2009 (5) TMI 965 - Board - Companies Law

Summary

Issues Involved:
1. Allegations of oppression and mismanagement.
2. Validity of the share transfer without full consideration.
3. Rectification of the register of members.
4. Authority of the second petitioner to file the petition.
5. Allegations of fraudulent transfer of shares.
6. Jurisdiction of the Company Law Board (CLB) to grant relief.

Issue-wise Detailed Analysis:

1. Allegations of Oppression and Mismanagement:
The petitioners alleged acts of oppression and mismanagement in the affairs of M/s. Blue Pearl Developments P. Ltd. They claimed that the shares were fraudulently transferred without payment of the full consideration. The respondents denied these allegations, asserting that the petitioners had voluntarily signed the share transfer forms and agreements.

2. Validity of the Share Transfer Without Full Consideration:
The petitioners contended that the agreed sale consideration for the shares was not fully paid, rendering the transfer invalid. They argued that only Rs. 175 lakhs out of the total Rs. 1000 lakhs had been paid, and no built-up space was allotted as promised. The respondents countered that the transfer was valid as per the agreement dated August 16, 2006, and that the petitioners had acknowledged receipt of Rs. 150 lakhs. They also claimed that the balance was to be allotted in the form of built-up space.

3. Rectification of the Register of Members:
The petitioners sought rectification of the register of members, asserting that the transfer of shares was invalid due to non-payment of full consideration. The respondents argued that the register of members was updated as per the agreement, and the petitioners had no right to seek rectification after having voluntarily signed the transfer forms.

4. Authority of the Second Petitioner to File the Petition:
The respondents challenged the authority of the second petitioner to file the petition on behalf of the first petitioner-company. They claimed that there was no board or general meeting authorizing such action, and the second petitioner had acted against the interest of the first petitioner-company. The petitioners maintained that the second petitioner had the right to file the petition based on his role and the agreements in place.

5. Allegations of Fraudulent Transfer of Shares:
The petitioners alleged that the share transfers were fraudulent and unauthorized. They claimed that the second petitioner did not attend the board meetings where the transfers were purportedly approved. The respondents refuted these claims, presenting board minutes and agreements showing the petitioners' consent and participation in the share transfer process.

6. Jurisdiction of the Company Law Board (CLB) to Grant Relief:
The CLB concluded that the grievances of the petitioners were related to breach of agreement rather than oppression and mismanagement. It held that such matters should be agitated in a competent civil court, not before the CLB. The CLB also noted that the petitioners did not hold the requisite number of shares to maintain a petition under Sections 397 and 398 of the Companies Act, 1956.

Conclusion:
The CLB dismissed the petition, stating that the petitioners had not made out a case for relief under Sections 397, 398, and 402 of the Companies Act, 1956. It held that the petitioners had voluntarily transferred the shares and any grievances regarding non-payment of consideration should be addressed in a civil court. The CLB also found no evidence of fraud or mismanagement and vacated any interim orders. The registry was directed to return the original documents to the respondents.