2015 (2) TMI 1260 - Board - Companies Law

Directions from this Bench to direct the respondents 1 to 12 to return the 1310 shares to the petitioner since the 13th respondent held the said shares in the R1 Company - Held that - The petition is liable to be dismissed on the ground that (i) the petitioner is not having the proper power of attorney to file the present petition for ventilating the grievance of the 13th respondent. (ii) the reliefs which are sought in the petition cannot be granted by this Bench for the reason that the claim of the 13th respondent is that he had not applied for any transfer of his shares nor did he sign any application for transfer jointly or otherwise. On the other hand the respondent contends that the 13th respondent had transferred his shares to R2 and one Mr. late K. Thangavel on 28.08.1985. One of the other grounds is to decide with regard to the fundamental question whether the 13th respondent transferred his shares or pledged the shares. These disputed questions of facts cannot be decided under the guise of mere rectification. In view of the aforesaid reasons the petition is not maintainable and liable to be dismissed

Summary

Issues Involved:
1. Jurisdiction of the Company Law Board (CLB) to entertain the petition.
2. Validity of the share transfer and whether it was a pledge or a transfer.
3. Locus standi of the petitioner to file the petition.
4. Compliance with procedural requirements under the Companies Act, 1956.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the Company Law Board (CLB) to entertain the petition:
The respondents argued that the CLB only has jurisdiction to order rectification of the Register of Members under Section 111 of the Companies Act, 1956, and that it cannot adjudicate on complex questions of title or ownership, which fall under the purview of civil courts. The High Court of Madras in S.A. No. 63 of 1998 had previously ruled that the civil court has no jurisdiction to entertain the suit, and the appropriate forum is the CLB.

2. Validity of the share transfer and whether it was a pledge or a transfer:
The petitioner claimed that the 13th respondent had pledged 1310 shares to respondents 2, 3, and the deceased K. Thangavel in 1985, and that the transfer of shares dated 28.08.1985 was forged and void. The respondents countered that the shares were legally transferred, as evidenced by duly executed share transfer instruments and Board approvals. The CLB noted that the petitioner failed to provide sufficient proof of the alleged pledge and that the matter involved complex questions of fact, which are beyond the summary jurisdiction of the CLB.

3. Locus standi of the petitioner to file the petition:
The petitioner claimed authority to file the petition based on a power of attorney executed by the 13th respondent. However, the CLB found that the power of attorney did not specifically authorize the filing of the petition before the CLB. The CLB concluded that the petitioner lacked the locus standi to file the petition, as he was not a shareholder and did not have proper authorization.

4. Compliance with procedural requirements under the Companies Act, 1956:
The CLB emphasized that under Section 111 of the Companies Act, 1956, the petitioner must show that his name was either wrongly entered or omitted from the Register of Members. The petitioner failed to meet these requirements, as he was not a member of the company and did not demonstrate sufficient cause for rectification. The CLB referred to relevant case law, including a judgment from the Bombay High Court, which highlighted that the CLB's jurisdiction is summary in nature and cannot adjudicate on complex factual disputes or disputed titles.

Conclusion:
The CLB dismissed the petition on multiple grounds:
1. Lack of proper authorization for the petitioner to file the petition.
2. The petitioner's failure to meet the procedural requirements under Section 111 of the Companies Act, 1956.
3. The complex nature of the factual disputes, which are beyond the summary jurisdiction of the CLB.

The petition was dismissed with no orders as to cost.