ANAND HEMANT PATEL Vs. ORNATE CLUB PVT LTD

JUDGEMENT

(1.) SHRI Anand Hemant Patel has filed seven appeals under Section 111 of the Companies Act, 1956, referred to above for rectification of the register of members of these companies for restoring the name of his father SHRI Hemant Hari Patel in the register of members of these companies wherever the same has been omitted. Since the relief sought for by the petitioner is common in all these seven appeals and the facts are also identical, these appeals are being disposed of by this common order.

(2.) The petitioner submits that the aforesaid seven companies are part and parcel of a group known as the Ornate group. He further submits that the articles of association of these companies provide for equal representation for various groups who joined together to incorporate themselves into the company. He further submits that at the time of incorporation there were six groups each having a one sixth share in the capital of the company and the articles of association of the company clearly set out the same. The petitioner further submits that out of the original six groups, two have retired or resigned and their shareholding has been equally divided amongst the remaining four groups with the result that these remaining four groups, viz., the Jaimal K. Shah group, the Hemant Patel group, the Suhas S. Pethe group and the Amar Vadhwani group, each became entitled to an equal one-fourth share in the capital of the company and thus accordingly held by them. The petitioner further submits that his father Hemant Hari Patel, suddenly died of a massive heart attack on or about December 3, 1990, and he is the only son of Hemant H. Patel and at the relevant time studying in the United States of America. The petitioner further submits that on return from America during the course of enquiries he met with his late father's associates who were the directors of the company when he was informed that according to them his late father's shares were still in his name and to the best of their knowledge not transferred or allotted to the three surviving groups. The petitioner further submits that the manner in which the shares of earlier groups have been dealt with by the company, it is a glorified partnership with the partners all having equal representation/participation in the shares of the company. He further submits that the practice adopted by the company in respect of the shares held by any of the groups on retirement of the group is to divide the shares held by the retiring group equally amongst the others. The petitioner further states that being concerned about his father's one fourth share in these companies, the petitioner applied for permission to intervene in the petition pending in the Company Law Board, Principal Bench, having regard to the fact that the respondents are companies, the name of a deceased shareholder cannot be deleted or omitted from the register of members without substituting the same with the name of the heirs and/or legal representatives or without following the due process of law. Accordingly, the petitioner has called upon these companies to transmit the shares held by his late father in the company but had not received any reply therefrom. The petitioner further submits that the Company Law Board, Principal Bench, vide its order dated May 12, 1997, has advised the petitioner to apply under Section 111 of the Companies Act for rectification of the register of members which the petitioner is doing by making these petitions.

(3.) THE respondent company vide its reply dated February 21, 1998, has confirmed that there are seven companies of the Ornate group and the parent company is Ornate Club Private Limited and the other six companies are its sister concerns. THEy have further confirmed in their reply that initially six groups were involved in the formation of these companies and further that all these groups are mentioned in the articles of association of the company and the two directors from each group were the first directors and permanent directors of the company. It is further confirmed that the Ashok Shah group and Suneet Rekhi group disassociated themselves from the company. THE shareholding of the remaining four groups was then reconstituted and each group came to hold 25 per cent, of the total equity of the company. THE letter from the petitioner's advocate wherein he claimed all the shares held by the Hemant Patel group was placed before the meeting of the board of directors held on July 7, 1997. Mr. Jaimal Shah claimed to have purchased the shares of Mr. Hemant Patel during his life time and hence it was decided in the said meeting to address a letter to Mr. Jaimal Shah in this respect. Mr. Jaimal Shah in his reply once again claimed that he has purchased the shares of Hemant Patel in his life time. However, no proof of any transaction was furnished by him. THE matter was accordingly considered by the board of directors on October 9, 1997. After a detailed discussion, the board of directors passed a resolution by majority accepting the claim of the petitioner to the extent of shares held by Hemant Patel. THE board of directors also resolved to restore the name of Ms. Sudha Trivedi, a nominee of Hemant Hari Patel, as a shareholder in respect of shares held by her. It was also decided that since the matter of rectification of the members' register was before this board, the resolution would be given effect to only after the petition was disposed of and after the Hon'ble Board passed the necessary orders.