C.P. No. 17 of 2013 and C.A. No. 137 of 2014. Case: 3A Capital Services Ltd. Vs HMG Industries Ltd. and Ors.. Company Law Board
| Case Number | C.P. No. 17 of 2013 and C.A. No. 137 of 2014 |
| Counsel | For Appellant: Rajeev Panday, Arun K. Shilwant and Jigarkumar Gandhi, Practising Company Secretary and For Respondents: M.P. Rao, Senior Counsel and Ramesh Mishra |
| Judges | Ashok Kumar Tripathi, Member (J) |
| Issue | Companies Act, 1956 - Sections 111, 111(4), 111A, 111A(2), 17, 391, 394, 80; Reserve Bank Of India Act, 1934 - Section 45-IA |
| Citation | 2015 (190) CompCas 516 (CLB) |
| Judgement Date | January 07, 2015 |
| Court | Company Law Board |
Order:
Ashok Kumar Tripathi, Member (J), (Mumbai Bench)
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The above captioned petition has been filed by the petitioner-company (hereinafter referred to as "the petitioner" in short) under section 111A(2) of the Companies Act, 1956 (hereinafter referred to as "the Act" in short) seeking an order thereby directing respondent No. 1 company (hereinafter referred to as "the company" in short) to register 5,00,000 preference shares held by the petitioner in the company and rectify its register of members in respect of the shares in question. At the outset, I would like to narrate the undisputed facts of the case in short herein as under:
The company was incorporated on September 28, 1987, as a public company limited by shares under the Companies Act, 1956.
The petitioner had purchased 5,00,000 preference shares from the ICICI Bank, respondent No. 2 herein, for consideration and the said preference shares were transferred by the ICICI Bank in its favour, along with all attached rights thereto and thus the petitioner has acquired all the rights, interest and title in the said shares.
After acquisition of the shares-in-question as aforesaid, the petitioner lodged the share certificates, along with share transfer forms duly executed by the transferor and transferee, in accordance with law, with the company, along with the letter dated June 4, 2012, which was delivered to the company on June 11, 2012. In response to the petitioner's letter dated June 4, 2012, Mr. Edgar John Kamath, the director of the company, issued a letter dated June 20, 2012, for and on behalf of the company, to the petitioner, inter alia, seeking time for a personal meeting with the manager of the petitioner to discuss the issue with respect to transfer of the shares-in-question. However, the company vide its subsequent letter dated July 30, 2012, raised certain objections regarding transfer of the said shares. Thereafter, the said director of the company personally visited the office of the petitioner and after having discussions, he promised to transfer the shares-in-question. When the petitioner did not receive any response, they wrote a letter dated September 25, 2012, to the company reiterating the request for transfer of the said shares with immediate effect. Instead of complying with the request of the petitioner for transfer of the said shares, the company vide its letter dated October 3, 2012, rejected the application of the petitioner for transfer of the said shares and asked the petitioner to approach the competent forum for redressal of its grievances, if so advised.
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It is the case of the petitioner that the reasons for rejection of the request for transfer of the shares-in-question by the company are mala fide arbitrary and against the basic principles governing the law of natural justice, which defeat the fundamental right of the shareholder/petitioner with respect to marketability of the shares held by it in the company and which is also against the public policy. It is, therefore, submitted that refusal by the company to register/transfer of 5,00,000 preference shares is without sufficient cause, and hence, this petition for the following reliefs:
(a) To pass a mandatory order thereby directing respondent No. 1-company and the other respondent directors to transfer 5,00,000 (five lakhs cumulative redeemable preference shares) as mentioned in the petition in favour of the petitioner.
(b) To pass an order thereby directing the respondents, pending the transfer of the said shares, to restrain from creating third party rights and interest and further to restrain from transferring the said shares to any other person.
(c) To pass an order thereby directing the respondent-company to pay costs of the petition and incidental expenses to the petitioner.
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Respondents Nos. 1 and 3 to 5 (hereinafter referred to as "the answering respondents") appeared and filed their reply justifying the reasons for rejection of transfer of shares-in-question in favour of the petitioner, which are stated here as under:
Because, the shares-in-question were acquired by the petitioner which were the subject matter of the scheme under section 391/394 of the Act as approved by the hon'ble High Court of Bombay in Company Petition No. 236 of 2005, and therefore, the transfer of the shares by the erstwhile owner, i.e., respondent No. 2 bank, in favour of the petitioner, is unlawful.
Because, the alleged transfer of the shares was in violation of the RBI Guidelines on the part of the seller, i.e., respondent No. 2 bank, while selling the non-performing finance assets, i.e., the shares-in-question.
Because, the erstwhile owner of the shares-in-question has no authority to sell the said shares, no proper resolution was passed by its board of directors, and similarly, the petitioner has no authority to purchase the said shares, as required by law.
Because, the seller had not given intimation to the company before sale of the said shares, as required by the articles of association of the company.
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On the aforesaid grounds, which shall be elaborately dealt with hereinafter in the course of appreciation of the contentions advanced by learned counsels representing the parties, the answering respondents have prayed for dismissal of the petition. In addition to the above, the answering respondents have sought dismissal of the petition, inter alia, on two preliminary grounds. Firstly, the petition is barred by limitation and secondly, serious question with respect to title of the shares is involved. It may be mentioned here that respondent No. 2 neither appeared nor filed any reply to the petition.
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I have heard learned counsels appearing for the respective parties at length and perused the record.
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First, I proceed to deal with the preliminary objections. According to learned counsel for the answering respondents, the petition is time barred, and therefore, deserves to be dismissed at the threshold stage on the ground of limitation. The other preliminary objection raised by learned counsel for the respondents is that, from the pleadings, serious question of dispute pertaining to the title of shares arises in the proceedings which cannot be decided in the summary proceedings and, therefore, a suit would be the proper remedy. Learned counsel to support the said preliminary objection has relied upon the decision in the cases of (1) Dr. Mahesh Batra v. Gajaraj Beverages P. Ltd. [2004] 5 Comp LJ 550 (CLB); (2) Bharat K. Gajjar v. Castrol India Ltd. [2003] 115 Comp Cas 396 (CLB) and (3) Gopalkrishna Sengupta v. Hindustan Construction Co. [2002] 112 Comp Cas 166 (CLB).
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As regards limitation, from perusal of section 111(4) of the Act, it is noted that the said provision, although does not specifically provide the period of limitation, however, in my view, the provisions of the Limitation Act would apply in a petition filed under...
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