2017 (6) TMI 457 - Tri - Companies Law

Oppression and mismanagement - family company - increase of the shareholding of the company - Held that - The petitioner is unsuccessful in challenging the validity of increase of the shareholding of the company in order to pay the debt of the Bank, and also the transfer of the shares of Shri S.K. Khemka in favour of R-2. During his lifetime, Late Shri S.K. Khemka never challenged the transfer of shares in favour of R-2, despite the Annual Returns for the years 2004-2005 and 2005-2006 having been filed in the year 2006. If Shri S.K. Khemka himself did not claim any right over the shares during his lifetime, there is no question of accrual of fresh cause of action to the petitioner after the death of Shri S.K. Khemka The record relied upon by R-2 in support of his defence version would reveal that R-2 made all efforts to revive the sick company and further those proceedings were being pursued with the active participation of Late Shri S.K. Khemka. The instant petition was filed only after the death of Shri S.K. Khemka and there cannot be any challenge on the ground of oppression or mismanagement on the basis of past and concluded acts. Thus we hold that the petitioner has not been able to prove the acts of oppression and mismanagement on the part of R-2. The acts complained of in the instant petition are very old and those were reflected in the Annual Returns filed in the year 2006, but the instant petition has been filed after more than 5 years. There is thus a huge delay and the petition would be clearly barred by time. This issue is also held against the petitioner. The petitioner is not entered in the record of R-1 company as shareholder/member. The present case also does not involve rectification of the register, but only the oppression and mismanagement. In the absence of the aforesaid relief, the petitioner would not have the locus standi to file the petition, as she is not eligible under Section 399 of the Act. We would also observe that if there is any delay in filing of the Annual Returns or if the transfer statedly made in the year 1995 was not reported to the Registrar of Companies till the year 2006, that will not provide any support to the petitioner s claim. As already observed, the petitioner claims to have inherited the estate of her father who himself did not challenge the transfer of his shareholding in the name of R-2. In view of the aforesaid discussion, the challenge to the appointment of R-3 as a Director on the basis of a document filed with the Registrar of Companies under the signatures of Late Shri S.K. Khemka is a matter, which cannot he questioned by the petitioner. In case, the petitioner still has the right over the preferential shares, she may have a remedy before the Civil Court, but not in the summary proceedings before the Tribunal.

Summary

Issues Involved:
1. Allegations of oppression and mismanagement.
2. Delay and laches in filing the petition.
3. Petitioner's locus standi and compliance with Section 399 of the Companies Act, 1956.

Detailed Analysis:

Issue 1: Allegations of Oppression and Mismanagement

The petitioner alleged that R-2 increased the authorized share capital from ?10,00,000/- to ?1,30,00,000/- without notice to the petitioner, and illegally transferred the entire shareholding of Late Shri S.K. Khemka to himself. The Tribunal noted that the petitioner would have locus standi only if there was a possibility of inheriting shares held by Late Shri S.K. Khemka. The Tribunal found that Late Shri S.K. Khemka had acknowledged the valid transfer of his shares to R-2, as evidenced by various documents, including a Memorandum of Understanding (MoU) dated 13.02.1995, and a compromise document signed by Late Shri S.K. Khemka, R-2, and Uma Devi during the pendency of CP No. 85 of 2001. The Tribunal concluded that the petitioner could not challenge the increase in share capital or the transfer of shares, as these actions were acknowledged and not disputed by Late Shri S.K. Khemka during his lifetime.

Issue 2: Delay and Laches

The Tribunal examined whether the petition was barred due to delay and laches. The petitioner filed the petition in January 2012, challenging actions that were reflected in the Annual Returns filed in 2006. The Tribunal referred to recent judgments, including Praveen Shankaralayam Vs. Elan Professional Appliances Pvt. Ltd. & Ors., where it was held that the period of limitation provided by the Limitation Act is three years. The Tribunal found that the petition was filed after more than 5½ years, making it clearly barred by time. The Tribunal emphasized that past acts which have come to an end cannot be taken for invoking the court's jurisdiction under Section 397 of the Act unless they have continuing or lasting consequences.

Issue 3: Locus Standi and Compliance with Section 399

The Tribunal assessed whether the petitioner held the requisite percentage of shareholding in R-1 company as required by Section 399 of the Act. The petitioner was not entered in the record of R-1 company as a shareholder/member. The Tribunal noted that the present case did not involve rectification of the register but only allegations of oppression and mismanagement. In the absence of the requisite shareholding, the petitioner did not have the locus standi to file the petition. The Tribunal also observed that the delay in filing the Annual Returns or the late reporting of the transfer of shares did not support the petitioner's claim, especially since Late Shri S.K. Khemka did not challenge the transfer during his lifetime.

Conclusion:

The Tribunal found no merit in the petition on all three issues. The petition was dismissed, and the pending miscellaneous applications were also disposed of. The Tribunal emphasized that the petitioner had not been able to prove acts of oppression and mismanagement and that the petition was barred by delay and laches. Furthermore, the petitioner did not meet the requirements of Section 399 of the Companies Act, 1956, to maintain the petition.