TMI Blog2006 (9) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ipments Manufacturing Co. P. Ltd. (hereinafter referred to as the respondent-company ) is a private limited company incorporated on January 15, 1962, under the Companies Act, 1956. It has its registered office at Tower House, 2A, Chowringhee Square, Calcutta, West Bengal. The authorised and the paid-up share capital of the respondent-company was ₹ 5,00,000 (50,000 equity shares of ₹ 10 each) and ₹ 10,000 respectively. As per the annual return for 1999 the paid-up capital is ₹ 3,70,000. The company was incorporated for the objects of general trading agencies and certain manufacturing activities such as containers and trailers. On receipt of the petition containing allegations as mentioned in paragraph 1 above, on the request of the petitioner the Company Law Board by its order dated August 20, 2004, directed the respondents to file documents to substantiate the petitioner's arguments returnable on November 3, 2004. The petitioner tried and invaded into the company's record despite not being a shareholder of the company to procure share transfer deeds and original index register, account books and proof of service of extraordinary general meeting held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication C.A. No. 50 of 2005 in C.P. No. 20 of 2003 is accordingly dismissed. 5. The petitioner again being aggrieved by the aforesaid order of the Board, filed yet another W.P. (C) No. 7070 of 2005 under Article 226 of the Constitution of India before the hon'ble High Court of Delhi at New Delhi and the learned single judge of the hon'ble Delhi High Court, by an order dated April 25, 2005 (ex-parte) was pleased to dismiss the petition with the following observations: I have carefully perused the order dated March 4, 2005. In my view, the only observations made by the Company Law Board appear in paragraph 4 of the order dated March 4, 2005. Paragraph 3 of the order merely records the submissions and contentions made on behalf of the respondents. Therefore, there are no findings whatsoever with regard to the locus standi of the petitioner to bring or maintain the petition before the Company Law Board. This issue is yet to be decided and shall be heard by the Company Law Board when it proceeds to hear the matter on May 19, 2005, or any date thereafter. I may also notice that the position so far as the proceedings before the Company Law Board are concerned, remains the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Manufacturing Co. P. Ltd., at Calcutta. The respondent company was incorporated out of the funds of the partnership funds and with a clear and complete agreement and understanding between the partners that the same is a quasi-partnership company and further the partnership firm carried out its business from the office premises located at Tower House No. 2A, Chowringhee Square, Calcutta. The company being a defunct company did not have any employees and also did not carry on any business, till it was forcefully, illegally taken over by the legal heirs of Mr. M. L. Maheshwari in the year 1986. Upon the death of Mr. M. L. Maheshwari bona fide steps were taken by Mr. M. L. Kocher for beneficial winding up of the business of the partnership firm and for preservation of its funds, assets and properties. There were inter se disputes besides disputes with other creditors. Shri P. N. Dutta, and Mr. Ranjit Mitra, were appointed as joint receivers over the assets and properties of the said firm and receivers were directed to take possession of the rooms at Tower House, Chowringhee Square, Calcutta, where the respondent-company was alleged to carry on its business and was allowed to do so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector was terminated with effect from March 20, 1986. However, a notice was sent by it dated June 4,1987. Thus, it is further important to note that the respondent-company had till the serving of the notice not effected the change in the management of the respondent and shareholding with the Registrar of Companies. The annual return/balance-sheet/ Form No. 2/Form No. 32 for the year 1986 were filed with the Registrar of Companies after a time lag of almost two years, all this indicates that there had been a deliberate delay on the part of the respondent-company. It is pertinent to mention here that as per the Form No. 32 filed with the Registrar of Companies reflects that Mr. Sanjay Agrawal was appointed as an additional director of the respondent-company, in the year 1987 and the Form No. 32 in this respect has been filed in the year 1988, this fact of appointment of Mr. Sanjay Agrawal as an additional director of the respondent-company has not been reflected in the annual return of the same year. The same was an afterthought and mischievous to the exclusion of Kocher group from the management and the ownership of the respondent-company. As on date Kocher group has zero sharehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigation be made with regard to the dealings and transactions of respondents Nos. 2 to 5 in connection with the management and affairs of the respondent-company and its assets and properties ; an independent auditor be appointed to re-audit the accounts of the company since 1986; the respondent-company be directed to rectify its register of members thereby entering the names of the petitioner and Mr. Shashank Kocher, legal heirs of the petitioner's deceased father, i.e., late Mr. M.L. Kocher, upon transmission of the shares in his name, as the rightful shareholders of the respondent-company ; reverse the wrongful entries made in the register of members of the respondent-company thereby inserting the names of Mr. Mayank Kocher and Mr. Shashank Kocher. 11. Shri Rana Mukherjee, counsel for the respondents argued. That the instant company petition under Section 237 of the Companies Act, 1956, inter alia, seeking an investigation into the affairs of respondent No. 1 company (hereinafter referred to as the company ) and for other reliefs is not maintainable because (a) the instant company petition has been filed admittedly by a person, who on the date of filing of the petition d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal interest in the matter and unless their rights and interests are in some way affected, is implicit in the interpretation of the section. 13. Hence, Shri Rana Mukherjee, counsel for the respondent emphasised that the petitioner: (a) cannot maintain the petition as he has no locus standi to invoke Section 237 of the Companies Act being a rank outsider; (b) even otherwise from the averments made in the petition itself assuming though not admitting that the petitioner could have maintained the petition either under Sections 111, 397 and 398 of the Companies Act, 1956, the petitioner on his own showing has ceased to be a shareholder as far back as in 1987 (paragraphs 10, 12, 14, 16, 17, 19, 22 to 24 and 29 refer) and that, therefore, in any event the reliefs as sought for cannot be granted, the petition being hopelessly barred by limitation, the cause of action having arisen if at all then. 14. The said petition is not maintainable in law. It is grossly belated. It is barred by limitation. The petitioner is guilty of laches in having filed the said petition after an inordinate delay thereby disentitling himself to any alleged relief claimed in the petition. It was furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case there were proper execution of transfer forms, attestation of signature, surrender/delivery of share certificates, payment of consideration and registration of transfer, rectification cannot be allowed without first proving that the facts on record were wrong. It was denied that there was any unilateral and/or secretive exercise of power of allotment of shares. It was denied that there was an intention of increasing the shareholding in the respondent-company in the interest of the directors and their friends. It was denied that the allotment has been for the purpose and/or for improper motive. It was denied that the allotment has been invalid. It was denied particularly that during the continuance of the business under the aegis of the partnership firm, the partners of the firm incorporated a private limited company in the name and style of M/s. Transport and Handling Equipments Manufacturing Co. P. Ltd. That the majority shareholding of the respondent-company was acquired by Mr. M.L. Maheshwari and Mr. M.L. Kocher after a period of about 10 years since its incorporation. It was emphatically denied that the respondent-company was incorporated out of the funds of the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification. The mere fact that a so-called shareholder is feeling dissatisfied about the way in which the affairs of the company are being conducted is not enough to get an order of investigation. Neither side can seek an order of investigation against the other after they have fallen out against each other, when the purpose is only to make a score against the other. Seeking an administrative order to investigate into the affairs of the respondent-company for such aggrieve-ment of the petitioner is beyond the scope of Section 237 of the Act. Other remedies are available against such aggrievement. Proper remedies could have been availed of under Section 111/397/398 of the Act. Where the matter under complaint can be taken care of under Sections 111, 397/398 of the Act, the petition goes beyond the scope of Section 237 of the Act. Though it is settled law that to approach the Company Law Board for an administrative order under Section 237 of the Act, the petitioner need not necessarily be a shareholder for being eligible to file the petition. Only to this extent the respondents' contention that the petitioner does not hold any shares in the company and has no locus standi for seek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the opinion of the Company Law Board suggest what has been set out in Sub-clauses (i), (ii) or (iii). The petitioners have failed to make out a case under Sub-clauses (i), (ii) or (iii) of Section 237(b) of the Act. The material placed before the Company Law Board must be such as to justify an order for deeper probe into the affairs of the company. The allegations made in the petition are not such a matter as to require an investigation. The proper remedies could have been availed of under Sections 111, 397 and 398 of the Act. 20. If Furthermore, the petitioner's prayer at page 23 of the petition seeking that the board of directors of the company be superseded and an administrator and/or special officer be appointed to take charge over the management and affairs and books, papers, records and documents of the company as well as its assets and properties is beyond the scope of Section 237 of the Act. Under Section 237 no orders granting such relief can be given. Under this section directing an investigation is only analogous to the issue of a fact finding commission by a civil court for looking into the accounts or making an investigation and does not amount to a judgment w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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