Company Petition No. 20 of 2008. Case: Ashokan Edachali and Anr. Vs Prompt Printing Press (P.) Ltd. and Ors.. Company Law Board

Case Number:Company Petition No. 20 of 2008
Party Name:Ashokan Edachali and Anr. Vs Prompt Printing Press (P.) Ltd. and Ors.
Judges:Kanthi Narahari, Member (Judicial)
Issue:Company Law
Citation:2011 (101) CLA 256, 2011 (108) SCL 439 (CLB)
Judgement Date:October 01, 2010
Court:Company Law Board
 
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Order:

Kanthi Narahari, Member (Judicial), (Mumbai Bench)

  1. The present petition is filed under Section 111(4) of the Companies Act, 1956 ('the Act') by Pradeep Kumar Jain, the constituted attorney of Petitioners praying this Bench to declare transfer of 40 per cent shares of Petitioner No. 1 to Respondent Nos. 2 and 5 and transfer of 5 per cent shares of Petitioner No. 2 to Respondent No. 4, are ab initio void and illegal. Also sought a direction to cancel the impugned shares and restore the said shares in the name of the Petitioners. Further, he also sought a direction to the Respondents to sell the balance 55 per cent shares of Respondent Nos. 2, 4, 5 and 6 to the Petitioners and also sought a declaration that Respondent Nos. 2 and 3 as disqualified directors and prosecute them being involved in misdeeds and misconduct.

  2. Shri Rajaratan Bhura, learned Counsel for the Petitioners, submitted the brief facts. Petitioner Nos. 1 and 2 were the subscribers of the memorandum of association and were appointed as the first directors of Respondent No. 1 along with Respondent No. 3 herein, since the date of incorporation, i.e., 27th September, 1988. Respondent Nos. 2 and 3 managed the affairs of Respondent No. 1 in the capacity as directors. Petitioner Nos. 1 and 2 are the shareholders of Respondent No. 1 holding 10,000 and 1,250 equity shares, respectively, which collectively constitute 45 per cent equity shares of Respondent No. 1 and still hold original share certificate Nos. 4, 7 and 8 containing 100 shares, 1,150 shares and 10,000 shares, respectively. The Petitioner have not received the notice of annual general meeting ('AGM') for the past two year's and after getting no response from Respondent No. 1, they approached their legal consultant. The consultants of the Petitioners undertook the search of the records of Respondent No. 1, maintained by the Registrar of Companies ('RoC') on the portal of Ministry of Corporate Affairs. The Petitioners were shocked when they were informed by their lawyers that 10,000 shares of Petitioner No. 1 were transferred equally, to Respondent Nos. 2 and 5 on 13th March, 2006 and 1,250 shares of Petitioner No. 2 were transferred to Respondent No. 4. Certified true copies of the annual return submitted on 30th September, 2006, filed with the RoC, Maharashtra through e-return showing therein the 40 per cent, shares, i.e., 10,000 shares of Petitioner No. 1 have been fraudulently and illegally transferred to Respondent Nos. 2 and 5 on 13th March, 2006, without his consent and knowledge and 5 per cent equity shares, i.e., 1,250 shares of Petitioner No. 2 has been transferred to Respondent No. 4 without their consent and knowledge and the names of Petitioner Nos. 2, 4, 5 are illegally shown as shareholders of Respondent No. 1 in the said annual return. Petitioner Nos. 1 and 2 were shocked when they came to know the above facts that their shares were transferred to Respondent Nos. 2, 4 and 5 without their consent, knowledge and consideration. Furthermore, the Petitioners have never handed over their original share certificates to anybody. Petitioner Nos. 1 and 2 are shown as shareholders in the annual return for the year ending on 31st March, 2005, which was submitted on 30th September, 2005 and filed with the RoC, Maharashtra. However, Respondent Nos. 2, 3, 4 and 5 fraudulently manipulated the shares and misrepresented to the RoC in particular and public in general the annual return for the financial period ending 31st March, 2006, submitted on 30th September, 2006. Respondent Nos. 2, 4 and 5 are illegally holding shares of Petitioner Nos. 1 and 2 due to the illegal transfer carried out with the help of Respondent Nos. 2 and 3 misusing their positions. The so-called transfer of shares are nothing but the acts of cheating and forgery on the part of Respondent Nos. 2 to 6 collectively and violation of statutory provisions of the Act. Respondent Nos. 2 and 3 being the directors of Respondent No. 1 assumed the fiduciary position and are required to act for the benefit of the company in general. Respondent Nos. 2 and 3 not only misused their position, but also committed breach of trust and, hence, are liable to be declared as "disqualified directors" and evicted from Respondent No. 1. Petitioner No. 1 has filed criminal complaint against Respondent Nos. 1, 2, 3 and 5 and Petitioner No. 2 has filed criminal...

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