2016 (11) TMI 80 - SC - Companies Law

Exercise of jurisdiction under Section 10F of the Companies Act, 1956 by the High Court - Held that - Exercise of jurisdiction under Section 10F of the Companies Act, 1956 by the High Court to interfere with the order of the CLB cannot be faulted. If the subject matter of the appeal before the High Court was limited to the validity of the transfer of 2,20,000 shares from Bobby Kuriakose to T.O. Abraham, the interference made with the entire of the Resolution dated 17.04.2002 thereby invalidating the other share transfers, not under challenge before the High Court, was clearly an error apparent on the face of the record. The correction made in the exercise of the review jurisdiction was, therefore, justified and will not call for any interference.

Summary

Issues:
Dispute over shareholding in a company - Validity of transfer of shares - Review of High Court's decision on share transfer.

Analysis:
1. Shareholding Dispute:
The case involved a dispute between the 'Abraham Group' and the 'Aleyas Group,' both branches of the same family, over shareholding in a company owning hotel properties. The conflict arose from a resolution in 2002 aiming for equal shares among family branches. The transfer of 2,20,000 shares from Bobby Kuriakose to T.O. Abraham was a focal point, leading to legal challenges and judgments by the Company Law Board (CLB) and the High Court.

2. Validity of Share Transfer:
The CLB initially upheld the validity of the share transfer, but the High Court, in its judgment, set aside the entire resolution from 2002, affecting other share transfers not under dispute. The High Court's findings were based on lack of evidence and raised questions about the transfer's validity. It highlighted issues of evidence, lack of substantiation, and the oppressive nature of the transfer to the Managing Director.

3. Review of High Court Decision:
Following the High Court's judgment, the Aleyas Group filed a review petition seeking to limit the decision's scope to the specific share transfer issue. The review corrected the error of invalidating other share transfers, not originally challenged. The Supreme Court, after considering the grounds for the High Court's reversal, found the review jurisdiction justified and upheld the correction made, leading to the dismissal of the special leave petitions.

In conclusion, the Supreme Court supported the correction made in the review of the High Court's decision, limiting the scope to the specific share transfer issue and not affecting other transfers. The judgment emphasized the importance of evidence, proper procedures under the Companies Act, and the need to rectify errors in legal decisions.