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2015 (6) TMI 685 - COMPANY LAW BOARD MUMBAI

2015 (6) TMI 685 - COMPANY LAW BOARD MUMBAI - TMI - Rectification in the Register of Members - Section 111 (4) of the Companies Act, 1956 - Shares transferred fraudulently - Doctrine of estoppel - Period of limitation - Held that:- In this case, the only controversy involved is as to whether the Petitioner has signed the documents placed on record by the Respondents in support of their claim. I may make it clear that in the course of submissions, the Ld. Sr. Counsel appearing on behalf of the Pe .....

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y in routine course and/or her signatures might have been obtained by mis-representation of without knowing the real nature of the transactions under challenge in this petition, and therefore, these documents are not binding on her.

Doctrine of estoppel - Having analyzed the facts and circumstances of the case, I am not inclined to accept that the doctrine of “estoppel”, waiver” and/or “acquiescence” would apply to the facts of the case in hand. By virtue of Section 108 of the Act, i .....

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, only the entries on the reverse of the share certificates need to be made. It is a well settled proposition of law as held in the decisions in the cases of (i) Shirish Finance Investment (P) Ltd. Vs. M. Sreenlvasulu Reddy [2001 (9) TMI 1055 - HIGH COURT OF BOMBAY ] (ii) Manna/al Khethan Vs. Kedarnath Khetan [1976 (11) TMI 135 - SUPREME COURT OF INDIA] that execution of Transfer Deeds under Section 108 of the Act, is a mandatory requirement in law and, therefore, there can be no estoppel, waive .....

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in laws to only look at and treat the Petitioner, the Respondent No.2, DGK and SNI as its members and/or joint holders qua the impugned shares. She has categorically pleaded and made an attempt to demonstrate that she did not execute any transfer forms transferring the impugned shares as required under Section 108 of the Companies Act. In my opinion, these allegations are sufficient to hold that the Petitioner is a person aggrieved” within the meaning of Section 111(4) of the Act, whose name, ac .....

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hese provisions, inter alia, empower the Court to add the name of any person, namely (1)”who ought to have been joined” and (2) “whose presence before the court may be necessary in order to enable the court to effectually and completely adjudicate upon and settle all the issues involved in the matter”. The object of Order 1 Rule 10 is to bring before the Court, at the same time, all persons who have an interest in the subject matter of the disputes so that separate trials may be avoided. - Decid .....

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knowledge of the instant proceedings. Therefore, in my view, the Contesting Respondents are not entitled to contend that the petition suffers from non-joinder of necessary and proper parties.

I have also considered the plea taken by the Respondents that keeping in view the complicated question of facts and law, the CLB is not competent to adjudicate this petition in the summary jurisdiction, and the proper recourse for the Petitioners is to file a civil suit for declaration with respe .....

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law are involved, in that eventuality, the CLB may relegate parties to the civil court for adjudication of their claims by way of filing a civil suit.

On overall discussion of the preliminary objections raised by the Respondents challenging the maintainability of the Company Petition, I have come to the conclusion that the petitioner has not approached the CLB with clean hands and, therefore, she is not entitled to the reliefs sought for and the petition deserves to be dismissed. Fur .....

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e with the law. However, since I have held that the petition is not maintainable for the reasons stated hereinabove, I, therefore, have no option but to dismiss the petition. - C.A No.154 of 2014 to C.A No.161 of 2014, C.P. No. 19 of 2011 to C.P. No. 26 of 2011 - Dated:- 18-5-2015 - Shri Ashok Kumar Tripathi, J. For The Petitioner : Mr. J.J. Bhatt, Sr. Advocate a/w Mr. Ashish Kamat, Mr. Rohan Sawant, Mr. Kunal Mehta, Advocates i/b M/s Crawford Bayley & Co. Advocates For The Respondent : Mr. .....

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alyani, Dr. Neelkant Anappa Kalyani, Mr. Shri Krishna N. Inamdar and Mr. Dilip Ganesh Karnik to the extent of shares mentioned in the respective petitions. 2. It was agreed between the parties that the pleadings in the C.P. No.19 of 2011, if referred to, would be enough to focus the controversy which is identical in all the cases. I, therefore, for the sake of convenience clubbed all the cases for the purpose of hearing and decision. However, I would like to reiterate that save and except the va .....

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the Company Petitions. 4. The Short fact of the case are as follows :- 4.1 The Petitioner is one of the Trustees of a private family trust, namely, N.S.Trust, which has been settled under an Indenture of Trust dated 10/4/1999 (hereinafter referred to as the Indenture in short). The Respondent No.1 is a private limited company incorporated for the purposes of holding and/or facilitating investments of the Late Dr. Neelkanth Kalyani and Mrs. Sulochana Kalyani, the Respondent No.2 (since deceased) .....

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various investment companies of Late Respondent No.2. This was done to secure the interest, firstly, of Late Respondent No.2 and the Petitioner, and secondly, upon demise of both of them, to secure the Respondent Nos.3 and 5. 4.3 That the Respondent No.1 is an investment company incorporated for the purposes of holding and and/or facilitating investments of the Kalyani Family, who owns diverse business interests, which are held by incorporated entities. The Kalyani Family exercises ultimate own .....

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p Ganesh Karnik (DGK) on behalf of the Trust 4.5 That the Respondent No.4 is the present Director of the Respondent No.1 Company, and, therefore, control and/or dominates the affairs of it. In 2005 she was appointed as Managing Director of Kalyani Forge Ltd. Around the same time, she also started to look after the Kalyani Family companies and business affairs. She had illegally and/or wrongfully gained the confidence of the Respondent Nos.2 and 3, who are both unfit, and under her illegal and/or .....

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ding deteriorating health of the Respondent No.2, the Petitioner and the Respondent No.2 did not take any legal action in the matter. 4.7 It is stated that, in January, 2010, the Petitioner and the Respondent No.2 revoked the two Powers of Attorney, which the Respondent Nos.3 and 4 had managed to obtain from them in the year 2008. It is alleged that as a result thereof, the Respondent No.4 started harassing the Petitioner and the Respondent No.2 in various ways, which led to a complete family un .....

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d to be rectified for the reason stated hereinafter. a. Because, by virtue of Section 153 of the Act, Respondent No-1 Company is not entitled to take cognizance of the Trust and was, therefore, obliged in law to only look at and treat the Petitioner, Respondent No.2, DGK and SNI as its members and/or joint shareholders qua the impugned shares. b. Because, under Section 108 of the Act, a company is not entitled to register a transfer of shares unless the same is accompanied by an instrument of tr .....

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ved and/or deleted for the shares from the Register of Members (hereinafter referred to as the ROM in short) of the Company. d. Because, in utter disregard of provisions contained in Section 108 of the Act and without sufficient cause, the Respondents have deleted the name of the Petitioner from the ROM of the Company. 4.8 Based on the above, the Petitioner, has filed the instant petition for rectification of ROM invoking the provisions contained in Section 111(4) of the Act seeking following re .....

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Members of the Respondent No.1 in respect of the said shares and on the share certificates. c. To pass an order thereby directing the Respondent No.1 to rectify its register in accordance with Section 111(4) of the Companies Act, 1956. 5. Pursuant to the notice, the Respondent Nos.1 Company and 2,3,4 appeared and filed their respective reply(s). The said Respondents shall hereinafter be referred to as the Contesting Respondents . 5.1 In reply filed on behalf of the Company, it is stated that th .....

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ation as a trustee from the said date and requested the Board of Trustees to accept her resignation and relieve her of her duties as trustee. 5.3 It has been further stated that by a Declaration of Relinquishment executed on 7/7/2007, the Petitioner had stated that she has sufficient income of her own; she is of an advanced age and after discussions and deliberations with her husband i.e. Respondent No.2 (since deceased) herein had decided to relinquish all benefits in the income and corpus of t .....

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, i.e. both, to the income or the corpus of the Trust. By the said letter, the Petitioner further stated that she had voluntarily and on her own relinquished all the rights and benefits to which she was entitled to. By the said letter, the Petitioner also requested the two addressees to act as Trustees of the Trust without considering her as a beneficiary. A copy of the aforesaid declaration dated 7/7/2007 was also sent to the two addressees under cover of the said letter. 5.5 It is further plea .....

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er, the Respondent No.2 also stated that this appointment would come into effect with immediate effect. By the said letter, the Respondent No. 2 also stated that in terms of clause AC (a) of the said Trust Deed,, he nominated Respondent No. 4, his daughter-in-law to be Chairperson of the Board of Trustees. 5.6 It is further pleaded that Mr. D. G. Karnik, who was one of the Trustees of the Trust, resigned as a Trustee on 22/6/2006. It is further stated that a meeting of the Board of Trustees of t .....

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tribute/transfer the income/corpus of the Trust. The proceedings of the said meeting was recorded in the Minutes of meeting dated 12/7/2007. 5.7 It is further stated that by a letter dated 20/7/2007, addressed by Mr. S. N. Inamadar, a Trustee of the said Trust, to the Board of Trustee, the said Mr. Inamdar referred to the minutes of the meeting dated 12/7/2007 and stated that after perusing the contents of the said minutes, the other Trustees had his consent to distribute/ transfer the income/co .....

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rred his shares In the Respondent No. 1 Company to the Respondent No. 3 by a registered gift deed, which fact was also to the knowledge of the Petitioner, as the share certificate also bears the signature of the Petitioner as director of the Respondent No. 1 Company. By reason of the same, the Petitioner is estopped from seeking the reliefs prayed for in the instant petition and/or, in any event, has waived her right to seek any reliefs prayed for in this petition. 5.9 Apart from the above, in t .....

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se, the Petition involves the dispute questions of facts and law, which cannot be adjudicated in a summary proceedings under Section 111 of the Act. (v) Because, the Petitioner is guilty of gross suppression of material facts and has, therefore, approached this Bench with unclean hands. (vi) Because, the Petition is barred by law of limitation. 5.10 It may be mentioned here that the Contesting Respondents have not disputed the fact pleaded by the Petitioner as to the non compliance of the provis .....

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e off the preliminary objections raised by them thereby assailing the maintainability of the petition at the first instance, the preliminary objections were taken into consideration by this Board. After hearing the parties at length, the same were rejected by an order dated 4/9/2013 passed by the CLB. Being aggrieved, the Answering Respondents preferred appeals, being Company Appeal Nos.(L) 79 to 86 of 2013, against the said order, before the Hon ble High Court of Bombay, wherein, after hearing, .....

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ed by the present appellants challenging the maintainability of the original petition. It would, in my view, serve the purposes of justice, if the following order is passed. (a) The impugned order is quashed and set aside. However, it is clarified that this is without any examination at all of the correctness of otherwise of the order on merits but only in order to facilitate the other directions that follows. (b) The Company Law Board shall decide the Company Petition on merits. While doing so, .....

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cation on the issue of maintainability since they have been allowed to raise this issue in their affidavits in reply. 3. The Company Appeals are disposed of with no order as to costs. 4. In view of the above order, all pending applications are also disposed or. 8. Pursuant to the said order, the parties further exchanged the pleadings. I have heard the arguments at length and perused the record. Now, I enter into adjudication of the case on merits. 9. Before I proceed to consider the Company Pet .....

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roceedings before the CLB are summary in nature and in normal circumstances, the proceedings are decided on the basis of Affidavits, and the documents, if any, filed by the respective parties in support of their respective claim(s). However, only in exceptional cases where the CLB, having regard to the peculiar facts of a case, think is empowered to pass an order either suo muto and /or on the application of any part to the Petition to summon a party or person has filed affidavit in the case for .....

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nts referred to and relied upon by the contesting respondents. The Ld. Sr. Counsel appearing for the Respondents confined his arguments by saying that the Petitioner was having no knowledge of having signed these documents. According to him, the Petitioner might have signed these documents inadvertently in routine course and/or her signatures might have been obtained by mis-representation of without knowing the real nature of the transactions under challenge in this petition, and therefore, thes .....

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f the Petitioner taken in the course of arguments of her counsel. 12. The first preliminary objection raised on behalf of the Contesting Respondents is that, according to the own case of the Petitioner, the subject shares belonged to N.S Trust and hence, the Petitioner has no locus standi to file the instant petition. Connected with this issue, the second preliminary objection raised on behalf of the Contesting Respondents is that the petition is barred by doctrine of estoppel, and waiver. 13. K .....

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ny. According to him, in the instant case, the Petitioner is admittedly neither the Company nor a member of the Company. He pointed out that the Petitioner s claim is that she is a person aggrieved, on the ground that she held the shares, as a Trustee of the N.S. Trust and her name has been wrongly deleted from the Register of the Members of the Company and, therefore, she has locus to maintain the petition. Referring to the said contentions of the Petitioner, it was submitted on behalf of the A .....

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erein that such relinquishment is irrevocable and permanent. Furthermore, the Petitioner intimated the relinquishment of her beneficial interest to its Trustees, by a letter dated 7/7/2007. Apart from the above, the Trustees of N.S Trust also accepted the resignation of the Petitioner as a Trustee at its meeting held on 10/7/2007. Referring to the said documents, the Ld. Sr. Counsel contended that these facts clearly make it clear that the Petitioner is neither a Trustee nor a beneficiary of the .....

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ed in favour of the Respondent No.2, Dr. Nilkant A. Kalyani, and also on the dates of subsequent registration of transfer of the said shares from the Respondent No.2 to the Respondent No.3. He then pointed out that the Petitioner being director of the company and its authorized signatory at the relevant time, by subscribing her signatures to the endorsements recording such transfers has been duly confirmed and acknowledged such transfers and as such the Petitioner is now estopped from challengin .....

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iled as Annexure R1 , R2 and R3 with the reply of the Respondents and, therefore, having executed these documents and having signed the transfer endorsement on the reverse of the shares in question, the entire transaction with respect to the transfer of shares stand completed. The Petitioner is a party to this transaction and, therefore, being party to this transfer, she is estopped to re-agitate this issue and the petition is, therefore, barred by doctrine of estoppel, waiver and acquiescence. .....

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d Others (1997) 10 SCC 488 @paras 47 to 59 @ Pgs. 512 to 520. (iii) Ashok Kumar Oswal & Anr. v. Panchsheel Textile Manufacturing and Trading Co. (P) Ltd. &Ors. (No.1) 2002 Camp. Cases 800 Vol. 110. (iv) Shri Murari Mohan Kejriwal & Ors. Vs M/s. Shree Hanuman Cotton Mills Ltd. (C.P. No.31/2006) (pars 14, 34, 49 (p. 27) paras 49 to 52 and (v) Graslm Industries Limited and Anr v Agarwal Steel (201) 1 SCC 83 (vi) Dale & Carrington Invt. (P). Ltd. and Anr. v P.K. Prathapan & Other .....

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e transfer, there was no reason for the Respondents to have maintained the share certificates. On the contrary, the Respondents would have sought the signatures of the Petitioner along with DGK on an instrument of transfer to ensure that the transfer of shares is effected in the name of the Respondent No. 2 in full compliance of Section 108. According to Mr. Bhatt, the admitted fact that this was not done makes it clear that the Petitioner was never a consenting party to the impugned transfer of .....

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, clearly, demonstrates that these signatures have been indiscriminately, wrongfully and Illegally secured by the Respondent No.4 for illegal purposes, including facilitating the Illegal transfers and raising such allegations. He, therefore, argues that the Petitioner has not knowingly signed the impugned share certificates, and hence, it Is wrong to allege that the Petitioner is not aggrieved party In terms of Section 108 of the Act. 19. In continuation of his argument, Mr. Bhatt next submitted .....

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r to validate an illegality /void act. It was, therefore, contended that the issue as to estoppel is cleariy unmeritorious, misconceived and is liable to be answered in necative. 20. Distinguishing the facts of this case from ;ne facts of the decisions cited on behalf of the Petitioner, Mr. Bhatt submitted that the common line in each of these decisions is that the party b ought to resile from the transaction was a consenting party. The transactions complained of were consensual transactions, wh .....

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e CLB with an unambiguous case that she has never consented to the impugned transfer of the shares in favour of the Respondent No.2. The impugned transfers are, therefore, not of a consensual character and the Petitioner is not disentitled from challenging the same. 21. It is next submitted on behalf of the Petitioner that the sole basis of the Respondents arguments against the Petitioner is the signature appearing on the reverse of the share certificate qua the entries confirming the impugned t .....

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gness qua the impugned transfers is the fact that if the Petitioner had, in fact, consented and/or knowingly participated in the impugned transfers, the Respondent Nos.3 to 5 could have secured her signature on transfer instruments and not resorted to mutilation of share certificate to remove her name there from. The Ld. Sr. Counsel submits that undisputedly, the Petitioner has not knowingly signed on any instrument of transfer to facilitate removal of her name as a member of Respondent No.1 and .....

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nd relied upon by the Respondents. 23. Mr. Bhatt submitted that the ratio of the decisions is that statutory right can be waived by a party for whose benefit certain requirements or conditions have been provided by the statute subject to that no public interest is involved therein and that such waiver may also be of a mandatory statutory provision. 24. According to Mr. Bhatt, the said decisions and/or the ratio does not apply to the present case. Firstly, there has to be a clear case of waiver b .....

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956, more than it being a provision for the benefit of the transferor or transferee, is a mandatory provision obligating the company not to register a transfer of shares unless the same is accompanied by a lawfully executed instrument of transfer. Hence, any alleged waiver by parties to the transfer does not absolve the company of its duty to refuse a transfer which is in breach of the provisions of the Act. 26. Lastly, Section 108 is a provision which has been enacted in public interest and to .....

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ve the company from litigation ensuing due to transfer/refusal on the basis of such claims. Once the company does not find a proposed transfer to be in compliance with the provisions of Section 108, it is the duty of the company not to allow such a transfer. If the company fails to do so, the CLB is legally obliged to rectify the register and shares and nullify the illegal transfers. 27. I have considered the rival submissions and perused the record. At the outset, for the sake of easy reference .....

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9. Due to old age and other responsibilities I am unable to continue to act as trustee of your trust. I am therefore resigning from my trusteeship from today. I request you to kindly accept my resignation and relieve me from my trusteeship of your trust. Thanking you, Yours sincerely, (Mrs. Sulochana Neelkanth Kalyani) R-2 Declaration of Relinquishment made and executed at Pune on the 7" day of July 2007. I, Mrs. Sulochana Neelkanth Kalyani, Age about 74 years, occupation: Industrialist, re .....

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Myself and my husband Dr. N.A. Kalyani has signed the said indenture as trustees. 2. 1 say that myself and my husband Dr. N.A. Kalyani have been named in the said indenture as beneficiaries. After death of myself and my husband my son Mr. Gaurishankar Neelkanth Kalyani and my grandson Mr. Viraj Gaurishankar Kalyani are named as beneficiaries. A trust is a discretionary trust in both the respects namely distribution of income and distribution of corpus. 3. 1 say that no benefits are distributed .....

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nt and effect that Dr. Neelkanth Annappa Kalyani shall alone be full beneficiary under the said trust. 4. 1 say and declare that this relinquishment is irrevocable and permanent. 5. 1 am aware that by this declaration I have deprived myself all the benefits whatsoever under the said NS Trust. 6. This declaration is binding on me and all the persons through me I am further aware that all the persons concerned and all the authorities concerned will act on the basis of this declaration. All such ac .....

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11 006 2) Mr. Shrikrishna N. Inamdar 2/A, Ameya Apartment 1193-B, K.B. Dhuru Road, Dadar, Mumbai 4000 028. 1) Yoursel w myself were trustees of the said NS Trust. I was also beneficiary of the said trust. 2) By my declaration on oath made on 7' July 2007 relinquished all my rights to the benefits of the said trust, whether to the income or to the corpus. I have voluntarily and on my own have relinquished my rights and benefits to which I was entitled. 3) By this letter I wish to inform you t .....

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and/or acquiescence would apply to the facts of the case in hand. By virtue of Section 108 of the Act, it is mandatory for a valid transfer of shares that the transferor and transferee must sign the form as provided in Section 108 and submit the same to the Company before making any entry on the reverse of the share certificate. It is also mandatory for the company to ensure and check as to the validity of the transfer form executed under Section 108 of the Act. Further, the transfer must be app .....

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ned in Section 108 of the Act. It is a well settled proposition of law as held in the decisions in the cases of (i) Shirish Finance Investment (P) Ltd. Vs. M. Sreenlvasulu Reddy 2002 (1) Bom C.R. 419, and (ii) Manna/al Khethan Vs. Kedarnath Khetan AIR [1977] SC 56 that execution of Transfer Deeds under Section 108 of the Act, is a mandatory requirement in law and, therefore, there can be no estoppel, waiver and/or acquiescence against the statutory provisions of law despite the fact that the Pet .....

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t shareholder in respect of the shares held by N.S. Trust. It is a settled proposition of law that by virtue of Section 153 of the Companies Act, 1956, the Company cannot take cognizance of the Trust and it is obliged in laws to only look at and treat the Petitioner, the Respondent No.2, DGK and SNI as its members and/or joint holders qua the impugned shares. She has categorically pleaded and made an attempt to demonstrate that she did not execute any transfer forms transferring the impugned sha .....

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efore, no application for the reason attributed by him in his submission referred above. therefore, for the sake of brevity would not repeat the same. I have, therefore, come to the conclusion that the Petitioner has locus standi to file the instant petition for redressal of her grievances by seeking rectification of Register of Members of the Company. These points are, therefore, answered accordingly. 31. Dealing with another preliminary objection raised on behalf of the Respondents, Mr. Mookhe .....

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t, as per the said provision, where there is more than one trustee, a co-trustee cannot act singly. The Ld. Sr. Counsel, therefore, submitted that the present petition is not maiqýÿ _ ng barred under Section 48 of the Trust Act. In support of his contention, the Ld. Sr. Counsel has relied upon the following decisions in the cases of :- a. Vedakannu Nadar & Ors. vs. Nanguner! Taluk Singikulam Annadana Chatram & Ors. [1938] AIR Madras 982. b. Bombay Government vs. Pestonji Arde .....

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ed that the Petitioner has not approached this Bench in a capacity as a trustee of the N.S.Trust , and therefore, the other co-trustee and/or other joint holders are not required to be joined as parties to the present petition. In addition, it was also argued that Section 153 of the Act prohibits the company from taking any notice of the Trust and hence, Section 48 of the Trust Act does not apply to the fact of the case in hand. Moreover, the CLB is required to decide the controversies involved .....

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the Ld. Sr. applicable to the case in hand. In continuation of his arguments, Counsel for the Petitioner submitted that a petition under Section 111 of the Act lies at the instance of the shareholder and/or member of the Company. According to him, the petition, therefore, seeks vindication of rights of the Petitioner as a member/shareholder. It is not and cannot be an action in relation to the Trust. He, therefore, submitted that the objection raised by the Contesting Respondents is without sub .....

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quently, a person who is not a party has no right to be impleaded against the wishes of the plaintiff. However, this general rule is subject to the exception as stipulated in Order 1 Rule 10(2) of the Civil Procedure Code which provides for impleadment of proper and necessary parties. It is a well settled proposition of law that a necessary party is one without whom no order can be made effectually, a proper party is one in whose absence an effective order can be made whose presence is necessary .....

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ct of Order 1 Rule 10 is to bring before the Court, at the same time, all persons who have an interest in the subject matter of the disputes so that separate trials may be avoided. 35. Keeping in view the aforesaid proposition of law, if I examine the facts of the present petition, I find that any action under Section 111 of the Act is necessary action of the member/shareholder who can seek redressal of his/her rights being a member/shareholder of the Company In respect of whom the relief is sou .....

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ioner, the question then arises for consideration is as to whether it would not be open for the aggrieved Co-trustee/ Petitioner in her individual capacity as a joint member in the Register of Members to institute this petition? I have given my serious thought to the question. In my view, such a member in the capacity of he/she being a Co-trustee would be entitled to maintain the petition. Further, It is not necessary for such Co-trustee/Petitioner to implead the other co-trustee(s) who are not .....

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under law. It is also fundamental law that no party can be compelled to invite evidence against himself/ herself. It is also pertinent to mention here that the parties, who, according to the Respondents, are the necessary and proper parties have not approached this Board till date for their impleadment as a party in this petition despite having knowledge of the instant proceedings. Therefore, in my view, the Contesting Respondents are not entitled to contend that the petition suffers from non-jo .....

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the impugned shares and as a member of the Company. I, therefore, hold that non-joinder of the other co-trustee(s) in the present case is not necessary for its complete and effective adjudication, and, thus, the said objection pertaining to non-joinder of necessary parties taken by the Respondents, is misconceived and devoid of merit and hereby rejected. This point is decided accordingly. 38. Dealing with the next preliminary issue raised by the Respondents that since the Petition involves compl .....

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gnation as Trustee of N.S. Trust and her letter to the Trustees, intimating the relinquishment of her beneficial interest and her signature on the reverse of the share certificate, wherein the transfer of impugned share have been endorsed, now has conceded the existence of her signatures in the said documents, but according to her, the same has been secured by playing fraud and misrepresentation on her. According to Mr. Mookherjee, such allegations cannot be decided in the summary jurisdiction u .....

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ents referred to and relied upon by the Respondent herein have to be accepted. c. After the transfer of the shares, the Petitioner has not complained of non receipt of notices of AGM of the Company, which she would have got in case she was still a member and her name remained in the Register of Members, and this fact goes to show that she had accepted the transfers of the shares. d. The Petitioner has not produced any document to show that she acted as a Trustee after 6/7/2007, which she would h .....

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luence, has no bearing on the substance of the Petition. According to him, the Petitioner has been confronted by the Respondent Nos.3 to.5 with these documents, which are plainly illegal and/or wrongful. He, therefore, submits that the Petitioner is entitled to contend that these documents stand vitiated being executed by playing fraud, misrepresentation and/or undue influence on her, and she shall challenge these documents in appropriate proceedings. 42. Mr. Bhatt further submitted that for con .....

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continues. 43. It was, therefore, argued that in case where undisputedly, there is a non-compliance of Section 108, the assertions made by Petitioner qua these documents cannot come in the way of the Petitioner maintaining this Petition. According to him, considering that the provisions of Section 108 has been undisputedly violated/breached, grant of relief under Section 111 of the Act is bound to follow. In this view of the matter, there are no complicated questions of facts involved in this ma .....

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pplies Corporation (P) Ltd. V/s M/s Modern Plastic Containers Pvt. Ltd. AIR [1998] SC 3153. Having gone through the said decision, it is to be noted that the Hon bie Apex Court has held in the said decision that the primary jurisdiction for rectification of register of members is with the CLB and on examination of the material available on record, if it comes to the conclusion that the serious questions of facts and law are involved, in that eventuality, the CLB may relegate parties to the civil .....

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e, entered in the register of members of a company, or (ii) after having been entered in the register, is, without sufficient cause, omitted there from; or (b) default is made, or unnecessary delay takes place, in entering on the register the fact of any person having become, or ceased to be a member; 31. the person aggrieved, or any member of the company, or the company, may apply to the Court for rectification of the register. 32. Sub-section (1) (a) of Section 155 refers to a case where the n .....

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not be doubted in spite of exclusiveness to decide all matter pertaining to the rectification it has to act within the said four corners and adjudication of such matter cannot be doubted to be summary in nature. So, whenever a question is raised court has to adjudicate on the facts and circumstance of each case. If it truly Is rectification all matter raised in that connection should be decided by the court under Section 155 and if it finds adjudication of any matter not falling under it, it may .....

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urt is impliedly barred. We have already held above the jurisdiction of the court under Section 155, to the extent it has exclusive, the jurisdiction of civil court is impliedly barred. For what is not covered as aforesaid the civil court would have jurisdiction. Similarly we find even under Sec. 446(1) its words itself indicate jurisdiction of civil court is not excluded. This sub-section states, ...no suit or legal proceedings shall be commenced... or proceeded with ...except by leave of the c .....

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lude the principle of law as decided by the High Court that jurisdiction of Court Under Section 155 is summary in nature cannot be faulted. Reverting to the second limb of sub _ learned counsel for the appellant that court should not have directed for seeking permission to file suit only because a party for dispute sake states that the dispute raised is complicated question of facts including fraud to be adjudicated. The Court should have examined itself to see whether even prima facie what Is s .....

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s with the CLB only. It is only the CLB, who after hearing, if finds that the questions involved in the case are complicated questions of facts and law, it may relegate the parties to the civil court. On a close scrutiny of the facts of this case, in my opinion, no complicated questions of facts and law are involved. As discussed above, Mr. Bhatt, Ld. Sr. Counsel for the Petitioner, in the course of his arguments has not disputed the signatures of the Petitioner on the documents- in-question. Th .....

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arties. However, I do not find it necessary to go into those cases and discuss the same. In view of my finding rendered above to this effect that having accepted the signatures on the documents-in-question, I do not find that any complicated questions of facts and law are involved in this petition for adjudication by the CLB. The only question involve for adjudication is as to whether the transfer of shares in question is bad in law, being in violation of Section 108 of the Act. I, therefore, ho .....

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oner has suppressed many material facts and documents which were relevant to determine her locus standi to maintain the petition. According to the Ld. Counsel, the Petitioner s letter dated 6/7/2007 addressed to the Trustees of N.S. Trust , thereby resigning as a Trustee thereof, the irrevocable relinquishment by her of her beneficial interest in the said Trust on 7/7/2007, the letter of the Petitioner to the Trustee of N.S. Trust , intimating the relinquishment of her beneficial interest, the M .....

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s in favour of the Respondent No.2 and, thereafter, in favour of the Respondent No.3. He submits that this fact is also material and goes to the root of the matter to decide as to whether the Petitioner is competent to maintain the Petition or is estopped from doing so. 49. Referring to the decisions viz. (1) (S.P. Chengalvaraya Naidu Vs. Jagannath & Ors.) reported In (1994) 1 SCC Pg.1 and (II) Sunil Poddar & Ors. Vs. Union of India & Ors. Reported In (2008) 2 SCC 326, it was submitt .....

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onal Commissioner (Administration), Bareilly Division, Bareilly & Ors. [2010] 4 SCC 728 (e) Ramjasv Foundation & Anr. Vs Union of India & Ors. [2010) 14 SCC 38 (f) Amar Singh Vs. Union of India & Ors. [2011) 7 SCC 69 (g) Smt. Bittan Devi Vs. Bank of Baroda & Ors. MANU/0144/2012 50. Answering to the aforesaid contentions, Mr. Bhatt, appearing for the Petitioner denied the allegations made by the Respondents as to the suppression of vital facts and documents. According to him, .....

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inder and did not suppress any material documents or facts. 51. Further, the Petitioner has stated that she was unaware of execution of these documents until 9/6/2007, when the Respondent Nos.3 to 5 produced the same. According to Mr. Bhatt, having no knowledge of these documents on the date of filing of the Petition, the question of suppression of documents on the part of the Petitioner does not arise. He, therefore, contended that the contention of the Respondents, therefore, deserves to be di .....

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r has stated in the Rejoinder that she had no knowledge and comprehension of the impugned documents and, therefore, there was no question of the Petitioner disclosing these documents in the petition and, hence, the issue of suppression does not arise. 53. Clarifying the Petitioner s signature on the reverse of the impugned Share Certificates, it was argued that whilst the Petitioner disputes and denies her signature, however, without prejudice, the Petitioner s signature 4 had secured thereon, i .....

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has to make full disclosure of facts and documents; such facts and documents are required to be relevant and material; and by virtue of such suppression, relief has been secured and/or was attempted to be secured by the party guilty of suppression. 55. Narrating the facts, Mr. Bhatt further tried to demonstrate that in the instant case none of these criteria stand fulfilled. According to him, there are reasons for the same. Firstly, these facts and documents were not to the knowledge of the Peti .....

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been moved by giving adequate notice to the Respondents, and as such, the Respondents have had every opportunity to place material on record and assert their case. There is, therefore, no question of the Petitioner indulging in suppression to secure favourable orders. 57. According to Mr.Bhatt, the suppression, if any, is on the part of the Respondents. It is settled law that when the transfers are impugned in the Petition, it is for the company (Respondent No.1) or Respondents Nos. 3 to 5 to ha .....

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dents are guilty of suppression and not the Petitioner. The judgments cited by the Petitioner, therefore, squarely apply to the Respondent Nos.1 and 3 to 5 - who have suppressed the only relevant documents viz. the instrument of transfer and the Register of Members, and not the Petitioner. 58. To support his contention, Mr.Bhatt distinguished the facts of the case in hand and that of the case of Needle Industries (India) Ltd. v Needle Industries Newey (India) Holding Ltd [1981] 3 SCC 333 (paras .....

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impugned transfers were allegedly approved and the Register of Members of Respondent No.1 and, therefore, it is the Answering Respondents who are guilty of misconduct. 59. Dealing with the allegation of the Respondents as to the suppression of the institution of the Suit, Mr.Bhatt submitted that this allegation is also unmeritorious and is liable to be rejected. The Ld. Sr. Counsel submits that the institution of the suit does not in any manner prejudice the maintainability of the Petitioner an .....

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ent Nos.3 to 5 herein and Shrikrishna Narhari Inamdar and challenges the co-option of Respondent Nos.3 and 4 in the Trust and he sought permanent injunction against the distribution and transfer of the Trust properties; and he also challenges certain documents executed in relation to the Trust properties. As against this, Mr.Bhatt submitted that the present Petition filed under Section 111 of the Act challenges the removal of the Petitioner s name as a joint shareholder qua the said shares and f .....

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uch, the institution of the Suit in no manner adversely affects and/or prejudices this Petition. 60. I have considered the aforesaid preliminary objection carefully. It Is a well settled proposition of law that if a party approaches a court for redressal of his grievances under equitable jurisdiction, he must come with clean hands and, In case, such party conceals any material fact(s) or suppresses the relevant document(s), he is not entitled to the discretionary reliefs from the court. However, .....

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vital fact was not to the knowledge of the Respondents or that the document could not have been in the knowledge of the Respondents, or that the document was not a public document, and (iii) lastly, that by suppression of such fact, orders were obtained which would not have been granted if the correct and true facts were pleaded. 61. 1 have given my serious thought to the contentions advanced by Mr. Mookherjee. According to Mr. Mookherjee, the Petitioner, inspite of having knowledge of the docu .....

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e on both the sides have been led now and the affidavits filed by them are available on record. On a careful analysis of the facts, I am not inclined to believe the statement of the Petitioner that she was not aware of the signing/ execution of the aforesaid documents. She has not denied signatures on it. It Is not worthy to rely upon that she has signed these papers in a routine manner without knowing the actual transaction therein. Having given my serious thought on these pleadings , it diffic .....

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Petitioners have deliberately, knowingly and malafidely did not mention these documents in her Company Petition and did not disclose the same at the first instance. She also made false statement in the petition that she did not sign these documents. This finding is confirmed from the fact that in the course of submission, the Ld. Sr. Counsel appearing for her, did not dispute her signatures on these documents. For these reasons, in my opinion, the law laid down in the decisions cited by the Ld. .....

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s. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property- grabbers, tax- evaders, bank -loan-dodgers and other unscrupulous persons from all walks of life find the court- process a convenient lever to retain the illegal -gains indefinitely. (11) Sangramsinh P. Gaekwad v. Shantadevl P.Gaekwad (2005) 11 SCC, 314, wherein the Hon ble Supreme Court has held as under :- 197. The Court may also refuse .....

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o the root of this case and has also suppressed the vital documents which would have thrown light for the just decision of this case. For this reason, the Petitioner is not entitled to the reliefs prayed for. This point is answered accordingly, 63. Assailing the maintainability of the Petition, the Ld. Sr. Counsel, Mr. Mookherjee appearing on behalf of the Respondents has raised next objection that the petition is barred by the law of limitation. In this regard, it has been argued on behalf of t .....

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hat the decision In the case of Canara Bank v Nuclear Power Corpn. of India Ltd. (1995) 84 Comp Cas 70 (SC), clearly lays down that the CLB is a Court. It is, therefore, contended that the provisions of the Limitation Act do apply to the proceedings pending before the CLB. In addition, the Ld. Sr. Counsel further contended that in any event, the Hon ble Supreme Court in the Decision reported in 2000 (5) SCC Pg.355, has held that the expression Court applies to all the terminals and authorities d .....

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ided by the commission. 64. Mr. Mookherji further submitted the Company Law Board has also held in its decision reported in (2014) 123 CLA that the Limitation Act applies to the proceedings under Section 111 of the Act. Similar is the finding of the Company Law Board in its decision in the case of Raju Grover Vs. Kalati Constructions Pvt. Ltd. dated 30 October, 2014. 65. Taking me through the pleadings and other material available on record, Mr. Mookherjee submitted that in this case where the e .....

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itation is wholly irrelevant, as sought to be contended by the Petitioner. 67. Mr. Mookherjee pointed out that in the instant case the Gift Deed executed by original Respondent No.2 in favour of the Respondent No.3 of transferring the impugned shares executed on 22/11/2007 is a registered document. According to him, in law, date of registration is treated as date of knowledge and, therefore, if the knowledge of a transaction is relevant, the Petitioner is deemed to have knowledge of such transfe .....

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l Leathers (P) Ltd. & Ors. v. Bhankerpur Simbhaoli Beverages (P) Ltd. (1994) 1 SCC 34, e. Anil Gupta v. Deihl Cloth and General Mills Co. Ltd. [1983] 54 Comp Cas 301 (Delhi), f. P. Sarathy v. State Bank of India (2000) 5 SCC 355. 68. In addition to the above, Mr. Mookherjee, Ld. Sr. Counsel appearing for the Contesting Respondents, submitted that the Petitioner has sought to contend that decisions of the Company Law Board that Limitation Act applies to proceedings before it is on the basis o .....

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Limitation Act, Mr. Mookherjee submitted that the question involved in the said case was whether the Company Law Board was a court under Rule 5 of the High Court Rules and, thus, the question whether the Company Law Board was a Court for the purposes of Limitation Act was not considered in the said case. According to him, in the said case, the Issue as to whether the Company Law Board was a Court under the Limitation Act was not involved. 70. Mr. Mookherjee contended that In view of the decisio .....

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not apply to the CLB, and more particularly, to a Petition under Section 111(4) of the Act. According to him, it is a settled principle of law that Limitation Act is applicable only to Courts, and not other adjudication bodies other than Courts such as, the CLB, notwithstanding the fact that such bodies or authorities vested with certain powers conferred on the Courts under the Codes of Civil or Criminal Procedure. 72. Mr. Bhatt, Ld. Sr. Counsel appearing for the Petitioner further contended tha .....

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, Companies Act does not make the Limitation Act applicable to proceedings before the CLB. He added that the CLB is not a Court, but a Board formed under the Act. The Act itself distinguishes between the CLB and the Court. As such, there is no question of the CLB being construed as a Court for the purposes of proceedings under the Act. In this connection, he attracted attention of the Court to the provisions contained in Sections 2(10-A) and 2 (11) of Act, which respectively define the CLB and t .....

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se may be, a Presidency Magistrate, having jurisdiction to try such offence, 73. Referring to the said provisions, Mr. Bhatt contended that it is thus apparent that the Act itself differentiates and distinguishes between the CLB and the Court . There is, therefore, no justification for the CLB to hold itself as a Court, more so in the context of proceedings under the Companies Act. In fact, the Court is exhaustively defined and confined to the High Court; notified District Courts; and Magistrate .....

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rder made by a Court under this Act may be enforced in the same manner as a decree made by the Court in a suit pending therein. 634-A Enforcement of orders of a Company Law Board - Any order made by the Company Law Board may be enforced by that Board in the same manner as if it were a decree made by a Court in a suit pending therein and it shall be lawful for the Board to send, in the case of its inability to execute such order, to the Court within the local limits of whose jurisdiction - a. in .....

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the CLB and the Court as provided by the parent statute i.e. the Act itself. He, further contended that the statute under which the CLB is formed does not recognize the CLB as a Court and as such, there can be no basis or justification to draw inferences from other statutes in support of the Respondents misconceived and flawed argument mat the CLB is a Court. 76. The Ld. Sr. Counsel for the Petitioner suomitted that the Hon ble High Courts of Allahabad and Andhra Pradesh have considered the iss .....

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This provision makes it apparent that the CLB is a statutory body created by exercise of the executive power of the Central Government. He, therefore, contended that the CLB can never be stated to be a part of the Courts established under the hierarchy prescribed under the Constitution of India. Further, the appointment of the members of the CLB is done by executive action and as such, does not satisfy the test of being a court. In this context, Mr. Bhatt, further asserted that the CLB is not a .....

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the Act or otherwise to construe and hold that the CLB is a Court, and as such, the Limitation Act does not apply. 77. In addition to the above, Mr. Bhatt urged that the present Petition is filed under Section 111(4) of the Act - which does not prescribe any period of limitation for making a rectification application. According to him, section 111 of the Act makes it apparent that there is no limitation period prescribed for an application under Section 111 (4) of the Act. The Ld. Sr. Counsel p .....

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us legislative intent not to prescribe a limitation period for the making of an application under Section 111(4) of the Act. 78. Mr. Bhatt next submitted that the present application is an application under Section 111 (4) of the Act and, therefore, no limitation period applies. Further, the Companies Act, 1956 is a special statute and Section 111 thereof is a self-contained code. The provisions of a general stature, namely Limitation Act, will not apply to an application under Section 111 (4). .....

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actions in Securities) Act, 1992 ( Special Courts Act ). It is in the context of the Special Court Act that the Supreme Court held that the CLB was a Court for the limited purpose of applicability of Section 9-A of the Special Courts Act. Hence, this decision is not an authority applicable to the instance case, since, it does not hold CLB to be a Court either for the purpose of the Companies Act, 1956 and / or the Limitation Act, 1963. b. Distinguishing the case of B/harl Da/want and Anr v Premk .....

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ew Vs Duroflex Limited [20041 122 Comp Cas 741 (CLB) ( Tommy Mathews Case ) which in turn, applies Article 137 of the Limitation Act on the basis of the Calcutta High Court decision in the case of Smt. Nupur Mitra Vs Basubani Pvt. Ltd. (1999) 2 Cal Li 264, but, according to Mr. Bhatt, both the decisions are inapplicable for the following reasons:- i The Hon ble Calcutta High Court has, in Nupur Mitra s case not decided the primary issue of whether the CLB is a court and as such, whether the Limi .....

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here is, therefore, no judicial decision on applicability of the Limitation Act to proceeding before the CLB. iii. That the Hon ble Supreme Court vide its Order dated 14/9/1999, has, in fact, remitted the matter back to the CLB, Calcutta and stated that nothing contained in the judgment of the Calcutta High Court would bind the CLB. Therefore, the findings in Nupur Mitra s case do not hold good and nothing on merits was decided. It was, therefore, contended that the entire premise of the CLB s d .....

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under Section 397 and 398 of the Companies Act is now transferred to the Company Law Board . This observation does not hold that the CLB is a Court . d. Distinguishing the case of Anil Gupta v. Delhi Cloth and General Mills Co. Ltd. [1983] 54 Comp Cas 301 (Delhi), Mr. Bhatt argued that this Judgment was rendered in relation to a petition under Section 155 of the Companies Act, 1956 filed In Delhi High Court which is obviously a court , and Limitation Act would apply to proceedings before a High .....

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d under Section 2 (10A) of the Act was a Court as defined under Section 2(11) of the Companies Act, 1956 and the Limitation Act, 1963. This is not a judicial precedent and the finding at paragraph 12 in the said decision is an unreasoned observation. f. Further distinguishing the case of P. Sarathy v. State Bank of India (2000) 5 SCC 355, it was contended that in this Judgment, the issue before the court was whether the Deputy Commissioner of Labour (Appeals), Madras was a Court for the civil co .....

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ken in the records of statutory authorities, including Registrar of Companies. According to Mr. Bhatt, the Petitioner has, therefore, acquired knowledge of the impugned transfers only post March 2011. The Ld. Sr. Counsel added that the Petitioner s pleas as regards indiscriminate execution of documents without her comprehension and lack of knowledge and notice of impugned transfer, is evident from the fact that the Respondents are propounding two sets of other certificates for the same documents .....

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dia Pvt. Ltd. Vs. A. Devarajan (2010) 155 Company Cases 175 Mad. 80. Next point argued by Mr. Bhatt, Ld. Sr. Counsel appearing on behalf of the Petitioner, is that the Petitioner s signatures have been indiscriminately obtained by the Respondent No.4 on documents without her comprehension. According to him, the Petitioner s assertions are borne out by the Respondents own documents, namely, two share certificates in respect of the impugned shares. He, therefore, contended that a case of mistake i .....

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the record as it stands makes it apparent that the Petitioner was not aware of and was not a consenting party to the impugned transfers. According to him, if the Petitioner was cognizant and consenting to the same, there would have been an instrument of transfer in existence. The non-production of instrument of transfers, minute books, register of members, register of transfer for and in relation to the impugned transfer makes it apparent that not only are the same illegal but also that the Peti .....

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attributed by him in his arguments mentioned above, I am not inclined to accept his contentions. In the case of Canara Bank (Supra), the Hon ble Supreme Court in the similar case, filed under Section 155 of Act, has categorically held that the CLB is court. I would like to extract the relevant part of the said decisions which confirms the aforesaid view here as under:- Now, under section 111 of the Companies Act, as amended with effect from 31 May, 1991, the Company Law Board performs the funct .....

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ompany with a fine. In regard to all these matters It has exclusive jurisdiction (except under the provisions of the Special Court Act, which is the Issue before us). In exercising its function under section 111 the Company Law Board must, and does, act judicially. Its orders are appealable. The Company Law Board, further, Is a permanent body constituted under a statute. It is difficult to see how it can be said to be anything other than a court particularly for the purpose of section 9A of the .....

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Limitation Act. 83. I must confess that during this period, I came across to a decision in the case of M.S.D. Chandresekhar Raja Vs )ayabharath Textiles (P) Ltd. (2015) (Mad) SIBI & Corporate Laws Vol. 130 Page 208 where in the Hon ble High Court of Madras has also held that the Company Law Board is not a Court. However, I respectfully unable to subscribe the aforesaid view in light of the decision of the Hon ble Supreme Court in the case of Canara Bank (Supra). As I stated above, the reaso .....

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from the case referred to and relied upon by the Respondents, but I am not convinced with those reasons. For the sake of brevity, I am not reproducing the relevant facts referred to by Mr. Bhatt. However, relying upon the decision of Canara Bank (Supra), I hold that CLB is a court and hence the provisions of Limitation Act in respect of the petition filed under Section 111 (4) of the Act are applicable. 85. I look this point from another angle also. The Law of Limitation is founded on public po .....

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e statutes of limitations is to compel a person to exercise his right of action within a reasonable time as also to discourage and suppress stale, fake or fraudulent claims. 86. Keeping in view the aforesaid object and reason as to application of limitation, if it is held that the provisions of the Limitation Act do not apply in the relation to petition filed under Section 111 (4) of the Act, in that case, it would imply that an aggrieved party may approach to the CLB even after several years. T .....

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ourt within the prescribed period of time with effect from the date of knowledge / cause of action. The next question then arises as to what is the prescribed period in the instant case. 87. It is true that the provisions contained in Section 111(4) of the Act, do not specifically provide the period of limitation. However it is a settled proposition of law that if no limitation period is prescribed, in that case Article 137 of the Limitation Act could be applicable. In terms of Article 137 of th .....

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ect to the impugned transfer of shares. These documents were admittedly executed in the year 2007. Therefore, the period of limitation of 3 years would start from the date, on which these documents were signed. Undisputedly, the petition came to be filed after expiry of 3 years. I, therefore, hold that the petition is barred by limitation and, therefore, deserves to be dismissed on this ground. 89. I have also taken into consideration the contention of the Ld. Counsel for the Respondents that in .....

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e facts and circumstances of this case, that the petition suffers from acute delay and lathes. Time and again, it has been held that if a petition suffers from unexplained delay and lathes, the petition may be dismissed on this ground also. This point is answered accordingly. 91. I have also taken into consideration the arguments advanced by Mr. Bhatt that where a transaction is void ab intio, the provisions of the Limitation Act do not apply. I am unable to accept this contention because for th .....

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ought for and the petition deserves to be dismissed. Further, I have come to the conclusion that the petition is barred by limitation and on this ground also the petition deserves to be dismissed. 93. Although on the above two preliminary grounds the petition fails, but taking into consideration that the matter was heard on merits also, I would like to enter into adjudication of the petition on the merits. It is matter of record that the Answering Respondents have not produced the instruments of .....

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