TaxTMI 
TaxTMI 
2022 (5) TMI 1702
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....the Court, the following questions arise for adjudication:- i. Whether the delay, in filing the appeal under Section 10F of the 1956 Act, beyond the maximum period for condonation of delay prescribed therein, can be condoned? ii. Whether the limitation for filing a petition before the Company Law Board under Section 397 and 398 of the 1956 Act, begins to run from the date on which the first step/act of oppression or mismanagement was carried out, particularly when such acts/steps from a series of actions which continue till the filing of the petition? In these appeals, this Court is faced with a situation where the Board after recording findings in favour of Sh. Sharad Saxena, the appellant in CAPP-5-2013, has failed to grant appropriate relief. Some facts are required to be noticed. The facts are being noted from CAPP-5-2013. The respondent- Company i.e. M/s EFN Global Impex Pvt. Ltd. came to be incorporated on 06.06.1995, with an authorized share capital of Rs. 50,000/- divided into 5000 equity shares of Rs.100/- each. The Company was closely held company by the Saxena family. Originally, the Company was promoted by Mr. Muneesh Kumar Saxena, being major....
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....y be pleased to issue interim orders restraining the Respondents from operating the bank accounts of the Company with immediate effect; (e) The Hon'ble Company Law Board may be pleased to immediately direct and order an investigation into the affairs of the Company under the control and management of the current Board of Directors; (f) The Hon'ble Company Law Board may be pleased to issue interim orders appointing the Petitioner as signatory for all Bank accounts of the Company with immediate effect along with any one present Director of the Company; (g) The Hon'ble Company Law Board may be pleased to issue interim orders appointing independent Directors on the Board of the Company" In substance, the appellant Sh. Sharad Saxena claimed that in order to reduce his share holdings from majority to minority, the respondent No.2 has taken the following steps :- i. 2349 shares from Sh. Sharad Saxena were transfered to Sh. Mahender Kumar Saxena on 30.03.2006. ii. 5000 shares were issued to Sh. Mahender Kumar Saxena by the Company. iii. Thereafter, 1000 shares were issued to respondent No. 7. iv. Subsequently, 17....
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....r and above, the respondents have not produced any evidence or any receipt showing payment of consideration for these shares. Thus, the Board declared the transfer of 2349 shares to be illegal. The Board, although, held that allotment of the equity shares in favour of Sh. Mahender Kumar Saxena, Sh. Uday Chawla and Sh. Muneesh Kumar Saxena suffered from technical lapses namely :- The requisite resolution of the share holders of Company has not been passed and the absence of offer to the existing shareholders however, still held that since these steps were required to borrow money from Rajasthan Financial Corporation (hereinafter referred to as 'the RFC') to meet its business requirements, therefore, on this account, no relief can be granted to the petitioner. In substance, the Board held as under :- "(a) Removal of the petitioner is declared as illegal and thereby, the petitioner is restored as Director in the company and Form-32 filed with ROC for his removal as director be treated as null and void, (b) Transfer of 2349 shares of the petitioner to R-3 is hereby declared as null and void and annual return showing such transfer of shares be treated as nul....
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....of delay to the extent time has been spent in this application and/or the time which they may explain based upon any other reasonable cause. The order dated 25.10.2013 shall cause no legal impediment against maintainability of such appeal. Disposed of Dasti. " Per contra, the learned counsel representing the Sh. Sharad Saxena draw the attention of the Court to Section 10F of the 1956 Act, which provides that the High Court can condone the delay while hearing appeal under Section 10F of the 1956, till the period of 60 days from the day on which the period originally prescribed comes to an end. In other words, the appeal can be entertained by the High Court only if it is filed within the total period of 120 days i.e. 60 (original period) + 60 (extended period). Section 10F of the 1956, is extracted as under :- "10F. APPEALS AGAINST THE ORDERS OF THE COMPANY LAW BOARD Any person aggrieved by any decision or order of the Company Law Board 2 [made before the commencement of the Companies (Second Amendment) Act, 2002] may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on an....
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....eyond the maximum period prescribed for condoning the delay therein and is, therefore, liable to be dismissed being barred by time. The Court declines to condone the delay beyond the maximum limit for condonation of delay prescribed in the Act. The Bench now proceeds to deal with question No.2. ii. Whether the limitation for filing a petition before the Company Law Board under Section 397 and 398 of the 1956 Act, begins to run from the date on which the first step/act of oppression or mismanagement was carried out, particularly when such acts/steps from a series of actions which continue till the filing of the petition? The Board while observing that Section 137 of the Limitation Act, 1963, is not applicable and the appellant came to know of the facts from the Annual Return as on 30.09.2009, which was filed in June, 2010, held that the petition is within limitation. In para 11 of the petition, the appellant has asserted that during October, 2006, on receipt of copies of the annual report for the Financial Year 2005-2006, he came to know about allotment of 5000 equity shares at par to respondent No. 3 and subsequent thereto, the share capital of the Company increased ....
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....rticle 137 of the Limitation Act, 1963, it is evident that the time from which the period begins to run is when the right to sue accrues. In the present case, the appellant has specifically pleaded that efforts were made and the respondents held a meeting of the Board of Directors in May, 2008, and passed a resolution in this regard. Thereafter, there was a delay in filing of the Annual Return and the appellant filed the petition immediately on coming to know of the fact that the respondents have not taken the steps as promised, filed the petition before the Board. In such circumstances, the time from which the period begins to run would be in June, 2010, as the Annual Return which was required to be filed on 30.09.2009, was actually filed in June, 2010. Furthermore, this matter can be examined from another perspective. There was continuous acts/steps on the part of the respondents which fall within the definition of oppression and mismanagement. All the aforesaid actions form a series of steps taken by the respondents. In such a situation, the limitation cannot be counted from date when the first act of the alleged transfer or allotment of the shares, had taken place. The cause....
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....e qua non for the maintainability, no question of limitation also could arise. Therefore, with great respect to the learned Chief Justice of the Calcutta High Court, having regard to the nature of the provisions of the Act, as held by the Supreme Court in Shanti Prasad Jain's case, (1965) 35 Comp Cas 351 (SC) : (1965) 1 Comp LJ 193 (SC) cited supra, we are unable to share his view that article 137 would apply to a petition under sections 397 and 398 of the Act." The learned counsel representing the legal heirs of Sh. Muneesh Khanna relies upon S. Sukhdeep Singh Jhikka Vs. S. Ajit Singh Deogan and others, 2009(150) Company Cases 182, to submit that Article 137 of the Limitation Act, 1963, applies in the present situation. This Court has carefully read the judgment. In para 16, the Court found that the first respondent before the High Court had the knowledge about the increase of share holdings even in the year 2002, but he remained quiet for 9 years from the date when the share holdings were increased. In those circumstances, the Court observed that the petition shall be barred by limitation as well as on account of latches. Thus, it is evident that the judgment relied upo....