TaxTMI 
TaxTMI 
2008 (2) TMI 907
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.... the case arc: The company has earlier filed a petition under Section 111A of the Act seeking for rectification of the register of members of the company to remove the names of respondents 1 to 16 on the ground that they had, by acting in concert, acquired shares in the company in violation of the provisions of SEBI (Substantial Shares Take Over) Regulations, 1999. In that petition I passed an order on 14.11.2006 that any further acquisition of shares by the respondents would be subject to the final order on the petition. However, I declined to pass an order of restraint against the respondents from transferring their shares impugned in the petition. The said petition is pending disposal. During the pendency of the said petition, some of the respondents therein had transferred their shares to respondents 18 to 27 herein. The company has filed the instant petition thereafter. At the time of mentioning the petition, in terms of Section 250(2) of the Act, the petitioner sought for restraining the respondents from transferring their shares and accordingly, I passed an order on 12.7.2007 directing the respondents to maintain status quo with regard to their shareholdings in the company. ....
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....rant of loans from one company to another, that majority of these respondent companies have a common registered office and most of them have common directors, common bank account and common auditors etc., thus clearly indicating the possibility of a connection among all the respondents. However, the company has not been able to find out all the facts with regard to the commonality of all these respondents other than finding out that the 1st respondent has close connections with all the other respondents. During the pendency of the proceedings under Section 111A, respondents 2 to 5, 7, 8, 9, 11 and 14 have sold their entire shareholdings to respondents 18 to 27. The quantum of shares so transferred is 134270 shares. In spite of huge number of shares involved, the price at which the shares were transferred is more or less static clearly indicating that the transfers were all concerted and not on arms length basis again indicating the close connection between the transferors and the transferees. 4. Therefore, the company has invoked the provisions of Section 247/250 of the Act to find out the relevant facts about the shares. The promoters hold about 55% shares and are in the manage....
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....nce to Section 250(1) of the Act and even in that case the petitioner has to establish that there are circumstances in terms of cither Section 247(1A)(a) or (b) of the Act. In the present case, it is not the case of the petitioner that the respondents in the petition do not hold shares in their own name or that they are not the true owners of the shares. It is also not the case of the petitioner that funds for acquisition of shares by these respondents have been provided by someone else. It is to be noted that up to 17 paras of the petition, same averments as in Section 111A petition have been reproduced. The complaint in the petition is that respondents 1 to 17 were acting in concert and the challenge was that as a whole, they were holding excess of 15% shares in the company. The true identity of the respondents had not been challenged in that petition. In the present petition, there is no allegation against the 1st respondent. Further, a company by itself cannot file a petition seeking to find out the true persons holding its own shares. As is evident from para 21 of the petition, the main allegation in this petition is that there is inter relationship between the transferors and....
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....ed shares. It is to be noted that when the petitioner sought for such a restraint order in the proceeding under Section 111A, the Board had declined to grant the same. Now the petitioner cannot seek the same relief in the present petition. 6. Shri Sen, Sr. Advocate, appearing for respondents 6 & 10 submitted: Both these respondents arc investment companies. In the petition, there are no allegations against these respondents nor any attempt has been made to connect these respondents with the 1st respondent. It is on record that CLB has not suo moto invoked the provisions of Section 247 in the proceedings under the pending petition under Section 111A of the Act. This petition has been filed with an oblique purpose of putting pressure on his clients and not for a bona fide purpose. It has to be necessarily examined whether the petitioner has filed this petition with a bonafide purpose of public interest. The only reason as given by the petitioner for adding his clients as respondents is that they supported the 1st respondent in the AGM and they also intervened in the civil suit filed by the 1st respondent in Calcutta High Court. In paragraph 4 and 8 of the petition, the petitioner ....
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....y. 7. Shri Pratap Chatterjee, Sr. Advocate, appearing for 19th respondent submitted that his client docs not have any connection with any other respondent and to that effect his client has filed an affidavit also and therefore the question of ordering any investigation against his client docs not arise. 8. Shri R.K. Mitra, Advocate for respondents 23 to 26 submitted that he was adopting the arguments of the Counsel for other respondents. He further submitted that his clients being individuals are only investors collectively holding only about 2000 shares. There is no averment in the petition that these respondents are in any connected with the 1st respondent and that with the negligible shareholding they can never influence the affairs of the company. 9. Shri Rujdeep Choudhary, Advocate, appealing for respondent Nos. 12, 13, 15 and 16 submitted: The 13th respondent acquired shares only after the AGM. There is no specific allegations against the other respondents except to show that some of them have common diuvtors. Even then, there is no allegation that these respondents are in any way connected with the 1st respondent. 10. In rejoinder, Slui Sarkar submitted: The peti....
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....n this behalf that there is good reason to find out the relevant facts about any shares (whether issued or to be issued) and the CLB is of the opinion that such facts cannot be found out unless restrictions specified in Sub-section (2) are imposed, the CLB may, by order, direct that the shares shall be subject to restriction imposed by Sub-section (2) for such period not exceeding 3 years, as may be specified in the order". 12. The issue as to whether an application/petition could be independently filed under Section 250 has been examined by this Board in Assam Brook case (supra). On a detailed examination, this Board came to the conclusion that a petition could be filed under Section 250(1) independently provided there is enough material to order an investigation in terms of Section 247(1A). In other words, unless there are circumstances warranting an investigation in terms of Section 247(1A), a petition under Section 250(1) cannot be maintained. No petition can be filed under Section 250(1) only for the purpose of getting the relief as specified in Sub-section (2) unless there arc circumstances suggesting that an investigation under Section 247(1A) is called for. 13. The pe....
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....s intended only for imposition of restrictions, if warranted, till the investigation is completed. The report would be useful only in the petition filed by the petitioner under Section 111A. As a matter of fact, that what even Shri Sarkar submitted. It is to be noted that in terms of Section 111A, this Board has been vested with powers to make such enquiry as it thinks, thus clothing this Board with wide sou moto inquisitorial power. When such a power is available to this Board under Section 111A itself, the petitioner need not to have filed the instant petition. The purpose and object of filing this petition is evident from the circumstances of this case. During the course of the proceedings in the petition under Section 111A, the petitioner specifically sought for restraining the respondents from transferring their shares impugned in that petition, which I declined in view of not only that no such power is vested with this Board under Section 111A but it specifically provides that there is no restriction in the right to transfer the shares impugned in that proceeding. By filing this petition invoking the provisions of Section 247/250, the petitioner has sought for restraining the....