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2023 (4) TMI 450
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.... Hyderabad), whereby, the 'Tribunal' dismissed the Petition filed under the Companies Act, 2013. 2. The 1st, 2nd & 3rd Appellant have claimed to be 'Shareholders' of the 1st Respondent Company with alleged holding together 94.80% of total paid up share capital of 1st Respondent. M/s Lexus Technologies Pvt. Ltd. is a 1st Respondent/ Company incorporated on 28.03.2000, with an authorised share capital of Rs. 1,50,00,000/- divided into 15,00,000 shares of Rs. 10 each and paid up capital of Rs. 1,10,96,230/- divided into 11,09,623 shares. The company is in business of developing software solutions and other ancillary activities. The 2nd, 3rd & 4th Respondents are Directors of the 1st Respondent Company. 3. Heard the Counsel for the Parties and perused the records made available including cited judgments of the Hon'ble Supreme Court of India and earlier orders of this 'Appellate Tribunal'. 4. The Counsel for the Appellants submitted that on 09.03.2004 the 2nd Respondent had entered into a share purchase agreement with Mr. C. Suresh (the Erstwhile Shareholder of the Company) and had acquired 10,51,933 equity shares representing 94.8% of the equity share capital of the comp....
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....its register pursuant to the provisions of Section 248 of the Companies Act, 2013 as the '1st Respondent' company did not file the 'Annual Returns and Financial Statements' for the continued period of 2014-2015, 2015-2016 and 2016-2017. 10. The Counsel for the Appellants further submitted that in 2017, they searched on the Ministry of Corporate Affairs Portal (in short 'MCA portal') and found out that the '2nd, 3rd & 4th Respondents' submitted fabricated Annual returns for the Financial Year 2014-2015, 2015-2016 and 2016-2017 of the '1st Respondent' Company with the Registrar of Companies. The Counsel for the Appellants stated that at that stage, they came to know for the first time that the 2nd, 3rd & 4th Respondents were committing fraud. The Counsel for the Appellants further stated that subsequently, the 2nd, 3rd & 4th Respondents were disqualified from the position of Directors of the 1st Respondent Company by virtue of Section 164 of the Companies Act, 2013 for committing fraud. 11. The Counsel for the Appellants brought out to the notice of this 'Appellate Tribunal' that despite various submissions made by the them, neither the 'Tribunal' directed the 'Respondents' nor....
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....,67,41,557/- is false. 17. The Counsel for the 1st Respondent submitted that the 'Respondents' did not write any letter to the Board of Directors of the 1st Respondent and there was no need for the 'Respondent' to write any such letter as the 'Respondents' did not intend to sell his shares to any person. As the 'Respondent' did not write any letter, the question of willingness to purchase by the 'Appellants' would not arise at all. 18. The Counsel for the 1st Respondent submitted that the certificates of banks filed by the 'Appellant' with the Company Petition is not towards any sale consideration for shares but for other reasons not connected to this case. 19. The Counsel for the 1st Respondent stated that the 'Appellants' failed to produce the original 'Transfer Deeds' and Share Certificates before the 'Tribunal' and the 'Tribunal' rightly observed in the 'impugned order' that no transfer of shares ever took place. 20. The Counsel for the 1st Respondent emphasised that the name of the company was restored by the 'Tribunal' and the status of the '1st Respondent' Company as on date in the Ministry of Corporate Affairs poral is "Active". 21. The Counsel for the 1st Re....
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....tificate/ letter of administration registered on ---------------at--------- and the No.---are left open as blank. The Counsel for the 1st Respondent stated that this indicates that these forms were never delivered to the '1st Respondent' Company and further no reliance is placed on record by the 'Appellants' to say that the Share Transfer forms (SH-4) is delivered to the Company as per Section 56 of the Company Act , 2013. 25. The Counsel for the 1st Respondent submitted that as per law and practice after execution of proper instrument of transfer with all particulars of transferor and transferee, the responsibility cast upon the transferor or transferee to deliver the said instrument to the Company within a period of 60 days from the date of execution along with the certificate relating to the securities for the company to process the same as per Section 58 of the Companies Act, 2013 and no such material is placed on record by the 'Appellants' to establish that the 'Appellants' complied with Section 56 of the Companies Act, 2013. 26. The Counsel for the 1st Respondent stated that a private company limited by shares in pursuance of the powers conferred to it under its article....
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.... that the original Share Certificates are in his possession and the Share Certificates enclosed by the 'Appellant' to are fabricated and the 2nd Respondent also stated that he has not alienated his shares either to existing members or to non-member of the Company. 31. The Counsel for the 1st Respondent stated that the 'Appellants' are not shareholders at all of the Company and further argued that assuming without conceding that if the 'Appellants' considers themselves as 95% shareholders of the 1st Respondent they should have not waited for more than three years to raise alleged objection before the company and the 'Appellants' never raised the alleged objection with the company. The Counsel for the 1st Respondent further stated that the 1st Respondent except acquiring valuable land no other business is carried after its incorporation. 32. The Counsel for the 1st Respondent submitted that the 'Appellants' herein have not placed any documentary to evidence establish that the 'Appellants' contacted the company or any other directors of the company. 33. The Counsel for the 1st Respondent submitted the underlying proceedings are barred by limitation. Pursuant to section 433 of....
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....ancies: i. That there are huge discrepancies with respect to photocopies of transfer deeds vis a vis photocopies of share certificates annexed in the Company Petition. ii. There are certificates without corresponding transfer deeds and transfer deeds without corresponding share certificates. iii. There are several photocopy transfer deeds even without execution by the transferee. iv. That the said deeds do not satisfy the tenets of section 56 of the Companies Act, 2013. v. The transfer deed does not contain any share certificate no. It is mandatory to enclose share certificates. vi. The 'Appellants' fail to explain how they paid stamp duty without even having an agreement to acquire shares from the 'Respondents' as there was no agreement regarding share purchase between the 'Appellants' and the 2nd Respondent. 38. The Counsel for the 2nd Respondent submitted that the transfer deeds that annexed with the appeal are fabricated as can be easily demonstrated by a bare perusal wherein, the company's acknowledgement column is no where endorsed, no one from company signed or checked or tallied the signature of transferor, no tra....
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....n some assumption the transfer of monies have to be considered as consideration cannot hold water and therefore the money so transferred cannot be considered as consideration for purchase of shares 42. The Counsel for the 2nd Respondent submitted that the 'Appellants' who had prayed for rectification of members' register cannot allege oppression and mismanagement for a very simple reason that they are not members of the company as per their own submission. 43. Concluding the arguments on behalf of the 1st and 2nd Respondents, the Counsel for 1st and 2nd Respondents reiterated that the 'Appeal' is mischievous, misleading, far from truth and devoid of any merits and need to be set aside. 44. This 'Appellate Tribunal' has carefully examined the 'impugned order' dated 21.08.2021. The 'Tribunal' has decided the original Petition on five grounds, namely:- (i) Whether the Petition filed is well within the time. (ii) Whether purported transfer of shares is in accordance with the provisions of the Companies Act and in accordance with clauses of the Articles of Association. (iv) Whether the amount purportedly paid should be treated as consideration to ....
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....y], specifying the shares held by any person, shall be prima facie evidence of the title of the person to such shares. 56. Transfer and transmission of securities - (1) A company shall not register a transfer of securities of the company, or the interest of a member in the company in the case of a company having no share capital, other than the transfer between persons both of whose names are entered as holders of beneficial interest in the records of a depository, unless a proper instrument of transfer, in such form as may be prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee and specifying the name, address and occupation, if any, of the transferee has been delivered to the company by the transferor or the transferee within a period of sixty days from the date of execution, along with the certificate relating to the securities, or if no such certificate is in existence, along with the letter of allotment of securities: Provided that where the instrument of transfer has been lost or the instrument of transfer has not been delivered within the prescribed period, the company may register the transfer on such terms as t....
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.... to any liability under the Depositories Act, 1996, where any depository or depository participant, with an intention to defraud a person, has transferred shares, it shall be liable under section 447. 58. Refusal of registration and appeal against refusal - (1) If a private company limited by shares refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or the transmission by operation of law of the right to, any securities or interest of a member in the company, it shall within a period of thirty days from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferor and the transferee or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal. (2) Without prejudice to sub-section (1), the securities or other interest of any member in a public company shall be freely transferable: Provided that any contract or arrangement between two or more persons in respect of transfer of securities shall be enforceable as a contract. ....
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....ication of the register. (2) The Tribunal may, after hearing the parties to the appeal under sub-section (1) by order, either dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a period of ten days of the receipt of the order or direct rectification of the records of the depository or the register and in the latter case, direct the company to pay damages, if any, sustained by the party aggrieved. (3) The provisions of this section shall not restrict the right of a holder of securities, to transfer such securities and any person acquiring such securities shall be entitled to voting rights unless the voting rights have been suspended by an order of the Tribunal. (4) Where the transfer of securities is in contravention of any of the provisions of the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 or this Act or any other law for the time being in force, the Tribunal may, on an application made by the depository, company, depository participant, the holder of the securities or the Securities and Exchange Board, direct any company or a depository to set rig....
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.... has caused, serious injury or damage to the interest of the trade, industry or business to which such company pertains; or (d) the business of a company, is or has been conducted and managed by such person with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or in a manner prejudicial to public interest, the Central Government may initiate a case against such person and refer the same to the Tribunal with a request that the Tribunal may inquire into the case and record a decision as to whether or not such person is a fit and proper person to whole the office of director or any other office connected with the conduct and management of any company. (4) The person against whom a case is referred to the Tribunal under sub-section (3), shall be joined as a respondent to the application. (5) Every application under sub-section (3)- (a) shall contain a concise statement of such circumstances and materials as the Central Government may consider necessary for the purposes of the inquiry; and (b) shall be signed and verified in the manner laid down in the Code of Civil Proced....
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.... or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h); (k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct; (l) imposition of costs as may be deemed fit by the Tribunal; (m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made. (3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal. (4) The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks ....
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....he company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; (b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members: Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241. Explanation.-For the purposes of this sub-section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member. (2) Where any members of a company are entitled to make an application under subsection (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them 248. Power of Registrar to remove name of company from register of companies. - (1) Where the Registrar has reasonable cause to believe that- (a) a company has failed to commence its business within one year of its incorporation; (or) [***] (c)a company is not car....
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....Registrar, before passing an order under sub-section (5), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company: Provided that notwithstanding the undertakings referred to in this sub-section, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies. (7) The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved. (8) Nothing in this section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the register of companies." (emphasis supplied) ....
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....2nd, 3rd & 4th Respondents. 51. This 'Appellate Tribunal' has already discussed the relevant provisions of the Companies Act, 2013 and the procedure regarding transfer of shares in case of Private Limited Company along with the Rules regarding compliance of Article of Association. This 'Appellate Tribunal' notes from the averments of the parties as well as from the 'impugned order' that there was no direct relationship between the 'Appellants' herein with the 'Respondents' herein. Accordingly, to the understanding with the 2nd Respondent, Mr. Lingamaneni Ramesh remitted through his known persons the following amounts to the Respondent's bank account with YES Bank, Vijayawada. 1. 17.04.2015 Sripathi Srivana 4,87,90,000 2. 17.04.2015 Vahini Surya Ch 4,90,59,400 3. 17.04.2015 Manjusha Yalamanchali 4,87,90,000 14,66,39,400/- Details of amount returned as per the instructions of Mr. Lingamaneni 1. 18.04.2015 Swarna Bhaskar H 7,50,00,00 2. 18.04.2015 Venkata Surya R 1,50,00,000 9,00,00,000 First of all, the money has not been transferred by the 'Ap....
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....tificate but the 'Appellants' herein failed to comply with the said order of the 'Tribunal'. This entire series of events, do not augur well for the 'Appellants' and do not establish genuineness of the alleged Shares Certificates claim to be held by the 'Appellants' along with the process of obtaining the Share Certificate. 54. This 'Appellate Tribunal' further finds it strange that the 'Appellants' claimed to have given Rs. 14,67,41,557/-, which was never followed by the 'Appellants' to pursue his rights and no concrete/ solid documentary evidence could be furnished by the 'Appellants' to indicate that all basic requirements before issue of Share Certificate were complied with in accordance with Companies Act, 2013 r/w Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014 as well as Article of Association. It is fundamental that without completing these formalities no corporate entity can issue or transfer the Share Certificate in the name of Allottee/ Transferee. Moreover, both the 1st Respondent Company as well as 2nd Respondent and alleged transferor of shares had denied any such events. In fact, the 2nd Respondent has categorically stated that he had neither i....