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TMI Blog2016 (6) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany; and (ii) Form 32 filed for changing the designation of the appellant from that of the Managing Director of the 1st respondent Company to that of a Director of that Company. The appellant has also sought for rectification of the register of members of the 1st respondent Company by removing the names of the 2nd, 3rd and 4th respondent as its members and other consequential reliefs. 2. The Company Law Board (hereinafter referred to as 'the CLB') by Annex. A12 order dated 20.11.2015 dismissed C.P. No. 100 of 2011 as not maintainable, on a finding that the appellant ceased to be a shareholder of the 1st respondent Company, on transfer of his shares to the 4th respondent and as such he has no locus standi to file Company Petition before the CLB. The reasoning of the CLB, as contained in Para. 8 of Annex. A12 order, reads thus; "8. The petitioner has not denied the transfer of shares to the 4th respondent nor disputed the signatures on the share transfer forms. However at para 6(viii) it is stated that he was merely coerced by the 4th respondent along with few other persons with a threat to his life and bodily harm, to transfer the shares held by him in the R1 Company t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of service of notice. The said order of status quo was thereafter extended from time to time till 2.2.2016. Later, on 4.2.2016, while posting the matter to 12.2.2016, it was ordered that the interim order will continue till then. 5. We heard the arguments of the learned counsel for the appellant and also the learned counsel for the respondents. 6. Going by the averments in the Company Petition, M/s. Meezan Realtors Pvt. Ltd. (hereinafter referred to as the 1st respondent Company) was incorporated on 23.8.2003, vide Annex. A1 certificate of registration, with the appellant and one Mr. Salahuddin Nalakath as its first Directors. The authorised capital of the Company was Rs. 1,00,000/- divided into 1,000 equity shares of Rs. 100/- each and that, the appellant holds 500 equity shares of Rs. 100/- each, equivalent to 50% of the issued share capital. Article 29 of the Articles of Association of the 1st respondent Company prescribes holding of at least 5 equity shares as qualification shares for continuing as a Director and that such shares shall be acquired within a period of two months from the date of their appointment. Mr. Salahuddin Nalakath failed to pay the share subscription ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeting was in fact convened. Further, the said transfer deed contain the signature of both the appellant and the 2nd respondent as the joint transferors, for the transfer of 500 equity shares of the 1st respondent Company, as if the appellant and the 2nd respondent are the joint holders of those equity shares, which is prima facie invalid and erroneous. In sub-para (i) to (xii) of Para. 6(b) of the Company Petition, the appellant has stated in detail the alleged oppressive tactics and acts of mismanagement in the affairs of the 1st respondent Company. It was in such circumstances, the appellant approached the CLB in C.P. No. 100 of 2011, seeking various reliefs. 9. Before the CLB, the respondents filed Annex. A9 counter. According to the respondents, the appellant had transferred his entire shareholding to the extent of 1000 shares, by executing Annex. B1 share transfer form on 27.4.2011, in favour of the 4th respondent. Having thus divested his entire shareholding, the appellant ceased to be a member of the 1st respondent Company and hence he has no locus standi to maintain the Company Petition before the CLB. The respondents have also denied the alleged acts of oppression and mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 2nd respondent has also signed the form as if he was a joint holder of the shares. According to the respondents, the appellant, knowing fully well that the 2nd respondent's signature was not needed as transferor, duly acquiesced in the process, and having done so, he is estopped at this stage from questioning the validity of that process. 13. The respondents contended that, at the Board meeting held on 9.8.2011, the 3rd and 4th respondents have been made additional Directors of the 1st respondent Company. Later, they were confirmed as Directors of the Company in the General Meeting of the 1st respondent Company held on 30.9.2011, as evident from Annex. B5 resolution. The appellant raised the issue of threat to life, etc., only in the Company Petition which was filed before the CLB in December, 2011. He did not find it proper to approach the Police authorities to file a complaint if he was indeed threatened with death or bodily harm. According to the respondents, since the entire shareholding of the appellant stood transferred in favour of others, with effect form 27.4.2011, he did not hold necessary qualification shares (5 shares) as required under Article 29 of the Articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto account by the CLB for arriving at such a conclusion are that, the appellant has not denied the transfer of shares to the 4th respondent nor disputed the signatures on the share transfer forms; there is no record to show that what legal action the appellant has taken if he was threatened to sign the share transfer form and transfer the shares to the 4th respondent; the transfer of shares held by the appellant to the 4th respondent is shown in the annual returns of the 1st respondent Company for the year 30.9.2011; etc. In view of the aforesaid reasons, the CLB concluded that, the transfer of shares by the appellant to the 4th respondent is legal and valid, and the appellant, who ceased to be a shareholder of the 1st respondent Company, has no locus standi to file such a petition. 17. Along with the Company Appeal the appellant produced certain additional documents, which do not form part of the Company Petition filed before the CLB. Instead of producing the additional documents along with an application under Order XLI Rule 27 of the Code of Civil Procedure, 1908, those documents are marked as Annexures and produced along with the memorandum of appeal, as if it forms part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent Company are directors of Meezan Jewellers Ltd. and all of them were present in the meeting of the Board of Directors of Meezan Jewellers Ltd. held on 27.4.2011, following the execution of Annex. B1 share transfer form by the appellant, a meeting of the Board of Directors of the 1st respondent Company was also held on 27.4.2011, wherein a decision was taken to induct Mr. Salahuddin Nalakath as a Director of the 1st respondent Company, as reflected in Annex. R1(d) minutes. The learned counsel contended further that, the said appointment of Mr. Salahuddin Nalakath was for filling up the casual vacancy in the Board of Directors of the 1st respondent Company, resulted on account of the 'disqualification' incurred by the appellant under Section 283(1)(a) of the Act. 21. As borne out from the pleadings and materials on record, the fact that the 1st respondent Company was incorporated on 23.8.2003 with the appellant and one Mr. Salahuddin Nalakath as its Directors is not in dispute. It is also not in dispute that, the appellant had subscribed 500 equity shares, out of the authorised share capital of Rs. 1,00,000/- of the 1st respondent Company divided into 1,000 equity shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed before the CLB was that, the decision taken at the General Meetings of the 1st respondent Company on 27.4.2011 were duly ratified by the Board at its meeting held on 15.5.2011 and hence the transfer of shares was complete. However, as borne out from the additional affidavit filed before this Court on 16.3.2016, the stand now taken by the respondents is that, in the meeting of the Board of Directors of Meezan Jewellers Ltd. held on 27.4.2011 a decision has been taken to transfer all the shares held by the appellant in the 1st respondent Company in favour of the 4th respondent, who had been authorised to take over the management of all associate Companies of 'Meezan Group'. Annexure R1(a) is the minutes of said meeting of the Board of Directors of Meezan Jewellers Ltd. held on 27.4.2011. 25. It is trite law that, a Company incorporated under the provisions of the Companies Act is a separate legal entity distinct from its individual shareholders or Directors. A Company is a juristic person and has an existence independent from that of the shareholders and it is the Company which owns its assets and not the shareholders. Therefore, Meezan Realtors Pvt. Ltd. (the 1st res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sub-section (1B) of Section 193 provides further that, in no case the minutes of proceedings of a meeting shall be attached to any such book as aforesaid by pasting or otherwise. 28. Section 194 of the Act provides that, the minutes of meetings kept in accordance with the provisions of Section 193 shall be evidence of the proceedings recorded therein. Section 195 of the Act provides further that, where minutes of the proceedings of any general meeting of the Company or of any meeting of its Board of Directors or of a committee of the Board have been kept in accordance with the provisions of Section 193, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and in particular, all appointments of directors or liquidators made at the meeting shall be deemed to be valid. 29. In Madhusoodhanan v. Kerala Kaumudi (P) Ltd. (2004 (9) SCC 204) the Apex Court held that, under Section 194 of the Companies Act, 1956, minutes of meetings kept in accordance with the provisions of Section 193 shall be evidence of the proceedings recorded therein and, unless the contrary is proved, it shall be pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 283(1)(a) of the Act. Though the respondents would contend that, the alleged share transfer was with the approval of the Board of Directors of the 1st respondent Company, none of the documents produced along with Annex. A9 counter filed before the CLB or the additional affidavit filed before this Court would indicate any such approval/sanction. In such circumstances, we find no reason to sustain the finding in Annex. A12 order of the CLB that appellant ceased to be a shareholder of the 1st respondent Company and hence he has no locus standi to file the Company Petition. The question as to the locus standi of the appellant to maintain the Company Petition requires fresh consideration with reference to the original minutes of the meetings of the Board of Directors of the 1st respondent Company and other statutory records. As the Company Law Board stands dissolved with effect from 1.6.2016, on the constitution of the National Company Law Tribunal, by virtue of the provisions under sub-section (1) of Section 466 of the Companies Act, 2013, such exercise shall be undertaken by the National Company Law Tribunal, Chennai Bench. 33. The learned counsel for the respondents adva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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