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TMI Blog2009 (11) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... th the assets of the company in any manners whatsoever and cannot be permitted to file any statutory forms or returns on behalf of the company. This injunction would operate during the pendency of the suit. - FAO (OS) NO. 337 OF 2009 AND FAO (OS) NO. 423 OF 2009 - - - Dated:- 6-11-2009 - SANJAY KISHAN KAUL AND AJIT BHARIHOKE, JJ. Rajive Sawhney, Viraj R. Datar and Vineet Jhanji for the Appellant Subodh K. Pathak, S.P.M. Tripathi, K.P.S. Kohli and Ms. Maneesha Dhir for the Respondent JUDGMENT Kaul, J. A dispute between two family groups to control Capital Land Builders (P.) Ltd., appellant No. 1 in FAO (OS) No. 337/2009 ('the said company'), and consequently deal with valuable land owned by the said company has given rise to a spate of litigation. The present appeals arise from one branch of that litigation. The said company is stated to have been incorporated in the year 1959 with the object of acquisition of properties, promotion and development of land and building, and other objectives as specified in the articles and memorandum of association. The original authorised capital of the said company is stated to have been Rs. 1 lakh divided into one th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ism, democracy and diffusion of political knowledge. The said company (respondent No. 1 in those proceedings) was stated to be a private limited company whose registered office earlier was at Pataudi House, Darya Ganj, Delhi, which was shifted to B-49, Connaught Circus, New Delhi and society had learnt that the said company had shifted its registered office at No. 5-A, Doctors Lane, Gole Market, New Delhi. Shri Janardhan Rai, respondent No. 2 in those proceedings, was stated to be the director of the said company. In para 11 of the petition, the society averred that a copy of the share certificate in favour of the society issued by the company was being annexed as annexure C and that "the original will be shown to the court at the time of hearing". We may note at this stage itself that this original share certificate has not seen the light of the day till the conclusion of the hearing of the present appeal. The application goes on to state that the society wanted to be better informed about the affairs of the company and on an inquiry found that no annual returns had been filed for a number of years nor any notice or information had been sent about the holding of a general or speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 5 shares each. A number of transactions are stated to have been done in respect of shares including re-transfer of shares to Chowdhry Brahm Prakash and transfer of shares by him. It would be useful to reproduce the relevant portion in this behalf, which is as under : S. No. Share Scrip Nos. No. of shares Date of transfer Name of the transferee along with address 1. 061-210 150 26th February, 1968 Sh. Chowdhry Brahm Prakash, 15, Curzon Lane, New Delhi 2. 211-310 100 26th February, 1968 Sh. G D Sehgal Vidhya Mandir Dharmshala, Himachal Pradesh 3. 311-315 005 10th July, 1972 Smt. Satya Chowdhry 15, Curzon Lane, New Delhi 4. 316-320 005 10th July, 1972 Shri Ajai Chowdhry 15, Curzon Lane, New Delhi 5. 321-325 005 10th July, 1972 Shri Sidharth Chowdhry 15, Curzon Lane, New Delhi 6. 326-335 010 29th January, 1974 Sh. Madan Singh, Village Chattarpur, New Delhi 7. 336-365 030 29th January, 1974 Ms. Usha Kiran, Outra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany and a Board resolution being passed on 25th May, 2006 where the failure of the past management about transfer of shares not being supplied was noted and the decision was taken to take on record shares of the society in the register of members of the company after adhering to the provisions and procedure of the Act along with applicable rules and regulations. Mr. Ajay Yadav is the brother-in-law of Mr. Ajay Chowdhry. Mr. Ajay Yadav was not originally a director. The petition under section 111 of the Act was pending. The letter has been issued from the address of Mr. Ajay Yadav being shown as that of the company. This letter was placed before the CLB on 29th May, 2006 and the society sought to withdraw the petition which permission was granted and the petition was dismissed accordingly. 9. It appears that inter se the society there were also some disputes for an application came to be filed on behalf of the society by Mr. Sidharth Chowdhry, who had filed the original petition, seeking recall of the order dated 29th May, 2006 permitting the petition to be withdrawn. It was averred in the application that Shri Ajay Chowdhry had fraudulently changed the constitution of the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the company gave no objection to withdrawal of the appeal. The result was that the learned Company Judge taking note of the statement made by the counsel for the society that the society cannot be compelled to prosecute the petition before the CLB directed that Company Petition No. 15/111/97 would stand dismissed as withdrawn and as a consequence thereof nothing survived for adjudication in the appeal. The upshot of this was that the society withdrew the proceedings before the CLB in which it could have got adjudicated the right of the society to get its name recorded in the register of members of the company. 11. The matter, however, did not rest at this since the learned Company Judge took a serious view of the conduct of Mr. Ajay Yadav. This conduct was a consequence of an order passed on 6th October, 2006 in an interlocutory application filed in CS(OS) No. 1906/2006 by the company in terms whereof the society, Mr. Ajay Chowdhry and other members of that group who were defendants in the suit (respondents herein) had been restrained from representing themselves as shareholders/representatives of the company till further orders. This order is stated to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting dated 28th September, 1983 and again on 20th January, 1998. The company is stated to have been maintaining its statutory record and filing annual returns with the RoC. The balance sheets and annual returns for the various years filed from time to time were placed on record. The registered office is stated to have been shifted to Doctors Lane and Form 18 filed with the RoC on 7th January, 2000. The present share holders of the company were stated to be as under : Shares No transfer records ( a )Janardhan Rai 135 ( b )H.C. Sachdeva 55 ( c )Runwell India (P.) Ltd. 430 ( d )Smt. Promila Kishor 2,480 ( e )S.S. Sobti 20 ( f )O.P. Sachdeva 3,800 ( g )Smt. Annu Sabharwal 2,500 ( h )Smt. Alka Sahni 2,500 ( i )Sh. Ankur Sachdeva 2,500 ( j )Sh. Ashish Kishor 4,500 ( k )Sh. Kishor Lal 3,000 ( l )Smt. Prema Sachdeva 2,000 ( m )Smt. Ashima Arora 1,000 13. The list of directors as per Form 32 filed is stated to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence in this behalf. 15. The plaint states that in April 2006 the company received information from the market that some persons are holding out themselves as directors of the company and negotiating for sale of the properties of the company. The company, thus, issued public notices on 11th April, 2006. The company also came to know that a Form 32 had been filed with the RoC on 18th March, 2006 showing change of directorship. This Form 32 gave the registered office of Doctors Lane and the date of appointment of Mr. Arjun Chowdhry, Mr. Ajay Yadav and others as 10th March, 2006. Further a Form-18 was filed for change of registered office with effect from 18th March, 2006 from Doctors Lane to A-3, Indian Express Apartments, Mayur Vihar, Delhi, the address of Mr. Ajay Yadav. A Form 2 about return of allotment was also filed in respect of issue of additional shares in pursuance to a resolution of the Board on 18th March, 2006 and the Form 5 for notice of consolidation, division, etc., or increase in share capital or increase in members was filed purportedly and in pursuance to a meeting held on 6th June, 2006 increasing the share capital from Rs. 25 lakh to Rs. 75 lakh as per a Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or contempt pronounced on 20th April, 2009 and on the said date when the concerned respondents were found guilty of contempt, further directions were passed pending pronouncement of judgment on the interim injunction applications that appellants 2 to 4 should also be re-strained from disposing of any property which should be standing in the name of appellant No. 1-company. The impugned judgment was thereafter pronounced on 6th August, 2009 whereby the ex parte injunction order was vacated. The learned Single Judge has, however, observed while vacating the said order that in the facts and circumstances of the case both the groups may be able to squander the assets of the company without waiting for final adjudication and, thus, during the pendency of the suit neither the original plaintiffs nor the defendants should be permitted to dispose of the assets standing in the name of the company in any manner. 18. FAO(OS) No. 337/2009 was filed by the appellants (original plaintiffs). The arguments were concluded on 20th August, 2009 but learned counsels, for the parties requested the matter to be placed for directions. In view of the nature of submissions advanced on 4th September, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an independent new suit. The purchase of shares by plaintiffs 3 and 4 are stated not to have been explained and the relevant documents not brought on record. The learned Single Judge has noticed the fact that the original share certificates were not produced by the respondents despite claiming to be in possession of the same. No doubt the plea of the appellants was that new share certificate had been issued which had been transferred. The learned Single Judge found that it was for the plaintiff to establish the prima facie case. 21. The impugned judgment is sought to be challenged by learned senior counsel for the appellants by pointing out that in terms of section 164 of the Act the register of members is prima facie evidence of any matters directed or authorised to be inserted therein by the Act. The said provision reads as under : "164. Registers, etc., to be evidence. - The register of members, the register of debenture-holders, and the annual returns, certificates and statements referred to in sections 159, 160 and 161 shall be prima facie evidence of any matters directed or authorised to be inserted therein by this Act." 22. Learned counsel submits that the entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to appreciate the scope of section 111 of the Act dealing with the provisions for rectification of register of members, learned senior counsel for the appellants referred to the judgment in Ammonia Supplies Corporation ( P. ) Ltd. v. Modern Plastic Containers ( P. ) Ltd. [1998] 30 CLA 355 (SC). The Supreme Court was seized with the question of the power of the court to rectify the register of members which was then contained in section 155 (now section 111) of the Act. The power was held to be summary in nature. The Supreme Court observed that if it truly is a case of rectification all matters raised in that connection should be decided by the court under section 155 (now section 111) and if it finds adjudication of any matter not falling under it, it may direct a party to get his right adjudicated by the civil court and the civil court would have jurisdiction unless the jurisdiction is expressly or impliedly barred under a statute. It was observed that the jurisdiction of the civil court was impliedly barred in case of matters of rectification. 25. The plea of the learned senior counsel, thus, is that it was for the CLB to decide this question arising from the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surreptitious manner by the respondents to achieve their objective even when the petition was still pending before the CLB. It has already been noticed that Form 32 is signed by Ajay Chowdhry for the society alone. The society was a stranger as per the own admission of the respondents since it had been wrongly excluded. No details of how the meeting could have been called contrary to the provisions of the Act has been explained. 27. There is no material on record to show either a proper requisition being made for extraordinary meeting of the company nor any notice was given under section 284 of the Act to plaintiffs 2 to 4 in respect of a proposal for their removal. The act of filing different forms and trying to change the composition of the Board, the share holding and the registered office were clearly only a prelude for issuing the letter dated 26th May, 2006 by falsely creating evidence in their favour by the respondents. 28. The CLB by restoring the petition sought to examine the validity and consequences of the letter dated 26th May, 2006. In the company appeal the counsel for the respondents sought to withdraw the company petition irrespective of the claim under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal share certificate relied upon by the respondent has not seen the light of the day. 31. We find that there is also merit in the plea of the learned senior counsel for the appellant that the last bit of shares held by the group of the respondents was transferred as far back as 1989. The matter was sought to be raked up by the respondents for the first time in 1997 after eight years before the CLB and those proceedings also dragged on and now stands withdrawn. The respondents have no explanation for their silence over this long period of time. 32. The details of the manner of transfer of shares right up to 1989 has been fully explained by the appellants along with documents. Learned counsel for the respondents did seek to plead that when a direction was passed by the CLB these documents were not produced and it was claimed that there had been a fire in the office. Be that as it may even at that stage it was pleaded by the appellants that the records were old and whatever they had been able to lay hands on had been produced. Whatever further documents have been located have been produced which substantiate the case of the appellants. 33. The appellants had further plead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted of the group of the respondents. Without first getting their rights to be entered into the shareholders register established the respondents cannot have a say in the running of the company. 35. It is trite to say that the Act is comprehensive enough to look after the aspects of management of the affairs of a company. In the case of an allegation of mismanagement, the minority group, if has sufficient members, can always move the CLB. The company is a separate legal entity and it is not as if any shareholder irrespective of its percentage of shareholding can interfere with the affairs of the company. They would, of course, have a right to speak in a shareholders meeting. The very pre-requisite of being a shareholder was absent in the case of the society and, thus, as a recourse to their grievance they rightly preferred the company petition under section 111 of the Act before the CLB. For the reasons best known to them they abandoned that remedy. During the pendency of that petition they surreptitiously tried to steal a march by manipulating documents and having failed in the same appeared to have backtracked. Despite their failure to establish a status in the company, they ..... X X X X Extracts X X X X X X X X Extracts X X X X
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