TMI Blog2015 (4) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas in para No.6(i) she has admitted that she received a sum of Rs,20,05,000/- towards part payment of the sale consideration for transfer of the said shares and the balance amount was to be paid upon valuation of the shares by a Chartered Accountant in terms of Articles of Association of the Company. In the instant case, it is a established fact that the Petitioner was paid ₹ 20,05,000/- as sale consideration, which according to case of the Petitioner towards the part payment of the total safe consideration to be determined by the Chartered Accountant in terms of AOA of the Company. However, admittedly the said amount is still lying with the Petitioner and she has not refunded the same till date to the respective Purchasers of the shares-in-question i.e Respondent Nos. 3 and 4 despite her own admission that she never intended to transfer the said shares, as contended by her. Moreover, she has not deposited this amount anywhere including this Board prior to filing of the instant petition. In my view, the Petitioner is therefore a party to such sale transaction having received the said amount which although according to her, is a part payment only. In addition to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 111 of the Old Act, 1956) read with Sections 397, 398 and 402 of the Companies Act, 1956 (hereinafter referred to as the Act in short) seeking a declaration to the effect that the Petitioner is a lawful owner of 2005 equity shares of ₹ 1,000/- each. It is further prayed that an order be passed thereby directing the Respondents to rectify in the Register of Members of the Company by reinstating the name of the Petitioner in place of the Respondent Nos.3 and 4 in respect of the shares-in-question. The Petitioner has also alleged certain acts of oppression and mismanagement purportedly committed by the Respondent Nos.2 to 7 in the conduct of the affairs of the Respondent No. l Company (hereinafter referred to as the Company in short) and has sought various reliefs under Section 402 of the Act as contained in the Petition. 2.1 The undisputed facts are that the Company was incorporated on 21/9/1988 with the Registrar of Companies, Maharashtra, Mumbai, and that around 1992, the Petitioner had purchased 5 Equity Shares of ₹ 1,000/- each and further on 31/3/1993, she purchased 2000 shares of ₹ 1,000/- each, totaling to 2005 Equity Shares comprising 20% of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding but the company failed to reply to the same. 2.6 It is stated by the Petitioner that the ROC, vide its letter dated 2/5/2013, replied to her complaint dated 26/11/2012 informing her that she was no longer a member of the Company after June 2007. The ROC further informed that as per the records maintained by the Company, which were produced before the ROC, she had transferred the shares in the name of the Respondent Nos. 3 and 4 and received a consideration of ₹ 20,05,000/- for the same. It is further stated that, in reply to the said letter dated 2/5/2013 of the ROC, the Petitioner addressed a letter dated 1/8/2013 to the ROC, recording therein, inter alia, that she had neither executed a share transfer form nor had executed the transfer deeds in terms of Section 108 (1) of the Act for transfer of the shares at any point of time; that the said alleged transfer, shown to have purportedly taken place in June 2007, had taken place without her knowledge or consent or authority and that the transfer, if any, has been done fraudulently and illegally; that the amount which was alleged to have been received by her towards the consideration for transfer of the said shares wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible to file the present petition in terms of the provisions contained in Section 399(1) (a) of the Act; (b) secondly, because the petition is barred by law of limitation; and (c) thirdly, because the Petitioner has not approached this Board with clean hands and suppressed the material documents and vital facts and tried to mislead the Bench and hence, the Petition deserves to be dismissed. 4. On merits, the Respondents have denied the allegation relating to acts of oppression and mismanagement purportedly committed by them towards the Petitioner. It has been further stated that on 30/6/2007 the petitioner had transferred her entire shareholding, comprising 2005 Equity Shares of ₹ 1,000/- each, in favour of the Respondent Nos.3 and 4 as shown in the following chart :- Date of transfer No. of Equity Shares transferred Distinctive No(S). Certificate No. Name of Transferee Remarks 30/6/2007 5 0031 to 0035 008 Mr. Prem Nandkumar Kalati 30/6/2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eking its dismissal in limine at threshold stage without entering into the merits of the case on the ground that the Petitioner does not hold the requisite qualification in terms of Section 399(1)(a) as on the date of filing of the petition she was not holding share in the company and her name was not existing in the Register of Members of the Company. According to the Ld. Counsel for the Respondents, the Petitioner has sold her entire shareholding in favour of the Respondent Nos. 3 and 4 as stated hereinabove and her name was accordingly deleted from Register of Members of the Company. 10. On the otherside, the Ld. Counsel appearing on behalf of the Petitioner contended that, admittedly, the Petitioner was holding 2005 shares constituting 20% total paid-up capital of the Company. According to the Ld, Counsel, she never transferred the shares in favour of the Respondents as contended by them. According to the Petitioner's Counsel, the alleged transfer of shares is bogus, void and ultra vires, being without consideration, in violation of Articles of Association of the Company and Section 108(1) of the Act and therefore, the same cannot be recognized under law. It was contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pleadings and law on this point. This will also help this Board to determine the question of limitation raised as a preliminary point on behalf of the Respondents. In view of the above, I now proceed to discuss with the validity of the transfer/sale of 2005 shares held by the Petitioner in favour of the Respondent Nos.3 and 4. 12. The Ld. Counsel appearing on behalf of the Petitioner argued that the alleged transfer of 2005 equity shares in favour of the Respondent No.3 and 4 is patently illegal, void and ultra vires, and that as the removal of the name of the Petitioner from the List of Members of the Company, without sufficient cause, she is entitled to be declared as lawful owner of the impugned shares and a member of the Company Further, the register of members of the Company is required to be rectified in terms of the provisions contained in Section 111 of the Act as prayed by the Petitioner, and therefore, this composite petition, filed under Section 59 of the Companies Act, 2013 and Section 397/398 of the Act, is maintainable, 13. The Ld, Counsel appearing on behalf of the Petitioner further submitted that any transfer of shares must comply with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaraj v. V.B. Gopalkrishnan [1992] AIR SC 453,the Ld. Counsel appearing for the Petitioner submitted that the provisions of Sections 26, 28, 31, 36, 39, 40 and 82 of the Companies Act, make it clear that the Articles of Association are the regulations of the company binding on the company and thus, on its shareholders. The Ld. Counsel further submits that the shares are undisputedly a movable property and their transfer is regulated by the Articles of Association of the Company. It was, therefore, argued that since Respondent Company did not follow the rules/regulations/guidelines as laid down in the Articles of Association of the Company, the question of a transfer of shares, as alleged by the Respondents, does not arise. In support of the above contentions, the Ld. Counsel further relied upon the decision in the case of Unity Realty and Developers Ltd.v. BW Highway Star Pvt., Kamat Hotels (India) Ltd., Clearwater Capital Partners (Cyprus) Limited and BSEL Infrastructure Realty Limited [2010] (1) Bom. CR 333,wherein it has been held that there can be no restriction on the transfer of shares in dematerialized form or physical form, but it needs to be subject to the Articles of Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be granted. 20. Responding to the above submission, the Ld. Counsel appearing on behalf of the Respondents took me through the Petition and the Rejoinder filed by the Petitioner. The Ld. Counsel for the Respondent invited my attention to para No.6(i) of the petition wherein the Petitioner has herself admitted that the amount which allegedly received by the Petitioner is towards part payment subject to valuation of the shares by a Chartered Accountant. The Ld. Counsel further attracted my attention to the said para and pointed out that the petitioner has further admitted that the company sent the transfer deeds for the Petitioner's signature but the same was not signed by the Petitioner and the said original transfer forms are still in the Petitioner's possession. The Ld. Counsel then invited my attention to para No.4 of the Affidavit-in- Rejoinder which inter alia states as follows:- The Respondent Nos.1 to 7 have alleged that the shares belonging to the Petitioner have purportedly been transferred to the Respondent Nos. 3 and 4 in the year 2007 and for which the Petitioner has received consideration of ₹ 20,05,000/-. In the year 2007, the Petitioner propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Counsel submitted that pursuant to the sale transaction, the original share Certificates were handed over to the Petitioner, however, the transfer deeds although were duly executed, yet they were misplaced and now the Petitioner being a party to the said transaction, cannot be allowed to challenge the same on account of non-compliance of the provision contained in Section 108(1) of the Act. 22. Pointing out the conduct of the Petitioner, it was argued by the Ld. Counsel appearing on behalf of the Respondents that the Petitioner did not deny having received the amount, although according to her, the said amount was received as part consideration. According to the Ld. Counsel for the Respondents, had it been only part consideration and the transaction with respect to purchase of the transfer was not completed, the Petitioner ought to have refunded the amount so received immediately. Now, after having retaining and utilizing this amount for a period over 7 years, she cannot be allowed to challenge the said transfer of share merely on the ground that the transfer deeds were not duly executed. The Ld. Counsel further submitted that, had the intention of the Petitioner were bona f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned transfer forms are in the possession of the Petitioner as the same was never executed or send back to the Company, whereas in para No.6(i) she has admitted that she received a sum of Rs,20,05,000/- towards part payment of the sale consideration for transfer of the said shares and the balance amount was to be paid upon valuation of the shares by a Chartered Accountant in terms of Articles of Association of the Company. Thereafter, in para No.4 of the Affidavit in Rejoinder, the Petitioner has stated that she came to know about the receipt of the amount of ₹ 20,05,000/- after demise of her husband in the year 2011. She has further disputed the authority of her husband late Shri Ramesh Grover to issue the receipt produced by the Respondents to prove that the entire sale consideration in the sum of ₹ 20,05,000/- was paid through the Bank. In my opinion, the above stated admissions made by the Petitioner clearly established that she had knowledge of the payment of ₹ 20,05,000/- in respect of the transfer of the impugned shares in favour of Respondent Nos.3 and 4 since June, 2007. Had she any grievance regarding the non-payment of full consideration, she should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e original share certificates are admittedly in the possession of the said Respondents. The endorsements made at the back side of share certificates-in relation to the transfer in favour of Respondent Nos.3 and 4 shows that the transfers of the shares were duly recorded in their favour. The extract of the Register of Members, filed along with the reply, proves the fact that proper entries were made in respect of the transfer of shares and the name of the Petitioner was deleted as a member of the Company. Further, the Annual Returns filed by the Company with the office of the Registrar of Companies reflect the transfer of shares in the year 2007 onwards. Apart from the above, it is pertinent to mention here that the Petitioner has herself filed the transfer deeds along with the petition as Annexure A3 . These two transfer deeds were duly issued by the ROC. It is to be noted that, proper stamp duty is affixed thereon and the respective transferees have duly signed these Transfer Deeds. However, the Transferor (the Petitioner) has not signed these transfer deeds. Therefore, the question that arises for consideration now, is as to whether on account of the violation of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chasers of the shares-in-question i.e Respondent Nos. 3 and 4 despite her own admission that she never intended to transfer the said shares, as contended by her. Moreover, she has not deposited this amount anywhere including this Board prior to filing of the instant petition. In my view, the Petitioner is therefore a party to such sale transaction having received the said amount which although according to her, is a part payment only. In addition to the above, In the original share certificates the names of the transferees have been duly recorded. The Register of Members of the company has been rectified accordingly. Furthermore, in the instant case, the transfer deeds were partly executed and were handed over to the Petitioner for her signatures. This possibility cannot be ruled out that the Respondents might have forgotten to receive back the said transfer deeds and now the Petitioner out of greed by misusing the same, is trying to resile from the sale transaction in which she herself was a party. Last but not the least, this argument of the Respondents cannot be brushed aside that had the intentions of the Petitioner were bona fide, she would have immediately repaid the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows : 54. It was submitted by Mr Setalvad that the principle of law enunciated tn the aforesaid decisions in England is restricted in its application to cases where the illegal contract has been performed and does not apply to an illegal contract which has been performed only in part. He contended that inasmuch as the ready-forward contract had only been performed in part, namely, as securities had been transferred under the first leg but the second leg was still to be performed, the principle laid down in the English cases would have no application. This contention of Mr. Setalvad cannot be accepted because the ratio of the said decisions is applicable even where an illegal contract is partially performed as would be evident from the following observation of Lord Browne Wilkinson; Neither at law nor in equity will the court enforce an illegal contract which has been partially, but not fully performed. However, it does not follow that all acts done under a partially performed contract are of no effect. In particular it is now clearly established that at law (as opposed to in equity) property in goods or land can pass under, or pursuant to, such a contract. (Emphasis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , hold that the Petitioner's name was removed from the Register of Members of the Company for sufficient cause. Based on the appreciation of the pleadings and evidence. It is, now established that the Petitioner was not a shareholder/ member on the date of filing of the petition and hence, she is not eligible to file a petition under Section 397/398 of the Act in terms of provisions contained in Section 399 of the Act. The Petition therefore, deserves to be dismissed on this ground alone. For the reason stated herein above, the prayer made by the Petitioner under Section 59 of the Companies Act, 2013 seeking declaration of title of shares and rectification in the Register of Members is without substance and hence same is liable to be declined. It is declined accordingly. 30. Now, I proceed to deal with the issue of limitation raised by the Respondents. Dealing with the issue of Limitation, the Ld, Counsel, appearing on behalf the respondents, argued that the Petition is time barred and hence liable to be dismissed. Elaborating the said plea, the Ld. Counsel on behalf of the Respondents, submitted that the impugned shares were transferred by the Petitioner to the Respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Smt. Nupur Mitra Anr. v. Basubani Pvt. Ltd. Ors. (1999) 2 CALLT 264 HC. 33. Responding to the above, while Inviting my attention to the Letter dated 21/4/2012 written by the Petitioner to the Company, the Ld, Counsel appearing for the Petitioner submitted that after demise of her husband In the year 2011, the Petitioner vide her letter dated 21/4/2012 brought to the notice of the Company that since the Petitioner was a registered member having Ledger Folio No.7 in the Register of Members of the Company, and also a shareholder, she was entitled to receive notices and other related documents, which a member of the company, under Section 53 of the Act, was entitled to receive. Thereafter, while inviting my attention to the Letters dated 1/6/2012, the Ld. Counsel submitted that the reminder was sent to the Company by the Petitioner and further vide letter dated 16/10/2012, the Petitioner sought for inspection of the statutory documents, to which the Petitioner was entitled to. When the Respondents did not pay any heed, the Petitioner made a complaint to the ROC in this regard vide her letter dated 26/11/2012 and requested the ROC to scrutinize the documents and returns which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at after 2007, the company was not correctly showing the shareholding pattern of the Company in its Annual Statement filed with the ROC. She has nowhere stated that her name existed in the shareholding in the Annual Returns filed after 2007 onwards. Admittedly, her name did not exist as a shareholder after 2007. This fact is confirmed from perusal of the order passed by the ROC on her complaint which states as under:- To Mrs. Raju Gover, Mumbai With reference to the above, it is informed that your complaint was taken up with Kalati Construction Private Limited who have since informed this office that you are not a member of the company subsequent to June, 2007. Further, information was called from the company to substantiate its Stand, during the process of which, the company had produced the Register of Members, Minutes of Board Meetings as also receipt from your good self having received consideration of ₹ 20.05 lacs including credit of the same into your account, evidencing transfer of shares from you to S/Shri Lalit N. Kalati and Prem N, Kalati. Bused on the said records produced by the company, It appears that you are no longer a shareholder of the company s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in any case, is not entitled to discretionary relief by the Court. It is further established that the Petitioner has filed this petition with ulterior motive and collateral purpose to exert pressure on the Respondents and not with genuine objective and on this ground also the petition deserves to be dismissed. In support of my view, I would like to refer few decisions as follows:- a. In the Case Of Ramjas Foundation and Anr. v. Union of India of India and Ors. [2010] 14 SCC 38, it is held as follows:- The principle that a person who does not come to the court with dean hands is not entitled to be heard on the merits of his grievance and, in any case, such person is not entitled to any relief is applicable not only to the petitions filed under Articles 32, 226 and 136 of the Constitution but also to the cases instituted in others courts and judicial forums. The object underlying the principle is that every court is not only entitled but is duty bound to protect itself from unscrupulous litigants who do not have any / respect for truth and who try to pollute the stream of justice by resorting to falsehood or by making misstatement or by suppressing facts which have a beari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... har [2004] 7 SCC 166 and Oswal Fats Oils Ltd. v. Commr. (Admn.) [2010] 4 SCC 728 this Court held that whenever the court comes to the conclusion that the process of the court is being abused, the court would be justified in refusing to proceed further and refuse relief to the party. This rule has been evolved out of need of the courts to deter a litigant from Abusing the process of the court by deceiving it. 52. In view of the above, we are of the considered opinion that Shri Manohar Lal did not approach the Court with disclosure of true facts, and particularly, that he had been allotted the land in the commercial area by GDA on the instruction of the Chief Minister of Uttar Pradesh. c. In the case Of Amar Singh v. Union of India and Ors. [2011] 7 SCC 69 it has been held as follows : This Court wanes to make it dear that an action at law is not a game of chess. A litigant who comes to Court and invokes its writ jurisdiction must come with dean hands. He cannot prevaricate and take inconsistent positions. Courts have, over the centuries, frowned upon litigants who, with intent to deceive and mislead the courts, initiated proceedings without full disclosure of facts. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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