TaxTMI 
TaxTMI 
1997 (12) TMI 658
X X X X Extracts X X X X
X X X X Extracts X X X X
....lers Association Private Limited, we passed an order on October 30, 1996, incorporating therein the terms of settlement between the parties and disposed of the petition as withdrawn. However, later, respondent No. 9 sought for recalling the order on the ground that even though she was a party to the proceedings, her consent was not obtained and incorporated in the consent terms in our order and that the terms of consent, if implemented, would prejudicially affect her. Having found that the terms of compromise did affect her rights and that she was not a party to the consent terms, we recalled that order and reopened the petition for hearing on the merits. 2. When the petition was taken up for hearing, counsel appearing for the respondent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on. (i) Petitioners Nos. 4 and 5 were never registered as shareholders of the company and even allotment of shares to petitioners Nos. 1 to 3 was against the provisions of Article 5 of the articles of association of the company and as such none could be considered to be a shareholder of the company, thus not qualified to apply under Section 397/398 in terms of Section 399 of the Act. (ii) Even assuming that the petitioners were shareholders, since their shares were forfeited due to non-payment of calls, on the date of filing, they were not shareholders of the company. (iii) Even otherwise since the shares held by the petitioners were partly paid and since certain calls were already made on the shares, which remain....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t High Court in Gulabrai Kalidas Naik v. Laxmidas Lallubhai Patel [1977] 47 Comp Cas 151, he submitted that the petitioners, if they so desire to maintain the petition, should first get the matter relating to shares resolved in a Section 111 petition and then come before the Company Law Board under Section 397/398. According to him, the rectification of the register of members or enquiring into whether the shares were forfeited properly, etc., cannot be agitated in a Section 397/398 petition. Under these circumstances, he prayed that the petition should be dismissed as not maintainable. 7. Shri Atul Sharma, appearing for respondent No. 1, while adopting the arguments of Shri Sarkar, reiterated that allotment made against the provisions o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s were liable is a question to be decided which can be done only after going through the petition in full and not at the initial stage. According to him, as decided in Rashmi Seth v. Tillsoil Farms Pvt. Ltd. [1995] 82 Comp Cas 409 (CLB), enquiries regarding rectification can be made in a Section 397/ 398 petition. He also submitted, that, after the shares were forfeited, they were allotted to someone else without notice to the petitioner as contemplated under Section 110 of the Companies Act, 1956. He submitted that since the entire issue on the maintainability relates to the shareholding of the petitioner which is one of the main issues in the petition, the same cannot be decided without hearing the petition. 10. We have considered the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... whether petitioner No. 5 is a shareholder or not even though we find share certificates in his name. 11. Section 84 of the Companies Act, reads as follows : "A certificate, under the common seal of the company, specifying any shares held by any member shall be prima facie evidence of the title of the members to such shares". 12. In the present case, the petitioners are in possession of the share certificates issued in their name collectively indicating that they are holders of 4,132 partly paid shares. Thus, the first limb of Section 399 is prima facie established that they are members of the company, notwithstanding their names having been omitted from the register of members. Even though Shri Sarkar contended that, as per ....