NCLAT stays NCLT order terming allotment of shares in Peerless 'void'

The National Company Law Appellate Tribunal (NCLAT) has stayed an order passed by the Kolkata Bench of the National Company Law Tribunal (NCLT) that had termed allotment of shares to the Roys of Peerless General Finance & Investment in 1988 ‘void’ and ordered cancellation.

In an order passed on Friday, the appellate tribunal said, the impugned order dated July 18, 2022, passed by the NCLT is stayed till further order.

It said, “By the impugned order since the NCLT has dealt with about 30,000 shares which were issued long back in the year 1987-1988, prima facie we are of the opinion that only while passing an order for maintaining ‘Status Quo’ may not serve the purpose. We are of the opinion that during the pendency of the Appeal the impugned order shall remain suspended.”

Jayanta Roy, MD of Peerless, said that he had full respect and faith in the judiciary. “We had received an order regarding this case from the NCLT Kolkata Bench on July 18. Being aggrieved with the order we had filed an appeal with the NCLAT. The NCLAT upon considering all the facts and circumstances of the case has granted a stay on the NCLT order dated July 18.”

Parasmal Lodha said, as per Supreme Court order, this is on fast track, NCLAT has dedicated September 21 full day hearing and will give its verdict in two-three days. “Therefore, the stay was given by our mutual consent until September 21.”

The issue relates to issuance and allotment of shares going back 34 years. About 30,000 shares of Peerless had been issued to friends, relatives and nominees of the Roys, promoters of Peerless, in 1988 following an annual general meeting in 1987.

Around the same time, the promoters had bought 15,626 shares of the company from Parasmal Lodha, Bhagwati Developers and other shareholders. The transactions shored up the holding of Roys in Peerless and brought down the holding of Parasmal Lodha.

The matter had landed in the Supreme Court which transferred it to the NCLT. The NCLT, last month, declared the issuance and allotment of 30,000 shares ‘void’ and ordered that the dividend received by allottee shareholders or their nominee or assigns be cancelled and returned to Peerless within 30 days.

The issuance of 15,626 shares was also declared ‘null and void’ and the holders were directed to return the shares, bonus shares and accrued dividend to previous shareholders within 30 days.

The NCLT order, it may be mentioned, puts the control of Peerless in question.

The NCLAT in its Friday's order said that the status which is prevailing today with regard to disputed shares may not be changed by either of the parties. 

The appellate tribunal has asked the counsels for the parties to ensure completion of pleading within three weeks. The Appeals have been listed for September 21.