TaxTMI 
TaxTMI 
2015 (10) TMI 955
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....re that the appellants were the Directors of respondent No.1 company. On 30.07.2006, the appellants entered into an agreement with respondent No.2 for transfer of all their shares to him and his relatives. It is the pleaded case of respondent No.2 that in pursuance of the said agreement, 2,50,000 shares were allotted to him and his relatives in the year 2008 and that on 04.02.2008, share transfer deeds were executed in favour of respondent Nos.3 to 5. The appellants have, however, approached the Company Law Board at Chennai, by way of C.P.No.34 of 2011 under Sections 397 and 398 read with Section 111A, 108, 237, 402 and 403 and Schedule XI of the Companies Act, 1956 (for short the Act) for multiple reliefs, the main relief being to declare ....
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....d share transfers are wholly fraudulent as the contesting respondents have failed to pay the balance sale consideration of about Rs. 8 to 9 crores. He has further submitted that as admittedly share transfers have purportedly taken place on 04.02.2008, the contesting respondents have to explain as to how to a tune of 5,70,065 shares were allotted in favour of appellant Nos.1 and 2 on a subsequent date i.e., 06.03.2008. Learned counsel has also invited this Courts attention to the information furnished by the new management to the Registrar of Companies to the effect that the transfer of shares has taken place on 10.09.2010, which is in conflict with their stand that the share transfers have taken place on 06.03.2008. He has also pointed out ....
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....ion that the civil Court alone has jurisdiction to enquire into the allegations of fraud. I have carefully considered the submissions of the learned counsel for the parties and perused the record. Section 111A (3) of the Act conferred jurisdiction on the Company Law Board to entertain an application made by the depository, company, participant or investor or the Securities and Exchange Board of India and direct any depository or company to rectify its register or records if it finds that the transfer of shares or debentures is in contravention of any of the provisions of the Securities and Exchange Board of India Act, 1992 or regulations made thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985 or any other law for t....
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....alone their holding 1/10th of the issued share capital. While the appellants admit entering into the agreement for share transfer and also receipt of part consideration, it is the pleaded case of respondent Nos.2 to 6 that as per the said agreement, entire sale consideration is paid through various cheques and also through cash for certain minor payments and thereafter share transfer was effected on 06.03.2008 with the consent of appellant Nos.1 and 2. Sri S.Ravi, learned senior counsel, has placed before the Court original share transfer records which purportedly contain the signatures of appellant No.1. Appellant Nos.1 and 2, however, denied such share transfer taking place. Thus, in effect, the dispute between the parties mainly centers....
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....ers of a company, or (ii) after having been entered in the Register, is, without sufficient cause, omitted therefrom; or (b) default is made, or unnecessary delay takes place, in entering on the Register the fact of any person having become, or ceased to be, a member; the person aggrieved, or any member of the company, or the company, may apply to the Court for rectification of the Register. Section 111A of the Act, to the extent it is relevant, reads: 111A. (1) In this section, unless the context otherwise requires, company means a company other than a company referred to in sub-section (14) of Section 111 of this Act; (2) Subject to the provisions of this section, the shares or debentures and any interest therein of a company shall be....
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....to rectify the Register without sufficient cause. While dealing with Section 155 of the Act, the Supreme Court held that if the question raised before the Court was truly one of the rectification, all matters raised in that connection should be decided by the Court under the said provision and that if it finds adjudication of any matter not falling under it, it may direct a party to get his right adjudicated by the Civil Court and that unless the jurisdiction is expressly or implicitly barred under the statute, for the civil Court would have jurisdiction. From the conspectus of the facts recorded above, it is clear that many disputed issue(s) need to be resolved by the Company Law Board before exercising its jurisdiction to direct rectific....