9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 1969 - Tri - Companies LawOppression and Mismanagement - sections 397 and 398 of the Companies Act, 1956 - bar provided under section 399 of the Companies Act, 1956 - transfer of shares by way of gift deed by the petitioner to her mother in law - resignation of the petitioner from the post of executive director of respondent No. 1- company. Whether the alleged transfer of 39,500 equity shares dated December 17, 2010 by way of gift deed by the petitioner to her mother in law, is valid? - HELD THAT - On perusal of clause 16 of the articles of association, it is clear that the restriction on transfer by way of gift is permissible to certain relations only and mother-in-law of the transferor is not covered under the relations specified in clause 16 of the articles of association - it is clear that the gift of shares made to respondent No. 5, i.e., mother-in-law of the petitioner is in contradiction with clause 16 of the articles of association. It is clear that transfer of petitioner's share- holding, i.e., 39,500 shares in respondent No. 1-company to her mother- in-law respondent No. 5 Smt. Manjula Jhunjhunwala is not a valid transfer. It is also clear that there is manipulation in the alleged share transfer form. The share transfer form was not valid on the date when the share transfer form was executed. No validity can be extended of such document, which was invalid on the date of execution itself. The position would have been different if the validity of the document would have expired after execution of the document, the then Registrar of Companies was authorised to extend the validity either before the expiry of the validity or after the expiry of the validity of document under sub-section (1)(d) of section 108 of the Companies Act, 1956. But in this case, proper procedure has not been adhered by the Registrar of Companies, Kanpur and Form 7C was allowed even though form was incomplete. In the circumstances, we hold that the alleged transfer of 39,500 shares in favour of Manjula Jhunjhunwala is not valid. This issue is decided negative in favour of the petitioner. Whether the petitioner is not eligible to present this petition under sections 397 and 398 of the Act in view of bar provided under section 399 of the Companies Act, 1956? - HELD THAT - It is undisputed that the company has power to allot fresh shares instead of the forfeited shares. Company also has power to permit the shareholders of the forfeited shares to receive the unpaid money and validate the forfeited shares, but in this case company has failed to issue fresh shares in lieu of forfeited shares, therefore forfeited shares cannot be taken into account to examine the eligibility of the petitioner to file the petition under sections 397 and 398 of the Companies Act, 1956. It is clear that out of 40,000 valid shares issued by the company petitioner holds 39,500 shares, which is about 98 per cent. Therefore, the petitioner was fully qualified to present the petition under sections 397 and 398 of the Companies Act, 1956 - the issue is decided in favour of the petitioner and against the respondents. Whether the alleged resignation letter dated December 17, 2010 of the petitioner from the post of executive director of respondent No. 1-company is valid? - Whether the alleged board resolution dated December 17, 2010 regarding acceptance of the alleged resignation of the petitioner from the post of executive director of the company is valid? - HELD THAT - The notice of board meeting is an essential element for the validity of the resolutions passed in the alleged board meeting. The respondent claims that board meeting took place on December 17, 2010. But the respondent has not filed any document to rebut the stand of the petitioner that no valid meeting of the board were held on December 17, 2010. Admittedly the petitioner was executive director and major shareholder of the company having 98 per cent. shareholding in the company then why petitioner was not called in the alleged board meeting dated December 17, 2010 creates doubt on the claim of the respondent that board of directors accepted the resignation of the petitioner from the post of executive director on December 17, 2010. The respondent has not filed the minutes of the alleged board meeting dated December 17, 2010 therefore, the contention of the respondent cannot be accepted that the petitioner's resignation was accepted by the board of directors in its meeting dated December 17, 2010 - thus, it is clear that the respondent contention that the petitioner tendered resignation from the post of executive director on December 17, 2010 and the same was accepted by the board of directors on the same day cannot be accepted. The respondent has manipulated the resignation letter of the petitioner from the post of executive director of the respondent No. 1-company. The respondents has wrongly stated that the resignation letter of the petitioner from the post of executive director was accepted in the board meeting dated December 17, 2010. The respondent has failed to file any document to show that the board meeting took held on December 15, 2010 and December 17, 2010. Since the board meeting was not, held on the alleged dates, therefore the question of granting validity to the alleged resolution passed in the meeting dated December 15, 2010 and December 17, 2010 does not arises - The respondent has also failed to prove that the petitioner herself gifted her entire shareholding in the company in favour of respondent No. 5 Ms. Manjula Jhunjhunwala. The removal of the petitioner from the post of executive director by manipulation of documents and preparation of alleged gift deed and transfer certificate of entire shareholding of the petitioner in the name of Manjula Jhunjhunwal, respondent No. 5 is clear result of the oppression and mismanagement of the affairs of respondent No. 1-company conducted by respondents Nos. 2 to 4 - Petition allowed.
Issues Involved:
1. Whether the alleged act of respondents Nos. 2 to 4 comes under the purview of oppression and mismanagement under sections 397 and 398 of the Companies Act, 1956? 2. Whether the petitioner is eligible to present this petition under sections 397 and 398 of the Act in view of the bar provided under section 399 of the Companies Act, 1956? 3. Whether the alleged transfer of 39,500 equity shares dated December 17, 2010, by way of gift deed by the petitioner to her mother-in-law, is valid? 4. Whether the alleged resignation letter dated December 17, 2010, of the petitioner from the post of executive director of respondent No. 1-company is valid? 5. Whether the alleged board resolution dated December 17, 2010, regarding acceptance of the alleged resignation of the petitioner from the post of executive director of the company is valid? Issue-wise Detailed Analysis: Issue No. 3: Validity of the Alleged Transfer of 39,500 Equity Shares The petitioner alleged that she never signed the transfer form and that the form was invalid on the alleged date of signing (December 17, 2010). The transfer form was revalidated by the Registrar of Companies on November 12, 2011, and the transfer was given effect on November 10, 2011. The petitioner argued that the transfer was not in compliance with the Companies Act and that the gift deed was not signed by her, as she was not present in Faizabad on December 17, 2010. The respondents contended that the petitioner signed the gift deed and transfer forms without coercion or fraud. The Tribunal found that the transfer was not valid as it contradicted clause 16 of the articles of association, which did not permit transfer to a mother-in-law. The Tribunal also noted manipulation in the share transfer form and found the extension of its validity by the Registrar of Companies to be improper. Issue No. 2: Eligibility of the Petitioner to Present the Petition The respondents argued that the petitioner did not meet the criteria under section 399 of the Companies Act, 1956, as she held only 4.20% of the issued capital. The Tribunal noted that the petitioner held 39,500 shares out of the total 40,000 valid shares, amounting to 98% of the paid-up capital. The Tribunal held that the petitioner was qualified to present the petition under sections 397 and 398 of the Companies Act, 1956, as the forfeited shares could not be counted to examine eligibility. Issue Nos. 4 and 5: Validity of the Alleged Resignation and Board Resolution The petitioner contended that she never tendered her resignation and that no board meeting was held on December 17, 2010. The respondents failed to produce any notice or minutes of the alleged board meeting. The Tribunal found that the resignation was manipulated and that no valid board meeting took place on December 17, 2010. The Tribunal held that the resignation and its acceptance were invalid. Conclusion: The Tribunal concluded that the respondents engaged in oppression and mismanagement by manipulating the petitioner's resignation and the transfer of her shares. The petition was allowed, and the petitioner was restored as the executive director and shareholder of respondent No. 1-company with 39,500 shares. The transfer of shares to respondent No. 5 was declared null and void. The Tribunal also directed an inquiry into the conduct of the Registrar of Companies regarding the extension of the share transfer form's validity.
|
