M.K. Shrawat, Member - (1.) The main Petition (CP No. 93 of 2013) was filed before the then CLB on 10th September, 2013. On receiving the Petition the Respondent has challenged the maintainability of the Petition by filing an Application (CA-266 of 2013) dated 28th September, 2013. The said Application, challenging the maintainability, is at present under consideration.
(2.) Facts OF THE CASE:-The main reason on the basis of which the Respondent/Applicant has challenged the main Petition was that on account of a Family Settlement the Petitioner (stated to be the only representative of the Kailashchand Kanodia Family) had transferred the entire shareholding of the Respondent No. 1 Company as a result ceased to have any interest in the Respondent No. 1 Company. For ready reference only the relevant portions of the impugned Application are extracted below: "(a) This Petition is filed by the Petitioner under Section 397 and 398 of the Act in respect of Kanodia Tex Industries Limited which is the 1st Respondent herein. The Petition is filed on the basis of a false averment by which the Petitioner claims to be the owner of 50% shareholding in the 1st Respondent but without producing either the share certificates or even giving particulars of his alleged shareholding. (b) The Petitioner is the son of one Kailashchand Kanodia, Kailashchand Kanodia, Mahavir Prasad Kanodia and Brishbhan Kanodia are brothers. Prior to 1990, the families of Kailashchand Kanodia, Mahavir Prasad Kanodia and Brishbhan Kanodia were pint and carried on joint family businesses, particularly textile business, under diverse partnerships and limited companies including the 1st Respondent. In or around 1987, with the downturn in the textile business, the family businesses were adversely affected and ran into huge losses. The said Kailashchand Kanodia and his family decided to separate out from the joint family businesses including the 1st Respondent it was mutually decided in the business and assets of the 1st Respondent. (c) Thus on November 16, 1990 Mr. Sanjay Kanodia and the Petitioner, who were the children of Kailashchand Kanodia, resigned as directors of the 1st Respondent The Applicant craves leave to refer to the resignation letters dated November 16, 1990 when produced. On November 30, 1990 the Petitioner, who was the only representative of the Kailashchand Kanodia family in the 1st Respondent, transferred his entire shareholding to the family members of Mahavir Prasad Kanodia and Brishbhan Kanodia. The Applicant craves leave to refer to the relevant share certificates in that regard. Thus, in terms of the family settlement, the Kailashchand Kanodia family ceased to have any Interest in the 1st Respondent. Effective November 16, 1990 they ceased to be directors of the 1st Respondent and effective November 30, 1990 the Petitioner has ceased to be a shareholder of the 1st Respondent. (d) This Family Settlement between the three families viz. Mahavir Prasad Kanodia, Brishbhan Kanodia and Kailashchand Kanodia who also recorded in a writing dated January 8, 1991, who was signed by the three brothers. This writing, which the Applicant believes is in the handwriting of the Petitioner, records the separation of Kailashchand Kanodia and further records that he will not have any Interest in the 1st Respondent Hereto annexed and marked Exhibit "A" is a copy of the said record of Family Settlement dated January 8, 1991. (e) The Petitioner has ceased to have any interest in the 1st Respondent since the year 1990. On the date of the Petition, the Petitioner is neither a shareholder nor a member of the 1st Respondent The Petitioner has no locus to maintain this Petition and does not fulfill the qualification contemplated under Section 399 of the Act. The Petition is not maintainable at the instance of the Petitioner. Without prejudice to the aforesaid, it is submitted that the Petition does not even aver that the facts would justify the making of a winding up order on the ground that it was just and equitable that the 1st Respondent should be would up, but to wind up the 1st Respondent would unfairly prejudice its members. This mandatory requirement of Section 397(2)(b) is not even averred in the Petition. On this ground also the Petition is not maintainable and must be dismissed."
(3.) On receiving the aforementioned preliminary objection, i.e. the impugned Application, now under consideration, the Petitioner (Respondent to the Application) has filed Reply on 10th February, 2014 wherein it was vehemently objected that the Petitioner was not a signatory of the alleged Family Settlement dated 8th January 1991, as well as, challenging the authenticity of the said document. The Petitioner has also submitted that being an original Director, he subscribed 21 Equity Shares at the time of incorporation, which constituted 50% Shareholding. It is stated that although the Petitioner was not in possession of the Share Certificates but the Respondents have also failed to provide inspection of the relevant documents. For ready reference only relevant portions of the Reply are extracted below:- "2. The Answering Respondent's Application contending that the Petitioner is not a member/shareholder in the 1st Respondent Company is premised on a family settlement alleged to have been recorded in a document dated 8th January 1991, However, the Petitioner is not a signatory to the alleged Family Settlement dated 08 January 1991 annexed and marked as Exhibit A to the Application, and can in no manner be bound by it. The Petitioner challenges the authenticity of the document appended at Exhibit A which in any event does not appear to have been stamped in accordance with law, and is thus and otherwise unenforceable, in law. 3. Furthermore, at the hearing held on 16 September 2013, the Answering Respondent had claimed to be in possession of the "Cancelled share certificate" of the Petitioner, which the Answering Respondent has unsurprisingly failed to produce, or annex to his Application. In view thereof, it would follow that such assertion was false and misleading, and for that reason too, the present Application is liable to be dismissed in limine. 4. The contents of Paragraph 1 that the Petition is not maintainable and/or without jurisdiction, are denied. In regard to Paragraph 1.1, it is denied that the Petitioner is not a shareholder of the 1st Respondent Company on the date of the Petition and does not possess the necessary Qualification under section 399 of the Companies Act, 1956("Act") Significantly, the Answering Respondent does not deny that the Petitioner was an original director of the Respondent No. 1 Company, having subscribed to 21 equity shares at the time of incorporation, which constituted 50% shareholding in the Respondent No. 1 Company. The Answering Respondent has failed to produce any document in support of its assertion that the Petitioner is not longer a shareholder/member of the 1st Respondent Company. Consequently, interim reliefs cannot be denied merely on the basis of unfounded allegations made in the present Application. In regard to Paragraph 1.2, the procedural allegation that the Petition does not comply with the mandatory requirement prescribed under Section 397(2)(b) of the Act for the Tribunal to exercise jurisdiction is denied. Section 397(2)(b) merely provides the criterion for the Company Law Board to satisfy itself in an application made under sub-section (1) of section 397. 5. The contents of Paragraph 2 that the Petition is filed on the basis of a false averment that the Petitioner holds 50% shares in the 1st Respondent, are denied. It is denied that the Petitioner has not given the particulars of his shareholding. The Petitioner is not in possession of the share certificates, which are admittedly in the custody of the Answering Respondent. The Petitioner's shareholding at the time of incorporation of the Respondent No. 1 Company is incontrovertibly established by the documents annexed to the Petition, Including the Articles of Association and Memorandum of Association, and the Answering Respondent has failed to either deny the same, or produce any documents that demonstrate any change in circumstances since incorporation. 6. ................ 7. The Petitioner puts the Answering Respondent to strict proof of the contents of Paragraph 4 that the Petitioner and his brother Sanjay Kanodia resigned as directors of the 1st Respondent Company. It is denied that the Petitioner transferred his entire shareholding to the family members of Mahavir Prasad Kanodia and Brishbhan Kanodia. The Answering Respondent, while making these false and baseless allegations in regard to the Petitioner's resignation as a director and/or transfer of shareholding, has failed to produce any documents in support of such allegations. Without any such documents in support, no allegation made by Answering Respondent is liable to be taken cognizance of. It is denied that it was in terms of any alleged family settlement that the Petitioner ceased to have any interest in the 1st Respondent Company. It is denied that the Petitioner ceased to be a director or a shareholder, as alleged or otherwise. 8. ............... 9. The contents of Paragraph 6 that the Petitioner has ceased to have any interest in the 1st Respondent since the year 1990, are denied. It is denied that on the date of the Petition the Petitioner is neither a shareholder nor a member of the 1st Respondent. It is denied that the Petitioner has no locus to maintain this Petition and does not fulfill the Qualification contemplated under Section 399 of the Act. It is denied that the Petition is not maintainable. It is denied that the Petition does not comply with the mandatory requirement prescribed under Section 397(2)(b) of the Act for the Tribunal to exercise jurisdiction. Section 397(2)(b) merely provides the criterion for the Company Law Board to satisfy itself with in an application made under sub-section (1) of section 397.";