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2013 (9) TMI 655 - Board - Companies LawNature of Company Listed or Not - Whether Premier Roller Flour Mills was a listed company - Held that - The petitioners were estopped from challenging the validity of these transactions, to which they have been consenting parties - Petitioners cannot blow hot and cold and cause prejudice to the respondents - contention of the petitioners to treat the company as a listed one was bound to fail - They were estopped from contending that the respondents have not complied with the SEBI takeover code by offering the shares to the public - Petitioners had been parties to the execution of transfer deeds, party to the Board meetings and resolution for transfer of shares by executing a compromise ratifying the transfer, and receiving consideration and repeatedly acknowledging the validity of transfer - The petitioners did not care to produce any documents to show that it was a listed company - It appeared that based on a letter dated 29th January, 2010 from the petitioners, SEBI had called for certain information regarding the change in promoters and their shareholding, percentage of shareholding since the year 2003-04, etc. - But the letter was not conclusive enough to show that the company was a listed one - Materials produced by the respondents sufficiently established that the petitioners had been holding out the company as unlisted. Shareholders or not Oppression and Mismanagement u/s 397 and 398 Relief u/s 402(f) - Whether the petitioners were shareholders of the company as on the date of filing the case - Whether the petitioners have made out a case of oppression and mismanagement u/s 397 and 398 of the Act - Whether the petitioners were entitled to any reliefs u/s 402(f) of the Act Held that - The company petition does not make out a case of oppression or mismanagement - The subsequent sale of the property had the approval of the Board and the valuation appears to be reasonable - No relief under section 402(f) could be granted since the CP was filed three months after the date of sale - The petitioners were not entitled to any reliefs u/s 397 and 398, because they had derived the benefits of the arrangement between the two parties through various payments spanning over a period from 2004-08, after voluntarily relinquishing their interest in the company by signing the deed of compromise, which is binding between the parties - The petitioners signed the deed of compromise fully aware of the legal implications. The petitioners themselves admitted that they signed blank transfer forms and handed over the possession of share transfer deeds and share certificates based on the understanding in the agreements - the shares now stand transferred - The chain of events proved in this case clearly established that the petitioners had relinquished their rights as shareholders of the company - The share transfer was challenged in the civil suit on the ground of fraud and coercion, but unconditionally withdrawn and on the basis of a settlement deed - No liberty had been reserved to file fresh proceedings on the same subject-matter - In such circumstances a petition under section 111A was not maintainable as held in Gulabrai Kalidas Naik v. Laxmidas Lallubhai Patel 1977 (5) TMI 70 - HIGH COURT OF GUJARAT . It was not necessary to go into details regarding the genuineness of the sale deed, undervaluation, etc. - Those issues were beyond the purview since a consideration of oppression and mismanagement arises only if the petitioners were found to be shareholders of the company - That issue being held against them the other issues pleaded in the CP do not arise - The petitioners had been indulging in forum shopping with some ulterior motive probably to extract money from respondents - Petitioners approached with unclean hands and they were not entitled to any equitable reliefs - The attempt of the petitioners to reagitate the concluded issues was nothing but an abuse of the process of the court - The company petition was devoid of any merits Decided against Petitioner.
Issues Involved
1. Whether Premier Roller Flour Mills is a listed company. 2. Whether the petitioners are shareholders of the company as on the date of filing this CP. 3. Whether the petitioners have made out a case of oppression and mismanagement under sections 397 and 398 of the Act. 4. Whether the petitioners are entitled to any reliefs under section 402(f) of the Act. 5. Reliefs and costs. Issue-wise Detailed Analysis Issue (a): Whether Premier Roller Flour Mills is a listed company The primary question was whether Premier Roller Flour Mills is a listed company, which would necessitate compliance with SEBI takeover regulations. The petitioners claimed the company was listed, while the respondents argued it was not. The annual returns for the years 1999, 2001, 2004, and 2005, signed by the first petitioner, indicated the company was "unlisted." Petitioners failed to produce any documents proving the company was listed. The materials provided by the respondents, including the Master data of the company, showed it was unlisted as of June 2008. Based on these findings, it was concluded that the company is unlisted, and the petitioners are estopped from contending otherwise. Therefore, the SEBI takeover code does not apply. Issues (b), (c), (d), and (e): Shareholding, Oppression, Mismanagement, and Reliefs The competence of the petitioners to initiate these proceedings was questioned, as the petitioners needed to be shareholders to maintain the petition. The respondents alleged that the petitioners had transferred all their shares by executing valid instruments of transfer and delivery certificates, effective from 1st November 2004. The petitioners claimed the share certificates were misused and collusion occurred between respondents and the mediator. The petitioners admitted to signing blank transfer forms and handing over share certificates as security for a loan. The loan agreement dated 29th October 2004 indicated that the petitioners transferred 86.5% of the company's shares to the respondents. Subsequent agreements and a Board meeting on 1st November 2004 confirmed the transfer and appointment of new directors. The petitioners did not take any steps to recover the properties by repaying the loan and instead filed a civil suit in March 2007, which was later settled out of court with a deed of compromise on 8th April 2008. The compromise deed ratified the transfer of shares and resignation of petitioners as directors. The petitioners' claims of coercion and fraud were not substantiated with evidence. The petitioners had encashed the consideration received, indicating acceptance of the transfer. The petitioners are estopped from challenging the transfer due to the compromise deed and repeated acknowledgments of the transfer's validity. Consequently, the petitioners do not satisfy the criteria under section 399 of the Act to file this petition. Reliefs and Costs The petitioners, having derived benefits from the arrangement by receiving Rs. 8 crore, are not entitled to any reliefs under sections 397 and 398. The subsequent sale of the property had Board approval and reasonable valuation. The petitioners' claims of oppression and mismanagement do not hold as they are not shareholders. The petitioners were found to be indulging in forum shopping with ulterior motives and approached the court with unclean hands. All interim orders are vacated, and pending applications are closed. Conclusion The company petition stands dismissed with no costs.
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