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TMI Blog2016 (6) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... ITION NO.20 OF 2011 COMPANY APPEAL (L) NO.43 OF 2015 IN COMPANY APPLICATION NO.156 OF 2014 IN COMPANY PETITION NO.21 OF 2011 COMPANY APPEAL (L) NO.44 OF 2015 IN COMPANY APPLICATION NO.157 OF 2014 IN COMPANY PETITION NO.22 OF 2011 COMPANY APPEAL (L) NO.45 OF 2015 IN COMPANY APPLICATION NO.158 OF 2014 COMPANY PETITION NO.23 OF 2011 COMPANY APPEAL (L) NO.46 OF 2015 IN COMPANY APPLICATION NO.159 OF 2014 IN COMPANY PETITION NO.24 OF 2011 COMPANY APPEAL (L) NO.47 OF 2015 IN COMPANY APPLICATION NO.160 OF 2014 IN COMPANY PETITION NO.25 OF 2011 COMPANY APPEAL (L) NO.48 OF 2015 IN COMPANY APPLICATION NO.161 OF 2014 IN COMPANY PETITION NO.26 OF 2011 COMPANY APPLICATION (L) NO.60 OF 2015 IN COMPANY APPEAL (L) N0.41 OF 2015 IN CLB COMPANY APPLICATION NO.154 OF 2014 IN CLB COMPANY PETITION NO.19 OF 2011 COMPANY APPEAL NO.86 OF 2015 IN COMPANY APPLICATION NO.154 OF 2014 IN COMPANY PETITION NO.19 OF 2011 COMPANY APPEAL NO.87 OF 2015 IN COMPANY APPLICATION NO.155 OF 2014 IN COMPANY PETITION NO.20 OF 2011 COMPANY APPEAL NO.88 OF 2015 IN COMPANY APPLICATION NO.156 OF 2014 COMPANY APPEAL NO.89 OF 2015 IN COMPANY APPLICATION NO.157 OF 2015 IN COMPANY PETITION NO.22 OF 2011 COMPANY APPEAL NO.90 OF 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, Respondent No.1 is not entitled to take cognizance of the trust. Accordingly, Dr. Kalyani, Sulochana, DGK and SNI have been joint shareholders of these shares and members of Respondent No.1 Company. (iii) In or about 2005, Dr. Kalyani's health started failing. Gaurishankar having peculiar medical problems connected to his mental / physiological imbalances, preventing him from taking responsibility of looking after the family business, Rohini started acquiring a position of dominance, control and trust in the affairs of the business of Kalyani family. She was appointed as Managing Director of Kalyani Forge Limited, an important group company, and also became a Director of other group companies and started looking after the Kalyani family companies and business affairs. It is Sulochana's grievance that Rohini had illegally and / or wrongfully gained confidence of late Dr. Kalyani and Gaurishankar and placed herself in a position where she exercised undue influence over them. (iv) Sometime later, unrest started in the family, when Dr. Kalyani and Sulochana started learning about the wrongdoings and illegalities committed by Rohini. With a view to maintain family amit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 108 of the Act, which are mandatory in nature ; (c) In the absence of a valid instrument of transfer, the shares continued to vest in Sulochana and other trustees and their names should not have been removed from the register of members in respect of the impugned shares. (vii) By its impugned order dated 18 May 2015, the CLB dismissed the petition as not maintainable. That order is impugned in the present company appeal. There is a crossappeal filed by Respondent Nos.2 to 4 challenging some of the findings of the CLB. 3. Though the CLB held in favour of the Petitioner on merits of the case, that is to say, the impugned transfer of shares to be invalid and not in accordance with law, the CLB proceeded to dismiss the petition on the following grounds: (i) The Petitioner deliberately, knowingly and mala fide failed and omitted to disclose, or mention about, material documents and thus, did not approach the CLB with clean hands. She "suppressed material and relevant facts going to the root of this case" as also "vital documents which would have thrown light for the just decision of this case." (ii) The petition was barred by the law of limitation, and also suffered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such joint holder, that without compliance with the provisions of Section 108, and particularly, her having executed any transfer deed, the shares are transferred, she is but an aggrieved person and can certainly apply for rectification in her individual capacity. When she does so apply, she is not executing the trust within the meaning of Section 48 of the Trusts Act, but seeking redressal as a 'person aggrieved' under Section 111(4) of the Companies Act. In that case, there is no need to join the other joint holders, even if they be cotrustees, as necessary parties. These joint holders cannot be termed as parties who ought to have been joined. The Petitioner, accordingly, had the locus and, as rightly held by the CLB, need not have joined the other joint holders/cotrustees as parties to the petition. 7. The question of bar of limitation has two aspects one, whether the Limitation Act, 1963 and particularly, Article 137 thereof (residuary article providing for applications, where no limitation period is otherwise provided for), applies to a rectification application to the CLB under Section 111(4), and two, what is the starting point of limitation wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the State and its subjects. But there is a wellknown distinction between 'courts' and 'tribunals', both of whom are required to decide matters involving a decision on the rights and obligations of the parties before them and act judicially, i.e. fairly and impartially and in accordance with law. Then there are judicial as well as quasijudicial tribunals. A mere duty to act judicially, either expressly imposed or arising by necessary implication by the nature of duties to be performed whilst so acting, does not of itself make a tribunal whether judicial or quasijudicial - a 'court' (See Ramrao vs. Narayan AIR 1969 Supreme Court 724). The distinction between a 'court' and a 'tribunal' is explained by the Supreme Court in Kihota Hollohon vs. Zachilhu AIR 1993 Supreme Court 412 by quoting Hidayatullah, J. in Harinagar Sugar Mills Ltd. vs. Shyam Sunder Jhunjhunwala AIR 1961 Supreme Court 1669 (V 48 C 315) 5 (2010) 11 Supreme Court Cases 1 in the following words: "........By "Courts" is meant Courts of civil judicature and by "tribunals", those bodies of men who are appointed to decide controversies arising under certain sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judicial power and discharge similar functions, there are certain wellrecognised differences between courts and tribunals. They are : (i) Courts are established by the State and entrusted with the State's inherent judicial power of administration of justice in general. Tribunals are established under a statute to adjudicate upon disputes arising under the said statute, or disputes of a specified nature. Therefore all courts are tribunals. But all tribunals are not courts. (ii) Courts are exclusively manned by Judges, Tribunals can have a Judge as the sole member, or can have a combination of a judicial member and a technical member who is an "expert" in the field to which the tribunal relates. Some highly specialised factfinding tribunals may have only technical members, but they are rate and are exceptions. (iii) While courts are governed by detailed statutory procedural rules, in particular the Code of Civil Procedure and the Evidence Act, requiring en elaborate procedure in decision making, tribunals generally regulate their own procedure applying the provisions of the Code Civil Procedure only where it is required, and without being restricted by the stric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a court, its powers are confined only to the provisions of the Companies Act in that behalf and exercised in only specific matters provided therein; that all members of the board are not judicial members, but there are technical members; that subsection (4D) of S.10 of the Act and Regulation 47 are deeming clauses treating the Board as a Court for a limited purpose; that matters which are not within the jurisdiction of the Board are decided by the High Court or the District Court as provided under Section 10 and other provisions of the Act; that the residue goes before ordinary civil courts or some other competent authority; and that considering the scope, function and special jurisdiction conferred on it, the Board can said to be only a Tribunal and not a Court. 11. Mr. Mukherjee, learned Senior Counsel for the Respondents, submitted that the expression 'Court' appearing in the Limitation Act, 1963 would include all bodies which discharge curial functions and thus include the CLB as a judicial body performing a curial function under Section 111 of the Act, which was originally with the High Court under Section 155 prior to the amendment to the Act. He relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al with them required to ascribe a broader meaning to the word 'court' so as to suppress the mischief and advance the remedy. The following paragraph from the judgment in Canara Bank explains the position : "28. Having regard to the enormity of the 'scam' and its vast ramifications, parliament thought it was necessary that all the matters or claims arising out of transactions in securities entered into between the stated dates in which a person notified was involved should be brought before and tried by the same forum. That forum had been invested with the jurisdiction to try persons accused of offences relating to transactions in securities entered into between the stated dates. It was also required to give directions to the Custodian in regard to property belonging to persons notified which stood attached under the provisions of the Special Court Act. The object of amending the Special Court Act to invest the Special Court with the power and authority to decide civil claims arising out of transactions in securities entered into between the stated dates in which a person notified was involved has already been stated. In these circumstances, it is proper to attrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and the case is no authority for the proposition advanced by the Respondents here. 15. In the premises, the CLB is not a 'court' for the purposes of Article 137 read with Sections 3, 4 and 5 of the Limitation Act, 1963 and there is no particular limitation period for an application under Section 111(4) of the Companies Act. The impugned order holding against the Petitioner on the ground of limitation, thus, clearly suffers from an error of law. 16. That is not to say that there are no considerations of delay and laches for granting reliefs under Section 111(4) of the Act. The relief to be granted under Section 111 is in the nature of a discretionary relief. Exercise of such discretion could certainly be affected by inordinate and unexplained delay, and laches. Any such delay may render granting of the relief of rectification inequitable; there could be equities arisen in favour of other parties as a result of such delay; such delay may give rise to a case of acquiescence, waiver or estoppal. These aspects would be for the CLB to assess and would depend on the peculiar facts and circumstances of each case. In the facts of the present case, there is no warrant for holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... especially in the face of a specific case in the alternative, which was pressed at the Bar, that the Petitioner signed the documents inadvertently in routine course or more seriously, the signatures were obtained by misrepresentation and without letting the Petitioner know the real nature of the transaction. The CLB has not come to this conclusion on the basis of any analysis of evidence, but simply deduced it from the socalled concession of Counsel. That is clearly impermissible and has led to miscarriage of justice. 18. We may now take up the case of suppression of material documents and facts, which is the other ground on which the petition was dismissed by the CLB. The CLB found that the various documents executed by the Petitioner, which purported to transfer the subject shares and which were used by the Company to effect the transfer, were deliberately not disclosed by the Petitioner; and that such nondisclosure amounted to suppression of material documents and facts, calling for dismissal of the petition. The documents were : (i) Letter dated 6.7. 2007 addressed by the Petitioner to the Board of Trustees of N.S. Trust tendering her resignation as a trustee, (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owledge of the nature or contents of the document executed. The submission is that if the document is in fact signed, the burden of establishing a plea of non est factum is on the signatory seeking to disown the document and that party must show that in signing the document, he acted with reasonable care; he cannot take advantage of his own wrong, say, of not reading the contents carefully. It is submitted that after having actually signed the documents, the Petitioner cannot plead ignorance of the nature or contents of the documents. 20. The Supreme Court in the case of Smt. Bismillah Vs. Janeshwar Prasad (1990) 1 Supreme Court Cases 207, considered the contours of the common law defence of non est factum in the following words : "12. The common law defence of non est factum to actions on specialities in its origin was available where an illiterate person, to whom the contents of a deed had been wrongly read, executed it under a mistake as to its nature and contents, he could say that it was not his deed at all. In its modern application, the doctrine has been extended to cases other than those of illiteracy and to other contracts in writing. In most of the cases in which this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of the latter, it is merely voidable." (emphasis supplied) However the House of Lords in Saunders v. Anglia Building Society reviewed the law and held that the essential features of the doctrine, as expressed by Byles, J. in Foster v. Mackinnon, had been correctly stated. Lord Reid, however, observed : (SC headnote at p.1005) "The plea of non est factum could not be available to anyone who signed without taking the trouble to find out at least the general effect of the document. Nor could it be available to a person whose mistake was really a mistake as to the legal effect of the document. There must be a radical or fundamental difference between what he signed and what he thought he was signing." 16. However the distinction based on the character of the document and the contents of the document was considered unsatisfactory. The distinction based on the character and contents of a document is not without its difficulties in its practical application; for, in conceivable cases the 'character' of the document may itself depend on its contents. The difficulty is to be resolved on a case by case basis on the facts of each case and not by appealing to any princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was made out. Instead of considering that, the CLB appears to have simply based its conclusion on the socalled concession of Counsel about signatures of the Petitioner. The reasoning of the CLB goes like this : The signatures are not disputed; if the Petitioner signed the documents, she cannot claim lack of knowledge of their contents; as she, thus, knew of the contents of the documents and their execution by her, and yet did not disclose the documents, she thereby suppressed material facts and documents, disentitling her to the discretionary relief of rectification. In other words, not only is the knowledge of contents deduced from the simple fact of nontraversal of the signatures (which is itself debatable), but a further inference of deliberate suppression on the part of the Petitioner of the documents purportedly signed by her is imputed. A defence of non est factum is ordinarily raised by the Defendant to avoid being bound by the document. If the defence fails, it means the document and its effect cannot be avoided by the Defendant. But to suggest that failure of such defence also implies actual knowledge of the contents of the executed documents and a deliberate n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company to controvert the Petitioner's case that the transfers did not actually take place; (iii) No minutes of the Board of Directors or of any transfer were placed on record in respect of the impugned transfers; (iv) The purported annual returns filed with the Registrar of Companies did not relate to the transfers claimed to have been executed; Based on these facts and applying the law laid down by the Supreme Court in the case of Mannalal Khetan Vs. Kedar Nath Khetan 1977 Company Cases Vol.47 Pg.185 and followed by our Court in Shirish Finance and Investment (P) Ltd. Vs. M. Shreenivamlu Reddy 2002 (1) Bom CR 419, holding that execution of valid transfer deeds within the meaning of Section 108 is a mandatory requirement of a valid transfer of shares, the CLB held the impugned transfers to be invalid and not in compliance with the provisions of Section 108. There is no error of law to be found in this analysis and the finding arrived at by the CLB on the basis thereof. 25. For the reasons stated above, the Company Appeal of Sulochana deserves to be allowed and the cross appeal/objections of the Respondents deserves to be disallowed. 26. In the premises, the following or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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