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TMI Blog2017 (4) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... shares subsequently within a period of 30 days from the receipt of the order. The 1st respondent company is further directed to return the letter of allotment as well as issue the necessary share certificates in the name of the petitioner for the 5001 equity shares held by the petitioner and in case of its non traceability issue duplicate share certificates upon the petitioner applying for the same within the prescribed statutory period as mandated under law without insistence of any further document. In relation to the reliefs for oppression and mismanagement as we have already held the acts of the respondents in depriving the petitioner of his shareholding amounts to oppression, we intend to mould the reliefs keeping in mind the facts and circumstances of the case as well as the interest of the company. The petitioner as is evident from Annexure A-5 of the petition even in the year 2003 had expressed his intent categorically to dissociate himself from the affairs of the 1st respondent company as well from other entities associated with SAHRDC Trust including IA-SAHRDC. Further serious allegations have been levelled against both its Indian and International arms and that the fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot initially involved in a public charitable trust under the name and style of South Asian Human Rights Documentation Centre (Trust) with a corpus of ₹ 1,000/- contributed by the Author of the said Trust in the year 1993. However, some years thereafter, according to the pleadings and documents made available by the parties, the 1st respondent company seems to have been incorporated on 28th day of November 1998 as a private limited company with an authorised share capital of ₹ 50,00,000/- divided into 5,00,000 equity shares of ₹ 10/- each and the capital subscribed therein seems to have been 2 shares of ₹ 10/- each, one by the petitioner and the other by the 4th respondent. Both of them, it is seen have been named as the first directors of the 1st respondent company not liable for retirement by rotation. The main objects seem to be that of collection and compilation of information and data and its dissemination. It is further averred in the petition that from the incorporation of the 1st respondent company till January 2002, the paid up share capital of the 1st respondent company remained as subscribed to in the Memorandum, but however, was increased in Janua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o about the repayments of amounts given as loan to the 1st respondent company from the 4th respondent, no written correspondences have been furnished to establish the same. In the meanwhile, probably taking umbrage in relation to the resignation of the petitioner and his dissociation in effect from the 4th respondent, the 4th respondent seems to have had the Board re-constituted, of course with the consent of the petitioner as evidenced from records produced, as well as to record transfer of 5001 equity shares held by the petitioner in the 1st respondent company, which transfer of shares is vehemently disputed by the petitioner as done without his consent and knowledge and being one of the subject matter before this Tribunal. While so, commencing from the year 2005 onwards, a spate of criminal complaints and litigations seems to have been unleashed against each other by the 4th respondent and the petitioner. The attack of the 4th respondent against the petitioner seems to have been two fold, namely one from the part and on behalf of the 1st respondent company, he being in control of the affairs of the 1st respondent and the other front being for and on behalf of the Trust in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... points raised in contest by the respondents about the maintainability of the petition in C.P. No. 67 of 2007. The petitioner herein aggrieved by the said order of the CLB dated 26.11.2007, seems to have preferred an appeal before the then appellate court, being the Hon'ble High Court of Delhi in Company Appeal No. CO.A (SB) 4/2008 and based on consent of the parties as well as the ratio laid down in Charanjit Khanna and ors. Vs. Khanna Paper Mills Ltd and Ors decided on 20th April 2011 reported in 164 Company Cases 315 Delhi passed the following order dated 08.11.2011 while disposing of the above noted appeal which is reproduced hereunder:- With consent of both the learned counsel, the impugned order dated 26th November, 2007 passed by the Company Law Board is set aside in view of the judgment passed by this Court in Co.A (SB)9/2011 titled as Charanjit Khanna v. M/s. Khanna Paper Mills Ltd., decided on 20th April, 2011 and the appellant is given liberty to file a consolidated Company Petition under Sections 397 and 398 read with Section 111 of the Companies Act, 1956. Mr. Nitesh Kumar Singh, learned counsel for appellant states that the appellant would file a fresh comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal will be required to go into the credence as to whether the petitioner is able to demonstrate that he has been wrongfully deprieved of his shareholding by illegal conduct of the respondents including transfers, either in full or in part from having the requisite percentage or he has been marginalized from having the requisite percentage by the illegal actions of the respondents, say by way of allotments but for such fraudulent and illegal actions he would have had the requisite qualifications to maintain a petition for relief against oppression and mismanagement. However, the de rigueur of 1956 Act, it must be noted in relation to the maintainability of a petition based on the required percentages or numbers or proportion of shareholders for oppression and mismanagement has been left now to judicial discretion for deciding the maintainability of a petition even without the requisite numbers, provided an application for waiver is filed under Section 241 read with Section 244 of the Companies Act, 2013 in a given case and decided by the Tribunal. From the above it is clear that both by way of principles laid down by Judicial pronouncements as held in Charanjit Khanna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition is an abuse of process of law based on false and baseless allegations and deserved to be dismissed; (g) That prima facie no case has been made out for maintaining a petition for oppression and mismanagement either in law or on facts; (h) That in relation to the earlier petition filed in C.P.67 of 2007 in relation to oppression and mismanagement the petitioner by way of an application for amendment of the prayers had given up all the prayers sought therein save the following:- (i) Declare the transfer of the Petitioner's shares to Respondent No. 2 was illegal, null and void and consequential every transfer thereafter of the Petitioner's share to any one is also Illegal, null and void; (ii) direct restoration of the Petitioner's shares and further , order for the rectification of the register of members of the company; (iii) direct the respondents to return the letter of allotment of the Petitioner forthwith; (iv) direct the removal of Respondent Nos. 2 3 from the Board of Directors of the company. and hence in the said circumstances the petitioner is precluded from raising any plea in relation to any other reliefs as sought to be raise her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t remains that the petitioner had resigned in the year 2003 which is an accepted fact on the part of the petitioner and in the circumstances he is not privy to the happenings of the Board of the 1st respondent company is also given. Now coming to the transfer of 5001 equity shares held by the petitioner, the contention of the petitioner in the petition is that he never executed any instrument of transfer of his shareholdings to anybody, leave alone the 2nd respondent, and that he came to know that he was not a shareholder of the 1st respondent company by virtue of inspection of the Annual Return for the year 2004-05 carried out in November/December 2006 and that in relation to the illegal and fraudulent transfer of his shares, he came to know about the same only upon perusal of the Annual Returns of the year 2002-03 in February 2007 and that the said transfer of shares had been made to the 2nd respondent and thereafter the 2nd respondent, out of the 5001 equity shares seems to have transferred 2500 equity shares to the 3rd respondent and that even the Annual Returns filed with the Registrar of Companies, a copy of which has been annexed as Annexure P14 by the petitioner, does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take shelter under the provisions of Section 163 of the Companies Act, 1956 and the Companies (Preservation and Disposal of Records) Rules, 1966 to contend that the transfer of shares had been done properly by the Respondent No. 1 and recorded in the ordinary course of business and that the respondent company being a private company, did not have onus to preserve documents other than those required by law to be so preserved by it. The respondents further seeks to rely under Section 164 of the Companies Act, 1956 that the Register of Members and the annual returns are prima facie evidence of any matters directed or authorized to be inserted therein by this Act and in the circumstances since the fact of share transfer and shareholdings are recorded therein, it will be sufficient to prove the transfer of shares in the absence of share transfer forms and share certificates or letter of allotment. However, the above contention of the respondents may not be correct in view of the wordings used in Section 164 of the Companies Act, 1956 (now Section 95 under 2013 Act) to the effect that registers, returns and documents shall be only prima facie evidence and hence subject to rebuttal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the share transfer form as mandated under the provisions of Section 108 of the Companies Act, 1956 as well as under Article 8 of the Articles of Association of the company have been produced by the respondents to demonstrate conclusiveness of the alleged share transfer, which forces us to draw an adverse inference against the respondents about the transfer of shares of the petitioner as claimed by them; (c) Even though the transferee (namely the 2nd respondent herein) happens to have signed along with other respondents and verified the reply statement including the averments of voluntary transfer by the petitioner to the 2nd respondent for valuable consideration of ₹ 50,000/- as is evident from the portions extracted in the paragraphs above, the 2nd respondent by way of an affidavit dated 28.07.2015 filed under the directions of the CLB subsequently has resiled from the statements made in reply to the petition, thereby resulting in approbation and reprobation on the part of the 2nd respondent, rendering the entire transaction of transfer of shares itself into question and as a sham done for mala fide and ulterior motives; (d) Further there is no proof produced for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement makes the transaction void under section 25 of the Indian Contract Act, 1872 as held in John Tinson Co. (P.) Ltd. v. Mrs. Surjeet Malhan [1997] 9 SCC 651 and in the absence of any proof of consideration having passed for the transfer of shares being produced between the transferor/petitioner and the transferee in the instant case, we have to draw a conclusion that the said transfer is void. Thus looking at the facts on hand as well as the above decisions cited, we are unable to sustain the transfer of 5001 equity shares of the petitioner to the 2nd respondent as alleged to have taken place by the respondents in the year 2003 looking from any angle and as a consequence the subsequent transfers if any effected by the second respondent of the shares of the petitioner to perpetuate the illegality also fails. The next question we are required to determine is with respect to the point of limitation, laches and delay. The applicability of the law of limitation to a petition under Section 111 of the Companies Act, 1956 is no more res integra in view of the decision of the Hon'ble Supreme Court in Nupur Mitra v. Basubani (P.) Ltd. However, can the respondent, in the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petition has been filed within the period of limitation and hence maintainable. Further it is also pertinent to note that the petition being a composite petition and the wrongful deprival of shares of the petitioner being a continuous wrong, under similar circumstances the CLB in Mohan Mahavirprashad Shah v. Indian Silk Mfg.Co. (P) Ltd (2016) 131 CLA 42 (CLB) has held that the question of limitation will not hold ground and must be decided against the respondents. In addition it is evident from the pleadings of both the parties that the shares have been subscribed to by the petitioner for valuable consideration and the same is not in dispute even though with respect to the manner of payment there seems to be disagreement. In the circumstances the act of the respondents calculated to dispossess the petitioner of the shares held in the 1st respondent company perse amounts to oppression and his exclusion from the affairs of the company based on the fraudulent transfer is a continuing act to this day which single act alone entitles him to relief in relation to Section 397 of the Companies Act, 1956 and in the scenario of the petitioner holding 50% of the share capital of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent company as well from other entities associated with SAHRDC Trust including IA-SAHRDC. Further serious allegations have been levelled against both its Indian and International arms and that the funds of the international trust are being laundered through the 1st respondent company and the same is siphoned off by the 4th respondent for his own personal benefit. Against such a back drop it may not be possible for the petitioner to work with the 4th respondent amicably in relation to the affairs of the company in view of their equal holding and the only way out seems to be to direct the respondents to purchase the shareholding of the petitioner at the face value of the shares. The initial petition C.P. No. 67 of 2007 was filed in the year 2007 and it will be in the interest of justice that the 50% shareholding of the petitioner i.e 5001 equity shares, is purchased by the respondents 2 to 4 either jointly or severally for valuable consideration as on 01.04.2007 at a fair value to be computed based on the financial statements of the 1st respondent company to be evaluated by an Independent Chartered Accountant - Mr. Alok Bajaj, B.Com (Hons), Regional Advisor, Board Member, Taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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