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2015 (9) TMI 1253 - COMPANY LAW BOARD MUMBAI

2015 (9) TMI 1253 - COMPANY LAW BOARD MUMBAI - TMI - Rectification in the Register of Members - period of limitation to challenge the genuineness of transfer of shares - The Share Certificates of the Company were issued in the name of the Trustees/Original Members, namely, the Petitioner, the Respondent No. 2, Mr. Shrikrishna Narhari Inamdar (SNI) and Mr. Dilip Ganesh Karnik (DGK) on behalf of the Trust.

Held that:- The Law of Limitation is founded on public policy. Its aim being to s .....

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s 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.

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. This cannot be a tr .....

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ithin 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. - Held that:- I have already held that the Petitioner had knowledge of having signed the documents with respect to the impugned transfer of share. I am, therefore, not inclined to accept that the Petitioner came to know for the first time in 2011 with respect to the impugned transfer of shares. These documen .....

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, it Is amply clear from the facts and circumstances of this case, that the petition suffers from acute delay and laches. Time and again, it has been held that if a petition suffers from unexplained delay and laches, the petition may be dismissed on this ground also. This point is answered accordingly.

Whether the transaction if void ab intio - Held that:- the petitioner has not approached the CLB with clean hands and, therefore, she is not entitled to the reliefs sought for and the p .....

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Act, 1956. The Petitioner has sought rectification in the Register of Members of each of the above company by deleting the names of Dr. Neelkant Annappa Kalayani and Mr. Gaurishankar Kalyani and inserting the names of Ms. Sulochana N. Kalyani, 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 b .....

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rial the Original Respondent Nos. 3 to 5/Applicants therein fited Company Applications being CA Nos. 154 to 161 of 2014, seeking cross examination of the Petitioner. These applications have also been clubbed and are being decided alongwith the Company Petitions. 4. The short facts 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 " .....

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2. The Respondent No. 4 is the wife of the Respondent No. 3. The Respondent No. 5 is the son of the Respondent Nos. 3 and 4. 4.2 That the Petitioner was appointed as one of the trustees of the trust, being "N.S. Trust", which was created for the purposes of holding shares of 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 .....

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s, one being Takle Investment Company (the Respondent No. l herein) and 8 other companies. 4.4 The Share Certificates of the Company were issued in the name of the Trustees/Original Members, namely, the Petitioner, the Respondent No. 2, Mr. Shrikrishna Narhari Inamdar (SNI) and Mr. Dilip Ganesh Karnik (DGK) on behalf of the Trust 4.5 That the Respondent No. 4 is the present Director of the Respondent No. l Company, and, therefore, control and/or dominates the affairs of it. In 2005 she was appoi .....

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ain illegalities and coercive and/or wrongful actions of the Respondent No. 4 qua the family started getting noticed by the Petitioner and her husband, the Respondent No. 2 (since deceased) herein. However, with a view to maintain cordial family relations and for other diverse reasons, including 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 Responde .....

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ompany held by the Trust were purportedly first transferred in favour of the Respondent No. 2 and then further transferred in favour of the Respondent No. 3. It is submitted that the purported transfer of the impugned shares is not valid and as such the illegal changes in the relevant documents need to be rectified for the reason stated hereinafter. a. Because, by virtue of Section 153 of the Act, Respondent No. l Company is not entitled to take cognizance of the Trust and was, therefore, oblige .....

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. Because, the Petitioner never executed any instrument of transfer to facilitate the transfer of shares. In the absence of such an instrument of transfer, the shares continue to vest in and/or required to stand in the name of the Petitioner and other trustees and their names could not have been removed 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 Sect .....

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spect of impugned shares of the Respondent No. l in the respective C.P. Nos. 19 to 26 of 2011. b. To pass an order thereby directing the Respondent No. l to reinstate the names of the said four trustees i.e. the Petitioner, the Respondent No. 2, Mr. Shrikrishna N. Inamdar and Mr. Dilip Ganesh Karnik on the Register of Members of the Respondent No. l 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 a .....

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deserves to be dismissed. 5.2 In the reply filed by the Contesting Respondents, they have stated that the Petitioner is no longer a trustee or a beneficiary of the N. S. Trust ('the said trust'). It is stated that by a letter dated 6/7/2007, addressed to the Board of Trustees of the N.S. Trust, the Petitioner had tendered her resignation 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 .....

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ion was irrevocable and permanent. 5.4 It is further averred that by a letter, also dated 7/7/2007, addressed to the Respondent No. 2 and Mr. S.N. lnamdar (the then Trustees of the said Trust), the Petitioner inter alia stated that by a declaration dated 7/7/2007, the Petitioner had relinquished all her rights to all the benefits of the Trust, 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 relinquishe .....

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hat he was a Trustee and beneficiary under the Trust Deed dated 10/4/1999. By the said letter, the Respondent No. 2 stated that the Petitioner had also resigned from office of the Trustee without nominating anybody and therefore, he co-opted his son, the Respondent No. 3 herein, and his daughter-in-law, Respondent No. 4 herein. By the said letter, 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 sta .....

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ik was placed before the Trustees and both the resignations were accepted. The minutes of the meeting also record that Mr. Manohar Basappa Hanarki, the Settler of the said Trust, had agreed to the co-option of himself and the Respondent No. 4 as Trustees of the said Trust, At the said meeting, the Respondent No. 2 also expressed his desire to distribute/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 f .....

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mpany were transferred to Respondent No. 2 (since deceased) on 17/9/2007. This fact was also known to the Petitioner as far back as on 17/9/2007, which is evident from a perusal of the share certificate, which bears the signature of the Petitioner as a Director of the Respondent No. 1 Company. Similarly, on 22/11/2007, the Respondent No. 2 transferred 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 Petition .....

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the petition and sought its dismissal inter alia on the grounds stated hereunder:- (i) Because the Petitioner has no locus standi to maintain the petition under Section 111 of the Act. (ii) Because, the Petitioner is barred by principle of estoppel and res judicata and waiver. (iii) Because, the Petition is bad for non joinder of necessary parties. (iv) Because, the Petition involves the dispute questions of facts and law, which cannot be adjudicated in a summary proceedings under Section 111 o .....

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ng Respondents that the Petitioner has not executed any transfer form as required by the said provision. However, based on the aforesaid pleas, the Answering Respondents have sought dismissal of the Petition. 6. Thereafter, further pleadings were exchanged between the parties. 7. It may further be mentioned here that at the request of the Respondents to dispose off the preliminary objections raised by them thereby assailing the maintainability of the petition at the first instance, the prelimina .....

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udgment dated 4th September, 2014 in various company applications filed by the appellants in the 1st respondent's company petition. 2. I have heard Mr. Mookherjee, Mr. Bhatt and Mr. Kamdar, learned senior advocates for the contesting parties at some length. In my view, it is not necessary to decide these appeals on merits. The order under appeal disposed of applications filed by the present appellants challenging the maintainability of the original petition. It would in my view, serve the pu .....

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influenced or bound by the order under appeal. (c) Parties are at liberty to file further affidavits in reply on or before 24th March 2014. Rejoinder/s, if any, to be filed on or before 21st April 2014. (d) Mr. Mookherjee withdraws the various company applications filed by him before the Company Law Board, Neither he nor the other contesting respondents will file any application on the issue of maintainability since they have been allowed to raise this issue in their affidavits in reply. 3. The .....

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licants/Original Respondent Nos. 3 to 5 in the respective Company Petitions for summoning the Petitioner as a witness and permitting them to cross examine her on the grounds stated therein. 10. I have examined the grounds stated in the applications seeking cross-examination of the Petitioner as also the submissions advanced by the rival parties in this regard. Undisputedly, the proceedings before the CLB are summary in nature and in normal circumstances, the proceedings are decided on the basis .....

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ed 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 Petitioner, did not seriously challenge the signatures of the Petitioner on the questioned documents. In other words, the Ld. Counsel impliedly accepted the signatures of the Petitioner on the documents referred to and relied upon by the contesting respondents. The Ld. Sr. Counsel appearing for the Respondents confin .....

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he Petitioner was revolving with respect to her signature on the documents-in-question. In the facts and circumstances narrated above, in my opinion, there is no sufficient reason or cause for calling the Petitioner or any other person as a witness for cross-examination. The Applications are, therefore, hereby rejected, being misconceived and unwarranted, having regard to the stand of the Petitioner taken in the course of arguments of her counsel. 12. The first preliminary objection raised on be .....

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ermination. 14. As regards locus standi of the Petitioner to file the instant petition, Mr. Mookherjee, Ld. Sr. Counsel for the Answering Respondents, drew my attention to the provisions contained in Section 111(4) of the Act, 1956, and contended that to maintain a petition under the said provision, the Petitioner is only required to establish that he/she is the "person aggrieved" and member of the company. According to him, in the instant case, the Petitioner is admittedly neither the .....

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he Petitioner is not a member of this Company. Further, according to Mr. Mookherjee, the Petitioner is also not a Trustee of the Trust, as she resigned as a Trustee of "N.S. Trust" by a letter dated 6/7/2007. Furthermore, she also executed a Deed of Relinquishment dated 7/7/2007, before a notary public at Pune, thereby relinquishing all her rights to the benefits, whether of income or corpus of "N.S Trust" and categorically stated therein that such relinquishment is irrevocab .....

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such she cannot be a "person aggrieved" within the meaning 111(4) of the Act, and therefore, she is not entitled to and has no locus to maintain the petition. 15. Apart from the above, Mr. Mookherjee pointed out that the Petitioner has signed on the reverse of the shares certificate in question, as a Director of the Company. According to him, such signatures have been subscribed on the dates of registration of such transfers i.e. 17/9/2007, when the subject shares were transferred in f .....

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e same. The Respondents' Counsel, therefore, contended that the Petitioner has no locus to file the instant petition and the same deserves to be dismissed on this ground alone. 16. As regards application of doctrine of "estoppel" and "waiver", the Ld. Sr. Counsel for the Respondents further submitted that as indicated hereinabove, the Petitioner herself has executed the documents i.e. letter of resignation dated 6/7/2007, Declaration of Relinquishment dated 7/7/2007, inde .....

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, barred by doctrine of estoppel, waiver and acquiescence. The Ld. Sr. Counsel also submitted that the principle of estoppel also apply as against the statutory provision in relation to a person who has been party to the transaction-in-question. According to the Ld. Sr. Counsel, a person/party cannot be permitted to escape from the disadvantage from such transaction. In this regard, Mr. Mookherjee has relied upon the following decisions:- (i) Sajan Singh v. Sardara Ali 51 Camp. Cases 359 @ Pgs. .....

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ngton Invt. (P). Ltd. and Anr. v P.K. Prathapan ^ Others (2005) 1 SCC 212 (vii) Dhirendra Nath Goari & Anr. v/s Sudhir Chandra Ghosh (1964) 6 SCR 1001; (viii) Krishna Bahadur v Purna Theatre (2004) 8 SSC 229, (ix) Ramdev Food Products v Arvindbhai Rambhai Patel (2006) 8 SSC 726; and, (x) General Manager Shri Siddeshwara Co-operative Bank Ltd. v Ikbal (2013) 10 SSC 83. 17. Refuting the Respondents' aforesaid contention, it is contended by Mr. Bhatt, the Ld. Sr. Counsel appearing for the P .....

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oner was never a consenting party to the impugned transfer of shares. 18. Mr. Bhatt further contended that it has been the Petitioner's case, right from the inception of the Petition, that her signatures have been indiscriminately, wrongfully and illegally secured by the Respondent No. 4 on a large number of documents. According to him, the impugned share certificates, in fact, buttress the Petitioner's case. He submitted that the very fact that the Petitioner has signed on the reverse o .....

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f the Act. 19. In continuation of his argument, Mr. Bhatt next submitted that the impugned transfers are in breach of Section 108 of the Act, and as such, void. According to him, it is an undisputed position on record that there exists no instrument of transfer jointly signed by all the four shares holders viz. Petitioner, Respondent No. 2, DGK and SNI. In view thereof, the Impugned transfers are in breach of law. When breach of law is established, there can be no estoppels. In other words, no e .....

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nting party. The transactions complained of were consensual transactions, which were subsequently repudiated and/or challenged and the challenger had deserved benefit from the transaction. According to Mr. Bhatt, none of the conditions are satisfied in the instant case. The Petitioner has not consented to the impugned transaction; no benefit has accrued to her; and the transaction complained of being in breach of Section 108 of the Act, is void. Therefore, no question of the Petitioner having he .....

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on the reverse of the share certificate qua the entries confirming the impugned transfers. However, according to Mr. Bhatt, it is the Petitioner's consistent case that her signatures on the reverse of the share certificates were indiscriminately, illegally and wrongfully secured, and the same were without her comprehension. The impugned transfers are, therefore, not of a consensual character and the Petitioner is entitled to challenge the same. 22. Mr. Bhatt, Ld. Sr. Counsel, further submit .....

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instrument of transfer to facilitate removal of her name as a member of Respondent No. 1 and joint shareholder qua the said shares. This, coupled with the fact that Respondent Nos. 3 to 5 have wrongfully secured the Petitioner's signatures on two share certificates in respect of the same set of shares, makes it apparent that the Petitioner has not consented or knowingly participated in the impugned transfers. They are against the Petitioner's volition. The aforesaid facts clearly, distin .....

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t apply to the present case. Firstly, there has to be a clear case of waiver by the party. The judgments deal with situations in which a party has participated in the transaction and the challenge is raised at a belated stage. In the present case, the Petitioner has averred that the impugned transfers were fraudulent and that she was not aware of the transfer of shares. There is, therefore, no question of waiver of her rights by the Petitioner and the Petition was filed immediately upon knowledg .....

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, Section 108 is a provision which has been enacted in public interest and to safeguard the rights and interest of the company and ensure transparency in its affairs. Section 108 requires the company to register a transfer only if the conditions specified therein are satisfied. The company is not concerned with either the contract between the parties and/or alleged waiver of the terms of such a contract. Consequently, the company is not required to determine claims/rights asserted by parties on .....

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missions and perused the record. At the outset, for the sake of easy reference, I would like to reproduce the questioned documents Annexure "Rl", "R2", and "R3" referred to and relied upon by the Contesting Respondents in support of their contentions. R-1 Sulochana N. Kalyani Parvati Nivas 221, D Kalyani Nagar Pune 411 006, India Phone: (022) 26651001 Fax . (020) 26651999 July 6, 2007 To, The Board of Trustees NS Trust 221, D, Kalyani Nagar Parvati Niwas Pune 411 00 .....

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at Pune on the 7th day of July 2007. I, Mrs. Sulochana Neelkanth Kalyani, Age about 74 years, occupation: Industrialist, resident of 221, D, Kalyaninagar, Parvati Nivas, Pune 411 006 do hereby solemnly declare on oath and state as under: 1. That aprivate trust has been made on 10th of April 1999 by Mr. Manohar Bassappa Hattarik of Belgaum by an Indenture of the said date in the name and style as 'NS Trust'. The said Manohar Bassappa Hattarki settled an amount of ₹ 1,000/- and hande .....

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trust in both the respects namely distribution of income and distribution of corpus. 3. I say that no benefits are distributed as yet. I have sufficient income of my own. I am of advanced age. I have considered the entire scenario in consultation with my husband Dr. Neelkanth Annappa Kalyani and after deliberation with him and with full knowledge I have decided to relinquish on my own all the benefits whether of income or corpus of the said trust (NS Trust) to which I might be entitled to if I .....

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er aware that all the persons concerned and all the authorities concerned will act on the basis of this declaration. All such acts taken by the persons concerned will bind me, my heirs, successors, executors and all persons through me. I further assure that I do not have any right to and I will not challenge such actions. 7. Whatever stated above is true and correct. Solemnly affirmed at Pune on 7th day of July 2007. R-3 Sulochana N. Kalyani Parvati Nivas 221, D Kalyani Nagar Pune 411 006, India .....

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ed 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 the fact of my relinquishment with a request to you to act as trustee of the said trust without considering me as beneficiary. You may act as if I was never beneficiary of the said trust. (4) A copy of my declaration on oath is sent to you along with this letter. Pleas .....

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nd 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 approved by the Board of Directors by an appropriate resolution to be passed in this regard, and thereafter, only the entries on the reverse of the share certificates need to be made. All these requirements are mandatory and without co .....

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rnath 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 Petitioner has executed the aforesaid documents. I am, therefore, of the view that this preliminary objection does not hold water and is accordingly rejected, being devoid of merits. 29. Having considered the rival submissions with respect .....

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k 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, according .....

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ant 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. Mookherjee, Ld. Sr. Counsel appearing for the Contesting Respondents, submitted that the petition is bad for non-joinder of necessary parties, and therefore, liable td be dismissed at the threshold stage on this ground alone. The Ld. Sr. Counsel submit .....

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In support of his contention, the Ld. Sr. Counsel has relied upon the Following decisions in the cases of :- a. Vedakannu Nadar & Ors. vs. Nanguneri Taluk Singikulam Annadana Chatram & Ors. [1938] AIR Madras 982. b. Bombay Government vs. Pestonji Ardeshi [1949] AIR PC 143. c. Shrikrishna Annaji Sonatake vs. Ramnarayan Pannallal Lathi & Ors. [1962] AIR Bombay 487. d. Atmaram vs. Gulamhusein (FB) [1973] AIR Gujarat 113. 32. Responding to the above contention, Mr. Bhatt, Ld. Sr. Counse .....

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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 in the petition on the basis of the provisions of the Companies Act and not under the provisions of the Trust Act. It is, therefore, contended on behalf of the Petitioner that the joinder of the other trustee(s) of the Trust is .....

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. 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 substance and liable to be reacted. 34. Having considered the rival submissions, in my opinion, the preliminary objection with respect to non-joinder of necessary parties taken by Answering Respondents is absolutely unsustainable in .....

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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 for a complete and final decision on the question involved in the proceedings. Rule 10(2) of Order 1 of the C.P.C also indicates as to who is to be termed as a necessary or proper party. These provisi .....

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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 sought for by the Petitioner. In the present case, the Petitioner has chosen to file the present petition in her capacity as a member/joint shareholder of the Company and not as a tru .....

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gister 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 willing to support his/her claim. The reason is obvious. There may be chances that the other co-trustee for some ulterior purpose might have colluded with the wrong doers i.e. the man .....

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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-joinder of necessary and proper parties. 37. In so far as the decisions referred to by the Respondents are concerned, in my opinion, the same have no application to the facts of the case .....

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ve 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 complicated question of facts and law, it cannot be adjudicated under the summary Jurisdiction of the CLB, as provided in Section 111 of the Act, the Ld. Sr. Counsel Mr. Mookherjee appe .....

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rtificate, 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 under Section 111 of the Act and the Competent Forum would be a Civil Court, as held in the case of Ammonia Supplies Corpn. Pvt. Ltd.Modern Containers Pvt. Ltd. AIR [1998] .....

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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 have done if she had not actually resigned as a Trustee. 40. On the aforesaid premise, the Ld. Sr. Counsel appearing for the Contesting Respondents sought dismissal .....

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, 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 consideration of grant of reliefs to the Petitioner, these documents are irrelevant. These documents relate to the matters of the trust, which the Respondent No. .....

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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 matter - where infraction of law is manifest and undisputed. The decisions relied upon by the Respondent Nos. 3 to 5 are, therefore, of no avail. 44. I hav .....

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t the Hon'ble 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 court for adjudication of their claims by way of filing a civil suit, I may like to reproduce the relevant part of the said decision :- "All t .....

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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 name of any person without sufficient cause entered or omitted in the register of members of a company. The word sufficient cause' is to b .....

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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 failing under it, it may direct a party to get his right adjudicated by civil court. Unless jurisdiction is expressly or implicitly barred under a statute, for .....

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t 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 court'. The words 'except by leave of the court' itself indicate on leave being giv .....

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at jurisdiction of Court Under Section 155 is summary in nature cannot be faulted. Reverting to the second limb of submission by 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 said is complicated question or not. Even dispute .....

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r 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. The Petitioner has failed to give any particulars of .....

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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, hold that this preliminary objection is without forc .....

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nts 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 Minutes of the Meeting of .....

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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. (i) (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 submitted by Mr .....

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ration), Bareilly Division [2010] 4 SCC 728 (e) Ramjasv Foundation v. Union of India [2010] 14 SCC 38 (f) Amar Singh v. Union of India [2011] 7 SCC 69 (g) Smt. Bittan Devi v. Bank of Baroda 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, even at the time of filing of the petition, the Petitioner has asserted that the Respondent No .....

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ated 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 dismissed, being devoid of merits. 52. Distinguishing the cases referred to by the Respondents& .....

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ed 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 thereon, in fact, establishes her case that Respondent No. 4 had secured indiscriminate execution of th .....

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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 Petitioner and as such, there was no question of making any disclosure; secondly, th .....

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ndents 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. l) or Respondents Nos. 3 to 5 to have produced the instrument of transfer and the statutory records of the compa .....

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y the Petitioner, therefore, squarely apply to the Respondent Nos. l 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 (para 67 and 73). According to the Ld. Sr. Counsel, the Petitioner's conduct .....

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s of Respondent No. l 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 and the Petitioner's entitlement to seek reliefs in terms thereof. .....

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ges 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 from the Register of Members of the Respondent No. l and see .....

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ely 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, elaborating the aforesaid proposition of law, it ha .....

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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. I have given my serious thought to the contentions advanced by Mr. Mookherjee. According to Mr. Mookherjee, the Petitioner, inspite of having knowledge of the documents, did not produce the same deliber .....

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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 is diffcult for me to believe that the Petition .....

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ingly 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. Counsel for the Respondents do appl .....

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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. (ii) Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad (2005) 11 SCC, 314, wherein the Hon'ble Supreme Court has held as under :- "197. The Court may also refuse to grant reli .....

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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 the .....

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t 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 .....

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ghts were being decided by the commission. 64. Mr. Mookherji further submitted the Company Law Board has also held in its decision Bihari Dalwani v. Premkutir (P.) Ltd. [2014] 123 CLR 21 (CLB) 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 v. Kalati Constructions (P.) Ltd.date 30th October, 2014. 65. Taking me through the pleadings and other material available on record, M .....

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, date of knowledge of a transaction for the purposes of limitation 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 releva .....

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Mitra Vs Basubani Pvt. Ltd. (1999) 2 Cal LJ 264, d. Stridewell Leathers (P) Ltd. & Ors. v. Bhankerpur Simbhaoli Beverages (P) Ltd. (1994) 1 SCC 34, e. Anil Gupta v. Delhi 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 Lim .....

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is held that CLB is not a Court for the purposes of the 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. 7 .....

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ions of the Limitation Act, 1963 ("Limitation Act") do 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, L .....

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. Sr. Counsel, the CLB is a statutory body constituted under the Companies Act, however, 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 c .....

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ny, as provided in section 10; (b) with respect to any offence against this Act, the Court of a Magistrate of the First Class or, as the case 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 .....

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hand make separate provisions for enforcement orders of Courts and the CLB as can bee seen from the following provisions ;- "634 Enforcement of orders of Courts - Any order 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 .....

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ement of the Companies (Second Amendment) Act, 2002." 75. Drawing my attention to the said provisions, the Ld. Sr. Counsel contended that there is a clear distinction between 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 Res .....

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uralikrishna & Ors. 2005 (124) Com. Cases 184. According to him, even on a jurisprudential analysis, the CLB cannot be held to be a Court. Section 10E of the Act provides for the constitution of the CLB. 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 In .....

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National Company Law Tribunal and holds the same not to be a Court. If the NCLT is not a Court, the CLB cannot be. Based on the above, it is, therefore, argued that there is no legal basis available either under 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 mak .....

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imitation period for an application under Section 111(2) of the Act of two months, there is no period of limitation prescribed for an application under Section 111(4) of the Act. There is, therefore, a conscious 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 .....

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unsel for the Petitioner contended that the issue before the Hon'ble Supreme Court was whether the CLB was a "Court" only for the purpose of Section 9-A of the Special Courts (Trial of Offences Relating to Transactions 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 de .....

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fore the CLB by the arguing counsel. With respect, the CLB's view is therefore, unconsidered; per incuriam; and not binding upon itself. According to him, the CLB has premised its decision on the decision reported in [2004] CLC 1094 i.e. Shri Tommy Mathew Vs Duroflex Lmited [2004] 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 .....

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1]. ii. In "Smt. Nupur Mitra's case" (supra), the CLB had held the Limitation Act to be inapplicable to proceedings before it, and was dealing with the issue of delay and laches of 50 years in filing a proceeding for rectification. The Calcutta High Court has merely proceeded on an assumption of the Limitation Act applying to the CLB. There is, therefore, no judicial decision on applicability of the Limitation Act to proceeding before the CLB. iii. That the Hon'ble Supreme Cour .....

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P) Ltd. & Ors. v. Bhankerpur Simbhaoli Beverages (P) Ltd. (1994) 1 SCC 34 it was argued by Mr. Bhatt that the Hon'ble Supreme Court was required to consider as to in which "High Court" an appeal under Section 10F of the Companies Act, 1956, would lie. In this context, there is a passing reference in paragraph 6 that "In short, the original jurisdiction of the High Court in respect of the matters under Section 397 and 398 of the Companies Act is now transferred to the Compa .....

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lished, and there was no occasion to consider the applicability of the Limitation Act, 1963 to proceedings In the CLB. e. Further distinguishing the case of R.D. Chinoy v. Central Bank of India First Appeal No. 132 of 1991 dated 1st September, 1992, it was submitted on behalf of the Petitioner that this is an Order passed by the National Consumer Disputes Redressal Commission, and does not consider whether the "Company Law Board" as defined under Section 2 (10A) of the Act was a " .....

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r Section 14 of the Limitation Act, 1963. Mr. Bhatt, therefore, contended that it was the civil court applying the Limitation Act, 1963. Reliance on this case is inappropriate. According to Mr. Bhatt, the CLB not being a Court, cannot make the Limitation Act, 1963 applicable to itself. 79. It was further argued by Mr. Bhatt that the Petition clearly states that the Petitioner has become aware of the impugned transfers only post March 2011 when she caused a search to be taken in the records of st .....

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l pointed out that none of the statutory records i.e. the Register of Members and transfer forms and Minutes Books of Respondent No. 1 are forthcoming and the Respondents had resisted giving the Petitioner inspection prior to the Petition. It was, therefore, argued that there is no question of the Petition, which is filed on 30/5/2011, being barred by limitation. In the aforesaid context, the Ld. Counsel placed reliance on the decision in the case of N.s. Nemura Consultancy India Pvt. Ltd. Vs. A .....

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, entitling the Petitioner to exclusion of time under Section 17 of the Limitation Act. He added that it is no one's case that the Petitioner had copies of the said share certificates. Furthermore, the Petitioner has been confronted with the share certificates and her alleged signatures thereon post institution of the Petition. This Petition has been filed on the basis of a search conducted in ROC post March 2011. He, therefore, urged that the petition, is within time. He submits that the re .....

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was not cognizant of and had not consented to the same. He, therefore, contends that on all counts, N.S. Nemura Consultancy India (P.) Ltd. case (supra) applies, and the Petition is liable to be held within time and an adverse inference is liable to be drawn against the Respondents. 81. I have considered the rival submissions carefully and gone through the decisions cited by the Ld. Counsels appearing from both the sides. Having given my anxious thought to the contentions of Mr. Bhatt that CLB .....

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the Company Law Board performs the functions that were theretofore performed by courts of civil judicature under section 155. It is empowered to make orders directing rectification of the company register, as to damages, costs and incidental and consequential orders. It may decide any question relating to the title of any person who is a party before it to have his name entered upon the company's register, and any question which is necessary or expedient decide. It may make interim orders. F .....

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ularly for the purpose of section 9A of the Section Court Apex". 82. The aforesaid view has been reiterated in the ABN Amro Bank (supra). As against the law laid down by the Hon'ble Supreme Court, the law laid down by the other courts holding that the CLB is not a court for the purpose of Limitation Act, without referring and distinguishing the cases of Canara Bank (supra) with all humility at my command is not a good law, I am, therefore, respectfully unable to accept the contention of .....

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the case of Canara Bank (supra). As I stated above, the reasons assigned by the Hon'ble Supreme Court in the said decision appear to me more convincing. Although, it is correct to say that the Hon'ble Supreme Court has stated that it has examined this issue for the purpose of Section 9A of the Special Court Act, however, from the entire reading of this case, it becomes clear that the decision of the Hon'ble Supreme Court in the case of Canara Bank (supra) clearly hold that the CLB i .....

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nt from another angle also. The Law of Limitation is founded on public policy. Its aim being to secure the quiet of community, to suppress fraud and perjury, to quicken diligence, and to prevent oppression. Its object is to give effect to the maxim, interest re-publicoe out sit finis littum-the interest of the state requires that there should be limit to litigation and to prevent disturbance or deprivation of what may have been acquired in equity and justice by long enjoyment or what may have be .....

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that an aggrieved party may approach to the CLB even after several years. This cannot be a true intent of the law. As stated above, as a matter of a policy, the purpose of the limitation prescribed in law is to restrict the litigation on the ground of limitation so that the parties can approach the court of law within a reasonable time. Only in the cases, where there is a continuous wrong, the law of limitation become irrelevant. In the present case, there is a definite date of cause of action .....

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7 of the Limitation Act could be applicable. In terms of Article 137 of the Limitation Act, 3 years period is prescribed to an aggrieved party to approach a competent forum, which in this case is CLB, for redressal of his/her grievances seeking appropriate relief. 88. In light of the above, I have examined the facts of this case. I have already held that the Petitioner had knowledge of having signed the documents with respect to the impugned transfer of share. I am, therefore, not inclined to ac .....

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onsideration the contention of the Ld. Counsel for the Respondents that in view of the registration of the Gift Deed, a notice may be taken from the date of the registration for the purpose of limitation. I have already held that the petitioner was in the knowledge of the execution of the documents. Therefore, the date of execution of the documents is taken as the date of knowledge in this case. 90. Assuming for the sake of arguments, that the provision of the Limitation Act, do not apply to the .....

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ion Act do not apply. I am unable to accept this contention because for the purpose of limitation, the date of knowledge is the crux of the matter. In my opinion, even in the case of void transaction, if the case is barred by limitation, the court will not grant any relief to such party. 92. 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 .....

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record that the Answering Respondents have not produced the instruments of transfer in respect of impugned shares. Further, the Answering Respondents have not produced the Register of members of the Company to controvert the Petitioner's case that no such transfers as alleged by Answering Respondents have taken place. The Answering Respondents have not produced any minutes of the Board of Directors of the Respondent No. l Company or of any transfer committee in respect of the transfers claim .....

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