M.K. Shrawat, Member - (1.) The petition under consideration was submitted before the erstwhile CLB, Mumbai Bench on 10th September 2014. On receiving the petition, the respondent has objected the maintainability of the petition through a reply submitted on 26-02-2015. The main reason for challenging the "maintainability" was on account of the allegation that the petitioner was not competent u/s. 399 of the old Act to file this petition because not having requisite number of shares as mandatory on the date of filing of the petition i.e. 10-09-2014.
(2.) The petitioner in the petition has stated that the respondent company was incorporated on 30-01-2001 and the nature of business was to deal in designing, developing and installation of custom made software, patented software etc. However, as per the petitioner at present the company was engaged in the business of distribution of pharmaceutical products. As per the claim of the petitioner he is a shareholder by holding 75000 equity shares of Rs. 10 each in the paid up share capital of the company, thus constituting 25% of the paid up share capital. Further narrating the background, the petitioner has stated that the petitioner along with the Respondent No. 2 and 3 have acquired the company on 10th August 2005. The company was acquired from the then shareholders, names not necessary, having shareholding of 10,200 shares. The Petitioner along with R2 and R3 held equal percentage i.e. 33.3 percent by acquiring 3,400 shares each. On taking over the company (R1) the petitioner was appointed as a Director on 10th August 2005. The Petitioner was assigned to look after day to day operation of the company. The claim of the Petitioner is that he had devoted time and efforts towards the growth of the company. Another claim of the Petitioner is that he had contributed Rs. 20 lakhs towards the share capital of the company, as against the contribution of R2 and R3 of Rs. 5 lakhs each respectively. The contribution of the Petitioner was reflected in the accounts as "Share Application Money Account". 2.1 The allegation of the Petitioner is that while taking search in the year 2006 it had come to his notice that fresh 4,800 shares in total were allotted to the existing shareholders, as well as a new shareholder viz. Mrs. Hema Nivrutti More was introduced. The fresh allotment was stated to be in the following manner:- 2.2 In the Petition the Petitioner has further stated that after the fresh share allotment the paid up share capital of the R1 Company had become Rs. 1,50,000/- constituting 15,000 equity shares as per the following details:- 2.3 One of the allegation of the Petitioner is that for number of years his capital contribution of Rs. 20 lakhs remained pending therefore, demanded the R1 company to refund the whole amount capped as Unsecured Loan Account. The Respondents have assured him that the account of the Petitioner would be settled in due course of time. On the other hand, according to the Petitioner, it had come to his notice that on 01-12-2007, R1 company had allotted 2,13,750 equity shares of Rs. 10/- each. The share capital of the company had increased to Rs. 21,37,500/-. The allotment of the shares was made to the existing three shareholders as under:- 2.4 According to the Petitioner, he was completely unaware of the allotment of the shares against the unsecured loan. The shares worth Rs. 7,12,500/- were allegedly allotted to the Petitioner against the share application money of Rs. 20 lakhs. 2.5 The Petitioner approached the bank for financial support but suddenly the Respondents have instructed the Petitioner to resign from the Office of the Director, Due to pressure and mental torture the Petitioner had resigned on 15-10-2008. It had also come to the notice while taking search that on 15-10-2008 the entire shareholding of the Petitioner of 75,000 shares were transferred although as per Petitioner no "share transfer deed" was ever executed by him. It is further alleged that no consideration was paid by R2 and R3 to the Petitioner on impugned transfer of 75,000 shares. 2.6 In the light of the above factual the ground, discussed in brief, the relief claimed by the Petitioner in the main Petition as under: Relief(s) sought: In view of the facts mentioned in paragraph 6 above, the Petitioners pray for the following reliefs: The Petitioners humbly pray for an order that- i. "Rectification of the register of members by cancelling the transfer for 75,000 equity shares; ii. Issue of share certificate for allotment of 71,600 shares; iii. appointment of an independent valuer to determine fair value of shares; iv. sale of business to either party at fair value determined by the independent valuer; v. such further or other orders be made or directions be given affording necessary relief to petitioner as in the premises of the Hon'ble Company Law Board may deem fit and proper."
(3.) A preliminary legal objection has been raised by the Respondents that in a situation when the entire shareholdings have been transferred by the Petitioner 15-10-2008, then the Petitioner had no legal right to file this Petition on 10th September 2014. By invoking the provisions of Sections 399 of the old Act the Respondents have challenged the "maintainability" of the Petition. While raising the legal objection through a reply submitted on 26-02-2015 the Respondents have confirmed that on 10-08-2005 the company was acquired and the Petitioner along with the two Respondents have been allotted 3,400 shares each. Thereafter in the year 2005 by a Board Resolution dated 15-11-2005, further 4,800 shares were allotted out of which the existing three shareholders were allotted 350 shares and a new shareholder was introduced by allotting her 3,750 shares. According to the Respondents, after the allotment of fresh 4,800 shares the original share certificates were cancelled and new share certificates were issued. The old share certificate No. 3 of 3,400 shares, which was originally issued in favour of the Petitioner, was cancelled. 3.1 The Respondents have also confirmed that there was further allotment of 2,13,750 shares held on 01-12-2007. The pattern of the allotment and shareholding had already been reproduced in the foregoing paragraph. 3.2 In respect of the amount of Rs. 20 lakhs contributed by the Petitioner, the Respondent has explained that as per the balance sheet drawn as on 31-03-2006 a sum of Rs. 12,50,000/- was brought in by the Petitioner and a sum of Rs. 2,50,000/- was brought in by his wife Mrs. Rucha Gandhi. It has also been clarified that HUF of the Petitioner had brought in a sum of Rs. 5 lakhs on 31-03-2008 as unsecured loan, duly reflected in the balance sheet for the period 2007-08. Therefore, the Respondent has affirmed that the total of all the three deposits thus amounted to Rs. 20 lakhs and further affirmed that it was an undisputed fact that the said amount was brought in by the Petitioner for the purpose of investing in the shares of the company. In support referred a correspondence dated 10-11-2005 made by the auditor of the company. In the reply the Respondent has also explained the delay in allotment of the fresh shares that the authorized share capital was only Rs. 1,50,000/- which was increased during the year ended on 31st March 2007. As a consequence, 2,13,750 shares were allotted on 01-12-2007. Since the Petitioner had already deposited the capital contribution hence with his consent fresh 71,250 shares were allotted to him. Out of the outstanding balance of Rs. 15 lakhs, an amount of Rs. 7,12,500/- was used towards allotment of shares and balance amount of Rs. 7,87,500/- was reflected in the accounts as per the balance sheet as on 31-03-2008 under the head Unsecured Loan. 3.3 The Petitioner had demanded refund of his investment and final settlement of his account vide letter dated 28-07-2008 and dated 29-09-2008. As per the Respondents, the account of the Petitioner was finally settled on 15-10-2008, duly signed by the Petitioner. As per the settlement the Petitioner had resigned w.e.f. 15-10-2008. Form No. 32 along with the letter of resignation was submitted to the Registrar of Companies. The resignation was also accepted at the Board meeting held in 15-10-2008. The entire shareholding of 75,000 shares were transferred equally in favour of Respondent No. 2 and Respondent No. 3. The original share certificates along with transfer deeds were handed to the Board of Directors at the Board meeting, claimed to have been held on 15-10-2008. This is the main reason for the preliminary legal objection as raised by the Respondents that in a situation when the entire shareholdings have been transferred by the Petitioner, therefore, having nil share on the date when the impugned Petition filed, the Petitioner had no locus standi in the eyes of law to file the petition. The second prayer of the Respondent is that the Petition is vitiated by delay and latches. According to the Respondents there was a long delay of 6 years. The Petitioner had resigned in the year 2008, however, the Petition was filed in the year 2014, resulting into the delay of long six years.;