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TMI Blog2020 (10) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... Company was incorporated on 13.02.2009 under the provisions of the Companies Act, 1956 (hereinafter referred as 'the Act') as a private Limited Company having its registered office at Room No. 1, Ground Floor, Vypana Buildings , Petta road Pala Kerala with the paid up capital of Rs. 3,20,00,000/- divided into 32,00,000 equity shares of Rs. 10/- each. The issued capital of the Company is Rs. 3,08,78,570 and the paid-up share capital is Rs. 3,08,78,570/-. The said company it is averred, was promoted and incorporated with the main objects as reflected in the Memorandum of Association of the Company to the following effect: - "to carry out the business of running hotels, resorts and tourism related events" Submissions by the petitioners: 4. The Company in order to meet the construction cost of the hotel had taken a term loan for sum of Rs. 4,00,00,000/- from Kerala State Financial Corporation (hereinafter called as 'KFC') in the year 2011. The Company is repaying the amount to KFC by the contribution of shareholders in proportion to their shareholding and this will be recorded as loan in the books of Respondent No. 1 Company. The company failed to repay the amount du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The minutes of the said conciliatory meeting were recorded in writing, wherein the Respondents conceded that the share transfer was to be made in the name of the petitioners. Further the parties have also agreed that shares would be transferred to Mrs. Susamma Reji (Petitioner No. 2). The said meeting was attended and signed by the petitioners and Respondent Nos. 4,6,7,10,12, and 13. Accordingly, the petitioner along with Respondent No. 10- the Manging Director of the company, handed over the Original Share Certificates and Share Transfer Forms to the Auditor (Respondent No. 9) of the Respondent Company to effect the transfer of shares in favour of petitioners. However, the petitioners did not hear back from the Respondent Nos.1 & 9 in the matter of transfer of shares in their favour. Then the petitioners have enquired about the status of share transfers from the Auditor to whom the relevant forms had been handed over. The Auditor, who is Respondent No. 9 replied to the petitioner, without denying that the share transfer and share certificates forms as pointed out in the petitioners letter dated 04.04.2016 had been handed over to them for the share transfer to be carried out, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide the Minute book copies to the Petitioners. Though the notice was duly served on the Respondent Nos.1, 2 and 10, no action was taken to transfer the shares or rectify the register of members. The Respondent No. 1 Company's share certificate register and the minute book were also not deposited in the registered office of the Respondent No. 1 Company. 7. It is also submitted that the Respondent Nos. 2 and 10 have not caused any Annual General Meetings or Board Meetings to be conducted since 2015 nor have the annual accounts been finalised by the Respondents since 2015. The Respondents have deliberately caused this, though this is in clear violation of the Companies Act. Further the Respondent No. 2 has caused minutes book to be removed from the registered office of the Company without any notice to other Directors. 8. After filing this Petition, the Petitioner at the request of the Respondents attempted settlement talks and the parties in fact entered into a Settlement Agreement on 09.12.2017 (hereinafter referred to as the "Settlement Agreement"), wherein it was acknowledged by Respondents that the 2nd Respondent (also on behalf of the 3rd Respondent), the 4th Respondent ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferee along with the original share certificate have to be lodged with the company either by the transferor or transferee within a period of 60 days from the date of execution and if the Company fails to register the transfer within a period of 30 days as provided under Section 58(1) of the Companies Act 2013, then only the cause of action for filing an Appeal under Section 59(1) would arise. The petitioners have not submitted the duly executed share transfer instrument or the share certificate in original to the respondents - Company as required under Section 56(1) of the Act. In support of the above argument, the counsel for the respondents pointed out the following case law: i. N. Ramji V. Ashwath Narayan Ramji & Anr. (2017) 203 CC 574(Madras). ii. Kerala- Mathrubhoomi Printing and Publishing Company Limited V. Vardhanan Publishers Limited & Ors (1992) 73 CC 80 Kerala. The main company petition under Section 241 of the Companies Act 2013, the petitioners must have threshold share qualification as provided under Section 244 (1) (a) of the Companies Act 2013. The 1st petitioner has got only 2,31,589 shares which constitute only 7.5% shares of issued share capital of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No. 9 13. It is submitted that Respondent No. 9 is an Auditor of the Respondent Company and not the Company Secretary. Therefore, Respondent No. 9 only audits the Company's accounts and do not undertake any secretarial work. It is also stated that certain documents were handed over for carrying out the corrections not the original share certificate or the share transfer forms. The Articles of Association of the Company were in conflict with the transfer of shares to a non-member, thus the same was returned to the Managing Director for splitting up of shares and also for amendment of Articles of Association which contemplate transfer of shares of non-members. FINDINGS: 14. Learned Representatives and counsels of both the sides have been heard at length. The Voluminous pleadings have been carefully perused. Evidences along with the list of events are duly examined and relevant case Laws and provisions of the Companies Act, 2013 are duly considered in the instant application. 15. The main issue to be considered in the instant petition is the purported breach of trust on the part of Respondents 2 to 8, who are the shareholders of the 1st Respondent Company, pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r filing of this Petition, at the request of the Respondents, the Petitioner attempted settlement talks and the Parties in fact entered into a Settlement Agreement dated 09.12.2017, wherein it was acknowledged by the Respondents that the 2nd (also on behalf of the 3rd Respondent), the 4th (also on behalf of the 5th Respondent), 6th and 8th Respondent (also on behalf of the 7th Respondent) would transfer 4.5% shares of the company to the Petitioners, immediately on the execution of the said agreement and that the 2nd, 4th and 6th Respondents would refund the balance amounts by way of cash or cheque on or before 31.03.2018 with interest at 14.5% calculated from 14.12.2017. Failing which, they would transfer further shares in the ratio of 1: 0.5: 0.5 to the Petitioners, and that the duly filled and signed share transfer forms would be held by Mr. K.T. Joseph, brother of the 2nd Respondent (mediator of this settlement). It is evident from minutes of the Board of Directors meeting dated 12.12.2017 that the settlement agreement dated 09.12.2017 was taken on record by the 1st Respondent company. 20. It is also expressly set out in the minutes that the transfer of 61756 shares of the 2nd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We also noticed that none of them raised any objection to transfer the shares to the 2nd Petitioner. 23. The Respondents initially contended that the Petitioners do not have the locus standi to maintain a petition under section 241 of the Act in the absence of the requisite 10% shareholding threshold. While deciding the question of shareholding of the petitioner at the time of filing, we rely on the following judgements: Suhas Chakna v. South Asia Human Rights Documentation Centre Pvt. Ltd. and Ors., [2017] 204 Comp Cas 638, the Hon'ble NCLT, Delhi: "8 whether the petitioner is able to demonstrate that he has been wrongfully deprived of his shareholding by illegal conduct of the respondents including transfers, either in full or in part from having the requisite percentage or he has been marginalized from having the requisite percentage by the illegal actions of the respondents, say by way of allotments but for such fraudulent and illegal actions he would have had the requisite qualifications to maintain a petition for relief against oppression and mismanagement. " The Hon'ble Apex Court in World Wide Agencies Pvt Ltd. v. Margarat T. Desor ( AIR 1990 SC7 37) held: "2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e signed transfer forms, a beneficial interest would accrue in favour of the transferee, if the agreement is one which the courts would order to be specifically enforced (See Re Kilnoore Ltd. (In Liquidation) Unidare Pic v. Cohen [2006] 1Ch.489). In Wood Preservation Ltd. v. Prior reported at [1969] 1 W.L.R. 1077 CA, it was held that the fact that the agreement is subject to fulfilment of a condition beyond the control of the parties will not prevent it from being specifically enforceable, notwithstanding that the condition has not been fulfilled, if the party for whose benefit the condition was inserted is prepared to waive it. It has been held in Hardoon v. Belilios [1901] AC 118 PC, that where the beneficial interest has passed, in terms of what has been discussed hereinabove, without the transferee's name being registered, the seller/transferor then becomes a trustee for the buyer and must account to him for any dividends he receives and vote in accordance with his instructions. This principle has also been taken note of and approved by our Supreme Court in Howrah Trading (supra)." 26. Considering the special circumstances of this case and relying on the above judgement, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 92634 PETITIONER 2- SUSSAMMA REJI Joy Abraham and Bindu Mony (Respondent No. 7 and 8) 46317 PETITIONER 1- ABRAHAM REJI Boban Abrham and Gemma George (Respondent No. 4 and 5) 30879 PETITIONER 1- ABRAHAM REJI Maneesh Sebastian (Respondent No. 6) 30879 PETITIONER 2- ABRAHAM REJI Total No. of shares to be transferred to Petitioner No. 1: 108075. Total No. of shares to be transferred to Petitioner No. 2: 92634. (ii) Respondent company is hereby directed to complete the entire exercise of transfer of shares in favour of petitioners, i.e., rectifying the register of members and filing with RoC etc., within a period of one month from the effective date of this order. A confirmation to this effect may be filed with the Registry within a week thereafter. (iii) As regards to prayer to investigate into the accounts and affairs of the Respondent No. 1 Company, we hereby appoint K. Venkitachalam Aiyer & Co., Chartered Accountants, No. 41, 3647B, first Floor, Blue Bird Towers, Providence Road, Ernakulam, Kochi- 682 018, email id: [email protected]. to investigate the same during the period from 01.04.2015 to 31.03.2019. A report in this regard may be submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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