TMI Blog2014 (7) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner and siphoning of funds of the company. But, the Respondents/Applicants Advocate has challenged the maintainability of the aforesaid Company Petition on the ground of law u/s. 399 of the Companies Act, 1956 on the argument that the Petitioner does not fulfill the mandatory provisions of Section 399 of the Companies Act, 1956 to entitle the Petitioner to file the Petition - in terms of Section 159 of the Companies Act, 1956, the Annual Returns are prima facie evidence of any matter stated therein and the Annual Returns clearly show that the Petitioner is the owner/member holding 6260 fully paid shares of Respondent Company under two different folios. In addition, it has also been highlighted that the shares cannot be held in the name of HUF which is not a legal entity. After perusal of the contentions of the Petitioner Advocate and Respondents Advocate, it is observed that while looking into the maintainability of the Petition, only averments made in the Petition and documents filed by the Petitioners are to be looked into and the same is assumed to be correct and no defense or new facts not alleged in the Petition and the documents could be looked into. In fact, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 399 of the Companies Act, 1956, the Company Petition is not maintainable. Due to non compliance of the statutory requirements of Section 399 of the Companies Act, 1956, the Company Petition is not maintainable. As such, the present Company Application is hereby allowed and consequently, the Company Petition is dismissed. - CA No. 49/2009 in CP No. 60(ND)2008 - - - Dated:- 28-7-2014 - Dhan Raj, Member For the Appellant : D.K. Malhotra and Rajesh Kr. Malhotra, Advocates For the Respondent : U.K. Chaudhary, Sr. Advocate, Sasnjiv Sen, Partha Sil and Himanshu Vij, Advocates ORDER Dhan Raj, Member 1. In this case, the Petition has been filed u/s. 397 and 398 of the Companies Act, 1956 on account of the alleged acts of oppression and mismanagement on the part of the Respondents and the said Petition is pending for adjudication. In the meantime, the present Company Application No. 49/2009 has been filed with the prayer to dismiss/stay the present Petition and also to vacate/stay the operation of the Orders passed by this Hon'ble Court on 25.9.2008 and 28.1.2009. Precisely speaking, the Respondents/Applicants Advocate has alleged that the Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the shareholders (members), general as well as extra-ordinary, were issued separately to two members i.e. Lt. Col. Sawai Bhawani Singh and H.H. Maharaja Sawai Bhawani Singh and as and when dividends were declared, the amounts of dividend were sent separately as mentioned above. 1.1 The Respondents/Applicants Advocate has further averred that all the 3260 shares held by the Petitioner in his personal capacity have been attached by the Income Tax Department and a notice has been served under Section 226(3) of the Income Tax Act on the company by the Income Tax Department by which it has been ordered that all dividends arising out of the said 3260 shares held by the Petitioner is to be remitted to the Income Tax Department on account of the shares having been attached by the Department towards the Income Tax and Wealth Tax dues which the Petitioner owes the Income Tax Department. Further, since the notice from the year 1994, all dividends are being paid to the Income Tax Department. Even for 3000 shares held by Petitioner as Karta of HUF, it has been stated that dividends are being sent to the Petitioner under intimation to the Receiver appointed by the Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it could be inferred that 3000 shares are held by the Petitioner as Karta of HUF. It has been pleaded that the dispute pending in Suit No. 870/1986 does not affect the right of Petitioner/Member to move the present Petition. Rather, the shares are held under two different folios in the name of Petitioner as Member/shareholder. The Petitioner as individual is known as Col. Sawai Bhawani Singh as well as H.H. Maharaja Sawai Bhawani Singh. 2.1 The Petitioner/Non-Applicant Advocate has further denied that the shares are held separately by two persons, as alleged. On the contrary, it has been submitted that the entire shareholding is held by the Petitioner in his individual name but under two different folios and merely because the shareholding are held under the two different folios does not permit the Respondent Company to allege that they are two different members. It has also been corroborated that being a family company of the four brothers, the Respondents are well aware of the fact that the Petitioner holds 6260 equity shares in his individual name being the eldest brother and all the brothers who are shareholders are joint owners in equal share of Ram Bagh Palace from wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh are entitled to pursue the Petition u/s. 397 and 398 of the Companies Act even if their names are not recorded on the members' register. As a matter of fact, this Hon'ble Board in terms of its Order dated 7.8.2006 upheld the right of Rajkumar Devraj and Rajkumari Lalitya to file a Petition under Section 397-399 against the same Respondents but in respect of the different Company titled Jai Mahal Hotel Private Limited'. Further, the pendency of the Civil Suit No. 870 of 1986 is neither relevant nor material to decide the fraudulent illegalities committed by the Respondents in the Applicant Company. 3. The Respondents/Applicants Advocate filed the rejoinder stating therein that 6260 equity shares are being held in two names i.e. 3260 shares in the name of Lt. Col. Sawai Bhawani Singh and 3000 equity shares in the name of H.H. Maharaja Sawai Bhawani Singh. Further, it has been clarified that some shares were so allotted in two different names and have been mentioned in the register of members under two different folios. Not only this, the aforesaid two set of shareholdings of 3000 equity shares as Karta of HUF and 3260 equity shares in the individual capacity were al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 shares are under the custody and control of the Receiver and the dispute relating to the partition suit of HUF properties of late Maharaja Sawai Man Singh of Jaipur is pending before the Delhi High Court as Original Suit No. 870/1986 and hence, these shares cannot be taken into account in the Petitioner's entitlement to file the present Petition. In fact, the Petitioner is required mandatorily to remit all dividends received in respect of these shares to the Receiver as per direction of Hon'ble Supreme Court vide Order dated 23.9.1994 in the Partition Suit. In this regard, it has also been underlined that the returns filed by the Applicants with the Income Tax and Wealth Tax Departments were also filed under two different signatures and hence, both the returns were not filed under the signatures of Lt. Col. Bhawani Singh, Besides this, even dividend was being paid by the company in the name of HUF of Late Maharaja Sawai Man Singh and Ltd. Col. Sawai Bhawani Singh in respect of 3000 shares and 3260 shares respectively. 3.3 It has also been stated that the Petitioner has no interest in the company and is running a competing hotel and his sole intention is to destroy th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up shares of 33260 shares and his name is recorded as member/shareholder in the Register of Members maintained by the company under the Companies Act, 1956. Furthermore, the name of Petitioner as member/shareholder is recorded under two folios as Lt. Col. Sawai Bhawani Singh and H.H. Maharaja Sawai Bhawani Singhji of Jaipur as per annual returns filed on record. Apart from this, it has also been highlighted that it is settled proposition of law that while deciding such plea of maintainability as demurrer, only averments made in Petition and documents filed by the Petitioner are to be looked into and same are to be assumed as true and correct and no defense/new fact not alleged in Petition or document could be looked into. The Petitioner has averred specifically in the Petition that 6260 fully paid up shares out of total paid up and subscribed 33260 shares, which represents 18.08% shareholding of the total subscribed and paid up share capital in two folios i.e. he is holding more than 1/10th of the issued share capital and the shareholders/members of the Respondent Company is limited to 5 or 6 members only of which Petitioner is one of them representing more than 1/10th of total me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its written statements would be irrelevant. (ii) 191 (2012) DLT 544 Mahesh Chander Malik v. Usha Malik Ors. 3. It is settled preposition of law that while considering an application for rejection of plaint, the Court is required to consider only the plaint and the documents filed by the plaintiff. Neither written statement nor the documents relied upon by the defendant can be considered at this stage. (iii) 203 (2003) DLT 538 Gurpartap Singh Anr. v. Vista Hospitality Pvt. Ltd. Ors. 16. I will now proceed to consider the other preliminary ground on which the Petition was held not maintainable by the CLB. Besides I do so, it is necessary to bear in mind, having regard to the object and purpose of Section 397 and 398 and the very wide and unbridled powers given to the CLB under Section 402, that the CLB should be extremely reluctant to reject the Petition in the threshold itself on highly technical grounds. In Jer Rutton Kavasmaneck and Ors. v. Gharda Chemicals Ltd. and Ors. (2001) 106 Company Cases 25 (Bom.), the learned Single Judge (S.S. Nijjar, J., as he then was) was confronted with a situation where, in an application under Section 397 and 398 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be established even if all the allegations made in the Petition are accepted to be true. It is only at the final hearing of the Petition that the Court would be able to decide the complicated issues of facts and law. The test is whether, even if the facts pleaded by the Petitioner in his Petition under Section 397 and 399 are assumed to be true, the Petition filed by him can be held to be not maintainable. This test is similar to the test applied by a Civil Court while dealing with the issue of rejection of the plaint under Order 7 Rule 11 CPC. 4.2 The Petitioner/Non-Applicant Advocate has emphatically stated that in terms of Section 159 of the Companies Act, 1956, the Annual Returns are prima facie evidence of any matter stated therein and the Annual Returns clearly show that the Petitioner is the owner/member holding 6260 fully paid shares of Respondent Company under two different folios. In addition, the fact that the Petitioner is owner of 6260 shares held under both folios, is clear from the annual returns filed by the Respondent Company as name, address and name of father of Petitioner is same in both the folios. Therefore, merely because the Petitioner has used two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is applicable only when shareholder is a defaulter with respect to the call money or other sums due on their shares to the Company and other sums due on their shares could be interest on delayed payment of call money or premium on the shares that is due, if any, to Company. However, there is no averment in the present Application that any sum is due on the shares held by Petitioner. In view of this, argument of the Respondents that even in case of pledge of shares, the shareholder cannot exercise right to file Petition, cannot be accepted. Therefore, Section 399 has no application to dealing between shareholders and outsider/third party such as Income Tax Department and hence, the liability, if any of shareholder towards third party will not curtail his right as member to file Petition till he continues as member/owner of shares in the register of members or annual returns. Further it has been underlined that the demand by the Income Tax Department in terms of notice of Section 226(3) of Income Tax Act is with respect to the income/dividend, which is payable to Petitioner on his shares. Such amount in law is amount due to the shareholder from the Company and hence, the Company is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by another person in trust for him or on his behalf, is liable for attachment and sale in execution of a decree against him. Section 64 of the Code of Civil Procedure, 1908 states that where an attachment of a property is made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment. What is forbidden under Section 64 of the Code of Civil Procedure is a private transfer by the judgment-debtor of the property attached contrary to the attachment that is, contrary to the claims of the decree holder under the decree for realization of which the attachment is effected. A private transfer under Section 64 of the Code of Civil Procedure is not absolutely void, that is, void as against all the world but void only as against the claims enforceable under the attachment. Until the property is actually sold, the judgment-debtor retains title in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appointment of a Receiver in respect of the shares in question. A perusal of the provisions of Section 182-A of the Land Revenue Act shows that there is no provision in it which states that on the appointment of a person as a Receiver the property in respect of which he is so appointed vests in him similar to the provision in Section 17 of the Presidency Towns Insolvency Act, 109 where on the making of an Order of adjudication the property of the insolvent wherever situate would vest in the official assignee, or in Section 28(2) of the Provincial Insolvency Act, 1920 which states that on the making of an Order of adjudication, the whole of the property of the Insolvent would vest in the Court or in the Official Receiver. Sub-section (4) of Section 182-A of the Land Revenue Act provides that Rules 2 to 4 of Order XL of the Code of Civil Procedure, 1908 shall apply in relation to a Receiver appointed under that Section. A Receiver appointed under Order XL of the Code of Civil Procedure only holds the property committed to his control under the Order of the Court but the property does not vest in him. The privileges of a member can be exercised by only that person whose name is en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Order, the Petitioner Advocate has emphasized that neither the defense nor the documents filed by the Respondent could be looked into. Consequently, the income is distributed is part of tax planning a matter between tax payer and Department and therefore, the company is estopped from taking plea contrary to Register of Members maintained by the company particularly in view of the fact that no declaration is given to Respondent Company under Section 187-C of the Act claiming rights in representative capacity. Lastly, it has also been submitted that the Petitioner has disclosed all material facts as required under the Rule to show that Petition is maintainable in terms of Section 399 of the Companies Act, 1956. There is no Order of any authority or Court which curtails the right of Petitioner to exercise his rights as member/shareholder of the Respondent Company. 5. In his arguments, the Respondents/Applicants Advocate has pointed out that the Petitioner deliberately and with malafide intention suppressed the following material facts from this Hon'ble Board:- (i) In respect of 3000 shares, the Hon'ble Supreme Court of India has appointed a Receiver vide Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the Court-process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. It has also been vehemently argued that the Income Tax amount is due on the shares of the Petitioner Lt. Col. Bhawani Singh are attached by the Income Tax Department and, therefore, the said shares are disqualified. Not only this, all notices annexed in the application relate only 3260 shares and not 6260 shares. Surely, the Income Tax Department knew of the difference between the two folios. It has also been emphatically stated that the money has become due on the shares that is due on property in the shares and thus the property is attached. As such, under Section 226(ix) and (x) and Section 281 of the Income Tax Act, the property itself being attached, money has become due and payable on the shares and hence, the Petitioner cannot transfer the shares. The legal consequence of not paying dividend to the Income Tax Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that 3000 shares which belonged to HUF and in respect of which a Receiver has been appointed by the Hon'ble Supreme Court of India and therefore, no action based on those shares can be initiated unless appropriate directions are obtained by the Petitioner from the Hon'ble Supreme Court of India. As these 3000 shares are in the custody of the Apex Court, the disqualification is attached to the shares and not to the members. Consequently, it is of no use for the Petitioner to say that so long he is a member in respect of some shares he can file a Petition notwithstanding the disqualification attracted on the said shares. The aforesaid disqualification was also indicated through several letters sent by the Petitioner to the Receiver and the company stating that the dividend/warrants may be issued directly in the name of the Receiver. In this context, specific reference has been made in the letter dated 7.4.1995 from Petitioner to Justice Divan (Receiver) with a copy to the Respondent No. 1 and vide this letter, the Petitioner has stated that he has authorized the Receiver to collect all dividends directly to the Receiver. In this context, the Respondents/Applicants Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Receiver is not the assignee or beneficial owner of the property entrusted to his care, it is an incomplete and inaccurate statement of his relations to the property to say that he is merely its custodian. When a Court has taken property into its own charge and custody for the purpose of administration in accordance with the ultimate rights of the parties to the litigation, it is in custodia legis. The title of the property for the time being, and for the purposes of the administration, may, in a sense, be said to be in the Court. The Receiver is appointed for the benefit of all concerned; he is the representative of the Court, and of all parties interested in the litigation, wherein he is appointed. He is the right arm of the Court in exercising the jurisdiction invoked in such cases for administering the property; the Court can only administer through a Receiver. For this reason; all suits to collect or obtain possession of the property must be prosecuted by the Receiver, and the proceeds received and controlled by him alone. If the suit has to be nominally prosecuted in the name of the true owners of the property. It is an inconvenient as well as useless form- inconvenient, beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed by a Court because eventually every case must be decided on its own facts and therefore whatever inferences are arrived at with regard to the powers and functions of the Receiver appointed in the present case they naturally flow from the facts and circumstances of this case alone. A look at the various Orders passed by this Court according to the sequence of events leaves no room for doubt that the Receiver was appointed in order not only to perform the five functions specified at the conclusion of the order but since ultimately the person appointed as Receiver was also the Mutwalli of the alleged Waqf he was permitted to become Receiver by this Court on the basis that he would also manage the property in dispute as Receiver. It is not disputed that the property of the alleged Waqf consisted only of the house in dispute and the realization of its rental income, its repairs incurring expenses on that account and maintenance of accounts etc. were all entrusted to the Receiver. This in substance amounted to investing the Receiver with the management of the property. It is true that Order 40, Rule 1 C.P.C. indicates the various functions and powers which may be conferred on a Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om which he derives his appointment, his possession is exclusively the possession of the Court, the property being regarded as in the custody of the law, in gremio legis, for the benefit of whoever may be ultimately determined to be entitled thereto. Apart from the above, The Respondents/Applicants Advocate has also laid emphasis on the judgment in the case of Maharaj Jagat Singh v. Lt. Col. Sawai Bhawani Singh Ors. (1993) 2 SCC 313 wherein it was held: 4. .....We, therefore, think it is just and proper that the impugned judgments should be set aside and an Administrator appointed in respect of the properties included in Schedule I II of the plaint and we Order accordingly. The Administrator will take charge of the said properties and will ensure that all steps are taken to manage, preserve and safeguard the same. It will be for the Administrator to take effective steps to assume control over the said properties. The Administrator, except to the extent set out herein, will be in the same position as a Receiver of the said properties and shall have the same powers and duties. The Administrator shall take charge of all the suit properties and make a complete inventory th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encumbered to Income Tax Department. Thus, if the two set of shares are segregated into two different capacities, the percentage of shares in each category will fall to less than 10%. 6. Having considered the Company Petition, Company Application and its reply, rejoinder as well as arguments (oral and written), it is observed that the Petitioner was allotted 10 shares of the Respondent Company in the name of Lt. Col. Sawai Bhawani Singh as per Minutes dated 15.7.1972 and further allotment of 3250 shares in his name as per Minutes dated 17.3.1976. However, 3000 shares were allotted vide the said Minutes dated 17.3.1976 in the name of His Highness Maharaja Sawai Bhawani Singh of Jaipur. This is further substantiated by the argument of the Respondents/Applicants Advocate that the Assessment Order bearing No. GIR 46-B for the year 1979-80 in the name of the assessee Lt. Col. Bhawani Singh in his capacity as individual has admitted to hold only 3260 shares of the Respondent Company and in the Wealth Tax Assessment Order bearing No. 11-B, HUF Lt. Col. Bhawani Singh in his capacity as Karta of HUF of City Palace, Jaipur is holding 3000 shares as part of the HUF. Further, admittedly, 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Karta of HUF. In the light of this, the instant Company Application on maintainability has been examined judiciously in the foregoing paragraphs. 6.1 The contention of the Petitioner Advocate that the Petitioner held 6260 shares under two different Folios, out of the issued 33260 equity shares is correct to the extent that 3260 shares were owned by the Petitioner in his individual capacity and the balance 3000 shares were held as Karta of HUF. It is also factually true that there are allegations in the Company Petition that the Respondent Company has committed serious acts of Oppression and Mismanagement including dilution of shareholding of the Petitioner and siphoning of funds of the company. But, the Respondents/Applicants Advocate has challenged the maintainability of the aforesaid Company Petition on the ground of law u/s. 399 of the Companies Act, 1956 on the argument that the Petitioner does not fulfill the mandatory provisions of Section 399 of the Companies Act, 1956 to entitle the Petitioner to file the Petition. However, the Petitioner Advocate argued that it is settled proposition of law that while deciding such plea on maintainability, only averments made in the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he owner/member holding 6260 fully paid shares of Respondent Company under two different folios. In addition, it has also been highlighted that the shares cannot be held in the name of HUF which is not a legal entity. Whereas on the other side, the Respondents/Applicants Advocate has pointed out that the Petitioner deliberately and with malafide intention suppressed the following material facts from this Hon'ble Board:- (i) In respect of 3000 shares, the Hon'ble Supreme Court of India has appointed a Receiver vide Order dated 20.10.1992, 6.11.1992 and 13.11.1992 in Civil Appeal No. 4492 of 1992. (ii) In respect of 3260 shares, the Deputy Commissioner of Income Tax, Special Range, New Delhi vide notice dated 28.9.1994 has informed the Respondent No. 1 Company about the income tax arrears to the extent of ₹ 8.50 crores against Brig. Bhawani Singh and the notice dated 28.9.1994 u/s. 226(3) of the Income Tax Act, 1961 was served on the company informing therein that the shares are attached and dividend in respect thereto be paid to the Deputy Commissioner, Special Range, New Delhi. Since then, the company under intimation to the Petitioner in his individual capac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jaipur and others and in respect thereto, a Receiver has been appointed by the Hon'ble Supreme Court of India. Thus, all the co-parceners of the Hindu Undivided Family are entitled to their shares in the shares and the Petitioner is one of them. However, as there is a Partition Suit and the Receiver has been appointed by the Hon'ble Supreme Court of India, the Petitioner in his capacity of Karta of HUF is not entitled to own those shares in individual capacity. At the same time, there is no evidence on record to show the share of the Petitioner out of the aforesaid 3,000 shares. In fact, various assets including these 3,000 shares are the subject matter of the suit and hence, it is not clear whether the impugned 3,000 shares or part thereof would come in the share of the Petitioner. Not only this, consequent upon the appointment of a Receiver by the Hon'ble Supreme Court of India, these 3000 shares cannot be disposed of by the Petitioner as Karta of HUF and dividend on these shares is also deposited with the Receiver resulting in the situation that the name of the Petitioner as Karta of HUF is only appearing in the Register of Members, however no financial benefit in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of holding the property of the litigants, whenever it is necessary that it should be kept in the grasp of the Court in order to preserve the subject matter of the suit and therefore, his possession is the possession of all the parties to the proceeding according to their titles. Thus, the Receiver being an officer of the Court from which he derives his possession is exclusively the possession of the Court, the property being regarded as in the custody of the law, in gremio legis, for the benefit of whoever may be ultimately determined to be entitled thereto. In view of the aforesaid legal position, 3000 shares in the name of His Highness Maharaja Bhawani Singh as Karta of HUF are in the custody of the Receiver appointed by the Supreme Court of India and the Receiver appointed is in the custody of the shares as officer of the Court to determine the entitlement thereto. Under these circumstances, the Petitioner cannot claim that he is entitled to all the 3000 shares of the Respondent Company till the Partition Suit is so decided by the Competent Court in his favour. At the same time, there is no consent/no objection from the Co-parceners of HUF to initiate the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that Petitioner is a Member in the records of the Company. On the other hand, the Respondent/Applicant Advocate highlighted that the Petitioner has no interest in the company and is running a competing hotel and his sole intention is to destroy the successful running of the company. The Petitioner/Non-Applicant Advocate has also pleaded that the jurisdiction of this Hon'ble Board is not in dispute whereas the qualification is being disputed by alleging new facts/defense and documents which is not permissible in law. It has also been argued that while deciding the maintainability of the Petition, principle of Order 7 Rule 11 CPC are to be followed and hence, while deciding a plea on maintainability, as demurrer, the allegations made in the Petition and the documents filed along with the Petition alone are to be seen and they have to be assumed to be correct and it is not permissible in law, to make plea or defense filed by the Respondents at this stage. The Petitioner Advocate has also averred that in terms of Section 159 of the Companies Act, 1956, the Annual Returns are prima facie evidence of any matter stated therein and the Annual Returns clearly show that the Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dend to Income Tax Authority. Lastly, it has been argued that even the attachment does not attract title/ownership to the Petitioner of the shares and hence, the Petitioner remains owner and his name is entered in the Register of Members. In his support, the Petitioner Advocate has cited the judgment of the Hon'ble High Court in the case of Balakrishan Gupta Ors. v. Swadeshi Polytex Ltd. (AIR 1985 SC 520) wherein observation has been made that an Order of attachment cannot have the effect of depriving the holder of the shares of his title to the shares and hence, the attachment of the shares has not deprived the shareholder of its right to vote at the meeting or to issue the notice u/s. 169 of the Act. In the present case, the Respondent Company has not deprived the shareholder/Petitioner of his title to the 3260 shares. On the contrary, the name of the Petitioner has been entered as the shareholder in the Register of Members and notices of General Meetings are given to him as a shareholder together with financial benefits. However, the Respondents/Applicants Advocate has pleaded that the Petitioner has suppressed the material fact from the Hon'ble Board to the extent tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of payment of calls arises. However, the general words other sums must have reference to any sum other than the amount of the calls clue on the shares. When the legislature has used general words, the Courts or law shall not be justified in restricting their scope on the supposed intention of the legislature, on the presumption that certain words were due to drafting error, omitted. The words other sums shall thus include any amount due from the share-holder other than the amount of calls, provided that such amount is due on the shares, that is can be recovered by the sale of such shares. From the aforesaid legal position as well as ruling given by the Allahabad High Court, it is clear that the Department of Income Tax has attached 3260 shares owned by the Petitioner by way of notice dated 28.9.1994 u/s. 226(3) of the Income Tax Act, 1961 and thereby, the said 3260 shares stands encumbered to the Income Tax Department in view of the determination of the sum due and payable to the Income Tax Department. It is also true that the Petitioner continues to be the shareholder in the Register of Members and is entitled to get notice of meeting as well as financial benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall include any amount due from the shareholders other than the amount of calls provided that such amount is due on the shares, i.e. can be recovered by the sale of such shares. In the instant case, the aforesaid 3260 shares have been attached by the Income Tax Department u/s. 226(3) of the Income Tax Act, and the said shares can be sold in the process of recovery under provisions of Sections 226(ix) and (x) and Sec. 281 of the Income Tax Act, 1961. Therefore, these 3260 shares cannot be considered for the fulfillment of the mandatory requirement u/s. 399 of the Companies Act, 1956. Consequently, the Petitioner has not fulfilled the requirements of Section 399 of the Companies Act, 1956 due to the Partition Suit in respect of 3000 shares held in the name of His Highness Sawai Bhawani Singh and 3260 shares held by the Petitioner in his own name but the said shares have been attached by the Income Tax Department. Thus, due to non compliance of the statutory requirements of Section 399 of the Companies Act, 1956, the Company Petition is not maintainable. As such, the present Company Application is hereby allowed and consequently, the Company Petition is dismissed with the liberty to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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