made available specifically under the
statutory regime of 2013. [Paras 7.25, 7.26, 7.27, 7.28 and
F 7.29][331-G; 333-B-E]
11. In the case at hand, the company in liquidation does not
have any creditors or customers who have dealings with the
company. In other words, there are no stakeholders who are
prejudiced by the failure of NCLT to order the publication of
G advertisement of the petition. This is not a case where the
company is sought to be wound up on the ground of inability to
pay debts or on just and equitable ground. This is a case of fraud
and all stakeholders are fully aware of the proceedings and they
have even shown extreme urgency in enforcing an ICC Arbitration
award and 2 BIT awards, before the conclusion of the winding up
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CORPORATION LTD. & ANR.

proceedings. Therefore, one is unable to sustain the argument A
that the failure of the Tribunal to order the publication of an
advertisement rendered the entire proceedings unlawful. [Para
7.30][334-B; C-D]
12. Limitation is not always akin to a lighted matchstick to
a train of gun powder. The date of commencement of the period B
need not necessarily be static. The date of commencement may
keep changing depending upon the acts of omission and
commission on the part of the party against whom the action is
initiated. These acts of omission and commission constitute the
bundle of facts, which determine the question whether an action
is barred by limitation or not. [Para 8.21][344-A; 345-A-B] C

13. The contours of fraud as delineated in Section 271(c) of
the Companies Act, 2013 cover three aspects namely, (i) the affairs
of the company being conducted in a fraudulent manner; (ii) the
company was formed for fraudulent and unlawful purpose; and
(iii) the persons concerned in the formation and management of D
its affairs have been guilty of fraud, misfeasance or misconduct in
connection therewith. A singular act of omission or commission
may constitute fraud and even a series of acts may constitute
fraud. A fraudulent act may be different from the fraudulent manner
in which an act is performed. The words “the conduct of the affairs E
of a company in a fraudulent manner” indicate that the process
was a continuing one. If the conduct of the affairs of the company
in a fraudulent manner is a continuing process, the right to apply
becomes recurring. [Para 8.22][345-B-E]
14. In the case at hand, fraud and corruption were F
discovered only later and by the time the discovery was made,
the attempts to reap the fruits of fraud had reached the pinnacle.
These attempts continue even till date and this falls squarely
within Section 271(c). Therefore, the contention that the petition
was barred by limitation was rightly rejected by the Tribunal and
there is no reason to take a different view. [Para 8.23][345-F-G] G
National Textile Workers’ Union v. P.R. Ramakrishnan
& Ors. (1983) 1 SCC 228 : [1983] 1 SCR 922; Standard
Chartered Bank v. Andhra Bank Financial Services Ltd.

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302 SUPREME COURT REPORTS [2022] 11 S.C.R.

A and Ors. (2006) 6 SCC 94 : [2006] 2 Suppl. SCR 1
and Jignesh Shah and Anr. v. Union of India and Anr.
(2019) 10 SCC 750 : [2019] 12 SCR 678 –
distinguished.
V. Ravi Kumar v. State, Rep. by Inspector of Police,
B District Crime Branch, Salem & Ors. (2019) 14 SCC
568: [2018] 14 SCR 828 – held inapplicable.
IDBI Bank Ltd. v. the Official Liquidator (2020) 15 SCC
517 – relied on.
National Conduits (P) Ltd. v. S.S. Arora AIR 1968 SC
C 279; Cotton Corporation of India Limited v. United
Industrial Bank Ltd. & Ors. (1983) 4 SCC 625 : [1983]
3 SCR 962; Sesh Nath Singh v. Baidyabati Sheoraphuli
Co-operative Bank Ltd (2021) 7 SCC 313; Laxmi Pat
Surana v. Union Bank of India (2021) 8 SCC 481; Asset
D Reconstruction company v. Bishal Jaiswal (2021) 6 SCC
366; and Svenska Handelsbanken v. Indian Charge
Chrome and Ors. (1994) 1 SCC 502 : [1993] 3 Suppl.
SCR 323 – referred to.
IDBI Bank Ltd. v. the Official Liquidator 2013 (6) CTC
E 40; Pradeep D. Kothari v. IDBI Bank Ltd. 2018 (1) CTC
136; T. Narayanan v. The Official Liquidator, 2012 (1)
MLJ 59 and Bengal Silk Mills Co. v. Ismail Golam
Hossain Ariff AIR 1962 Cal 115 – referred to.
Ebrahimi v. Westbourne Galleries Ltd. (1972) 2 WLR
F 1289 and Re Medical Battery Co. (1894) 1 Ch. 444
and Re Walter L. Jacob & Co. Ltd. 89 5 BCC 244 –
referred to.
Halsbury’s Laws of England (4th Edition) paragraph
1463 Para 359, Vol. XVI, Fifth Edition (2017) of
Halsbury’s Laws of England – referred to.
G
Case Law Reference
AIR 1968 SC 279 referred to Para 7.12
[1983] 3 SCR 962 referred to Para 7.13

H (2020) 15 SCC 517 relied on Para 7.20
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 303
CORPORATION LTD. & ANR.

[2019] 12 SCR 678 distinguished Para 8.2 A
(2021) 7 SCC 313 referred to Para 8.19
(2021) 8 SCC 481 referred to Para 8.19
(2021) 6 SCC 366 referred to Para 8.19
[2018] 14 SCR 828 held inapplicable Para 10.2 B
[2006] 2 Suppl. SCR 1 distinguished Para 10.2
[1993] 3 Suppl. SCR 323 referred to Para 10.2
[1983] 1 SCR 922 distinguished Para 11.2
C
CIVIL APPELLATE JURISDICTION : Civil Appeal No.5766
of 2021.
From the Judgment and Order dated 08.09.2021 of the National
Company Law Appellate Tribunal at Chennai in Company Appeal (AT)
(CH) No.17 of 2021.
D
With
Civil Appeal No.5906 of 2021.
Mukul Rohatgi, Arvind P. Datar, Sr. Advs., Ms. Anuradha Dutt,
Ms. B. Vijayalakshmi Menon, Pawan Sharma, Ms. Priyanka MP,
Chaitanya Kaushik, Ambar Bhushan, Haaris Fazili, Kunal Dutt, Advs. E
for the Appellant.
N. Venkataraman, Balbir Singh, ASGs, Ankur Talwar, Rajat Nair,
P. V. Yogeswaran, Chinmayee Chandra, Arvind Kumar Sharma, Ajay
Bhargava, Ms. Vanita Bhargava, Ms. Maithili Moondra, Ms. Trishala
Trivedi, Arvind Ray, Ms. Vansha Sethi for M/s Khaitan & Co., Naman F
Tandon, Ms. Surbhi Singh, Samarvir Singh, Sagarica Kaul, Ms. Monica
Benjamin, K. Gurumurthy, Prahlad Singh, Advs. for the Respondents.
The Judgment of the Court was delivered by
V. RAMASUBRAMANIAN, J.
G
1. Challenging an order of winding up passed by the National
Company Law Tribunal under Section 271(c) of the Companies Act,
2013 (for short the 2013 Act), which was confirmed by the National
Company Law Appellate Tribunal on appeals, the company in liquidation,
namely, Devas Multimedia Private Limited, through its ex-Director has
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304 SUPREME COURT REPORTS [2022] 11 S.C.R.

A come up with an appeal in Civil Appeal No.5766 of 2021 and one of the
shareholders of the company in liquidation, namely, Devas Employees
Mauritius Private Limited (hereinafter referred to as DEMPL) has come
up with another appeal in CA No.5906 of 2021.
2. We have heard Shri Mukul Rohtagi, learned senior counsel
B appearing for the company in liquidation, Shri Arvind P. Datar, learned
senior counsel appearing for the shareholder-appellant, Shri N.
Venkataraman, learned Additional Solicitor General appearing for
Respondent No. 1 herein, which is the company which moved the Tribunal
for winding up the company in liquidation and Shri Balbir Singh, learned
Additional Solicitor General appearing for the Union of India.
C
3. Brief Background
3.1 The first respondent in these appeals, namely, Antrix Corporation
Limited (hereinafter referred to as Antrix), incorporated on 28.09.1992
under the Companies Act, 1956, is the commercial arm of the Indian
D Space Research Organisation (ISRO for short) which is wholly owned
by the Government of India and coming under the administrative control
of the Department of Space.
3.2 On 28.07.2003, Antrix entered into a Memorandum of
Understanding with Forge Advisors, LLC, a Virginia Corporation. The
E intent, as spelt out in the MOU, was to make both parties become “strong
and vital partners in evaluating and implementing major new satellite
applications across diverse sectors including agriculture, education,
media and telecommunications”. Apart from other things, the MOU
contemplated Forge Advisors to provide a broad array of advisory
services that included near-term tactical projects in the areas of sales,
F marketing, business development, strategic partnership negotiations and
other related business areas and long term projects in the areas of
corporate strategy, market opportunity assessment, business case
development for new services, launch of new application services etc.
3.3 On 22.03.2004, Forge Advisors made a presentation proposing
G an Indian joint venture, to launch what came to be known as “DEVAS”
(Digitally Enhanced Video and Audio Services). It was projected in the
said proposal that DEVAS platform will be capable of delivering multimedia
and information services via satellite to mobile devices tailored to the
needs of various market segments such as (i) consumer segment,
comprising of entertainment and information services to digital multimedia
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consoles in cars and vehicles; (ii) commercial segment, comprising of A
high value information services to Commercial Information Devices in
commercial transport vehicles; and (iii) social segment, comprising of
Developmental Information Services to Rural Information kiosks in
underserved areas.
3.4 The presentation dated 22.03.2004 was followed by a proposal B
dated 15.04.2004. The proposal was to form “a strategic partnership
to launch DEVAS, a new service that delivers video, multimedia
and information services via satellite to mobile receivers in vehicles
and mobile phones across India”. The proposal dated 15.04.2004
indicated that DEVAS was conceived as a new National Service,
expected to be launched by the end of 2006, that would deliver video, C
multimedia and information services via satellite to mobile receivers in
vehicles and mobile phones across India1. The proposal contemplated
the formation of a joint venture and an obligation on the part of ISRO
and Antrix to invest in one operational S-Band satellite with a ground
space segment to be leased to the joint venture. In return, ISRO and D
Antrix were to receive lease payments of USD 11 million annually for a
period of 15 years.
3.5 The concept of DEVAS, as indicated in the penultimate
paragraph of the Executive Summary of the proposal dated 15.04.2004,
was based upon the evolution and performance of similar services in E
other markets such as XM Radio and Sirius Radio in the United States
and Mobile Broadcasting Corporation’s multimedia services via satellite
in Korea and Japan.
3.6 It appears that pursuant to the aforesaid proposal, several
meetings were held between the representatives of Forge and ISRO/ F
Antrix and a Committee headed by one Dr. K.N. Shankara, Director of
SAC (Space Application Centre) was constituted to examine the proposal.
3.7 On 17.12.2004 Devas Multimedia Private Limited, (hereinafter
referred to as ‘Devas’ or the ‘company in liquidation’) was incorporated
as a private company under the Companies Act, 1956. Immediately G
thereafter, Antrix entered into an Agreement with the said company on
28.01.2005. The Agreement was titled as “Agreement for the lease of
space segment capacity on ISRO/Antrix S-Band spacecraft by
DEVAS”. The preamble of the Agreement stated that Devas was
1
Paragraph 1 of the Executive Summary of the Proposal dated 15.04.2004 H
306 SUPREME COURT REPORTS [2022] 11 S.C.R.

A developing a platform capable of delivering multimedia and information
services via satellite and terrestrial system to mobile receivers, tailored
to the needs of various market segments and that Devas had, therefore,
requested Antrix, space segment capacity for the purpose of offering S-
DMB service, a new digital multimedia and information service, including
but not limited to audio and video content and information interactive
B
services, across India that will be delivered via satellite and terrestrial
system via fixed, portable mobile receivers including mobile phones, mobile
video/audio receivers for vehicles etc.. What was to be leased out by
Antrix to Devas was 5 numbers of C X S transponders each of 8.1 MHz
capacity and 5 numbers of S X C transponders each of 2.7 MHz capacity
C on the Primary Satellite 1 (PS1). The leased capacity was agreed to be
delivered by Antrix to Devas from a fully operational and ready PS-1
within 30 months of the agreement, with a further grace period of six
months.
3.8 Article 7 of the Agreement contained provisions for the
D termination of the Agreement by either of the parties, with certain
consequences to one or the other, depending upon the circumstances
under which termination was made.
3.9 It appears that Devas obtained approvals from Foreign
Investment Promotion Board (FIPB) during the period May 2006 to
E September 2009. Pursuant to those approvals, Devas actually brought
into India, an investment of about INR 579 crores.
3.10 Devas also obtained an Internet Service Provider (ISP)
License from the Department of Telecommunications on 02.05.2008.
Devas then obtained permission from the Department of
F Telecommunications on 31.03.2009 for providing Internet Protocol
Television (IPTV) Services within the scope of the terms and conditions
of ISP license. Devas claims to have conducted experiments on the
emerging technologies for satellite and terrestrial system in September
2009.

G 3.11 However the Agreement dated 28.01.2005 was terminated
by Antrix by a Communication dated 25.02.2011, in accordance with
Article 7(c) of the Agreement, which provides for termination on the
ground of force majeure. It was stated in the said letter that the
Government of India had taken a policy decision not to provide orbital
slots in S-Band for commercial activities.
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3.12 This termination led to Devas initiating a commercial A
arbitration in India before the ICC Arbitral Tribunal. Independently, the
Mauritius investors initiated a BIT arbitration under the India-Mauritius
Bilateral Investment Treaty and the German Company by name Deutsche
Telecom, initiated a BIT arbitration under the India-Germany BIT. ICC
Arbitral Tribunal passed an Award on 14.09.2015 directing Antrix to pay
B
Devas, a sum of USD 562.5 million with simple interest @ 18% p.a.
The Government of India suffered similar awards in the other 2 BIT
Arbitral proceedings also.
3.13 In the meantime, the Central Bureau of Investigation (CBI)
filed a First Information Report on 16.03.2015, against the company in
liquidation namely Devas, as well as the officers of Devas and Antrix, C
for offences under Section 420 read with Section 120B of IPC and
Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption
Act, 1988. It was followed by a charge-sheet filed on 11.08.2016 and a
supplementary charge-sheet on 08.01.2019. Similarly the Enforcement
Directorate filed a report in ECIR No.12/BGZO/2015. D
3.14 Therefore, Antrix made a request to the Ministry of Corporate
Affairs, Government of India, on 14.01.2021 seeking authorization to
initiate proceedings under Section 271(c) of the 2013 Act for winding up
Devas. Authorisation was given on 18.01.2021, on the basis of which
Antrix filed a petition before the National Company Law Tribunal, E
Bengaluru Bench on 18.01.2021 for the winding up of Devas.
3.15 On 19.01.2021, NCLT passed a reasoned order, after hearing
the counsel for Devas, admitting the company petition and appointing
the Official Liquidator attached to the High Court of Karnataka at
Bangalore, as the provisional liquidator. F
3.16 Against the said order of NCLT admitting the company
petition, DEMPL filed an appeal, but the same was disposed of by the
NCLAT with a direction to DEMPL to seek impleadment before NCLT
and raise all objections.
3.17 DEMPL simultaneously filed a writ petition in W.P. No. 6191 G
of 2021 before the Karnataka High Court challenging the constitutional
validity of Section 272(1)(e) of the Companies Act, 2013 and praying for
quashing the authorization dated 18.01.2021 granted by the Ministry of
Corporate Affairs to Antrix to initiate proceedings for winding up Devas.
The High Court dismissed the Writ Petition on 28.04.2021 and also imposed
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308 SUPREME COURT REPORTS [2022] 11 S.C.R.

A costs of Rs.5,00,000/-on DEMPL on the ground that they were guilty of
abuse of process of law.
3.18 By a final order dated 25.05.2021, NCLT directed the winding
up of Devas. Aggrieved by the order of winding up, Devas filed one
appeal and the shareholder-DEMPL filed another appeal before NCLAT.
B These appeals having been dismissed by NCLAT by an Order dated
08.09.2021, the ex-Director of the company as well as the shareholder
are on appeal before us.
4. Grounds of Attack:
4.1 The Company in liquidation, which is the appellant in one appeal,
C assails the impugned orders of NCLT and NCLAT broadly on the
following grounds:-
(i) breach of the mandatory requirement of advertisement
before ordering winding up;

D (ii) winding up petition barred by limitation;
(iii) Antrix estopped from pleading fraud;
(iv) violation of the principles of natural justice due to the
denial of permission for cross examination.
E (v) erroneous findings of fact;
(vi) application of incorrect standard of proof on the question
of fraud;
(vii) erroneous conclusions regarding the consequences of fraud,
assuming that fraud was established;
F
4.2 DEMPL, which is the appellant in the second appeal before
us and which holds 3.48% of the issued equity share capital of the
Company in liquidation, assails the impugned orders broadly on the
following grounds:-
(i) The question of locus of a small shareholder to oppose
G
winding up has been decided by both Tribunals contrary to
law;
(ii) Findings recorded against shareholders on the question of
fraud, have been so recorded without making them a party
and without giving them an opportunity of hearing;
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DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 309
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(iii) Inapplicability of the theory of useless formality to mandatory A
requirements such as advertisements before ordering
winding up.
5. Defence
5.1 The impugned orders are sought to be defended by Shri N.
Venkataraman, learned Additional Solicitor General appearing for Antrix, B
broadly on the following grounds:-
(i) Detailed findings recorded by the Tribunal on 8 different
types of fraud committed by Devas, both in the formation
of the Company and in the manner in which the affairs of
the Company were carried out, which cannot be assailed in C
an appeal under Section 423 of the Companies Act, 2013.
(ii) The Agreement dated 28.01.2005 entered into between
Antrix and Devas spoke about three components, namely,
DEVAS2 Technology, DEVAS services and DEVAS device,
none of which existed either on the date of formation of D
Devas or on the date of execution of the Agreement or on
the date of termination of the Agreement and not even on
the date of winding up of the company.
(iii) Violation of SATCOM policy, manipulation of minutes of
meetings and the misleading Cabinet Note. E
(iv) Shocking nature of the financial fraud.
5.2 Shri Balbir Singh, learned Additional Solicitor General appearing
for the Union of India defended the impugned orders broadly on the
following grounds:
F
(i) The requirement of an advertisement before winding up is
redundant in a petition under Section 271(c).
(ii) The question of fraud has to be addressed from the broad
parameters laid down, not only in Section 17 of the Indian
Contract Act, 1872, but also in Section 447 read with Section G
7 of the Companies Act, 2013 and keeping in mind the
distinction between fraud, fraudulent manner, fraudulent
purpose and unlawful purpose.
2
Wherever there is a reference to the company in liquidation, we have used the lowercase
of the letters in the word ‘Devas’ and wherever there is a reference to the technology
and services offered by Devas, we have used the capital letters in the word ‘DEVAS’ H
310 SUPREME COURT REPORTS [2022] 11 S.C.R.

A (iii) The attempt of Devas to challenge the constitutional validity
of Section 271(c) and its failure.
(iv) The case on hand not falling under the category of cases
where cross-examination was necessary.
6. Fraud as a ground for winding up and the difference
B between 1956 Act and 2013 Act
Before we proceed to consider the specific grounds of challenge
to the impugned order, it is necessary to see the contours of Section 271
(c) of the Companies Act, 2013, as it is stated by the learned counsel on
both sides (i) that this is a new addition to the Companies Act; and (ii)
C that this is the first case of winding up on the ground of fraud. Therefore,
a comparison of the provisions of 2013 Act with those of the 1956 Act
may serve us better.
6.1 The Companies Act, 1956 spoke about two categories of winding
up, namely, (i) winding up by the Tribunal; and (ii) voluntary winding up.
D The circumstances in which a company could be wound up by the Court,
were enlisted in Section 433 of the 1956 Act. This Section contained a
list of nine circumstances in which a company may be wound up. Fraud
(i) either in the formation of the company or (ii) in the conduct of
affairs of the company or (iii) on the part of persons concerned in
E the formation of or the management of its affairs, was not one of
the circumstances stipulated in Section 433 of 1956 Act.
6.2 Though Section 433 of the 1956 Act did not include fraud as
one of the circumstances in which a company may be wound up, there
was still an indirect reference to fraud. Section 439(1) of the 1956 Act
F provided a list of seven persons who were entitled to file an application
for the winding up of a company. Under clause (f) of sub-section (1) of
Section 439, an application for winding up shall be presented by “any
person authorized by the Central Government in their behalf” in a
case falling under Section 243.
6.3 Section 243 of the 1956 Act empowered the Central
G
Government to cause a petition for winding up to be presented, in cases
covered by sub-clause (i) or sub clause (ii) of Clause (b) of Section 237.
Section 243 of the 1956 Act read as follows:-
“243. Application for winding up of company or an order
under section 397 or 398. - If any such company or other body
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corporate is liable to be wound up under this Act and it appears to A
the Central Government from any such report as aforesaid that it
is expedient so to do by reason of any such circumstances as are
referred to in sub-clause (i) or (ii) of clause (b) of section 237, the
Central Government may, unless the company, or body corporate
is already being wound up by the Tribunal, cause to be presented
B
to the Tribunal by any person authorised by the Central
Government in this behalf –
(a) a petition for the winding up of the company, or body
corporate on the ground that it is just and equitable that it
should be wound up ;
C
(b) an application for an order under section 397 or 398,
(c) both a petition and an application as aforesaid.”
6.4 Section 243 forms part of a set of provisions from Sections
235 to 251 in Chapter I of Part VI of the Act. This cluster of provisions
from Sections 235 to 251 is grouped under the Heading “Investigation”. D
Section 235(1) empowers the Central Government to order an
investigation into the affairs of the company whenever a Report has
been made by the Registrar under Section 234. Independent of Section
235(1), Central Government is empowered also under Section 237
to order an investigation, if, in its opinion or in the opinion of the E
Company Law Board (i) the business of the company is being
conducted for a fraudulent or unlawful purpose or (ii) the company
was formed for any fraudulent or unlawful purpose or (iii) persons
concerned in the formation of the company or the management of
its affairs have in connection therewith, are guilty of fraud. Section
237 of the 1956 Act reads as follows:- F
“237. Investigation of company’s affairs in other cases. -
Without prejudice to its powers under section 235, the Central
Government –
(a) shall appoint one or more competent persons as inspectors
G
to investigate the affairs of a company and to report thereon
in such manner as the Central Government may direct, if –
(i) the company, by special resolution ; or
(ii) the Court, by order,
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312 SUPREME COURT REPORTS [2022] 11 S.C.R.

A declares that the affairs of the company ought to be
investigated by an inspector appointed by the Central
Government ; and
(b) may do so in its opinion or in the opinion of the Tribunal,
there are circumstances suggesting –
B (i) that the business of the company is being conducted
with intent to defraud its creditors, members or any
other persons, or otherwise for a fraudulent or
unlawful purpose or in a manner oppressive of any
of its members, or that the company was formed for
C any fraudulent or unlawful purpose;
(ii) that persons concerned in the formation of the
company or the management of its affairs have in
connection therewith been guilty of fraud,
misfeasance or other misconduct towards the
D company or towards any of its members ; or
(iii) that the members of the company have not been given
all the information with respect to its affairs which
they might reasonably expect, including information
relating to the calculation of the commission payable
E to a managing or other director, or the manager, of
the company.”
6.5 Thus a combined reading of Sections 439(1)(f), 243 and 237(b)
of the 1956 Act shows that, (i) fraud in the formation of the company;
(ii) fraud in the conduct of affairs of the company; and (iii) fraud on the
F part of the persons engaged in the formation or conduct of the affairs of
the company, though not listed as some of the circumstances under Section
433 of the 1956 Act, were still available for the winding up of the company,
even under the 1956 Act. But there were 3 requirements to be satisfied.
They are: (i) the perpetration of one or the other types of fraud mentioned
above are reflected in a report of investigation; (ii) the petition under
G these provisions is to be filed only by a person authorised by the Central
Government; and (iii) the petition should be premised on the ground that
it is just and equitable to wind up the company.
6.6 What is interesting to observe from section 243 (a) is that a
petition for winding up in terms of Section 439(1)(f) of the 1956
H Act, read with Section 237(b)(i) and (ii), has to be on “just and
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 313
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equitable” ground. Clause (a) of Section 243 of the 1956 Act, enabled A
the Central Government (if upon receipt of a report about the existence
of the circumstances referred to in Section 237(b)(i) and (ii), it appears
to the Central Government that it is expedient to do so), to authorize any
person to present a petition for the winding up of a company, not directly
on the ground of fraud but actually on the ground that it is just and
B
equitable that the company should be wound up.
6.7 It must be noted that just and equitable clause has several
facets. The origin of just and equitable clause in Company law, is traceable
to the law of partnership, which developed “the conceptions of probity,
good faith and mutual confidence3”. The principle behind just and
equitable clause, in the words of the House of Lords is that “equity C
always does enable the Court to subject the exercise of legal rights
to equitable considerations”. In other words, equitable considerations
get superimposed on statutorily governed legal rights under this clause.
6.8 It is well settled that the words “just and equitable” in the
legislation specifying the grounds for winding up by the Court, are not to D
be read as being ejusdem generis with the preceding words of the
enactment. They are not to be cut down by the formation of categories
or headings under which cases must be brought if the enactment is to
apply4. But apart from cases, (i) where there is something in the history
of the company or in the relationship between the shareholders; or (ii) E
where there is functional deadlock of a paralysing kind; or (iii) where
there is justifiable lack of confidence, which may give rise to a petition
for winding up on just and equitable clause, there have also been other
cases at least before the Courts in England, some of which are listed in
paragraph 360 of Volume 16 of the Fifth Edition (2017) of the Halsbury’s
Laws of England. Two of them are (i) where the company is a bubble F
company; and (ii) where the company is fraudulent in its inception and
carries on at a loss without a capital of its own.
6.9 But traditionally, fraud committed by a company on outsiders
or the fact that the company acted dishonestly to outsiders, was not a
ground for winding up in English Law. A useful reference may be made G
in this regard to Re Medical Battery Co.5, where a question relating to
investigation through public examination came up. It was held therein
3
Ebrahimi vs. Westbourne Galleries Ltd.; (1972) 2 WLR 1289
4
Para 359, Vol. XVI, Fifth Edition (2017) of Halsbury’s Laws of England.
5
(1894) 1 Ch. 444
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314 SUPREME COURT REPORTS [2022] 11 S.C.R.

A that the relevant provision was not intended to apply to a case where the
charges were about the commitment of fraud in the course of business
with the outside world and not connected in any way with the promotion
or formation of the company.
6.10 But the law has not remained static even in England. The
B Insolvency Act, 1986 was amended in England through the Companies
Act, 1989 to incorporate Section 124-A. Under Section 124-A of the
Insolvency Act, 1986, (i) the Secretary of State may seek the winding
up of a company if he thinks that it is expedient in the public interest
to wind up the company and (ii) if the court thinks it just and equitable
to do so. Such winding up may be based upon, (i) the reports of some
C investigations under the Companies Act itself; or (ii) a report under the
Financial Services and Markets Act; or (iii) any information under the
Criminal Justice Act, 1987.
6.11 In Re Walter L. Jacob & Co. Ltd.6, the Court of Appeal
(Civil Division) was concerned with a case, where the Secretary of
D State, after examining the books of the company in question, formed an
opinion that the company should be wound up in public interest. Therefore,
he filed a petition under Section 447 of the Companies Act, 1985 for
winding up on just and equitable ground under Section 122(1)(g) of the
Insolvency Act, 1986. The High Court dismissed the petition. While
E reversing the decision and ordering the winding up, the Court of Appeal
held that the Court’s task in the case of petitions for winding up in public
interest, is to carry out a balancing exercise, having regard to all the
circumstances as disclosed by the totality of the evidence. One of the
arguments raised in that case was that the company sought to be wound
up did well and that all clients to whom the company owed money except
F one, had settled the matter with the company. While rejecting the said
argument, the Court of Appeal emphasised that the Parliament had
recognised the need for the general public to be protected against the
activities of unscrupulous persons who deal in securities.
6.12 Thus, there was a shift even in the English Law, from the
G conservative view that fraud committed by the company upon outsiders
was not available as a ground for winding up. However, winding up on
the ground of public interest was also linked to just and equitable clause
in England. This is perhaps why the law even in India, for the winding up
6
(1989) 5 BCC 244
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of a company on the ground of fraud, was also linked to just and equitable A
clause under the 1956 Act.
6.13 But the mandate of Section 243 (a) of the Companies Act,
1956 to take recourse, in cases of fraud, to just and equitable ground,
was little incongruous. This is due to the reason that under Section 443(2),
the court may refuse to make an order of winding up, on just and equitable B
ground, if some other remedy was available to the persons seeking
winding up. Section 443(2) of the 1956 Act reads as follows:-
“443. Powers of tribunal on hearing petition
xxxxxxxxxxxxxxx
C
(2) Where the petition is presented on the ground that it is just and
equitable that the company should be wound up, the Tribunal may
refuse to make an order of winding up, if it is of the opinion that
some other remedy is available to the petitioners and that they are
acting unreasonably in seeking to have the company wound up
instead of pursuing that other remedy.” D
Therefore, despite the fact that fraud was available, albeit
indirectly, as a circumstance for the winding up of a company, even
under the 1956 Act, its link to just and equitable clause was little
problematic because of section 443(2).
E
6.14 Coming to the 2013 Act, provisions similar to sub-clauses (i)
and (ii) of clause (b) of section 237 of the 1956 Act, are to be found in
sub-clauses (i) and (ii) of clause (b) of section 213 of the 2013 Act.
They employ the same language for the purpose of ordering an
investigation into the affairs of a company. But under section 237 of the
1956 Act, the power to order investigation was with the central F
Government, while it is with the Tribunal under Section 213 of the 2013
Act. Section 224 (2) of the 2013 Act is similar to Section 243 of the 1956
Act as it enables the Central Government to authorize any person to file
a petition for winding up, on the basis of the report of any investigation.
Here again, the petition for winding up on the basis of the report of such
G
investigation, is to be on just and equitable ground by virtue of clause (a)
of sub-section (2) of Section 224, which is similar to clause (a) of Section
243.
6.15 The main departure of the 2013 Act from the statutory regime
of the 1956 Act, is the specific inclusion of fraud, directly as one of the
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316 SUPREME COURT REPORTS [2022] 11 S.C.R.

A circumstances in which a company could be wound up. Section 271 of
the 2013 Act lists out the circumstances in which a company may be
wound up. What were clauses (a), (g), (h) and (i) of Section 433 of 1956
Act have now become clauses (a), (b), (d) and (e) of Section 271 of the
2013 Act, though not in the same order. In addition, (i) conduct of the
affairs of the company in a fraudulent manner; (ii) formation of the
B
company for fraudulent or unlawful purpose; and (iii) persons concerned
in the formation or management of its affairs being guilty of fraud,
misfeasance or misconduct, have now been included in clause (c) of
Section 271, as some of the circumstances in which a company could be
wound up. In other words, fraud has now directly become (under the
C 2013 regime), one of the circumstances in which a company could be
wound up, though it also continues to be a ground indirectly, under section
224(2) read with section 213 [as it was under Section 439(1)(f) read
with sections 243 and 237(b) of the 1956 Act] .
6.16 As a matter of fact, Section 271(1) of the 2013 Act, as it was
D originally enacted, included the inability of a company to pay its debts as
one of the grounds for winding up. Therefore, the deeming provision
which was there in Section 434 of the 1956 Act found a place as sub-
section (2) of Section 271 of the 2013 Act. But by the Insolvency and
Bankruptcy Code, 2016 (Act 31 of 2016), “inability to pay debts” has
been deleted from Section 271. As a consequence, the deeming provision
E in sub-section (2) of Section 271 also stands deleted. In fact, section 271
of the 2013 Act (along with sections 270 and 272) got amended even
before they were notified under Section 1 (3) of the Act to come into
force.
6.17 In other words, Section 271 as it originally stood in the 2013
F Act, listed six circumstances in which a company may be wound up.
Inability to pay debts was one of those six circumstances. But by Act 31
of 2016, ‘inability to pay debts’ got deleted from the list of circumstances7.
Section 271 of the 2013 Act, as it now stands after 2016, reads as follows:
“271. Circumstances in which company may be wound up
G by Tribunal— A company may, on a petition under section 272,
be wound up by the Tribunal,—
(a) if the company has, by special resolution, resolved that the
company be wound up by the Tribunal;
7
Now the inability of a company to pay its debts is a ground for initiation of CIRP. If
H CIRP fails, winding up can be resorted to.
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 317
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(b) if the company has acted against the interests of the A
sovereignty and integrity of India, the security of the State,
friendly relations with foreign States, public order, decency
or morality;
(c) if on an application made by the Registrar or any other
person authorised by the Central Government by notification B
under this Act, the Tribunal is of the opinion that the affairs
of the company have been conducted in a fraudulent manner
or the company was formed for fraudulent and unlawful
purpose or the persons concerned in the formation or
management of its affairs have been guilty of fraud,
misfeasance or misconduct in connection therewith and that C
it is proper that the company be wound up;
(d) if the company has made a default in filing with the Registrar
its financial statements or annual returns for immediately
preceding five consecutive financial years; or
D
(e) if the Tribunal is of the opinion that it is just and equitable
that the company should be wound up.”
6.18 Just as Section 439(1) of the 1956 Act provided a list of
persons by whom an application for winding up may be filed, Section
272(1) of the 2013 Act also provides a list of persons by whom a petition E
for winding up may be filed. What is common to both Section 439(1) of
the 1956 Act and Section 272(1) of the 2013 Act, is that a petition for
winding up may be filed by: (i) the company; (ii) any contributory; (iii)
the Registrar; and (iv) any person authorized by the Central Government
in that behalf.
F
6.19 Both Section 439(1) of the 1956 Act and Section 272(1) of
the 2013 Act use two important expressions, in relation to the persons
competent to file a petition for winding up and the procedure to be
followed. They are, (i) authorization; and (ii) sanction. The circumstances
in which an ‘authorization’ has to be granted and the circumstances in
which a sanction has to be granted, are different. Similarly, the grant of G
sanction should be preceded by an opportunity of hearing, but the issue
of authorization does not require any prior opportunity to the company to
make a representation. Sub-sections (5) and (6) of section 439 of the
1956 Act and sub-section (3) of section 272 of the 2013 Act are presented
in a table for easy reference:
H
318 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 439. Provisions as to applications for 272. Petition for winding up
winding up (1) ………..
(1) …………. (2) ………..
(2) ………….
(3) The Registrar shall be entitled to
(3) ………….
present a petition for winding up under
(4) ………….
section 271, except on the grounds
(5) Except in the case where he is
specified in clause (a) of that section:
authorised in pursuance of clause (f) of
B sub- section (1), the Registrar shall be
Provided that the Registrar shall obtain the
previous sanction of the Central
entitled to pre- sent a petition for winding
Government to the presentation of a
up a company only on the grounds specified
petition:
in clauses (b), (c), (d), (e) and (f)] of section
433: Provided further that the Central
Provided that the Registrar shall not present Government shall not accord its sanction
a petition on the ground specified in clause unless the company has been given a
C (e) aforesaid, unless it appears to him either reasonable opportunity of making
from the financial condition of the company representations.
as disclosed in its balance sheet or from the
report of a special auditor appointed under
section 233A or an inspector] appointed
under section 235 or 237, that the company
is unable to pay its debts:
Provided further that the Registrar shall
D obtain the previous sanction of the
Central Government to the presentation
of the petition on any of the grounds
aforesaid.
(6) The Central Government shall not
accord its sanction in pursuance of the
foregoing proviso, unless the company has
E first been afforded an opportunity of
making its representations, if any.
6.20 It may be seen from the above table that the second proviso
to sub-section (5) of section 439 of the 1956 Act became the first proviso
to sub-section (3) of Section 272 of the 2013 Act and sub-section (6) of
Section 439 became the second proviso to sub-section (3) of Section
F 272. They respectively prescribe, (i) that for presenting a petition for
winding up, the Registrar requires previous sanction of the Central
Government; and (ii) that before granting sanction, the Central
Government should give a reasonable opportunity to the company to
make a representation.
G 6.21 Thus, in effect, the distinction between the procedure to be
followed by the Registrar and the procedure to be followed by “any
other person authorised by the Central Government”, for presenting a
petition for winding up, is maintained as such. If the petition is to be filed
by the Registrar, it should be preceded by 2 things namely, (i) a sanction;
and (ii) an opportunity to the company to object. If the petition is to be
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 319
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filed by “any other person”, there is only one requirement namely that of A
authorization by the Central Government by notification.
6.22 The above discussion would show that in contrast to the
1956 Act, the 2013 Act provides 2 different routes for the winding up of
a company on the ground of fraud. They are:
(i) winding up under clause (c) of Section 271 (directly on the B
ground of fraud) by any person authorised by the Central
Government by notification; or
(ii) winding up under clause (e) of Section 271 (on the ground
that it is just and equitable to wind up) in terms of Section
224(2)(a) on the basis of a report of investigation under Section C
213(b).
6.23 If the second route is taken, then the power of the Tribunal
to order winding up, may perhaps stand circumscribed by sub-section
(2) of Section 273 which states that where a petition is presented on just
and equitable ground, the Tribunal may refuse to make an order of winding D
up, if it is of the opinion that some other remedy is available to the
petitioners and that they are acting unreasonably in seeking to have the
company wound up instead of pursuing the other remedy. But the question
whether such a restriction could be applied to cases of fraud, established
by reports of investigation, may have to be tested in appropriate cases. E
6.24 Having seen the distinguishing features between the 1956
Act and the 2013 Act, with regard to the question of availability of fraud
as a ground for the winding up of a company, let us now take up for
consideration, the grounds of attack to the impugned orders one after
another. F
7. Advertisement of the Company Petition
Admittedly, the petition for winding up, in this case, was never
advertised nor even ordered to be advertised, either upon the admission
of the petition or anytime thereafter. It is therefore contended by the
appellants that the failure to comply with this requirement which is G
mandatory, vitiates the whole proceedings.
7.1 Under the 1956 Act regime, the mode of proceedings to be
held for winding up of a company, was prescribed by the Companies
(Court) Rules, 1959 issued in exercise of the powers conferred by sub-
sections (1) and (2) of Section 643 of the 1956 Act. Rule 10 of these H
320 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 1959 Rules prescribed that all applications under the Act, unless otherwise
provided by the Rules or permitted by the Judge, shall be made (i) either
by a petition; or (ii) by a Judge’s summons. Rule 11(a) contains a list of
about 23 types of applications under the Act, which shall be made by
way of petition. Rule 11(b) states that all applications other than those
covered by Rule 11(a), shall be made by a Judge’s summons.
B
7.2 After making a distinction between (i) applications to be made
by way of a petition; and (ii) applications to be made by way of a Judge’s
summons in Rule 11, the Companies (Court) Rules, 1959 speaks about
advertisement in Rules 23 and 24. Rules 23 and 24 of the Companies
(Court) Rules, 1959 read as follows:-
C
“23. Summons for direction - (a) Where a petition is presented
under paragraphs (1), (3), (4), (22) and (23) of Rule 11, an
application shall, in every case, be made by summons to the Judge
in Chambers for directions as to the advertisement of the petition,
the notices to be served and the proceedings to be taken. Except
D where, in any particular case, a different form is prescribed by
these rules, such summons shall be in Form No. 4. (b) The
summons shall be posted for hearing before the Judge in Chambers
at the next Chamber sittings, and the Judge may make such orders
thereon and may give such directions as may seem to him
E appropriate. (c) No summons for directions shall be necessary in
the case of other petitions, but the petition shall, upon admission,
be placed before the Judge in Chambers for fixing the date of
hearing and directions as to the advertisement of the petition and
the notices to be served, and such other directions as may be
necessary.
F
24. Advertisement of petition - (1) Where any petition is
required to be advertised, it shall, unless the Judge otherwise orders,
or these rules otherwise provide, be advertised not less than
fourteen days before the date fixed for hearing, in one issue of
the Official Gazette of the State or the Union Territory concerned,
G and in one issue each of a daily newspaper in the English language
and a daily newspaper in the regional language circulating in the
State or the Union Territory concerned, as may be fixed by the
Judge. (2) Except in the case of a petition to wind-up a company
the Judge may, if he thinks fit, dispense with any advertisement
H required by these rules.”
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 321
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

7.3 As could be seen from Rule 23, the summons for directions as A
to advertisement of the petition, dealt with by Rule 23, correlates only to
5 out of the 23 items listed in Rule 11(a). These 5 items mentioned in
Rule 23, are those found in serial Nos.1, 3, 4, 22 and 23 of Rule 11(a). A
petition for winding up falls under item No.15 of Rule 11(a). Therefore,
Rule 23 has no application to a petition for winding up.
B
7.4 Rule 24 deals with advertisement of a petition. But Rule 24(1)
begins with the words “where any petition is required to be advertised”.
Therefore, Rule 24 will also have no application unless there is any provision
in the Act or the Rules which require the petition to be advertised.
7.5 Part III of the 1959 Rules contains special provisions relating
to proceedings for winding up. This part comprises of Rules 95 to 338. C
Rule 95 requires a petition for winding up to be in Form No.45, 46 or 47.
Rule 96 speaks about admission of petition and directions as to
advertisement. It reads as follows:-
“96. Admission of petition and directions as to
advertisement - Upon the filing of the petition, it shall be posted D
before the Judge in Chambers for admission of the petition and
fixing a date for the hearing thereof and for directions as to the
advertisements to be published and the persons, if any, upon whom
copies of the petition are to be served. The Judge may, if he thinks
fit, direct notice to be given to the company before giving directions E
as to the advertisement of the petition.”
Rule 99 deals with advertisement and it reads as follows:-
“99. Advertisement of petition - Subject to any directions of
the Court, the petition shall be advertised within the time and in
the manner provided by rule 24 of these rules. The advertisement
F
shall be in Form No. 48.”
7.6 It must be remembered that Chapter II of Part VII of the
1956 Act, did not contain a provision in itself, requiring the advertisement
of a petition for winding up. But Section 643(1) read with Clause (i) of
Sub-section (2) of Section 643 of the 1956 Act delegated to the Rule
making power of the Central Government, the power to prescribe the G
mode of proceedings to be held for the winding up of a company by the
Court. Therefore it is the Rules that speak about advertisement.
7.7 Coming to the rules framed under the 2013 Act, Sub-sections
(1) and (2) of Section 468 of the 2013 Act empower the Central
Government to make Rules providing for all matters relating to winding H
322 SUPREME COURT REPORTS [2022] 11 S.C.R.

A up of companies. In exercise of the powers so conferred, the Central
Government has issued a set of Rules known as the Companies (Winding
up) Rules, 2020. Rules 5 and 7 of these Rules speak about advertisement.
These Rules read as follows:
“5. Admission of petitioner and directions as to
B advertisement.- Upon filing of the petition, it shall be posted
before the Tribunal for admission of the petition and fixing a date
for the hearing thereof and for appropriate directions as to the
advertisements to be published and the persons, if any, upon whom
copies of the petition are to be served, and where the petition has
been filed by a person other than the company, the Tribunal may,
C if it thinks fit, direct notice to be given to the company and give an
opportunity of being heard, before giving directions as to the
advertisement of the petition, if any, and the petitioner shall bear
all costs of the advertisement.
7. Advertisement of petition.- Subject to any directions of the
D Tribunal, notice of the petition shall be advertised not less than
fourteen days before the date fixed for hearing in any daily
newspaper in English and vernacular language widely circulated
in the State or Union territory in which the registered office of the
company is situated, and the advertisement shall be in Form WIN
E 6.”
7.8 In view of the language employed in Rule 7 of the 2020 Rules,
it is contended by Shri Arvind P. Datar, learned senior counsel appearing
for DEMPL, that there is no option available to NCLT but to order the
advertisement of the petition. Rule 7 begins with the words “subject to
any directions of the Tribunal, notice of the petition shall be
F advertised”. These words, in the contention of the learned senior counsel
for DEMPL, indicate the availability of a limited elbow space to the
Tribunal to issue directions about the newspaper in which the
advertisement is to be issued and the particular edition (State, Regional
or National Edition) in which the advertisement shall be published. In
G other words, his contention is that ordering the publication of an
advertisement is mandatory, but smaller things such as the particular
newspaper, particular edition etc., are left to the discretion of the Tribunal
to be exercised in the form of directions.
7.9 Before we test the correctness of the above argument, it may
H be necessary to look at the anatomy of Rule 5 which prescribes the
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CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

procedure to be followed by the Tribunal, upon the filing of a petition for A
winding up. The step-by-step procedure prescribed in Rule 5 is as
follows:-
(1) The petition should first be posted before the Tribunal for
admission.
(2) The purpose of posting the petition for admission is three- B
fold, namely, (i) fixing a date for hearing of the petition; (ii)
issuing appropriate directions as to the advertisement to be
published; and (iii) indicating the persons upon whom the copies
of the petition are to be served.
(3) On the date when the petition is posted for admission, the C
Tribunal may direct notice to be given to the company and
also provide an opportunity of being heard before giving
directions as to the advertisement of the petition.
7.10 The essence of Rule 5 is to provide an opportunity of being
heard to the company sought to be wound up, even before directions as D
to the advertisement of the petition are given. The last limb of Rule 5
speaks about the discretion vested in the Tribunal to direct notice to be
given to the company and to give an opportunity of being heard before
giving any directions as to the advertisement of the petition. This last
limb of Rule 5 provides the clue about the purpose of advertisement. E
7.11 One way of looking at the requirement of an advertisement
is that it provides an opportunity to all the stakeholders such as (i)
creditors; (ii) workers; (iii) suppliers; (iv) customers; and (v) the general
public, either to support or oppose the proceedings for winding up. There
is also another way of looking at the object of issuing an advertisement F
of the petition for winding up. The advertisement serves as a warning/
notice or red alert to all those dealing with the company so that they
know that there could be an element of risk in dealing with the company.
7.12 After all, the winding up of a company is like the insolvency
of an individual. The advertisement of the petition for winding up, not
G
merely serves as an opportunity to support or oppose winding up, but
also harms the reputation of the company and sends shock waves in the
stock market, if it is a listed company or among the stakeholders who
have dealings with the company. This is why an opportunity of being
heard is contemplated in Rule 5, before ordering the advertisement of
H
324 SUPREME COURT REPORTS [2022] 11 S.C.R.

A the petition. This is exactly the reason why this Court held in National
Conduits (P) Ltd. vs. S.S. Arora8 as follows:-
“xxxxx xxxxx xxxxx
The view taken by the High Court that the Court must, as soon as
the petition is admitted, advertise the petition is contrary to the
B plain terms of Rule 96. Such a view, if accepted, would make
the Court an instrument, in possible cases, of harassment
and even of blackmail, for once a petition is advertised, the
business of the Company is bound to suffer serious loss
and injury.”
C 7.13 The decision is National Conduits (P) Ltd. (supra) was
followed in Cotton Corporation of India Limited vs. United Industrial
Bank Ltd. & Ors.9 In fact, the argument of the companies sought to be
wound up in Cotton Corporation of India Limited (supra) was that
“the presentation of winding up petition coupled with advertisement
D thereof in newspapers, has certain serious consequences on the
status, standing, financial viability and stability and operational
efficiency of the company.” While dispelling the apprehensions so
expressed, this Court relied upon the decision in National Conduits (P)
Ltd. (supra) to say that the apprehensions stood removed by taking a
view that advertisement is not automatic.
E
7.14 Therefore, the way in which the requirement of advertisement
has been viewed by Courts is that advertisement causes more harm to
the company than the benefit that it brings to the company. Hence the
argument of the appellant in this case that the failure to advertise the
petition was prejudicial to their interest, goes contrary to one of the
F important purposes of the advertisement and the chilling effect that it is
supposed to have on the company.
7.15 It is no doubt true that in National Conduits, this Court was
concerned with an appeal arising out of an order of the Delhi High Court,
holding that once a petition is admitted to file, the Court is bound forthwith
G to advertise the petition. Interestingly, such an order was challenged by
the Company itself on the ground that advertisement was prejudicial to
them. While considering the challenge, in terms of Rule 24(2), this Court
held in National Conduits (in paragraph 4) that a petition for winding up
8
AIR 1968 SC 279
9
(1983) 4 SCC 625
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cannot be placed for hearing before the Court, unless the petition is A
advertised.
7.16 In IDBI Bank Ltd. vs. the Official Liquidator10, authored
by one of us (VRS, J.) as a Company Judge in the High Court of
Judicature at Madras, it was held that Rule 99 of the 1959 Rules makes
it mandatory for an advertisement to be issued and that Rule 24(2) does B
not confer any power even upon the Company Court to dispense with
any advertisement, in the proceedings for winding up. It was also pointed
out in IDBI Bank Ltd. (supra) that Rule 100(2) which prohibits the
withdrawal of a winding up petition before the date fixed in the
advertisement for the hearing of the parties, also provided a clue about
the mandatory nature of the requirement to advertise. In the aforesaid C
decision, Rule 101 which provides for the substitution of a creditor or
contributory in the place of the original petitioner, upon his failure to
advertise, was also taken note of. Rule 101 of the Companies (Court)
Rules, 1959 reads as follows:
“Rule 101. Substitution of creditor or contributory for D
original petitioner. – Where a petitioner. –
(1) is not entitled to present a petition, or
(2) fails to advertise his petition within the time prescribed by
these rules or by order of court or such extended time as the
court may allow, or E
(3) consents to withdraw the petition, or to allow it to be dismissed,
or the hearing to be adjourned or fails to appear in support of his
petition when it is called on in court on the day originally fixed for
the hearing thereof, or any day to which the hearing has been
adjourned, or F
(4) if appearing, does not apply for an order in terms of the prayer
of his petition
or
where in the opinion of the court there is other sufficient cause
G
for an order being made under this rule, the court may, upon such
terms as it may think just, substitute as petitioner any creditor or
contributory who, in the opinion of the court, would have a right to
present a petition, and who is desirous of prosecuting the petition.”
10
2013(6) CTC 40 H
326 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 7.17 In the light of the aforesaid Rule 101 also, it was held in
IDBI Bank Ltd., that the requirement of advertisement was mandatory.
While coming to the said conclusion, the Madras High Court also took
note of the difference of opinion in this regard between the High Courts
of Allahabad and Gujarat on the one hand and the High Court of Delhi
on the other hand, with respect to the power of the Court to dispense
B with the publication of advertisement in the official Gazette. Paragraphs
53 to 55 of the decision of the Madras High Court in IDBI Bank Ltd. is
reproduced for easy reference as follows:-
“53. In U.P. Twiga Fiberglass Ltd vs. Parekh Marketing Pvt.
Ltd {1986 (59) CC 886}, a Division Bench of the Allahabad High
C Court considered on appeal, a question, among others, as to
whether the non-publication of the advertisement in the Gazette
would be violative of Rule 24. In that case, the Company Judge
ordered the publication of advertisements in one English Daily
and one Vernacular Daily, but not in the Gazette. The Division
Bench of the Allahabad High Court held that Rule 24(1) contains
D a rider “unless the Judge otherwise orders” and that Rule 99 also
speaks about “subject to any directions of the Court”. A similar
view with regard to the power of the Company Court to dispense
with the publication of advertisement in the Government Gazette
was taken by a Division Bench of the Gujarat High Court
E in Plastisac P. Ltd vs. Gujarat Lease Finance Ltd {2000 (101)
CC 334 (Guj.)}. But a Division Bench of the Delhi High Court
disagreed with the views expressed by the Allahabad and Gujarat
High Courts, with regard to the power of the Company Court to
dispense with the publication of advertisement in the Official
Gazette. In Lt. Col. R.K.Saxena vs. Imperial Forestry
F Corporation {2001 (107) CC 401 (Del.)}, a Division Bench of the
Delhi High Court, after a careful consideration of Rules 96, 99
and 24 held that “the publication of the advertisement of a petition
for winding up is mandatory, even in respect of the Official
Gazette”. On the scope of the discretion conferred by Rule 99,
G the Delhi High Court held that the discretion is limited only to the
extent of deciding at what stage the petition is to be advertised.
The contention that the Company Court has inherent powers by
virtue of Rule 9 even to dispense with the requirement of Rule 24,
was also rejected by the Delhi High Court on the ground that “if a
statute requires a thing to be done in a particular manner, it shall
H be done in that manner or not at all”.
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54. Though there was a difference of opinion between the A
Allahabad and Gujarat High Courts on the one hand and the Delhi
High Court on the other hand, with regard to the power to dispense
with the publication of advertisement in the Official Gazette, all
these Courts were unanimous in their opinion at least with regard
to the mandatory nature of the requirement of publication of
B
advertisements, in one English Daily and one Vernacular Daily as
ordered by the Company Judge. Therefore, it is clear that
publication of advertisements is mandatory. Irrespective of whether
the Court has any discretion to dispense with the publication in
the Gazette or not, the publication of advertisements at least in
newspapers is mandatory and the failure of the petitioning creditor C
to comply with this requirement despite a positive order to that
effect, is fatal to his petition.
55. In Falcon Gulf Ceramics Ltd vs. Industrial Designs
Bureau {1996 (86) CC 207 (Raj.)}, a Division Bench of the
Rajasthan High Court set aside an order of winding up passed by D
the Company Court, on the sole ground that the winding up order
was not preceded by an advertisement. The Division Bench of
the Rajasthan High Court held in that case that advertisement of
a petition was imperative in view of the provisions of Rule 96
read with Rule 99. For holding so, the Division Bench of the
Rajasthan High Court relied upon paragraph 1463 of Halsbury’s E
Laws of England (4th Edition), which stated that non-compliance
with these provisions is a ground on which the Court shall reject
the petition. After citing the relevant passage from the decision of
the Supreme Court in National Conduits, the Division Bench held
in para 16 of its decision that in the absence of advertisement and F
admission, the petition for winding up was bound to be rejected.”
7.18 However, when the decision of the Company Judge in IDBI
Bank Ltd. was assailed in an intra-court appeal, the Division bench of
the Madras High Court held in Pradeep D. Kothari vs. IDBI Bank
Ltd.11 as follows:
G
“31. Therefore, to our minds, two aspects would arise for
consideration given the fact and circumstances obtaining in the
instant case. First, if, winding up is not advertised, by the original
petitioner as directed, can the Court direct the PL to advertise the
11
2018 (1) CTC 136 H
328 SUPREME COURT REPORTS [2022] 11 S.C.R.

A petition, having regard to the fact that the proceedings are inter
alia for the benefit of creditors at large and not one single creditor
?
31.1. The answer to this poser, to our minds, has to be in affirmative
as there is no bar in the Rules which prohibits a PL from advertising
B the Company Petition in such like circumstances, though, ordinarily,
in practice, Company Petitions are advertised by the petitioner
who institutes the action. As alluded to above, the Rules do not
bar the Company Court from directing the PL to advertise the
petition. The reason, why we hold this view is plainly this,
that, while, advertisement of the petition is compulsory as
C winding up proceedings are proceedings in rem and
therefore should receive the widest of publicity enabling
all stakeholders to have notice of the proceedings, there is
no such stipulation in the Rules that once, the winding up
petition is admitted by a Court, it can in no circumstances
D move forward, unless an advertisement is taken out by the
original petitioner or a suitable substituent who fulfills the
qualifications provided in Rule 101(4).”
7.19 But the Judgment of the Company Judge of the Madras High
Court in IDBI Bank Ltd. and the Judgment of the Division Bench in
E Pradeep D. Kothari, arose out of proceedings for winding up, in which
a specific order directing the publication of the advertisement had been
made by the Company Court at the time of admission. However, the
said direction was omitted to be complied with, by the petitioning creditor.
Therefore, the crucial question that fell for consideration in that case
was as to how a company Judge should proceed, in circumstances where
F the petitioning creditor loses interest in prosecuting the petition further
and abandons the proceedings without carrying out the advertisement.
This question assumed significance in the light of the fact that the failure
of one petitioning creditor cannot result in serious prejudice to a whole
body of creditors, in a proceedings in rem.
G 7.20 The above decision of the Division Bench of the Madras
High Court in Pradeep D. Kothari was assailed before this Court. While
upholding the decision of the Division Bench, in its decision in IDBI
Bank Ltd. vs. the Official Liquidator12, this Court held as follows:
12
(2020) 15 SCC 517
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“14.3. Against this backdrop, the crucial question that arises for A
our consideration is whether a winding up petition can be dismissed
solely on the ground lack of a prosecuting creditor under Rule
101, or whether the Company Court has the power to direct the
publication of an advertisement by the Liquidator of the company,
especially in cases where other unsatisfied creditors still remain.
B
For answering this question, it is important to bear in mind
that winding proceedings are proceedings in rem and have
an impact on the rights of people, in general. Thus, it is
mandatory to advertise such proceedings so as to ensure
that they receive the widest possible publicity and all
relevant stakeholders have adequate notice. This implies that C
in a situation where the petitioning creditor fails to advertise the
petition and no other creditor or contributory comes forward to
prosecute it, Rule 101 should not be read in a manner that absolutely
bars the continuation of a winding up petition. This is particularly
so when there are unsatisfied creditors who should have been
D
given an opportunity to prosecute the petition, but were deprived
of the same due to the failure to advertise. Indeed, Rule 101 is
only limited to instances where the petitioning creditor fails to
advertise the petition. However, there is nothing in the language
of Rule 24, 96 or 99 to indicate that only such petitioning creditor
can advertise the petition. In our considered opinion, given the E
absence of a specific provision mandating that the petition can
only be advertised by the petitioning creditor, the Company Court
has the discretion to direct the publishing of an advertisement to
secure the interest of other creditors. In such situations, the winding
up proceedings cannot be dismissed, as it would frustrate the very
F
objective of securing the interest of all creditors.
14.4.In the light of this discussion, we find that it would be unjust
to dismiss the winding up petition in the instant case solely on the
ground that there is no other person willing to substitute the original
creditor in terms of Rule 101. Here, due to the lack of
advertisement of the winding petitions, it appears that the secured G
creditors of KOFL were constrained to approach the DRT for
recovery of their dues by filling OAs Nos. 139 of 2001, 978 of
2000 and 14 of 2002. Further, upon learning of the decision of the
Company Judge dated 04.10.2013, dismissing the winding up
petition, one of the secured creditors (SBI) also approached the H
330 SUPREME COURT REPORTS [2022] 11 S.C.R.

A DRT to secure its interest. Based on this, vide order dated
13.12.2013, the DRT had directed that the amount to be returned
to KOFL be attached so that the banks have an opportunity to
recover their dues from KOFL. This clearly goes on to show that
the secured creditors of KOFL were relevant stakeholders who
were affected by the non-advertising of the winding-up petition.
B
They should have been called upon to indicate whether they would
want to step into the shoes of the petitioning creditors as per Rule
101.”
7.21 Thus even in a case where the Court took a view that
advertisement is mandatory, not only in view of the prescription contained
C in the Rules, but also in view of the specific order passed by the Company
Court at the time of admission, directing the publication of the
advertisement in specified newspapers, this Court did not see the failure
to publish an advertisement as something that would lead to the automatic
dismissal of the petition for winding up. This is for the reason that the
D advertisement of a petition for winding up is perceived to be something
that worked at cross purposes, sometimes beneficial to several
stakeholders as it provides an opportunity of hearing to them and
sometimes as a measure of harassment of the company. There are cases
where the companies themselves have opposed the advertisement of
the petition on the ground that the same would harm their reputation and
E cripple their commercial activities. There are also cases where the failure
to advertise has led to some of the creditors not having any notice of the
proceedings and thereby suffering prejudice. This is why another Bench
of the Madras High Court held in T. Narayanan vs. the Official
Liquidator13, after taking note of the decision in National Conduits, as
F follows:
“38. Assuming that the mandatory requirement was not complied
with, the question falling for consideration is, can the non-
compliance of procedural mandatory requirement would ipso facto
vitiate the winding up order and stall further proceedings?. The
G next question falling for consideration is ‘can the non-
compliance of a procedural mandatory requirement be a
ground to set aside the winding up order after three years,
especially when the appellant had the opportunity of fighting
out the litigation in the earlier round?’
13
2012 (1) MLJ 59
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 331
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

39. The purpose of advertisement is to give an opportunity to the A
creditors/debtors/Company to put forth their case before the Court.
Assuming that the procedural mandatory requirement was
not complied with, in our considered view, it cannot be a
ground to set aside the winding up order after three years.
As rightly contended by the learned Senior Counsel for the
B
Official Liquidator, to sustain the allegations of violation of
principles of natural justice, one must establish prejudice.
When fairness is shown and if the facts and circumstances
indicate that the Company/contributory were put on notice
and that no prejudice was caused to them, the Company/
contributory cannot complain of any procedural irregularity.” C
7.22 We may also have to take note of one more aspect. The
Companies Act, 2013 mandates the constitution of a National Company
Law Tribunal and a National Company Law Appellate Tribunal to exercise
and discharge such powers and functions as may be conferred upon it
by or under the Act. Section 424(1) makes it clear (i) that the Tribunal D
and the Appellate Tribunal shall not be bound by the procedure laid down
in the Code of Civil Procedure, 1908, but shall be guided by the principles
of natural justice; and (ii) that subject to the other provisions of the Act
and of any rules made thereunder, the Tribunal and the Appellate Tribunal
shall have power to regulate their own procedure.
E
7.23 While Section 468(1)of the 2013 Act empowers the Central
Government to make Rules consistent with the Code of Civil Procedure,
providing for all matters relating to winding up, Section 469(1) empowers
the Central Government generally to make Rules for carrying out the
provisions of the Act.
F
7.24 In exercise of the powers conferred by Sections 468 and
469, the Central Government issued the Companies (Winding Up) Rules
2020. Similarly, the Central Government issued another set of Rules
called the National Company Law Tribunal Rules, 2016 (for short “NCLT
Rules 2016”) in exercise of the powers conferred by Section 469.
G
7.25 Rule 35 of the National Company Law Tribunal Rules, 2016
deals with advertisement of petitions. It reads as follows:-
“35. Advertisement detailing petition.- (1) Where any
application, petition or reference is required to be advertised, it
shall, unless the Tribunal otherwise orders, or these rules otherwise
H
332 SUPREME COURT REPORTS [2022] 11 S.C.R.

A provide, be advertised in Form NCLT-3A, not less than fourteen
days before the date fixed for hearing, at least once in a vernacular
newspaper in the principal vernacular language of the district in
which the registered office of the company is situate, and at least
once in English language in an English newspaper circulating in
that district.
B
(2) Every such advertisement shall state;-
(a) the date on which the application, petition or reference was
presented;
(b) the name and address of the applicant, petitioner and his
C authorised representative, if any;
(c) the nature and substance of application, petition or
reference;
(d) the date fixed for hearing;
D (e) a statement to the effect that any person whose interest is
likely to be affected by the proposed petition or who intends
either to oppose or support the petition or reference at the
hearing shall send a notice of his intention to the concerned
Bench and the petitioner or his authorised representative, if
any, indicating the nature of interest and grounds of
E
opposition so as to reach him not later than two days previous
to the day fixed for hearing.
(3) Where the advertisement is being given by the company, then
the same may also be placed on the website of the company, if
any.
F
(4) An affidavit shall be filed to the Tribunal, not less than three
days before the date fixed for hearing, stating whether the petition
has been advertised in accordance with this rule and whether the
notices, if any, have been duly served upon the persons required
to be served:
G
Provided that the affidavit shall be accompanied with such
proof of advertisement or of the service, as may be available.
(5) Where the requirements of this rule or the direction of the
Tribunal, as regards the advertisement and service of petition, are
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 333
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

not complied with, the Tribunal may either dismiss the petition or A
give such further directions as it thinks fit.
(6) The Tribunal may, if it thinks fit, and upon an application being
made by the party, may dispense with any advertisement required
to be published under this rule.”
7.26 It may be seen from Sub-rule (1) of Rule 35 that the procedure B
laid down in Rule 35 is applicable to cases “where any application,
petition or reference is required to be advertised.”
7.27 The requirement to advertise a petition for winding up does
not flow out of the statute, but flows out of the Rules. Since the
requirement to advertise a petition for winding up is stipulated in Rules 5 C
and 7 of the Companies (Winding up) Rules, 2020, what is prescribed in
Rule 35 would cover even petitions for winding up.
7.28 If so understood, Sub-rules (5) and (6) of Rule 35 of the
NCLT Rules 2016 would throw light upon the controversy on hand.
Sub-rule (5) makes it clear that even in cases where the direction of the D
Tribunal as regards advertisement has not been complied with, the Tribunal
has an option (i) either to dismiss the petition; or (ii) to give such further
directions as it may think fit. Sub-rule (6) confers power upon the Tribunal
even to dispense with any advertisement.
7.29 In other words, what was not specifically available in black E
and white, under the 1956 statutory regime, namely the power to dispense
with any advertisement, is now made available specifically under the
statutory regime of 2013.
7.30 In the case on hand, the company in liquidation was
incorporated on 17.12.2004, the Memorandum of Association of the F
Company was subscribed to by two persons by name D. Venugopal and
M. Umesh. They subscribed to 9000 equity shares and 1000 equity shares
respectively @ Rs.10 per share. Subsequently six individuals by name
Ramachandran Vishwanathan, Paresh Shah Natwarlal, James Fox, MG
Chandrasekar, Abhishek Jain and L Clarence Irving were issued with
G
equity shares on 31.12.2005. Thereafter, two corporate entities, namely,
Columbus Capital Devas (Mauritius) Ltd. and the Telecom Devas
Mauritius Ltd., were issued Optionally Convertible Preference Shares
and equity shares. Subsequently, two other companies by name Deutsche
Telecom Asia Plc. Ltd. and Devas Employees Mauritius Pvt. Ltd. were
issued with equity shares. All these shareholders are aware of the winding H
334 SUPREME COURT REPORTS [2022] 11 S.C.R.

A up proceedings and the proceedings are fought tooth and nail by one
shareholder DEMPL through Mr. Ramachandran Vishwanathan who
was also a shareholder. Another individual shareholder by name MG
Chandrasekar has filed one of the above appeals as the ex-director of
the company in liquidation. Admittedly, the company in liquidation does
not have any creditors or customers who have dealings with the company.
B
In other words, there are no stakeholders who are prejudiced by the
failure of NCLT to order the publication of advertisement of the petition.
Though technically the Tribunal may not be correct in invoking “useless
formality theory” in cases of this nature, we can certainly apply the
test of prejudice, especially in the light of the serious nature of the
C allegations of fraud, on the basis of which the company is sought to be
wound up. This is not a case where the company is sought to be wound
up on the ground of inability to pay debts or on just and equitable ground.
This is a case of fraud and all stakeholders are fully aware of the
proceedings and they have even shown extreme urgency in enforcing
an ICC Arbitration award and 2 BIT awards, before the conclusion of
D
the winding up proceedings. Therefore, we are unable to sustain the
argument that the failure of the Tribunal to order the publication of an
advertisement rendered the entire proceedings unlawful.
7.31 The Companies (Winding Up) Rules, 2020 contain a list of
Forms in which all the proceedings before the Tribunal are to be couched.
E While FORM WIN 1 prescribes the format of a petition for winding up
by a person other than the company and Forms WIN 2, WIN 3 etc.,
prescribe the formats of certain other things, FORM WIN 11 prescribes
the format of a winding up order. The National Company Law Tribunal
is obliged under Rule 17(1) of the Companies (Winding Up) Rules 2020,
F to prepare the order for winding up in FORM WIN 11 with such variations
as may be necessary. On the basis of the contents of FORM WIN 11, it
was argued by the learned counsel for the appellants that paper publication
of the advertisement of the winding up petition is mandatory.
7.32 FORM WIN 11 reads as follows:-
G FORM WIN 11
[See rule 17(1)]
Before The National Company Law Tribunal
Bench At……………………………
In The Matter of——Ltd (Give The Name of The Company)
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 335
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

(Company incorporated under Companies Act,……………….. ) A
Company Petition No…../20……..
……………….‘Petitioner
Before the Hon’ble Mr. ——-
Dated…………
B
Winding up Order
Upon the petition of…………….. presented on the day of………
.20 , upon hearing Shri ……………representative for the petitioner
Shri representative for the creditors (or contributors) supporting
the petition, Shri……………………….. representative for the
creditors (or contributors) opposing the petition, and C
Shri………………… representative for the company, upon
reading the said petition, the affidavit of A.B., filed the
………………….day of……………... 20 verifying the said
petition, the affidavit of x.y., filed the ....... day of…………… 20
..... the (state or union territory) paper publication of the D
advertisement of the said petition this Tribunal doth order:
*(1) That the said company be wound up by this Tribunal under
the provisions of the Companies Act, 2013; and
(2) That the provisional liquidator or Company Liquidator as the
case may be as liquidator of the company aforesaid forthwith E
take charge of all the property effects actionable claims and books
and papers of the said company;
**(3) That the provisional liquidator or Company Liquidator shall
cause a sealed copy of this order to be served on the company by
pre’paid registered post; F
(4) That the petitioner do advertise within fourteen days
from this date a notice in the prescribed form of the making
of this order in one issue (each) of. .. (here enter the
newspaper or newspapers in which the order is to be
advertised);
G
(5) That the said petitioner do serve a certified copy of this order
on the Registrar of Companies not later than one month from this
date; and
(6) That the cost of the said petition shall be paid out of the assets
of the said company. H
336 SUPREME COURT REPORTS [2022] 11 S.C.R.

A Dated this …...... day ….... 20.
(By the Tribunal)
Registrar
*Where the company ordered to be wound up is a Banking
B Company or an Insurance Company add at the end of clause (1)
“and the Banking Companies Act, 1949' or ‘and the Insurance
Act 1938" as the case may be.
** To be inserted only where the company is not the petitioner.
7.33 The above FORM WIN 11 contains a reference to
C advertisement, in two places. In the first place, it is found in the preamble
portion of the format, beginning with the words “upon the petition…..”.
In the second place, a reference to advertisement is found in paragraph
4 of FORM WIN 11. While the advertisement referred to in the preamble
of FORM WIN 11, obviously relates to the advertisement of the petition,
D the advertisement referred to in paragraph 4 of WIN 11 relates to the
advertisement of the making of the order of winding up. It is needless to
say that the advertisement of the petition for winding up is different
from the advertisement of an order of winding up.
7.34 In so far as the advertisement of the order of winding up is
concerned, Rules 19 and 20 occupy the field. Rules 19 and 20 of the
E
Companies (Winding Up) Rules, 2020 read as follows:-
“19. Directions on making winding up order. - At the time of
making the winding up order or at any time thereafter the Tribunal
shall give directions to the petitioner as to the advertisement of
the order and the persons if any on whom the order shall be served
F
and the persons if any to whom notice shall be given of the further
proceedings in the liquidation and such further directions as may
be necessary.
20. Advertisement of order. - Save as otherwise ordered by
the Tribunal the order for the winding up of a company by the
G Tribunal shall within fourteen days of the date of the order be
advertised by the petitioner in a newspaper in the English language
and a newspaper in vernacular language widely circulating in the
State or the Union territory where the registered office of the
company is situated and shall be served by the petitioner upon
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 337
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

such person if any and in such manner as the Tribunal may direct A
and the advertisement shall be in Form WIN 14".
7.35 Rule 19 mandates the Tribunal, at the time of making of
the winding up order or any time thereafter to give directions to the
petitioner as to the advertisement of the order. This is why paragraph 4
of FORM WIN 11 forms part of the operative portion of the FORM. B
7.36 In so far as the reference to advertisement contained in the
preamble of FORM WIN 11 is concerned, it is merely one of the several
items that the Tribunal may take into account for passing a winding up
order. The items mentioned in the preamble of FORM WIN 11 are, (i)
the petition for winding up; (ii) the hearing of the representative for the C
petitioner; (iii) the hearing of the representative for the creditors or
contributories supporting the petition; (iv) the hearing of the representative
for the creditors or contributories opposing the petition; (v) the hearing
of the representative of the company; (vi) the affidavits; and (vii) the
paper publication of the advertisement of the petition.
D
7.37 Thus the preamble merely contains a list of several matters
that may be taken into account by the Tribunal before passing an order
of winding up. All those items need not necessarily be present in all
cases. For instance, there may be cases where the petition may not be
supported by all creditors or contributories. There may also be cases
where the petition may not be opposed by all creditors or contributories. E
However, there is a mention in the preamble about the hearing of the
representatives of creditors supporting or opposing the winding up petition.
Therefore, we cannot hold that merely because something is mentioned
in the preamble of Form WIN-11, it becomes mandatory.
8. LIMITATION F
8.1 The second ground on which the impugned orders are assailed,
is that the petition under Section 271(c) was hopelessly barred by
limitation. Section 433 of the Companies Act, 2013 makes the provisions
of the Limitation Act, 1963 applicable to proceedings or appeals before
the Tribunal or the Appellate Tribunal as the case may be. Therefore, it G
is the contention of the learned senior counsel for the appellants that
Article 137 of the Schedule to the Limitation Act, which prescribes a
period of limitation of 3 years for any application for which no period is
prescribed elsewhere, is applicable to the case on hand. The period of 3
years so prescribed, according to the learned Senior Counsel for the
H
338 SUPREME COURT REPORTS [2022] 11 S.C.R.

A appellants, in cases of fraud, would start running from the date stipulated
in Section 17 of the Limitation Act, 1963. Section 17 reads as follows:
“17. Effect of fraud or mistake.—(1) Where, in the case of
any suit or application for which a period of limitation is prescribed
by this Act,—
B (a) the suit or application is based upon the fraud of the
defendant or respondent or his agent; or
(b) the knowledge of the right or title on which a suit or
application is founded is concealed by the fraud of
any such person as aforesaid;
C
or
(c) the suit or application is for relief from the
consequences of a mistake; or
(d) where any document necessary to establish the right
D of the plaintiff or applicant has been fraudulently
concealed from him,
the period of limitation shall not begin to run until plaintiff or applicant
has discovered the fraud or the mistake or could, with reasonable
diligence, have discovered it; or in the case of a concealed
E document, until the plaintiff or the applicant first had the means of
producing the concealed document or compelling its production:
Provided that nothing in this section shall enable any suit to
be instituted or application to be made to recover or enforce any
charge against, or set aside any transaction affecting, any property
F which—
(i) in the case of fraud, has been purchased for valuable
consideration by a person who was not a party to the
fraud and did not at the time of the purchase know,
or have reason to believe, that any fraud had been
G committed, or
(ii) in the case of mistake, has been purchased for
valuable consideration subsequently to the transaction
in which the mistake was made, by a person who did
not know, or have reason to believe, that the mistake
H had been made, or
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 339
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

(iii) in the case of a concealed document, has been A
purchased for valuable consideration by a person who
was not a party to the concealment and, did not at
the time of purchase know, or have reason to believe,
that the document had been concealed.
(2) Where a judgment-debtor has, by fraud or force, prevented B
the execution of a decree or order within the period of limitation,
the court may, on the application of the judgment-creditor made
after the expiry of the said period extend the period for execution
of the decree or order: Provided that such application is made
within one year from the date of the discovery of the fraud or the
cessation of force, as the case may be.” C

8.2 The argument of Shri Mukul Rohatgi, learned Senior Counsel
for the appellant is that even assuming that the so called fraud was
incapable of being discovered with due diligence, limitation would start
running at least from the date of actual discovery of the fraud. The date
of actual discovery of fraud cannot be postponed beyond 11.08.2016, D
which was the date on which a charge sheet was filed in the criminal
case, by the CBI before the Special Court. Therefore, it is the contention
of the learned senior counsel for the appellants that the petition for winding
up ought to have been filed at least on or before 10.08.2019. However,
Antrix applied to the Government of India only on 14.01.2021 for the E
grant of authorisation. The authorisation was issued on 18.01.2021 and
the petition for winding up was filed on 18.01.2021 (the same day).
Therefore, placing heavy reliance upon the decision of the three member
Bench of this Court in Jignesh Shah and Anr. vs. Union of India and
Anr.14, it is contended on behalf of the appellant that the petition for
winding up should have been thrown out on the ground of limitation, F
even if we take the date of filing of the charge-sheet alone as the date of
knowledge of the alleged fraud.
8.3 Before we consider the aforesaid contentions independently,
it will be useful to take note of the manner in which the National Company
Law Appellate Tribunal dealt with the question of limitation and decided G
the same against the appellants.
8.4 The Member (Technical) of NCLAT, in his separate but
concurring opinion, dealt with the question of limitation, from paragraphs
14
(2019) 10 SCC 750 H
340 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 2 to 13. In sum and substance, the Member (T) of NCLAT held (i) that
the fraud alleged by Antrix was not a singular act which was transaction-
specific; (ii) that the petition for winding up was based upon a series of
acts of fraud, unearthed over a long period of time; (iii) that though the
CBI filed a first charge-sheet on 11.08.2016, a supplementary charge-
sheet was filed on 8.01.2019; (iv) that a complaint was lodged under the
B
Prevention of Money Laundering Act, 2002 alleging financial frauds,
only on 24.12.2018; and (v) that in cases of this nature, the date of
discovery of the first act of fraud among a series of acts of fraud, cannot
be taken to be the date on which the right to apply accrued in terms of
Article 137 of the Schedule to the Limitation Act, 1963.
C 8.5 The above view taken by NCLAT is a plausible view and
does not suffer from any perversity. The above view cannot be said to
be completely contrary to law. However, we will independently deal
with this issue, so that the myth of limitation is demystified.
8.6 The various provisions of the Companies Act, 2013,
D unfortunately came into force on various dates, in view of the leverage
granted under Section 1(3) to the Central Government to appoint different
dates for different provisions to come into force. Section 270 providing
for the winding up by the Tribunal, Section 271 prescribing the
circumstances in which a company may be wound up by the Tribunal
E and Section 272 stipulating the requirements of a petition for winding up,
as they were originally enacted in the Companies Act, 2013, never came
into force, since no notification under Section 1(3) of the Act was issued
in respect of these three provisions.
8.7 However, the Insolvency and Bankruptcy Code, 2016 (Act
F 31 of 2016) received the assent of the President on 28.05.2016. Section
255 of this Code declared that the Companies Act, 2013 shall stand
amended in the manner specified in the 11th Schedule to the Code. The
existing provisions of Sections 270 to 272 of the Companies Act, 2013
were replaced by the 11th Schedule read with Section 255 of IBC. Section
255 of IBC came into force on 15.11.2016 vide S.O 3453(E) dated
G 15.11.2016. Consequently the 11th Schedule containing amendments to
the Companies Act, 2013 also came into force on 15.11.2016. Sections
270, 271 and 272 as they stand today, resultantly came into force on
15.11.2016.
8.8 In contrast, the provisions of Sections 4 to 32 of IBC came
H into force on 1.12.2016 vide S.O 3594(E) dated 30.11.2016. The provisions
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 341
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

relating to Corporate Insolvency Resolution Process are found in Sections A
6 to 32 of IBC 2016. Sections 7, 9 and 10 of IBC 2016 provide for the
initiation of Corporate Insolvency Resolution Process, respectively by
the financial creditor, the operational creditor and the corporate applicant.
8.9 Section 434 of the Companies Act, 2013, as it was originally
enacted, provided for transfer of certain proceedings pending before B
various forums on the date of coming into force of the Act. Clause (c) of
Sub-section (1) of Section 434 provided for the transfer of the winding
up proceedings to the Tribunal, with a mandate to the Tribunal to proceed
to deal with those proceedings from the stage before their transfer. IBC
2016, through the 11th Schedule, substituted a new provision in Section
434. Though the newly incorporated Section 434 also provided under C
Clause (c) of Sub-section (1) for the transfer of winding up proceedings
from the High Court to the Tribunal, such transfer was made subject to
certain restrictions. One of those restrictions was that only those
proceedings relating to winding up which are at a stage as may be
prescribed by the Central Government, which may be transferred to the D
Tribunal. This restriction is found in the first proviso to Section 434(1).
8.10 Therefore, the Central Government issued a set of Rules
known as the Companies (Transfer of Pending Proceedings) Rules, 2016.
These Rules (except Rule 4 which relates to voluntary winding up) came
into force with effect from 15.12.2016. Rule 5 of these Rules prescribes E
the stage at which alone, a petition for winding up under Section 433(e)
of the 1956 Act could be transferred to NCLT. Similarly Rule 6 prescribes
the stage at which the petitions for winding up filed under Clauses (a)
and (f) of Section 433 of the 1956 Act could be transferred.
8.11 What is important to note from the above discussion is F
(i) that while Sections 270 to 272 of the Companies Act, 2013
came into force on 15.11.2016, Sections 7, 9 and 10 of IBC
came into force on 1.12.2016 and the Rules relating to
transfer proceedings came into force on 15.12.2016; and
(ii) what is provided for under the Companies (Transfer of G
Pending Proceedings) Rules, 2016 read with Section 434
of the Companies Act, 2013 and Section 239 of the IBC
2016 is the transfer of only three categories of petitions for
winding up, namely, those that fall under clauses (a), (e)
and (f) of Section 433 of the 1956 Act.
H
342 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 8.12 Keeping in mind the above statutory scheme, let us now see
what happened in Jignesh Shah (supra), on which heavy reliance is
placed. In Jignesh Shah, a suit for specific performance of an agreement
with an alternative claim for damages, was filed by IL&FS, on 19.06.2013,
on the ground that the cause of action, namely, the refusal to honour the
commitment under the agreement arose on 16.08.2012. After more than
B
two years of the date of the institution of the suit and after more than
three years of the date mentioned in the plaint as the date of arising of
the cause of action, the plaintiff in the suit issued a statutory notice
under Sections 433 and 434 of the 1956 Act, on 3.11.2015. After receipt
of the reply from the defendant, a petition for winding up was filed by
C the plaintiff in the suit, against the defendant, on 21.10.2016 before the
Bombay High Court under Section 433(e) of the 1956 Act. This petition
for winding up was transferred by the High Court of Bombay to the
NCLT, by an order dated 1.02.2017, in terms of Section 434 of the
Companies Act, 2013 read with Rule 5 of the Companies (Transfer of
Pending proceedings) Rules, 2016. NCLT treated the petition for winding
D
up as a petition for corporate insolvency resolution under Section 7 of
IBC by a financial creditor and ordered the admission of the petition.
The order of admission was unsuccessfully challenged before the
NCLAT, whereafter, the matter landed up before this Court. The view
taken by NCLAT was that since Section 7 of IBC 2016 came into force
E on 1.12.2016, the winding up petition was within the period of limitation.
It was this view of NCLAT which was put to test before this Court in
Jignesh Shah.
8.13 In essence, Jignesh Shah was one under Section 433(e) of
the 1956 Act which related to inability of a company to pay its debts.
F Therefore, unless the debt was a legally recoverable debt, on the date
on which a petition for winding up was filed, no petition for winding up
was maintainable. If a suit for recovery of such a debt was already time
barred, it is incongruous to say that a petition for winding up was
maintainable in respect of such a debt. Therefore, the test applied in
Jignesh Shah was not new but what was so obvious. In fact, on the
G date on which a petition for winding up was filed on the file of the Bombay
High Court in Jignesh Shah, the civil suit for enforcement of the contract
with an alternative claim for damages was pending. If the plaintiff had
waited for a decree in the suit and thereafter moved a petition for winding
up on the basis of the decree, Section 434(1)(b) of the Companies Act,
H 1956 would have come into play and the winding up petition could not
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 343
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

have been held in Jignesh Shah to have been time barred. Since the A
plaintiff in the suit moved an application for winding up even during the
pendency of the suit, limitation had to be naturally counted on the basis
of the original cause of action mentioned in the civil suit, with reference
to Section 434(1)(a).
8.14 As we have seen earlier, Section 434 of the 2013 Act read B
with the Companies (Transfer of Pending Proceedings) Rules, 2016 apply
only in respect of three types of proceedings for winding up, namely, (i)
proceedings on the ground of inability to pay the debts, covered by Clause
(e) of Section 433 of the 1956 Act; (ii) proceedings initiated by the
company itself by a special resolution covered by Clause (a) of Section
433; and (iii) proceedings on just and equitable ground covered by clause C
(f) of Section 433.
8.15 As we have seen in Chapter 6 above, fraud was not included
in Section 433 of the 1956 Act as one of the nine circumstances in which
a company may be wound up. Under the 1956 statutory regime, a petition
for winding up, even if triggered on the basis of an investigation report D
under section 237(b) read with section 243 and Section 439(1)(f), was
required to be only on just and equitable ground under Section 433(f).
Therefore, on the date on which IBC came into force, if a petition for
winding up was pending under section 433 (e) or (f), it was liable to be
transferred to NCLT by virtue of Section 434 of the 2013 Act read with E
the Companies (Transfer of Pending Proceedings) Rules, 2016.
8.16 But under the Companies Act, 2013, three different types of
fraud are included in Section 271(c), as the circumstances for winding
up a company. Such a winding up is independent of just and equitable
ground. Therefore, the parameters applicable to winding up on the ground F
of inability to pay debts or on just and equitable ground may not be
applied blind fold to a case of fraud.
8.17 Antrix, which initiated the proceedings for winding up, is neither
a financial creditor nor an operational creditor nor a corporate applicant.
This is why Antrix have not and could not have gone for insolvency G
resolution process, under the IBC, but taken recourse to Section 271(c)
of the Companies Act, 2013. Hence the ratio in Jignesh Shah, as
applicable to debts, whose recovery in any case should not have been
time barred on the date of initiation of the proceedings for winding up/
insolvency resolution process, cannot have any application to the case
on hand. H
344 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 8.18 It is fundamental to the law of limitation that limitation
extinguishes the remedy and not the right. If the remedy of filing a civil
suit for the recovery of a debt stands extinguished by the Law of
Limitation, the creditor cannot make use of Section 433(e) of the
Companies Act, 1956. This is the premise on which this Court decided
Jignesh Shah.
B
8.19 After Jignesh Shah, this court was concerned with the
application of sections 14 and 18 of the Limitation Act, 1963 in different
cases. In Sesh Nath Singh v. Baidyabati Sheoraphuli Co-operative
Bank Ltd15 , this Court held that Sections 14 and 18 will apply to cases
filed under section 7 or 9 of IBC. Again in Laxmi Pat Surana vs Union
C Bank of India16, this Court held :”Section 18 of the Limitation Act
would come into play every time when the principal borrower and/
or the corporate guarantor (corporate debtor), as the case may be,
acknowledge their liability to pay the debt. Such acknowledgement,
however, must be before the expiration of the prescribed period of
D limitation including the fresh period of limitation due to
acknowledgement of the debt, from time to time, for institution of
the proceedings under Section 7 of the Code.”
8.20 Thereafter, the question whether the entries made in the
balance sheets of a corporate debtor would amount to acknowledgement
E of a liability under section 18 of the Limitation Act came up for
consideration in Asset Reconstruction company vs Bishal Jaiswal17.
After referring to the judgment of the Calcutta High Court in Bengal
Silk Mills Co. v. Ismail Golam Hossain Ariff18, this Court held in Bishal
Jaiswal (i) that “though the filing of a balance sheet is by compulsion
of law, the acknowledgement of a debt is not necessarily so; and (ii)
F that the entries made in the balance sheets would amount to
acknowledgement of liability depending upon whether such an entry
qua any particular creditor is unequivocal or has been entered into
with caveats in the form of notes that are annexed to or forming
part of such financial statements”
G 8.21 The above decisions show that limitation is not always akin
to a lighted matchstick to a train of gun powder. The date of
15
(2021) 7 SCC 313
16
(2021) 8 SCC 481
17
(2021) 6 SCC 366
18
AIR 1962 Cal 115
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 345
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

commencement of the period need not necessarily be static. The date of A
commencement may keep changing depending upon the acts of omission
and commission on the part of the party against whom the action is
initiated. These acts of omission and commission constitute the bundle
of facts, which determine the question whether an action is barred by
limitation or not.
B
8.22 As we have pointed out elsewhere, the contours of fraud as
delineated in Section 271(c) of the Companies Act, 2013 cover three
aspects namely, (i) the affairs of the company being conducted in a
fraudulent manner; (ii) the company was formed for fraudulent and
unlawful purpose; and (iii) the persons concerned in the formation and
management of its affairs have been guilty of fraud, misfeasance or C
misconduct in connection therewith. As rightly pointed out by the Tribunal,
a singular act of omission or commission may constitute fraud and even
a series of acts may constitute fraud. A fraudulent act may be different
from the fraudulent manner in which an act is performed. The words
“the conduct of the affairs of a company in a fraudulent manner” D
indicate that the process was a continuing one. If the conduct of the
affairs of the company in a fraudulent manner is a continuing process,
the right to apply becomes recurring.
8.23 We must keep in mind the fact that apart from the persons in
charge of the management of the affairs of the company in liquidation, E
the officials of Antrix as well as the officials of the Department of Space
are now facing prosecution not only for offences under Section 420
read with Section 120B of the Indian Penal Code, but also for offences
under the Prevention of Corruption Act, 1988 and the Prevention of
Money Laundering Act. The termination of the Contract on 25.02.2011,
was not triggered by an allegation of fraud and corruption. Fraud and F
corruption were discovered only later and by the time the discovery was
made, the attempts to reap the fruits of fraud had reached the pinnacle.
These attempts continue even till date and this falls squarely within Section
271(c). Therefore, the contention that the petition was barred by limitation
was rightly rejected by the Tribunal and we have no reason to take a G
different view.
9. ESTOPPEL
9.1 The next ground of attack to the impugned orders is that Antrix
is estopped from pleading fraud and seeking winding up of Devas, in
H
346 SUPREME COURT REPORTS [2022] 11 S.C.R.

A view of the fact, (i) that the letter of termination dated 25.02.2011, of the
Agreement dated 28.01.2005 was not on the ground of fraud but by
invoking the force majeure clause; (ii) that in the proceedings before
the arbitral Tribunals, no allegation of fraud was ever raised; and (iii)
that the Auditor’s reports of Antrix for all these years, contained a
statement that no fraud was committed on Antrix.
B
9.2 The contention of the appellants is that under Section 19 of
the Indian Contract Act, 1872, an agreement vitiated by fraud is not void
but only voidable at the option of the party who is a victim and that
therefore the failure of Antrix, (i) to terminate the contract on the ground
of fraud and/or (ii) to set up fraud as a defence to the arbitral proceedings
C operated as estoppel. In addition, the Auditor’s statements in the Annual
Reports, that no fraud was committed on Antrix, would give rise to a
valid plea of estoppel.
9.3 Factually, the appellants are right in pointing out that the
Agreement dated 28.01.2005 was terminated by a letter dated 25.02.2011
D only by invoking the force majeure clause and that fraud was not set up
as a defence in the arbitral proceedings. The appellants are also factually
correct in pointing out from the Auditor’s reports of Antrix dated
15.09.2012, 19.07.2016, 24.07.2017, 19.06.2020 etc., that there was a
certification by the auditors to the effect that no fraud on or by the
E company has been noticed or reported during the course of the audit. In
the Annexure to the Auditor’s report dated 15.09.2012, the Auditors
have stated:-
“According to the information and explanations given to us in
the course of our audit, we report that no fraud on or by the
F Company has been noticed or reported during the course of
our audit.”
9.4 Similarly, in the Annual Report dated 19.07.2016, for 2015-16,
it was reported by the Auditors as follows:-
“To the best of our knowledge and belief and according to the
G information and explanations given to us, we report that no
case of fraud has been committed on or by the Company or by
its officers or employees during the year.”
9.5 A statement similar to the one extracted above, also finds a
place in the Auditor’s report dated 24.07.2017, forming part of the Annual
H Report 2016-17.
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 347
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

9.6 Even in Annexure-B Report dated 19.06.2020, the Auditors A
have given a statement as follows:-
“Fraud by company or its officers and employees
According to the information and explanation given to us, there
are no frauds reported by the company or any fraud has been
noticed or reported during the year. Accordingly, the provisions of B
clause 3(x) of the said order are not applicable.”
9.7 Under Clause (xxi) of paragraph 4 of the Companies (Auditor’s
Report) Order, 2003, issued in exercise of the powers conferred by
Section 227 (4A) of the Companies Act, 1956, there is a prescription
that the Auditor’s Report should contain a statement as to whether any C
fraud on or by the company has been noticed or reported during the year
and if so, the nature and the amount involved.
9.8 But the question is as to whether all the above would lead to
an inference of estoppel against Antrix. The fact that the Agreement
dated 28.01.2005 was not terminated on the ground of fraud, through D
the letter dated 25.02.2011, cannot take the appellants anywhere. The
earliest First Information Report for the offences under Section 420
read with Section 120B of the IPC was filed by the CBI only on
16.03.2015. The officers of Antrix as well as officials of the Government
were also implicated in the FIR for offences under the Prevention of E
Corruption act, 1988. Therefore, the appellants cannot set up a plea of
estoppel on the ground that the termination of the Agreement in the year
2011 was not on the ground of fraud, when the discovery of fraud itself
was many years later.
9.9 For the very same reason, the failure of Antrix to plead fraud F
in the ICC arbitration proceedings, cannot also operate as estoppel. The
arbitral proceedings commenced in the year 2013 and the award itself
was passed on 14.09.2015. Antrix cannot be expected to plead fraud in
the arbitral proceedings, even before the discovery of fraud.
9.10 The Chartered Accountants/Auditors are not experts either
G
in Criminal Law or in the technology that formed the subject matter of
the Agreement between Antrix and Devas. The statement of Chartered
Accountants are always qualified with certain riders such as “according
to the information and explanations given to us in the course of our
audit” or “to the best of our knowledge and belief and according to
the information and explanations given to us”. H
348 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 9.11 In fact, the Companies (Auditor’s Report) Order, 2015 which
was superseded by another order in 2016 was issued by the Central
Government in exercise of the power conferred by Section 143(11) of
the Companies Act, 2013. Section 143(12) obliges the Auditor to report
to the Central Government, if he has reason to believe that an offence of
fraud of a particular dimension was being committed in the company by
B
its officers or employees. Sub-section (13) of Section 143 also provides
immunity to the Auditors for furnishing a report to the Central Government,
if it is done in good faith. Sub-section (12) & (13) of Section 143 read as
follows:-
“143. Powers and duties of auditors and auditing standards.-
C
xxxx xxxx xxxx
(12) Notwithstanding anything contained in this section, if an
auditor of a company in the course of the performance of his
duties as auditor, has reason to believe that an offence of fraud
D involving such amount or amounts as may be prescribed, is being
or has been committed in the company by its officers or employees,
the auditor shall report the matter to the Central Government within
such time and in such manner as may be prescribed:
Provided that in case of a fraud involving lesser than the
E specified amount, the auditor shall report the matter to the audit
committee constituted under section 177 or to the Board in other
cases within such time and in such manner as may be prescribed:
Provided further that the companies, whose auditors have
reported frauds under this sub-section to the audit committee or
F the Board but not reported to the Central Government, shall disclose
the details about such frauds in the Board’s report in such manner
as may be prescribed.
(13) No duty to which an auditor of a company may be subject
to shall be regarded as having been contravened by reason of his
reporting the matter referred to in sub-section (12) if it is done in
G
good faith.”
9.12 If the auditors of a company fail to make a report in terms of
Section 143(12), despite having knowledge about the fraud, they may
become liable for penal consequences under Section 448 read with
Section 447 of the Companies Act, 2013. But the failure of the auditors
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 349
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

to make a report as required by Section 143(12) or as required by the A
order issued under Section 143(11), cannot operate as estoppel against
the company. The auditor’s report can neither be taken as gospel truth
nor act as estoppel against the company. The statement in the auditor’s
report, is as per the information given to them or as per the information
culled out to the best of their ability.
B
9.13 The reliance placed upon Section 19 of the Indian Contract
Act, 1872 to raise the plea of estoppel may not wholly be correct. Section
19 of the Indian Contract Act, deals with only one type of fraud namely,
a fraud perpetrated on a party to secure his consent to an agreement.
Section 19 begins with the words “when consent to an agreement is
caused by coercion, fraud…..”. Frauds other than those used to induce C
the consent of a party to an agreement, are not covered by Section 19.
In fact, the definition of fraud under Section 17 is also confined only to
certain acts committed by a party to a contract. There are cases where
a party may perpetrate a fraud either upon non-contracting parties or
upon the Government or even upon the courts. The principle that fraud D
vitiates all solemn acts, will itself be rendered nugatory, if the
understanding of fraud is confined only to the realm of contract.
9.14 In the case on hand, the fraud alleged by Antrix is not solely
on the ground that their consent to the Agreement dated 28.01.2005 was
vitiated by fraud. What is alleged in the petition for winding up are, (i)
formation of the company for fraudulent or unlawful purpose; (ii) fraud E
in the conduct of the affairs of the company; and (iii) fraud on the part
of the persons who were involved in the formation and/or in the
management of affairs of the company. The fraud relatable to the
agreement, is only one facet of the whole scheme of things. Therefore,
we have to go beyond section 19 of the Contract Act. F
9.15 In fact, the Explanation (i) under Section 447 of the companies
Act, 2013 also defines fraud, but for the purposes of Section 447. What
is covered by Section 271(c) of the Companies Act, 2013 is a fraud that
goes beyond what lies in the realm of contract or in the realm of the
penal provisions of the Companies Act, 2013. Hence the contention that
G
Antrix was estopped from pleading fraud, was rightly rejected by the
Tribunal and we see no reason to taken a different view.
10. Refusal to permit cross-examination
10.1 Another ground of attack by the appellants to the impugned
orders is that the foundation for the allegation of fraud was the averment
H
350 SUPREME COURT REPORTS [2022] 11 S.C.R.

A that Devas offered to provide goods and services which were non-existent
both on the date of execution of the agreement and on the date of its
termination and that Devas was also incapable and did not have the
necessary permission/approvals to provide such device/services.
Contending that the question of existence/availability of the technology
has become a contentious issue with both parties filing several affidavits,
B
Devas filed an application before NCLT seeking permission to cross-
examine the officials of Antrix. This application was taken up along with
the main company petition. While ordering winding up, by a final Order
dated 25.05.2021, NCLT justified its action by holding that the case did
not require any oral evidence. Therefore, in the memorandum of grounds
C of appeal before NCLAT, the appellants raised a specific ground that
the omission on the part of the Tribunal to afford an opportunity of cross-
examination, vitiated the final outcome. But NCLAT upheld the view
taken by NCLT.
10.2 Therefore, it is contended on behalf of the appellants that (i)
D allegations of fraud, as a rule, warrant a full-fledged trial and proof; (ii)
that in the light of the specific bar of jurisdiction of Civil Courts under
Section 430 of the Companies Act, 2013, NCLT was obliged to scan the
allegations of fraud very carefully, by allowing parties to lead evidence
and cross-examine the witnesses; (iii) that the Tribunal is conferred
with the same powers as are vested in a Civil Court under the Code of
E Civil Procedure, 1908, in respect of the summoning and enforcing of the
attendance of any person and examining him on oath, under Section
424(2) of the Companies Act, 2013; (iv) that Rules 52 and 135 of the
National Company Law Tribunal Rules, 2016 make it clear that the
Tribunal has the power to summon the appearance of any witness, cross-
F examine him on oath and even issue commission for the examination of
witnesses; and (v) that the Tribunals committed a gross error of law in
recording findings on serious allegation of frauds, solely on the basis of
affidavits and documents. Reliance is placed in this regard by the learned
senior counsel for the appellants, on the decisions of this Court in Standard
Chartered Bank vs. Andhra Bank Financial Services Ltd. and Ors.19;
G Svenska Handelsbanken vs. Indian Charge Chrome and Ors.20 and
V. Ravi Kumar vs. State, Rep. by Inspector of Police, District Crime
Branch, Salem & Ors.21
19
(2006) 6 SCC 94
20
(1994) 1 SCC 502
21
H (2019) 14 SCC 568
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 351
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

10.3 At the outset we should point out that the decision in Svenska A
Handelsbanken (supra) arose out of an interim order of injunction
granted in a civil suit. The principle of law laid down in the said decision
that mere pleadings cannot make out a case of fraud, is an off-shoot of
the time tested principle that pleadings cannot take the place of proof.
Insofar as the decision in Standard Chartered Bank (supra) is
B
concerned, the same arose out of proceedings before the special Court.
One of those proceedings was under Section 111 of the Companies Act,
1956 which was “somewhat summary in nature”. Therefore it was in
that context that this Court held that when a seriously disputed question
of title arises, the Company Court should relegate the parties to a civil
suit. But having admitted that under Section 430 of the Companies Act, C
the jurisdiction of the Civil Court is barred, it is not open to the appellants
to rely upon this decision to say that the parties could be relegated to a
civil court.
10.4 Similarly the decision in V. Ravi Kumar (supra), arose out of
criminal proceedings under Section 482 Cr.P.C for quashing the second D
complaint, after the withdrawal of the first complaint. The High Court
quashed the criminal complaint and while setting aside the order of the
High Court, this Court held that the allegations of fraud and cheating,
which prima facie constitute offences under Section 420 IPC, have to
be established through evidence at the time of trial.
E
10.5 Thus the decisions relied upon by the appellants to drive
home the point that the Tribunal must have permitted cross-examination,
have no relevance to the case on hand. However, dehors those decisions
relied upon by the appellants, let us see whether the omission of NCLT
to permit cross-examination was fatal.
F
10.6 The Tribunal classified the allegations made by Antrix into
eight categories. In sum and substance, they revolve around, (i) the
offer of a non-existent technology; (ii) misrepresentation about the
possession of intellectual property rights over a device; (iii) violation of
SATCOM policy; (iv) securing of an experimental licence fraudulently;
(v) manipulation of the minutes; and (vi) the trail of money brought in G
through FIPB approvals.
10.7 All the averments forming the foundation of the allegations
of fraud, from the point of view of the Indian Evidence Act, would fall
under only two categories, namely, (i) positive assertions requiring persons
making those assertions to prove them; and (ii) negative assertions. H
352 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 10.8 A party alleging the non-existence of something, cannot be
called upon to prove the non-existence. It is the party who asserts the
existence or who challenges the assertion of non existence, who is liable
to prove the existence of the same.
10.9 In the case on hand, Antrix asserted that Devas offered
B services which were non-existent, through a device which was not
available and that even the so-called intellectual property rights over the
device were not available. Therefore, obviously Antrix cannot lead
evidence to show the non-existence or non-availability of those things,
either by oral evidence or by subjecting their officials to cross-examination
by Devas. Devas never produced before the Tribunals any device nor
C did they demonstrate the availability to Devas services. All that Devas
wanted was, the cross-examination of the officials of Antrix. Any amount
of cross-examination of the officials of Antrix could not have established
the existence of something that was disputed by Antrix.
10.10 It is also interesting to note that the application for cross-
D examination was moved by Devas on 5.5.2021, after arguments in the
main petition itself had commenced on 30.04.2021 and concluded on
3.05.2021 on the side of Antrix. The list of dates filed by Shri N.
Venkataraman, Additional Solicitor General shows that on 19.01.2021,
NCLT ordered the admission of the company petition and appointed a
E provisional liquidator. In fact this order was passed after hearing objections
of the company. As against the order of admission, DEMPL filed an
appeal before NCLAT. But the same was dismissed by NCLAT on
11.02.2021, with liberty to the DEMPL to file an application for
impleadment. DEMPL filed an application for impleadment on 2.03.3021.
They also filed a writ petition before the High Court of Karnataka
F challenging the authorisation given by Central Government to Antrix, as
well as the constitutional validity of Section 272(1)(e) read with Section
272(3) of the Companies Act, 2013. After hearing extensive arguments
over several dates, the High Court of Karnataka dismissed the writ
petition by an Order dated 28.04.2021 with costs of Rs.5,00,000/- for
G abuse of process of law. It was only thereafter that the company petition
was taken up by NCLT and arguments on behalf of Antrix was heard
and concluded on 30.04.2021 and 3.05.2021.
10.11 When the company petition was adjourned to 5.05.2021 for
arguments on behalf of Devas, a two-pronged strategy was adopted by
H Devas. The first was to make DEMPL file a writ appeal before the
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 353
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Division Bench of the High Court of Karnataka against the order of the A
learned Single Judge upholding the constitutional validity of the aforesaid
provisions. Simultaneously, Devas filed an application on 5.05.2021 to
cross-examine the Managing Director and Finance Director of Antrix.
However, Devas also continued their arguments in the main company
petition and concluded the same on 10.05.2021. On 10.05.2021, NCLT
B
reserved the judgment.
10.12 Incidentally, it must be pointed out that the writ appeal filed
by the DEMPL came up for hearing before the Division Bench of the
High Court of Karnataka on 12.05.2021. The Division Bench directed
the matter to be listed on 19.05.2021 with a condition that the costs as
awarded by the learned Single Judge should be paid on or before the C
said date.
10.13 On 25.05.2021, the NCLT passed final orders, after which
DEMPL withdrew the writ appeal on 27.05.2021.
10.14 It is clear from the above time-line of events that the D
application for cross-examination was moved by Devas after conclusion
of the arguments on the side of Antrix in the main petition itself, and that
too after the unsuccessful attempt made by one of its shareholders to
assail the constitutional validity of the statutory provisions. Therefore,
the Tribunal was right in rejecting the request for cross-examination.
E
11. LOCUS STANDI OF THE SHAREHOLDERS
11.1 The next ground of attack to the impugned orders is that
despite the petition for winding up containing specific allegations of fraud
as against the shareholders of Devas, NCLT did not give any opportunity
to the shareholders. Even the application for impleadment filed by F
DEMPL which is one of the shareholders, pursuant to the leave granted
by NCLAT, was taken up along with the main company petition and
eventually rejected along with the main company petition. Therefore,
DEMPL filed an independent appeal before NCLAT. Unfortunately, the
Member (Judicial) of NCLAT dismissed the appeal, as not maintainable,
on the ground (i) that the rights of the shareholders are confined to the G
election of Directors, voting in the meetings of the company, distribution
of dividends and the distribution of surplus upon liquidation; and (ii) that
the company in liquidation itself, through its ex-Director, has independently
filed an appeal as an aggrieved person.
H
354 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 11.2 Therefore, relying upon the decision of this Court in National
Textile Workers’ Union vs. P.R. Ramakrishnan & Ors. 22, it is
contended that it would be contrary to every recognised principle of fair
judicial procedure and violative of the rule of audi alteram partem which
constitutes one of the basic principles of natural justice, to deny to the
shareholders, the right to be heard before an order prejudicially affecting
B
their interest was passed.
11.3 It is true that the petition for winding up was filed under
Section 271(c) alleging (i) that the affairs of the company have been
conducted in a fraudulent manner; (ii) that the company was formed for
fraudulent and unlawful purpose; and (iii) that the persons concerned in
C the formation or management of its affairs have been guilty of fraud.
But there is no scope either in the Act or in the Rules for the impleadment
of any shareholder as a respondent to the petition for winding up. Rule
3(1) of Companies (Winding Up) Rules 2020 requires a petition for
winding up to be in Form WIN 1 or Form WIN 2. A look at these forms
D would indicate that there is no provision for making any one, as the
respondent in the petition. Therefore, the question of impleading any
shareholder at the time when the petition for winding up was filed, did
not arise.
11.4 Interestingly, Antrix sought the authorisation under Section
E 272(1)(e) on 14.01.2021 and the Central Government granted
authorisation on 18.01.2021. On the very same day, the petition for winding
up was filed. When the petition was taken up by NCLT on 19.01.2021
for the first time, Devas Multimedia Private Limited, which is the company
in liquidation appeared through counsel and opposed the petition and
also sought sufficient time to file reply. Therefore, NCLT did not have to
F go through the formality of ordering notice before admission, as a battery
of counsel appeared for Devas, raised preliminary objections and also
sought time to file response. The Tribunal passed a detailed order dated
19.01.2021 admitting the company petition and appointing a provisional
liquidator even while granting time to the company to file its reply. In
paragraph 5 of the detailed order dated 19.01.2021, the preliminary
G
submissions made by the company in liquidation against the admission of
the company petition, are recorded.
11.5 The order dated 19.01.2021 admitting the company petition
became the subject matter of an appeal before NCLAT at the instance
22
H (1983) 1 SCC 228
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 355
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

of the company in liquidation. Therefore, on 8.02.2021 when the company A
petition came up for hearing, it was adjourned to 16.02.2021 and,
thereafter, to 2.03.2021. On 2.03.2021, DEMPL which is a shareholder
filed a petition for impleadment. It is true that this application was not
independently dealt with and disposed of at that stage. However, the
objections of DEMPL to the main company petition were just the same
B
as the objections of the company in liquidation. Despite the fact that a
provisional liquidator has been appointed on 19.02.2021 itself, the ex-
Director of the company in liquidation was permitted to file objections to
the main company petition and also argue the same fully.
11.6 After the conclusion of the arguments on the part of Antrix
to the main company petition, DEMPL even moved a writ petition C
challenging the constitutional validity of Section 272(1)(e) and the
authorisation issued to Antrix. The writ petition was dismissed with costs
and the writ appeal was withdrawn.
11.7 It will be clear from the above sequence of events that (i)
despite NCLT not disposing of the impleadment petition before passing D
final orders; and (ii) despite NCLT dismissing the impleadment petition
along with the main company petition, their objections to the main
company petition have been dealt, along with the objections of the ex-
Director of the company in liquidation. In other words, the objecting
shareholder had an effective hearing before NCLT. Though their appeal E
was rejected by NCLAT on the ground of maintainability, their arguments
for opposing the winding up, which were just the same as that of the
company, have been considered. Therefore, the objection that an
opportunity was not given to the shareholders, is just theoretical, when in
fact they were heard.
F
11.8 It is true that in National Textile Workers’ Union (supra),
this Court took the law relating to locus standi by a leap forward. But as
seen from the facts of the said case, the petition for winding up was
triggered by one group of shareholders, both on the ground that company
was unable to pay its debts and on the ground that it is just and equitable
to wind up the company. The company Judge before whom the winding G
up petition came up, granted an ex-parte injunction restraining company
from borrowing any moneys and from alienating and/or creating any
charge or encumbrance over any of the assets of the company. As a
consequence, the Employees’ Cooperative Stores, stopped issuing any
provisions or supplies to the workmen. The workmen were also prevented H
356 SUPREME COURT REPORTS [2022] 11 S.C.R.

A from enjoying the benefits under the ESI scheme. The wages payable
for the following month itself became doubtful. Faced with the sudden
threat to their livelihood, the workers’ Unions sought to implead
themselves as party to the winding up proceeding. Therefore, the decision
rendered in National Textile Workers’ Union’s case has to be
understood in the context in which it was rendered.
B
11.9 It is true that the dismissal of the appeal filed by DEMPL, by
NCLAT on the ground of maintainability may not be correct. Section
421(1) of the Companies Act, 2013 enables “any person aggrieved by
an order of the Tribunal”, to file an appeal. To say that DEMPL cannot
be taken to be a person aggrieved, may be far-fetched. But on that sole
C ground, the impugned order cannot be set aside.
11.10 We have seen from the memorandum of grounds of appeal
filed by DEMPL before NCLAT and the memorandum of grounds of
appeal filed by DEMPL before this Court that their objections to the
petition for winding up are just the same as those of the ex-Director of
D the company in liquidation. In fact, before us, the ex-Director of the
company in liquidation was represented by Shri Mukul Rohtagi, learned
senior counsel and DEMPL was represented by Shri Arvind P. Datar,
learned senior counsel. While the learned senior counsel for the company
in liquidation occupied the crease only for limited number of overs, the
E learned senior counsel appearing for DEMPL took the entire
responsibility on his shoulders and played a very long innings. Therefore,
it is not possible for us to set aside the order of winding up, on the sole
ground that the shareholders application for impleadment as well as the
appeal were rejected wrongly.

F 11.11 Before leaving the discussion on this ground of attack, we
must also take note of one submission made by Shri N. Venkataraman,
learned Additional Solicitor General. According to him, all the shareholders
of Devas are arrayed as accused by the CBI in the criminal cases. But
the CBI has not even been able to serve summons on them. Therefore,
persons who are ducking/ avoiding summons in the criminal prosecution,
G cannot be heard to contend that they must have been heard in the petition
for winding up. Taking advantage of their citizenship/residence abroad,
these shareholders are prosecuting proceedings for the enforcement of
(i) ICC Arbitral Tribunal Award in India; and (ii) BIT Awards overseas,
even while making it impossible for CBI to serve summons on them for
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 357
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the past five years. It is not open to such persons to raise the bogey of A
failure to afford an opportunity.
12. FINDINGS ERRONEOUS AND PERVERSE AND THE
STANDARD OF PROOF APPLIED INCORRECT
12.1 The next ground of attack to the impugned orders is that the
findings recorded by the NCLT which were approved by NCLAT were B
completely perverse and erroneous and that the Tribunals applied a
completely incorrect standard of proof. In any case, the findings were
recorded to be only prima facie, which is not sufficient to order the
winding up of the company.
12.2 In order to test the correctness of the above contention, it is C
necessary to take note of the averments on which Antrix built their case
for winding up, the response of Devas to the averments, the findings
recorded by NCLT and the findings recorded by NCLAT.
12.3 Briefly stated, the averments made by Antrix in their petition
for winding up were, (i) that Devas was incorporated as a private limited D
company, on 17.12.2004, with an authorised share capital of Rs.1,00,000/
- divided into 10,000 equity shares of Rs.10/- each; (ii) that within a few
weeks of incorporation, an Agreement dated 28.01.2005 was entered
into between the company and Antrix, as a result of a fraudulent and
criminal conspiracy between the persons in management of the affairs E
of the company and the officials of Antrix/Government of India, to award
a lease of scarce and valuable S-band spectrum, without obtaining
necessary approvals and without following applicable norms and
procedures; (iii) that the persons in-charge of the formation as well as
the management of the affairs of Devas did not possess the necessary
technical know-how or the intellectual property rights for the provision F
of what was claimed as “Devas Services”, either at the time of signing
of the agreement or even till date; (iv) that despite not being in possession
of either the technology or the device, the company was pushing Antrix
and the Government of India to launch the satellite; (v) that as part of
the conspiracy, the Agreement dated 28.01.2005 was terminated by Antrix G
by a letter dated 25.02.2011 by invoking the force majeure clause; (vi)
that it made things easy for Devas to initiate an arbitration before the
ICC Arbitral Tribunal, apart from the initiation of the two BIT Arbitrations
by the shareholders of Devas, (vii) that when the criminal conspiracy,
fraud and corrupt practices came to light, an FIR was lodged by the CBI
H
358 SUPREME COURT REPORTS [2022] 11 S.C.R.

A on 16.03.2015; (viii) that a charge-sheet was filed by CBI on 11.08.2016,
both against the persons responsible for the formation and management
of the affairs of the company in liquidation, as well as the officials of
Antrix and Government of India; (ix) that a supplementary charge-sheet
was filed on 08.01.2019; (x) that a complaint was also registered under
the Prevention of Money Laundering Act, 2002 on 24.12.2018; (xi) that
B
the company which was formed with an authorized share capital Rs.
1,00,000/- in December, 2004, managed to secure a contract for a stated
consideration of an “up-front capacity reservation fee” in the region of
US, $ 20 million per satellite, apart from annual license fee of around US
$ 9 million per satellite; (xii) that the execution of such a contract and
C the award of a public largesse of such a huge magnitude was not through
any public auction but by private negotiations held by the officials of
Antrix with Forge Advisors of USA, (xiii) that after securing the contract,
the company was able to sell its equity shares as well as OCP shares at
a huge premium to foreign investors; (xiv) that equity shares of a face
value of Rs. 10/- were sold at the rate of Rs. 1.26 lakhs per share; (xv)
D
that interestingly, DT Germany which invested Rs. 430 crores through
DT Asia obtained only 19% share holding, while four Mauritius investors
obtained 37% share holding by investing Rs. 150 crores; (xvi) that
experimental licences were obtained by Devas by manipulating the
minutes of the meetings; (xvii) that FIPB approvals were secured for
E the stated purpose of providing Internet services, though the agreement
was for rendering a hybrid service known as Satellite based Digital
Multimedia Broadcasting Services (SDMB Services, for short); (xviii)
that the fact that such a hybrid technology was not in existence at that
time was suppressed from FIPB as well as other authorities; (xix) that
after showcasing the inflow into India, of investment to the tune of Rs.
F
579 crores, the company siphoned out of India, a sum of Rs. 75 crores
for creating a wholly owned subsidiary in USA, a sum of Rs. 180 crores
towards payment for business support services and sum of Rs. 233 crores
toward litigation services; (xx) that a sum of Rs. 92 crores alone was
kept in India out of which Rs. 21 crores was by way of Fixed Deposits
G and a sum of Rs. 59 crores was paid to Antrix towards up-front capacity
fee; (xxi) that some of the then officials of Antrix and the Government
of India were parties to the fraudulent and unlawful purpose for which
Devas was created and the fraudulent manner in which the affairs of
the company had been conducted; (xxii) that the persons including
investors and the share-holders concerned in the formation and the
H
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 359
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management of its affairs have been guilty of fraud, corrupt practices A
and money laundering and that therefore the company was liable to be
wound up.
12.4 On the basis of the pleadings, the documents produced and
the submissions made, NCLT recorded the following findings namely,
(i) that the incorporation of Devas was with fraudulent intention to grab B
the prestigious contract in question, in connivance and collusion with the
then officials of Antrix; (ii) that it is not in dispute that at the time of
entering into the contract, Devas did not have the technology,
infrastructure or experience to perform their obligations under the
Agreement; (iii) that one of the subscribers to the Memorandum of
Association of the company in liquidation was an Auditor by name Shri C
M. Umesh, whose Article Clerk by name Gururaj was the one signed
the Agreement; (iv) that the Executive Director of Antrix who signed
the Agreement of behalf of Antrix is one of accused in the criminal
cases; (v) that the incorporation of Devas was with fraudulent motive
and unlawful object, to bring money into India and divert it by dubious D
methods; (vi) that even after the termination of the Agreement, Devas
was not carrying on any business operations; (vii) that the objective of
Devas was hardly to do any business except grabbing Primary Satellite-
I (PS-I) and Primary Satellite-II (PS-II), and that therefore the
requirements of Section 271(c) stand satisfied.
E
12.5 The order of the Appellate Tribunal is in two parts; the first
authored by Member (Judicial), and the second authored by Member
(Technical). The Member (Judicial) noted, (i) that the company in
liquidation failed to establish either the existence of technology or the
ownership of intellectual property rights over the stated technology; (ii)
that even according to the affidavit of Shri M. G. Chandrashekar, Devas F
had ample time to develop Devas Technology, meaning thereby that its
non-existence at that time was admitted; (iii) that the company did not
have a single approval, permission or licence to render Devas services
utilising Devas technology; (iv) that the approval of the Space Commission
for building a satellite for Devas, was secured only after finalisation of G
commercial terms but without apprising the Space Commission of the
same; (v) that even in the cabinet note, prepared by the Department of
Space on 17.11.2005 a full picture was not recorded; (vi) that there was
a contravention of the SATCOM Policy; (vii) that though the original
minutes of the meeting required Devas to secure a spectrum licence
H
360 SUPREME COURT REPORTS [2022] 11 S.C.R.

A from Wireless Planning Committee (WPC), after appearing before the
apex committee with requisite technical details, the minutes of the
meetings were manipulated later as though the company was exempted
from the requirement; (viii) that after objections about the manipulations,
the original minutes of the meeting came to be restored, on 20.11.2009,
but this happened only after the grant of experimental licence on
B
07.05.2009; (ix) that in any case the experimental licence was to establish
Wireless Telegraph Station in India under the India Telegraph Act, 1885,
without which experimental trials could not have been conducted; (x)
that Devas obtained IPTV licence as part of ISP licence, which has
nothing to do with what was offered as DEVAS services; (xi) that the
C agreement dated 28.01.2005 made no reference of IPTV; (xii) that
undeniably, Devas services cannot be provided with ISP licences; (xiii)
that after bringing an amount of Rs 579 crores into India, a major portion
was taken out of India; (xiv) that the only business activity carried on by
Devas was to provide ISP services in a particular locality in Bangalore
for a few residents and that too for a short duration, which made Devas
D
earn a revenue of Rs. 80,000/; (xv) that the diversion of Rs. 489 crores
and Rs. 58 crores for non ISP purposes is violative of ISP licence, which
comes squarely within the ambit of Section 271(c); (xvi) that Devas
fraudulently approached FIPB through the ISP route to avoid scrutiny
by Department of Space; (xvii) that the investors of Devas actually
E became shareholders and they also had their nominees on the Board of
Devas; (xviii) that therefore these persons were also guilty of the conduct
of the affairs of Devas in the manner stated; (xix) that the Share
Subscription Agreement dated 06.03.2006 entered into with the investors
contains a recital as though appropriate licences have been validly issued
or assigned to the company, though in fact the only licence namely ISP
F
licence was obtained much later on 02.05.2008 and (xx) that therefore
the formation of the company and the conduct of the affairs of the
company were fraudulent and the persons concerned therewith were
also guilty of fraud.
12.6 In his independent but concurrent opinion the Member
G (Technical) of NCLAT classified the items of fraud into eight categories.
He first found that the company was formed and the Agreement was
entered into with the stated object of providing a bouquet of services,
which were non-existent. The second category of fraud dealt with by
the Member (Technical) related to the misrepresentation in the
H Agreement. The third category of fraud concerned the violation of
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 361
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SATCOM Policy. The fourth category was actually an extension of the A
third category which related to SATCOM Policy. The fifth category
was about suppression and misrepresentation in obtaining the approval
of the cabinet. The sixth category of fraud revolved around the ISP
licence dated 02.05.2008, of which IPTV licence was a part, but which
had nothing to do with Devas Services. The seventh category related to
B
the fraudulent manner in which experimental licence was obtained and
the eighth category related to FIPB approvals and money trail. The
Member (Technical) found the formation of company, the conduct of
the affairs of the company and those persons concerned in the formation
and conduct of management of its affairs to be guilty of fraud.
12.7 Technically speaking, the appeal before us which is under C
Section 423 of the Companies Act, 2013, is only on a question of law.
When two forums namely NCLT and NCLAT have recorded concurrent
findings on facts, it is not open to this Court to re-appreciate evidence.
Realising this constraint, the learned Senior Counsel for the Appellant
sought to project the case as one of perversity of findings. But we do not D
find any perversity in the findings recorded by both the Tribunals. These
findings are actually borne out by documents, none of which is challenged
as fabricated or inadmissible. Though it is sufficient for us to stop at this,
let us go a little deeper to find out whether there was any perversity in
the findings recorded by the Tribunals and whether such findings could
not have been reached by any reasonable standards. E

12.8 The following undisputed facts emerge from the documents
placed before the Tribunal. The authenticity of these documents were
never in question or denied:
(i) An agreement of a huge magnitude, for leasing out five F
numbers of C X S transponders each of 8.1 MHz capacity
and five numbers of S X C transponders each of 2.7 MHz
capacity on the Primary Satellite-I (PS-I), was surprisingly
and shockingly entered into by Antrix with Devas, without
same being preceded by any auction/tender process. It
appears from the letter dated 27.09.2004 sent by DEVAS G
LLC, USA to Shri K.R. Sridhara Murty, Executive Director
of Antrix with copies to Dr. G. Madhavan Nair, Chairman,
ISRO and others that Shri Ramachandran Viswanathan,
met the then Chairman of ISRO and other officials in
Bangalore in April-2003 and they met once again in H
362 SUPREME COURT REPORTS [2022] 11 S.C.R.

A Washington D.C. during the visit of the then Chairman of
ISRO. These meetings, which were not preceded by any
invitation to the public for any Expression of Interest,
culminated in a Memorandum of Understanding dated
28.07.2003. Though it is not clear where the MoU was
signed, there are indications that it was signed overseas;
B
(ii) It must be noted here that a one man Committee comprising
of Dr. B.N. Suresh, former Member of the Space
Commission and Director of Indian Institute of Space
Science and Technology, was constituted on 8.12.2009, long
after the commencement of the commercial relationship,
C to look comprehensively into all aspects of the contract,
both commercial and technical. According to the Report
submitted by him in May-2010, it was Forge Advisors, USA
which made a presentation in March-2003, on technology
aspects of digital multimedia services to Antrix/ISRO,
D followed by a presentation in May-2003 purportedly to the
top management of Antrix/ ISRO. The MoU was signed
thereafter;
(iii) But the documents filed by the appellants themselves show
that a power point presentation was made by Forge LLC
E on 22.03.2004, proposing an Indian joint venture to launch
what came to be known as DEVAS (which perhaps
ultimately turned out to be ASURAS23). It was claimed in
the said proposal that DEVAS platform will be capable of
delivering multimedia and information services via satellite
to mobile devices tailored to the needs of various market
F segments such as consumer segment, commercial segment
and social segment. This presentation dated 22.03.2004 was
followed by a proposal dated 15.04.2004, about which we
have made a brief mention in paragraph 3.4 above. This
proposal obliged ISRO/Antrix to invest in one operational
G S-band Satellite with a ground space segment to be leased
to a joint venture between Forge and Antrix. What was to
be reserved for the joint venture was 97% of the space.
The consideration receivable by ISRO/ Antrix upon such a
lease, was to be US $ 11 million annually for a period of 15
23
H According to Hindu Mythology, Devas are demigods and Asuras are demons
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 363
CORPORATION LTD. & ANR. [V. RAMASUBRAMANIAN, J.]

years. At least at this stage the proposal to invest in an A
operational S-band satellite and the lease of nearly the entire
space of such satellite to a joint venture, should have come
to the public domain, to see, (a) if the technology existed;
and (b) if the proposal was commercially viable. But it was
not done;
B
(iv) On 14.05.2004, a Committee headed by one Dr. K.N.
Shankara, Director, Space Applications Centre was
constituted purportedly to examine the technical feasibility,
risk management including possibilities of alternate uses of
space segment, financial and market aspects and time
schedule. According to the Report submitted by this C
Committee, DEVAS was conceived as a new national
service expected to be launched by the end of 2006 that
would deliver video, multimedia and information services
via high powered satellite to mobile receivers in vehicles
and mobile phones across India. The catch here lies in the D
fact that while it was possible to deliver some of these
services via terrestrial mode, it was not possible at that
point of time to provide this bouquet of services via satellite.
Even today satellite phones are beyond the reach of a
common man. Mobile receivers or devices which can simply
receive audio and video content are different from mobile E
phones, which are capable of providing a two way
communication. The technology for providing the services
through mobile phones was not in existence at that time,
which is why the proposal made by Forge Advisors included
an expectation that such a service may be launched by the F
end of 2006. It was with this expectation/promise that an
Agreement was entered into on 28.01.2005 but this so-called
new national service was never launched as promised in
2006. The launch of the services was not linked to the
provision of a S-band satellite by Antrix, at least at the time
when negotiations took place; G
(v) Admittedly, FIPB (Foreign Investment Promotion Board)
approvals taken by Devas during the period May-2006 to
September-2009 were on the basis of the ISP (Internet
Service Provider) license secured from the Department of
H
364 SUPREME COURT REPORTS [2022] 11 S.C.R.

A Telecommunications on 02.05.2008 and IPTV (Internet
Protocol Television) services license obtained on 31.03.2009;
(vi) Therefore, the finding of the Tribunal, (a) that a public
largesse was doled out in favour of Devas, in contravention
of the public policy in India; (b) that Devas enticed Antrix/
B ISRO to enter into an MoU followed by an Agreement by
promising to provide something that was not in existence at
that time and which did not come into existence even later;
(c) that the licenses and approvals were for completely
different services; and (d) that the services offered were
not within the scope of SATCOM Policy etc. are actually
C borne out by records;
(vii) There is no denial of the fact that Devas offered a bouquet
of services known as (a) Devas Services through a device
called (b) Devas device in a hybrid mode of transmission,
which is a combination of satellite and terrestrial
D transmissions, and which is called (c) Devas Technology
but none of which existed at the relevant point of time or
even thereafter;
(viii) Devas did not even hold necessary intellectual property rights
in this regard though they claimed to have applied;
E (ix) That the formation of the company, namely, Devas
Multimedia Private Limited was for a fraudulent and
unlawful purpose is borne out by the fact that the company
was incorporated in December-2004, as a result of
preliminary meetings held at Bangalore in March-2003 and
F in USA in May-2003, followed by the signing of the MoU
on 28.07.2003, the presentation made on 22.03.2004 and
the discussions held thereafter. The ground work was clearly
done during the period from March-2003 to December-2004
before the company was formally incorporated. Immediately
after incorporation, the Agreement dated 28.01.2005 was
G signed. Therefore, the first ingredient of Section 271(c) of
the Companies Act, 2013, namely, the formation of the
company for a fraudulent and unlawful purpose was clearly
made out;
(x) The kind of licenses obtained such as ISP and IPTV licenses
H and the object for which FIPB approvals were taken but
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 365
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showcased as those sufficient for fulfilling the obligations A
under the Agreement dated 28.01.2005 demonstrated that
the affairs of the company were conducted in a fraudulent
manner. This is fortified by the fact that a total amount of
Rs.579 crores was brought in, but almost 85% of the said
amount was siphoned out of India, partly towards
B
establishment of a subsidiary in the US, partly towards
business support services and partly towards litigation
expenses. We do not know if the amount of Rs.233 crores
taken out of India towards litigation services, also became
a part of the investment in a more productive venture,
namely, arbitration. The manner in which a misleading note C
was put to the cabinet and the manner in which the minutes
of the meeting of TAG sub-committee were manipulated,
highlighted by the Tribunal, also shows that the affairs of
the company were conducted in a fraudulent manner. Thus,
the second limb of Section 271(c), namely, the conduct of
D
the affairs of the company in a fraudulent manner, also stood
established.
(xi) SATCOM Policy perceived telecommunication and
broadcasting services to be independent of each other and
also mutually exclusive. Therefore, a combination of both
was not permitted by law. It is especially so since no E
deliberation took place with the Ministry of Information and
Broadcasting. Moreover, unless ICC allocates space
segment, to a private player, the same becomes unlawful.
This is why the conduct of the affairs of the company
became unlawful; F
(xii) That the officials of the Department of Space and Antrix
were in collusion and that it was a case of fence eating the
crop (and also allowing others to eat the crop), by joining
hands with third parties, is borne out by the fact that the
Note of the 104th Space Commission did not contain a
G
reference to the Agreement. The Cabinet Note dated
17.11.2005 prepared after ten months of signing of the
Agreement, did not make a mention about Devas or the
Agreement, but proceeded on the basis as though ISRO
received several Expressions of Interest. These materials
H
366 SUPREME COURT REPORTS [2022] 11 S.C.R.

A show the complicity of the officials to allow Devas to have
unjust enrichment;
(xiii) It is on record that the minutes of the meeting of the Sub
Committee dated 06.01.2009 were manipulated and the
experimental licence was granted on 07.05.2009. Only
thereafter, the original minutes were restored on 20.11.2009
B
and that too after protest.
(xiv) Admittedly, every one of the investors procured shares of
the company in liquidation and each shareholder had a
representative in the board of directors. Since the board
controlled the company, the directors were guilty of the
C conduct of the affairs of the company in a fraudulent
manner. Since each shareholder had a representative in the
board, the shareholders had to take the blame for the
misdeeds of the directors;
(xv) Additionally, the shareholders were fully aware of the fact
D that the application for approval dated 02.02.2006 to the
FIPB was for ISP services. But they entered into a Share
Subscription Agreement on 06.03.2006 for Devas services.
The Share Subscription Agreement discloses that they were
aware of the false statements contained in the Agreement
dated 28.01.2005. Therefore, the shareholders, who now
E want to reap the fruits of a tree, fraudulently planted and
unlawfully nurtured, cannot feign ignorance and escape the
allegations of fraud.
12.9An argument was advanced by the learned senior counsel
for the appellants, on the basis of a statement contained in the order of
F NCLAT that the allegations are prima facie made out, that a company
cannot be ordered to be wound up on the basis of prima facie findings.
The standard of proof required for winding up of a company cannot be
prima facie.
12.10 But we do not think that the appellants can take advantage
of the use of an inappropriate expression by NCLAT. The detailed findings
G recorded by the Tribunal show that they are final and not prima facie.
Merely because NCLAT used an erroneous expression those findings
cannot become prima facie.
13. Miscellenous Grounds
13.1 Apart from the above main grounds of attack, which we
H have dealt in extenso, the learned senior counsel for the appellants also
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX 367
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made a few supplementary submissions. One of them was that a lis A
between two private parties cannot become the subject matter of a petition
under Section 271(c). But this argument is to be rejected outright, in
view of the fact that the claims of Devas and its shareholders are also
on the property of the Government of India. The space segment in the
satellite proposed to be launched by the Government of India, is the
B
property of the Government of India. In fact, the shareholders have
secured two awards against the Republic of India under BIT. Therefore,
it is neither a lis between two private parties nor a private lis between a
private party and a public authority. It is a case of fraud of a huge
magnitude which cannot be brushed under the carpet, as a private lis.
13.2 Another contention raised on behalf of the appellants is that C
the petition under Section 271(c) should have been preceded, at least by
a report from the Serious Fraud Investigation Office, which has now
gained statutory status under Section 211 of the Companies Act, 2013.
But this contention is un-acceptable, in view of the fact that under the
2013 Act there are two different routes for winding up of a company on D
allegations of fraud. One is under Section 271(c) and the other is under
the just and equitable clause in Section 271(e), read with Section 224(2)
and Section 213(b). What was Section 439(1)(f) read with Section 243
and Section 237(b) of the 1956 Act, have now taken a new avatar
under Section 224(2) read with Section 213(b). It is only in the second
category of cases that the report of the investigation should precede a E
petition for winding up.
13.3 Yet another contention raised on behalf of the appellants is
that the criminal complaint filed for the offences punishable under Section
420 read with Section 120B IPC, has not yet been taken to its logical
end. Therefore, it is contended that in case the officials of Antrix and F
shareholders of Devas are acquitted after trial, the clock cannot be put
back, if the company is now wound up. Attractive as it may seem at first
blush, this contention cannot hold water, if scrutinised a little deeper. The
standard of proof required in a criminal case is different from the standard
of proof required in the proceedings before NCLT. The outcome of one
need not depend upon the outcome of the other, as the consequences G
are civil under the Companies Act, 2013 and penal in the criminal
proceedings. Moreover, this argument can be reversed like the handle
of a dagger. What if the company is allowed to continue to exist and also
enforce the arbitration awards for amounts totalling to tens of thousands
of crores of Indian Rupees (The ICC award is stated to be for INR H
368 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 10,000 crores and the 2 BIT awards are stated to be for INR 5,000
crores) and eventually the Criminal Court finds all shareholders guilty of
fraud? The answer to this question would be abhorring.
13.4 Lastly, it was contended that the actual motive behind Antrix
seeking the winding up of Devas, is to deprive Devas, of the benefits of
B an unanimous award passed by the ICC Arbitral tribunal presided over
by a former Chief Justice of India and the two BIT awards and that
such attempts on the part of a corporate entity wholly owned by the
Government of India would send a wrong message to international
investors.
13.5 We do not find any merit in the above submission. If as a
C matter of fact, fraud as projected by Antrix, stands established, the motive
behind the victim of fraud, coming up with a petition for winding up, is of
no relevance. If the seeds of the commercial relationship between Antrix
and Devas were a product of fraud perpetrated by Devas, every part of
the plant that grew out of those seeds, such as the Agreement, the
D disputes, arbitral awards etc., are all infected with the poison of fraud. A
product of fraud is in conflict with the public policy of any country
including India. The basic notions of morality and justice are always in
conflict with fraud and hence the motive behind the action brought by
the victim of fraud can never stand as an impediment.
E 13.6 We do not know if the action of Antrix in seeking the winding
up of Devas may send a wrong message, to the community of investors.
But allowing Devas and its shareholders to reap the benefits of their
fraudulent action, may nevertheless send another wrong message namely
that by adopting fraudulent means and by bringing into India an investment
in a sum of INR 579 crores, the investors can hope to get tens of
F thousands of crores of rupees, even after siphoning off INR 488 crores.
14. Conclusion
Therefore, in fine, we find all the grounds of attack to the
concurrent orders of the NCLT and NCLAT to be unsustainable.
Therefore, the appeals are dismissed. However, without any order as to
G costs.

Bibhuti Bhushan Bose Appeals dismissed.
(Assisted by : Mahendra Yadav, LCRA)

H