MANSANI CONSTRUCTIONS PRIVATE LIMITED Vs. STATE

JUDGEMENT

(1.) THE petitioner claiming 40% of the paid up capital of M/s. Mansani Constructions Private Limited ("the Company"), by virtue of transfer of 23,200 shares effected by certain shareholders in January 2007, has invoked the jurisdiction of the Company Law Board for reliefs under Sections 397 and 398 of the Companies Act, 1956 ("the Act"), on account of certain acts of oppression and mismanagement in the affairs of the Company and pending the making of final order, the petitioner, with a view to regulate the conduct of the Company's affairs, has been urging for interim reliefs, as under:

(2.) Shri V.S. Raju, learned Counsel has challenged the very maintainability of the company petition on the premise that the petitioner is never a shareholder of the Company and that the purported board minutes dated 23.01.2007, disclosing the consent of the board of directors for the transfer of 23,200 shares (200 + 5000 by third respondent and 18,000 by second respondent) are fabricated, without conveying any valid title in favour of the petitioner. The petitioner, taking advantage of the signatures of the second respondent on blank papers, has fabricated the minutes of the board meeting allegedly held on 23.01.2007. The disputed board minutes are comprised of four sheets, whereas, the last sheet does not contain the signature of the second respondent, which confirms the manifestation of the board minutes at the instance of the petitioner. The petitioner, in support of his title to the shares, has not chosen to produce the original share certificates or any particulars thereof such as share certificate numbers or distinctive or folio numbers or instruments of transfer, in the absence of which he cannot validly claim to be a shareholder of the Company. The petitioner has not produced any material establishing the payment of any consideration for acquiring 23,200 shares from the respondents 2 & 3. The second respondent has been carrying on construction activities, in the name of the fourth respondent, since the year 1999 and later in 2004, expanded the construction business by incorporating the first respondent Company. The petitioner, working as an executive engineer with Government of Andhra Pradesh, never involved in any of the activities of the Company. At the insistence of the petitioner, on taking voluntary retirement, he came to be inducted in the board of the Company, for which no qualification shares need be held, in terms of Clause 37 of the articles of association of the Company. Thus, the petitioner is a director, but never a shareholder, as claimed by him.

(3.) I have considered the arguments advanced on behalf of the parties. The legality of acquisition of 23,200 shares by way of transfers, in the name of the petitioner, on strength of which the provisions of Sections 397 and 398 have been invoked, is being seriously challenged, which necessarily necessitates the Bench to adjudicate the issue of maintainability of the main petition, as provided in Section 399 of the Act, without, however rejecting it in limini and disqualifying the petitioner at the threshold. The petitioner's shareholding is claimed beyond 10% of the issued and paid up capital of the Company on basis of the transfers effected by the respondents 2 & 3, which are impugned by the second respondent. The petitioner, in the words of the second respondent is a director but never a member of the Company, whereas the former is sustaining his title to the impugned shares on the lone board minutes dated 23.01.2007 approving the transfers, the relevant portion of which recites as under: