M. PALANISAMY Vs. S.V.T. SPINNING MILLS (P.) LTD.

JUDGEMENT

(1.) This company appeal filed under Section 10F of the Companies Act, 1956 (for brevity, 'the Act') has been directed against the order, of the Company Law Board ('CLB') passed in CP No. 37 of 2006 {now reported as M Palanisamy v. SVT Spinning Mills (P.) Ltd., 2011 101 CLA 346 by which the CLB has dismissed the petition filed by the Appellants against the Respondent-company under Sections 235, 237, 397 and 398 of the Act seeking a direction to the first Respondent-company to issue duplicate share certificates representing 3,888 shares of the company and for consequential reliefs.

(2.) The main grounds raised against the impugned order of the CLB are that the CLB has taken an inconsistent stand regarding the transfer of shares and, therefore, there is a factual error and that the reliance placed on by the CLB, the income and wealth tax returns of the 6th Respondent to decide that the shares of the company have not been transferred is an extraneous grounds and that order of the CLB in holding removal of the first Respondent as managing director of the first Respondent-company as per the procedure under Section 284 of the Act is not in order and that when the transfer of shares in favour of the Appellants was stated to be established in facts, the finding by the CLB that the Appellants have not proved their shareholding is contrary to the fact and that the CLB has exceeded its jurisdiction in arriving at a conclusion that the Appellants claims are not bona fide.

(3.) In the light of the earlier judgment passed by this Court in CA No. 10 of 2007, the short facts leading to the filing of the appeal are that the 6th Respondent was a promoter of the first Respondent-company and the land in which the factory of the first Respondent-company is located belonged to the 6th Respondent. The first Appellant and the Respondents 2 and 3 have jointly taken over the first Respondent-company with an understanding that all the three persons should equally invest and carry on the affairs jointly and an agreement was entered accordingly on 27th July, 1989 between the first Appellant and the Respondents 2 and 3 on one side and the 6th Respondent on the other side. It is the case for taking over the said company together with land, plant and machinery and other assets for a total consideration of Rs. 60 lakh. It is stated that the first Appellant has paid an amount of Rs. 1,00,000 towards advance from the personal amount on the date of agreement and the balance was agreed to be paid within one month. A joint current account was opened with Indian Bank, Variety Hall Road, Main Branch, Coimbatore by the Petitioner and the Respondents 2 to 5 for depositing the money to be paid to the 6th Respondent. It is stated that the Petitioner has deposited a sum of Rs. 19 lakh while the Respondents 2 and 3 deposited a sum of Rs. 37,50,000.