9911796707
TMI Blog1998 (3) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... ith their names having been entered in the register of members in respect of 14,900 and 72,150 shares respectively, totally constituting 2.10 per cent. in the share capital of ₹ 413.79 lakhs as in November, 1996. When the company proposed a rights issue of fully convertible debentures (FCDs) in July, 1996, the second petitioner applied for 7,00,000 FCDs out of an underwriter's quota, on an application for renunciation provided to the second petitioner by the underwriter. In response to this application, the company allotted 5,66,647 FCDs and since Part A of the FCDs was convertible into shares on the date of allotment itself, the second petitioner was allotted 5,66,647 shares on November 8, 1996, and share scrips for the shares were also issued to the second petitioner. The first and the fourth petitioners had renounced their rights entitlement to the third petitioner for 43,600 FCDs and accordingly, the third petitioner was allotted 43,600 FCDs. On conversion of Part A of the FCDs, the third petitioner was allotted 43,600 shares on November 8, 1996. During the period between October 31, 1996, and November 8, 1996, the second petitioner acquired 1,97,305 shares, which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned certain interim relief, and as such, by. instituting the present proceedings, the petitioners are prosecuting parallel proceedings, which cannot be allowed. (ii) Of the four petitioners, only two are, as on date, registered as members of the company and among themselves they hold only a negligible percentage of shares, and as such they are not qualified in terms of Section 399 of the Companies Act, to file a petition under Section 397/398. (iii) In respect of certain shares impugned in the petition, the petitioners have already filed petitions, under Section 111, before the Eastern Bench of the Company Law Board and as such no allegation in respect of those shares can be examined in the present proceedings. (iv) There has been enormous delay on the part of the petitioners in filing this petition, since the annulment of the allotment took place more than a year back. (v) Since the petitioners have been already refunded all the amounts paid by them for the FCDs, the question of their being considered as members of the company does not arise. 5. Elaborating the above objections, he submitted that the satisfaction of the provisions of Section 399 is a primary conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subramaniam, senior advocate, appearing for the petitioners, while concurring with the arguments of Shri Kapur submitted that without going through the merits of the case, it is not possible at all to decide on the maintainability and as such he prayed for a direction to the respondents to file their replies, so that, along with the merits, the maintainability of the petition could also be considered. 7. We have considered the arguments of counsel on the maintainability. While we appreciate the arguments of counsel for the petitioners that the maintainability of the petition may not be decided without going through the merits of the case after filing of the replies by the respondents, we consider that two of the objections raised by Shri Sarkar merit consideration by us, even at this stage, as they touch upon the locus standi of the petitioners, without having to go through the merits of the case. They are pending prior proceedings in another forum and qualification under Section 399. In view of the submissions by counsel for the petitioners that they have decided to withdraw the earlier proceedings, we do not propose to deal with the same. Thus, the only issue for our consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public notice and the second and the third petitioners have also been refunded all the money that they had paid for the shares. In other words, the prima facie evidence through share certificates is no longer available to them since the shares have been cancelled. This being the case, the issue that arises is, whether we can consider this petition as maintainable when the very cancellation has been made a subject-matter of the petition and that on a decision being favourable to the petitioners they would qualify under Section 399. A decision in favour of the petitioners in regard to the shares would result in an order for rectification of the register of members. Without such rectification being ordered, the restoration of the petitioners as members in the register of members would not arise. The decision of the Gujarat High Court in Gulabrai's case [1977] 47 Comp Cas 151, 159 is directly on this point. When a composite petition was filed under Section 397/398, combined with Section 155, the Gujarat High Court held that, one has to be a member before he can complain of oppression as a member of the company. Now, if the petitioner's title to the membership is in dispute, an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
