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2017 (1) TMI 61 - Tri - Insolvency and BankruptcyRemoval from directorship - allotment of shares without petitioner knowledge - Period of limitation as per the provisions of Limitation Act - Held that - As been stated in para 2 that his shareholding was reduced from 33% to 1.91%. The aforesaid general assertion has been explained in para 6.5 of the petition. According to para 6.5, the allotment of shares by increasing the share capital was made on 06.10.2009, 19.9.2009, 22.01.2010 and 03.02.2012. The allegation is that the allotment of shares was made without his knowledge which he obviously has acquired on 23.2.2011 and even that later increase has come to his knowledge. The allegation that the petitioner was not aware of the Board meetings held in year 2009, 2010 or 2011 would pale into insignificance because on his own showing, the petitioner had the knowledge in 2011. The petitioner also had the knowledge of his removal as director which is evident from the perusal of the reply at para 10 dated 23.2.2011 (P-3). It is thus evident that the cause of action to the petitioner has arisen in the year 2009 to February, 2012. The present petition has been filed first on 01.10.2015 before the erstwhile CLB and then re-filed somewhere in 2016. Taking the period of limitation on the date of first filing on 01.10.2015, it is hopelessly time barred as apart of the cause of action had arisen to the petitioner in February, 2012. There is no provision for condoning the delay in filing of suits and such like rights are known as imperfect rights. In other words, these rights are recognised by law but no complaint of their breach could be made on account of efflux of time. Even otherwise, it is extremely doubtful whether the petitioner has locus standi to file such a petition because his shareholding on the date of filing the petition is barely 1.91% which is far below the 10%. We have also been told by the learned counsel for the respondent that the claim of the petitioner is not correct with regard to number of shareholders when he asserted that the number of shareholders was 07. According to Mr. Midha, learned counsel for the respondents, the number of shareholders is 13. It is thus doubtful whether the petitioner fulfills all the requirements of Sec. 399 of the Companies Act, 1956. The argument of learned counsel for the petitioner that the petitioner was in depression has failed to impress us. Learned counsel has placed reliance on medical certificates issued by Dr. Rani Susan Abraham (Annex. P-T). A reference has also been made to the Homeopathic treatment for depression, anxiety, neurosis, Insomnia and related issues. Petitioner then argued that the petitioner was involved in litigation with his wife and reconciliation could take place only in the year 2014. We have not been able to persuade ourselves to accept the illness of the petitioner as a cause for extending the period of limitation because firstly, the period of limitation cannot be extended in a suit and the present proceedings are the original proceeding which are in the nature of a suit. The adjudication made by this Tribunal result in passing of a decree which is executable as such. Therefore, we reject the aforesaid submissions. The petition is dismissed as barred by limitation. However, the petitioner shall be entitled to claim the unclaimed dividends as per the statement made by the learned counsel for the respondents.
Issues Involved:
1. Application of Limitation Act, 1963 to proceedings before the Tribunal. 2. Determination of the period of limitation for complaints regarding illegal induction of directors and reduction of share capital. 3. Applicability of Section 433 of the Companies Act, 2013. 4. The Tribunal's powers and procedures under the Companies Act, 2013. 5. Petitioner's locus standi and shareholding requirement under Section 399 of the Companies Act, 1956. 6. Petitioner's delay in filing the petition and its justification. 7. Petitioner's entitlement to unclaimed dividends. Detailed Analysis: 1. Application of Limitation Act, 1963 to proceedings before the Tribunal: The Tribunal emphasized that the Limitation Act, 1963, applies to proceedings before it as per Section 433 of the Companies Act, 2013. The Tribunal noted, "The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to proceedings or appeals before the Tribunal or the Appellate Tribunal." 2. Determination of the period of limitation for complaints regarding illegal induction of directors and reduction of share capital: The Tribunal observed that no specific period of limitation is provided for the illegal induction of directors or wrongful reduction of share capital. Therefore, Article 113 of the Limitation Act, which prescribes a three-year period for suits with no specified limitation, applies. "In cases where no period of limitation is provided elsewhere in the Schedule, there Article 113 is to apply." 3. Applicability of Section 433 of the Companies Act, 2013: Section 433 of the Companies Act, 2013, was applied to determine the limitation period. The Tribunal clarified that even though Section 433 was enforced from 01.06.2016, the petitioner could not overcome the delay in filing the petition as the cause of action arose much earlier. 4. The Tribunal's powers and procedures under the Companies Act, 2013: The Tribunal is vested with powers similar to a civil court under Section 424 of the Companies Act, 2013. The Tribunal stated, "The Tribunal and the Appellate Tribunal shall not, while disposing of any proceeding before it or, as the case may be, an appeal before it, be bound by the procedure laid down in the Code of Civil Procedure, 1908 but shall be guided by the principles of natural justice." 5. Petitioner's locus standi and shareholding requirement under Section 399 of the Companies Act, 1956: The Tribunal questioned the petitioner's locus standi as he did not meet the 10% shareholding requirement. The petitioner held only 1.91% shares, which was insufficient to maintain the petition under Section 399 of the Companies Act, 1956. 6. Petitioner's delay in filing the petition and its justification: The Tribunal found the petition barred by limitation, noting the cause of action arose between 2009 and February 2012, while the petition was filed in October 2015. The Tribunal rejected the petitioner's argument of depression as a cause for delay, stating, "The period of limitation cannot be extended in a suit and the present proceedings are the original proceeding which are in the nature of a suit." 7. Petitioner's entitlement to unclaimed dividends: The Tribunal acknowledged the petitioner's right to claim unclaimed dividends, as stated by the respondent's counsel. "The petitioner shall be entitled to claim the unclaimed dividends as per the statement made by the learned counsel for the respondents." Conclusion: The petition was dismissed as barred by limitation. The Tribunal concluded, "The petition is dismissed as barred by limitation. However, the petitioner shall be entitled to claim the unclaimed dividends as per the statement made by the learned counsel for the respondents." The parties were directed to bear their own costs due to the petitioner's personal difficulties.
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