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2020 (10) TMI 693 - Tri - Companies LawRectification of the Register of Members of the Respondent Company - restraint on Respondent Company from holding the Annual General Meeting or Extraordinary General meeting - Section 59(1) of the Companies Act, 2013 - Whether the Company by exercising paramount lien can sell off the shares of a shareholder for recovering the dues? - HELD THAT:- The Respondent Company in the instant petition will fall under the category of "unpaid seller" who can exercise the above rights only. Nothing more. It is settled law as decided by the Hon'ble Supreme Court of India in its judgement in TRIVENI SHANKAR SAXENA VERSUS STATE OF U.P. AND OTHERS [1991 (12) TMI 285 - SUPREME COURT] a lien is only a right to retain which is rightfully and continuously in possession belonging to another until the claims are satisfied. It can be acquired either by contract or by operation of law. It is the right of retention of goods - in the absence of delineated process to exercise paramount lien, the Respondent Company can exercise lien to the extent of retention of goods; in this case shares which can be extendable payable to the shareholder - the submissions made by the Respondent Company cannot be agreed upon. Whether the action of 1st Respondent Company is backed up by any contractual agreement to recover the 'rental dues' by auctioning the shares? - HELD THAT:- In the absence of a written agreement a documentary evidence to support their action, the very action of the Respondent's company was without any basis. Any of the unilateral action by one party, will not bind the others and will be set aside. Further the contention that the shops are under benami holding and not conforming to the Income Tax Act is not supported by any valid notice from income Tax authorities or any credible report to support this argument. Even if we go by submissions of learned PCS for respondents, we have not come across any steps taken by the respondent company to regularise the position in respect of the shops which are the property of respondent Company. During the arguments the bench asked to the PCS representing the company whether the company has taken any steps to get the shop vacated by the occupants for their rental arrears. The respondents submitted that they have not taken any action in this regard. Whether due process is followed by the Company in auctioning and allotting the shares to a 3rd party? - HELD THAT:- The Articles of Association of the company is silent about the process to be followed to ensure paramount lien. However, in the Respondent Company, the lien was exercised for recovery of rental dues by auction the shares. Here the Respondents exercised right to lien to recover the arrears of rent from the shareholder who has not agreed to execute rental/lease agreement - In the instant petition, the Respondent auctioned the shares without the consent of shareholders and without original shre certificate and transfer form in their possession. The earlier action appears to the illegal and not as per the Companies Act 2013 - answered in negative. The company has no right to auction and allot the shares to the third parties ignoring the right of fully paid up shareholders. The rental dues claimed by the respondent company is not supported by rental/lease agreement which is agreed by shareholder - Petitioner is declared as the legitimate equity share holder under Folio No. 41 - application disposed off.
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