TMI Blog2002 (9) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... a Group of companies of which Shri B.L. Batra was the Chairman. He expired on 10-8-1993 at Chandigarh. The petitioner No. 1 and respondent No. 2 are the two sons of late Shri Batra. The petitioner Numbers 2, 3 and 4 respectively are the wife and minor sons of Petitioner No. 1. In the above noted petition, the petitioners have alleged that respondent No. 2 who was the Managing Director of respondent No. 1 company has in an illegal and unauthorized manner without specific authority or consent from the petitioners transferred all the shares of the petitioners in M/s. Gajraj Beverages Pvt. Ltd. (Respondent No. 1) by way of mutual exchange with the shares of Batra Films pvt. Ltd. which is a defunct company of the Batra Group. The said transfers are being impugned in the present and other petitions and the reliefs as specified in the petitions have been sought. 3. Shri Sagar, learned counsel for the petitioner after placing the relevant paragraphs of the petition has contended that as long as Shri B.L. Batra was alive, the work in the Group companies was running smoothly. After the death of Shri Batra on 10-8-1993 when the arrangements were being made on 13-8-1993 to proceed to Haridw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he requirements of Section 108 of the Act which was mandatory has not been complied with as the transfer forms were not the prescribed forms besides being incomplete and relevant columns left blank. They were also not duly stamped. In support of this submission, reliance has been placed in the case of Mannalal Khetan v. Kedar Math Khetan AIR 1977 SC 536. (3) The transfers were against the Articles of Association in as much as no approval of the Board of Directors was taken as required under Clauses 7 and 8 of the Articles. The violation of the Articles would make the transfer per se illegal. (4) That the transfers are without consideration as Batra Films Pvt. Ltd. is a defunct company having no assets. The whole transfer by way of mutual exchange being without consent and without any consideration is also violative of Section 25 of the Contract Act. (5) That transfers were not approved at any meeting of the Board of Directors and the allegations that they were approved by the Board of Directors in the meeting dated 13-8-1993 is absolutely false as on the said date, no meeting had taken place and only the condolence was recorded in the minute book and some directions regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Canara Bank v. Nuclear Power Corporation, 1995 2 CLJ 203 and some other cases by different courts that it is for all intent and purpose a court consequently by the provisions of Limitation Act would apply to it. Though Section 111(4) of the Act prescribes no period of limitation, however, as held in the case of Corporation Bank v. Navin J. Shah AIR 2000 SC 761, it has to be filed within a reasonable time which the Legislature in its wisdom has prescribed as 3 years in the residuary Article 137 of the Limitation Act. Referring to the decision of the Gujarat High Court in the case of Bipin Vadilal Mehta v. Ramesh B. Desai[1998] 92 Comp. Cas. 910, it has been contended that limitation would start running from the date when the right to apply accrues and in case the petitioner is trying to get over the bar of limitation by alleging fraud not only has the same to be established but it has also to be shown that the knowledge of his right to have recourse to law was concealed by the other side. 6. The learned counsel has further contended that the petitioner by his letter dated 16-1-1994 addressed to his mother acknowledged the receipt of the transferred shares and again by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng his children. It has also been suppressed that the transfer of some of their shares to the petitioner were approved by the Board of Directors in the meetings held on 9-12-1991, 9-3-1993, 7-7-1993 which were attended by the petitioner No. 1. 9. Replying to the arguments of the petitioner on merits of the case, the learned counsel for the respondents has contended that the exchange of shares was made in terms of the transfer deeds which the petitioner No. 1 had signed and deposited with his father. However, the process could not be completed as his father died on 10-8-1993 and subsequently the transfer of shares pursuant to the proposed exchange was effected and completed sometimes in December, 1993 with the approval of the Board of Directors of the respective companies. It has been further contended that since the year 1993 the petitioner No. 1 concentrated in his medical practice and ceased to have any connection with the respondent companies but suddenly in August, 1996 to create evidence a letter was written to ROC making various allegations regarding the transfer of shares alleging that the same were done behind his back by playing fraud. These allegations, it has been con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder (P.) Ltd. [1999] 32 CLA 47, it was contended that CLB in the said case has held that in the case of closely-held private companies, certain lapses of not following the legal procedure should not be held against the company. 12. Denying the allegation that the petitioner had given signed blank forms to his father and after his death entries therein have been forged, it was submitted that once signed blank document is given with the authority to fill in the blanks specifically with regard to the share certificates along with blank transfer forms, the transferor transmits his title to the shares both legal and equitable and the transferee can fill up the blanks and ask for the registration to his name in the books of the company. Support for the said proposition has been sought from the case of Arjun Prasad v. Central Bank of India Ltd. AIR 1956 Pat. 32. 13. As regards the submission that the transfers were made without consideration, it was denied that Batra Films Pvt. Ltd. had no assets as alleged. On the contrary it was submitted that exchange of shares in another company is also one of the modes of consideration. Batra Films Pvt. Ltd. was not a defunct company as allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l breach of trust against respondent No. 2 whose petition for anticipatory bail has also been rejected. 17. As regards the contention of the respondents that this Board does not have the jurisdiction to decide highly disputed questions alleged to be involved therein, the learned counsel has placed strong reliance in the case of Amonia Supplies Corporation (P.) Ltd. v. Modern Plastic Containers (P.) Ltd. AIR 1998 SC 3153 and has contended that this Board before giving findings on the issues of disputed questions of facts have to apply its mind and see the plea raised regarding the disputed questions of facts are genuine or wrong. If on the pleadings it is sufficient that the case can be decided, then, this Board should take cognizance. In the present case, since the forgery has been established from the report of the Forensic Laboratory and that apart the mandatory provisions of Section 108 have not been complied with, therefore, this Board is fully competent to decide the matter in the present petition as the dispute falls within the peripheral field of rectification. 18. Replying to the submissions of the respondents on the merits of the case, learned counsel for the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore different courts including the Apex Court in the case of Amonia Supplies Corporation (P.) Ltd. (supra). Both the learned counsel for the parties have placed reliance on this case. The counsel for the petitioner has sought support from the decision and has submitted that such questions can be decided by this Board if the same falls within the peripheral field of rectification, and discretion lies with this Board whether to take cognizance or refuse the same. Whereas the learned counsel for respondents has submitted that this dispute does not fall within the peripheral field of rectification. It is submitted that the dispute is based on the questions of title and denial of transactions which can only be decided by a civil court. Strong reliance has been placed on paragraph 26 of the aforesaid judgment. The decision of the Apex Court in Amonia Supplies Corporation (P.) Ltd's case (supra) has been elaborately considered and explained by the Bombay High Court in the case of National Insurance Co. Ltd. v. Glaxo India Ltd. AIR 1999 Bom. 240. It will be worthwhile to quote paragraph 8 of the said decision wherein the judgment of the Apex Court has been discussed as follows : It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s could not be decided in proceedings under Section 155 of the Companies Act. The High Court observed that if there is any fraud played upon the petitioner as a result of which shares which were standing in the petitioner's name have been transferred, the remedy would He by way of a suit and not filing the present petition. 24. This Board has also in the case of Dr. G.L. Byra Reddy v. Arathi Cine Enterprises (P.) Ltd. [1997] 89 Comp. Cas. 745 has held that where a large number of complicated and disputed questions of facts like the date of executing the alleged transfer deeds, whereabouts of transfer deeds, alleged payment of consideration, persons to whom the alleged payments have been made and the time at which the petitioner actually came into the knowledge of the impugned transfer etc. could not be decided on the basis of the affidavits and the matter requires to be tried by leading evidence. 25. Applying the ratio of the aforesaid decisions in the facts of the present case at hand, it may be noticed that the petitioners were alleging fraudulent transfers, fabrication of documents and forgery in respect of the signatures of the petitioner on the transfer forms and als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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