2017 (1) TMI 743 - Tri - Companies Law

Tribunal dismisses Company Petition for lack of standing, directs parties to pursue full trial in Civil Court.

Mrs. Sadhna Bagla Versus Upper India Cold Storage Limited and Others

Mrs. Sadhna Bagla Versus Upper India Cold Storage Limited and Others - TMI Issues Involved:1. Maintainability of the Company Petition in view of the pending civil suit.2. Locus standi of the Petitioner to maintain the petition under Sections 397 and 398 of the Companies Act, 1956.3. Consequential orders to be passed in the Company Petition.Detailed Analysis:I. Maintainability of the Company Petition:The Tribunal examined whether the Company Petition was maintainable given the pending civil suit (OS No. 313 of 2014) in the Civil Court, Kanpur. The civil suit and the Company Petition were found to involve substantially the same issues, particularly concerning the non-transmission of 40497 shares from RP Bagla to BP Bagla and allegations of fraud and manipulation of the Members’ Register. The Tribunal noted that the reliefs claimed in the Company Petition, such as rectification of the Register of Members and allegations of oppression and mismanagement, were intricately linked to the disputed shares and required a full-dressed trial, which was beyond the Tribunal's jurisdiction. The Tribunal cited the Supreme Court's decision in the Ammonia Supplies Corpn. (P.) Ltd. case to emphasize that complex issues of fraud and title should be adjudicated by a Civil Court.II. Locus Standi of the Petitioner:The Tribunal assessed whether the Petitioner had the locus standi to maintain the petition under Sections 397 and 398 of the Companies Act, 1956. The Petitioner, Smt. Sadhna Bagla, claimed to be the legal heir of BP Bagla and sought the transmission of shares held by RP Bagla. However, the Tribunal found that the entitlement of BP Bagla to the 40497 shares was never acknowledged by the Respondents and was under dispute. The Tribunal emphasized that the Petitioner was not a 'member' as defined under Sections 397 and 398, as her name was not entered in the Register of Members. Additionally, the Petitioner did not satisfy the minimum eligibility criteria under Section 399, as she held only 500 shares, representing less than 1/10th of the total issued share capital. The Tribunal referred to the Supreme Court's decision in World Wide Agencies Pvt. Ltd. vs. Margarat T. Desor and other relevant case law to conclude that the Petitioner lacked the requisite standing to file the petition.III. Consequential Orders:Given the findings on the maintainability and locus standi, the Tribunal concluded that the Company Petition was not maintainable. The Tribunal held that the issues of fraud, manipulation, and entitlement to shares required adjudication by a Civil Court. Consequently, the Tribunal allowed the Company Application No. 217 of 2014 and dismissed the Company Petition No. 115 (ND) of 2014. Each party was directed to bear its respective costs of the proceedings.Conclusion:The Tribunal dismissed the Company Petition on the grounds that the Petitioner lacked the locus standi and that the issues involved required adjudication by a Civil Court. The Tribunal emphasized that complex issues of fraud and title could not be decided in a summary enquiry by the Tribunal.