MAIF Investment India PTE Ltd. v. Ind-Barath Power Infra Ltd.
[Company
Appeal (AT) No. 334 of 2018 decided on 28.05.2019 by NCLAT]
In the appeal
before the NCLAT, an order of the NCLT, Hyderabad was under challenge, vide
which the NCLT had dismissed the petition of the Petitioner filed under Section
59 of the Companies Act, 2013 (“Act”)
and observed that contentious issues are involved in the facts of the present
case which could not be dealt by NCLT under Section 59 of the Act. The brief
undisputed facts of the case were that the Petitioner (along with one other
investor) entered into an investment agreement with the promoters of the
company and inter alia subscribed to
the 906599 Compulsorily Convertible Debentures (“CCD”) of the company. The Articles of the company were accordingly
amended to incorporate the terms of the investment agreement including the
stipulation that the CCDs would be converted into equity by the promoters
within 5 days after receiving a notice for the same from the holder of CCDs.
The case of the
Petitioner before NCLT and NCLAT was that the promoters and the company
deliberately went into inter-se litigation (and procured a stay of the general
meeting of the company) upon receiving the notices for conversion of the CCDs
into equity (in August, 2017 and September, 2017). Thereafter, they withdrew
the petition and unilaterally converted the CCDs into equity without any fresh
notice from the Petitioner. Thus, it was averred that there was no affirmative
consent for conversion of the CCDs at the time when the board meeting was held
and also the board meeting was conducted without proper quorum. Therefore,
there was no sufficient cause for the Company to reflect in the Register of
Members that securities had been issued in favour of the Appellant against the
conversion of CCDs.
The defense of
the contesting Respondents including the company was that Petition being under
Section 59 of the Act, the NCLT could not go into these issues. Further, it was
argued that the Petitioner had already once invoked the arbitration clause (and
withdrawn) in the investment agreement and has also invoked Insolvency and
Bankruptcy proceedings against one of the Respondents, therefore, the effect of
arbitration, insolvency proceedings and interpretation of the agreement are
contentious issues and outside the scope of Section 59 of the Act. Reliance was
placed by the NCLT (and the Respondents) on the judgment of the Apex Court in Ammonia Supplies Corpn. (P) Ltd. v.
Modern Plastic Containers (P) Ltd. [(1998)
7 SCC 105] in support of the
contention that in case of a serious dispute as to title, the matter could be
relegated to a civil suit.
The NCLAT while
allowing the appeal noted the change in law in 2013 when the Act came into
force and observed that the law laid down by the Apex Court in Ammonia Supplies (Supra) is not
applicable in the context of changed law. Further, it was also observed that
with section 430 of the Act coming into force,
if a dispute emerges, the civil suit remedy would be completely barred and
the power would be vested with the NCLT under Section 59 of the said Act.
The NCLT / NCLAT shall have exclusive powers to deal with the matters
pertaining to the rectification of registers and all questions including
incidental and peripheral questions raised with respect to rectification.
Reliance was placed by the NCLAT on the judgment of the Apex Court in Shashi
Prakash Khemka v. NEPC Micon & Ors. [Civil Appeal Nos. 1965 -1966
of 2014 decided on 08.01.2014] and
its earlier judgment in Smiti Golyan & Ors. v. Nulon India Limited
& Ors. [(2019) 214 Comp Cas 576].
Yash Vardhan Mall v. Indrapuri Studios Pvt. Ltd. & Ors.
[C.P.
No. 189 / KB/ 2015 decided on 17.09.2019 by NCLT, Kolkata]
In the present case
while entertaining a composite petition alleging oppression and mismanagement
and seeking rectification of register under the Act, the NCLT inter alia had an occasion to examine
the powers of the company / directors to rectify the registers if a mistake has
crept into the register of members. In the specific facts of the case, the
Petitioner was inter alia aggrieved
that his name has been omitted from the register of members despite the fact
that he is the owner of 61.92% of the shareholding on the strength of being
nominee of 3890 shares of a deceased shareholder and having subsequently bought
4160 shares of the company.
The NCLT while
dismissing the Petition observed that the Petitioner was only appointed as a
guardian of the nominee (minor daughter of the deceased shareholder) and not as
a nominee. Moreover, the deceased shareholder by a subsequent nomination form
amended the Petitioner’s appointment (as guardian) and appointed the father of
the nominee as her guardian. Thus, the registration of 3890 shares in the name
of Petitioner was void and validly rectified by the company. With respect to
the remaining 4160 shares, it was observed that the same was required to be
necessarily cancelled in as much as transfer of shares of the company to a
third person (who is not a shareholder) was against the Articles of the
company. It was further observed by the NCLT that the company / directors are
within their powers to unilaterally rectify the register to correct a mistake
and the same would not contravene any legal provisions. Reliance was placed on
the judgments titled Reese River Silver Mining case, [(1869) Law
Reports 4 House of Lords, page 83] and
Michaels and Anr. v. Harley House
(Marylebone), [(1999) 2 Com. L.J. 466 (1997) 3 All E.R. 446].
3A Financial Services Ltd. v. Synthite Industries Ltd. & Ors.
[TCP/33/KOB/19
(CP/899 of 2018) decided on 23.10.2019 by NCLT, Kochi]
The present petition was filed by the Petitioner
under Section 58 read with 59 of the Act, on being aggrieved by the refusal to
register its name in the register of company. The critical facts of the case
were that the Petitioner after purchasing the shares of the company delivered a
share transfer form along with the original share certificates to the company
on 27.01.2018 and requested for registering its name in compliance with the
Act. However, the same were returned by the company on 26.02.2018 inter alia raising discrepancies for not
accompanying transfer fee (as required under the articles of the company).
Thereafter, the Petitioner again submitted the share transfer form and other
documents on 12.03.2018, however, inadvertently the original share certificates
were not submitted. Subsequently, the original share certificate was delivered
on 10.04.2018. Despite the aforesaid submissions, the company returned the share
transfer forms and certificates and refused to transfer and register the shares
in the name of the Petitioner. It was observed by the NCLT that the main
reasons (as per the company) for returning of the form were (a) Transfer fee
was not accompanied with the form; (b) Original share certificates were not
enclosed; and (c) Stamps were not duly cancelled. On the basis of said reasons,
the company averred that it had to necessarily return the forms as the
provisions of the law were not complied with.
The NCLT, while allowing the petition held, on the
basis of material placed before it, that the objections as stated in (a) and
(b) above were already complied by the petitioner and the objection of non
cancellation of the stamps (affixed on the share transfer form) by crossing the
same was just a technical error. It was further held that the act of returning
the form for want of sharpening extreme technicalities (of non cancellation of
stamps) depicts the ulterior motives of the company behind denial of registration
of shares in the name of the bona fide purchaser. The NCLT also took note of a
similar case decided by the Chennai Bench on 27.03.2018 concerning the
respondent company wherein the transfer was refused on frivolous reason.
Sawai Singhai Yash Jain & Ors. v. Maharashtra Scooters Ltd.
[CP No. 3656/CA/2019 decided on 18.11.2019 by NCLT, Mumbai]
In this petition, the NCLT
refused to direct the company to register the shares of the deceased mother in
the name of the legal heirs on the basis of a will executed by the deceased
mother, for want of probate / letter of administration.
It was the case of the
Petitioners that they were minors during the demise of their mother in the year
2000 and that their guardian did not take any step to get the shares
transferred on the basis of the will. It was in the year 2017 that they got to
know about their rights in the shares and accordingly approached the company
seeking transfer of the shares in their name. However, it was averred by the
Petitioners that the company wrongly refused to transfer the shares for want of
probate / letter of administration despite the fact that the same is not
mandatorily required in the State of Madhya Pradesh as per Section Sections 57,
212 and 213 of the Indian Succession Act, 1925.
The NCLT, despite noting
the settled legal principle that courts cannot emphasize on the probate of will
as the same is not mandatory in State of Madhya Pradesh, rejected the
contention of the Petitioners on the ground that the company was well within
its rights to ask for probate / letter of administration from the Petitioners
in view of the fact that the will was executed on 13.02.2000 and the
Petitioners are approaching for transmission in the year 2017.
Wilson Godinho and Ors. v. Arondha Properties Private Limited and Ors.
[CP
No. 748 of 2018 decided on
25.11.2019 by NCLT, Mumbai]
The Petitioners filed the case under Section 59 of
the Act seeking cancellation of registration of shares of the company which
stood in the name of NSB Infrastructure & Projects Pvt. Ltd. (Respondent
No. 3). The critical facts of the case were that the Petitioners executed a MoU
dated 06.10.2010 with the Respondent No. 3 wherein 65% the shares of the
company were to be transferred to Respondent No. 3 in two tranches i.e. first
50% of the holding was to be transferred on payment of Rs.10 crores and the
balance 15% against the payment of Rs.17.75 crores within a period of 18 months
of MoU. Accordingly, the Petitioners executed the share transfer forms with
respect to 50% of the shares against the consideration of Rs. 10 crores and the
transfer was effected in favour of the Respondent No. 3. However, the
Respondent No. 3 failed to honour the requirement with respect to second
tranche.
It was the case
of the Petitioners that the share transfer forms (with respect to 50% of the
shares) were not duly stamped and since stamping is mandatory requirement, the
transfer was illegal. Moreover, no board meeting took place to authorize the
said transfer. The NCLT rejected the contentions of the Petitioners and
dismissed the petition. While relying on the judgment of the Apex Court in Vasudev
Ramachandra Shelat v. Pranlal Jayanand Thakar [(1975) 45 SCC 43] it was observed that the transfer of
shares gets validly completed and transferee gets title to the shares once he
has the share certificates and blank transfers signed by the registered
holder(s). Further, the NCLT also observed that the Stamp Act is a fiscal
measure enacted to secure revenue for the State and not to arm a litigant with
a weapon of technicality to meet the case of his opponent. The burden of
payment of stamp duty lies upon the Petitioners and thus, they cannot be
permitted to take advantage of their own wrong that too after lapse of seven
years from the date of transfer. Reliance was placed on the judgment of the
Apex Court in Hindustan Steel Ltd. vs. M/s Dilip Construction Co. [(1969) 1 SCC 597)].
Harish Jain v. Haveli Restaurant & Resorts Ltd. & Ors.
[Company
Appeal (AT) No. 390 of 2018 decided on 26.02.2020 by NCLAT]
The appeal was preferred by the original Petitioner
/ Appellant assailing the order of the NCLT, Chandigarh by which the NCLT
dismissed the Petition alleging oppression and mismanagement and seeking
restoration of 50% of shareholding in the company. The case of the Petitioner
was that he owned 50% shareholding of the company at the time of incorporation
in the year 1997 and the same was subsequently reduced to zero by the
Respondents by indulging into acts of oppression and mismanagement. It was alleged
by the Petitioner that the director resignation letter (bearing his signatures)
was forged by the Respondents as also stated by the hand writing expert in his
report. Further, it was inter alia contended
that no board meeting or notice was given to the Petitioner for increasing the
capital of the company which resultantly relegated the shares of the Petitioner
as negligible. The Petitioner claimed to have got the knowledge of the said
facts only in 2015 in a family meeting and therefore has approached the NCLT,
Chandigarh within the limitation period.
The NCLAT rejected the contentions of the Petitioner
and upheld the order of the NCLT that the petition was not maintainable, being
time barred and also for the reason that the Petitioner is not a shareholder of
the company. The NCLAT based its decision on the following observations:
a) The
NCLAT rejected the contention of the Petitioner that the resignation letters
were forged and observed that the Petitioner failed to show that he has not
attended the meeting dated 31.10.2011 (or has not received the notice) wherein
the change in the constitution of board was an agenda. Further, the hand
writing expert’s report cannot be relied upon as the same was based on the
photo copy of the documents and not the original and has been procured by the
Petitioner himself;
b) Further,
it was observed that the Petitioner was always aware of increase in the capital
of the company which is evident from the fact that he signed the annual returns
of the Respondent company for the year 1999, 2001 and 2003. Therefore, he
cannot take a plea that he had no knowledge about transfer of his shares and
increase in paid up capital of the Respondent Company;
c) The
Petitioner failed to show anything to rebut the fact that owing to a family
settlement the Petitioner had sold his entire shareholding in the company and
acquired 100% shareholding in another family owned company;
d) The
NCLAT also relied on the collateral proceedings instituted (and dismissed)
against the company by one Sohan Singh to discredit the contention of the
Petitioner that he got to know about the alleged facts only in the year 2016.
Dhananjay Krishnanath Gaikwad and Ors. v. Tulijabhavani Cold Storage Pvt. Ltd. and Ors.
[Company
Appeal (AT) No. 322 of 2018 decided on 25.07.2019 by NCLAT]
The present appeal was preferred by the Appellants
(original Respondents) assailing an order of the NCLT, Mumbai by which it had allowed the composite
petition by the original Petitioner under Section 59, 241-242, 246, 337 to 341
of the Act. The limited challenge before the NCLAT was on grounds that (a) the
alleged consideration paid by the original Petitioner was already returned to
him and hence he is not a member of the company; and (b) that the petition is
time barred in as much as right to sue accrued in favour of the original
Petitioners in February, 2013 (when the alleged transfer of majority
shareholding was made) where as the petition has been filed in September, 2016
i.e. after expiry of 3 years. The NCLAT was pleased to dismiss the appeal on
the following reasons:
a)
With
respect to the averment on return of the entire share consideration, it was
observed by the NCLAT that in absence of any specific denial (reply) by the
Respondents, the averments of the Petitioner that he has paid Rs. 70 Lakhs
towards 51% of the shareholding (25,500 equity share) and the Respondents
delivered duly executed equity share certificates stood admitted. Further, it
was observed that a bald assertion which has neither been raised before the
court of first instance nor the same is supported by record has to be out
rightly rejected;
b) The plea of
limitation is a mixed question of law and facts. Applying Article 137 of the
Limitation Act, 1963 (which is applicable to the petitions under section 241 –
242 of the Act) to the facts of the present case, the NCLAT was of the view
that the despite transferring of the majority shareholding to the original
Petitioner in February, 2013, the Petitioner was kept in dark about the working
and returns of the company. Further, the suppression of transfer of majority
shareholding was for the first time discovered by the Petitioner in February,
2016 on search of documents filed with Registrar of Companies. Moreover, in
absence of any reply by the Appellants (before NCLT, Mumbai), the said facts
remain unrebutted and uncontroverted. Therefore, the petition filed in
September, 2016 is within the period of 3 years from the date of knowledge of
the suppression; and
c)
In any case,
without prejudice to the fact that no notice of AGM was given to the Petitioner
(who was a majority shareholder), each filing of statutory compliances
suppressing the material facts of transfer of majority shareholding would
constitute a continuing cause of action and hence computation of period of limitation
even from September, 2013 (when the AGM was held) would bring the Company
Petition within the period of limitation.
