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2018 (3) TMI 200 - Tri - Companies LawTransfer of shares - legal heirs eligibility - illegally transferred the shares owned by the petitioner without valid Transfer Deed and signature of the petitioner - Validity of company petition as time barred - Held that - Respondent did not say that either they have informed the Petitioner at any point of time about the fact that her shares have been transferred in favour of the Respondent No.4 nor the Petitioner had knowledge about the transfer of her shares. The perusal of the pleadings reveal that the Petitioner has become aware about the transfer of her shares in favour of Respondent No.4 only on 14.7.2014, when her counsel has received the reply of her legal notice that was sent to the Respondents on 2.6.2014. Therefore, the objection of the Respondent pertaining to the issue that the Company Petition is time barred stands rejected, the petition has been filed on 26.8.2015, which is within the period of limitation. Issuance of Share Certificate for 500 shares to the Petitioner - Held that - Respondents did not discharge the burden of proof pertaining to their assertion of the fact that on allotment of shares, the Share Certificates were sent to the Petitioner. It is on record that the name of the 1st Respondent Company was changed, and as a matter of procedure, the old Share Certificates were to be called back and fresh Share Certificates had to be issued; but nothing has been placed on record that at any point of time, on change of the name of the 1st Respondent Company, the fresh Share Certificates were dispatched to the Shareholders including the Petitioner. Therefore, the Respondents failed to prove their claim that the Share Certificates were issued to the Petitioner by 1st Respondent Company. There is even no shred of evidence to show that at any point of time the Petitioner has transferred her 500 shares to Respondent No. 4. Thus, the resolution dated 23.9.2009 passed by the Board of Directors of 1st respondent company to transfer 500 shares held by the petitioner in 1st Respondent Company is not based on any valid document, which is in violation of the provisions of Section 108 of the companies Act 1956. Therefore, the issue stands decided in favour of the Petitioner and against the Respondents. The 1st Respondent Company and its Board of Director seem to have transferred 500 shares on the pretext that the Petitioner has availed loan of ₹ 50,000/- from late Mrs. Thangam, who was the mother of 2nd and 4th Respondents, because as per the statement of the Respondents, the Petitioner has denied to return the amount of purported loan. It has been stated in the Counter by the answering Respondent that Mrs. Thangam had given a loan of ₹ 50,000/- by way of cheque bearing No. 958482 drawn on ICICI Bank, Egmore branch dated 22.3.2005 to the Petitioner for allotment of 500 equity shares of the 1st Respondent Company, but the Petitioner did not issue any cheque to the 1st Respondent Company for allotment of 500 shares and the Respondents failed to prove the same, as has been asserted by them in para No. 8 of their Counter, The legal heirs cannot stake claim over 500 shares owned by the Petitioner in 1st Respondent Company, on the ground that their late mother viz., Mrs. Thangam had advanced loan of ₹ 50,000/- to the Petitioner for purchase of 500 shares in the 1st Respondent Company. The legal heirs i.e. 2nd and 4th Respondents could have explored the possibilities of the recovery of the amount of loan, if any, by filing civil suit, before the court of competent jurisdiction. Therefore, the action of the 1st Respondent company to transfer 500 shares of the Petitioner to Respondent No. 4 is illegal and in violation of the provisions of Section 108 of the Companies Act, 1956.
Issues Involved:
1. Whether the Company Petition is time barred. 2. Whether share certificates for 500 shares have been issued by the 1st Respondent Company to the Petitioner. 3. Whether the Petitioner has transferred her 500 shares held in 1st Respondent Company to Respondent No.4 for liquidating the amount of loan advanced by Mrs. Thangam. 4. Whether the resolution dated 23.09.2009 passed by the Board of Directors of 1st Respondent Company to transfer 500 shares held by the petitioner in 1st Respondent company to Respondent No.4 is legally tenable. 5. Reliefs. Issue-wise Detailed Analysis: Issue No. i: The Petitioner claimed to have learned about the share transfer on 14.07.2014, upon receiving a reply to her legal notice dated 2.6.2014. The Respondents argued that the shares were transferred on 23.9.2009, making the petition time-barred as it was filed on 26.8.2015. However, the tribunal found that the Petitioner was unaware of the transfer until 14.7.2014 and thus, the petition was filed within the limitation period. The objection of the Respondents was rejected. Issue No. ii: The Respondents claimed that share certificates were sent to the Petitioner immediately after the allotment, but failed to provide proof of dispatch. The tribunal noted that no evidence was presented to show that fresh share certificates were issued after the company's name change. Thus, the Respondents failed to prove that the share certificates were issued to the Petitioner. Issue No. iii: The Petitioner sent a notice on 20.6.2014 requesting the share certificates. The Respondents replied on 8.7.2014, claiming the shares were transferred to Respondent No.4. However, the Respondents' defense contained contradictions, and no evidence was provided to prove that the Petitioner executed a transfer deed. The tribunal found no proof that the Petitioner transferred her shares to Respondent No.4. Issue No. iv: The tribunal found that the Board of Directors' resolution dated 23.9.2009 to transfer the Petitioner's shares to Respondent No.4 was not based on any valid document and violated Section 108 of the Companies Act, 1956. The Respondents failed to verify the purported transfer deed's authenticity, and no evidence was provided to show the Petitioner requested the transfer. Conclusion: The tribunal concluded that the transfer of 500 shares was illegal and violated Section 108 of the Companies Act, 1956. The Petitioner's shares were transferred on the pretext of an alleged loan from Mrs. Thangam, which was a private transaction unrelated to the company. The legal heirs of Mrs. Thangam could have sought loan recovery through civil court, but not through share transfer. Order: 1. The resolution dated 23.9.2009 transferring the Petitioner's shares to Respondent No.4 is set aside. 2. The 1st Respondent Company and its Board of Directors are directed to rectify the Register of Members by removing Respondent No.4's name and reinstating the Petitioner's name for 500 shares, along with any accrued benefits since 23.9.2009. 3. The 1st Respondent Company and its Board of Directors are directed to issue share certificates for 500 shares to the Petitioner within 10 days of receiving the order. 4. The 1st Respondent Company and its Board of Directors are directed to pay ?50,000 as litigation costs to the Petitioner within three weeks of receiving the order. The order was pronounced in open court in the presence of counsel for both parties. The file shall be consigned to record after due completion.
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