BAKHTAWAR CONSTRUCTION CO PVT LTD Vs. BLOSSOM BREWERIES LTD

JUDGEMENT

(1.) THE petitioner has filed this instant petition under Section 247/250 of the Companies Act, 1956, seeking an order of investigation into the ownership of various shares of Blossom Breweries Ltd. as indicated in annexure "IV" to the petition on the ground that the names of shareholders mentioned therein are fictitious/non-existent/benami. Certain interim reliefs have also been sought. Hearing on interim relief was fixed for December 13, 1996. On that day, in spite of notice, none from the respondent's side appeared. Accordingly, with a notice to the respondent, the matter was heard on December 24, 1996, by which time the respondent company had filed its reply to the petition. At the time of hearing, counsel for the respondent, Shri S. H. Doctor, made a submission, that, before interim prayers are considered the maintainability of the petition should be decided. THE authorised representative for the petitioner, Shri T. M. Khumri stated that since he received a copy of the reply only a day before, he should be given time to file his rejoinder. However, in view of the issue regarding maintainability being raised, we suggested to Shri Khumri that he should argue on the maintainability of the petition.

(2.) According to. Shri Khumri, the company had come out with a public issue in March, 1993. When the petitioner had asked for a certified copy of the list of members in June, 1996, and when the company failed to supply a copy, the petitioner sought the intervention of the Company Law Board, Western Bench, under Section 163 of the Companies Act for an order to direct the company to supply a copy of the list of members and on an order made by the said Bench, a copy was made available to the petitioner. On receipt of the list of members, the petitioner issued notices to 200 members asking them to confirm their shareholding in the company. Out of these 200 notices, 28 were returned by postal authorities as "incomplete address" and 14 were returned as "unknown". In addition, the petitioner also obtained affidavits from three persons to show that either the purported shareholder does not reside at the address shown or the shareholding as stated in the list of members was not correct. Further, the petitioner also came to know from one of the ex-directors of the company, Ms. Zeenia Lawyer, that the directors of the company had substantial shareholding in Shapien Consultants Pvt. Ltd. who were the registrars to the issue. This registrar to the issue had not complied with the provisions of law in processing the application for shares and allotment and subsequent transfers. According to him, an investigation into the shareholding would reveal that the shares have been issued in the name of benami, fictitious or non-existent persons. Further, the petitioner has apprehensions that many transfers of shares have taken place the details of which he is not aware. An investigation under Section 247(1A) of the Act, according to him, would help to find out the relevant facts about the true owners and the means of finance for purchase of the shares. He further stated that unless otherwise restrictions under Section 250 of the Act are imposed, the facts cannot be found out. According to him, the petitioner has already made complaints to the SEBI, the stock exchange, the Registrar of Companies and the Regional Director for a thorough enquiry into the entire allotment and transfers.

(3.) WE have considered the pleadings and arguments. This petition has been filed under two Sections, viz. Section 247/250. As per the provisions of Section 247(1A), the Company Law Board is empowered to invoke the powers to order investigation in the course of any proceeding before it if the conditions as specified therein are satisfied. In other words there should be a proceeding before the Company Law Board before it invokes its power under Section 247(1A). On the question whether a complaint can be entertained under Section 250(1) so as to make it a proceeding under Section 247(1A), the Company Law Board has held in the affirmative in Smt. Padma Taparia v. Assambrook Ltd. [19971 88 Comp Cas 838 (CLB). While coming to this conclusion, the Company Law Board-considered the words "on a complaint made by any person in this behalf" as used in Section 250(1A) and held that a complaint under the Section should be with reference to "situations" in which a reference could be made by the Central Government under Sections 250(1) to the Company Law Board. Under Section 250(1), the Central--Government can make a reference in connection with any investigation under Sections 247, 248 or 249. Therefore, to entertain a petition, under Section 250(1), the grounds specified under these sections should be first satisfied. In other words, Section 250(1) is only facilitative in nature to consider ordering investigation under Section 247, 248 or 249. Since this petition is under Section 247, we have to examine whether the situations contemplated under this Section are satisfied.