2003 (7) TMI 587 - HC - Companies Law

Issues Involved:
1. Appeal against the judgment of the Company Law Board.
2. Whether the appeal is barred by limitation.
3. Legality of the transfer of shares under the Securities Contracts (Regulation) Act, 1956.
4. Jurisdiction of the High Court under section 10F of the Companies Act, 1956.

Issue-wise Detailed Analysis:

1. Appeal against the judgment of the Company Law Board:
The appeal was filed against the judgment and order dated November 25, 1998, passed by the Company Law Board, Eastern Region Bench at Calcutta, in Original Petition No. 15(111)/ERB/1995. The appeal was filed under section 10F of the Companies Act, 1956.

2. Whether the appeal is barred by limitation:
The respondent argued that the appeal was barred by limitation as it was filed beyond the prescribed period of sixty days from the date of communication of the decision. The appellant received the certified copy of the order on November 27, 1998, but filed the appeal on May 14, 1999. The appellant contended that they did not receive the certified copy sent under certificate of posting and only received it on March 25, 1999, after which the appeal was filed. The court noted that the certified copy of the judgment should not have been sent under certificate of posting and accepted the appellant's contention, condoning the delay and proceeding to hear the appeal on merits.

3. Legality of the transfer of shares under the Securities Contracts (Regulation) Act, 1956:
The core issue was whether the transfer of shares from Tuhin to Bhagwati was a spot delivery contract as required by the Securities Contracts (Regulation) Act, 1956. The Company Law Board found that the transfer did not meet the criteria for a spot delivery contract since part of the consideration was paid much later, on November 21, 1994. The Board concluded that the transaction was illegal and void under sections 13 and 16 of the Act. The High Court upheld this finding, noting that the payment of Rs. 10,00,000 on November 21, 1994, and the retention of dividends by Tuhin as part of the consideration indicated that the transaction did not qualify as a spot delivery contract.

4. Jurisdiction of the High Court under section 10F of the Companies Act, 1956:
The High Court's jurisdiction under section 10F is confined to questions of law arising from the Company Law Board's order. The court emphasized that it could not reverse findings of fact unless there was no material evidence to support them or improper legal tests were applied. The court found that the Company Law Board had correctly formulated the points for determination and its decision was not perverse. The findings that the transaction was hit by the provisions of the Securities Contracts (Regulation) Act, 1956, were supported by the evidence and reasoning provided by the Board.

Conclusion:
The High Court dismissed the appeal, finding no merit in the appellant's arguments. The court directed the parties to bear their respective costs.

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