9911796707
TMI Blog2013 (4) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 MW capacity in Sirohi or Jodhpur in the State of Rajasthan. The said agreement required a company to be incorporated in India under the Act, and the power generated by the said company to be purchased by the RSEB. Pursuant thereto, Marudhar Power Private Limited (which later changed its name to VS Lignite Power Private Limited-R-1) was incorporated on 10.10.2001. The registered office of R-1 was located at Jodhpur in the State of Rajasthan, till it was later shifted to Hyderabad in the State of Andhra Pradesh. Certain other agreements were entered into, which included an agreement for transmission and supply of power. This agreement executed on 13.03.2002 was to subsist for a period of 15 years which, the appellants claim, is still in force. They rely on a letter obtained under the Right to Information Act, (a copy of which has been enclosed along with C.A. No. 992 of 2012), in this regard. A Memorandum of Understanding (MOU) was also entered into between R-1 and the Rajasthan Mineral Development Corporation Limited (RMDC). 2. Appellant No. 2 (A-2) is the wife of appellant No. 1 (A-1), and appellant No. 3 (A-3) is his father and the power of attorney-holder of A-1, 2 and 4. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign exchange laws; while Form-2 was filed showing allotment of 2,50,000 equity shares in cash on 10.10.2001, there was no bank account for R-1 on 10.10.2001; the appellants transferred their shares on consideration being paid to them in the year 2006; the project contemplated in the MOU dated 03.04.2002 got frustrated; the permissions granted in the year 1999 were not renewed, as the project did not commence within the cut off date period; after the original project was abandoned, a totally new project was taken up by R-2 and R-3, and was established at a different place; it is this project which is operational; R-8 was not obliged to transfer 40 lakh shares, as the "development, construction and operation" did not start; approximately ₹ 700 crores was invested in the new project; the respondents, and other power consumers, had provided equity/preference capital of ₹ 174 crores; the balance was sourced by lenders; and the appellants played no role financially, managerially, technically or administratively in the implementation of the new project. 4. The CLB, in its order in C.P. No. 4 of 2010 dated 25.05.2012, held that the petitioners were not entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pe of an enquiry under Sections 397 of the Act. 8. This Court is also not required, therefore, to examine the submissions of Sri L. Ravichander, Learned Senior Counsel, that the project contemplated, in the MOU dated 03.04.2002, was abandoned and the land, purchased from funds brought in by R-2, R-3 and R-8 for the said project, remains vacant till date; under the MOU, the appellants were entitled to 40 lakh shares only during construction of the project which never commenced; commencement and completion of the project was a condition precedent for payment of consideration; and the appellants had taken contradictory stands as to the company in which they were entitled to 40 lakh shares. I. PRELIMINARY OBJECTIONS: 9. Preliminary objections are raised by the respondents to the maintainability of the appeal on the grounds that (a) as this Court had admitted the appeal only on two questions of law, none of the other questions of law can be examined; (b) the appeal is restricted only to the appellants claims against R-1 to R-8, as they had given up all claims that would affect the other respondents and, except for their claim for rectification of the register of members, all other co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le admitting the appeal by its order dated 06.08.2012, noted two questions of law which, according to it, arose for consideration in the appeal. Accordingly, notice was issued by this Court to the respondents. 13. It is only "on a question of law, arising out of the order of the Company Law Board", does an appeal lie to this Court under Section 10F of the Act. When a question is raised before the CLB and is dealt with by it, it is clearly one arising out of its order. When a question of law is raised before the CLB, but is not dealt with by it, it must be deemed to have been dealt with and is, therefore, one arising out of its order. When a question is not raised before the CLB, but the CLB deals with it, that will also be a question arising out of its order. It is only when a question of law is neither raised before the CLB, nor considered by it, will it not be a question arising out of its order notwithstanding that it may arise on the findings given by it. Stating the position compendiously, it is only a question that has been raised before or decided by the CLB that can be held to arise out of its order. (CIT v. Scindia Steam Navigation Co. Ltd. AIR 1961 SC 1633; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were decided by, the CLB. As long as the contentions urged before this Court fall within the framework of the questions of law which were in issue before the CLB, such questions can be examined in an appeal under Section 10F of the Act. Accepting the submission, that these two questions of law do not specifically and unambiguously fall within the framework of the ten questions of law raised in the memo of appeal, would require this Court to hold that each aspect of the said ten questions of law is itself a distinct question of law, which would be an over-refinement of the scope of an appeal under Section 10F of the Act. 16. A second appeal lies to the High Court, under Section 100 CPC, from any decree passed in appeal by the Court subordinate to it, if the case involves any substantial questions of law. Supposing, in a memo of appeal, three substantial questions of law have been formulated, but when the matter comes up for hearing, if the learned Judge is of the opinion that, additionally, some more substantial questions of law would arise, then he has the power, under Section 100 CPC, to examine them, but only after the parties are appraised of the additional substantial questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tailed twin hearing, on the same questions of law, is not contemplated by Section 10F of the Act. The only limitation placed on the exercise of the appellate power of this Court, under Section 10F of the Act, is that the questions of law should arise out of the order of the CLB. 19. Sri L. Ravichander, Learned Senior Counsel, does not complain of not being given adequate time to put forth his submissions on the questions of law urged on behalf of the appellants. The submission, on the other hand, is that the respondents cannot be called upon to answer the questions of law, urged on behalf of the appellants during the course of hearing of the appeal, unless the Court has formulated such questions of law at the stage of admission; or, after formulating the "questions of law", the Court has put the respondents on notice. It is not as if the respondents were caught unawares, and were denied an opportunity of being heard, on these questions. The elaborate final hearing of this appeal spread over more than two months, and adjournments were often granted at the request of the Learned Senior Counsel for the respondents also. Both Sri L. Ravichander, Learned Senior Counsel and Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 111 and 397, can be filed before the CLB. All that is required, in case a composite petition is filed, is that the documents relating to the reliefs sought for, both under Section 111 and 397 of the Act, should be annexed thereto. Serial No. 23 of Annexure III to the CLB regulations requires production of documentary evidence in proof of the eligibility and status of the applicants to file a petition invoking the jurisdiction of the CLB under Section 397 of the Act. The annual returns (in Annexure P-10 and P-12) are the documentary evidence in proof of the appellants plea that they are members of R-1, their names are reflected in the Register of Members, and they are eligible and have the status to file the petition. 22. Rule 3 (1) of the Company Law Board (Fees on Applications and Petitions) Rules, 1991 (hereinafter called the "fees Rules"), stipulates that every petition made to the CLB shall be accompanied by the appropriate fee specified in the Schedule to the Rules. At serial No. 9 of the Schedule is the fee prescribed for a petition under Section 111, and at serial No. 27 is the fee prescribed for a petition under Sections 397. If a composite petition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner's plea of oppression under Section 397 of the Act. This Court may not be understood to have held that this is the only course which the CLB should adopt. Suffice it to hold that adoption of the aforesaid procedure would not fall foul of the provisions of the Act, the Rules and the Regulations made thereunder. 25. This contention, that a composite petition is not maintainable, was neither urged before the CLB nor was it called upon to examine and decide the said issue. Whether this Court would have jurisdiction to examine such a contention, raised for the first time in an appeal under Section 10F of the Act, is debatable. The present appeal is preferred, not by the respondents (including respondent No. 20), but by the petitioners before the CLB. It does not stand to reason that the contention, of a composite company petition not being maintainable before the CLB, should be examined, in an appeal under Section 10F, at the behest of a person who has not even chosen to prefer an appeal against the said order. Viewed from any angle the submission that a composite petition, seeking reliefs both under Sections 111 and 397 of the Act, is not maintainable does not merit acceptanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls (P) Ltd. (2011) 101 CLA 346 (Mad)). A finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence or if it is unreasonable and perverse, but where there is evidence to consider, the decision of the CLB is final even though the High Court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. 29. In between the domains occupied respectively by questions of fact and of law, there is a large area in which both these questions run into each other forming enclaves within each other. The questions that arise for determination in that area are known as mixed questions of law and fact. These questions involve first the ascertainment of facts on the evidence adduced, and then a determination of the rights of the parties on an application of the appropriate principles of law to the facts ascertained. The ultimate finding on the issue must, therefore, be an inference to be drawn from the facts found on the application of the proper principles of law and, in such cases, an inference from facts is a question of law. In this respect mixed questions of law and fact differ from pure q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d law; it had, therefore, declined to grant them relief under Section 111 of the Act, and had relegated them to seek appropriate remedies before a Civil Court; and the CLB is not expected to conduct a roving enquiry into the disputed questions of fact presented before it. 33. 111(4)of the Act is in pari-materia with Section 155(1) of the Act as it stood before its repeal by the Companies (Amendment) Act, 1988 with effect from 31.05.1991. Under Section 111(4)(a) if the name of any person (i) is, without sufficient cause, entered in the register of members of a company; or (ii) after having been entered in the register is, without sufficient cause, omitted therefrom; or (b) default is made, or unnecessary delay takes place, in entering in the register the fact of any person having become, or ceasing to be, a member; the person aggrieved or any member of the company or the company may apply to the CLB for rectification of the register. The remedy provided by Section 111 of the Act is summary in nature. (Ammonia Supplies Corporation (P) Ltd. v. Modern Plastic Containers Pvt. Limited AIR 1994 Delhi 51 (FB); Soma Vati Devi Chand v. Krishna Sugar Mills Ltd. (AIR 1966 P&H 44; In Re: Dhela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusive jurisdiction to decide any question raised within the peripheral field of "rectification". The discretion of the CLB to send a party to seek his relief before the civil court first for the adjudication of facts, (in case the claim is based on some seriously disputed right or title, denial of the transaction or other basic facts which may be the foundation to claim a right to be a member), is not taken away, more so if the CLB feels that such a claim does not constitute a rectification, but an adjudication of basic facts falling outside the realm of rectification. Otherwise, under the garb of rectification, an applicant may lay a claim of many such contentious issues for adjudication not falling under it. The CLB has the discretion to ascertain whether the dispute raised is really for rectification or is of such a nature that, unless decided first, it would not come within the purview of rectification. It is not as if the CLB, as soon as complex or complicated questions are raised in a petition under Section 111, becomes functus officio. (Public Passenger Services Ltd. v. M. A. Khader AIR 1966 SC 489; Gulabrai Kalidas Naik v. Laxmidas Lallubhai Patel of Baroda ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CLB questioning the action of the company in not entering his name therein. If, in such a case, the company were to dispute the claim of the said person, to have his name entered in the Register of members, the burden of proof would rest on such a person to establish that he is entitled to have his name entered therein either on the ground that he was allotted shares by the Company or that shares had been transferred in his favour by an existing member of the Company or that he was issued share certificates by the Company. Clause (a)(ii) of 111(4) of the Act is attracted only in cases where the name of a person has already been entered in the Register of members but the company, without sufficient cause, has later deleted his name there from. The initial burden to prove that his name was entered in the Register of members is, undoubtedly, on the person who invokes the jurisdiction of the CLB. Existence of the name of a person, in the Register of members, presupposes that he is a member or a shareholder of the company to the extent of the shares indicated against his name in the said Register. Once the petitioner adduces sufficient evidence to establish, or the company admits, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Act, 1988 w.e.f. 31.3.1991. Section 155(1)(b) is in pari-materia with the present Section 111(4)(b) of the Act. As the appellant therein claimed that he was entitled to have his name entered in the Register of members, the burden was placed on him to show that he was so entitled; and to establish that all procedural requirements prior thereto, including issuance by the company of a share certificate in his favour, had been complied with. As is detailed hereinafter, in the present case the names of the appellants were shown, in the annual returns (annexures P.10 and 12), to have been entered in the Register of members of R-1. As the appellants deny having executed any share transfer deeds in favour of R-4 and R-8, it was for the respondents (either R-1 Company or the alleged transferees-R-4 and R-8) to establish that the appellants had, indeed, transferred their shares in favour of respondent Nos. 4 and 8, after complying with the mandatory provisions of Sections 108 and 108(1-A) of the Act and the Rules made thereunder. 41. It must also be borne in mind that a petition, under Section 111 of the Act, cannot be disposed of straight away merely stating that, as complex and compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Suppliers Corpn. AIR 1998 SC 3153, observed:- .... the 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 what is apparent on the face of it on comparison of any disputed signature with that of the admitted signature the Court is able to conclude no fraud, then it should proceed to decide the matter and not reject it only because fraud is stated.... ... We have gone through the judgment of the High Court. It has rightly held the law pertaining to the jurisdiction of 'court' under Sec. 155 and even referred to some of the documents of the appellant but concluded since they are disputed and said to be forged hence it directed for seeking leave if advised for suit. We feel it would have been appropriate if the Court would have seen for itself whether these documents are disputed and if any document is alleged to be forged, whether it said to be so only to exclude the jurisdiction of the Court or it is genuinely so. Similarly we feel appropriate while deciding this the Court should take into consideration the submissions for the respondents, whether i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that such transfer was effected on the basis of valid documents as mandated by law. 46. The authorized share capital of R-1, before the EGM allegedly held on 29.09.2004, was ₹ 50,00,000/-. It is evident, from the reply statement filed by respondents 1 to 3 before the CLB, that this share capital of ₹ 50,00,000/- was held as under: Name of the Shareholders No. of Shares Face value per share Total Face value of shares Sucheta Kanunga(A-2) 5,000 Rs.10/- Rs.50,000 Manoj Kumar Kanunga(A-1) 5,000 Rs.10/- Rs.50,000 Ghewarchand Kanunga(A-3) 100 Rs.10/- Rs.1,000 Suresh Bhai Pandiya 100 Rs.10/- Rs.1,000 Anita Impex Limited(A-4) 2,50,000 Rs.10/- Rs.25,00,000 Arvind Kumar D Sanghi 2,39,800 Rs.10/- Rs.23,98,000 Total 5,00,000 Rs.10/- Rs.50,00,000 47. As the statements of the respondents can be used against them, but cannot be used in their favour accepting them to be correct statements, (Mahendra Manilal Nanavati v. Sushila Mahendra Nanavati: AIR 1965 SC 364, the admission of R-1 to R-3, in their reply statement filed before the CLB, that A-1 to A-4 held shares in R-1 should be accepted as proof of their shareholding. An admission, unless explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Memorandum notes that A-1 and A-2 were desirous of being formed into a company pursuant to the MOU; and they had respectively agreed to be the members holding shares in the capital of the company as shown opposite their respective names. Both A-1 and A-2 had subscribed to 5000 shares each and, in terms of Section 41(1), must be deemed to have become the members of R-1. As has been detailed, hereinafter, the annual returns (Annexure P-10 and P12) show that they were members, and their names were entered in the Register of members, of R-1 when its AGM was held both on 25.09.2004 and 29.09.2005. (iii) APPELLANTS 3 AND 4 BECAME MEMBERS OF THE 1ST RESPONDENT ON THEIR BEING ALLOTTED SHARES: 52. It is submitted on behalf of the respondents that the burden was on A-4 to prove that 2,50,000 shares had been legally allotted for a legal consideration; A-4 did not produce any document, despite being called upon to do so; the contention of A-4 that, since they were shown as a share holder in the balance sheet of R-1 on 31.3.2005, it need not produce its share certificates does not hold water, as secondary or collateral evidence on any aspect can only be received if a proper explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only when shares are allotted by a company does Section 75(1)(a) require it to file, with the Registrar of Companies, a return of allotment. The fact that such a return of allotment was filed by R-3, on behalf of R-1, is an acknowledgement on their part that they had allotted 2,50,000 shares of ₹ 10/- each to A-4. An admission in pleadings as to the execution of a document dispenses with the necessity of proof of its execution, (Valluri Jaganmohini Seetharama Lakshmi v. Kopparthi Ramachandra Rao AIR 1994 AP 284 (DB)), and admission of the documents means the admission of the facts contained in the documents. (Sitaram Motilal Kalal v. Santanuprasad Jaishanker Bhatt AIR 1966 SC 1697). The contents of Form No. 2 dated 1.11.2011 (Annexure R-5) should, therefore, have been accepted by the CLB, and A-4 must have been held to be a member of R-1 as it was allotted 2,50,000 shares by them. Whether or not A-4 had applied for allotment of shares in R-1 is wholly irrelevant as the return of allotment, in Annexure R5, shows that 2,50,000 shares of ₹ 10/- each were allotted to them by R-1. 56. Sri S. Prabhakar, Learned Counsel for R-20, would submit that this sum of ₹ 25,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame is found on it, to interest on the share held, but also to participate in certain proceedings relating to the company. (Vasudev Ramchandra Shelat v. Pranlal Jayanand Thaker AIR 1974 SC 1728). A shareholder means the holder of shares. It is a common term used, and only means the person who holds the shares by having his name on the register. (M/s. Howrah Trading Co. Ltd. v. Commissioner of Income-tax, Central Calcutta AIR 1959 SC 775). The rights conferred by shares are all rights against the company, and no person can exercise his rights as a shareholder vis-à-vis the company, or be recognized by the company as a member, unless and until he is placed on the register of members. (In Re Rose v. Inland Revenue Commissioners 1952 (1) ALL ER 1217). Title to shares is based upon entries in the share register, and certificates of holdings of shares are merely prima facie evidence of the existence, on a share register, of entries at the date on which the certificate was given. A share certificate is not, in any sense, evidence at a later date of the proper title to shares at that later date, and in order to prove title it is necessary to go to the share register. (International ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a certificate signed by the signatories of the return stating (a) that the return states the facts as they stood on the day of the AGM correctly and completely; and (aa) that, since the date of the last annual return, the transfer of all shares and the issue of all further certificates of shares have been appropriately recorded in the books maintained for the purpose. Under Section 162(1), if a company fails to comply with the provisions contained in Sections 159, 160 or 161, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues. 61. The annual return filed by R-1, (Annexure P-10 - for the AGM dated 25.09.2004), records A1, A2 and A4 to be the shareholders of R-1 holding 5000, 5000 and 2,50,000 shares respectively. The annual return filed by R-1, (Annexure P-12 - for the AGM dated 29.09.2005), reflects the shareholding of A1 to A4. Clause V of Part II of the said annual return shows A-1 and A-2 to be holding 5000 shares each; A-4 to be holding 2,50,000 shares; and A-3 to be holding 100 shares in R-1. Certification of the annual return (in Annexure P-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xited from the company, it is necessary to refer, in brief, to the relevant provisions of the Act, and the Rules and Regulations made thereunder, regarding the mode and manner of transfer of shares from one person to another. The requirements of Section 108 necessitate compliance for a valid transfer of shares. (v) COMPLIANCE WITH SECTION 108 OF THE ACT NECESSARY FOR A VALID TRANSFER OF SHARES. 65. A "member" is defined in Section 41 of the Act to be one who agrees to become a member of a company, and whose name is entered in its Register. An application, for the registration of the transfer of shares, is to be made either by the transferor or the transferee. Registration of transfer of shares is restricted until the instrument of transfer, duly stamped and executed by the transferor and transferee, has been delivered to the company. (Ammonia Supplies Corporation (P) Ltd. AIR 1998 SC 3153). A transfer is incomplete until registered. The transferee does not become the legal owner until his name is entered on the register in respect of these shares. (Vasudev Ramchandra Shelat AIR 1974 SC 1728; Palmer's Company Law (21st edition-1968, p. 334). Section 108 does not pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transfer shall be in Form 7-B. Sub-rule (3) of Rule 5A stipulates that, when an instrument of transfer is presented to the prescribed authority, he shall forthwith stamp or otherwise endorse thereon the date of such presentation, affix his signature thereto and return the instrument to the party presenting the same. The share transfer form, in Form 7-B, requires the names of the transferor and the transferee to be stated therein. Both the transferor and the transferee are required to affix their signature thereon in the presence of witnesses. The signature of the transferor is also required to be attested by a Magistrate or a Notary Public or a Special Executive Magistrate or a similar authority holding a Public Office and authorized to use the seal of his office. The said transfer form is also required to be affixed with the prescribed stamps before it is signed by the transferor and before any entry is made therein; and to be presented to the prescribed authority i.e. the Registrar of Companies who is required to stamp or otherwise endorse thereon the date on which it was so presented. Clauses (a) and (b) of Section 108(1), Rule 5A of the CG Rules and Forms, and Form 7-B of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was produced. The CLB failed to consider the inspection report (Annexure-R.1), and the remarks of the Inspectors therein that the respondents had not produced any evidence to show either the execution of, or the misplacing of, the share transfer deeds. 70. The respondents have also not chosen to furnish details of the date on which the share transfer forms were presented before the prescribed authority-Registrar of Companies, the person who attested the said share transfer forms, and the date on which it was delivered by R-4 and R-8 respectively to R-1. As compliance with Section 108 of the Act is mandatory and, in the absence of any evidence on record to show that the provisions of Sections 108 and 108(1)(a), Rule 5A of the CG Rules and Forms and Form 7-B thereof were complied with, the conclusion of the CLB, that the appellants had transferred their shares to R-4 and R-8, is based on no evidence and is perverse. (vi) PAYMENT OF CONSIDERATION FOR TRANSFER OF SHARES: NO PROOF: 71. The appellants submit that the CLB accepted the incredible contention that R-4 had paid ₹ 25.00 lakhs in cash for purchase of shares from A-4; and R-4 had been inserted only to avoid the require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors meeting attended by R-2 and R-3, is the so called minutes of the meeting (Annexures-R.25 and R.26); the purported minutes, of the said meetings dated 15.06.2006 and 31.08.2006, were not produced from the "minutes book", and appear to be photo-copies of some pages, without authentication and pagination; there are also differences between both these minutes; the requisite primary evidence in proof of transfer of shares by the appellants was not available; and there were no notices or agenda for the Board meetings. 75. The maintenance of books of accounts, minute books etc., is the collective responsibility of the Board of Directors as the general administration of the company vests in them. The Board of Directors are duty-bound, in the management of the affairs of the company, to ensure that the statutory and other records of the company are maintained in accordance with the provisions of law. It is the duty of each and every director to explain why he should not be held responsible for the loss, non-maintenance and non-availability of the minutes books. (Technical Consultancy House v. Kuldip Raj Narang (1989) 66 Comp Cas. 410 (Delhi)). 76. Section 193(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed that the meeting has been duly called, held and all proceedings there at to have duly taken place. If the minutes are not recorded or signed in the prescribed manner, and within the prescribed period, it is then presumed that it is not properly kept and will not be receivable in evidence. (B. Sivaraman v. Egmore Benefit Society Ltd. (1992) Vol. 75 Comp Cas. 198) (MAD)). 78. The first respondent failed to produce the minutes book, and it is only photostat copies, that too in loose sheets, of the alleged minutes of the board meeting, stated to have been held on 15.06.2006 and 31.08.2006, which were produced before the CLB as Annexures R.25 and R.26. Annexure R-25 records that the Board of Directors of the first respondent, in their meeting dated 15.06.2006, had resolved to approve the transfer of shares by A-4 to R-4. Annexure R-26 records that, in the Board meeting dated 31.08.2006, the shares of A-1 to A-3 were transferred in favour of R-8, and shares of R-4 were transferred to R-8. While Annexure R.25 contains the head "minutes book", Annexure R.26 does not. Annexure R-25, i.e., the minutes of the Board meeting dated 15.06.2006 is at variance with Annexure R-34 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants' had transferred their entire share holding in, and had chosen to exit from, R-1; the appellants were aware that the share transfer deeds were lost when the shares of R1 were dematerialized by NSDL; the material available before the CLB were (a) Board resolution dated 03.04.2002; (b) MOU dated 03.04.2002; (c) Form No. 2; (d) Balance Sheet of A-4; (e) affidavits of R-4 and R-6; (f) Legal review Report of M/s. Khaitan and Co; and (g) dematerialization of shares by NSDL; and the CLB has appreciated the evidentiary value, has analyzed each and every document, and has given cogent reasons for rendering a finding that preponderance of probabilities was in favour of the respondents. 80. As the CLB held that there was no record to show that A-4 had brought in ₹ 25 lakhs to the account of the company in a legally permitted manner; A-4 is not a party to the MOU nor is it referred to as a shareholder in Annexure P-11 Board resolution; the respondents were compelled to acknowledge and own the allotment to A-3 and A-4 in view of the substantial investment of ₹ 26 crores made by R-2 and R-3 in the company after the signing of the MOU; it is necessary to examine whether thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh or under him, shall, notwithstanding that the transfer, or any previous transfer, or the issue of the security, was by reason of the residence of any person concerned other than the first mentioned person prohibited by the provisions of this Act relating to the transfer or issue of securities, be valid unless the first mentioned person had notice of the facts by reason of which it was prohibited. (2) Without prejudice to the provisions of subsection (1) of this Section, the Treasury may issue a certificate declaring, in relation to a security, that any acts done before the issue of the certificate purporting to effect the issue or transfer of the security, being acts which were prohibited by this Act, are to be, and are always to have been, as valid as if they had been done with the permission of the Treasury, and the said acts shall have effect accordingly. 84. While examining the scope of Sections 8(1) and 18(1) and (2), it was held:- ... In my judgment counsel for the company is correct in submitting that this section, by necessary inference, presupposes that the purported issue of a security in manner prohibited by the 1947 Act is wholly invalid. Were this not so, I cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign exchange laws by Anita Impex Limited (A4). In this context reference can, usefully, be made to Dale and Carrington Invt. (P) Ltd. v. P.K. Prathapan AIR 2005 SC 1624 wherein the Supreme Court held:- ... This brings us to the issue regarding locus standi of Prathapan and Prathapan's family to maintain the petition under Sections 397 and 398 of the Companies Act and their failure to obtain permission of the Reserve Bank of India as per Section 29 of the Foreign Exchange Regulation Act. So far as the question of permission of the Reserve Bank of India under FERA is concerned the same can be obtained ex-post facto. This stands concluded by judgment of this Court in Life Insurance Corporation of India v. Escorts (1986) 1 SCC 264). The statute does not provide any time limit for obtaining the permission. We cannot lose sight of the subsequent development in this connection. FERA stands repealed and the statute brought in force by way of replacement of FERA, i.e. the Foreign Exchange Management Act (FEMA), does not contain any such requirement.... ... It is to be further noted that the entire scheme regarding purchase of shares in the name of mother of Prathapan was suggested b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lares the existing state of affairs and does not 'quash' so as to produce a new state of affairs. (Pune Municipal Corporation 2007 (5) SCC 211; and State of Punjab v. Gurdev Singh AIR 1992 SC 111). It is only if a statutory provision, whether expressly or by necessary implication, requires such proceedings to be so held, can a Court/Tribunal declare it to be a nullity. It is made clear that this Court has neither held that A4 has violated foreign exchange laws, in investing in 2,50,000 shares in R1, nor that such an investment by them is a nullity, for these are matters which need to be examined by the CLB, in the first instance, while adjudicating afresh the claim of the appellants, including A-4, for rectification of the Register of members of R-1 under Section 111 of the Act. (x) LEGAL REVIEW REPORT OF M/s. KHAITAN AND COMPANY: 88. At the request of R-8, M/s. Khaitan and Company conducted a legal review of R-1. The legal review report dated 26.10.2006 (Annexure-R17) starts with a caveat that M/s. Khaitan and Company assumed the genuineness of all signatures, the authenticity of all documents/information submitted to them as original, and the conformity of the copies or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorized Capital of R-1; the Board meeting dated 15.6.2006 (Annexure-R-25); and the Board meeting dated 31.8.2006 (Annexure R-26). 90. From the Executive Summary of the report, it is evident that, when M/s. Khaitan and Company undertook the exercise of legal review of R-1, the entire share holding of A-1 to A-3 had already been transferred to R-8; and the entire shareholding of A-4 had already been transferred to R-4, and again by R-4 to R-8. It is evident, from the disclaimer in their report, that M/s. Khaitan and Co. had merely accepted the extracts of the minutes, of both the Board of Directors meetings and the meeting of the shareholders, furnished to them. The Legal Review Report does not even refer to any share transfer deeds having been executed by A-1 to A-4 transferring their entire share-holding in R-1, let alone that they had verified/inspected the share transfer deeds relating to the alleged transfer of shares by A-4 to R-4; and the alleged transfer of shares from A-1, 2 and 3 to R-8. The finding of the CLB, that there was contemporaneous verification of the share transfer deeds by Khaitan and Co, is based on no evidence. (xi) DEMATERIALISATION OF THE SHARES OF THE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CLB in the order under appeal, nor has any such provision been brought to the notice of this Court. Likewise no proceedings of NSDL, of its having perused the share transfer deeds allegedly executed by A-4 in favour of R-4, or the share transfer deeds allegedly executed by A-1 to A-3 in favour of R-8 and R-2 as its nominee, has been referred to in the order of the CLB, much less was any documentary proof in this regard been placed before it. There is no evidence on record, (other than the self-serving assertions of the respondents in their reply statements), to show that the share transfer deeds, allegedly executed by A-1 to A-4, were produced before NSDL for its verification; or to establish that NSDL had examined the share-transfer deeds executed by the appellants in favour of R4 and R8. The finding of the CLB, that NSDL had verified the share transfer deeds allegedly executed by A-1 to A-4, is based on no evidence and is perverse. (xii) REPLY STATEMENTS OF RESPONDENTS 4 AND 6: 94. Reliance is also placed by the respondents on the reply statements of R-4 and R-6, filed before the CLB, in support of their contention that A-1 to A-4 had transferred their shares, and had execute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of shares of R-1 by NSDL, show that the share transfer deeds, allegedly executed by A-4 in favour of R-4, and A-1 to A-3 in favour R-8 were verified by them. Annexure 25 and Annexure 26, the alleged minutes of the meeting of Board of Directors of R-1 dated 15.06.2006 and 31.08.2006 respectively, are "loose sheets", and do not form part of a "minutes book" required to be maintained by R-1 under Section 193 of the Act. These "loose sheets" have, therefore, no evidentiary value. The findings recorded by the CLB that the appellants had executed share transfer deeds, and had transferred their shares in R1 in favour of R4 and R8, is based on no evidence and is perverse. Except for the self serving assertions in the reply statements filed by R-4 and R-6, (both of whom were the Directors of R-1), there is no other evidence on record to show that the appellants had executed share transfer deeds, and had transferred their shares in favour of R-4 and R-6. The CLB has not assigned reasons for accepting the version of R-4 and R-6 that the appellants had executed share transfer deeds and had transferred their shares, and to disbelieve the assertions of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. The perversity of the finding itself becomes a question of law. (Dale and Carrington Invt. (P) Ltd. AIR 2005 SC 1624). The High Court would be justified in quashing the impugned order if it is satisfied that the said order is not based on any evidence at all. But the conclusion that the impugned order is not supported by any evidence must be reached after considering the question as to whether probabilities and circumstantial evidence do not justify the said conclusion. (Board of High School and Intermediate Education v. Bagleshwar Prasad AIR 1966 SC 875). 'No evidence' does not mean total dearth of evidence. It extends to any case where the evidence, taken as a whole, is not reasonably capable of supporting the finding, or where no tribunal could reasonably reach that conclusion on that evidence. This 'no evidence' principle has something in common with the principle that perverse or unreasonable action is unauthorized and ultravires. It also has some affinity with the substantial evidence rule which requires that findings be supported by substantial evidence on the record as a whole. Lord Denning MR., in Ashbridge Investments Ltd. Vs. Minister of Housing and Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended on behalf of the respondents that the admission of the appellants that they had sold 76% of their shares leads to the only irresistible logical conclusion that they had the transfer deeds and share certificates of all their shares, and they had parted with 76% of the share certificates; and, failure of appellants to produce the remaining share certificates relating to 24% of their shareholdings, disentitles them from seeking rectification of the Register of Members. 104. In the order under appeal, the CLB noted that, while the appellants had admitted that they had transferred 76% of their shareholding in respondent No. 1 to respondent No. 8, the particulars of such transfer was not forthcoming; the appellants had contended that the respondents had illegally transferred the balance 24% shares held by them; the respondents had contended that the appellants had voluntarily transferred their entire share holding; on the probabilities of the case, it was evident that the appellants had preferred to exit from R-1 after transferring their shares to R-8; the dispute, if any, was regarding receipt of consideration; and, if at all there was a plea that no consideration was paid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up capital, and allotment of shares to others, only during December, 2006 when an advertisement was released relating to the initial public offer proposed by R-1, held that, evidently and admittedly, the appellants became aware of the happenings in R-1 as early as in the year 2006; the respondents had sent a reply in 2008 stating that the alleged rights under the MOU, as regards R-1, had been completely extinguished as the substratum of the MOU could not be implemented, and it was four years since the 150MW project was dropped; the respondents had also stated that the appellants had existed from R-1 by selling their shareholdings and relinquishing their directorship in R-1; thereafter also the petitioners did not care to initiate any proceedings before the CLB; there was no explanation for the long delay of more than two years in filing the petition; and the petitioners were guilty of unexplained delay and laches. 108. It is no doubt true that an application for rectification of the Register of Members can be defeated by unexplained delay, (Cuddalore Construction Co. Ltd., In re: Somasundar Pillai (T.V.) v. Official Liquidator (1967) 37 CC 440 (Mad); Nupur Mitra v. Basubani Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt to see why the position should be different merely because the claim is for relief under s. 359. Delay of this length would without more have led me to refuse relief. Given these circumstances I am of the view that rectification of the ISIS Factors' register (whether in exercise of the court's discretion under s. 359(2) or as part of the working out of a decree of specific performance) would be to the manifest prejudice of LSB which purchased that control in ignorance of Mr. Dulai's claims and on the footing that it was acquiring the whole of that company's issued share capital. On that further ground, therefore, I would have declined to grant the relief claimed.... (Emphasis supplied) 110. In Re ISIS Factors Plc, Dulai (2003) EWHC 411 (Ch) the delay was of nearly a decade, and there was no satisfactory explanation there for; and, after judiciously considering the long delay of a decade, the Court declined to grant relief holding that the claim was barred by latches. No period of limitation is prescribed for rectification of the Register of Members under 111(4)of the Act. Even if the provisions of the Limitation Act are presumed to be applicable, to proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est audiendus-he is not to be heard who alleges things contradictory to each other" squarely applies to the facts of this case; the appellants have been contradicting themselves many a time on the issue of the shares which they had transferred to the respondents; and, as the claim of the appellants is a bundle of contradictions, it was rightly rejected by the CLB. 113. As noted hereinabove where the finding is one of fact, the fact that it is itself in inference from other basic facts will not alter its character as one of fact. Factual inferences to be drawn from findings of fact are not questions of law, and cannot be examined in appellate proceedings under Section 10F of the Act. It is wholly inappropriate for this Court, therefore, to examine (a) the inferences to be drawn from the appellants plea that they had transferred 76% of their shares to R-8; (b) the contradictions between their pleadings on the one hand, and the letters addressed by them to the respondents from 08.12.2006 onwards, on the other; (c) the inconsistencies, if any, between the contents of the MOU dated 03.04.2002 and their pleadings; (d) the non-participation of the appellants in the affairs of R-1; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the general body for the initial increase in authorized share capital; and, consequently all subsequent increases in authorized share capital are illegal. 116. As several contentions are urged by Counsel on either side on this question, it is convenient to classify them under different sub-heads. (i) IS APPROVAL OF THE COMPANY LAW BOARD REQUIRED TO BE OBTAINED ONLY AFTER THE REGISTERED OFFICE OF A COMPANY IS SHIFTED FROM ONE STATE TO ANOTHER? 117. It is contended on behalf of the appellants that the EGM dated 29.9.2004 could not have been held in the registered office at Jodhpur in the State of Rajasthan as the order of the CLB, confirming shifting of the registered office of R-1, was passed five months prior thereto on 29.4.2004; it is only after the registered office of a company is shifted from one state to another, is confirmation required to be obtained from the CLB; and the very fact that the CLB had, by its order dated 29.4.2004, granted approval for shifting of the registered office goes to show that the registered office of R-1 must have been shifted from Jodhpur to Hyderabad prior to 29.4.2004, and not thereafter. 118. I find considerable force in the submissions ur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e registered office of the company from one State to another. An order of confirmation by the CLB, under Section 17(2), does not presuppose that the registered office of the company has already been shifted from one State to another. The only condition prescribed, for invoking the jurisdiction of the CLB under Section 17(2), is that a special resolution has been passed by the company to alter the provisions of its memorandum so as to change the place of its registered office from one State to another. It is only after the CLB confirms the alteration; a certified copy of the order of the CLB, confirming the alteration, is filed with the Registrar of Companies; and the Registrar certifies it under his hand; would alteration of the Memorandum of Association have effect. While the CLB confirmed the alteration of the Memorandum of R-1, relating to the change of its registered office from Jodhpur to Hyderabad, on 29.4.2004, registration and certification, of the said alteration by the Registrar, was only on 10.01.2005. It is only after 10.01.2005 was the 1st respondent entitled to shift its registered office. Shifting of the registered office of R-1, from one State to another, prior ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d despatch of documents from the company; and service of notice on A-1 to A-3 for summoning the meeting of the shareholders of R-1; the "minutes" of the meeting of the Board of Directors resolving to summon the EGM; the original "minutes book" containing the signed copies of the minutes, along with the attendance register of the members present at the meeting; the attendance register for the said EGM; the signed minutes recorded in the "minutes books", for the shareholders meetings, in accordance with Sections 193 and 194 of the Act; and proof of travel to Jodhpur by Sri Arvind Kumar Sanghvi to attend the EGM purportedly held on 29.09.2004. 123. It is further submitted, on behalf of the appellants, that, as they had not been invited either to participate in the meeting of the Board of Directors or for the EGM purportedly held on 29.09.2004, they could not have produced any evidence to establish to the contrary, except to deny on oath; the inspection report shows dearth of material even at the registered office of R-1; in the absence of a police complaint, having been lodged by them regarding loss of documents, the contention of the respondents that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y otherwise provide, apply with respect to general meetings of a private company which is not a subsidiary of a public company. Clause 30 of the Articles of R-1, which relates to the notice of general meetings and the explanatory statement, enables the directors, if they think fit, to convene a general meeting, other than the AGM of the company, by giving a notice thereof being not less than three days in accordance with the provisions of law. Though Section 171(1) provides for a general meeting of the company to be called by giving notice of not less than 21 days, Clause 30 of the Articles of R-1 would prevail, and a notice of three days would suffice for convening an EGM. However, as the Articles do not provide otherwise, the provisions of Sections 172 and 173 of the Act would necessitate compliance for convening an EGM of R-1. Section 172(1) stipulates that every notice, of the meeting of the company, shall specify the place and the day and the hour of the meeting, and shall contain a statement of the business to be transacted thereat. Section 172(2)(i) stipulates that a notice, of every meeting of the company, shall be given to every member of the company in any manner authoriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stipulates that Regulations 49 to 55 of Table (A) of the Act would apply. Regulation 49(1) of Table (A) stipulates that no business shall be transacted at any general meeting unless a quorum is present thereat. Regulation 49(2) stipulates that, in the case of a private company, two members present at the meeting shall be the quorum. Clause 54 of the Articles, which relates to the quorum for a meeting of the directors, stipulates that the quorum, for necessary transaction of the business of directors, shall be two or 1/3 of the total number of directors whichever is higher. Clause 62 of the Articles relates to notices, and stipulates that service of any document or notice, by the Company on its members, shall be effected in accordance with the provisions of Section 53 of the Act. Section 53(1) of the Act stipulates that the document may be served by a company, on any member thereof, either personally or by sending it by post to his registered address or, if he has no registered address in India, to the address, if any, within India supplied by him to the company for the giving of notices to him. The two modes of service of notice envisaged under Section 53 of the Act, are personal s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for increasing the authorized capital. 130. Clause 1.16 of the Legal Review Report, of M/s. Khaitan and Company (Annexure R-17), refers to a Board of Directors meeting allegedly held on 25.9.2004 wherein it was resolved to issue a notice for convening the EGM, and seek authorization to increase the authorized capital of the company. Notice to all the Directors, that a meeting of the Board of Directors is being convened, is essential for the validity of any resolution passed thereat and, if no notice is given to one of the Directors of the Company, the resolution passed at the said meeting is invalid. (Parmeshwari Prasad Gupta MANU/SC/0395/1973MANU/SC/0395/1973 : AIR 1973 SC 2389). Whether or not such a Board meeting was held is in dispute as the "minutes book" of the meetings of the Board of Directors was not produced, and A-1, (who was admittedly a director of R-1 till he ceased to be a director from 02.12.2004 -Annexure P-29 - Form No. 32), claims not to have been informed of either the Board of Directors meeting allegedly held on 25.9.2004 or the EGM allegedly held on 29.9.2004. Curiously while Sri Arvind Kumar Sanghvi, in his affidavit filed before the CLB, claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Court under the Civil Procedure Code, 1908, except what is stipulated under Section 10E(4C) of the Act. (B. Subba Reddy v. S.S. Organics Ltd. (2009) 151 Comp Cas 190 (AP)). Section 10-E (4-C) of the Act confers powers on the CLB, (which are vested in a Court under the CPC), to compel production of documents as evidence. Regulation 24 of the CLB Regulations empowers the CLB, before passing orders on the petition, to require the parties to produce such further documentary or other evidence as the CLB may consider necessary (a) for the purpose of satisfying itself as to the truth of the allegations of the petition; or (b) for ascertaining any information which, in its opinion, is necessary for the purpose of enabling it to pass orders on the petition. In the light of the conflicting and opposite stands, taken by the appellants and the respondents in their respective pleadings, the only manner in which the CLB could have ascertained the truth was to exercise its powers under Section 10-E(4-C) of the Act and Regulation 24 of the CLB Regulations; summon the records from R-1, (which is its custodian), including copies, if any, of the notices sent to the members informing them that an EG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding stipulated under Section 399(1)(a) of the Act. 136. For the purpose of deciding the eligibility of a member of a company, to maintain a petition under Sections 397 of the Act, the qualification, in respect of the requisite shareholding in the company, of such person, prior to the act of oppression complained of, has to be taken into consideration, and not the qualifying shares thereafter. If the date of presentation of the petition is taken as the relevant date, it could defeat the very purpose of the legislative enactment of Section 397 of the Act, as the overbearing majority shareholders can simply, by high-handed action and by oppressive methods, dismember the minority shareholders and leave them with no remedy, as the dismembered minority shareholders would then, technically, not qualify for maintaining a petition under Section 399 of the Act, being not members at all. As the minority shareholders can complain only after the acts have occurred, and when they have been removed from the membership of the company, Section 399 should be so understood and interpreted so as to further the object of the relief to be given in a situation governed by Section 397 of the Act, and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had, during the course of arguments, given up the appeal against the respondents, (other than those who had entered appearance through Counsel and those on whom notices in the appeal were served); no order, which would affect the respondents who were given up, can be passed by this Court without hearing them; it needed to be brought on record that Counsel for R-1 to R-8 had filed a memo stating that R-16, who had executed a vakalat in favour of his Counsel during the hearing before the CLB, did not continue the engagement; thus, along with the other respondents, even R-16 was unrepresented before this Court; the appellants' plea regarding the alleged illegal increase in authorized share capital cannot be divested from the present facts scenario wherein several shareholders have a considerable stake in R-1; the said issue cannot be agitated after a conscious exclusion of the shareholders of the company from the present appeal proceedings; while it may be debatable whether the shareholders of a company are required to be made parties to the Company Petition, the appellants had themselves arrayed the shareholders of R-1 as parties, and had subsequently given them up; the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 16 to 19. 142. While admitting the appeal on 6.8.2012, this Court permitted the counsel for the appellants to take out notices on the respondents and, accordingly, notices were taken out by registered post acknowledgement due. A memo was filed by the counsel for the appellants of having sent notices to the respondents by registered post acknowledgement due. While the notice sent by registered post to respondent No. 10 was returned unserved with the endorsement "left", notices sent by registered post to respondents 11 to 13 and respondents 16 to 19 were neither returned undelivered nor has any proof, of service of notice on them, been filed by the appellants. 143. In this appeal the appellants filed an application, in C.A. No. 835 of 2012, seeking interim directions to the respondents to maintain status quo on the shareholding, the Board of Directors, and the fixed assets of the company during the pendency of the appeal. When Sri S. Ravi, Learned Senior Counsel for the appellants, sought an interim order in C.A. No. 835 of 2012 this Court pointed out that all the respondents had not been served, and it would be inappropriate for this Court to pass any interim order in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court to presume that, in the common course of natural events, the communication would have been delivered at the address of the addressee. The presumption that is raised under Section 27 of the General Clauses Act is a far stronger presumption. While Section 114 of the Evidence Act refers to a general presumption, Section 27 refers to a specific presumption. (C.C. Alavi Haji (2007) 6 SCC 555). 146. It is wholly unnecessary for this Court to delve on this aspect any further as the CLB is merely being directed, by this order, to re-examine the appellants' claim that the initial increase in authorised share capital was illegal, in the light of the statutory provisions, returns and documents referred to hereinabove; and, if need be, on summoning and examining the records/documents statutorily required to be maintained by R-1 under the Act and the Rules and Regulations made there under. It is only if the CLB, after its adjudication afresh, were to hold that the initial increase of authorized share capital is illegal, can respondents 10 to 13 and 16 to 19 be said to be adversely affected provided, of course, that the notices sent were not received by them. The interests of all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LB is, admittedly, to reach a fair, reasonable and acceptable via media to run the company in a fair manner; the appellants had, impliedly, condoned all the actions of the respondents, including increase in authorized share capital, and the subsequent allotment of shares; the CLB rightly came to the conclusion that the appellants were disentitled from claiming equitable reliefs; as the jurisdiction conferred under Section 10F also involves exercise of the equitable jurisdiction, this Court ought to take into consideration the equities involved in the case, even while adjudicating the appeal under Section 10F; this is a clear case of chance litigation; and the CLB had rightly concluded that the appellant had not come to the Court with clean hands. 148. While the submission of Sri L. Ravichander, Learned Senior Counsel, that the appellants cannot have any grievance with regards the subsequent increase in share capital, after they existed from the company on 31.7.2006 and 31.8.2006 respectively, does not merit acceptance as the very transfer of shares of A-1 to A-4 in favour of R-8 and R-4 is in doubt, and necessitates further examination by the CLB, it is wholly unnecessary for this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholders or the company; the remedy is not intended to enable the aggrieved shareholders to set at naught what has already been done by the controlling shareholders (Mohanlal Ganpatram v. Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd. AIR 1965 Guj 96); and a petition which is launched not with the genuine object of obtaining the relief claimed, but with the object of exerting pressure in order to achieve a collateral purpose, is an abuse of the process of court. (Re Bellador Silk Ltd. (1965) 1 All ER 667). 150. The CLB shall also bear in mind, the submissions urged on behalf of the appellants, that the remedy under Section 397 and 402 is potent and effective, as the power conferred on it is extremely wide; and it can pass such order as it thinks necessary for the purpose of putting an end to the oppression by the controlling shareholders; the nature of the order it can pass would depend on the state of affairs prevailing in the Company, and the nature of the restrictions required to put an end to such state of affairs; the necessity of interference, under these sections, may arise in an infinite variety of circumstances; and the Legislature has, therefore, left these matt ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
