2005 (8) TMI 724 - Board - Companies Law

CLB mandates civil suit for complex disputes involving loan, share transfers, forgery allegations

The Company Law Board (CLB) decided that the disputes regarding loan repayment, share certificates lodgment, title transfer of shares, authenticity of ... - Issues Involved:1. Repayment of the loan amount by the Company.2. Lodgment of the pledged share certificates for transfer.3. Title transfer of the impugned shares to the petitioner.4. Authenticity of transfer entries and rubber stamp impressions on share certificates.5. Return of original share certificates to the petitioner.6. Genuineness of the correspondence among the petitioner, Company, and VINMAR.Detailed Analysis:Repayment of the Loan Amount:The petitioner extended a loan of Rs. 10 lakhs to the Company against a pledge of 1,04,200 equity shares. The petitioner claims the Company failed to repay the loan in full, leaving a balance of Rs. 6 lakhs plus interest. The Company contends it repaid the entire loan in installments, including payments made through third parties and cash, which the petitioner denies. The Company did not provide specific dates or witnesses for these payments. The lack of detailed evidence and the subsequent actions of the second respondent, including sending a demand draft of Rs. 17.96 lakhs to the petitioner, suggest the loan was not fully repaid.Lodgment of the Pledged Share Certificates for Transfer:The petitioner lodged the share certificates and transfer deeds with the Company through VINMAR, as evidenced by various communications. However, discrepancies exist regarding the number of shares and transfer deeds lodged. The petitioner claims 1,05,200 shares were lodged, while VINMAR initially forwarded 86,400 shares. The communication from the Transfer Agents and subsequent actions by the petitioner raise doubts about the lodgment process. The Company's acknowledgment of receipt of the share certificates from VINMAR further complicates the matter.Title Transfer of the Impugned Shares:The petitioner asserts that the shares were transferred to his name and returned by the Company. However, the Company disputes this, alleging the transfer entries and rubber stamp impressions on the share certificates are fabricated. The petitioner's actions, including selling 1,000 shares and attempting to dematerialize others, indicate he believed the shares were transferred. Yet, the Company's consistent denial and the lack of clear evidence supporting the petitioner's claim create substantial doubt.Authenticity of Transfer Entries and Rubber Stamp Impressions:The Company alleges the transfer entries and rubber stamp impressions on the share certificates are forged. The petitioner provided the original share certificates during the hearing, but discrepancies in the size and appearance of the rubber stamp impressions raise questions about their authenticity. The communication from the Company in June 1999, stating the transfer entries are not genuine, supports the Company's claim. The ongoing criminal case for forgery and cheating further complicates this issue.Return of Original Share Certificates:The petitioner claims the Company returned the original share certificates after transferring them to his name. However, the Company denies this, and the inconsistencies in the petitioner's evidence, including the lack of forwarding letters and the use of plain paper for critical communications, cast doubt on this claim. The petitioner's inability to produce original documents requested by the second respondent further weakens his position.Genuineness of the Correspondence:The petitioner provided various communications to support his claims, but the Company alleges these are fabricated. The discrepancies in the content, format, and signatures of these communications, along with the lack of postal acknowledgments, suggest they may not be genuine. The petitioner's reliance on these disputed documents and the Company's consistent denial highlight the need for a thorough investigation.Conclusion:Given the complexity of the disputes, including allegations of forgery and fabrication, the Company Law Board (CLB) decided that these issues cannot be resolved through summary proceedings under Section 111A of the Companies Act, 1956. The proper course of action is to relegate the parties to a civil suit where a detailed investigation and trial by evidence can occur. The CLB's decision aligns with judicial precedents emphasizing the need for civil suits in cases involving serious disputes and allegations of fraud. The company petition and related application are disposed of, with no order as to costs.