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TMI Blog2014 (7) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... sought by the petitioners relate to question of title of immovable property and complicated question of facts and law are involved and, therefore, the Company Law Board ('CLB') has no jurisdiction to entertain this petition, and, thus, the parties are required to be relegated to civil court? - Held that: - As is evident from the perusal of the pleadings, the present dispute relate to transmission of shares by a claimant claiming on the basis of legal heir-ship as well as a legatee of the Will executed by his late Father. It has nothing to do with the property and, therefore, I am inclined to accept the contention of the petitioners that under sections 111 and 111A of the Act, is entitled to entertain the petition one has jurisdiction to try the same - no serious question of facts and law is involved and the parties need not be relegated to the civil court for the purpose of adjudication of their rights as to the title of the shares in question. I, therefore, do not find any force in this objection of the respondents and the same is rejected. Whether, the petitioners have suppressed material and vital fact and have not approached this forum with clean hands, if so its effect? - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -company is, inter alia, business of carrying on the trade of building, buying, selling, hiring, letting and development of land. 1.2 In 1951, the respondent No. 1-company had allotted 50 shares having face value of ₹ 1,000 each and bearing share certificate Nos. 351 to 400 in the joint names of Mr. Ramchand Dalwani and Mr. Tikamdas Sewaram. In or around 1952, Mr. Tikamdas Sewaram expired and consequently Mr. Ramchand Dalwani became the sole holder and beneficiary of the said 50 shares in accordance with the articles of association ('AoA') of the company, as Mr. Ramchand Dalwani was the joint shareholder of the said shares. Thereafter, Mr. Ramchand Dalwani expired on 24th September, 1957. Before his death, Mr. Ramchand Dalwani, father of the petitioners bequeathed his entire estate to the petitioners through a Will dated 15th July, 1956 and as such the petitioners became absolute owners of the shares of the respondent No. 1-company standing in the name of later Mr. Ramchand Dalwari. 1.3 In addition to the above, in 1952, the respondent No. 1-company had allotted 20 shares vide share certificates bearing Nos. 612 to 631 to Mrs. Jayadevi Bai Ramchand Dalwani, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to PKL/1976/1031 on 1st March, 1976. Subsequently, respondent No. 4 was brought on record as the joint holder of the said 49 shares along with Mr. Mohanlal Dalwani. 1.7 That 49 debentures were in fact were never issued to Mr. Mohanlal Dalwani nor the said 49 debentures were ever converted into shares of the respondent No. 1-company, Further, if the debentures were to be issued by the respondent No. 1-company, the same ought to have been issued to Mrs. Jayadevi Bai Ramchand since she was, at the time of issue of the debentures, an existing member of the respondent No. 1-company. 1.8 That it was on the basis of the above 50 shares issued in the joint names of Mr. Tikamdas Sewaram and Mr. Ramchand Dalwani and the 20 shares issued in the name of Mrs. Jayadevi Bai Ramchand that 2 flats, namely, flat 6B and flat 6C came to be allotted and not on the basis of the debentures that were allegedly issued in 1956 and 1959, of which no records and no documents have been produced by the respondent Mo. 1-company, as alleged by the respondents. 1.9 In view of the above, the petitioners claim that only they are the only owners of 64 shares which are the subject matter of this petition, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further averred that according to clause 3 of Schedule '1' Shri Mohanlal T, Dalwani had 4/12th share in the balance 11/12th share of the shares in the respondent-company. Further, Smt. Jasoda T. Dalwani, the mother of Shri Ramchandra Tikamdas and Shri Mohanlal T. Dalwani, held 4/12th share in the balance 11/12th shares of the shares in the respondent-company. It is submitted that it was on the basis of the letters of administration and the schedule of property annexed thereto that the 50 shares, which were held in the name of Ramchand Tikamdas, were transmitted in the manner specified therein. The name of Shri Mohanlal T. Dalwani standing in these shares was to be treated as a consenting party for the transfer of the shares. Further, the 11/12 Shares out of the 50 Shares, which comes to 45.84 shares was divided between Smt. Jasoda T. Dalwani, Mohanlal T. Dalwani, Jaydevi Ramchand, Biharilal Ramchand Dalwani and Santosh Ramchand Dalwani in the following manner: 2.2 The respondent No. 1 has further stated that the shares bearing No. 386 to 400 were recorded in the name of Shri Mohanlal T. Dalwani. Apart this, on 30th April, 1956 Shri Mohanlal T. Dalwani was issued 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties in support of their cases, the following points arise for determination: (i) Whether petition is barred by limitation? (ii) Whether reliefs sought by the petitioners relate to question of title of immovable property and complicated question of facts and law are involved and, therefore, the Company Law Board ('CLB') has no jurisdiction to entertain this petition, and, thus, the parties are required to be relegated to civil court? (iii) Whether, the petitioners have suppressed material and vital fact and have not approached this forum with clean hands, if so its effect? (iv) Whether the name of the late Mr. Mohanlal Dalwani in respect of 15 shares and 49 shares in question was illegally entered by the respondent No. 1-company in violation of AoA of the company, if so its effect? (v) Are the petitioners entitled to the shares in question related to Flat No. 6B in dispute. (vi) To what relief, if any, the petitioners are entitled to. 5. Now, I proceed to deal with the aforesaid points hereasunder Point No. (i) 6. The learned counsel appearing for the respondents submitted that according to the own case of the petitioners their application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further stated that in the said letter they are negotiating to sell the fiat and shares to Mr. Binoy Ghanshyam Dembla and Mrs. Rovina Ghanshyam Dembla. The learned counsel contended that at that point of time also the petitioners never claimed any ownership in respect of Flat No. 6B. 9. Thereafter, taking me through the resolution dated 20th May, 1994, communicated to the petitioners vide letter dated 1st July, 1994, filed as Annexure 14, which clearly recorded that only share certificate Nos. 351 to 385 are being transferred in the name of the petitioners, the learned counsel submitted that at that point of time, the petitioners in spite of having knowledge did not raise any objection with regard to the alleged failure on the part of the company to transfer share certificate Nos. 385 to 400. 10. The learned counsel further drew my attention to the letter dated 10th February, 1998, whereby the petitioners claimed that they were not required to clear the outstanding dues in respect of the flat held by late Mr. Mohanlal Dalwani and without prejudice to their rights and contentions, they have made payment of dues of Mohanlal Dalwani under protest . The learned counsel submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o entertain the claim of the petitioners asking them to prove their bona fides. It was, therefore, argued that, the respondents preliminary objection as to the maintainability of the petition on the ground of limitation is untenable and is liable to be rejected. 12. I have considered the rival submissions and perused the record. In my opinion, the petition is barred by law of limitation. In fact, from bare reading of the contents of the correspondences dated 26th November, 1992 (Annexure 11), 28th October, 1992 (Annexure 12), and 10th February, 1998 it is seen that the petitioners were having knowledge of the entire affairs with respect to the shares in question from beginning. This fact is further corroborated from the resolutions passed by the company on 20th May, 1994, which was communicated to the petitioners vide a letter dated 1st July, 1994 (Annexure 14), which dearly states that only share certificates from 351 to 385 were being transferred in the name of the petitioners, however, the petitioners did not raise any objection with respect to the failure to transfer the share certificate Nos. 386 to 400, and this fact itself dearly goes to show that the petitioners despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 111 and 111A of the Act, is the only Forum for consideration of the application of the petitioners for transmission of shares which the company has refused to do so without any sufficient reason and, therefore, this petition is well within the jurisdiction of this Bench. 16. Referring the decision in the case of N.S. Nemura Consultancy India (P.) Ltd. v. A Devarajan [2010] 155 Comp Cas 175 Mad.)(, the next point argued on behalf of the petitioners is that only if there are deep rooted allegations of fraud, forgery or serious questions as to the title of the shares are involved only in that case, the disputes needs to be referred to a civil court instead of CLB. The learned counsel submitted that in the present case since there is no complex question of facts and law arises as regards to the title of the flat-in-dispute and, therefore, the contention of the respondents for relegating the present case to a civil court on the ground that the same relates to an immovable property is unfounded. It was further contended that the plea of the respondents that the share were HUF property and, thus, the dispute regarding the same need to be referred to a civil court as contended by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CLB is empowered with the jurisdiction to decide questions relating to title of the shares while deciding applications for rectification of register and, therefore, even assuming without admitting that there is any dispute as regards the title of the shares in respondent No. 1-company, the present dispute squarely falls within the jurisdiction of the CLB. 18. I have considered the submissions and perused the record. I find sufficient force in the submission of the petitioners that this is for the CLB to decide after examination of the pleadings and materials produced before. It as to whether the complicated question of facts are involved and the case needs to be referred to a civil court for regular trial instead of a summary trial in the CLB. This view is supported by a ratio laid down in the case of Ammonia Supplies Corporation (P.) Ltd. v. Modern Plastic Containers (P.) Ltd. [1994] ILR 1 Del. 371 whereby the hon'ble Supreme Court has expressed as follows: Court should have examined itself to see whether even prima facie what is said is a complicated question or not. Even dispute of fraud, if by a bare perusal of the document or is apparent on the face of it on com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was argued that it is an accepted legal position that where the shares are held in the joint names and one of the joint shareholder dies, it is the surviving shareholder to whom the entire rights and privileges with respect to such shares solely belong to and not to the legal heirs or the legal representatives of the deceased share holders. It was, therefore, contended that upon the death of Mr. Tikamdas Sewaram, the shares were to belong solely to Mr. Ramchand Dalwani. The learned counsel for the petitioners submitted that even though Mr. Ramchand Dalwani himself expired in 1957, the company in 1962 recognised him as the sole owner to the shares jointly held by Mr. Tikamdas Sewaram. The learned counsel further submitted that the respondents plea that the shares were HUF property has not been supported by any document on record. 25. It was further argued that Mr. Ramchand Dalwani prior to his death had executed a Will dated 15th July, 1956, according to which the petitioners became the sole beneficiaries under the Will. According to the learned counsel under the Will, only in the event, Mr. Behan Dalwani and Mr. Santosh Dalwani were to predecease Mr. Ramchand Dalwani and that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Mr. Ramchand Dalwani had himself expired. (iv) Because, the petitioners have not predeceased Mr. Ramchand Dalwani, thereby negating the requirement of the Will that the properties of Mr. Ramchand Dalwani are to be bequeathed to Mr. Mohanlal Dalwani in the event of the petitioners predeceasing Mr. Ramchand Dalwani. (v) Because, as per Board Resolution dated 20th May, 1994, the company has recorded that the shares standing in the joint names of Mr. Tikamdas Sewaram and Mr. Ramchand Dalwani which were transmitted in the names of Mr. Mohanlal Dalwani and respondent No. 4 are in fact to be transmitted in the names of the petitioners being the beneficiaries of the Will of Mr. Ramchand Dalwani. (vi) Because, the shares mentioned in the said Board resolution form part of the same cluster of shares which were jointly owned by Mr. Tikamdas Sewaram and Mr. Ramchand Dalwani. Hence, it cannot be that for one part of the cluster, i.e., share certificate Nos. 351 to 385, the respondent No. 1-company recorded the petitioners as the beneficiaries of the Will but for the other part of the cluster, i.e., share certificate Nos. 386 to 400, the respondent No. 1-company holds that the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... singh, Bombay, in which the deceased was a partner. 4,931.39 The deceased's one twelfth share of the movable and immovable Properties belong to the joint Hindu undivided family, of which the deceased was a member and the manager and the karta at the time of his death. 1,06,578.00 (Note: The remaining eleven-twelfth share in the movable and immovable properties of the said Joint Hindu Undivided Family belongs to the following proportions, viz., 1. The deceased's mother, Jasodabai, Widow of Tikamdas Sewaram, four-twelfth share, 2. The deceased's brother Mohanlal Tikamdas four twelfth share, 3. The deceased's widow Saraswatibai alias Jaydevbhai Ramchand one-twelfth share, 4. The deceased's minor son Beharilal Ramchand, one twelfth share and, the deceased's minor son Santoshkumar Ramchand, one twelfth share). 5,96,052.47 30. Having examined the above referred Schedule of the Will in the light of the submissions made by the learned counsel for the respondent-company, I have no hesitation to hold that the company had rightly distributed the shares on the basis of the Will. I do not find any irregularity or illegality in the recording ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal of the company but it is not the case of the respondents and, therefore, their case that the debentures were issued which were converted into shares itself proves to be false. Based on the above the learned counsel for the petitioners it was argued that the petitioners are entitled for the reliefs prayed for. 33. Per contra, it was argued on behalf of the respondents that the share certificate Nos. 983 to 1031, were issued pursuant to the conversion of debentures into shares in the year 1976. According to the learned counsel it is dear from perusal of Annexure 2 that the debentures were standing in the name of Mohanlal Dalwani and these shares were issued to him in the years 1956 and 1959, pursuant to conversion of debentures into shares in 1976 The learned counsel submits that at no point of time the petitioners claimed any right in respect of share certificate Nos. 983 to 1031, since then. According to the learned counsel, the claim in respect of these shares appeared for the first time in the present petition. The learned counsel submitted that the petitioners have claimed that they became aware of issuance of these share certificates only in and around February 2009, how ..... X X X X Extracts X X X X X X X X Extracts X X X X
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