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TMI Blog2013 (9) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... hare capital was raised to 10,000 shares of Rs. 10 each. These shares were held as follows: Ms. Manju Shiv Sud 2000 shares, S.N. Sud 2500 shares, Mrs. Krishna Sud, the wife of S.N. Sud 3000 shares and Dinesh Sud 2500 shares. No physical share certificates were given to them, apparently because they were all family members. 3. The appellant and his father, S.N. Sud, were also carrying on business in partnership in the name and style of Stitchwell Qualitex. 4. On 01.10.1993, the appellant resigned from the directorship of the company. Mrs. Krishna Sud, his mother, died intestate on 03.01.1995 and S.N. Sud, his father, died on 11.02.2001, leaving a will dated 25.06.1998. 5. Trouble appears to have started when the appellant wrote to the company on 10.01.2009, through his advocate, that he came to know from some documents that he was not being shown as a shareholder of the company and demanded to know how many shares stood in his name. He also wanted to inspect the records of the company. The company wrote back, through its advocate, on 20.01.2009 that (a) the appellant was not a shareholder of the company; (b) he was not a shareholder for the past 15 years; (c) that pursuant to a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g pattern of the company was set out, which did not show the appellant as a shareholder, but showed only S.N. Sud, his wife Krishna Sud, daughter Manju Shiv Sud and her son Pankaj Shiv Sud as shareholders. Thereafter, Krishna Sud transferred her shares to Manju Shiv Sud and Pankar Shiv Sud, as evidenced by the letter dated 28.11.1994 addressed to the board of the company. She passed away in 1995. In the year 1998, S.N. Sud, the father, transferred his shares in the company to Manju Shiv Sud and Pankaj Shiv Sud and accordingly informed the Registrar of Companies by letter date 31.03.1998. Thereafter, the only shareholders of the company were Manju Shiv Sud and her son Pankaj Shiv Sud. The fact that there was a family settlement in 1993 was also adverted to in the will left by S.N. Sud. He passed away in 2001. The annual returns were filed with the RoC only on the above basis, that is to say, that Manju Shiv Sud and Pankaj Shiv Sud were the only shareholders of the company. It is inconceivable that a person claiming 52.5% shareholding in the company would have kept away from the affairs of the company and would not have shown any interest in them or would not have made any enquiry ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted the family settlement and without any reason and justification, and out of spite and ill-will towards his sister and her son, has filed the petition to harass and humiliate them; (vi) that the family settlement was acted upon by all parties including the petitioner and it was not open to him, after a period of 16 years, to claim that there was no such settlement; (vii) that there was ample documentary record to show that the family settlement was acted upon; (viii) there was no evidence to show that the petitioner was entitled to any shares held by S.N. Sud and Krishna Sud, on their death; (ix) the petition was liable to be dismissed on the ground of limitation itself, having been filed after 16 years from the date on which his name was omitted from the register of members, or in the alternative, the petition was liable to be rejected on the ground of laches or unreasonable delay. 10. The CLB was inclined to look upon the company as a family concern, run without any pretence to professionalism; no share certificates were issued, no formal meetings were held and annual returns were not filed with any regularity. It noted that all the members of the family resided in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Prathapan & ors. (2004) 122 Comp. Cas. 161 (SC) in support of his contention that section 108 was mandatory in nature. It was further contended that there can be no question of any waiver or acquiescence of the rights of a shareholder as laid down in Sha Mulchand & Co. Ltd. (in liquidation) vs. Jawahar Mills Ltd. (AIR 1953 SC 98). Alternatively, it was contended that limitation, if any, commenced from the time at which the appellant had knowledge about the acts of the company. At any rate, it was contended, the appellant was afflicted by acute ulcerative colitis and severe eye problem during the period 2001 to 2008 which explained the delay, if any. In support of his submissions, learned counsel relied on the following further authorities: Maheshwari Khetan Sugar Mills (P.) Ltd. & ors. vs. Ishwari Khetan Sugar Mills & ors. (1963) 33 Comp. Cas. 1142 (All.); Farhat Sheikh vs. Escman Metalo Chemical Pvt. Ltd. & anr. (1991) 71 Comp. Cas. 88 (Cal.) and N. S. Nemura Consultancy India P. Ltd. & anr. vs. A. Devarajan (2010) 155 Comp. Cas. 175 (Mad.). 13. Per contra, the submissions of the learned counsel for the respondents were as follows. There are at least five documents which are c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the settlement had been acted upon by the parties. 14. In his rejoinder, the learned counsel for the appellant submitted that even the CLB has observed that there was no regular filing of the annual returns by the company, which was run as a family concern and therefore no reliance can be placed upon them. Further, in the annual return made up to 30.09.1994, it has been stated by the company that no transfer of shares took place since the last annual general meeting, which must have been in 1993; that shows that the shares of the appellant were not transferred or given up by him pursuant to the so-called family settlement. Further, the chartered accountants in their inspection report have stated that no annual returns relating to the year 1990-91 to 1998-99 were available with the RoC. He finally submitted that the appeal may be allowed and the appellant's name be directed to be included in the register of members or in the alternative the matter may be remanded to the CLB for fresh disposal. 15. On a careful consideration of the facts in the light of the rival contentions and the authorities cited, I am unable to see any question of law arising out of the decision of the CLB. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties to it; the court noted that the family arrangement had been acted upon by the parties and therefore none of them can be permitted to impeach it thereafter. In S. Shanmugham Pillai & ors. vs. K. Shanmugham Pillai & ors. (1973) 2 SCC 312 it was held that equitable principles such as estoppel, election, family settlement, etc. are not mere technical rules of evidence; they have an important purpose to serve in the administration of justice and courts have been liberally relying on these principles. In Kale's case (supra), it was held that the parties to the family settlement were estopped from impeaching or questioning it if they have conducted themselves consistent with the arrangement and have also "kept their mouths shut for full seven years and later try to resile from the settlement". All this is subject to the caveat that the family settlement or arrangement should be entered into bona fide. 16. The above principles relating to a family settlement, if applied to the present case, would show that the appellant cannot question it or act contrary to the terms of the settlement at any later point of time. It is not denied by him that he was a signatory to the letter dated 31. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the partnership business. Therefore it is possible to attribute to the words "withdraws from his rights" the meaning that the appellant would be giving up his shares in the company and become the exclusive proprietor of the business of bag-closing machines and conveying systems, which was the business of the partnership firm. This is further fortified by the subsequent letter written by S.N. Sud to the Noida authority on 25.01.1994. In this letter, the shareholders' names were given, which showed only S.N. Sud, his wife Krishna Sud, their daughter Manju Shiv Sud and her son Pankar Shiv Sud as shareholders. The name of the appellant was not shown as a shareholder. The letter in the earlier part also referred to the fact that the premises at G-58, Sector 6, Noida will henceforth be used by the company M/s. Stitchwell Qualitex (P) Ltd. Both the letters, taken together, certainly show that the intention of the settlement was to constitute the appellant as the exclusive owner of the partnership business which was that of bag-closing machines and conveying systems and to give more shares in the company to Manju Shiv Sud and induct her son Pankaj Shiv Sud. It appears that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to belong to him exclusively, at least from April, 1994, in return for giving up the shares. He could not have been oblivious to the anxiety of his parents to provide for his sister and nephew, given the fact that they were all staying in the same premises and being aware of the tragedy that had fallen upon her. If he had not accepted the terms of the settlement, he would have made his intentions known at a very early stage and would have resisted when asked to part with the shares. He kept his mouth shut, when there was no compulsion upon him to do so, which can only mean acceptance of the settlement. His long silence for a period of 15-16 years was in conformity and consistent with the family settlement. He had consciously given up his shares in the company. For reasons best known to him, he now wants to resile from the earlier position. That, in the light of the authorities to which I have referred, cannot be permitted. There is no explanation for his long silence. The illness from which he was said to have been suffering is not supported by any medical reports. That does not appear to have hampered the business which he was carrying on - at any rate, no evidence has been brough ..... X X X X Extracts X X X X X X X X Extracts X X X X
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