9911796707
|
Home
Issues Involved
1. Rectification of the share register. 2. Allegations of fraudulent transfer of shares. 3. Jurisdiction and appropriateness of summary proceedings under Section 155 of the Companies Act, 1956. 4. Non-production of documents and adverse inference. 5. Limitation. Detailed Analysis 1. Rectification of the Share Register The appeal was directed against an order mandating the rectification of the share register of Property Company (Private) Ltd. The order also included a mandatory injunction for the company and the appellants to pay dividends accrued on 170 shares to the respondent, and to hand over the share scrips or duplicate share scrips of those shares to the respondent. The respondent claimed that these shares were lawfully gifted to him by S.F. Mazda and were registered in his name. However, the appellants contended that the shares were transferred to the first appellant and his wife, and the respondent was not the registered holder of these shares. 2. Allegations of Fraudulent Transfer of Shares The respondent alleged that the transfer of his 170 shares to the first appellant was "false, fictitious, sham, colourable and a mere nullity." He claimed that the appellants had fraudulently transferred these shares without his consent or knowledge. The respondent denied receiving any consideration for the purported transfer and alleged that his signature on the transfer deed was forged. He also denied having any account with the American Express Co., where the proceeds from the sale of the shares were allegedly credited. The appellants, however, maintained that the shares were lawfully purchased through Abdullah Gangee & Sons, a share broker, and the transaction was legitimate. 3. Jurisdiction and Appropriateness of Summary Proceedings under Section 155 of the Companies Act, 1956 The primary question was whether the court could adjudicate on serious disputed questions of fact in a summary proceeding under Section 155 of the Companies Act, 1956. The court noted that serious allegations of fraud, forgery, and impersonation were involved, which could not be resolved merely on affidavit evidence. The court emphasized that such complex disputes required a thorough investigation, including oral testimony and cross-examination of witnesses, which is not feasible in a summary proceeding. 4. Non-production of Documents and Adverse Inference The respondent argued that the appellants' failure to produce the transfer deed and a letter allegedly written by K.R. Irani expressing his desire to sell the shares should lead to an adverse inference against them. However, the court held that there was no legal obligation on the appellants to produce these documents in a summary proceeding under Section 155. The court stated that an adverse inference under Section 114(g) of the Evidence Act could only be drawn if there was a legal obligation to produce the documents, which was not the case here. 5. Limitation The appellants contended that the application for rectification was barred by limitation. The respondent countered this by citing a Bench decision in Techno Metal India (P.) Ltd. v. Prem Nath Anand. The court chose not to express an opinion on this issue and left it open for the trial court to decide upon remand. Conclusion The court concluded that the serious and complex nature of the disputes required a full trial with evidence, including discovery and inspection of documents, and cross-examination of witnesses. The summary procedure under Section 155 was deemed inappropriate for resolving such intricate issues. The court remanded the application to the trial court to be heard on evidence, allowing the appellants to file a further affidavit by way of rejoinder. The appeal was allowed, and the judgment and order under appeal were set aside. The costs of the appeal and the trial court were to abide by the result of the remanded application.
|
