2015 (4) TMI 805 - Board - Companies Law

Rectification of register of members u/s 59 of the Companies Act, 2013 - Bar of limitation - Held that - The record reveals that the Respondent No. 1 Company vide its letter dated 31/03/2011 had advised the Petitioner/appellant to approach the competent forum for redressal of its grievances, and therefore, the cause of action lastly arose in the month of March 2011. From perusal of Section 111(4) of the Act, it is noted that the said provision although does not specifically provide the period of limitation, however, in my view, the provisions of the Limitation Act would apply in a petition filed under Section 111/111A of the Companies Act, 1956 as laid down in the case of reported in 2015 (4) TMI 640 - COMPANY LAW BOARD MUMBAI .It is settled law that, if no limitation period is prescribed, in that case Article 137 of the Limitation Act shall be applicable. Therefore, in terms of Article 137 of the Limitation Act, 3 years period with effect from the date of cause of action would be available for an aggrieved party to approach the CLB for relief under Section 111/111A of the Act. It may be seen that the Respondent Nos. 3 to 8 for the last 17 years have not come forward to claim the ownership of the impugned shares. The Petitioner/Appellant is a Public Sector Undertaking. There is no reason to disbelieve the claim of the Appellant in respect of the impugned shares. I am, therefore, of the view that the Appeal/Petition deserves to be allowed.It is declared that the Appellant/Petitioner is the owner of 230 shares of the Respondent No.1 Company along with all incidental benefits like dividend, bonus issue, rights issue, etc. accruing thereon since 1996 and the Respondent No. 1 is directed to rectify the Register of Members to effect the transfer of shares in the name of the Appellant, subject to furnishing an Indemnity Bond in favour of the Respondent No.1 to its satisfaction. - Decided in favour of appellant.

Summary

Issues involved:
1. Ownership declaration of 230 shares in a company under Section 59 of the Indian Companies Act, 2013.
2. Rectification of the Register of Members.
3. Restraint on issuing duplicate share certificates.

Ownership Declaration of Shares:
The Appellant filed a Company Appeal seeking ownership declaration of 230 shares in a company since 1996 under Section 59 of the Indian Companies Act, 2013. The shares were originally held by other parties but were acquired by the Appellant in good faith through a stockbroker. Despite efforts to transfer the shares and correspondence with the transferors, no action was taken by the original holders for 17 years. The Respondents challenged the maintainability of the appeal, citing issues with signatures on transfer deeds and the lapse of time. However, the judge ruled in favor of the Appellant, stating that the cause of action had indeed arisen against the Respondents. The Appellant's claim was supported by the lack of response from the original holders over the years, leading to the declaration that the Appellant was the rightful owner of the shares.

Rectification of Register of Members:
The Respondents initially objected to the appeal, claiming that the main dispute was between the Appellant and other parties, and the proper remedy was a civil suit. However, the judge found that the Company Law Board (CLB) had jurisdiction over the matter as per Section 59 of the Companies Act, 2013. The Respondents also raised concerns about the non-joinder of a necessary party, but the judge ruled that the principal shareholder's inclusion was sufficient. Additionally, the Respondents argued that the appeal was time-barred, but the judge determined that the three-year limitation period from the last cause of action had not expired, allowing the appeal to proceed. Ultimately, the judge directed the company to rectify the Register of Members and transfer the shares to the Appellant's name.

Restraint on Issuing Duplicate Share Certificates:
The Appellant sought to restrain the company from issuing duplicate share certificates to other parties. The judge, after considering all objections and arguments, directed the Respondents to issue duplicate share certificates to the Appellant in place of the original ones. The judgment concluded with the disposal of the Company Appeal, granting the Appellant ownership of the shares and instructing the necessary rectifications to be made in the Register of Members without any costs awarded to either party.