TMI Blog1997 (4) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... moters, their relatives and associates. The company had initially allotted 6,410 equity shares in the capital of the company, which was increased to 10,000 equity shares in 1985. The petitioners were allotted 3,590 shares. Though the company issued and allotted share capital, it never issued share certificates to the members. Some time in 1983, on account of differences between the second respondent and Shri K. N. Seshadri, and the interference of respondents Nos. 3 to 6, the second respondent could not proceed with the theatre project, which was under construction. 3. It is further alleged that the petitioners were never issued any share certificate by the company in respect of their holdings. Neither did the petitioners sell nor transfer their shares for consideration to respondents Nos. 3 to 6. The various cheques said to have been issued by respondents Nos. 3 to 6 towards consideration for transfer of shares were neither received nor encashed by the petitioners. The cheques do not even belong to the respondents. The register maintained by the company is forged, fabricated, concocted, erroneous and does not reflect the correct position. The register does not contain either th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 1989. The petitioner's right, enforcement of which was already barred, cannot be revived before this Bench. Even otherwise, the petitioners are guilty of laches in not having approached this Bench for nearly eight years after the transfer of the impugned shares. The rectification of the register is a discretionary remedy and cannot be exercised in favour of the petitioners. 8. Section 111 contemplates a summary enquiry. The matters alleged in the petition require elaborate evidence and trial. The petitioners should agitate their rights in the civil court. 9. In view of the pendency of winding up proceedings against the company, an order of rectification will be void unless the High Court otherwise orders. The petitioners shall obtain leave from the Karnataka High Court to continue the proceedings or this petition should be heard after disposal of the winding up petition. 10. During the hearing held on December 27, 1996, counsel for the petitioners reiterated the submissions made in the petition and submitted that no share certificates were issued in favour of the petitioners by the company in respect of their holdings. The petitioners had neither sold their shares n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the petitioners submitted that the petitioners' claim is not barred by limitation when especially the petition has been filed within three years of orders dated January 7, 1992, of the High Court of Karnataka, in Original Side Appeals Nos. 16 and 19 of 1990 (see [1993] 77 Comp Cas 97). He further submitted that the cause of action for rectification of the register of members for wrongful removal of the petitioners' name is a continuing one and the petitioners could approach this Bench without any time limit. 14. Counsel for respondents Nos. 3 to -6 while reiterating the submissions made in the reply submitted that the petition is not maintainable on the ground of limitation. The High Court of Karnataka alone had the jurisdiction under Section 155 of the Act till May 31, 1991. In the light of article 181 of the Limitation Act, 1963, the petitioners' claim before the High Court was barred by time. He relied upon the decision in Kerala State Electricity Board v. T. P. Kunhaliumma, AIR , 1977 SC 282, to state that . .. article 137 of the Limitation Act, 1963, will apply to any petition or application filed under any Act to a civil court. He also cited the case of Anil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate enquiry to find out whether payments have been received or not by the petitioners. There was no opportunity to cross-examine the parties alleging irregularities in the matter of transfer of impugned shares and passing of consideration for transfer of the same as well as the second respondent resulting in a large amount of oral and documentary evidence which could be relegated to a civil suit. 16. The petitioners and respondent No. 2 being closely related have colluded to defeat the interest of the company. The transfer of the impugned shares was registered at the board meeting held on February 24, 1986. The second respondent and his daughter, petitioner No. 5, were present at the said meeting and signed the minutes. The petitioner cannot now challenge registration of the impugned shares. 17. Respondents Nos. 3 to 7 cannot go into the reported irregularities pointed out by the petitioners in the transfer of the shares and are bound by the principles of indoor management. 18. In view of the pendency of winding up proceedings against the company since the year 1987, this petition before this Bench cannot be pursued without the leave of the High Court of Karnataka on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld in a few cases that the Company Law Board is not covered by the provisions of the Limitation Act. Therefore, this argument of counsel for the respondents has to fail. 21. In regard to the second limb of the argument that the right to sue had become time barred as early as in 1989 at which time the High Courts had jurisdiction in matters relating to Section 111, the petitioner had contended that they became aware of the impugned transfers only in March 16, 1992, after the judgment of the Karnataka High Court. The petitioner had advanced the same arguments on the plea of laches taken by the respondents. Even if we were to give the benefit of doubt to the petitioners yet the question as to whether they had any knowledge at all about the impugned transfers before the judgment of the Karnataka High Court is a moot point to be considered. It has been averred by the respondents that petitioner No. 5 was one of the signatories to the resolution regarding the registration of the transfer on February 24, 1986. Considering the close family relationship between the petitioners and respondent No. 2 who was one of the parties impleaded in the proceedings before the Karnataka High Court, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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