TMI Blog2021 (6) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... n obtained - the onus of proving that the shares have been indeed transferred by Respondent No.7 for valuable consideration is on the Petitioner. Prima facie, the Share Certificate on which they seek to rely, in the absence of other mandatory records to establish the transfer of 520 equity shares of the Respondent No.7 to the transferees who supports the original petitioner, is itself not conclusive about the actual date of transfer, as in Annual Returns, since both the dates are different no credence can be given to the document evidencing the share transfer as claimed by the Petitioner, which forces this Tribunal to draw an adverse inference against the consent holders Sl no.1 to 10 about the transfer of shares of the Respondent No.7 as claimed by them. Moreover, the Petitioner produced certain documents relating to the meetings conducted by the Respondent No.7 under the management of the Petitioner to sell the shares. Nowhere it is agreed or stated that these shares are sold to the consenting persons. No records have been produced by the Petitioner to prove that the consenting persons are the shareholders of the Respondent Company. Whether the Petition filed by the Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case on record and renumbered as TCP No. 45/ KOB/ 2019. 2. M/s. Mannam Centenary Textiles Limited was incorporated on 16th December, 1977 as a Public Company limited by shares (hereinafter referred to as the company ). The authorised and paid up capital of the company is ₹ 1,00,000/- (Rupees One Lakh Only) divided into 1000 Equity Shares of₹ 100/- each and ₹ 5,00,000 divided into 5000 preference shares. The Registered office of the Company is at OP7/447-A, Olavanna, Panthirankavu Post, Calicut-673019. 3. The above petition has been filed under Sections 397 and 398 read with Section 402 and 403 of the Companies Act, 1956 (hereinafter referred as the Act ) alleging oppression and mismanagement in the affairs of M/s. Mannam Centenary Textiles Limited, [Respondent Company] seeking the following reliefs: (a) to declare that the acts of the Respondent No.2 to 5 are oppressive and prejudicial to the interests of the company and members. (b) To declare that the EGM held on 06.02.2010 is illegal and void ab initio. (c) To declare that the removal of the petitioner from the directorship of the Company is illegal and void ab initio. (d) To declare that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecial notice was issued to the Company to remove the Petitioner from the Directorship of the Respondent Company. Moreover, the petitioner was not heard in the meeting. Particularly the Company did not convene any meeting for this purpose. Thus the removal was not in accordance with Section 284 of the Companies Act. Submissions by the Respondent Nos.1 to 5 8. The first and foremost contention of the Respondents is that the consent enclosed by the Petitioners is not a valid consent under Section 399 of the Companies Act, 1956. It is further stated that 23 persons have assented their consent to file the Petition among them Serial no. 11 is the petitioner himself. Therefore, it is clear that the documents are drawn up for some other purpose and not for giving consent to file this petition. 9,. Respondents also stated that Respondent No.7 being the largest shareholder of the Respondent Company under the management of Respondent No.5 and Respondent No.2 as the President and Secretary respectively since 2005 has come to the knowledge that the Respondent Company has stopped functioning long back. The statutory compliances were not carried out by the petitioner during his tenure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the RoC. The Annual Return reveals that the shares held by the Respondent No.7 have been transferred to certain persons. Even though it was filed before the RoC by the Petitioner it is certain that such transfer of shares as specified in the Annual Return based on the Annual General Meeting held on 30.09.2009 is false and fabricated. Considering the false schedule filed by the Petitioner Respondents filed revised schedule before the RoC. Submissions by the Respondent No.7 14. Respondent No.7 also claimed that the Petition is not maintainable and stated that the petitioner holds 14 shares in Respondent company and has filed this petition purportedly with the consent of 23 members of the company who are said to hold 61.60% of the shares in the company and had claimed that he was eligible to file the petition, on the grounds of consent obtained from 61.60% of shareholders of the company. It is further contended that the Consent enclosed to Petition is not a valid consent. The purported consent enclosed in pages 1-3 of Vol. I, under index to typeset of documents enclosed after page 8 in Vol. I cannot be construed to be a valid consent under Section 399 of Companies Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Petitioner are fabricated evidence. 18. It is further claimed that the important document conveying the transfer of title would be the signed Share Transfer Forms. Petitioner produced the share transfer forms executed by the Respondent No.7 to various persons, transferring 520 equity shares on 22.10.2008. In the Share Transfer Form, the bottom left entry shows that the transfer effected on 22.10.2008 and approved on 22.08.2008 two months prior to the alleged transfer. 19. It is further contented that the Annual Return filed for the year ending 30.09.2009 by the Petitioner before the RoC shows the date of registration of the transfer of 520 shares on 22.09.2008. The petitioner filed this Form before RoC on 04.02.2010. Hence, the facts reveal that these Share Transfer Forms are an afterthought and a clear fabrication by the Petitioner. REJOINDER OF THE PETITIONER: - 20. In the rejoinder the Petitioners stated that Respondent No.7 was allotted 520 equity shares as described in the counter. Later, on 24.08.2008 under the Chairmanship of its president P. Venugopala Menon, to discuss the selling of the shares held by the Respondent No.7 in the Respondent Company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an Extra Ordinary General Meeting held on 06.02.2010 convened at the requisition of certain persons, out of which three persons are not shareholders of the Company. It is also the case of the Petitioner that he was not heard as provided under Section 284 of the Companies Act, 1956. It is alleged that the said meeting was held illegally, without following due procedure in the Act and that the Respondent No.5 appointed himself as one of the Directors of Respondent Company and appointed three more persons as Directors, and to remove the Petitioner and 2 others from the Directorship of the Respondent Company. 24. The main objection raised by the Respondents is that the Petition is not maintainable as it does not satisfy the requirement mentioned under Section 399 of the Companies Act, 1956. In terms of Section 399, the petitioners filing a petition under Sections 397 or 398 should fulfil one of the requirements prescribed in that Section. According to this Section, in the case of a company having a share capital, not less than 100 members of the company or not less than 1/10th of the total number of its members, whichever is less or any member or members holding not less than 1/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 10. Since the Respondents have raised strong objection on the transfer of shares this Tribunal has verified various records annexed along with the Petition. 28. On perusal of the record, it is seen that an appeal has been preferred by the Respondent No.7 M/s. NSS Karayogam, Kodalnadakkavu against the order of NCLT Chennai Bench dated 21.11.2016 in C.A No.1 2013 stating that NSS Karayogam is neither a shareholder of the Respondent Company nor any relief has been claimed against the same. Therefore, that Application was rejected. Being aggrieved by the that order, Company Appeal (AT) No.2 of 2017 has been preferred by the Respondent No.7 M/s. NSS Karayogam as Kodalnadakkavu, in which the Hon ble Appellate Tribunal passed the following order: - 4 . but we find the appellant, M/s. NSS Karayogam, Kodalnadakkavu has been shown as the shareholder and holds 520 shares out of 1000 fully paid up equity shares as on 31.03.2012. We find that the Tribunal erred in holding that the applicants are not the shareholders and rejected the company petition in wrong ground. 29. From the observation of Hon ble NCLAT it is clear that Respondent No.7 holds 520 shares out of 1000 fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons are the shareholders of the Respondent Company. 30. Now the question is whether the Petition filed by the Petitioner along with the consent of rest of the shareholders qualify the requirement under Section 399 of the Companies Act, 1956? 31. With the above view that the alleged Share Transfer was not held between the parties make this Tribunal to restrict itself to consider the consent provided by the rest of the shareholders, in order to qualify the Petition to be considered under Sections 397 and 398 of the Companies Act,1956. In the original Company Petition the Petitioner failed to produce the share Certificates issued to Shyam Prasad Manish Kumar and P.K. Prabhakaran Nair. Instead of their Share Certificates, Petitioner produced two Certificates of Mr. P. Damodaran Nair and it is also observed that Petitioner has produced two certificates in his name, one is issued in 1978 (1 Share) and the other is in 1986(14 Shares). Hence, the shares of the remaining consented shareholders totalling to 82 shares which constitute only 8.2% of the total paid up equity capital of the Company. The company took an objection that the petitioner violated the condition precedent prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as contemplated under section 399(1) and (3) of the Act. 33. A reading of the above decision makes it clear that the consent contemplated under Section 399(3) is an intelligent consent, in the sense, a consent given for the purpose of claiming a particular relief and therefore a blanket consent cannot be a consent as contemplated under Section 399 of the Act. In the consent letter all the shareholders consenting to the petition has signed in the next page of the consent letter. In the first page Petitioner has himself put his signature, which cannot be considered as consent letter obtained from the petitioner. To hold that the requisite members can give their consent in writing without applying their minds or without considering the nature of the allegations and the reliefs sought would frustrate the entire purpose of section 399 which prohibits the filing of an application under section 397 and 398 of the Act. Rule 81 of the Company Law Board Regulation, 1991, categorically provides for the filing of signed letter of consent along with the petition thereby reinforcing the relevance and importance of the Consent in Writing . In the Rejoinder Petitioner has annexed consent o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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