2023 (4) TMI 450 - AT - Companies Law

Oppression and Mismanagement - Time Limitation - Transfer of shares - Petition was filed on 09.11.2018 which is beyond three years as per Article 113 of the Limitation Act, 1963 - locus standi to file application - HELD THAT - First of all, the money has not been transferred by the Appellants in favour of the Respondents. Secondly, as admitted in the averments as well as recorded clearly in the impugned order that, Mr. Linganameni Ramesh gave Rs. 14,67,41,557/- and took back Rs. 9 Crores from the Respondents as such prima-facie this does not seem to be a clear transaction of payment of money towards acquisition of shares and consequently allotment of shares in favour of the Appellants is also not established. Time Limitation - HELD THAT - The Tribunal has held that alleged transfer of shares in favour of the Appellant herein was claimed to be on 18.04.2015, whereas, the Petition was filed before the Tribunal on 09.11.2018 which is beyond three years and as per Article 113 of the Limitation Act, 1963 the limitation period is only three years. This Appellate Tribunal do not find any error in the impugned order. This Appellate Tribunal also do not find any material which can substantiate that all the procedures laid down in the companies Act, 2013 as well as the Article of Association were followed by the Appellants herein. The photocopies of the share capital as a form have already been denied to be true by the Respondents and the same has been held by the Tribunal as tannable averments from the Respondents herein. This Appellate Tribunal also observes that the Tribunal had discussed this aspect in detail in the impugned order and recorded that no concrete evidence or documentary proof could be furnished by the Appellants herein to proof their claims of genuine certificates. In fact, the Tribunal held that the alleged Share Certificate submitted by the Appellants herein to be fabricated and fraudulent as there were lot of discrepancies, in the forms and substance, of the Shares Certificate vis- -vis the original certificates held by the Respondents. This Appellate Tribunal also observed that there is no communication between the Appellant herein and the Respondent herein during the relevant period of alleged dates of transfer of shares in the year 2015 and immediately thereafter and in absence of any concrete trail of suitable communications between the various parties involved, it is difficult to believe that indeed such transaction took place which establishes the right to claim said shares by the Appellants. This Appellate Tribunal further finds it surprising that although the Appellants is claiming to hold 94.8% of Share Capital of the 1st Respondent Company, yet they did not bother to take over the management and control of the 1st Respondent Company. It is natural and established commercial prudence that person holding the majority of share will have dominating position in composition of Board of Directors of the Company - this Appellate Tribunal also does not find convincing that the Appellants did not get any notice of the meeting including that of AGM or have not received any documents/ minutes/circular/ agenda/ annual financial statement/ statutory audit report and yet did not seek any remedy thereafter in the entire period. The case of Oppression and Mismanagement, claimed by the Appellants, under Section 241 r/w Section 242 of the Companies Act, 2013, the Appellants/ Claimants, has to cross the first hurdle of Locus. The Oppression and Mismanagement, is available only to a person who is aggrieved and who is also a Member / Shareholder, of the Company - the Appellants could not establish regarding their entitlement to receive Transfer Shares, from the Respondents, neither could prove that the payment, was indeed made by the Appellants to the Respondent for consideration of said shares. It is, therefore, establishes that the Appellants, did not have any share in their names and were therefore not members / shareholders, of the 1st Respondent Company and therefore, the Appellants, do not have any Locus, to file an application, under Section 241, r/w Section 242 of the Companies Act, 2013. This Appellate Tribunal, do not find any error in the impugned order - Appeal is dismissed.

Summary

Issues Involved:
1. Whether the Petition filed is within the limitation period.
2. Whether the purported transfer of shares is in accordance with the Companies Act and Articles of Association.
3. Whether the amount purportedly paid should be treated as consideration for the shares.
4. Whether the share certificates purportedly issued to the Petitioners are genuine.
5. Whether the Petition is maintainable and whether any relief can be granted to the Petitioners.

Summary:

Limitation Period:
The Tribunal held that the alleged transfer of shares occurred on 18.04.2015, while the Petition was filed on 09.11.2018, exceeding the three-year limitation period under Article 113 of the Limitation Act, 1963. Therefore, the Petition was deemed not filed within time.

Transfer of Shares:
The Tribunal found no documentary evidence or communication between the parties to establish the alleged transfer of shares. The provisions of the Companies Act, 2013, and the Articles of Association were not complied with, and thus, the transfer of shares was not validated.

Consideration for Shares:
The Tribunal noted an unexplained difference in the amount purportedly paid as consideration for the shares. The money was remitted by Mr. Lingamaneni Ramesh, not the Appellants, and a substantial portion was taken back. Therefore, the transaction could not be attributed to the transfer of shares and was not treated as consideration for share acquisition.

Genuineness of Share Certificates:
The Tribunal concluded that the share certificates presented by the Appellants were fabricated. There were glaring discrepancies between the alleged certificates and the original ones held by the Respondents. The Appellants failed to produce the original certificates as directed by the Tribunal.

Maintainability and Relief:
The Tribunal held that the Appellants failed to prove their case, rendering the Petition not maintainable. The Appellants were not recognized as legitimate shareholders and did not comply with the necessary legal procedures for share transfer.

Conclusion:
The Appellate Tribunal upheld the Tribunal's decision, dismissing the Appeal as devoid of merit. The Appellants did not establish their entitlement to the shares, nor did they prove the payment of consideration. Consequently, they lacked the locus to file an application under Section 241 r/w Section 242 of the Companies Act, 2013. The Appeal was dismissed with no costs.