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Sailesh Rajnikant Parekh Versus Starline Travels Private Limited, Sanjay Jayvarthanavelu, Asha Raje Geakwad and Bipin B. Shah

2003 (5) TMI 525 - COMPANY LAW BOARD CHENNAI

C.P. No. 7/111/SRB/1999 - Dated:- 6-5-2003 - K.K. Balu For the Appellant: Samir S. Shah, Adv. For the Respondents: V. Venkadasalam, Adv. for First Respondent and T.K. Baskar, Adv. for Second Respondent ORDER K.K. Balu, Member 1. This is a petition filed under Section 111/111A of the Companies Act, 1956 ('the Act') against M/s Starline Travels Private Limited ("the Company") and others. The reliefs made in the petition as amended in CA No. 30 of 2000 are to direct the Company to .....

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r. Thereafter, the petitioner by his letter dated 04.03.1997 forwarded the original share certificates in respect of the impugned shares together with the transfer form to the Company to register the transfer in favour of the petitioner. In spite of repeated demands made in writing by the petitioner and the legal notice, the Company failed to register the transfer in respect of the impugned shares in favour of the petitioner. In this connection, Shri Shah referred to the correspondence exchanged .....

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d the Chartered Accountant of the Company, as respondent No. 4. The petitioner had neither executed any transfer deed transferring the impugned shares in favour of the third respondent nor received any consideration from the third respondent. The Company had colluded with the other respondents, played fraud upon the petitioner; illegally transferred the impugned shares in favour of the third respondent on the basis of a forged transfer deed and further illegally approved the transfer of the shar .....

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uments by the Company) executed by the third respondent in favour of the second respondent is dated 21.08.1995. The third respondent had signed the transfer form on 02.09.1995. Whereas, the Company had resolved only on 06.09.1995 to issue duplicate share certificates in favour of the third respondent on the strength of an indemnity bond dated 02.09.1995. Thus, when the third respondent had demanded the original share certificates from the petitioner in August 1995, approached the Company in Sept .....

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validly transferred the shares in favour of the second respondent. Consequently, the alleged transfer by the third respondent in favour of the second respondent is also not valid. In the circumstances, Shri Shah prayed for the reliefs claimed by the petitioner. 3. According to Shri V. Venkadasalam, Advocate appearing for the Company, the Company originally having its registered office at Bombay was a private limited company with eight shareholders holding 12,020 equity shares. The petitioner an .....

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of Directors of the Company. Accordingly, the second respondent had purchased all the shares of the company including the impugned shares from the petition for valuable consideration. As the third respondent was in-charge of the affairs of the Company and the original share certificates as well as the transfer forms in respect of the impugned shares were in her custody, the Board of Directors of the Company had on 15.02.1995 approved the transfer in her favour. Thereafter, the third respondent .....

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petitioner, not having title to the impugned shares. Shri Venkadasalam urged that the question of maintainability of the petition must first be decided and only if that issue is found in the affirmative by the CLB, the merits need to be gone into, in support of which he relied on (1999) 6 Supreme Court 632-T.K. Lathika v. Seth Karsandas Jamnadas. After shifting the registered office to Coimbatore, the petitioner had somehow fraudulently obtained possession of the original share certificates as .....

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tified true copy of the resolutions passed by the Board of Directors at its meeting held on 06.09.1995 and certificate dated 02.04.2001 issued by Indian Bank (Pages 1-8 & 11 of typed set of documents filed by the Company). 4. Shri T.K. Bhaskar, Advocate appearing for the second respondent has raised the following preliminary objections: a) The cause of action for the petition arose in the year 1995, but the petition has been filed only in 1999. Therefore, the petitioner is guilty of laches, .....

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the date of filing of the petition, Section 111 is inapplicable. According to Shri Bhaskar, the second respondent and his family members had purchased 12,020 equity shares of the Company including the impugned shares for ₹ 9,61,600/-. As the transfer instruments were in compliance with the provisions of Section 108, the Company had registered the transfer in respect of these shares in favour of the second respondent. The petitioner and GCP and voluntarily transferred the impugned shares as .....

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inst the respondents, but failed to give any particulars of fraud on account of which the petition is liable to be dismissed. Shri Baskar reiterated that second respondent and his family purchased the entire shares from the third respondent in good faith without any notice of defect in the title and that the Company had registered the transfer of shares in favour of the second respondent, in which case, the petitioner cannot claim any right over the impugned shares. Shri Baskar urged that the ch .....

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cation which could be decided by the CLB. Tarsem Kansil v. Dev Spinners Ltd. - 2000 CLC 957 - to show that the highly disputed questions of fact regarding fraud, forgery, mis-representation and manipulation cannot be a case exclusively pertaining to rectification which could be decided by the CLB. Smt. Soma Vati Devi Chand v. Krishna Sugar Mills Ltd. - AIR 1966 Punjab 44 (V 33 c 12) - to show that Section 155 is not meant to be used for deciding the disputes requiring investigation. In the case .....

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petition, I shall deal with certain preliminary legal issues raised by Counsel for the respondents. They are - the applicability of Section 111 to public limited companies; the maintainability of the petition by virtue of Limitation Act, 1963. The Company was originally a private limited company, but at the time of filing the petition in May 1999, it has become a public limited company. With coming into force of Sub-section (14) of Section 111, with effect from 20.09.1995 this section is not app .....

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el for the respondents that the petition is barred by limitation and that the petitioner is guilty of laches, delay and acquiescence on account of the delay in filing the petition, beneficial reference is invited to the decision of a division bench of the Calcutta High Court in Smt. Nupur Mitra v. Basubani Pvt. Ltd. (1999) 2 CAL LJHC 264, where it has been held that in proceedings under Section 111 of the Act, the provisions of Limitation Act would apply. This decision of the Calcutta High Court .....

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tion arose in March, 1997, but the petition was filed in May, 1999, within a period of three years. Moreover, the petitioner is alleging that the second respondent became the owner of the impugned shares pursuant to the fraud perpetuated on him by the respondents in collusion with each other and that the transfer was registered in favour of the respondents 2 & 3 by the Company on the bass of forged transfer forms, in which case, the period of limitation, if any, cannot strictly be applied, a .....

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he shares to the second respondent for valid consideration. It is observed from the available form the available records that the petitioner had forwarded the original share certificates in respect of the impugned shares together with the share transfer form by his letter dated 04.03.1997 (Annexure 'A') requesting the Company to register the transfer in his name. The petitioner had reminded the Company by his letters dated 12.04.1997, 15.07.1997 and 29.08.1997 (Annexure 'B' to &# .....

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This letter sent on behalf of the Company does not vindicate the present defence taken by the respondents in spite of the petitioner's subsequent written requests in his letters dated 03.10.1997 and 16.12.1997 (Annexure 'F' & 'G'). I find that the respondents have come forth for the first time with the plea of sale of the impugned shares by the petitioner in favour of the third respondent only in their counter filed to the main petition. It is patently clear from the cer .....

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ved the transfer of the impugned shares in favour of the third respondent without lodgement of the original share certificates and share transfer form. It is therefore, beyond doubt that the mandatory provisions of Section 108 were not complied with while registering the transfer of shares in favour of the third respondent. Consequently the transfer effected in favour the third respondent is not valid. By a letter dated 11.08.1995 (Page 10 of Rejoinder to Counter filed by the Company) the third .....

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executed by the third petitioner (Pages 5 and 6 of Typed Set of documents by the Company) assume importance, according to which the original share certificates were misplaced by the third respondent. The directors of the Company had thereafter on 06.09.1995 resolved to issue duplicate share certificates to the third respondent in lieu of the original share certificates which were in the custody of the petitioner, as borne out by the letters stated supra. The duplicate share certificates so issue .....

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f Directors of the Company at its meeting held on 06.09.1995 (Page 7 of Typed Set of documents by the Company). Moreover, the transfer of the impugned shares by the third respondent in favour of the second respondent was approved at the Board meeting held on 06.09.1995 as per certified true copy of the resolution passed by the Board of Directors (Page 8 of typed set of documents by the Company). Thus, while executing the share transfer form by the third respondent on 02.09.1995, the second respo .....

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