AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2009 (11) TMI 515
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.... 100 each and a paid-up capital of Rs. 56,000. There were only two original subscribers Shrimati Satya Chowdhry, wife of late Chowdhry Brahm Prakash, the first Chief Minister of Delhi holding ten shares of Rs. 100 each and Mr. Kishor Lal Sachdeva holding five shares. Chowdhry Brahm Prakash is stated to have acquired 500 shares of the company out of the total share capital of 560 shares in the year 1962 for which three share certificates were issued. In the year 1963 he formed a society by the name of Shaheed Memorial Society (Regd.), respondent No. 1 herein, of which he became the president. The 500 shares held by him in the said company were transferred to the society of which he continued to be the president till his death. It is the claim of appellants 1 to 4 that in the year 1983 the society was allotted 150 additional shares by the said company but during the period 1968-89 these shares were transferred to different parties leaving the society with no shareholding in the company by the end of the year 1989 and the name of the society was removed from the register of shareholders of the said company. In a nutshell the claim of the appellants is that the family of appellants 2 t....
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....t it had learnt that the company had without any cause omitted the name of the society from the register of members of the company and the directors of the company had transferred the shares belonging to the society to themselves or their nominees or friends. No proper instrument of transfer duly stamped and executed by or on behalf of the society is stated to have been delivered to the company along with the certificate relating to the shares. This transfer is alleged to be irregular surprisingly on the ground that as per rule 6 of the articles and memorandum of association vested in the governing body of the society though it is really a matter of running of the society and not of the company. No Board resolution is stated to have been passed by the society for transfer of its shares. The claim was made that the name of the society should be recorded in the register of the members of the company for 61 to 560 shares. 4. This petition filed before the Company Law Board ('CLB') by the society was resisted on behalf of appellant No. 1 herein by filing a reply alleging that the society was no more a shareholder of the said company. The share scrip was stated to have been split into ....
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....ark, Delhi-110009. 11. 456-475 020 29th January, 1974 Sh. Om Prakash, 313-F, Outram Lines, Kingsway Camp, Delhi-110009 12. 476-505 030 29th January, 1974 Smt. Sharda Devi, C-2, Bali Nagar, New Delhi. 13. 506-535 030 29th January, 1974 Smt. Vidya Khera, G/68, Bali Nagar, New Delhi 14. 536-555 020 29th January, 1974 Smt. Promila Kishore, 309-F, Outram Lines, Kingsway Camp, Delhi 15. 556-560 005 1989 Sh. Chowdhry Brahm Prakash, New Delhi 5. A perusal of the aforesaid shows that these transfers have occurred from 1968 to 1974 except five shares in 1989. 6. It is important to note that in the affidavit it has been alleged that in the year 1986 the society had filed a case in the city civil court alleging that the land sold by the company does not actually belong to it and the land in question actually belonged to the society which suit had been dismissed. The relevance of this averment will be discussed later as in the course of hearing of the appeal the details were made available and the record of that suit was summoned and put to the respondents including the society. 7. The company has also alleged in the affidavit that the society was, thus, fully aware ....
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....oring the petition and directed it to be listed for final arguments on 23rd August, 2006. 10. The society and Mr. Ajay Chowdhry thereafter filed a writ petition under articles 226 and 227 of the Constitution of India on 27th April, 2007 seeking to challenge the order of the CLB dated 29th June, 2006 restoring the company petition to its original number. In the mean time subsequent orders had also been passed by the CLB numbering six on the later dates which were also sought to be challenged in this writ petition. The writ petition, however, was directed to be registered as a company appeal and assigned a company appeal number, being C.A.(SB) No. 9/2007. In the company appeal C.A. No. 723/2008 was filed. The said application in the appeal came up for consideration before the learned Company Judge on 30th April, 2009. In the said proceedings it is recorded that on the previous date of hearing the counsel for the society urged that it was not concerned with inter se disputes between the directors of the company and that irrespective of the status of Shri Ajay Yadav as to whether or not he was or is a director of the company and whether the letter dated 26th May, 2006 was issued under....
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....l representing Mr. Ajay Yadav. The vakalatnama filed by the counsel on behalf of Shri Ajay Yadav as if he was representing the company was found to be in teeth of the order of injunction and the action of Shri Ajay Yadav in signing the vakalatnama was observed to be a blatant attempt to lower the authority of the court in violation of the order dated 6th October, 2006 passed in CS(OS) No. 1906/2006. The conduct of Shri Ajay Yadav was held to be an effort to prejudice due course of judicial proceedings and would fall within the definition of criminal contempt and the matter was thereafter directed to be placed before the appropriate Bench after registering the petition as such. 12. The aforesaid detailed history was necessary to appreciate the circumstances in which CS(OS) No. 1906/2006 came to be filed in the present court, the present appeals arising from the decision on the interlocutory applications in that suit. The suit has been filed for injunction and damages. The plaint alleges that the present authorised capital of the company is Rs. 25 lakh divided into 25,000 equity shares of Rs. 100 each while the issued and paid-up capital is Rs. 24,92,000 divided into 24,920 equity s....
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....974 10 -Do- Sh. Madan Singh 1974 30 -Do- Smt. Usha Kiran 1974 30 -Do- Sh. Sushil Kh. 1974 30 -Do- Sh. Rakesh Sach. 1974 20 -Do- Smt. Promila Kish. 1974 20 -Do- Sh. Om Prakash 1974 30 -Do- Sh. H.S. Gulati 1974 30 -Do- Smt. Sharda Rai 1974 30 -Do- Smt. Vidya Kh. 1983 150 New Allotment Shaeed Mem. 1989 55 Shaheed Mem. Society Sh. J. Rai 1989 100 -Do- Sh. G.D. Sehgal The aforesaid, thus, shows that all the share transfers are stated to have occurred from 1968 to 1989. The society was stated to have been defunct without any activity for 20 years and no returns had been filed till 2005. Thereafter the filing of the company petition under sections 108 and 111(4) of the Act have been referred to and the factum of the company contesting the same as also the proceedings which transpired thereafter. The letter dated 26th May, 2006 is naturally stated to have been forged and fabricated. The company goes on to state that it received a letter dated 3rd February, 2006 from the Office of the Assistant RoC about complaints from one of the shareholders, i.e., the society. There were subsequent exchanges and correspondence in this behalf. 15. The plain....
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....ned from representing themselves as shareholders/representatives of the appellant-company till further orders. 16. The suit was resisted by the respondents. The story set up by the respondents is in the same manner as their claim set out above. In reply to paragraphs of the plaint dealing with the registered office and the increase of authorised capital all that has been stated is that it warrants no reply. It is material to once again note that para 1.5 of the plaint deals with the increase of issued capital and the respondents in response to the same have once again reiterated the aspect of their holding the share of the company which is in possession of the society. Similarly while dealing with para 1.7 of filing the balance sheet it has again been stated that the same is a matter of record. Para 1.10 deals with existing directors as per Form 32 and the defendants state that the same warrants no reply. 17. The hearing on the interlocutory applications under order 39, rules 1 and 2 of the Code, order 39, rule 4 of the Code and also under order 39, rule 2A of the Code were concluded on 9th May, 2008. The judgment on the applications for contempt pronounced on 20th April, 2009 an....
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....sed any intention of filing an appeal against the impugned order and that the then senior counsel appearing had defended the order. The new senior counsel appearing in FAO (OS) No. 423/2009 stated that the appellants were only concerned with the operative portion of the directions in the impugned order since despite vacating the order of ex parte injunction the learned Judge in the operative portion of the order had passed interim injunction against both the parties. The parties were heard on this aspect also on 14th October, 2009 when judgment was reserved. 20. A reading of the impugned judgment shows that after discussing the factual matrix the learned Judge found that this was really a fight between two groups. The appellants were stated to be fighting to get the declaration that they are the persons who alone can represent the company but they were yet to establish as to how and when they entered into the company. It is noticed that the question whether the society had sold its entire shareholding to the company was a controversy already pending decision before the CLB and, thus, there was no need to initiate an independent new suit. The purchase of shares by plaintiffs 3 and ....
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....ed on an application filed by the society itself through Mr. Sidharth Chowdhry who had filed the original application and the company petition was restored to its original number. A grievance in that behalf was raised by other group representing the society who are the respondents herein and who tried to close the proceedings that there should be no re-activation of the proceedings before the CLB. The company appeal came to be decided by the learned Judge of this court on a categorical plea of their counsel that he was not interested in prosecuting the company petition before the CLB irrespective of the fact whether the rights were recognised or not under the letter dated 26th May, 2006. It is on that condition that the petition before the CLB was directed to be treated as dismissed as withdrawn and so also the company appeal before the learned Company Judge. The result of these proceedings is that the avenue which was open to the society and the group representing it to get the question of inclusion of their names in the register of members adjudicated remained unadjudicated and closed. 24. In order to appreciate the scope of section 111 of the Act dealing with the provisions for....
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....he appellants in this behalf. It was the own case of the respondents that their name had been wrongly excluded from the register of members and, thus, they had filed the appropriate proceedings under section 111 of the Act to, get the claim adjudicated. It has obviously been a folly on their behalf not to have taken the matter to its logical conclusion where either they Would, have been able to establish their claim or the same would have been rejected. The claim stands withdrawn by them. The respondents seem to have proceeded on the premise that the letter dated 26th May, 2006 would serve their purpose. Prima facie the manner and origination of the said letter itself is not free from doubt. The claim of the respondents was yet to be adjudicated and as to how they could have held a Board meeting of the company ostensibly claiming to be the directors is a moot point. It was of course for the respondents to establish that they have been wrongly excluded. It was during the pendency of the proceedings before the CLB that unilaterally Form 32, Form 18, Form 2 and Form 5 were filed in surreptitious manner by the respondents to achieve their objective even when the petition was still pend....
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.... which time the society had no shareholding left in the company. The claim of the respondents is predicated on the society owning a part of shareholding which is not borne out of the records. This claim is also falsified by the own stand of the society in the proceedings initiated under section 111 of the Act whereby they wanted their names to be inserted in the register of members of the company. The shares have been transferred in pursuance to the transfer deeds filed. No doubt learned counsel for the respondents contended that when these documents were sought for before the CLB, they were not available and were stated to have been destroyed in fire and only some of the returns were filed but the fact remains that in the suit these documents have been filed after locating and on a perusal of the same appear to be prima facie authentic. The absence of scrutiny of these documents by the learned Single Judge has resulted in a finding that the appellant had not supported their case with documents and, thus, finding is contrary to record. We may also note that the original share certificate relied upon by the respondent has not seen the light of the day. 31. We find that there is als....
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.... non-prosecution. 34. The appellants, in our considered view, have undoubtedly been able to establish a prima facie case that they are in-charge of the company having shareholding and the society does not figure in the list of shareholders. Once the company is controlled by the appellants group, its functioning cannot be brought to a standstill by the nature of the impugned order passed whereby both the parties have been restrained from dealing with the assets of the company. This would amount to throttling the company and would cause irreparable prejudice and harm to the functioning of the company which is primarily dealing with the landed estate. The balance of convenience has to be in favour of the appellants as they have been running the show for decades and the respondents kept silent from 1989 to 1996 when for the first time they instituted the petition before the CLB claiming the exclusion of their shareholding from the register of members. The original documents filed by the appellants clearly show that after 1989 there is no shareholding reflected of the group of the respondents. Without first getting their rights to be entered into the shareholders register established t....