9911796707
TMI Blog1999 (3) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... 40,000 shares of the appellant T.G. Veera Prasad and 50,000 shares of TMTL. 3. The appellant T.G. Veera Prasad filed a petition in C.P. 2/111 /SRB/91 alleging that all the shares belonging to the TGL Group together with blank transfer forms were entrusted to the 2nd respondent for the purpose of pledging them, if so required, with the financial institutions and banks, only for raising finances, but the 2nd respondent committed breach of trust and misappropriated them surreptitiously by transferring the said shares to the third respondent without payment of any considera-tion to the original shareholders. The third respondent had no funds to purchase the shares in question. The Company without making proper investigation regarding the genuineness of the transaction and without sufficient cause omitted the names of the members of the company and entered the name of the transferee in the register of the members of the company. 4. Making similar allegations, the appellant TMTL had also filed C.P. 3/111/SRB/91. It has been further alleged that the annual general meeting of the company was to be held on 24-6-1988 and the transfer was effected just three days in advance and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent, that is Brilliant, as quid pro quoior the shares of the company transferred by the 2nd respondent in favour of the TGL group. The 3rd respondent, that is Brilliant, pleaded that it is not a necessary party to the proceedings. On 17-6-1988, the appellant T.G. Veera Prasad as its director had executed transfer forms in respect of the impugned shares of the appellant TMTL. On 13-6-1988 and on 19-6-1988, he had executed the transfer deeds in respect of the shares held by him for consideration. The shares were handed over to the 3rd respondent, Brilliant, which has forwarded the same to the first respondent company for registration. On 6-6-1988 TMTL had written a letter to the 3rd respondent-Brilliant to pay the sale proceeds of Rs. 1,50,000 to the 1st respondent-company to be credited/adjusted against the 1st respondent-company and on the basis of that letter, the amount was paid to the first respondent-company. The appellant T.G. Veera Prasad had instructed the 3rd respondent- Brilliant for payment of consideration of his shares to the 1st respondent- company. 6. The CLB held that the applications filed by the appellants are not barred by limitation. It narrated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts of each case, whether an application is for rectification or something else. So field or peripheral jurisdiction of the Court under it would be what comes under rectification not projected claims under the garb of rectification. So far exercising of power for rectification within its field there could be no doubt the Court as referred under section 155 read with section 211 and section 10, it is the Company Court alone which has the exclusive jurisdiction .... 28. Question for scrutiny before us is the peripheral field within which Court could exercise its jurisdiction for rectification. As aforesaid the very word 'rectification' connotes something what ought to have been done but by error not done and what ought not to have been done was done requiring correction. Rectification in other words, is the failure on the part of the Company to comply with the directions under the Act. To show this error the burden is on the applicant, and to this extent any matter or dispute between persons raised in such Court it may generally decide any matter which is necessary or expedient to decide in connection with the rectification. 29. Both under the 1913 Act and 1960 Act a pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n entering on the register the fact of any person having become, or ceased to be a member; the person aggrieved, or any member of the company, or the company, may apply to the Court for rectification of the register.' 31. Sub-section (1)( a ) of section 155 refers to a case where the name of any person without sufficient cause entered or omitted in the Register of Members of a company. The word 'sufficient cause' is to be tested in relation to the Act and the Rules. Without sufficient cause entered or omitted to be entered means done or omitted to do in contradiction of the Act and the Rules or what ought to have been done under the Act and the Rules but not done. Reading of this sub-clause spells out the limitation under which the Court has to exercise its jurisdiction. It cannot be doubted in spite of exclusiveness to decide all matter pertaining to the rectification it has to act within the said four corners and adjudication of such matter cannot be doubted to be summary in nature. So, whenever a question is raised Court has to adjudicate on the facts and circumstances of each case. If it truly is rectification all matter raised in that connection should be decided by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had misused the alleged blank transfer forms duly signed by the concerned shareholders and, therefore, the appellants may take action against the 2nd respondent and on account of his alleged misconduct it cannot be said that the company had not entered in the register of members of the company the name of the third respondent-Brilliant without sufficient cause. 13. True that allegations regarding misuse of blank transfer forms have been made against the 2nd respondent but it is equally true that there are other allegations made in both the applications which, if proved, may establish that the names of the appellants were omitted without sufficient cause. Similarly if it is proved that the blank transfer forms have been actually misused by the second respondent, it would definitely have an effect on the validity of the transfer of shares and consequently may affect the decision of the company of making necessary entries in the register of its members. Under these circumstances, I am unable to accept the contention of the learned counsel of the respondents that the applications deserve to be dismissed merely on the ground that allegations against the second respondent have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases the CLB had proceeded to decide the case finally on the basis of the affidavits and the documents. Under section 10(E) of the Companies Act, the CLB is empowered to summon witnesses. The CLB has not recorded a finding as to whether the cases come within the purview of section 111 or not. The CLB, under the aforementioned circumstances of the case, is directed to decide whether the cases come within the scope of rectification or not, keeping in view the above observations made by me and in particular in the light of the law laid down by the Apex Court in the case of Ammonia Supplies Corpn. (P.) Ltd. ( supra ) , after giving reasonable opportunity to the parties to the appeals and after perusing the relevant records. In case the CLB comes to the conclusion that the cases come under section 111, then, it should treat the affidavits on record as examination-in-chief of the deponents and such deponents may be sum-moned for the purpose of cross-examination. Assistance of hand writing expert may also be taken to decide whether the signatures on the documents in question are genuine or not. Because the matter is pending since 1991, it is appropriate to direct the CLB to decide th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
