1996 (3) TMI 428 - HC - Companies Law

Issues Involved:

1. Whether the petition is prima facie barred by the law of limitation under Article 137 of the Limitation Act, 1963.
2. Whether the averments of fraud in the petition can be considered as fraud in the eye of law under Order VI, Rule 4 of the Civil Procedure Code, 1908.
3. Whether the provisions under Section 17(1)(b) of the Limitation Act, 1963, apply to bring the petition within the prescribed time-limit.
4. Whether no period of limitation is attracted because the alleged transaction of acquiring shares is void.
5. Whether the petition can be admitted based on sufficient cause under Section 5 of the Limitation Act, 1963.
6. Whether the alleged transaction constitutes a continuing wrong, thereby extending the limitation period.

Issue-wise Detailed Analysis:

Issue (A): Whether the petition is prima facie barred by the law of limitation under Article 137 of the Limitation Act, 1963.

The court observed that the petition for rectification of the share register was not made within the stipulated period of three years as provided under Article 137 of the Limitation Act, 1963. The petition was presented after about six years, making it prima facie barred by the law of limitation.

Issue (B): Whether the averments of fraud in the petition can be considered as fraud in the eye of law under Order VI, Rule 4 of the Civil Procedure Code, 1908.

The court noted that the petitioners repeatedly mentioned fraud but failed to provide specific particulars as required under Order VI, Rule 4 of the Civil Procedure Code, 1908. General allegations without specific details do not amount to an averment of fraud that the court should take notice of. Therefore, the averments of fraud in the petition do not meet the legal standards.

Issue (C): Whether the provisions under Section 17(1)(b) of the Limitation Act, 1963, apply to bring the petition within the prescribed time-limit.

The court held that to benefit from Section 17(1)(b) of the Limitation Act, 1963, the petitioners needed to establish that the knowledge of their right to apply was concealed by fraud. The court found no sufficient evidence or specific particulars of fraud that kept the petitioners from knowing their right. Therefore, the petitioners could not bring their case within the purview of Section 17(1)(b).

Issue (D): Whether no period of limitation is attracted because the alleged transaction of acquiring shares is void.

The court rejected the argument that the transaction being void exempts it from the limitation period. The court cited relevant case law, including the Supreme Court decision in State of Punjab v. Gurdev Singh Ashok Kumar, which clarified that even if a transaction is void, the aggrieved party must approach the court within the prescribed period of limitation.

Issue (E): Whether the petition can be admitted based on sufficient cause under Section 5 of the Limitation Act, 1963.

The court found that the petitioners did not show any cause for the delay, much less a sufficient cause, as required under Section 5 of the Limitation Act, 1963. The allegations of fraud lacked specific particulars, and no valid reason for the delay was provided. Thus, the petition could not be admitted based on sufficient cause.

Issue (F): Whether the alleged transaction constitutes a continuing wrong, thereby extending the limitation period.

The court clarified that a continuing wrong involves a series of continuous injuries caused by an act that renders the doer responsible for the continuance. In this case, the wrongful act was complete upon the share transfer and its entry in the share register. The continuing effect of the wrong does not equate to a continuing wrong. Therefore, the alleged transaction does not constitute a continuing wrong that would extend the limitation period.

Conclusion:

1. The petition is barred by the law of limitation under Article 137 of the Limitation Act, 1963.
2. The averments of fraud in the petition do not meet the legal standards under Order VI, Rule 4 of the Civil Procedure Code, 1908.
3. The petitioners could not bring their case within the purview of Section 17(1)(b) of the Limitation Act, 1963.
4. The argument that the transaction being void exempts it from the limitation period was rejected.
5. No sufficient cause for the delay was shown under Section 5 of the Limitation Act, 1963.
6. The alleged transaction does not constitute a continuing wrong.

Judgment:

Company Application No. 113 of 1995 is allowed. Company Petition No. 35 of 1988 is dismissed as being barred by the law of limitation. Company Application No. 26 of 1988 is disposed of as infructuous. No costs.

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