TaxTMI 
TaxTMI 
2019 (5) TMI 521
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....NCLT', in short) in Company Petition 27(ND) of 2015. The Appellants claim to be shareholders as well as Directors in Nulon India Limited (hereafter referred as - 'Company') -arrayed as original Respondent No.1 (OR1) in the Company Petition. It is stated that the Company was incorporated on 08.05.1987. It appears that the first Directors were Respondent No.3 - Mahabir Prasad Golyan (original Petitioner No.2) and the Appellant No.2 - Krishan Kumar Golyan (original Respondent No.3 - OR3) and one L.K. Bajoria, said L.K. Bajoria resigned as Director on 27.07.1995. It is stated that the Appellant No.1 - Smiti Golyan (Original Respondent No.2 - OR2) was then inducted as Director. 2. We will refer to the parties in the manner in which they have been arrayed before NCLT and as reflected in the Impugned Order, which referred to the Amended Petition. It seems that earlier only OP1 - Yash Golyan filed Petition and then by amendment, his grandfather and grandmother appear to have been added as Petitioners with him. OR2 and 3 are admittedly parents of OP1 - Yash Golyan. OP2 and 3 are parents of OR3 Krishan Kumar Golyan. 3. According to the Appellants, OP2 - Mahabir Prasad Golyan decided th....
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....the Appellants, the approved balance sheets along with compliance certificate and audit report was filed by the Company on 27.10.2014 before Registrar of Companies and Annual Return was filed on 25th November, 2014. Subsequently, a mistake was detected as transfer of aforesaid shares was not reflected in the Annual Return and the rectification letter dated 4th December, 2014 along with list of shareholders duly signed by OP2 - Mahabir Prasad Golyan and the Appellant No.1, was filed on 6th December, 2014 with the Registrar of Companies. Revised Annual Return was accepted by ROC. The Appellants claim that the original Petitioners were aware of all this. The Appellant No.2 shifted from jointly owned and possessed family bungalow in February, 2015 due to family reasons. It is also claimed that when the financial year was approaching on 31.03.2015, Accountant carried the complete ROC file containing all share transfer deeds, original minutes register and miscellaneous accounts to CA on the evening of 25.03.2015 on his motorcycle but the bundle containing the documents was lost somewhere on the way and police complaint was filed in Police Station, New Friends Colony on 26.03.2015. The Ap....
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.... not to adjudicate on the ownership of the disputed shares. 7. Judgement in the matter of "Vasudev Ramchandra Shelat" (supra) has been discussed by the Hon'ble Supreme Court in the matter of "LIC" (supra). In para - 80 of the Judgement in the matter of "LIC", Hon'ble Supreme Court discussed how in the Judgement in the matter of "Vasudev Ramchandra Shelat" two statements of law were reconciled. It was observed:- "The two statements of law were reconciled by the court and its was stated, "the transferee under a gift of shares, cannot function as a shareholder recognised by Company Law until his name is formally brought upon the register of a company and he obtains a share certificate as already indicated above. Indeed, there may be restrictions on transfers of shares either by gift or by sale in the articles of association". It was pointed out that, "a transfer of 'property' rights in shares, recognised by the Transfer of Property Act, may be antecedent to the actual vesting of all or the full rights of ownership of shares and exercise of the rights of shareholders in accordance with the provisions of the Company law," and that while transfer of property in general was no....
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....rightly claim that all due procedure under the Companies Act was followed for omitting the name of OP1 and entering the name of OR2 in the register of members. Thus, it is necessary to analyse the facts of the present matter and the evidence to arrive at a decision. 8. Before discussing the facts and the evidence, it would be appropriate to also refer to Judgement in the matter of "Ammonia Supplies Corporation (P) Ltd. Versus Modern Plastic Containers Pvt. Ltd. and Others" (1998) 7 SCC 105. That was a matter where Hon'ble Supreme Court was dealing with Sections 155 (the predecessor of Section 111) and 466 of the Companies Act, 1956. With reference to rectification, it was observed by the Hon'ble Supreme Court in that matter in paragraphs - 27 and 28 of the Judgement as under:- "27. In other words, in order to qualify for rectification, every procedure as prescribed under the Companies Act before recording the name in the Register of the company has to be stated to have been complied with by the applicant - at least that part as required by the Act - and assertion of what has not been complied with under the Act and Rules by the person or authority of the respondent-Comp....
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....e Appellants (OR2 and 3) only because they were in the management of the Company and so could do it. According to the Counsel for original Petitioners, OP1 noticed somewhere in February, 2015 that his share certificates were missing and approached the Company for duplicate shares and official - Mr. Ajay Sharma of the Company had informed that duplicate shares will be issued on compliances. The OP1 executed necessary documents for issue of duplicate shares but then noticed revised Annual Return being filed which fraudulently showed transfer of shares. OP1 never signed any transfer deed in respect of 4,66,600 shares in favour of Appellant No.1 - Smiti Golyan. The impugned transfer of shares has been effected contrary to provisions of Section 108 of the old Act. According to the original Petitioners, initially, the Appellants took the stand that transfer of shares were effected in proper manner as per normal process and family arrangement and subsequently, claimed loss of bundle containing attested documents being lost on motorcycle in Noida. The alleged complaint to Police dated 26.03.2015 was never followed up. It is stated, that the Appellants also relied on several affidavits to c....
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....e name of OP1 - Yash Golyan, is not in dispute. It is not in dispute that after the alleged AGM held on 30.09.2014, when the balance sheet along with compliance certificate and audit report was filed with ROC on 27.10.2014 also, the name of OP1 reflected as shareholder of these shares. Of course, the Appellants claimed that this happened by mistake and they filed rectification letter dated 4th December, 2014. The Appellants claimed that they had rectified the Annual Return because of mistake and wanted to refer to Page - 236 of the Appeal to say that the list of shareholders as on 31.03.2014 had the other signature of OP2 - Mahabir Prasad Golyan. 11. When we have perused the said Page - 236, we find while the signature of Appellant No.2 - Krishan Kumar Golyan can be read, the other signature is not at all legible. The Counsel for Respondents - original Petitioners has argued that they disputed this document and the signature because it is an odd document in the Returns filed where everywhere else, the Appellants were signing. If the Appellants want to read Page - 236 of the Appeal in their favour, the original Petitioners are pointing out Page - 182 of the Appeal, which is also ....
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....his right. They were necessary to enable the donee to exercise the rights of the shareholder. The mere fact that such transfers had to be recorded in accordance with the company law did not detract from the completeness of what was donated." The Hon'ble Supreme Court accepted the argument in that matter that even in the absence of registration of the gift deed, the delivery of the documents mentioned above to the donee with the clear intention to donate, would be enough to confer upon the donee a complete and irrevocable right of the kind indicated above, in what is movable property. 14. We are keeping in view the above distinction as can be seen from the Judgements referred by the learned Counsel for the Appellant. It is stated that Civil Suit is pending for declaration sought by the Appellant No.1 - Smiti Golyan that she owns the disputed shares as they have been gifted to her. 15. In the present matter, however, when it is an admitted fact that the shares stood in the name of OP1- Yash Golyan and he filed the Company Petition claiming that his shares in the Company had been illegally shown as transferred and the Register of members was required to be rectified, what we ....
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....hat 4,66,600 Equity shares of the company were transferred to Mrs. Smiti Golyan in Financial Year 2013 -14 as per normal process even though the rectification with ROC was filed on later date. Shri M.P. Golyan, Director of the company is fully aware about the transfer of your share from your name to Mrs. Smiti Golyan's name since he had signed the list of shareholder of the company as on 31.03.2014 which was much after the said transfer. It was the usual normal & general practice known to all Directors of the company about the manner of transfer of share from one name of family member to another name of family member as a part of family arrangement & understanding for convenience sake which practice was adopted for other group companies also to the knowledge of Shri M.P. Golyan. Besides the above you were also fully aware about this normal practice of the family for transfer of shares from one name to another & likewise you were aware of the said transfer of Shares to your mother Mrs Smiti Golyan and hence raising of this issue is mala fide & after thought." 17. Thus, if the above contents are seen, the initial stand taken by the Appellants who have been admittedly managing the ....
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....estaurant business was set up; that there were losses and claimed that the OP1 started feeling guilty and remorse. It is then pleaded:- "petitioner No.1 thought it fair to gift the shares held by him in the two companies i.e. Nulon India Ltd. and Nulon Global Limited to his mother i.e. respondent no.2 in January 2014 on the upcoming occasion of silver anniversary celebration of his parents in February 2014 in Koh Samui, Thailand. Petitioner No.1 also informed all family members that said shares were of no use for him as he was not interested in the running and affairs of any of the companies and neither he was Director nor was involved in day to day affairs of Respondent No.1 at any point of time. The gifted shares alongwith transferred deeds were handed over by petitioner No.1 to his mother i.e. respondent No.2 in January 2014 which were lodged by her with respondent No.1 in the end of January 2014 and ultimately were transferred in her favour on 14.02.2014." The Reply then referred to the OP1 along with other sisters and other relatives celebrating the silver anniversary at Thailand and claimed that OP1 had informed the gathering about he gifting the shares and that s....
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....an and few friends had gone to Koh Samui, Thailand for about four nights in February, 2014 and all celebrated the occasions happily and defendant No.1 informed everybody present in the gathering about his gifting of shares to his mother as gift for the occasion which as per his insistence were to be transferred on 14.02.2014 in the name of the plaintiff so that he could proudly and happily announce the same before the gathering on 15.02.2014 i.e. the day of silver anniversary." [Emphasis Supplied] It appears that subsequently, the Plaint in Civil Suit was rejected under Order - VII, Rule 11 of the Code of Civil Procedure, 1908 on 06.08.2016 as the Plaintiff failed to correct valuation. It appears yet another suit numbered as 698/2017 has been filed sometime in July, 2017 (Annexure - A2 with Diary No.8195) and this time, similar para No.5 as was pleaded in the earlier suit, was repeated but with changes. This time, it was mentioned that:- "the defendant No.1 thought it fair to gift the shares shown in his name in the above said two companies to plaintiff in January, 2014 on the upcoming occasion of silver anniversary celebrations of his parents in February, 2014....
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....e with complete share transfer deeds and other documents and also the minutes of meetings. He claimed that he was carrying the same on his motorcycle to meet the CA and found the whole bundle missing and could not locate the same. He claimed that the bundle slipped away somewhere and he could not locate the same. The letter did not seek for any search and merely informed the SHO that FIR was being lodged "to take on record the same". Now if this FIR is kept in view and we peruse Page - 260 of the Appeal, we have a copy of e-mail from the OP1 - Yash Golyan sent to Ajay Sharma as well as the Appellant No.2 and others, attaching a letter sent by him that he had applied for duplicate share certificates and now was shocked as it came to his attention that his 4,66,600 equity shares have been transferred in the name of Mrs. Smiti Golyan, and informed that he had never sold or transferred his shares to Smiti Golyan or to anybody else. He called upon the Directors to immediately inform with documentary proof as to how and on what basis/documents his shares had been transferred to Smiti Golyan. He even alleged fraud and conspiracy between the two Appellants. Page - 260 read with that Page -....
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....n the basis of law as it stood before coming into force of New Act. 21. In para - 31 of the Judgement in the matter of "Ammonia Supplies" portions of which we have reproduced above, the Hon'ble Supreme Court had observed that there was nothing under the Companies Act expressly barring the jurisdiction of the Civil Court and thus mandated that the "Court" should examine whether prima facie what is said is a complicated question or not. The earlier Section 10 GB of the companies Act, 1956 relating to Civil Court not to have jurisdiction, does not appear to have been enforced but the position has now changed with coming into force of Companies Act, 2013 and Section 430 of the Act providing that Civil Court would not have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act. Under the new Companies Act - Section 59, it is for the NCLT to consider if the name of any person is "without sufficient cause" entered or omitted from the register of members of a company. Recently in the matter of "Shahi Prakash Khemka (Dead) Through LRs. and Another Versus NEPC Micon (Now called N....