TMI Blog2007 (10) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 10/- each. The petitioners have sold their share-holding in the Respondent company against due consideration during the period 1989-1991 and were not shareholders of the Respondent No. 1 company till 2002. In the year 2002 the petitioners were transferred 2 shares and with exception of 2 shares presently held by petitioner No. 2 the petitioners are not shareholders of the company as on date. The said fact is evident from the annual returns filed for the period September 1990 and 1991. My attention was drawn to the annual returns to show that petitioners sold their respective share-holding to M/s Suvidha Viniyog Company Pvt. Ltd. and the transfers were registered on 3.10.1989 and 20.2.1991. The said petitioners have received full consideration for the said transaction. The returns and the accompanying financial statements filed by the petitioners before the Income tax authorities for the relevant period also duly reflect the transfer of shares. It was pointed out that the petitioners out of their own volition did not want to be associated with the management and administration of the Respondent No. 1 company and petitioner No. 1 had resigned from the Board of Directors of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholders. Even otherwise the petition is hopelessly time-barred as it seeks to challenge transfer of shares that has taken place between 1989-1991. The petitioners have failed to put forth any reason, let alone sufficient reason, to explain the delay in approaching the Hon'ble Company Law Board. 5. Further, Sh. Bakhru pointed out that it is apposite to mention that Ishwar Lal Patwari group has filed an application under Section 397/398 of the Companies Act, 1956 against Telengana Spinning Weaving Mills Ltd. and Ram Gopal Patwari Others before the Additional Principal Bench, Chennai in the month of Mach 2007. The present Company petition is only a counter blast to the litigation filed by Ishwar Lal Patwari group and is liable to be dismissed accordingly. 6. Shri Jaideep Gupta, Senior Counsel for the petitioners argued that the Respondents are not entitled to apply under Section 399 of the Companies Act, 1956 or claim dismissal of the company petition at the threshold itself. It is a plea of demurrer. They are not entitled to direct denial of the statements of the petitioners without the benefit of counter affidavit. The petitioners have been wrongfully and illegall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon both the Respondent No. 1 and Suvidha Viniyog Company Pvt. Ltd. to show the alleged consideration for such alleged transfers and also to produce the purported share transfer deeds so that the same may be adjudged null and void and cancelled. It was denied that any of the petitioners have received any consideration for the alleged transfer or otherwise, or any returns or the accompanying financial statements filed by any of the petitioners before the Income-tax Authorities for any of the alleged period would reflect the alleged transfer as stated above. It was argued that the question of any of the petitioners showing the alleged consideration in any of their Income tax returns also does not and cannot arise at all. 7. Further, Shri Gupta pointed out that the respondents had falsely stated that any of the petitioners out of their own volition or otherwise did not want to be associated with the management or administration of the company or that had resigned from the Board of Directors of the company on September 9, 1975 or that the same could be evident from Form 32 filed with the Registrar of Companies on October 8, 1975, as alleged or at all. In their reply to the CA, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be filed has not yet come. Shri Gupta contended that the requirement to show the shareholding, even as per the Regulations of the Company Law Board can hardly be said to be mandatory in the sense that non-compliance with any of them would ipso facto result in the dismissal of the petition. Relying on the decision in the case of Gwalior, Sugar Co. Ltd. and Others [2004] SC 714, Shri Gupta contended that the objection to the maintainability being taken by way of demurrer, the Company Law Board can decide the issue on the basis of the averments contained in the petition alone, accepting the pleas therein as correct. In the present case, the respondents had not yet filed even a counter affidavit. To support the petitioners' contention in the matter Shri Gupta also placed reliance on the decisions in the cases of Satish Chandra Sanwalka and Others v. Tinplate Dealers Association Pvt. Ltd . and others and Rajkumar Devraj and Another v. Jai Mahal Hotels P. Ltd. and Others . 9. Rejoining to the petitioners' arguments Sh. Bakhru argued that the petitioners have failed to show as to how C.P. No. 88/07 is maintainable under Section 397/398 of the Act without their having th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsider the issue of maintainability of the petition. The requirement of share qualification is relevant and material for maintaining the petition. Considering the pleadings and the arguments of the parties on the issue of maintainability of CP. No. 88/07, which is a preliminary issue, I find that the respondents' contentions as made in their Application No.357/07 are tenable. The entire arguments of the petitioners including the reliance on the judgments cited, have been on the assumption that it is plea of demurrer. The respondents have rightly pointed out that it is not a plea of demurrer. The issue being maintainability of the CP under Section 397/398 of the Act without having the requisite qualification as provided in Section 399 of the Act, I may examine that Section. This Section provides that to maintain a petition under Section 397/398 in case of a company having a share capital, it should be filed by members having 10% of the subscribed capital or constituting 10% of the total membership of the company or by a member/members who have obtained consent of the rest. In the present case, the petitioners have only shown a chart of their shareholding. Their shareholding alr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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