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TMI Blog2003 (1) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... s that it is not sure whether the plaintiff company is rightful successor of LTE or not as till 1997 the defendant had no information about the change of name of LTE and in 1997 SEI claimed to be the successors (transferees)-in-interest of the shares of LTE and on the premise of this claim, SEI was permitted to nominate its Director in the Board of Directors. In 2000 the plaintiff staked its claim as successor-in-interest of LTE for the first time on the basis of the alleged merger of LTE into SESA in the year 1997. 3. Mr. Arun Kathpalia, learned counsel for the defendant-TC contends that the defendant-TC allowed SEI to nominate its nominee on the Board of Directors on the bona fide belief on the representation of SEI that it was the successor in-interest of LTE and its representation on the Board of Directors continued for three years i.e. for 1997, 1998 and 1999. It was only in the year 2000 when the plaintiff SESA started claiming the succession of LTE on the basis of the alleged merger that it made the defendant wake up and examine the bona fide of the plaintiff company as to its claim. The defendant started examining the records and unearthed the following facts: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds sent by the defendant company to it in the years 1997, 1998, 1999 and 2000. These dividends were being sent to the LTE as the name of LTE alone figured in the Register of the Members of the Company and further that for the first time the letter dated 20th July, 1999 was sent by the SEI to the defendant company asserting the rights of succession to the rights of the LTE in the company and appointing Directors on its Board and the appointing Directors on the Board of the defendant TC. Subsequent communications in this regard referred by Mr. Kathpalia are: ( i )The letter dated 26th September, 1999 sent by SEI to the Board of Directors of Defendant-TC asserting the rights of LTE as its successor in TC. ( ii )Letter dated 26-8-1999 sent by the SEI to the defendant TC. ( iii )Affidavit filed by SEI in the OMP 6/90 moved by defendant TC against LTE stating that: ( a )LTE first changed its name to Telemecanique; ( b )Telemecanique then entered into a contract of contribution with SEI which was earlier known as Schneider Electric SA (SESA). ( c )The Schneider Electric SA (SESA) then changed its name to Schneider Electric Industries SA (SEI) on 7th May, 1999. 6. From th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i )is without sufficient cause, entered in the register of members of a company; or ( ii )after having been entered in the register, is without sufficient cause, omitted therefrom; or ( b )default is made, or unnecessary delay takes place, in entering in the register the fact of any person having become, or ceased to be, a member [including a refusal under sub-section (1)], the person aggrieved, or any member of the company, or the company, may apply to the Company Law Board for rectification of the register. (5) The Company Law Board, while dealing with an appeal preferred under sub-section (2) or an application made under sub-section (4) may, after hearing the parties, either dismiss the appeal or reject the application, or by order ( a )direct that the transfer or transmission shall be registered by the company and the company shall comply with such order within ten days of the receipt of the order; or ( b )direct rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved. (6) The Company Law Board, while acting under sub-section (5) may, at its discretion make ( a )such interim orders, including any orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nishable with fine which may extend to fifty rupees for every day during which the default continues. (13) Nothing in this section and section 108, 109 or 110 shall prejudice any power of a private company under its articles to enforce the restrictions contained therein against the right to transfer the shares of such company. 8. According to Mr. Kathpalia the plaintiff company has tried to bye-pass the provisions of section 111 as they have the right to get the matter decided by Company Law Tribunal if the defendant-TC has refused to Register the transfer or transmission by operation of law of the right to any shares or another of a Member. Apart from this, Mr. Kathpalia also contends that section 41 of the Companies Act provides the status of a Member of a company to a person whose name is entered in the Register of Members of the company and since the name of even SEI what to talk of the plaintiff company is not entered in the Register of Members of the company as the name LTE still continues to be on the Register, the defendant-TC is not obliged to invite the nominee of the plaintiff company to the meetings of Board of Directors. 9. Mr. Kathpalia has strongly relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered subject to documentary evidence by the plaintiff. Along with this letter the plaintiff company enclosed notarised copies of the following documents: "( i )English version of the extract of the minutes of the joint general meeting of Telemecanique held on 9th June, 1997 approving the merger-takeover and dissolution of Telemecanique by its parent company, namely, Schneider S.A. and the English version of the extract of the minutes of the general meeting held on 10th June, 1997 of Schneider S.A. whereby the totality of its capital, assets and liabilities of Telemecanique were contributed by way of merger; ( ii )A notarised affidavit of Mr. J.P. Jacamon, CEO of SESA sating that all shares (395,200) held by LTE in TC were transmitted to Schneider S.A. (presently known as Schneider Electric S.A.) pursuant to ( i ) above. ( iii )English version of the extract from the minutes of the ordinary and extraordinary general meeting held on 6th May, 1999 whereby the name of Schneider SA was changed to Schneider Electric SA." 12. According to Mr. Rohtagi this document itself shows that the question of transmission of shares in favour of the plaintiff was being considered by the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continued till August 2001 is difficult to lose sight of. 15. It appears that the defendant is playing hide and seek with the plaintiff. If at all defendant-TC was not convinced about the claim of the plaintiff it could have called upon the plaintiff company to indemnify the amount of shares so as to obviate the future claim by any third party. Without facing a situation where no third party had preferred its claim to the shares of LTE as its successor-in-interest the defendant-TC was obliged to Register the plaintiff company as a Member in the Register of Members and invite them in their capacity as a Director to the Board meetings. 16. The contract of contribution by virtue of which Schneider SA became the successor-in-interest very clearly shows that the contract of contribution is with regard to the shares LTE held in the defendant company. When the LTE merged with Schneider SA the shares of LTE automatically went to Schneider SA and by no means these shares could have come to the share of SEI as SEI only inherited the name Telemecanique and Patents and Designs of LTE. 17. As regards the affidavit of the representative of the SEI it is clear that the SEI represent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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