PREM KUTIR PVT LTD Vs. BHENOY G DEMBLA

JUDGEMENT

(1.) BY this appeal, the appellants challenge the order dated 23rd February 2001 passed by the Company Law Board, Western Region Bench, Mumbai in C.P. No.2 of 2000. The respondents had filed a petition before the Company Law Board stating therein that the respondents had entered into an agreement of sale dated 28th October 1993 with Mr. Bihari Dalwani and Mr. Santosh Dalwani for purchase of flat No.6-C on the sixth floor of a building known as Prem Kutir, a building which is owned by the present appellants. It is further stated that the respondents had entered into a sale deed with the vendors which provided amongst other things that the vendors are members of the appellant Company and are owners of 55 equity shares. It is further stated that the appellant Company had addressed a letter dated 1st July 1994 to the vendors of the respondents that the transfer of shares from vendors to the respondents was approved in the meeting of the Board of Directors of the appellant Company held on 20th May 1994. It is further stated that the vendors had reproduced all the resolutions passed by the Board of Directors in its meeting held on 20th May 1994 in the letter. It is further stated that the respondents had made various payments to the appellant Company. A share transfer form was also lodged by the respondents with the appellant company. The original share certificate was also submitted by the respondents to the appellant Company. The respondents complained that despite their complying with all the conditions, the appellants had not returned the share certificate duly endorsed by the appellant Company. It is further stated that by communication dated 22nd March 1998, the appellants informed the respondents that the share transfer form submitted by the respondents were invalid owing to the expiry of transfer date end they should be resubmitted after revalidation. According to the respondents, they got the documents revalidated and resubmitted them, still the share certificates duly endorsed with the respondents' names were not forwarded by the appellants to the respondents. Therefore, the respondents filed a petition before the Company law Board. A direction was sought from the Company Law Board against the appellants directing the appellants to return the original share certificates duly endorsed with the respondents' names on that. On behalf of the appellants, an affidavit in reply was filed. The appellants contended in the reply that the respondents had suppressed material facts and documents from the Company Law Board. It was alleged that the respondents had committed breach of the conditions on which approval to the transfer of share certificates was granted. It was alleged that the open space adjoining the flat was not sold and no price was paid by the respondents for the same. The respondents had unauthorisedly end illegally extended the area of the premises by using extra F.S.I. It was also alleged that though one of the conditions imposed was that the respondents will submit indemnity bond, it has not yet been submitted. There were other points also raised by the respondents in its reply. There was counter affidavit filed on behalf of the respondents. Perusal of that counter affidavit shows that the respondents did not dispute that the respondents have encroached upon the open space and have raised construction thereon. The petition was decided by order dated 23rd February 2001.

(2.) IN the petition filed by the respondents, there is a statement made that the petition is within limitation. However, it appears that thereafter there was an application filed for condonation of delay in filing the petition. Perusal of the order of the Company Law Board shows that though the application has been granted by the Company law Board and the delay has been condoned, there was some controversy before me as to whether there was any application filed for condonation of delay. Therefore, an order was made for calling the record of the proceedings from the Company Law Board. The learned counsel appearing for appellants stated before me that on the record of the Company Law Board there is an application for condonation of delay but according to him, copy of that application was not served on the appellants. But the learned counsel submitted that even if it is assumed that the delay could have been condoned, according to the learned counsel, the order of Company Law Board cannot be sustained on merits.

(3.) THE learned counsel appearing for respondents submits that under the Companies Act, company has the power to approve the membership or not to approve the membership, it does not have power to impose any conditions for approval of the membership. According to the learned counsel therefore, the resolutions of the Company imposing conditions is beyond the powers of the Company. He further submits that firstly by the resolution No.1, the transfer of membership was approved and therefore, according to the learned counsel, the conditions imposed by the resolution No.4 are the conditions which will govern their membership and therefore, as membership has already been granted by resolution No.1, the appellant Company was not justified in withholding the share transfer certificates. The learned counsel also submits that there have been constructions made by other members but no action has been taken against them by the Company and therefore, the conduct of the Company is discriminatory.