2014 (7) TMI 1254 - Board - Companies Law

Maintainability of petition - Transfer/transmission of all the shares - time limitation - Whether petition is barred by limitation? - Held that - from bare reading of the contents of the correspondences dated 26th November, 1992 (Annexure 11), 28th October, 1992 (Annexure 12), and 10th February, 1998 it is seen that the petitioners were having knowledge of the entire affairs with respect to the shares in question from beginning - In the present case, although it has been argued that the petitioner came to know only in the year 2009 when their application for transmission/transfer of shares was refused by the respondent-company, however, from the appreciation of the pleadings and the evidence produced by the parties discussed hereinabove, in my opinion, it is proved that the petitioners had knowledge since for the last so many years, but despite having knowledge they did not approach the CLB for the appropriate reliefs knowing fully-well that they have not genuine claim in respect of the shares in question - the petition is time barred and is liable to be dismissed. Whether reliefs sought by the petitioners relate to question of title of immovable property and complicated question of facts and law are involved and, therefore, the Company Law Board ( CLB ) has no jurisdiction to entertain this petition, and, thus, the parties are required to be relegated to civil court? - Held that - As is evident from the perusal of the pleadings, the present dispute relate to transmission of shares by a claimant claiming on the basis of legal heir-ship as well as a legatee of the Will executed by his late Father. It has nothing to do with the property and, therefore, I am inclined to accept the contention of the petitioners that under sections 111 and 111A of the Act, is entitled to entertain the petition one has jurisdiction to try the same - no serious question of facts and law is involved and the parties need not be relegated to the civil court for the purpose of adjudication of their rights as to the title of the shares in question. I, therefore, do not find any force in this objection of the respondents and the same is rejected. Whether, the petitioners have suppressed material and vital fact and have not approached this forum with clean hands, if so its effect? - Held that - This issue was not seriously agitared by the learned counsel for the respondents. I also do not see any substance in this plead. It is, therefore, answered in negative. Whether the name of the late Mr. Mohanlal Dalwani in respect of 15 shares and 49 shares in question was illegally entered by the respondent No. 1-company in violation of AoA of the company, if so its effect? - Are the petitioners entitled to the shares in question related to Flat No. 6B in dispute? - Held that - I have no hesitation to hold that the company had rightly distributed the shares on the basis of the Will. I do not find any irregularity or illegality in the recording of the names of the shareholder by the company in the register of members. Therefore, the impugned resolution is perfectly valid and does not require to be cancelled. The petitioners have failed to prove that the company has refused the transmission/transfer of shares without sufficient cause. They have further failed to prove that the name of late Mohanlal Daliwani was wrongly entered in the register of members of the company without sufficient cause, I have already held hereinabove that the petition is time barred. Thus, the petition is without devoid of substance and deserves to be dismissed. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Whether the petition is barred by limitation.
2. Whether the reliefs sought relate to the question of title of immovable property and involve complicated questions of facts and law, thus falling outside the jurisdiction of the Company Law Board (CLB).
3. Whether the petitioners have suppressed material facts and approached the forum with unclean hands.
4. Whether the name of the late Mr. Mohanlal Dalwani in respect of 15 shares and 49 shares was illegally entered by the respondent-company in violation of its Articles of Association (AoA).
5. Whether the petitioners are entitled to the shares in question related to Flat No. 6B.
6. The relief, if any, to which the petitioners are entitled.

Detailed Analysis:

Point No. (i): Whether the petition is barred by limitation?

The petitioners' application for transmission of shares dated 26th November 1992 was refused by the respondent-company, and the present petition was filed on 26th February 2010. The respondents argued that the petition is barred by limitation since the refusal occurred in 1992, and the petition was filed much later. The petitioners contended that they only became aware of the refusal in 2008. However, the court found that the petitioners had knowledge of the refusal since 1992, as evidenced by various correspondences and resolutions. Therefore, the petition is barred by the law of limitation as per Article 137 of the Limitation Act, which prescribes a three-year period for such petitions. The petitioners' claim of knowledge from 2009 was deemed unreliable. Consequently, the petition is time-barred and dismissed on this ground.

Point No. (ii): Whether the reliefs sought relate to the question of title of immovable property and involve complicated questions of facts and law, thus falling outside the jurisdiction of the CLB?

The respondents argued that the dispute involves the title of immovable property and complicated questions of facts and law, which should be addressed by a civil court. The petitioners contended that the dispute relates to the wrongful refusal by the respondent-company to register the shares in their name, which falls within the jurisdiction of the CLB under sections 111 and 111A of the Companies Act. The court agreed with the petitioners, stating that the CLB has the jurisdiction to decide such matters unless there are deep-rooted allegations of fraud or serious questions of title. The court found no such complications in this case and held that the CLB is competent to entertain the petition.

Point No. (iii): Whether the petitioners have suppressed material facts and approached the forum with unclean hands?

This issue was not seriously agitated by the respondents, and the court found no substance in this plea. Therefore, it was answered in the negative.

Points No. (iv) and (v): Whether the name of the late Mr. Mohanlal Dalwani in respect of 15 shares and 49 shares was illegally entered by the respondent-company in violation of its AoA, and whether the petitioners are entitled to the shares in question related to Flat No. 6B?

The court considered these points together. The petitioners argued that the 15 shares (share certificate Nos. 386 to 400) and 49 shares (share certificate Nos. 983 to 1031) were wrongfully transmitted to Mr. Mohanlal Dalwani and the respondent No. 4. The court examined the Will of Mr. Ramchand Dalwani and found that the shares were rightly distributed according to the Will, which acknowledged the shares as HUF property. The court found no irregularity or illegality in the respondent-company's actions. Regarding the 49 shares, the court noted that the petitioners did not challenge the issuance of debentures in favor of Mr. Mohanlal Dalwani in 1956 and 1959, which were later converted into shares in 1976. The petitioners' claim that they were unaware of these shares until 2009 was not credible. The court held that the petitioners failed to prove their entitlement to the shares and that the company's refusal to transfer the shares was without sufficient cause.

Point No. (vi): The relief, if any, to which the petitioners are entitled.

Based on the above findings, the court concluded that the petitioners are not entitled to any relief. The petition is dismissed, and all interim orders are vacated. There is no order as to costs, and a copy of the order is to be circulated to all concerned.

Order:
(a) The petition is dismissed.
(b) Interim orders, if any, stand vacated. Any pending applications also stand disposed of.
(c) No order as to costs.
(d) A copy of the order is to be circulated to all concerned.