TMI Blog2010 (2) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... f three years, the view of the Company Law Board that the action was well within the limitation, hence, merits to be accepted. In the circumstances, the order of the Company Law Board stands confirmed and this company appeal stands dismissed. No costs. - CIVIL MISC. APPEAL (NPD) NO. 2304 OF 2004 - - - Dated:- 9-2-2010 - MRS. CHITRA VENKATARAMAN, J. R. Venkatavaradan for the Appellant. A.K. Mylsamy for the Respondent. JUDGMENT Mrs. Chitra Venkataraman, J. The respondents in the company petition before the Company Law Board are the appellants herein challenging the order passed under section 111 of the Companies Act, 1956 (A. Devarajan v. N.S. Nemura Consultancy India P. Ltd. [2006] 130 Comp. Cas. 407). The respondent herein sought for rectification of the register of members of the company by deleting the name of the second appellant herein as owner of 101 equity shares of the company and entering the respondent's name as the holder of the impugned shares. 2. The appellants have raised the following questions of law : "( a ) Whether the Company Law Board was right in holding that the petition is not barred by limitation when the petitioner had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concern" that the company's account settled on December 30, 1995, was accepted by the respondent herein ; he had also received his profit due to him from the business transacted up to December 30, 1995 and he would not involve himself in the name of the company in any other transaction. The managing director of the company lodged a complaint with K.K. Nagar Police Station, Chennai on January 4, 1996, alleging that on January 3, 1996 at about 8.00 p.m., the respondent trespassed into the company along with several persons, threatened the first appellant and other employees and removed all the documents. In the circumstances, the managing director sought for protection to his life and to the property after taking necessary action against the respondent. Thereafter, there was no progress or further investigation made by the appellants herein. While the matter stood thus, the respondent herein sent a notice on April 12, 2003, stating that without the consent and knowledge of the respondent, the shares held by him had been transferred in favour of one Paneerselvam, the second appellant herein. It was stated that he was under the bona fide impression that he was the owner of the 101 equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996. In the above circumstances, the appellants submitted that the respondent approached the Company Law Board without any cause of action for seeking the relief of rectification under section 111 of the Companies Act and as there is no question of any rectification of the register, the claim itself was barred by limitation. 6. The respondent herein reiterated his contention in the rejoinder that he had not executed any transfer deed and in the absence of duly executed transfer deed, he could only presume that the company had effected the same on the basis of the forged deed. 7. After hearing both parties, the Company Law Board passed an order granting the relief to the respondent. As to the plea of limitation taken by the appellants herein, the Company Law Board pointed out that the shares were purportedly transferred on January 30, .1997, about which the respondent claimed no knowledge till the records were inspected by him in March, 2002. Thus with the knowledge on the transfer of shares gained in the year 2002 on the inspection of the records of the company with the Registrar of Companies, the respondent rightly invoked the jurisdiction of the Company Law Board on July ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8] 94 Comp. Cas. 310; [1998] 7 SCC 105 (Ammonia Supplies Corporation P. Ltd. v. Modern Plastic Containers P. Ltd.) ; [1999] 98 Comp. Cas. 378 (Bom.); [1999] 2 Comp. LJ 205 (National Insurance Co. Ltd. v. Glaxo India Ltd.) ; [2000] 100 Comp. Cas. 349 (CLB); [2000] 1 Comp. LJ 110 (A Akhilandam v. Great Eastern Shipping Co. Ltd. and [2007] 137 Comp. Cas. 229 (Ker.); [2008] 2 Comp. LJ 314 (Duroflex Ltd. v. Tommy Mathew). 11. He laid emphasis on the decision of the apex court reported in [1998] 94 Comp. Cas. 310; [1998] 7 SCC 105 (Ammonia Supplies Corporation P. Ltd. v. Modern Plastic Containers P. Ltd.), particularly to paragraph 28, wherein the apex court pointed out that the word "rectification" connotes something what ought to have been done but by error not done and what ought not to have been done but was done requiring correction. If the error is something to be rectified on the available material on a scrutiny of documents, then certainly the Company Law Board has jurisdiction. He pointed out that the burden is on the respondent. In the circumstances, he submits that the order passed by the Company Law Board is liable to be set aside. 12. Heard learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the mandatory provisions of section 108 of the Companies Act. 15. In the decision reported in [1977] 47 Comp. Cas. 185 ; [1977] 2 SCR 190 (Mannalal Khetan v. Kedar Nath Khetan), the Supreme Court emphasised as to the mandatory character of section 108(1) requiring that the company shall not register a transfer which does not comply with the provisions of the Act. The Supreme Court pointed out that the mandatory character is strengthened by the negative words used in section 108(1) of the Act. 16. In the context of the above said decision, the decision of the Supreme Court reported in [1998] 94 Comp. Cas. 310 ; [1998] 7 SCC 105 (Ammonia Supplies Corporation P. Ltd. v. Modern Plastic Containers P. Ltd.) assumes significance. The Supreme Court, in the said decision, referring to the word "rectification", held as follows (page 326) : "28. Question for scrutiny before us is the peripheral field within which the court could exercise its jurisdiction for rectification. As aforesaid the very word 'rectification' connotes something what ought to have been done but by error is not done and what ought not to have been done but was done requiring correction. Rectifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration of such transfer, which should have been in the custody of the appellants herein. It is not denied by the appellants herein that where any transfer takes place as regards the shares held by the shareholders, it should get reflected in the statutory books to be maintained, apart from the meeting of the board of directors approving the transfer. It is also not denied by the appellants that the transfer deeds are in the custody of the company. However, nothing had been produced before the court to substantiate the explanation from the appellants that they are all part of the record, which had been removed by the respondent. 19. A reading of the complaint made by the appellants show that there was only a general allegation as regards the removal of documents belonging to the company by the respondent. If really the appellants had a complaint about the removal of the transfer deeds, nothing prevented them from taking up the cause against the respondent immediately thereon. 20. In the circumstances, the findings of the Company Law Board are. unexceptional, being based on the admitted fact as regards non-production of the resolution as well as the documents. 21. Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly called for in the case and the company was to issue duplicate share certificate in respect of the impugned shares in favour of the respondent herein. Hence, even applying the decision of the apex court, particularly, the case reported in [1998] 94 Comp. Cas. 310 ; [1998] 7 SCC 105 (Ammonia Supplies Corporation P. Ltd. v. Modern Plastic Containers P. Ltd.), in the absence of any material to support the case of the appellants on valid transfer in terms of section 108 of the Act and when the basic documents were not placed before the Board by the appellants, rightly the Company Law Board granted the relief, a course which could not be faulted by this court. 24. As regards the plea of limitation, in paragraph 57 of the order, the Company Law Board dealt with the said contention only to point out that the respondent acquired knowledge of the transfer of shares only in the year 2002 and the company petition was filed on July 21, 2003, within a period of three years of acquiring knowledge. In the above circumstances, applying section 137 of the Limitation Act, 1963, the Tribunal answered the question in favour of the respondent. 25. The Company Law Board pointed out th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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