TMI Blog2013 (9) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... oner-company never passed any resolution for transfer of the said shares. It is the case of respondent No. 2 in [CP No. 4(ND) of 2010] titled as S.P. Gupta v. International Commenter Ltd., pending adjudication before the hon'ble Principal Bench, Company Law Board ('CLB'), New Delhi, that he had been removed as director of the petitioner-company with effect from 18th June, 2009. 2. It has been also submitted that the transfer of the said shares is bad in law because the same has been done without any consideration received by the petitioner. It has also been submitted that no resolution to transfer those shares has been passed by the petitioner and no Board meeting has been held for the purpose. It has been stated that no consideration has been paid for transfer of the above mentioned shares to the petitioner by the transferees. It has also been alleged that the respondent-company nowhere in the reply to the petitions produced the transfer deeds in question, whereas the production of the same is imperative for the adjudication of the present petition. 3. It has also been pleaded by the petitioner that the power of CLB in deciding questions with respect to the recti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lfil the basic criteria laid down under section 111A of the Act, to maintain the present petition and unless the requirements laid down under the particular section are met, the petition in respect thereof would not be maintainable Section 111A states the following: 111A Rectification of register on transfer-(1) In this section, unless the context otherwise requires, company means a company other than a company referred to in sub section (14) (i.e., private companies) of section 111 of this Act (2) Subject to the provisions of this section, the shares or debentures and any interest therein of a company shall be freely transferable Provided that if a company without sufficient cause refuses to register transfer of shares within two months from the date on which the instrument of transfer or the intimation of transfer as the case may be is delivered to the company the transferee may appeal to the Company Law Board and it shall direct such company to register the transfer of shares (3) The Company Law Board may, on an application made by a depository, company, participant or investor or the Securities and Exchange Board of India, if the transfer of the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of petitioner at the particular time and his signatures were also lodged with respondent-company as authorised signatory In such a situation the petitions are not maintainable on the said facts mentioned even in the petition 7. It has been further stated that a bare perusal of section 111A of the Act makes it clear that the alleged claim is not covered by the authority vested in the said section The Legislature in its wisdom drafts the sections as it desires and the same must be read accordingly without any ifs and buts, particularly when something is added to an existing provision Here, section 111A was added by restricting applicability of section 111 of the Act only to private limited companies or the companies becoming public limited under section 43A of the Act For the limited companies, a new section as section 111A was added with specific provisions and whatever was desired to apply in respect of some subsections of section 111 under this new section, those were specifically mentioned in sub-section (7) of the section 111A of the Act On perusal of the said sub-section (7), it would be seen that sub-section (4) of section 111 of the Act has not been made applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(g) of the Act, all the affairs of the petitioner-company were being managed and controlled by them only and Mr. Robin Gupta never participated in any proceedings of the company All the returns under the Income-tax Act and the Act were filed by Mr. S.F. Gupta, respondent No. 2, who also signed all the balance sheets of the company with other directors and Mr. Robin Gupta never signed any balance sheet also, as per evidences filed Since Mr. Robin Gupta was not at all participating in the affairs of the petitioner-company earlier, he was not aware of such sale of shares In fact, Mr. Robin Gupta/Mr. B.C. Gupta, on the letter head of the petitioner-company, have themselves admitted vide letter dated 24th September, 2009, addressed to the Registrar of Companies ('RoC'), New Delhi, that they never participated in any meeting of the company earlier This clearly proves and shows that Mr. Robin Gupta never attended any meeting of the petitioner-company and that is the reason why he is not aware of the affairs of the company 11. It has also been argued that necessary Form 32 appointing other persons (belonging to the first family of Mr. Robin Gupta, i.e., his father, mother, wif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised in a civil suit as it involves complicated question of facts and cannot be agitated in summary proceedings like these Also, there is a limitation period under which a petition under section 111A can be filed which in two months, but the petition has been filed after almost twenty months of the alleged incident It has been also stated that the question of removal of the directors of the petitioner-company is pending in another proceeding between the parties in CP No. 4(ND)/2010, before Principal Bench in Delhi 13. It has also been stated by the respondents that in the whole of the petition, the petitioner has not even mentioned the details of the alleged shares to which it is showing its ownership Neither the details of such shares have been mentioned therein nor photocopies of the shares certificates have been attached with the petition Also, at no place, the genuineness of the signatures on the transfer deeds has been challenged, then how respondent No. 1 at all comes in the picture Thus, provisions of the section 111A are not attracted I here is no allegation or any police report that those share certificates were ever misplaced or stolen Those shares certificates were al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in contravention of the provisions of SEBI Act, or regulations made there under, or SICA or any other law for the time being in force The petitioner has not challenged the registration of the transfer on any of these grounds, but on the ground that the transfer had not been authorised by the Board and that no consideration had been received and that the transfer is fraudulent None of these grounds can be taken under section 111A(3) of the Act Reliance was placed in this regard on Morgan Ventures Ltd. v. Blue Coast Hotels Resorts Ltd. [2010] 98 CLA 1 (Bom) : [2010] 104 SCL 516 (Bom) (paras 14 and 15) overruling Finolex Industries Ltd. v. Anil Ramchand Chhabria [2000] 37 CLA 278 (Bom) : [2000] 26 SCL 233 (Bom) as relied by the petitioner 17. It has also been stated that respondent No. 1-company being a public limited company has to register the transfer of shares on presentation of proper document of transfer It is not concerned with the internal disputes of the management of the petitioner It has been further pleaded that even otherwise, in view of the allegation of fraud, non-authority for transfer, non-receipt of consideration, etc, being complicated questions of fact, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edly removed as directors of the petitioner-company under section 283(1)(g) of the Act, in June 2009 In view of the fact, not denied by the petitioner, that till 2009 respondent No. 2 was controlling the petitioner-company and filing its returns also and whose signature was duly lodged with respondent No. 1-company, it cannot be doubted that the transfer deeds duly signed by respondent No. 2 on behalf of the petitioner-company were valid transfer deeds as he was properly authorised on behalf of the petitioner-company for this purpose and the respondent No. 1-company legally acted thereon. Affidavits have been filed by the directors of respondent No. 1-company stating that transfer of the shares were as per law. The signatures on the transfer deeds have also not been challenged as not authentic or genuine of the signatory. There is no complaint to the police that the share certificates were ever stolen or lost. The contention of the petitioner that respondent No. 1-company failed to produce the original share transfer deeds is not relevant because it is not in dispute that the same was signed by Mr. S.P. Gupta on behalf of the petitioner-company at the time when he not only was a di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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