TMI Blog1999 (6) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 8 is A.P. Industrial Development Corpora- tion (the 'Corporation'). The respondent No. 2 and the respondent No. 8 were the co-promoters of the respondent No. 1 company. 4. The contention of the petitioners, in the company petition before the learned single Judge was that the third petitioner and his group wanted to purchase 1000 shares of the respondent-company and negotiations were made for the same by the respondent No. 2. The price of shares was fixed at Rs. 110 per share. The petitioner No. 7 took a demand draft of Rs. 1,10,000 on 31-1-1981 in favour of the respondent No. 7 and simulta-neously the respondent No. 2 obtained bank demand drafts from the very same bank for different amounts in favour of (1) the respondent No. 7, (2) V. Madhusudhana Rao, (3) V. Krishna Rao and (4) K.V.S.N. Prasad. It may be pointed out that Sri Madhusudhana Rao and Krishna Rao are brothers and together held 1250 shares of the face value of Rs. 100 each. The petitioner No. 7 took a draft for Rs. 6,000 from his Bank as instructed by the respondent No. 2 and both of them (petitioner No. 7 and respondent No. 2) then met at the Office of Mr. Kolluri who was admittedly auditor of the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, contend that the respondent company had never rejected the petitioners claim to register shares in favour of petitioners and suppression of six instruments of transfer in favour of the petitioners by the respondent Nos. 1 and 2 was an act of fraud and the same was substituted in the name of the appellants/claimants in whose favour ultimately it has been registered. This was done due to the fact that the respondent No. 2 was in possession of the blank share certificates, and that the respondent No. 2 had obtained signatures of transfer. On these allegations, the petitioners claim that since they had in fact purchased the shares by paying the amounts to the respondent No. 2, the respondent No. 1 company be directed to rectify the register of members of the company by including the petitioners name in respect of concerned equity shares. The details of distinctive numbers of the shares have been given in the schedule. 5. The respondent Nos. 1 and 2 were the real contestants before the learned Single Judge. They had filed a joint counter. Another counter was filed by the respondent No. 3. The other respondents did not file any counter. 6. The plea of the respondent Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riate company was a party. It was immaterial if the said company was takenover by Coromandel Indag (P.) Ltd. later on. The petition was maintainable as the respondent No. 1 was the appropriate company, against whom the petitioner had sought relief. The learned Single Judge found that merely the Management of the Company the respondent No. 1 was takenover, and therefore, it did not matter as to who managed the company, if the company itself was a party. The mere fact that the respondent No. 2 ceased to be the managing director and the management was taken by some other company did not make any difference. 9. The learned counsel for the respondent Nos. 3 and 9 to 14 (who are the appellants in OSA No. 25 of 1989) raised three points before us to challenge the validity of the impugned Judgment. The first point was that the Company Court ought not to have exercised its jurisdiction in a summary proceedings under section 155 for deciding the question wherein fraud was alleged by the petitioner. Secondly, it was alleged that assuming that the court had jurisdiction, the fraud alleged by the petitioners was nowhere established. Thirdly, it was contended that there was violation of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares is not barred." (underlined to give emphasis) From these conclusions, it is patent that Company Court has power to decline to go into disputed and complicated questions, but it is not mandatory for the Company Court to decline to entertain petition involving disputed questions. The conclusion No. 3 only states that filing of a suit for adjudication of disputes relating to title to shares is not barred. This conclusion only means that a suit also is maintainable. We are unable to find anything in the said Judgment to support the contention of respondents that the jurisdiction of Company Court is completely ousted as soon as there are some disputed questions of fact thrown up in a petition before the Company Court. 11. The learned counsel also referred to a decision of the Supreme Court reported in Ammonia Supplies Corpn. ( P. ) Ltd. v. Modern Plastic Contain-ers ( P. ) Ltd. (2) [1998] 7 SCC 105. No doubt in this case the Apex Court held that jurisdiction of Company Court under section 155 is of a summary in nature, but it was further held that the Company Court has to adjudicate in the facts and circumstances whether the dispute raised really is for rectification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 2 by giving a phone call. Nextly it is proved from that evidence that the petitioner No. 7 attended the Banjara Hills Police Station, where the found that the respondent No. 2 and other co-promo- ters were having some disputes inter se. The co-promoters were asking the respondent No. 2 to return their capital from the company. At that point the respondent No. 7 informed co-promoters that he was interested in purchasing their shares. The evidence also shows that the respondent No. 2 later took the petitioner No. 7 along with him to show the factory of the Company at Patancheru, and thereafter the petitioner No. 7 was asked to come with cash of Rs. 1,10,000 for the shares in question. The respon-dent No. 2 asked the petitioner No. 7 to come at Syndicate Bank Branch, Somajiguda with the amount. It is needless to go into the minute details of the evidence. Suffice it to state that the evidence is quite convincing and has all been accepted. The evidence shows that the petitioner No. 7 took the demand draft in favour of the respondent No. 7. Sri K.V.S.N. Prasad and cash of Rs. 4,500 was given to the respondent No. 2. The evidence clinchingly establishes that at the instanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould examine him. No reason is forthcoming for non-examination of Kolluri by the respondents. The evidence of R.W. 3 Mr. V.L. Pahade, who is also the respondent No. 3, is obviously unacceptable. R 3 stands to gain by his evidence. Hence it is difficult to accept it. 17. A defence has been raised that the petitioner Nos. 3 and 4 wanted to purchase only 100 shares which has been rightly disbelieved by the learned Single Judge. The learned Single Judge has highlighted the fact that the petitioner No. 3 was made additional director of the company. It is true that under section 270 of the Act, it is not necessary that a director should have shares of the company in his name at the point of time of he being appointed as a Director. However, having regard to the common course of business, it is impossible to believe that a totally stranger like the petitioner No. 3 would be made additional director, even though he was not holding any shares. It is not the case that the petitioner No. 3 was known since long time by the respondent No. 2. Furthermore normally a person is made as director without holding shares only if services of such person would bring some benefit to the company. If a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness box, his evidence would have been to the detriment of the respondents, in the case. 19. The evidence of the respondent witness No. 4, witness No. 5 and witness No. 6 is of very little value of the respondents. 20. In our view, in the first place, there is no reason for reappreciating the evidence by us in the appeal as the learned Single Judge has taken a very probable view of the evidence in the circumstances of the case. Assuming that evidence requires reappreciation in the appeal, even then on reappreciation we concur with the findings of the learned Single Judge for the reasons given above. In the circumstances, the refusal of respondent- company to register the transfer of shares in the name of petitioners was unjustified and the petition was rightly ordered in favour of the petitioners. 21. The last contention raised by the respondents (Appellants) was that the company cannot register transfer of shares unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name and address and occupation of the transferee has been delivered to the company. However, proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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