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TMI Blog2015 (10) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of the Register – Decided in favour of the Respondents. - COMPANY APPEAL No.11 of 2014 - - - Dated:- 11-3-2015 - SRI JUSTICE C.V.NAGARJUNA REDDY, J. For The Appellant : Sri Ch.Venkat Raman For The Respondent : Sri C.Raghu, Sri S.Ravi, senior counsel Sri K.Ramakrishna and Sri C.Sai Vishnu JUDGMENT: This company appeal arises out of the order, dated 13.12.2013 of the Company Law Board Chennai Bench at Chennai in C.A.No.165 of 2011 in C.P.No.34 of 2011, whereby it has allowed the company application and dismissed the company petition. Brief facts leading to the filing of this appeal are that the appellants were the Directors of respondent No.1 company. On 30.07.2006, the appellants entered into an agreement with respondent No.2 for transfer of all their shares to him and his relatives. It is the pleaded case of respondent No.2 that in pursuance of the said agreement, 2,50,000 shares were allotted to him and his relatives in the year 2008 and that on 04.02.2008, share transfer deeds were executed in favour of respondent Nos.3 to 5. The appellants have, however, approached the Company Law Board at Chennai, by way of C.P.No.34 of 2011 under Sections 397 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008. He has also pointed out that as per the details of the share capital for the financial years 2007-10, appellant Nos.1 and 2 held share capital to the tune of 9,33,260 and 3,10,100 respectively and that therefore, the objection to the maintainability of the company petition on the ground that appellant Nos.1 and 2 have ceased to be the members of respondent No.1 company is contrary to the record produced by respondent Nos. 2 to 6 themselves. Sri S.Ravi, learned senior counsel, appearing for the respondents, submitted that the appellants have filed the company petition on the premise that they continued to be the members of respondent No.1 company, which claim is contrary to the record. He has further submitted that the appellants have played fraud against respondent Nos.2 to 6 with regard to share transfers and that the jurisdiction of the Company Law Board under Section 111A (3) of the Act being the summary in nature, the allegation of fraud cannot be adjudicated by it and that the appropriate remedy for the appellants is only to file a civil suit before the Court of competent civil jurisdiction. The learned senior counsel contends that the Company Law Board has, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that they filed the application in any capacity falling under Section 399 of the Act. There is a serious dispute about the appellants continuing as members of respondent No.1 company, let alone their holding 1/10th of the issued share capital. While the appellants admit entering into the agreement for share transfer and also receipt of part consideration, it is the pleaded case of respondent Nos.2 to 6 that as per the said agreement, entire sale consideration is paid through various cheques and also through cash for certain minor payments and thereafter share transfer was effected on 06.03.2008 with the consent of appellant Nos.1 and 2. Sri S.Ravi, learned senior counsel, has placed before the Court original share transfer records which purportedly contain the signatures of appellant No.1. Appellant Nos.1 and 2, however, denied such share transfer taking place. Thus, in effect, the dispute between the parties mainly centers around whether appellant Nos.1 and 2 have ceased to be the members of respondent No.1 company and whether the alleged share transfers are valid or respondent Nos.2 to 6 played fraud against the appellants in respect of the purported share transfers. Unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) The Company Law Board may, on an application made by a depository, company, participant or investor or the Securities Exchange Board of India, if the transfer of shares or debentures is in contravention of any of the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992), or regulations made thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), or any other law for the time being in force, within two months from the date of transfer of any shares or debentures held by a depository or from the date on which the instrument of transfer or the intimation of the transmission was delivered to the company, as the case may be, after such inquiry as it thinks fit, direct any depository or company to rectify its register or records... Though the language of Section 155 of the Act and that of the proviso to Sub-Section (2) to Section 111A or Section 111A(3) of the Act is not similar, however, both the provisions deal with the power of the Company Law Board to rectify the Register of members and they apply to a situation where the company refuses to rectify the Register without sufficient cause. While dealing with Section 155 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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