2000 (2) TMI 828 - Board - Companies Law

Summary

Issues involved:
Rectification of the register of members regarding the transfer of shares in a company.

Analysis:
The petitioner sought rectification of the register of members of the respondent-company, alleging fraudulent transfer of shares to respondents Nos. 7 and 8 without his knowledge. The petitioner claimed to have never sold the shares, signed transfer deeds, or received consideration. The respondents denied the allegations, asserting the validity of the transaction, supported by share transfer deeds signed by the petitioner and attested by bankers. The petitioner's resignation and receipt of consideration were also cited. The main issue was whether the transfer of shares and recording of new members were valid or a result of forgery, fraud, and collusion.

The respondent argued that the case involved highly disputed questions of fraud and forgery, suggesting it should be addressed in a civil court. Citing legal precedents, the respondent contended that such contentious issues fall outside the scope of rectification by the Company Law Board (CLB). The apex court's judgment clarified that the CLB has discretion to determine if a dispute is truly for rectification or requires civil court adjudication. The Bombay High Court further emphasized that issues regarding ownership, fraud, or forgery must be decided by the civil court.

Considering the serious allegations of forgery, fraud, and manipulation, the CLB concluded that the matter involved complex factual disputes beyond the scope of rectification jurisdiction. The petitioner's requests for expert comparison of signatures and summoning of witnesses indicated the need for detailed examination best suited for a civil court. Therefore, the CLB refrained from making any observations on the case's merits to avoid prejudicing the parties and dismissed the petition without costs.