2017 (8) TMI 1716 - AT - Companies Law

Maintainability of petition under Sections 397 and 398 of the Companies Act, 1956 - claim under Section 59 of the Companies Act, 2013 - name of the appellant's has not recorded in the register of shareholder - HELD THAT - Except a member qualified in terms of Section 399 (now Section 244 of the Companies Act, 2013), no other person is entitle to file any petition under Sections 397 and 398 (now Section 241 and 242 of the Companies Act, 2013), the application at the instance of the applicant under Sections 397 and 398 was not maintainable. Application under Section 59 of the Companies Act, 2013 - HELD THAT - Once the Tribunal held that petition under Sections 397 and 398, was not maintainable, the Tribunal was not required to decide the merit of the claim under Section 59 of the Companies Act, 2013, which is required to be decided on different criteria. As the petition was not maintainable before the Tribunal, it was not open to the Tribunal to give any finding with regard to the merit of the claim under Section 59 of the Companies Act, 2013. The observation of the Tribunal with regard to the merit of the application under Section 59 of the Companies Act, 2013 are set aside. The order dated lOth March, 2017 stands modified - application preferred by the appellant under Sections 397 and 398 is dismissed. Appeal disposed off.

Summary

Issues:
1. Maintainability of combined application under Sections 59, 397, and 398 of the Companies Act, 1956.
2. Entitlement to file a petition under Sections 397 and 398 without being a registered member.
3. Decision on the application under Section 59 of the Companies Act, 2013.
4. Tribunal's authority to decide the merit of the claim under Section 59 when the petition under Sections 397 and 398 is not maintainable.

Analysis:
1. The appellant filed an appeal against the National Company Law Tribunal's order dismissing the company petition under Sections 397 and 398 of the Companies Act, 1956, citing the appellant's name not being recorded in the shareholder register. The Tribunal accepted the respondent's argument and dismissed the petition based on this ground.

2. The appellant contended that the combined application under Sections 59, 397, and 398 was maintainable. However, the respondents argued that without the appellant's name in the register of members, the petition under Sections 397 and 398 was not maintainable as per Section 399 of the Companies Act, 1956. The Tribunal agreed with the respondents, stating that only a qualified member could file a petition under these sections.

3. The Tribunal clarified that since the petition under Sections 397 and 398 was not maintainable, it was unnecessary to decide on the merit of the claim under Section 59 of the Companies Act, 2013. The decision on the application under Section 59 should be based on different criteria, separate from the maintainability issue of the petition under Sections 397 and 398.

4. Consequently, the Tribunal set aside its observations regarding the merit of the application under Section 59 and modified the order. The application under Sections 397 and 398 was dismissed, allowing the appellant to seek appropriate relief in a Court of competent jurisdiction if entitled under the law. The appeal was disposed of with these observations.