TaxTMI 
TaxTMI 
2026 (8) TMI 734
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....ina Agarwal, Ms. Ekta Agarwal, Saloni Bansal Chartered Accountant, Landspaces Developers Pvt. Ltd, Ved Promoters Pvt. Ltd., Venkatesh Associates Pvt. Ltd., Shri Sachin Chandra Kumar, Shri Rajendra Prasad Hansaria, Shri Abhijit Neog and Ms. Aruna Bansal JUSTICE YOGESH KHANNA OFFICIATING CHAIRPERSON AND MR. AJAI DAS MEHROTRA MEMBER (TECHNICAL) For the Appellant : Mr. Atanu Saikia, Ms. Sujata Nath, Advocates. For the Respondents : Mr. Abhinav Hansaria, Advocate for R-1. JUDGMENT [Per: Ajai Das Mehrotra, Member (Technical)] The four appeals viz Company Appeal (AT) No. 102, 103, 104 and 113 of 2020 have been filed against the common impugned order dated 13.01.2020 passed by the Ld. NCLT Guwahati Bench in CP/16/59/213/241/244/GB/2018. 2. The impugned order is regarding sale of shares of the Company viz Assam Medical Corporation Pvt. Ltd. by Dr. Kali Charan Das Trust (in short, the "Trust") and other shareholders to Agarwal and Khemani groups (hereinafter referred to as the "Incoming Shareholders"). The Company Appeal (AT) No. 102 of 2020 has been filed by the incoming shareholders. The Company Appeal (AT) No. 103 of 2020 has been filed by the Assam Medical Corporatio....
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....ire shareholding comprising 117 equity shares of the Company, representing approximately 23.4% of the total share capital of the Company, in favour of the Trust. Dr. Kalicharan Das passed away on 03.03.1983 and thereafter his wife, with assistance of appellant Mr. Balendra Choudhury, who is son of Mrs. Kiran Bala Choudhury, elder sister of Dr. Das, managed the Nursing Home. Mrs. Das passed away on 07.04.1985, and elder sister of Mr. Das inherited the estate, including 55 shares in AMC. Mrs. Kiran Bala Choudhury passed away on 29.03.2021, whereafter on 25.06.2004 her 55 shares were transmitted to the Mr. Choudhury and he became Director of AMC on 30.09.2009 and since then he is continuously holding this position. (vi) Over a period of time, the Company witnessed a decline in its financial condition and the need for additional fund was felt. (vii) A meeting of the trustees of the Trust was convened on 27.12.2017 and after deliberations regarding the financial requirements of the Trust and the nursing home, the trustees decided to sell the shares held by the Trust in AMC. (viii) An Agreement for Transfer of Shares (hereinafter called the "STA"), dated 28.12.....
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....d 03.01.2018 for the convening of the EOGM on 24.01.2018 also contained a proposal for enhancement of the authorised share capital to Rs. 1,00,00,000 divided into 10,000 equity shares of Rs. 1,000 each. (xii) Another notice dated 19.01.2018 was issued for convening a meeting of the Board of Directors on 24.01.2018 to confirm the proceedings of the Board of Directors meeting held on 03.01.2018 and for consideration of the transfer of shares. (xiii) At the Board Meeting held on 24.01.2018, Mr. Balendra Choudhury objected to the proposed transfer of the shares held by the Trust. The Minutes of the meeting records his objection but states that "after explanation to him, the following resolutions were adopted by the Board". It is noteworthy that the content of the explanation given to Mr. Balendra Choudhury was not recorded in the minutes of the meeting. The Board thereafter approved the transfer of the 117 shares held by the Trust, together with the shares held by Dr Rajendra Prasad Hansaria and Mr Sankar Hazarika, as set out below: S. No. Existing Shareholder (Transferor) Shares Incoming Shareholder (Transferee) 1 Dr Kali Charan Das Trust 40 V....
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....pointment of CA Saloni Bansal as director in his place; and approval of certain further share transfers lodged with the Company, including the transfer of 5 shares by Dr Rajendra Prasad Hansaria to Mrs. Aruna Bansal. The meeting was rescheduled for 03.05.2018 by a notice dated 23.04.2018. (xviii) Mr. Balendra Choudhury, on 27.04.2018 objected to the calling of the Board Meeting without following the requirements of law, and requested that the meeting be postponed. (xix) Item 4 of notice dated 23.04.2018 recorded that the Board was in receipt of a letter from shareholders namely, M/s. Ved Promoters Pvt. Ltd. (represented by CA Saloni Bansal), Mr. Shanky Agarwal, and M/s. Landspaces Developers Pvt. Ltd. (represented by Mr. Shanky Agarwal), requesting that an Extraordinary General Meeting be convened to remove Mr. Balendra Choudhury from the Board. (xx) Mr. Balendra Choudhury, by a further letter dated 30.04.2018, objected specifically to Item 4 of the said agenda. (xxi) The Board Meeting convened for 03.05.2018 was not concluded and stood adjourned, in the first instance to 05.05.2018 and thereafter to 17.05.2018. It was on 05.05.2018 that Mr. Sobh....
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....ed interim reliefs covered by prayer clauses A- (1) to (XXXIX) and final reliefs covered by prayer clauses B-(1) to (XXXIII) of Para (V) in the petition. 58. In so far as the relief of an order declaring the EOGM scheduled to be held on 01.06.2018 and the decisions taken therein are illegal and void covered by prayer clause III is concerned, the learned advocate appearing for the R1 Company clearly pleaded in their reply and also confirmed during the course of arguments that no such EOGM was held on 01.06.2018 and, therefore, the said relief has become Infructuous and no order needs to be passed in this regard. 59. The main grievance of the petitioners in the pleadings as well as at the time of argument is that the R1 Company has illegally-transferred its shares of the promoter Trust M/s. Kalicharan Das Trust to the respondents No.4, 6, 12, 13 and 14 in the minutes of meeting dated 24.01.2018 without considering his objections only with an intention to convert the land of the R1 for construction of real estate project against the aims and objects of the R1 Company It is the contention of the petitioners that the transfer of 117 shares of M/s. Kalicharan Das Trust ....
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....he transfer of 117 shares of M/s. Kalicharan-Das-Trust in Board Meeting held on 24.01.2018 is legal and In accordance with the AOA? (2) Whether the petitioners are entitled for numerous relies claimed in the petition? (3) To what relief? 61. In order to answer the above issue No.1, it Is important to read Article 15 of the Articles of Association and also the Minutes of the Meeting dated 24.01.2018, which are extracted hereunder for ready reference as follows: "Article 15: notice of transfer- 15. Every member or the legal representative of a deceased member who intends to transfer shares (hereinafter called 'the vendor') shall give in writing to the Board notice of his intention. That notice shall constitute the Board his agent for the sale of the said shares, in one or more lots at the discretion of the Board, to mernbers of the Company at a price to be agreed upon by the vendor and the Board or in default of agreement at a price which the auditor of the Company for the time being shall certify by writing under his hand to be in his opinion, the fair selling value thereof as between a willing vendor and a willing purchaser." ....
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....garwal, CA Bal Kishan Bansal and Mr. Anup Kumar Khemani were appointed as directors in the Board Meeting held on 24.01.2018. It is very clear from Article 15 of the AOA that a procedure for transfer of shares is provided. under the AOA. The R1 Company except making the above statement in their reply did not place any evidence before this Tribunal regarding the procedure adopted by them in transferring the shares of the Trust. It is interesting to note that in the minutes dated 24.01.2018, the R1 Company having recorded the objections of the petitioners with regard to transfer of 117 shares of the Trust, miserably failed to record the explanation under which the petitioner was satisfied about his objections. It is very hard to believe that the petitioners having satisfied, filed the present petition in the absence of the recording of the explanations in the minutes nor evidence to that effect. As rightly contended by the petitioners, those 117 shares were held by M/s. Kalicharan Das Trust and they cannot be transferred in a routine manner like transfer of shares of other members, as the sold shares belongs to a Trust created by the Founder Member of the R1 Company Late Dr. ....
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....ners have not placed any substantial evidence before this Tribunal warranting grant of those reliefs nor pressed those reliefs at the time of submissions. 66. In the light of the above facts and circumstances and observations, this Tribunal is of the considered opinion that the petitioners are not entitled for all the reliefs claimed in the petition except to the extent of setting aside the transfer of 117 shares of M/s. Kalicharan Das Trust and accordingly, this Tribunal pass the following orders:- (i) It is hereby declared that the transfer of 117 shares of M/s. Kalicharan Das Trust in the Board Meeting dated 24.01.2018 is not in accordance with law and is hereby set aside and consequently, the R1 Company is directed to undo the said transfer in all the relevant registers and shall also communicate the same to the concerned statutory authorities. (ii) Mr. Anup Kumar Khemani is ceased to be the director of the R1 Company from the date of communication of this order unless he possess some other shares other than the 30 shares of M/s. Kallcharan Das Trust. (iii) The appointment of Mr. Sunil Agarwal, CA Bal Kishan Bansal and CA Saloni Bansal as dir....
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....pondent. The Ld. NCLT has rightly dealt with the objections and has held that non-joinder of Trust is not fatal to this proceeding. vi. Objections in the board meetings were not properly recorded, and this fact was brought to the notice of the chairman and managing director of AMC by Mr. Choudhury vide letter dated 12.04.2018, which is scanned below: vii. Mr. Baruah, vide letter dated 05.05.2018 had offered to acquire more shares of the company. The said letter is scanned below: viii. The real estate company had taken over control of AMC with a view to shutdown the Nursing Home and use it for commercial motive. ix. In CA (AT) No. 113 of 2020 Mr. Choudhury and Mr. Baruah had challenged the order of Ld. NCLT stating that there is no difference in the shares of Kalicharan Das Trust and the shares held by the individuals and they should not have been treated separately. The transfer of shares held by individuals is also in violation of Article 15 of the Articles of Association. x. It is submitted that the appellants Mr. Balendra Choudhury and Mr. S.M.B. Baruah, were not personally present in the hearing before the Ld. NCLT and they had not a....
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....t must be "an intentional act with knowledge". Per Lord Chelmsford, L.C. in Earl of Darnley v. London, Chatham and Dover Rly. Co. [1867] L.R. 2 H.L. 43 There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abandons it. It is pointed out in Halsbury's Laws of England (4 d) Volume 16 in paragraph 1472 at page 994 that for a "waiver to be effectual it is essential that the person granting it should be fully informed as to his rights". " vi. The sale of shares to outsiders without following Article 15 was not void but only voidable. The reliance has been placed on the judgment of Radhabari Tea Co. v. Mridul Kumar Bhattarcharjee (2009) SCC Online Gau.88). vii. Mr. Choudhury and Mr. Baruah conceded and restricted their case only with respect to the transfer of trust shares to the third parties and gave up all other reliefs and are estopped from seeking these reliefs before this Tribunal. viii. Grave errors have been committed in the impugned order by applying different yardsticks to the sale of shares by individuals and sale of trust shares. The sta....
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....as under: "2(68) "private company" means a company having a minimum paid-up share capital as may be prescribed, and which by its articles,- (i) restricts the right to transfer its shares; ........ (iii) prohibits any invitation to the public to subscribe for any securities of the company;" 7.4 From a plain reading of aforesaid Section it is apparent that a private limited company has a right to restrict the 'right to transfer' of its shares through its Articles of Association. 7.5 Applying the right to restrict transfer of its shares, as prescribed in the Section 3(iii) of Companies Act, 1956, the AMC had adopted the following Article 15: "Article 15: notice of transfer- Every member or the legal representative of a deceased member who intends to transfer shares (hereinafter called the vendor) shall give in writing to the Board notice of his intention. That notice shall constitute the Board his agent for the sale of the said shares, in one or more lots at the discretion of the Board, to members of the Company at a price to be agreed upon by the vendor and the Board or in default of agreement at a price which the auditor of....
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.... discovered price of subject shares, as required under Article 15. 7.9 We now look at judicial guidance on the pre-eminence and overriding impact of Articles restricting transfer of shares in a Private Limited company. 7.9.1 It has been held in Lyle & Scott Ltd. v. Scott's Trustees, 1959 AC 763 that there can be restrictive rights on transfer of shares in favour of strangers if the existing members of the company are willing to buy them. Such restrictions imposed by the Articles were held to be valid. 7.9.2 It has been held in the case of V.B. Rangaraj v. V.B. Gopalkrishnan (1992) 73 Comp. Case 201 SC that the restriction on transferability of shares as provided in the Articles of private company shall be binding and any additional rights to transfer contrary to the Article shall not be binding on the company. 7.9.3 The Hon'ble Supreme Court in the case of Claude-Lila Parulekar (Smt.) v. Sakal Papers (P) Ltd. & Ors. (2005) 11 SCC 73 in para 25 held as under: "25. Section 36 of the Companies Act, 1956 makes the memorandum and articles of the company, when registered, binding not only on the company but also the members inter se to the same extent as if they had ....
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....d to the sale of shares in the meetings held on 03.01.2018 and 24.01.2018, though objections were not fully or correctly recorded. Mr. Baruah in letter dated 05.05.2018 had offered to buy the shares from the outgoing shareholders. In any case, we find that procedure given in Article 15 was not adopted. 7.13 It is nobody's case that sale of shares made in 2018 were in anyway covered by the exceptions given in Article 28. The contention the Article 15 was not followed as there was acquiescence of the shareholders in the said transfer also does not hold good. The company was required to follow the procedure as prescribed in Article 15. Since the procedure prescribed in Article 15 has not been followed and pre-emptive rights of existing shareholders have been totally ignored, we cannot hold that the shareholders have consciously elected to waive their rights and are estopped by their conduct. In the facts of this case, we hold that the transfer of shares by the individual shareholders as well as by the Trust is not in accordance with law, and we hereby set aside the said transfer of shares. The company shall be at liberty to revisit the sale and transfer of shares by following the p....