NCLAT Stays NCLT Order Calling Peerless Stock Award “Void”

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The National Company Law Appeal Tribunal (NCLAT) has suspended an order issued by the Kolkata Court of the National Company Law Tribunal (NCLT) that had characterized the 1988 allotment of shares to the Roys of Peerless General Finance & Investment as ‘void’ and ordered the cancellation.

In an order issued on Friday, the appeals tribunal said the contested order dated July 18, 2022, passed by the NCLT, is stayed until further notice.

He said: ‘By the contested order since the NCLT dealt with approximately 30,000 shares which were issued long ago during the year 1987-88, on the face of it we are of the opinion that it is not is that passing a ‘standstill quo’ order may not serve the purpose. We are of the opinion that for the duration of the appeal, the impugned order will remain suspended. »

Jayanta Roy, MD of Peerless, said he fully respects and trusts the justice system. “We had received an order regarding this matter from the NCLT Kolkata Bench on July 18. Being aggrieved by the order, we filed an appeal with the NCLAT. The NCLAT, after considering all of the facts and circumstances of the case, has granted a stay of the NCLT’s order dated July 18.

Parasmal Lodha said that as per the Supreme Court’s order, the proceedings are expedited, the NCLAT has devoted a full day of hearings to September 21 and will deliver its verdict in two or three days. “Therefore, the reprieve has been granted by our mutual agreement until September 21.”

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

Around the same time, the promoters had purchased 15,626 shares of the company from Parasmal Lodha, Bhagwati Developers and other shareholders. The transactions boosted Roys’ stake in Peerless and dropped Parasmal Lodha’s stake.

The case landed in the Supreme Court which transferred it to the NCLT. The NCLT last month declared the issue and allotment of 30,000 shares “cancelled” and ordered that the dividend received by the beneficial shareholders or their nominees or assigns be canceled and returned to Peerless within 30 days. .

The issuance of 15,626 shares was also declared “null and void” and holders were asked to return the shares, free shares and accrued dividends to previous shareholders within 30 days.

The NCLT order, it may be mentioned, calls into question the control of Peerless.

The NCLAT, in its order on Friday, said the status that prevails today with respect to the disputed actions cannot be changed by either party.

The appeal tribunal asked counsel for the parties to ensure that the pleadings are completed within three weeks. The calls were listed for September 21.

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