TMI Blog2013 (9) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... he firm and on the contrary he practically became the full owner of the partnership business, S.N. Sud having decided to become a sleeping partner and that too only till March, 1994. A very crucial aspect of the case is the long period of 15-16 years in which the appellant had accepted the settlement and acted upon it. Not only the appellant, but also the other members of the family did act upon the settlement. It should not be forgotten that the appellant himself got the bag-closing and conveying systems business, earlier carried on by the partnership firm of himself and his father, only in terms of the family settlement. He also resigned from the directorship of the company as he no longer had any interest in the working of the company, having foregone his shares in favour of the other family members. It would therefore be counter-productive for him to question the very existence of the family settlement. But the contention was that the long period of silence or inaction on his part does not amount to acquiescence or estoppel. A shareholder, it was contended, did not have to do anything except hold on to his shares which is what he did in all these years. He also became ill du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph, notes that as per the records available with the RoC, as on 31.03.2000, the status of the shareholding of Rs. 6,50,000 was that Manju Shiv Sud held 39,650 shares of Rs. 10 each amounting to Rs. 3,96,500 and Pankaj Shiv Sud held 25,350 shares of Rs. 10/- each amounting to Rs. 2,53,500. This shows that even on 31.03.2000, the appellant was not a shareholder - Decided against appellant. - CO. A(SB) 69/2011 - - - Dated:- 18-9-2013 - R. V. Easwar,JJ. For the Appellant : Mr. H. L. Tiku, Sr. Advocate with Mr. Ajay Goyal, Mr. Shubhankar Sengupta, Mr. Shailabh Tiwari, Mr. Bikash Mohanty and Ms. Ritu Chabbra, Advocates. For the Respondents : Mr. Anish Dayal with Mr. Siddharth Vaid, Advocates. JUDGMENT R. V. Easwar, J. This is an appeal filed under Section 10F of the Companies Act, 1956, the order impugned being that of the Company Law Board passed on 04.07.2011 in Co. Pet. No.10/111/2009, in an application filed by the appellant herein under section 111(4) of the Act for rectification of the register of members. 2. M/s. Stitchwell Qualitex Pvt. Ltd., the first respondent herein, is a company incorporated on 23.07.1980. Its initial shareholders were member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5% of the total shares and therefore he was entitled to be taken into confidence about the manner in which the company was being run, the meetings held etc. He also claimed that there were irregularities in the manner of conducting the affairs of the company and fudging of records, forging his signatures and the like. He also demanded to be supplied with a copy of the family settlement said to have been effected by his father. 7. The company s response, through its advocate s letter dated 09.04.2009 was this. There was a family settlement in 1993 under the guidance of late S.N. Sud, under which it was decided that the appellant would resign from the company and take up the operations of the firm M/s. Stitchwell Qualitex at A-11, Sector 57, Noida, S.N. Sud would continue in the firm only as a sleeping partner, that too only till March, 1994. The company would continue to run the operations at G-58, Sector-6, Noida. It would be managed by S.N. Sud and the appellant (Dinesh Sud) would withdraw from his rights in the company. This arrangement was informed to the NOIDA authority on 31.12.1993 by a letter, which was also signed by the appellant. Pursuant to the family settlement as abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent before the CLB, was wrong in denying inspection to the appellant; (v) the appellant was denied information about the affairs of the company and its accounts, as well as about the meetings held; (vi) the mere separation of the family business into agricultural implements business and bag-closing machines and conveying systems which took place in 1993 is being deliberately twisted to show as if it was a family settlement; (vii) facts were misrepresented to the Noida authority; (viii) the petitioner was ill with acute ulcerative colitis and severe eye problem between 2001 and 2008, which prevented him from raising his claim with the company; there was no negligence on his part. 9. On behalf of the respondents before the CLB, the following points were made: (i) the petition filed after 16 years from 1993, when the name of the appellant was said to have been omitted from the register of members, is vexatious; (ii) the petitioner was not justified in denying the family settlement, of which he was part, and was thus within his knowledge; (iii) the petitioner cannot avail of the remedy under section 111 which provides for a summary proceeding, and the proper remedy was to file a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his view of the matter, the petition was dismissed. 11. It is the above order of the CLB that is under challenge in the appeal before me. 12. The learned counsel for the appellant Dinesh Sud confined his claim to the 2500 shares allotted to him in 1983, apparently realising the difficulty in pitching his claim higher to include the shares which the appellant claimed on the death of his parents, which would have involved complicated questions relating to the proving of the will etc. that are really matters for a civil court to deal with. He contended that firstly there was no period of limitation prescribed by sub-section (4) of section 111 for filing an application to the CLB seeking rectification of the register of members and therefore the observations of the CLB regarding laches and unreasonable delay on the part of the petitioner-appellant were of no relevance. He pointed out that section 108 is mandatory in nature, in the sense that no transfer of shares can be registered by the company unless there is a written transfer deed; in the present case, there was no communication from the appellant to the company to transfer his shares. Therefore, it was contended, the removal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily settlement effected earlier. Moreover, there was complete silence on the part of the appellant during a period of 16 years from 1993 till the date of filing the petition before the CLB, which is wholly inconsistent with the claim now made. The long and inordinate delay has not been explained; there was thus laches on his part. Further, there is no medical certificate filed in support of the illness from which the appellant was said to have been suffering during 2001-2008, and in any case, it covers only a part of the long period, the period between 1993 and 2001 remaining to be explained. The extracts from the minutes-book for the meeting held on 20.06.1997 filed by the appellant himself, do not show his name as a shareholder, and show only S.N. Sud, Manju Shiv Sud and Pankaj Shiv Sud as shareholders. A letter had also been written by Krishna Sud on 28.11.1994 to the company asking it to transfer her shares in the name of her husband, daughter and grandson; no shares were given to the appellant, her son. Strong reliance was placed on the judgment of the Supreme Court in Kale vs. Deputy Director of Consolidation ors. (1976) 3 SCC 119 in which the sanctity to be accorded to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solidation and Ors. (supra) that a family settlement may be implied from a long course of dealing. Since it is assumed that there is some sort of antecedent title vested in the parties to the settlement which the settlement recognises and acknowledges, no conveyance is required in these cases to pass the title from the one in whom it resides to the person receiving it under the settlement: Sadhu Madho Das vs. Pandit Mukand Ram (supra). In Ram Charan Das (supra) it was further observed that the consideration in the case of a family arrangement is the expectation that it will result in establishing or ensuring amity and goodwill amongst persons bearing relationship with each other and therefore the rights obtained thereunder cannot be permitted to be defeated thereafter. The courts strongly lean in favour of family arrangements or settlements because they ensure peace, harmony, amity and goodwill amongst the members of the family and settle present disputes and avoid future disputes. In Mathuri Pulliah s case (supra) it was further held that the disputes need not involve legal claims, and bona fide disputes, present or possible, are sufficient. In Kanhaiya Lal vs. Brij Lal (AIR 191 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 67, NOIDA COMPLEX-201301, DISTRICT GAZIABAD (U.P.) 31.12.1993 Ref no.S:SN:103:93:VN The Chairman Noida. Dear Sir, We wish you very Happy New Year. We have to inform you that in the interest of efficient working, bout the partners of M/s Stitchwell Qualitex have decided to divide the operation of the business into two independent units, one. At A-11, Sector 57 of Closing Machines and conveying systems to be looked after and managed by Sri Dinesh Sud and the other, at G-58, Sector-6 for the manufacture of Agricultural Machines to be looked after and managed by Shri S.N.Sud exclusively, Shri Dines Sud having withdrawn from his rights. It is also understood that Shri S.N.Sud shall continue to be sleeping partner is stitchwell qualitex till end March 1994. It was also agreed that necessary stage be taken to approach you for making such amendments in your records. We have no objection to the division of the properties as mentioned above. An early action on your part shall be very much appreciated. Thanking you Yours truly For Stitchwell Qualitex 1. Dinesh Sud 2. S.N.Sud There may be some ambiguity in the words used in the letter, but the argument of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CLB. 17. A very crucial aspect of the case is the long period of 15-16 years in which the appellant had accepted the settlement and acted upon it. Not only the appellant, but also the other members of the family did act upon the settlement. It should not be forgotten that the appellant himself got the bag-closing and conveying systems business, earlier carried on by the partnership firm of himself and his father, only in terms of the family settlement. He also resigned from the directorship of the company as he no longer had any interest in the working of the company, having foregone his shares in favour of the other family members. It would therefore be counter-productive for him to question the very existence of the family settlement. But the contention was that the long period of silence or inaction on his part does not amount to acquiescence or estoppel. A shareholder, it was contended, did not have to do anything except hold on to his shares which is what he did in all these years. He also became ill due to acute ulcerative colitis and severe eye problem between 2001 and 2008. But when once he came to know that his name did not appear in the register of members, he immedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court (supra). There is total absence of any explanation for the long delay or laches. Moreover, the appellant has confined his claim to the 2500 shares which were allotted to him in 1983 and has not made any claim over the shares left by his deceased parents who died in 1995 and 2001. Further, the copy of the extracts from the minutes-book as on 20.06.1997, filed by the appellant himself, shows that on that date there were only three shareholders: S.N. Sud, Manju Shiv Sud and Pankaj Shiv Sud. The appellant had referred to the inspection report of the chartered accountant which stated that the annual returns for the years 1990-91 to 1998-99 were not available in the records of the RoC; the same inspection report, in the opening paragraph, notes that as per the records available with the RoC, as on 31.03.2000, the status of the shareholding of Rs. 6,50,000 was that Manju Shiv Sud held 39,650 shares of Rs. 10 each amounting to Rs. 3,96,500 and Pankaj Shiv Sud held 25,350 shares of Rs. 10/- each amounting to Rs. 2,53,500. This shows that even on 31.03.2000, the appellant was not a shareholder. 21. In the light of the above discussion, I do not consider it necessary to ref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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