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TMI Blog2007 (2) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... he conclusion that alleged appointment of Dr. Ashish Gupta and Dr. Anil Agarwal as directors on 14-5-1999 was void and illegal and, accordingly, appointments of other directors made by them would also fail. The appointment of directors was also faulted for want of notice to the respondent and her husband, who admittedly were the first and continuing directors of the hospital. It has also been held that allotment of shares in the hospital to the appellants and members of their group was contrary to the provisions of the Act and memorandum and articles of association and, therefore, bad in law. The Company Law Board has given a finding that the respondent and her husband are the only directors and shareholders of the hospital, all other appointments and shareholding have been set aside. 3. It may be noted that Dr. Ashish Gupta and Dr. Anil Agarwal have not challenged and questioned the judgment dated 2-3-2005 and have accepted the same. 4. An appeal under section 10F of the Companies Act is maintainable only on questions of law and is normally decided on the basis of facts as found by the Company Law Board by applying principles of law to the said facts. This is because, on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66(1) ? (2)When the point for determination is a mixed question of law and fact; while the finding of the Tribunal on the facts found is final, its decision as to the legal effect of those finding is a question of law which can be reviewed by the court ? (3)A finding on a question of fact is open to attack, under section 66(1) as erroneous in law when there is no evidence to support it or if it is perverse ? (4)When the finding is one of fact, the fact that it is itself in inference from other basic facts will not alter its character as one of fact ?" 6. Again in Raja Bahadur Kamakshya Narain Singh v. CIT [1969] 3 SCC 791, the Supreme Court observed : "The case of Sree Meenakshi Mills Ltd. v. CIT (1956) SCR 691 holds that where an ultimate finding on an issue is an inference to be drawn from facts found on application of a principle of law, there is a mixed question of law and fact and such an inference in such a case is a question of law open to review by the court. On the other hand, when the final determination of the issue does not involve any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "24. The principles relating to section 100 CPC relevant for this case may be summarised thus : ( i )An inference of fact from the recitals or contents of a document is a question of fact. But the legal effect of the terms of a document is a question of law. Construction of a document involving the application of any principle of law, is also a question of law. Therefore, when there is misconstruction of a document or wrong application of a principle of law in construing a document, it gives rise to a question of law. ( ii )The High Court should be satisfied that the case involves a substantial question of law, and not a mere question of law. A question of law having a material bearing on the decision of the case (that is, a question, answer to which affects the rights of parties to the suit) will be a substantial question of law, if it is not covered by any specific provisions of law or settled legal principle emerging from binding precedents, and, involves a debatable legal issue. A substantial question of law will also arise in a contrary situation, where the legal position is clear, either on account of express provisions of law or binding precedents, but the court below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been challenged by the respondent who was responsible for these acts, after more than 3 years with the sole intention of denying the very existence of the company? ( vi )Whether a company petition is maintainable at the behest of respondent who passes a resolution for increasing share capital allowing others to invest in the shareholding and then turning volte face and denying the very act of increase in share capital ? ( vii )Whether a petition by respondent, who is in fiduciary relationship as a director of the company, should have been at all entertained when she asked for disconnection of electricity and vehemently opposed its restoration in this Hon ble Court and also asked for cancellation of registration of the hospital, which is the only business of the company and thus has already affected the company substantially ? ( viii )Whether a company petition at the behest of respondent could have been entertained, when with malicious intention she claimed the company s property as her own property ? ( ix )Whether the findings of the Company Law Board can be legally sustained when ( a ) they are against the interest of protecting the company; ( b ) throwing the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany Law Board noticed that in the photocopy of the power of attorney the date on which it was executed had been left blank, but had been filled up in the original. As, admittedly, the power of attorney is registered, the date of execution, even if by mistake had been left blank in the relevant paragraph of the document, is not of significance. This by itself will not make the power of attorney a void document. Date on which the power of attorney was registered is available. Moreover, the respondent was asked and called upon to reiterate and confirm that she had authorized Mr. Kamal Kapoor to file the petition. This was done. Sections 196 to 200 of the Contract Act, 1872, permit and allow retrospective authorisations. Moreover, the first question to the extent whether the respondent had executed the power of attorney is essentially a question of fact and not a question of law. The first question is, accordingly, answered in favour of the respondent and against the appellants. 11. The second question is the core issue and has to be answered keeping in mind the limited scope and jurisdiction of this Court under section 10F of the Act. 12. The facts as found by the Company La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, capital expenses, losses and profits of the nursing home prior to 1-4-1999 were to be borne, paid and enjoyed by the respondent and not by the appellants. After 1-4-1999 profits and losses were to be shared between the appellants and the respondent. 16. Clause 4 of the agreement is relevant and for the sake of convenience is reproduced below : "UC and DD have agreed to own and share the business in the ratio of 49 per cent and 51 per cent respectively. For this purpose, UC would disinvest its existing equity in the company to the extent of 51 per cent in favour of DD and/or his family members." 17. The above clause stipulates disinvestment of existing equity in the company by the respondent (who has been described as UC), to the extent of 51 per cent in favour of Dr. Ashok Mohan Dwarkadas Motiwala and his family members (described as DD in the agreement). The clause, therefore, indicates that the respondent would be the initial shareholder of the company to be incorporated and thereafter there would be disinvestment of the shareholding held by the respondent to the extent of 51 per cent in favour of Dr. Ashok Mohan Dwarkadas Motiwala and his family members. Thus, dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and challenged before me, that the respondent and her husband had left India for United Kingdom on 3-5-1999 and thereafter except for two short trips from 5-12-1999 to 12-12-1999 and from 7-2-2000 to 20-2-2000, they did not come back to India during the next two years. 20. It is the case of the appellants that, on 14-5-1999, a meeting of the board of directors of the hospital was held. The respondent and her husband had participated in the said meeting and they had nominated Dr. Ashish Gupta and Dr. Anil Agarwal as additional directors. Reliance in this regard was placed upon Form No. 32, dated 19-5-1999, which is signed by the respondent. This appointment has been disbelieved as, admittedly, both the respondent and her husband were not in India on 14-5-1999. No document was placed on record to establish that a meeting dated 14-5-1999 was held and any resolution for appointment of Dr. Anil Agarwal and Dr. Ashish Gupta was passed. 21. Learned counsel for the appellant submitted that Dr. Ashish Gupta and Dr. Anil Agarwal were members of the respondent group. However, he did not deny that both Dr. Ashish Gupta and Dr. Anil Agarwal are related to Dr. Ashok Mohan Dwarkadas Motiw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held to be bad. The meeting thus convened was held to be invalid for want of proper notice. 24. The allegation that the respondent had taken away the relevant documents from the chartered accountant s office has been rejected by the Company Law Board by giving cogent and valid reasons. There was also no material to show and establish that the said documents would have been kept in the premises of the chartered accountant and not in the premises of the hospital. In his letter dated 15-7-2002, the chartered accountant had informed Registrar of Companies that, on 5-5-2002, the respondent had come to their office and demanded to see her income-tax file. The chartered accountant claimed that, when the files were shown, the respondent took away the files in a hurry and in this process she also took away the files containing original balance sheets, audit notes, working papers, certificates etc. It is not stated in this letter that the original register of meeting of board of directors had been taken away. The original register recording minutes of the resolution of the board of directors/attendance register is an important register. Had the said register been taken away by the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Dr. (Mrs.) Nirmala Dwarkadas as authorised signatory of the hospital and not in the capacity as directors of the hospital. 28. After examining the entire facts and material on record, the Company Law Board did not feel it expedient to give unnecessary emphasis and place reliance on some letters allegedly written by the respondent. In fact, the Company Law Board after examining the material on record came to the conclusion that there was merit in the stand of the respondent that she had signed some blank papers and these papers had been misused. In this regard, the Company Law Board relied upon suit for permanent injunction, which had been filed by the hospital under the signatures of Dr. Ashok Mohan Dwarkadas Motiwala. In the plaint, it has been specifically mentioned that the respondent was a non-resident Indian and she had left India and was working and living in United Kingdom and was not taking active part in the running of the hospital. 29. The findings of the Company Law Board are largely findings of fact which have been given on the basis of material and documents placed before the said Board by applying the principles of preponderance of possibility. It cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. The question of onus of proof has greater force where the question is, which party is to begin. Burden of proof is used in three ways: ( i ) to indicate the duty of bringing forward evidence in support of a proposition at the beginning or later; ( ii ) to make that of establishing a proposition as against all counter-evidence; and ( iii ) an indiscriminate use in which it may mean either or both of the others. The elementary rule in section 101 is inflexible. In terms of section 102 the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same. 20. In R.V.E. Venkatachala Gounder v. Arulmigu Viswaraswami and V.P. Temple [2003] 9 SCC 752 the law is stated in the following terms : (SCC p. 768, para 29). 29. In a suit for recovery of possession based on title it is for the plaintiff to prove his title and satisfy the court that he, in law, is entitled to dispossess the defendant from his possession over the suit property and for the possession to be restored to him. However, as held in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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