1998 (4) TMI 571 - Board - Companies Law

Summary

Issues Involved:
1. Validity of the issuance of duplicate shares.
2. Compliance with the Articles of Association and the Companies Act.
3. Allegations of public defamation and denial of rights.
4. Preliminary objections regarding previous litigations and delay in filing the petition.

Detailed Analysis:

1. Validity of the Issuance of Duplicate Shares:
The petitioner argued that the issuance of 200 duplicate shares by the respondents was done through clever manipulation and was in violation of the Articles of Association and the Companies Act. The petitioner claimed that a valid sale notice in writing was necessary for the transfer or issuance of duplicate shares, which was not provided. The respondents, however, contended that the duplicate shares were issued in accordance with Articles 42 and 35 of the Articles of Association and that the petitioner had been called upon to deliver the original share certificates, which he failed to do. Consequently, the board decided to issue duplicate shares and publish a notice in the newspapers.

2. Compliance with the Articles of Association and the Companies Act:
The petitioner emphasized that the transfer of shares must comply with Section 108 of the Companies Act, which mandates an instrument of transfer duly stamped, executed by the transferor and transferee, and delivered to the company along with share certificates. The respondents argued that as a private company, the Articles of Association allowed restrictions on the transfer of shares, and under Section 111(13) of the Act, these restrictions were valid irrespective of Section 108. They also highlighted that Article 37 contained a deeming provision allowing the company to appoint a director as an agent to execute the transfer if the member failed to do so.

3. Allegations of Public Defamation and Denial of Rights:
The petitioner claimed that the public notice issued by the company in 1980 caused public defamation and resulted in the denial of his rights and employment opportunities. He argued that the notice falsely stated that his shares were forfeited, which was incorrect as they were fully paid. The respondents did not specifically address this allegation but maintained that their actions were in compliance with the Articles of Association and the Companies Act.

4. Preliminary Objections Regarding Previous Litigations and Delay in Filing the Petition:
The respondents raised several preliminary objections, including:
- The petitioner had pursued multiple legal proceedings over the years without disclosing them in the current petition, violating the Company Law Board Regulations, 1991.
- The petition was barred by waiver, acquiescence, estoppel, and res judicata due to the previous litigations.
- The petitioner was guilty of laches and delays, having filed the petition nearly 20 years after the impugned shares were transferred.

The petitioner attempted to justify the delay by stating that he was approaching various authorities for inspection and investigation and that some petitions were dismissed due to lack of jurisdiction. However, the tribunal found these explanations unsatisfactory and noted that the petitioner failed to provide sufficient evidence that previous cases were dismissed without considering the merits. The tribunal concluded that the petitioner had engaged in "forum shopping" and had not come with clean hands, warranting the dismissal of the petition.

Conclusion:
The tribunal dismissed the petition on the grounds of the petitioner's failure to disclose previous litigations, the inordinate delay in filing the petition, and the lack of satisfactory explanation for the delay. The tribunal did not delve into the merits of the case due to these preliminary objections. No order as to costs was made.