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TMI Blog2023 (4) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... D THAT:- The Tribunal has held that alleged transfer of shares in favour of the Appellant herein was claimed to be on 18.04.2015, whereas, the Petition was filed before the Tribunal on 09.11.2018 which is beyond three years and as per Article 113 of the Limitation Act, 1963 the limitation period is only three years. This Appellate Tribunal do not find any error in the impugned order. This Appellate Tribunal also do not find any material which can substantiate that all the procedures laid down in the companies Act, 2013 as well as the Article of Association were followed by the Appellants herein. The photocopies of the share capital as a form have already been denied to be true by the Respondents and the same has been held by the Tribunal as tannable averments from the Respondents herein. This Appellate Tribunal also observes that the Tribunal had discussed this aspect in detail in the impugned order and recorded that no concrete evidence or documentary proof could be furnished by the Appellants herein to proof their claims of genuine certificates. In fact, the Tribunal held that the alleged Share Certificate submitted by the Appellants herein to be fabricated and fraudulent as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/2021 - - - Dated:- 10-4-2023 - [Justice M. Venugopal] Member (Judicial) And [Naresh Salecha] Member (Technical) For the Appellants : Mr. PBA Srinivasan, Advocate. For the Respondents : Mr. P.H. Arvindh Pandian, Senior Advocate For Mrs. Harshini Jhothiraman and Mr. Avinash Krishnan Ravi, Advocates JUDGMENT ( Virtual Mode ) NARESH SALECHA, MEMBER ( TECHNICAL ) The Present Appeal is filed against the impugned order dated 21.08.2021 passed in CP. No. 667/59 241/HDB/2018 by the Tribunal (National Company Law Tribunal, Amravati Bench, Hyderabad), whereby, the Tribunal dismissed the Petition filed under the Companies Act, 2013. 2. The 1st, 2nd 3rd Appellant have claimed to be Shareholders of the 1st Respondent Company with alleged holding together 94.80% of total paid up share capital of 1st Respondent. M/s Lexus Technologies Pvt. Ltd. is a 1st Respondent/ Company incorporated on 28.03.2000, with an authorised share capital of Rs. 1,50,00,000/- divided into 15,00,000 shares of Rs. 10 each and paid up capital of Rs. 1,10,96,230/- divided into 11,09,623 shares. The company is in business of developing software solutions and other ancillary acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving a shareholding of 31.72%, 31.54%, 31.54% holding 3,51,933; 3,50,000; 3,50,000 equity shares respectively @10 Rupees per share. The Counsel for the Appellants further submitted that the copies of the Share Transfer Deeds along with the respective share certificates duly executed by the Transfer and Transferee, clearly establish the fact of the transfer of shares in favour of the Appellants . 9. The Counsel for the Appellants submitted that the Registrar of Companies had struck off the name of the 1st Respondent company and have removed the name from its register pursuant to the provisions of Section 248 of the Companies Act, 2013 as the 1st Respondent company did not file the Annual Returns and Financial Statements for the continued period of 2014-2015, 2015-2016 and 2016-2017. 10. The Counsel for the Appellants further submitted that in 2017, they searched on the Ministry of Corporate Affairs Portal (in short MCA portal ) and found out that the 2nd, 3rd 4th Respondents submitted fabricated Annual returns for the Financial Year 2014-2015, 2015-2016 and 2016-2017 of the 1st Respondent Company with the Registrar of Companies. The Counsel for the Appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st Respondent emphasised that the allegations that the Respondent sold 10,51,933 shares held by him in favour of the 1st, 2nd 3rd Appellants is false and against the records of the 1st Respondent Company. The Counsel for the 1st Respondent submitted that neither any shares were sold nor had executed any securities transfer form in favour of the Appellants . The Counsel for the 1st Respondent further submitted that the 2nd Respondent he has not sold any of his shares and therefore allegation against the Respondent receiving sale consideration of Rs. 14,67,41,557/- is false. 17. The Counsel for the 1st Respondent submitted that the Respondents did not write any letter to the Board of Directors of the 1st Respondent and there was no need for the Respondent to write any such letter as the Respondents did not intend to sell his shares to any person. As the Respondent did not write any letter, the question of willingness to purchase by the Appellants would not arise at all. 18. The Counsel for the 1st Respondent submitted that the certificates of banks filed by the Appellant with the Company Petition is not towards any sale consideration for shares but for o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act, 2013. 24. The Counsel for the 1st Respondent stated that the underlying company petition under Section 59 and consequent relief(s) under Section 241, 242 and 244 of the Companies Act, 2013 is not maintainable. The Counsel for the 1st Respondent stated that Transfer forms (SH-4) enclosed with the is appeal are all dated 18.04.2015, the various columns like for office use only such as checked by, signature tallied by, entered in the register of transfer on ----- vide transfer No. ----, approval dated----, power of attorney/ probate/death certificate/ letter of administration registered on ---------------at--------- and the No.---are left open as blank. The Counsel for the 1st Respondent stated that this indicates that these forms were never delivered to the 1st Respondent Company and further no reliance is placed on record by the Appellants to say that the Share Transfer forms (SH-4) is delivered to the Company as per Section 56 of the Company Act , 2013. 25. The Counsel for the 1st Respondent submitted that as per law and practice after execution of proper instrument of transfer with all particulars of transferor and transferee, the responsibility cast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates of 1st Respondents Company is a printed format and the back ground comprises with company names as LTPL and the Certificate No. starts as with LTPL 000---, whereas the alleged Share Certificate enclosed to this Petition is a computer generated one and the same is not covered by any such features stated above. 30. The Counsel for the 1st Respondent submitted that the contention of the Appellants that the 2nd, 3rd 4th Respondents affixed their signature on the share transfer forms is false as the 2nd Respondent informed to the 1st Respondent Company that the original Share Certificates are in his possession and the Share Certificates enclosed by the Appellant to are fabricated and the 2nd Respondent also stated that he has not alienated his shares either to existing members or to non-member of the Company. 31. The Counsel for the 1st Respondent stated that the Appellants are not shareholders at all of the Company and further argued that assuming without conceding that if the Appellants considers themselves as 95% shareholders of the 1st Respondent they should have not waited for more than three years to raise alleged objection before the company and the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the same to any person. 36. The Counsel for the 2nd Respondent submitted that the distinctive nos do not match with the original distinctive Nos issued by the Company. This clearly establishes fabrication of Share Certificates by the Appellants and moreover, photocopies of share certificates and transfer deeds are not acceptable as evidence. 37. The Counsel for the 2nd Respondent emphasised that an analysis of fabricated share enclosed by the Appellants and original shares held by the 2nd Respondent reveals following discrepancies: i. That there are huge discrepancies with respect to photocopies of transfer deeds vis a vis photocopies of share certificates annexed in the Company Petition. ii. There are certificates without corresponding transfer deeds and transfer deeds without corresponding share certificates. iii. There are several photocopy transfer deeds even without execution by the transferee. iv. That the said deeds do not satisfy the tenets of section 56 of the Companies Act, 2013. v. The transfer deed does not contain any share certificate no. It is mandatory to enclose share certificates. vi. The Appellants fail to explain how they paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh in order to grab the Respondent No. 1 Company and its assets by illegal and fraudulent methods. 41. The Counsel for the 2nd Respondent emphasised that the monies involved and transferred in the case at hand clearly indicate that there is some other transaction which is not being brought to notice of the Appellate Tribunal by the Appellants and further there were no communication between the parties abut such transfer of money in law of alleged share purchased from the 2nd Respondent and that on some assumption the transfer of monies have to be considered as consideration cannot hold water and therefore the money so transferred cannot be considered as consideration for purchase of shares 42. The Counsel for the 2nd Respondent submitted that the Appellants who had prayed for rectification of members' register cannot allege oppression and mismanagement for a very simple reason that they are not members of the company as per their own submission. 43. Concluding the arguments on behalf of the 1st and 2nd Respondents, the Counsel for 1st and 2nd Respondents reiterated that the Appeal is mischievous, misleading, far from truth and devoid of any merits and need to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement of the relief by the Appellant herein, the Tribunal held that since the Appellant herein failed to proof the case, the Petition was not maintainable. 46. Before examining the merit of the issues, it should be necessary to look into the relevant provisions of the Companies Act, 2013 . 46. Certificate of shares. (1) A certificate, issued under the common seal, if any, of the company or signed by two directors or by a director and the Company Secretary], specifying the shares held by any person, shall be prima facie evidence of the title of the person to such shares. 56. Transfer and transmission of securities - (1) A company shall not register a transfer of securities of the company, or the interest of a member in the company in the case of a company having no share capital, other than the transfer between persons both of whose names are entered as holders of beneficial interest in the records of a depository, unless a proper instrument of transfer, in such form as may be prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee and specifying the name, address and occupation, if any, of the transferee has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) Where any default is made in complying with the provisions of sub-sections (1) to (5), the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees. (7) Without prejudice to any liability under the Depositories Act, 1996, where any depository or depository participant, with an intention to defraud a person, has transferred shares, it shall be liable under section 447. 58. Refusal of registration and appeal against refusal (1) If a private company limited by shares refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or the transmission by operation of law of the right to, any securities or interest of a member in the company, it shall within a period of thirty days from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferor and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring in the register, the fact of any person having become or ceased to be a member, the person aggrieved, or any member of the company, or the company may appeal in such form as may be prescribed, to the Tribunal, or to a competent court outside India, specified by the Central Government by notification, in respect of foreign members or debenture holders residing outside India, for rectification of the register. (2) The Tribunal may, after hearing the parties to the appeal under sub-section (1) by order, either dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a period of ten days of the receipt of the order or direct rectification of the records of the depository or the register and in the latter case, direct the company to pay damages, if any, sustained by the party aggrieved. (3) The provisions of this section shall not restrict the right of a holder of securities, to transfer such securities and any person acquiring such securities shall be entitled to voting rights unless the voting rights have been suspended by an order of the Tribunal. (4) Where the transfer of securities is in contravention of any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and functions under the law or of breach of trust; (b) the business of a company is not or has not been conducted and managed by such person in accordance with sound business principles or prudent commercial practices; (c) a company is or has been conducted and managed by such person in a manner which is likely to cause, or has caused, serious injury or damage to the interest of the trade, industry or business to which such company pertains; or (d) the business of a company, is or has been conducted and managed by such person with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or in a manner prejudicial to public interest, the Central Government may initiate a case against such person and refer the same to the Tribunal with a request that the Tribunal may inquire into the case and record a decision as to whether or not such person is a fit and proper person to whole the office of director or any other office connected with the conduct and management of any company. (4) The person against whom a case is referred to the Tribunal under sub-section (3), shall be joined as a respondent to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h); (k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct; (l) imposition of costs as may be deemed fit by the Tribunal; (m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made. (3) A certified copy of the order of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than onetenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; (b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members: Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241. Explanation. For the purposes of this sub-section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member. (2) Where any members of a company are entitled to make an application under subsection (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them 248. Power of Registrar to remove name of company from register of companies. - (1) Where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved. (6) The Registrar, before passing an order under sub-section (5), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company: Provided that notwithstanding the undertakings referred to in this sub-section, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies. (7) The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved. (8) Nothing in this section shall affect the powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent to sign blank paper which apparently has been used by the Appellants to commit frauds on 1st Respondent company as well as 2nd, 3rd 4th Respondents. 51. This Appellate Tribunal has already discussed the relevant provisions of the Companies Act, 2013 and the procedure regarding transfer of shares in case of Private Limited Company along with the Rules regarding compliance of Article of Association. This Appellate Tribunal notes from the averments of the parties as well as from the impugned order that there was no direct relationship between the Appellants herein with the Respondents herein. Accordingly, to the understanding with the 2nd Respondent, Mr. Lingamaneni Ramesh remitted through his known persons the following amounts to the Respondent's bank account with YES Bank, Vijayawada. 1. 17.04.2015 Sripathi Srivana 4,87,90,000 2. 17.04.2015 Vahini Surya Ch 4,90,59,400 3. 17.04.2015 Manjusha Yalamanchali 4,87,90,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crepancies, in the forms and substance, of the Shares Certificate vis- -vis the original certificates held by the Respondents . In fact, on this particular point about genuineness of Share Certificates claimed by the Appellant , the Respondents herein had moved an Application bearing No. IA/23/2019 before the Tribunal seeking directions against the Appellant to produce original share certificates and share transfer deeds before the Tribunal and the Tribunal in its order dated 18.02.2021 directed the Appellants to produce the original certificate but the Appellants herein failed to comply with the said order of the Tribunal . This entire series of events, do not augur well for the Appellants and do not establish genuineness of the alleged Shares Certificates claim to be held by the Appellants along with the process of obtaining the Share Certificate. 54. This Appellate Tribunal further finds it strange that the Appellants claimed to have given Rs. 14,67,41,557/-, which was never followed by the Appellants to pursue his rights and no concrete/ solid documentary evidence could be furnished by the Appellants to indicate that all basic requirements befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, this Appellate Tribunal also does not find convincing that the Appellants did not get any notice of the meeting including that of AGM or have not received any documents/ minutes/circular/ agenda/ annual financial statement/ statutory audit report and yet did not seek any remedy thereafter in the entire period. 57. As regards, the case of `Oppression and Mismanagement , claimed by the `Appellants , under Section 241 r/w Section 242 of the Companies Act, 2013, the Appellants / `Claimants , has to cross the first hurdle of Locus. The `Oppression and Mismanagement , is available only to a person who is aggrieved and who is also a `Member / `Shareholder , of the Company. As discussed and observed earlier in preceding paragraphs that the Appellants could not establish regarding their entitlement to receive `Transfer Shares , from the Respondents , neither could prove that the `payment , was indeed made by the Appellants to the Respondent for consideration of said shares. It is, therefore, establishes that the Appellants , did not have any share in their names and were therefore not `members / `shareholders , of the 1st Respondent Company and therefore, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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