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TMI Blog2016 (12) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... of total issued equity shares. Meghdoot Services Limited, the petitioner no. 4 is holding 3,875 equity shares in the respondent no. 1 company being 7.05% of the total issued equity capital. It has been stated that the respondents have purportedly showing that the petitioner no. 4 is holding 2,875 equity shares instead of 3,875 equity shares. 2. The petitioners have contended that they are holding 14.25% of equity shares in the respondent no. 1 Company and contended that the petitioners are entitled to file petition under Section 397 and 398 of the Companies Act, 1956 in accordance with Section 399 of the Companies Act. 3. It has been stated in the petition that the respondent Nos. 2, 3, 4 and 5 are the Directors of the Respondent No. 1 Company and are principal persons in control of management and affairs of the respondent no. 1 within the meaning of Section 6 of the Companies Act, 1956. The respondent nos. 4 and 5 together jointly holding 5000 equity shares in the company amounting to 10% of the total issued share capital. 4. Respondent nos. 6, 7, 8 and 9 have sold the shares of the respondent no. 1 company to the petitioner Nos. 1, 2 and 3 and they have executed Share Transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment. It was also contended that the respondent nos. 2, 3, 4 and 5 should be removed as Directors and should be restrained by orders or injunction to act on behalf of the Company. 10. The petitioners have prayed for amongst other reliefs that injunction be issued restraining the respondents from holding or convening any meeting of the Board of Directors, or AGM or EOGM or from dealing with or disposing of or encumbering or alienating and/or transferring the assets and properties of the respondent no. l company or creating any third party interest or from changing the nature or character in any form or manner whatsoever in respect of the assets of the respondent no. 1 company with suitable directions for registering the transfer of shares and to make necessary entries in Register of Members the name of the petitioners and to provide the petitioners access to the records and register thereof. 11. The petitioners have further prayed that appropriate orders be passed restraining the respondent Nos. 2, 3, 4 and 5 from operating the bank accounts of the respondent no. 1 company and/or interfering with or intermediating in the management and affairs of the company in any manner wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be dismissed. 17. The respondent nos. 2, 3, 4 and 5 have contended that the petitioners together hold less than 10% of the total equity shareholding of the petitioner no. 1 Company and they do not have the requisite percentage as stipulated under Section 399 of the Companies Act, 1956 to file petition under Section 397 and 398 of the Companies Act, 1956. Therefore, petition is not maintainable on this ground. 18. The respondents have contended that the name of the petitioner no. 4, Meghdoot Services Ltd. was struck off from the Registrar of Companies, West Bengal in 2007. But the name was again restored by the erstwhile Company Law Board's order. However, Hon'ble High Court allowed the appeal and recalled the order dated 13/11/2014 passed by the erstwhile Company Law Board. This order was again challenged before Division Bench of the Hon'ble High Court but that appeal was also dismissed by the Hon'ble High Court. Hence, petitioner no. 4 is not a legal entity on the date of filing the petition (i.e. 09/03/2015). 19. After hearing the Ld. Counsels for the parties and perusing the records it appears that the respondents counsel has raised objection regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holders of and in the respondent no. 1 company. Therefore, petitioners are entitled to apply under Section 397 and 398 of the Act in accordance with the provisions of Section 399 of the said Act. 23. The respondents counsel has contended that the petitioner Nos. 1 to 3 are not recorded shareholders of the respondent no. 1 company. Therefore, simply on the basis of purchasing the shares of respondent No. 1 company petitioner Nos. 1 to 3 do not get the right to file a petition under Section 397 and 398 of the Act. 24. The respondent counsel has emphasized on the annexure 11 of the petition which is a copy of Annual Return of respondent No. 1 Company on the basis of AGM held on 30th September, 2014. In the said Annual Return total equity shares of the respondent no. 1 company has been shown as 55,000 of Rs. 100/- each and total issued share capital has been shown as Rs. 55,00,000/-. At page 207 list of all the shareholders of the petitioner no. 1 company is given wherein out of all the petitioners only the name of the petitioner no. 4, M/s. Meghdoot Services Ltd. is mentioned among the other shareholders and it is also mentioned that Meghdoot Services Ltd. holds 2875 shares of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, however, recognized only the person who is its member as a shareholder. In the other words, the rights that may exist between the company and its members or shareholders can be exercised only by members. Similarly the company can only look to its members for the discharge of their obligations to the company as its shareholders. The only person, therefore, who is entitled to exercise these rights and privileges or discharge these obligations is the transferor. The transferee is an outsider as far as the company is concerned and is only right is to have the transfer registered and thus to get himself accepted as a member and shareholder of the company. If the transferee is denied this right, he has a remedy under ss. 111 and 155 of the Companies Act. (cf. Ved Prakash v. Iron Traders (P.) Ltd.). He cannot, however, claim to exercise the rights or privileges as a member of the company or to discharge any obligations as a member or as a shareholder of the company. He can only exercise such rights through the transferor who is constructive trustee." 30. In the above case law Hon'ble Bombay High Court have clearly laid down that the company recognize only the person who is its me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no right to file a petition under section 397 and 398 of the act because they are not member or shareholder of the respondent no. 1 company, and recorded shareholders who are holding shares as trustee for the benefit of transferee have not given the authority to the transferee of shares through a power of attorney. Petitioners in person have submitted that their company petition is not only under section 397 and 398 of the act but also under sections 111 and 111A of the Act. Therefore, petition cannot be rejected on this ground as prayers have also been sought for rectification of the register of transfer of shares in respect of the shares they have purchased. The above justification does not hold good to bring a petition under sections 397 and 398 of the Act, where only a member or members of the company have a right provided, they qualifies the conditions given in section 399 of the act. 35. In this case the petitioner nos. 1 to 3 are admittedly only transferee shareholders of the respondent no. 1 company but transferor have not given any authority to file petition on their behalf under Section 397 and 398 of the Act. 36. Ld. Counsel for the petitioners has relied on the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f shares may be treated as holder of shares but he cannot be treated as a member of the company, so he does not have a right to bring a petition under section 397 and 398 of the Act. 38. Hon'ble Supreme Court in Dale & Carrington Investment (P.) Ltd. v. P.K. Prathapan [2005] 1 SCC 212 has held that a joint petition under Sections 397, 398 and 111A of the Act is maintainable provided the petitioners who were registered as shareholders of the company on the date of filing of the petition together held the requisite number of shares in the company. 39. In the above case Hon'ble Supreme Court was of the view that on the date of presentation of the petition petitioner, P. K. Prathapan and his wife Pushpa was recorded shareholders of the company and they hold requisite number of shares in the company on the date of presentation of the petition under section 397 and 398 of the Act. Therefore, Hon'ble Supreme Court has held that a joint petition in that case is maintainable. But in the instant case petitioner nos. 1 to 3 are not recorded shareholders on the date of presentation of the petition and the petitioner no. 4 has no legal entity also on the date of presentation. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , petitioner no. 4 was not a legal entity, therefore, only proposed applicant with a holding of 4.55% shareholding, out of the total shareholding of the respondent no. 1 company, does not have requisite number to bring a petition under section 397 and 398 of the Act. Therefore, impleadment application also deserves to be rejected. 43. It is also pertinent to mention that this company petition has been filed in the year 2015 and date for reckoning of the requisite qualification is the date of presentation. If M/s. Lucky Trading Company is at all added as a petitioner in this case, this will also not change the situation for presenting petition u/s 397 and 398 of the Act. Only members, who were on the date of presentation of the petition, were entitled to bring a petition. Subsequent to that date if any member is added then their shareholding cannot be counted for reckoning the requisite qualification for filing a petition under sections 397 and 398 of the Act as is required under Section 399. 44. Therefore, it is clear that C.P. no. 61/2015 and I.A. No. 14/2016 are not maintainable, hence dismissed. C.A. No. 836 of 2015, which has been not pressed by the applicant-respondents, is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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