TaxTMI 
TaxTMI 
2015 (4) TMI 273
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....rportedly committed by the Respondent Nos.2 to 7 in the conduct of the affairs of the Respondent No. l Company (hereinafter referred to as "the Company" in short) and has sought various reliefs under Section 402 of the Act as contained in the Petition. 2.1 The undisputed facts are that the Company was incorporated on 21/9/1988 with the Registrar of Companies, Maharashtra, Mumbai, and that around 1992, the Petitioner had purchased 5 Equity Shares of Rs. 1,000/- each and further on 31/3/1993, she purchased 2000 shares of Rs. 1,000/- each, totaling to 2005 Equity Shares comprising 20% of the total paid up share capital of the Company. 2.2 It is the case of the Petitioner that on or about 15/3/2007, when she received two share-transfer forms through courier from the Company she realized that her shareholding of 505 shares of Rs. 1000/- each was sought to be transferred to the Respondent No. 3 and 1500 shares of Rs. 1000/- each to the Respondent No.4. However, she did not sign the said transfer forms as she never intended to transfer her shares, and the said unsigned original forms are in her possession. 2.3 The Petitioner has stated that she was never served with any notice of....
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....ed a letter dated 1/8/2013 to the ROC, recording therein, inter alia, that she had neither executed a share transfer form nor had executed the transfer deeds in terms of Section 108 (1) of the Act for transfer of the shares at any point of time; that the said alleged transfer, shown to have purportedly taken place in June 2007, had taken place without her knowledge or consent or authority and that the transfer, if any, has been done fraudulently and illegally; that the amount which was alleged to have been received by her towards the consideration for transfer of the said shares was in fact received by her towards part payment subject to final valuation of the shares by a Chartered Account in terms of the Articles of Association of the Company; that although the Company sent transfer deeds for her signature, the same were not signed by her; and that the said original transfer forms are still in her possession. It was further recorded in the said letter to the ROC by the Petitioner that the Respondents have filed the Company's revised Annual Returns for the year 2007 in the month of April 2013 and Form No.20B for the year 2008 only on 23/4/2012, Form No. 66 on 31/7/2012, Form 23....
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....petitioner had transferred her entire shareholding, comprising 2005 Equity Shares of Rs. 1,000/- each, in favour of the Respondent Nos.3 and 4 as shown in the following chart :- Date of transfer No. of Equity Shares transferred Distinctive No(S). Certificate No. Name of Transferee Remarks 30/6/2007 5 0031 to 0035 008 Mr. Prem Nandkumar Kalati 30/6/2007 500 2686 to 3185 0027 Mr. Prem Nandkumar Kalati The original share Certificate No. 15 got splitted into 2 new Share certificates For the purpose of transfer vide Board Resolution dated 30/6/2007 30/6/2007 1500 3186 to 4685 0028 Mr, Latit Nandkumar , Kalati 5. Referring the above mentioned, it has been pleaded that for transfer of the said shares, the Petitioner has received the consideration of Rs. 5,05,000/- for 505 Equity Shares of Rs. 1000/- each from the Respondent No.3 and Rs. 15,00,000/- for 1500 Equity Shares of Rs. 1000/-each from the Respondent No.4, i.e. totally a sum of Rs. 20,05,000/- was received by the Petitioner from the Respondent Nos.3 and 4, as is evident from the Statements of Account issued by the Union Bank of India reflectin....
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....unsel, the alleged transfer of shares is bogus, void and ultra vires, being without consideration, in violation of Articles of Association of the Company and Section 108(1) of the Act and therefore, the same cannot be recognized under law. It was contended that the name of the Petitioner has been wrongly removed from the Register of Members of the Company without sufficient cause and therefore, the Petitioner has filed this composite petition under Section 59 of the Companies Act, 2013 and Section 397/398 of the Act. The Ld, Counsel submitted that a composite petition filed under Section 59 of the Companies Act, 2013 and section 397/398 of the Act, is maintainable and it cannot be dismissed in limine at a threshold stage. 11. I have considered the rival submissions advanced by the Ld. Counsel representing the respective Parties, It is a settled proposition of law that a composite petition under Section 59 of the Companies Act, 2013 read with Section 397/393 of the Act, is maintainable as held in the case of Charanjit Khanna & Ors. v. Khanna Paper Mills Ltd. & Ors. MANU/ DE/1878/2011. It is further settled proposition of law that to determine the maintainability of the petition f....
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....ite petition, filed under Section 59 of the Companies Act, 2013 and Section 397/398 of the Act, is maintainable, 13. The Ld, Counsel appearing on behalf of the Petitioner further submitted that any transfer of shares must comply with the provisions of Section 108(1) of the Act. Furthermore, the registration of transfer of shares is only legally permissible, if a proper transfer deed in Form No.7B duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee, and specifying the name, address and occupation, if any, of the transferee, has been delivered to the company indicating the number of shares, consideration, signature of witness, stamp duty, etc. along with the share certificate duly endorsed by the company vide their Board Meeting date and authorized signature on the back of the Share Certificate. The Ld. Counsel pointed out that the Respondents have failed to show the aforesaid document having been executed by the Petitioner, and therefore, the purported transfer of shares as contended by the Respondents, is invalid, void and cannot be recognized under law. 14. In continuation of his arguments, the Ld. Counsel submitted that the shar....
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....s (Cyprus) Limited and BSEL Infrastructure Realty Limited [2010] (1) Bom. CR 333,wherein it has been held that there can be no restriction on the transfer of shares in dematerialized form or physical form, but it needs to be subject to the Articles of Association as the transfer of shares is regulated by the Articles of Association. The Ld. Counsel pointed out that the transfer of shares in the aforesaid case was in violation of Articles 17 and 19 and the Court therefore, held the transfer to be impermissible, null, void and invalid. According to the Ld. Counsel for the Respondents, in the present case also there is a complete violation of and disregard to the Articles of Association which regularize the transfer of shares. According to him, the transfer of shares as alleged, if any, is in violation of articles 15, 16, 17 and 18 therefore, the said alleged transfer ought to be declared as null, illegal, bad in law and void ab initio. 17. The Ld. Counsel next submitted that, admittedly, the payment of sum of Rs. 20,05,000/- received by the Petitioner from the Respondent Nos. 3 and 4, is not the fair market price of the shares allegedly transferred, and hence, there cannot be and ....
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....leged that the shares belonging to the Petitioner have purportedly been transferred to the Respondent Nos. 3 and 4 in the year 2007 and for which the Petitioner has received consideration of Rs. 20,05,000/-. In the year 2007, the Petitioner proposed transfer her shares to Respondent Nos. 3 and 4 at a value to be ascertained by the Statutory Auditor of the Respondent No. 1. Pursuant thereto, a sum of Rs. 20,05,000/- (Rupees Twenty lakhs Five thousand only) was transferred to the Petitioner by way of an advance payment with the remainder sum to be paid after valuation of the shares. However, subsequently, the parties could not agree upon the value of the shares and hence the proposed transfer did not proceed. Further, it was the Petitioner's husband who used to handle the Petitioner's bank accounts and it was only in late 2011 after her husband, Mr. Ramesh Grover's demise that the Petitioner became aware of the amounts in her bank account and after which ensued the correspondence between the Petitioner and the Respondents. This arrangement is further substantiated by the fact that even the receipt for Rs. 20,05,000/- (Rupees Twenty Lakhs Five Thousand Only) has been ackno....
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....period over 7 years, she cannot be allowed to challenge the said transfer of share merely on the ground that the transfer deeds were not duly executed. The Ld. Counsel further submitted that, had the intention of the Petitioner were bona fide, she would have deposited the amount of Rs. 20,05,000/- together with interest accrued thereon, before filing of this petition. But she did not do so deliberately. The Ld. Counsel submits that the Petitioner on one side wants to enjoy the amount, on the otherside, she is challenging the sale, which she is not entitled to under law. The Ld. Counsel submitted that assuming for the sake of argument, but not admitting that the amount was received by the Petitioner towards part payment of the sale consideration, she could at the most sue the Respondents for recovery of balance sale consideration. It is, therefore, argued that the Transfer of shares-in-question is valid in law and since the Petitioner was not a member of the Company on the date of filing of the Company Petition, therefore, she is not entitled to file a petition under Section 397/398 of the Act. In addition to the above, it was argued that assuming any amount remained unpaid, the all....
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....the payment of Rs. 20,05,000/- in respect of the transfer of the impugned shares in favour of Respondent Nos.3 and 4 since June, 2007. Had she any grievance regarding the non-payment of full consideration, she should not have kept silence for a period over 7 years. She ought to have refunded the said amount immediately, which according to her was paid as part payment towards the sale of shares, if she had no intention to sell the shares held by her in the Company. Retaining the said amount and utilizing the same for such a long period of 7 years and then saying that the said amount of Rs. 20,05,000/- was received being part payment of the sale consideration, cannot be accepted. I am also not inclined to accept the contention of the Petitioner's Counsel that a party who invested Rs. 20,05,000/- in the year 1993 would not agree to receive the same amount without any profit, dividend or interest accrued thereon for two fold reasons, firstly, that the said fact has not been pleaded and proved by the Petitioner that she did not get any profit, dividend or interest on the said amount in the past 10 years. Therefore, in the absence of such pleading, the other side did not get an oppor....
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....s. However, the Transferor (the Petitioner) has not signed these transfer deeds. Therefore, the question that arises for consideration now, is as to whether on account of the violation of the provisions contained in Section 108, this sale transaction cannot be recognized under law, as contended by the petitioner? 25. Before I proceed to consider the said question, it seems useful to refer few decisions rendered by the Hon'ble Apex Court on this point. I may clarify here that although these decisions were not cited at bar, yet looking at the relevancy of these decisions, on this point-in-issue, I myself thought it proper to discuss these decisions :- a. Khetan v. Kedar Nath Khetan [1997] 47 Comp Cases 185, wherein the Hon'ble Supreme Court has laid down the following ratio : "The words 'shall not register' are mandatory in character. The mandatory character is strengthened by the negative form of the language. The prohibition against transfer without complying with the provisions of the Act is emphasized by the negative language. Negative language is worded to emphasis the insistence of compliance with the provisions of the Act. The provisions contained i....
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.... was a party. Last but not the least, this argument of the Respondents cannot be brushed aside that had the intentions of the Petitioner were bona fide, she would have immediately repaid the amount of Rs. 20,05,000/-. Taking into consideration the stock of the aforestated facts, in my opinion, the Petitioner is not entitled to challenge the alleged transfer of shares-in-question on the ground of non-compliance of the provisions contained in Section 108(1) of the Act. In the case of Claude-Lila Parulekar (supra) and Mannalal Khetan(supra)the facts were that the parties had challenged the transfer of shares contending that the transfer is bad for want of compliances of Section 108 and such persons were not parties to such alienation /transfer /sale. The contention of the Petitioner, therefore, in my view is not tenable that the transfer of shares-in-question by way of sale is bad-in-law. I would further like to add here few authorities, wherein it has been laid down that where the Parties have acted upon the transaction of sale, assuming there was some irregularity, such transfer cannot be disown by a person who himself/herself was party to such transaction. a. In the case of Saja....
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.... contract are of no effect. In particular it is now clearly established that at law (as opposed to in equity) property in goods or land can pass under, or pursuant to, such a contract." (Emphasis supplied) 64. The following conclusions flow from the aforesaid discussion: a. Infringements of the instructions issued by the Reserve Bank of India under the Banking Regulation Act prohibiting the banks from entering into buy-back arrangements do not invalidate such contracts entered into between the banks and its customers. b. The ready-forward contract is severable into two parts, namely, the ready leg and the forward leg. The ready leg of the transaction having been completed, the forward leg, which alone is illegal, has to be ignored. c. With the ready leg having been performed the illegality of the forward leg contained in the agreements cannot affect the transfers which had already taken place. d. Murari Mohan Kejriwal & Ors. v. Shree Hanuman Cotton Mills Ltd. & Ors. [2013] 116 CLA 50 (CLB). In this case too the shares were transferred without conjoining with the provisions contained in Section 108(1) of the Act and the issue came to be considered by the CLB, Principa....
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....nd hence liable to be dismissed. Elaborating the said plea, the Ld. Counsel on behalf of the Respondents, submitted that the impugned shares were transferred by the Petitioner to the Respondent Nos.3 and 4 in the year 2007. However, the Petitioner has filed the present petition in the year 2014 i.e. after a lapse of a period of 7 years. Referring to the correspondences made by the Petitioner with the Company and the Registrar of Companies, the Ld, Counsel submitted that the Petitioner, for the first time, has made these correspondences in 2012. The Ld. Counsel added that the Petitioner has nowhere shown that she has been diligent enough to enforce her claim for rectification of Register of Members through a competent forum within the time prescribed in the statute. According to the Ld, Counsel, admittedly it was on 23/04/2012 that the Petitioner lodged her first complaint before the ROC, Referring the decision in the case of Jitendra Kumar Jain v. Mangaiore Refinery reported in 2006 133 Comp Cas 566 CLB, the Ld. Counsel submitted that the plea of ignorance of law or seeking shelter under the correspondence exchanged with the Petitioner and the ROC would in no way constitute a suffi....
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....e Respondents did not pay any heed, the Petitioner made a complaint to the ROC in this regard vide her letter dated 26/11/2012 and requested the ROC to scrutinize the documents and returns which were filed by the Company with the ROC. Another letter was written by the Petitioner to the ROC on 1/8/2012 upon receiving an answer from the ROC vide its letter dated 3/5/2013 intimating that the Petitioner is no more shareholder of the Company, she having transferred her shares to the Respondent Nos.3 and 4. The Ld. Counsel then invited my attention to the various Annual Returns for the previous Financial Years from 2007 onwards filed by the Company with the ROC in the month April 2013 and submitted that this clearly shows the malafide and fraudulent intention on the part of the Company and its Directors i.e, the Respondent Nos.2 to 4. Inviting my attention to the Annual Returns of the Company for the F.Ys. 2007 and 2008, the Ld, Counsel submitted that the purported transfer of the shares by the Petitioner has not been shown / reflected in the Annual Returns. According to the Ld. Counsel, had the transfer of the impugned shares took place in the year 2007, this could have been shown in th....
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....g transfer of shares from you to S/Shri Lalit N. Kalati and Prem N, Kalati. Bused on the said records produced by the company, It appears that you are no longer a shareholder of the company since end June 2007 and therefore, your complaint that you have not received information/ documents from the company which a member is entitle to receive, is not substantiated. Accordingly, no action is called for and your complaint has been disposed off as closed". Dated: 3/05/2013 Sd/- ROC 36. From perusal of the above stated communication, it is thus clear that In the statutory form showing the shareholding pattern, the Petitioner's name did not exist, since 2007. Therefore, the Petitioner's assertion that she got cause of action in 2012 only is Incorrect and is liable to rejected. 37. I, therefore, hold that the petition is barred by law of limitation having been filed after expiry of 3 years. This issue is, therefore, decided accordingly. 38. Having held hereinabove that the Petitioner was not a shareholder /member since June 2007, therefore, her alleged complaint about the non receipt of the notices, with respect to the meetings/ EOGMs etc held by the Company beco....
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....s litigants who do not have any / respect for truth and who try to pollute the stream of justice by resorting to falsehood or by making misstatement or by suppressing facts which have a bearing on adjudication of the issue(s) arising in the case. b. In the case Of Manohar Lal (dead) by LRs v. Ugrasen (Dead) by LRs. And Ors. With Ghaziabad Development Authority v Ugrasen (Dead) by LRs. And Ors. [2010] 11 SCC S57, it is held as under:- 48. The present appellants had also nor disclosed that land allotted to them falls in commercial area. When a person approaches a court of equity in exercise of its extraordinary jurisdiction under Articles 226/227 of the Constitution, he should approach the court not only with clean hands but also with clean mind, clean heart and clean objective. "Equally, the judicial process should never become an instrument of oppression or abuse or a means in the process of the court to subvert justice." Who seeks- equity must do equity. The legal maxim "Jure naturae aequum est neminem cum alterius detrimento et injuriajieri locupletiorem", means that it is a law of nature that one should not be enriched by the loss or injury to another, (Vide Ramjas Foundat....