TaxTMI 
TaxTMI 
2018 (9) TMI 1969
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....d company in the year 2006, as "Sargam Exim P. Ltd". The name of the company was later changed to "Satori Global P. Ltd." The petitioner and respondent No. 2 (husband of the petitioner) were the original pro motor and only shareholder of the said company. (ii) The authorised share capital of the company as in the year 2006 was Rs. 2 crores (rupees two crores) divided into Rs. 20 lakhs equity shares of Rs. 10 each and the subscribed and paid-up capital was Rs. 3 lakhs divided into 30,000 equity shares of Rs. 10 each. (iii) That the main business of respondent No. 1 is to trade in paper. The company trades mainly in the paper of Yash Papers Ltd., which has its manufacturing premises at Darshannagar, Faizabad and also having its registered office at 47/81 Hatia Bazar, Kanpur-208 001, Uttar Pradesh. (iv) The petitioner was one of the promoter of the company and initially subscribed to 5,000 equity shares of company, and the remaining 25,000 equity shares of company were subscribed to respondent No. 2. (v) The petitioner further stated that despite having 5,000 equity shares, number was further increased to 39,500 and company never sent physical certi....
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....nsequently, a resignation of the petitioner was then prepared by way of fabricating the documents and using the blank signed documents of the petitioner, and the petitioner resigned from the company on December 17, 2010. It is submitted that the petitioner had no knowledge about the same and that the resignation has been prepared by the respondents acting in collusion with each other and with the sole object to oust the petitioner from the company. Furthermore, there was no occasion for the petitioner to have resigned from the company, and more particularly given the fact that the relations of the parties were not cordial at the relevant time, thereby ruling out any charity or thoughtful consideration for the respondents at all. A copy of the fabricated document being resignation of the petitioner prepared by the respondent dated December 17, 2010 along with Form 32 is marked as annexure A8. (xiii) The petitioner brought to note that the petitioner was not even available at Faizabad, Uttar Pradesh on December 17, 2010 when she allegedly signed her resignation, she had already left for Kolkata on December 16, 2010 itself and came back on February 1, 2011 only (proof of the ....
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....the financial year ending on March 31, 2012 and the list of shareholders of company are collectively marked as annexure A14). (xix) Further stated that the shares were also transferred to some other persons inter se, which is apparent from the list of shareholders of respondent No. 1 as on September 29, 2012. (A list of shareholders of respondent No. 1 as on September 29, 2012 is marked as annexure A15) (xx) However, it is extremely important to note that respondent No. 2 and his family exercise considerable clout in the entire Faizabad and they made sure that the complaints made by the petitioner never saw the light of the day. They were successful in manipulating the entire process, and the police never took any action, whatsoever, on the complaint filed by petitioner. (xxi) A subsequent complaint once again was filed by the petitioner on August 13, 2011 however, to the petitioner's knowledge, the police has done nothing in the said complaint as well. A copy of complaint dated August 13, 2011 is marked as annexure A11. (xxii) According to the articles of association of the company, clause 16 provided for transfer of shares by way o....
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....1, 2007. (xxvii) The audited balance-sheet as on March 31, 2007 reflects that the issued, subscribed and paid-up share capital of the company comprising 40,000 equity shares of Rs. 10 each fully paid-up and 9,00,000 equity shares of Rs. 10 each called up and bid of for Rs. 2.50 each. (xxviii) After that, in the meantime, since the call made on the unpaid shares amounting 9,00,000 in number was not paid, the said shares were forfeited by the company. No claim or dispute has been raised by the concerned shareholders holding those 9,00,000 equity shares, whose shares were forfeited by the company on account of non-payment of call made. (xxix) Admittedly as on September 25, 2010 as per Form 20B, the petitioner was holding more than 98 per cent. of the shareholding of company by way of holding 39,500 equity shares in her name. The remaining 500 shares were being held by respondent No. 4. (xxx) It is further submitted that the relations between the parties turned sour in the year 2010 on account of matrimonial dispute. As a result, respondent No. 2 cleverly and clandestinely, having obtained signatures of the petitioner on blank papers under threat and....
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....000 equity shares. Subsequently 24,500 equity shares were transferred by respondent No. 2 to the petitioner and 500 equity shares to respondent No. 4 on October 30, 2006. Then there was an allotment of 10,000 equity shares on February 20, 2007 to the petitioner. Then the shareholding on February 20, 2007 emerged as under : (1) 5,000 + 24,500 + 10,000 = 39,500 equity shares Shailja Krishna (petitioner) (2) 500 equity shares Nirupama Mishra (respondent No. 4) : Register of shareholding of Ms. Shailja Krishna as on February 20, 2007 Sl. Nature of transaction Date of Date of sale/Transfer No. of shares Total shares 1. Share subscribed on incorporation of company. 13-4-2006 - 5,000 5,000 2. Share received on 30-12-2006 from Mr. Ved Krishna, ex-husband 30-12-2006 - 24,500 29,500 3. Share subscribed through private placement. 20-2-2007 - 10,000 39,500 Subsequently, an allotment of 9,00,000 equity shares at a premium of Rs. 40 was made on March 31, 2007 by the board, and necessary Form 2 was filed under the signature of the petitioner. It also pertinent to mention here that allotm....
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....2011. Therefore, it is wrong to say that the petitioner holds almost equivalent to 98 per cent. of the issued share capital of the company and it is patently false statement that the petitioner is entitled to make the application under section 399 to seek relief under sections 397 and 398 of the Companies Act, 1956. (iii) Since year 2006, i.e., incorporation the annual return of the company till 2013 are correct. It is wrong to say that the respondent fraudulently acting in collusion with each other has transferred the shares from petitioner to respondent No. 5. It is denied that share certificates were not handed over to the petitioner as the petitioner herself was whole-time director of the company and was responsible to hand over the share certificates to each shareholder including herself. (iv) That the petitioner was the first director of the company till she resigned from the directorship, i.e., with effect from December 17, 2010. It is not a case of the petitioner that she did not sign the resignation letter. It is not a case of the petitioner which she did not sign transfer deed and gift deed. Thus, there is no allegation and pleading that the sig....
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....aper for some other purpose. Given the fact above the alleged gift deed cannot be held good. 9. In reply to the company petition, the respondents had not uttered a single word suggesting that the alleged gift deed agrees with the articles of association. 10. It is further submitted that the respondents have placed their whole reliance on the alleged resignation dated December 17, 2010. It is further submitted that the documents above has been created by the respondents subsequently, using the signatures of the petitioners which were taken on blank papers under threat and coercion for which FIR was lodged in this regard. 11. It is further submitted the resolution of respondent No. 3 on December 15, 2010 is under challenge in this petition. The notice of the alleged board meeting was never received by the petitioner which is in contradiction to clause 16 of the articles of association. 12. It is further submitted that the alleged resolution dated December 15, 2010 is in contradiction to clause 53 of the articles of association which provides that "the corum necessary for transaction of the business at a board meeting shall be two". The alleged resolution was passed by res....
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....n and mismanagement under sections 397 and 398 of the Companies Act, 1956 ? (ii) Whether the petitioner is not eligible to present this petition under sections 397 and 398 of the Act in view of bar provided under section 399 of the Companies Act, 1956 ? (iii) Whether the alleged transfer of 39,500 equity shares dated December 17, 2010 by way of gift deed by the petitioner to her mother in law, is valid ? (iv) Whether the alleged resignation letter dated December 17, 2010 of the petitioner from the post of executive director of respondent No. 1- company is valid ? (v) Whether the alleged board resolution dated December 17, 2010 regarding acceptance of the alleged resignation of the petitioner from the post of executive director of the company is valid ? 20. Heard learned counsel for the petitioner and perused the record. Decision on issue No. 3 will be determinative factor for deciding the maintainability of the petition thus firstly we are taking issue No. 3. 21. Issue No. 3 : Whether the alleged transfer of 39,500 equity shares dated December 17, 2010 by way of gift deed by the petitioner to her mother in law, is valid ? The pe....
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....public limited company and not of a private limited company. It is, therefore, submitted that on this ground also respondent No. 1 could not have transferred the shares in favour of respondent No. 5. (vii) Respondent No. 1 has nowhere in their pleadings stated or which date was the transfer form and the alleged gift deed been produced by respondent No. 5 to give and transfer the shares in favour of respondent No. 5. It is interesting to know how the documents are procured and used to mislead the authorities and this conduct itself amounts to oppression and total mismanagement by respondents Nos. 1 to 4. (viii) Further in the application of maintainability filed by respondent No. 5 before this hon'ble Tribunal shows a Form 7C which has been filed by respondent No. 5 before the Registrar of Companies in which the reason for delay in filing the transfer form is given as "misplaced". The form mentions of the loss/misplaced of the transfer forms, gift deed and shares certificates to request the concerned authorities (the Registrar of Companies) to condone the delay and revalidate the transfer forms. On perusal of the alleged gift deed dated December 17, 20....
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....e since neither the transfer deeds can be called as a blank piece of paper nor the stamp paper can be called as a blank paper. (iv) Counsel has taken a plea that it was on account of force and coercion but no case of force and coercion has been proved till date before the competent court. (v) She has lodged FIR, and five times final report has been filed, court did not take the cognisance of any alleged force or coercion to sign the blank paper. (vi) No order by the petitioner counsel has been produced to demonstrate that the criminal court which is a competent court has recognised or accepted or taken cognisance and found respondent No. 2 guilty of force and coercion to get the blank paper signed. It is again respectfully sub mitted that this is not a forum where in a proceeding under sections 397 and 398 a case of coercion and force or any other nature has to be proved. Once a signature appears, the document cannot be ignored, which has been held by the apex court also in judgment of Grasim Industries Ltd. v. Agarwal Steel [2010] 1 SCC 83. The third last paragraph of the said judgment is reproduced herein below (page 84) : "In our opinion, when....
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....11. Therefore, the document by the company or any other authority has to be seen the law applicable on the date of lodgement of the document here application of transfer of share along with transfer deed, gift deed. Since the shares of the public limited are freely transferable and no restrictive article can be contained in the articles of association of the public limited company. The respondent has contended that the petitioner transferred her share- holding in the company by way of gift deed dated December 17, 2010 to her mother-in-law. The respondent has filed the copy of the gift deed, which contains the signature of petitioner along with the signature of two witnesses of the gift deed. The petitioner has not denied her signature on the alleged gift deed but has stated that the gift deed was signed under coercion and threat. The petitioner further claims that witnesses of the alleged gift deed are Mr. Sachin Srivastava and Mr. S. N. Sharma, both are employees of Yash Paper Ltd., of which respondent No. 2 is the majority shareholder and managing director. It is further said that she never handed over the share certificate to respondent No. 5 at the time of alleged transfe....
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.... not binding either on the company or the shareholders. On perusal of clause 16 of the articles of association, it is clear that the restriction on transfer by way of gift is permissible to certain relations only and mother-in-law of the transferor is not covered under the relations specified in clause 16 of the articles of association. Thus, it is clear that the gift of shares made to respondent No. 5, i.e., mother-in-law of the petitioner is in contradiction with clause 16 of the articles of association. It is contended by the respondent that the gift was made by the donor and donee where respondent No. 1-company has no role to play while the gift deed was made because it is a transaction between donor (the petitioner) and donee (respondent No. 5). The gift deed, certified copy of gift deed and transfer deed in original and share certificate were lodged with the company in November, 2011. On said date, the company was a public limited company and the law applicable on the date on which the transfer deed and other documents were placed before the board was November 10, 2011. Therefore, the document by the company or any other authority has to be seen the law applicable on....
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....ral meeting dated September 24, 2011 was sent to petitioner Shailja Krishna and in the said notice, number of shares in the name of petitioner is shown as 39,500. Similarly in the dispatch register regarding the information of notice of the extraordinary general meeting dated June 20, 2011 name of the petitioner is at serial No. 1, and some shares held by the petitioner is shown as 39,500. Respondent No. 1 has also filed the list of shareholders of Satori Global Ltd., as on September 24, 2011 which contains the signature of respondent No. 2-Ved Krishna and executive director Ujjwal Agarwal respondent No. 3. In this list at serial No. 1, the name of the petitioner Shailja Krishna is mentioned, and equity shares held by Shailja Krishna is shown as 39,500. It is also important to mention that up to September 24, 2011 respondents Nos. 2 and 3 accepted that Shailja Krishna was having 39,500 shares in her name in respondent No. 1-company. The said respondent No. 1 has filed the copy of board resolution dated November 10, 2011 which shows that the board of directors approved the transfer in its meeting held on November 10, 2011. The share transfer form has stamp of the Registrar of Com....
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....5. The share transfer form which is the basis of transferring shares of the petitioners in the name of respondent No. 3-Manjula Jhunjhunwala is also attached with Company Application No. 14 of 2016. Share transfer form contains the revalidation stamp of the Assistant Registrar of Companies, Kanpur which shows that the validity of the share transfer form was extended up to November 12, 2011. It is also relevant to mention that initially the alleged share transfer form was issued by the Registrar of Companies on October 1, 2010. Its validity has been extended up to November 12, 2011 by application submitted before the Registrar of Companies, Kanpur. 26. The alleged Form 7C which is the proper pro forma of the application under the provision 108(1D) of the Companies Act, 1956 does not contain that mode and particulars of the payment and date of payment of the application fees, whereas it is specifically mentioned in the form that particulars of the payment with date is to be mentioned in column 10. Why column 10 is left blank itself, creates the doubt on the activity of the then Assistant Registrar of Companies, Kanpur who has extended the validity of form. It is also important to ....
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....er the document was valid on the date of execution ? If the document itself was invalid on the date of execution of document, then validity of such document cannot be extended. In this case, the application filed for extension of validity is incomplete. The particulars of application fees and mode and date of payment of application fees is not mentioned in column 10, whereas it was mandatory. The Registrar of Companies has extended the validity of document, which was invalid document on the date of execution of the document. In the share transfer form, there is overwriting, and manipulation regarding the distinctive number of shares and corresponding share certificate numbers. Therefore, the alleged share transfer form and its extension of its validity is completely doubtful, which needs thorough inquiry by the Department of the Ministry of Corporate Affairs, regarding the conduct of the officials who has extended the validity of share transfer form. 27. The petitioner's share in respondent No. 1-company has been transferred by way of gift deed dated December 17, 2010. It is also undisputed that on December 17, 2010 respondent No. 1-company was a private limited company. ....
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....is case, proper procedure has not been adhered by the Registrar of Companies, Kanpur and Form 7C was allowed even though form was incomplete. In the circumstances, we hold that the alleged transfer of 39,500 shares in favour of Manjula Jhunjhunwala is not valid. This issue is decided negative in favour of the petitioner. Issue No. II. Whether the petitioner is not eligible to present this petition under sections 397 and 398 of the Act in view of bar provided under section 399 of the Companies Act, 1956 ? Learned counsel for the respondent has raised the issue of maintainability of this petition given specific provision of section 399 of the Companies Act, 1956. The respondents have stated that section 399(1)(a) provides that in case of a company having a share capital not less than 100 members of the company or not less than, one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares". The respondents claims that provisions contained in section 399 of the Companies Act, 19....
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....pretation of section 399(1)(a) of the Act as put forth by respondents Nos. 1 and 3 which practically make impossible to present an application under sections 397 and 398 of the Act, and a bar would be created by those erstwhile shareholders whose shares stands forfeited due to non-fulfilment of conditions regarding their allotments of shares. The language used in section 399 would reveal that for an applicant to be eligible to maintain an application under sections 397 and 398 of the Act, it is mandatory that such an applicant, ought to have paid all the calls on the shares held by him/her. In other words, if the applicant has not paid all the calls on the shares allotted to him/her, and when such calls were made, he or she is not entitled to present a petition under sections 397 and 398 of the Act, and there is a bar against him. At the same time, if the literal interpretation put forth by respondents Nos. 1 and 3 is accepted, even if such person who has not paid all the calls on his shareholding, when such calls are made can still go ahead and block the chances of other shareholders to present a petition under sections 397 and 398 of the Act. The shareholders whose shares stands ....
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....y has failed to issue fresh shares in lieu of forfeited shares, therefore forfeited shares cannot be taken into account to examine the eligibility of the petitioner to file the petition under sections 397 and 398 of the Companies Act, 1956. It is clear that out of 40,000 valid shares issued by the company petitioner holds 39,500 shares, which is about 98 per cent. Therefore, the petitioner was fully qualified to present the petition under sections 397 and 398 of the Companies Act, 1956. Therefore, this issue No. II is decided in favour of the petitioner and against the respondents. Issue Nos. IV and V : Whether the alleged resignation letter dated December 17, 2010 of the petitioner from the post of executive director of respondent No. 1-company is valid ? Whether the alleged board resolution dated December 17, 2010 regarding acceptance of the alleged resignation of the petitioner from the post of executive director of the company is valid ? 35. It is contended by the respondent that the petitioner on December 17, 2010 resigned from the post of executive director of respondent No. 1-company. The petitioner has submitted that she has never tendered her resign....
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....sputed that notice to all the directors of a meeting of the board of directors was essential for the validity of any resolution passed at the meeting and that as, admittedly, no notice was given to Mr. Khaitan, one of the directors of the company, the resolution passed terminating the services of the appellant was invalid." 39. Further in the matter of Dale and Carrington Invt. P. Ltd. v. P. K. Prathapan [2004] 122 Comp Cas 161 (SC) ; [2005] 1 SCC 212 at page 224, hon'ble Supreme Court held as under (page 172 of 122 Comp Cas) : "(a) The appellants have filed a photocopy of the minutes of the alleged meeting of the board of directors said to have taken place on October 24, 1994. As per the photocopy, the minutes appear to be signed by Ramanujam as chairman. The presence of Suresh Babu as a director of the company has been shown in the minutes. However, there is no evidence of the presence of Suresh Babu in the said meeting. Article 36 of the articles of association of the company requires that a notice convening the meetings of the board of directors shall be issued by the chairman or by one of the directors duly authorised by the board in this behalf. Suresh Babu fi....
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....therefore, wholly unauthorised and invalid and has to be set aside . . . The facts on record show that the company was being run as one man show and Ramanujam was maintaining the minutes book of meetings of board of directors only to comply with the statutory requirement in this behalf. The minutes were being recorded by him according to his choice and at his instance. The minutes do not reflect the actual position. Article 38 mandated that a book should be maintained to record presence of directors at meetings of the board of directors. If a book for recording signatures of directors attending meetings of the board of directors was not maintained, it was in clear violation of article 38 of the articles of association of the company. The Company Law Board without going into these relevant aspects, proceeded on an assumption that a meeting of the board of directors did take place on October 24, 1994. This assumption of the Company Law Board is clearly without any basis. (b) When no meeting of the board of directors of the company was held on October 24, 1994, the question of validity of the meeting does not arise. On the relevant date Suresh Babu was the only other....
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....pondent has only filed copy of resolution passed in the board meeting dated December 17, 2010, but minutes of the said board meeting has not been filed. Without the minutes of the alleged board meeting dated December 15, 2010 and December 17, 2010 contention of the respondent that respondent No. 3 was appointed as additional director on December 15, 2010 and resignation of petitioner from the post of executive director is untenable in law. As per law laid down by the hon'ble Supreme Court in Dale and Carrington Invt. P. Ltd. v. P. K. Prathapan [2004] 122 Comp Cas 161 (SC) ; [2005] 1 SCC 212, it is clear that without production of the minutes of the board meeting, question of validity of the board meeting does not arises. It is pertinent to mention that the respondent has filed the copy of the dispatch register, the notice of board meeting dated June 24, 2011, explanatory statement attached with the notice with their reply to the petition. For the board meeting August 16, 2011, every document has been filed to show that the notice was given to shareholder Shailja Krishna on August 17, 2011. It is also written in the dispatch register that Shailja Krishna holds 39,500 equity shar....
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....r under sections 397 and 398 of the Companies Act, 1956 is allowed with cost. Resolution passed in the alleged board meeting dated December 15, 2010 and December 17, 2010 are set aside. The petitioner is restored as executive director of the respondent No. 1-company with immediate effect. It is also declared that the petitioner holds 39,500 shares of the respondent No. 1-company. The transfer of 39,500 equity shares carried out by respondent No. 1 dated November 18, 2011 relying upon the instrument of transfer allegedly by the petitioner in favour of respondent No. 5 is declared as null and void and of no consequence. 44. Respondent No. 1 is further directed to delete the name of respondent No. 5 as owner of 39,500 equity shares from the register of shares and include the name of the petitioner as the lawful and exclusive owner of 39,500 equity shares issued by respondent No. 1. Respondent No. 5 is further directed to handover the physical possession of the share certificates containing 39,500 shares to the petitioner within 15 days from date of order. 45. We have found that there is overwriting and manipulation in the share transfer form, copy of which is attached with Compa....