2015 (6) TMI 686 - Board - Companies Law

Rectification in Register of Members u/s Section 111 and 111A of the Companies Act, 1956 - To get convenience of de-materialization share sent to the company for transfer in a single name - Period of limitation - Doctrine of delay and laches - Held that - The Petitioners have not given any cogent and convincing reason as to why they did not approach the CLB in the 7 years i.e. from 2005 to 2012. Assuming that the provisions of Limitation Act do not apply with respect to the petition filed under Section 111 of the Act, it is undisputed proposition of law that the doctrine of delay and laches applies to the proceedings filed under Section 111 of the Act. Despite having knowledge of dismissal of the Appeal and further not offering any explanation for delay of 7 years in filing the present Appeal, in my considered opinion, they are not entitled from any equitable and discretionary reliefs from this forum. Period of limitation - 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 toy CLB for relief under Section 111/111A of the Act. In light of the above law, I have examined the pleadings as contained in the petition. On perusal of the pleadings, it is noted that the cause of action to file the instant Company Petition had arisen firstly in the year 2005 when the Petitioners appeal was dismissed by the Appellate Court. Undisputedly, the petition came to be filed in the year 2012 which is obviously beyond prescribed period of 3 years. I, therefore, hold that the petition is hopelessly time barred and it deserves to be dismissed on this ground alone. The Respondent has categorically denied that there was any difference of signatures on the Transfer Deeds. There is no reason to disbelieve the statement made by the Answering Respondent that there is no difference of signatures on the Transfer Deeds. In my view, the contention of the Petitioners as to non-appearance of the Respondent Nos.2 and 3 in the instant Company Petition also does not in any way help the Petitioner s case. Furthermore, the technical points raised by the Petitioners as to the non-compliance of guidelines for Good /Bad Delivery by the Respondent No.1 Company, and non compliance of the Circular of Ministry of Company Affairs do not have much substance. In my considered opinion, the Petitioners have failed to establish that their names were removed by the Company without sufficient cause. In conclusion, the Petition deserves to be dismissed being time barred and having no merits. - Decided against the appellant.

Summary

Issues involved:
1. Non-joinder of necessary party.
2. Barred by law of limitation.
3. Merits of the petition regarding the alleged wrongful transfer of shares.

Detailed Analysis:

1. Non-joinder of necessary party:
The Respondent No.1 Company argued that the petition should be dismissed for non-joinder of the National Securities Depository Limited (NSDL), claiming it was a necessary party since the shares were in dematerialized form. However, the Petitioners contended that under Section 10 of the Depositories Act, NSDL, as a registered owner, does not have voting rights or other rights in respect of dematerialized shares held in the depository system. The Board agreed with the Petitioners, stating that NSDL is neither a necessary nor a proper party in this case. Therefore, this preliminary objection was rejected.

2. Barred by law of limitation:
The Respondent No.1 Company argued that the petition was barred by the law of limitation, as it was filed in 2012, seven years after the Petitioners' appeal was dismissed by the Appellate Court in 2005. The Petitioners argued that there is no time limit provided in Section 111 of the Companies Act for rectification in the Register of Members. The Board, however, noted that even if the Limitation Act does not apply, the doctrine of "delay" and "laches" does. The Board held that the petition was time-barred, as it was filed beyond the three-year period prescribed by Article 137 of the Limitation Act. Consequently, the petition was dismissed on this ground alone.

3. Merits of the petition regarding the alleged wrongful transfer of shares:
The Petitioners alleged that the Company transferred the shares based on forged documents and removed their names from the Register of Members without proper cause or compliance with guidelines. They claimed that the shares were intercepted in postal transit and transferred to Respondent No.2 without their consent. The Respondent No.1 denied these allegations, asserting that the transfer deeds were not forged and the shares were rightfully transferred.

The Board examined the merits of the case and found that the Petitioners failed to provide convincing evidence of forgery or negligence by the Company. The Board noted that the technical points raised by the Petitioners regarding non-compliance with guidelines for "Good/Bad Delivery" and the Circular of the Ministry of Company Affairs did not have much substance. The Board concluded that the Petitioners failed to establish that their names were removed without sufficient cause.

Conclusion:
The petition was dismissed on the grounds that it was time-barred and lacked merit. The Board ordered that the petition be dismissed, with no order as to costs, and any interim orders vacated. Copies of the order were to be issued to the parties involved.