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TMI Blog2018 (12) TMI 1767X X X X Extracts X X X X X X X X Extracts X X X X ..... ve No.811219 to 811368 of face value of Rs. 10/- each in the books of respondent No.1 (earlier known as DLF Universal Ltd.) on 08.11.2005. Shri Devki Nandan Kaura is stated to have made his Will dated 20.08.1980 at New Delhi and Will is stated to be registered with the Sub Registrar, Assurances, District-1, Delhi vide serial No.2756 Additional Book No.III from pages 154-155 on 20.08.1980. It is stated that Shri Devki Nandan Kaura died on 27.08.1987. 3. It is further stated that respondent No.1 company offered rights issue of debentures vide letter of offer dated 21.12.2005 relating to 35,08,007- 2% unsecured redeemable debentures of Rs. 100/- which were optionally, fully or partly convertible at par or at premium on rights basis to the existing shareholders of respondent No.1 company. Further, it is submitted that some of the minority shareholders including the petitioner did not receive the letter of offer dated 21.12.2005 and upon grievance of the minority shareholders, and to redress the grievances, the respondent No.1 had entered into an agreement dated 21.05.2007 with respondent No.2 and Mr. M.M. Sabharwal, Brig. (Retd.) N P Singh, Independent Director of the company, where i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nistration on 31.01.2012 as per Will dated 20.08.1980 and pursuant thereto, the petitioner undertook to administer the letters of administration and the District Judge (North) vide order dated 25.04.2012 accepted the undertaking given by the petitioner. It is submitted that in response to the request made thereafter by letter dated 01.06.2012 to the respondent No.1 company, the petitioner received a letter dated 17.09.2012 from the respondent No.1 company raising an altogether a totally inconsistent plea regarding non-inheritability of the rights to receive shares in lieu of convertible debentures issued on rights basis. It is stated that the petitioner again wrote to the respondent No.1 company vide letter dated 15.10.2012 and that the respondent No.1 company sent reply vide letter dated 08.11.2012 raising a new plea that the relevant documents were not submitted to the respondent No.1 company on or before 26.09.2007. A legal notice dated 24.12.2012 is stated to be sent by the petitioner to the respondent No.1 company. 7. It is stated that the respondent No.1 company acted in a manner which has exerted an oppression on the petitioner who is a minority shareholder and that the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny by CLB diary No.9136 dated 22.08.2014 stating that directing transfer of shares or deciding the entitlement to shares is not within the scope of the provisions invoked by the petitioner. 12. Replies on behalf of respondent No.1 and respondent No.2 companies were filed by diary No.2200 dated 28.09.2017 and diary No.2582 dated 13.11.2017 respectively. It has been submitted that the petitioner is ingeniously attempting to seek allotment and/or transfer of shares which is wholly out of the scope of Section 58 of the Act and 397 of the Companies Act, 1956. It is also submitted that the petitioner has sought to condone delay of 328 days, wherein he has given no cogent grounds/explanation to the Tribunal in order to condone the said delay. 13. Written statement dated 01.08.2017 has been filed on behalf of respondent No.3 stating that letter of administration dated 05.06.2012 was granted in relation to a Will of the father of the petitioner and respondent No.3, wherein the father of the parties had bequeathed all his immovable and moveable properties in equal shares between the petitioner and respondent No.3 and the respondent No.3 has equal share in the equity shares of the father. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd., M/s Rajdhani Investments & Agencies Pvt. Ltd. was substituted as respondent No.2. 16. During the course of hearing, it has been argued by the learned Senior Counsel for respondents No.1 and 2 that the Tribunal does not have jurisdiction to entertain and try the petition under Section 58 (4) of the Act or even Section 59 of the Act since the present petition is not for transfer of shares held by the deceased in favour of legal heirs, rather the present petition is for seeking allotment of shares of the respondent No.1. It has been argued that the present is the case of "allotment of shares" by the company and not that of "transfer of shares" as is sought to be projected. It is also argued that right to a share would fructify only when an offer made by the company is accepted by the existing member in terms of the offer and that the benefit under the redressal scheme for the remaining shareholders was a time bound scheme which was available only up to 26.09.2007 and the said offer was not an entitlement but was offered only as a time bound benefit as it was a special arrangement made between respondent No.1 and respondent No.2 and was stated in the nature of declaration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 21. The application for condonation of delay states that the respondent No.1 company refused to honour the judgement/order dated 25.04.2012 of District Judge(North), Delhi granting letters of administration in respect of 150 shares of late Shri Devki Nandan Kaura vide their letter dated 08.11.2012 and that the limitation for filing the petition expired on 07.01.2013 in terms of Section 58 of the Act. The petition was filed before the Company Law Board on 03.12.2013. It is submitted that the delay occurred solely on account of wrong advice given by the counsel and that the petitioner was entitled to challenge the order of refusal of the respondent No.1 company to transfer shares within three years of refusal to do so in terms of Article 58 of the Limitation Act and that the petitioner is only class 10th pass and is an ordinary businessman having no knowledge whatsoever of the technicalities of law. It has been argued by the learned Senior Counsel for respondent No.1 and 2 companies that admittedly the limitation under Section 58 (4) of the Act is provided for in Section 58 (4) of the Act itself and as such the petitioner could not have been advised of limitation of three years, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2007 which was decided after a period of 5 years, in the year 2012. The delay thus cannot be said to be malicious or contumacious but rather bonafide. The application for condonation of delay is thus allowed. 25. In CA No.06 of 2014 respondents No.1 and 2 companies have objected to the maintainability of the petition on the ground that Section 58(4) of the Act or even Section 59 of the Act as well as Section 397 of the Companies Act, 1956 are not applicable. As regards the applicability of Section 397 of the Companies Act, 1956, no detailed submissions have been made by the petitioner to prove that his case is covered by the above provision. Therefore, the petition is held to be not maintainable under Section 397 of the companies Act, 1956. As regards applicability of Section 58 of the Act, the main objection is that the petition is not for transfer of shares held by the deceased in favour of legal heirs and rather, the present petition is for seeking allotment of shares of respondent No.1. These issues are intertwined with the merits of the case and therefore, the maintainability and merits of the case are being examined together. 26. The facts of the case are already discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove arrangement, he became entitled to 60,000 equity shares of respondent company No.1 at a price of Rs. 2/- per share. The petitioner has stated that vide letter dated 08.11.2012, respondent No.1 company did not transfer the 60,000 equity shares in his name. 28. The relevant provisions of Section 58 (4) are as follows:- "(4) If a public company without sufficient cause refuses to register the transfer of securities within a period of thirty days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, is delivered to the company, the transferee may, within a period of sixty days of such refusal or where no intimation has been received from the company, within ninety days of the delivery of the instrument of transfer or intimation of transmission, appeal to the Tribunal". 29. It is argued by the learned Senior Counsel for respondents No. 1 and 2 companies that Section 58(4) of the Act (supra)can be invoked only when a company refuses to register transfer of shares without sufficient cause and transfer pre supposes the existence/allotment of shares in favour of an allottee and then transfer of the said shares from the allottee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e/probate of the will/letter of administration. The petitioner filed response vide letter dated 19.11.2007 (Annexure P-7 of the petition) enclosing all the papers requested for including share transfer form for transfer of shares held in respondent No.1 company by erstwhile respondent No.2 company in favour of transferee i.e. petitioner. Letter dated 30.11.2007 (Annexure P-8 of the petition) of the respondent No.1 company also states that in fact, as stated in our earlier letter, it is a special arrangement to transfer shares from HUPL (erstwhile respondent No.2 company) to all the eligible shareholders, provided the claim alongwith all other related documents is lodged latest by 26.09.2007. 31. Therefore, the arrangement as well as the later correspondence of respondent No. 1 company clearly brings out that transfer of share is involved and thereby Section 58(4) of the Act would become applicable. In view of this position, the applicability of Section 59 of the Act is not being examined. 32. The learned Senior Counsel for respondent No.1 and 2 companies has argued that the petitioner was duly advised by respondent No.1 vide its letter dated 06.08.2007(Annexure P-5 of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the respondent No.1 company in letter dated 17.09.2012 (Annexure P-12 of the petition) that since no documents e.g. probate etc. were submitted by 26.09.2007 and therefore, the respondent No.1 company is not in a position to consider the matter for shares in lieu of convertible debentures issued on rights basis is without any basis. 35. The learned counsel for respondent No.2 and 3 companies has argued that no heritable right could be claimed in respect of offer made under the rights issue or the offer made under the subsequent special arrangement between respondent No.1 and 2 which was contractual in nature. The position is clear from the following extract of letter dated 06.08.2007 (Annexure P-5 of the petition) of the respondent No.1 company to the petitioner reading as follows:- "In view of the undertaking given by the company in the Red Herring Prospectus dated May 25, 2007 and Prospectus dated June 18, 2007 filed with Registrar of Companies, NCT Delhi & Haryana all the eligible shareholders or in case of deceased shareholder their legal heirs on the above record date have to submit proof for transmission of shares in their favour after procuring necessary succession ..... X X X X Extracts X X X X X X X X Extracts X X X X
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