Akal Spring Ltd. & Ors vs Amrex Marketing Pvt. Ltd

[Arising out of Order dated 23rd September, 2019 passed by the Adjudicating Authority (National Company Law Tribunal) Chandigarh Bench, Chandigarh in CA No. 67 of 2017 in diary No. 1991 dated 17.03.2017]

IN THE MATTER OF: Akal Spring Limited & Ors. .....Appellants Vs. Amrex Marketing Private Limited ......Respondent

Present :

For Appellants: Mr. Gaurav Varma, Surekh K. Baxy and Mr. Shantanu Singh, Advocates.

For Respondent: Ms. Niharika Ahluwalia, Mr. Kiran and Ms. Chetan, Advocates.

J U D G M E N T

VENUGOPAL M. J.

Heard the Learned Counsel for the Appellant.

It is the averment of the Appellants in I.A. No. 3632 of 2019 that the

certified copy of the Impugned order dated 23rd September, 2019 passed by the

Tribunal ('National Company Law Tribunal'), Chandigarh Bench, Chandigarh in

CA No. 67 of 2017 in diary No. 1991 dated 17.03.2017 was applied for by them

and in view of the fact that the limitation period in preferring the Appeal expires

COMPANY APPEAL (AT) NO. 326 OF 2019 1 on 07.11.2019, an exemption may be given to the Appellants from filing the

certified copy of the impugned order.

2. Taking into consideration of the aforesaid request made on the side of the

Appellants this Tribunal permits the Appellants to prefer the present Appeal

without the production of certified copy of the impugned order. However, this

Tribunal directs the Appellants to furnish the certified copy of the Impugned

Order dated 23rd September, 2019 in CA No. 67 of 2017 in diary No. 1991 dated

17.03.2017 within a week from today. Accordingly, I.A. No. 3632 of 2019

stands disposed of.

3. The Appellants / Respondents have preferred the instant Company Appeal

(AT)No. 326 of 2019 as 'Aggrieved Persons' in respect of impugned order dated

23rd September, 2019 passed by the Adjudicating Authority ('National Company

Law Tribunal') Chandigarh Bench, Chandigarh in condoning the delay of 186

days in CA No. 67/2017 in Diary No. 1991 dated 17.03.2017, in filing the Appeal.

4. Earlier, the Adjudicating Authority while passing the Impugned Order

dated 23rd September, 2019 in CA No. 67/2017 in Diary No. 1991 in condoning

the delay and allowed the application filed by the Respondent / Applicant

whereby a direction was issued to the Respondent / Applicant to deposit the cost

of Rs. 25,000/- in the 'Prime Minister's National Relief Fund' within two weeks

from the date of passing of the Impugned Order etc.

5. The Learned Counsel for the Appellants urges that the Adjudicating

Authority had failed to appreciate that the statutory prescribed time period to

COMPANY APPEAL (AT) NO. 326 OF 2019 2 supply for 'Transfer of Shares' and 'Rectification of Register' is 60 days from the

date of receipt of refusal or in case no notice of refusal was transmitted by the

Company, within a period of 90 days from the date of which the Instrument was

transferred was delivered to the Company.

6. In this connection, the Learned Counsel for the Appellants takes a stand

that while assuming jurisdiction, the Learned Adjudicating Authority does not

possess the power to condone the delay of 186 days, although, admittedly the

delay was more than 1700 days.

7. The Learned Counsel for the Appellants points out that the actual delay

was '1795' days as the request for registration of 'Transfer of Shares' was for the

first time made on 29th November, 2011 and the same was refused. In fact, the

cause of action for filing of the Appeal before the Tribunal had lapsed on 28th

March, 2012 and that the Respondent / Applicant had not ascribed any

sufficient reason to explain the delay.

8. The Learned Counsel for the Appellants point out that on 29.11.2011, the

Respondent / Applicant through its Director had applied for registration of

1,00,000 shares of the first Appellant in its name and that the Respondent /

Applicant applied to the 1st Appellant for 'Transfer of Shares' of the 1st Appellant

/ Company in its favour. Further, the shares applied for 'Transfer' by the

Respondent / Applicant are the same held by 'Unit Trust of India' (A/C Vecaus-

I) was of the 'Subscription Agreement' and the request was accompanied with

the 'Original Share Certificates', 'Original Transfer Deed', 'Memorandum and

COMPANY APPEAL (AT) NO. 326 OF 2019 3 Article of Association' of the Appellant / Company and the documents were

addressed to the Registered Office of the 1st Appellant / Company.

9. Added further, the Learned Counsel for the Appellants brings it to the

notice of this Appellate Tribunal that the 1st Appellant / Company had not

registered the 'Transfer of Shares' in favour of the Respondent / Applicant and

neither issued any notice of refusal and, therefore, as per the provisions of

Section 111A of the Companies Act, 1956, an Appeal before the Hon'ble Tribunal

ought to have been made within four months from the date of delivery of the

'Instrument of Transfer', i.e. on or before 28.03.2012.

10. The Learned Counsel for the Appellant(s) contends that the 1st Appellant

is a Public Limited Company providing for free transferability of shares and it

has in good faith on 22.12.2014, through its Director had responded to the letter

by informing the Respondent / Applicant for 'Transfer of Shares', the latter is to

comply with the statutory process and provide all mandatory requirements such

as 'Original share certificates', 'Transfer Deed' etc.

11. Yet another submission of Learned Counsel for the Appellants is that the

1st Appellant / Public Company had onwards responded to the request of the

Respondent and allowed it the Respondent to issue a 'Transfer Instrument' as

per Companies Act, 2013.

12. Expatiating his contention, the Learned Counsel for the Appellants puts

forth a plea that 'Refusal of Registration of Transfer of Shares' is effectively the

'Refusal of shares' and not the 'Instrument'. That apart, the Respondent in the

COMPANY APPEAL (AT) NO. 326 OF 2019 4 year 2011 had sought for the registration of 'Transfer of Shares' which was

deemed to be refused, as no acceptance of refusal was issued by the Appellants.

Subsequently, the Respondent / Applicant instead of preferring the 'Appeal'

before the Tribunal against the said refusal relodges a fresh instrument for

transfer of the same shares, with an intention to revive a time barred action.

13. The Learned Counsel for the Appellants submits that the Tribunal had

committed an error in applying its mind in respect of 'issue' of limitation by

blindly reported the decision of Hon'ble High Court of Calcutta reported in 2015

SCC online Cal 10466 M/s Mackintosh Burn Limited Vs. M/s Sarkar &

Chowdhury Enterprises Private Limited, in allowing the Application.

14. The Learned Counsel for the Appellants points out that the Tribunal

('National Company Law Tribunal') Chandigarh Branch had failed to consider the

decision of Hon'ble Supreme Court Mackintosh Burn Limited Vs. M/s Sarkar

& Chowdhury Enterprises Private Limited 2018 5 SCC Page 575 wherein it

was observed that the High Court on erroneous appreciation of facts recorded

that there were no other grounds except ground of limitation taken by the Public

Company. Also, the Hon'ble High Court at page 583 at para 19 interalia observed

.........."The order dated 16.09.2015 passed by

the Company Law Board, Kolkata Bench, Kolkata, the

order dated 15.10.2015 in Mackintosh Burn Ltd. v.

Sarkar & Chowdhury Enterprises (P) Ltd. 2015(SCC

Online Cal 10466) and the order dated 15.09.2017 in

COMPANY APPEAL (AT) NO. 326 OF 2019 5 in Mackintosh Burn Ltd. v. Sarkar & Chowdhury

Enterprises (P) Ltd. 2017 (SCC Online Cal 20415) are

set aside. The matter is remitted to the Company Law

Board, now the National Company Law Tribunal for

consideration afresh of the appeal filed under Section

58 of the Companies Act, 1956".

15. It is the contention of the Learned Counsel for the Appellants that the

period of 'Limitation' will commence from the date of first refusal to register the

'Transfer Instrument' in the year 2011 and that the ingredients of Section 111 of

the Companies Act, 1956 clearly provided that an 'Appeal' shall be made within

4 months from the date on which the 'Instrument of Transfer' was delivered and,

therefore, the time period for filing of the 'Appeal' expired on 28.03.2012. That

Apart, the Appellants take a stand that the Respondent / Applicant had not

exercised its available remedies within the 'Parameters' of Law and continued to

insist upon the 1st Appellant to register the 'Transfer Instrument' dated

29.11.2011 till 2015.

16. The Learned Counsel for the Appellants contends that in any event, the

Respondent / Applicant had not offered 'satisfactory reasons' to explain the delay

and has adopted a casual and laconic approach in its 'Application' for

Condonation of Delay.

17. Per contra, it is the contention of the Learned Counsel for the Respondent

that by means of Impugned Order dated 23.09.2019 passed by the 'National

COMPANY APPEAL (AT) NO. 326 OF 2019 6 Company Law Tribunal' Chandigarh Bench, Chandigarh that delay of 186 days

in preferring the application was condoned subject to certain direction being

issued thereto.

18. The Learned Counsel for the Respondent contends that the dispute

between the parties revolves around the "acquisition of 1,00,000 shares" of the

Appellant / Public Limited Company, by the Respondent / Applicant and

shockingly the Appellant / Company had refused to register the "Transfer of

Shares" on 19th August, 2016, on the pretext that the 'Articles of Association' of

the Public Limited Company contains a 'First right of refusal by other Members' .

19. The Learned Counsel for Respondent urges before this Court that the

request for 'Transfer of Shares' made by the Respondent / Applicant through

letter dated 29.11.2011 was never delivered to the Appellant and that the 1st

Appellant had categorically admitted that the Respondent's request through

letter dated 29.11.2011 was 'undelivered' and never received by it. Furthermore,

the 1st Appellant/ Public Limited Company in the letter dated 11.01.2016 had

requested for the 'Correct Share Transfer Form' so that they could register the

'transfer' in the name of the Respondent / Company and hence the Appellants

are estopped from taking a different plea.

20. It is the submission of the Learned Counsel for the Respondent that the

malafide act of refusal by the Appellant(s) to registering the 'Transfer of Shares'

is apparent from the fact that the 1st Appellant / Company through its letter

dated 25.07.2015 had offered to buy-back the 1,00,000 shares from the

COMPANY APPEAL (AT) NO. 326 OF 2019 7 Respondent and when this was refused on 19.08.2016 for the first time the

Appellant had raised the issue on registration of 'Transfer of Shares' in the

'Articles of Association'.

21. The Learned Counsel for the Respondent comes out with an argument that

the 'Issue of Limitation' is not to be pressed into service, to defeat the substantive

right of 'Transferee' which accrues to it by means of an 'Operation of Law'.

22. The Learned Counsel for the Respondent relies on the decision (Property

Company Limited vs. Rohinten Daddy Mazda, reported in (2017) 200

CompCas 87(Cal) wherein the order of 'Company Law Board' in condoning the

delay was not interfered with.

23. The Learned Counsel for Respondent places reliance refers to the decision

of Golden Vyapar (P) Ltd. & Ors. Vs. Shefali Papers Ltd. & Ors. wherein a

delay of approximately eight years was condoned.

24. The Learned Counsel for Respondent refers to the order dated 04.11.2017

of 'National Company Law Tribunal', Mumbai Bench between Kamlesh Kalidas

Shah Vs. State Bank of India Ltd. in Company Application No. 13/58(4) &

59/CLB/MB/MAH/2015 Under Section 58(4) & 59 of Companies Act, 1956

wherein at para - 7 interalia observed as follows: -

.........relief - "As a consequence, we are of

the considered view that on this technical

ground, specially when the matter related to the

COMPANY APPEAL (AT) NO. 326 OF 2019 8 period when the provisions of Companies Act,

2013 were not applicable, it is unfair, unlawful

and unjustifiable to throw this vigilant Petitioner

out of the litigation at the very threshold without

granting him an opportunity of hearing which

otherwise is his one of the judicial rights."

25. While winding up, it is the contention of the Learned Counsel for

Respondent that the delay in filing the Application before the Tribunal was

passed on the reason that the Respondent / Applicant of his registered Office

in Kolkata and that the Appellant's Office place his Office in Ludhiana and

further that the Respondent had to collect the documents from the year 2011

etc. and that the Hon'ble Tribunal was satisfied as to the instance of 'Sufficient

Cause' to condone the delay. Moreover, it is the case of the Respondent that

no prejudice would be caused to the Appellants, if the main matter was heard

on merits.

26. This Court has heard the Learned Counsel for the respective parties

and noticed their contentions.

27. At the outset, this Tribunal pertinently points out that the Impugned

Order dated 23rd September, 2019 in CA No. 67/2017 in Diary No. 1991 dated

17.03.2017 passed by the 'National Company Law Tribunal', Chandigarh

Branch pertains to 'Condonation of Delay Application' and therefore, this

COMPANY APPEAL (AT) NO. 326 OF 2019 9 Tribunal is not traversing upon the merits of the controversies between the

parties in main Dispute and also not delving deep into the same.

28. While dealing with an 'Application for condonation of Delay', the

concerned Tribunal / Appropriate Authority is only required to consider

whether the 'Plea of Sufficiency of Cause' is a reasonable one or otherwise,

of course after taking into consideration of the facts and circumstances of a

given case. Undoubtedly, consideration of an existence of a 'Sufficient Cause'

is within the ambit of the concerned Authority, which has to be exercised

based on sound judicial principles.

29. It cannot be gain said that 'Right to refuse' registration of transfer of

shares, 'Sufficient Cause' is question of law and the cause shown for refusal

is sufficient or otherwise in a given case, can also be a 'mixed question of law'

and fact. Besides this, a refusal may be on the basis of 'Breach of Law' or any

other 'Sufficient Cause'.

30. It is to be remembered under the Companies Act, 1956, in case of

refusal to transfer the shares by a Public Company, no time limit was

specified in filing an Appeal against 'Refusal' and whereas under the

Companies Act, 2013 it is mentioned that in case, the 'Transferee' receives an

intimation of refusal, an Appeal has to be filed within 60 days of such refusal

and in case any intimation was received by a person, then, within 90 days of

lodgement of the instrument of transfer with the Company.

31. As regards the 'Condonation of Delay' matter, the length and breadth

of the delay is an irrelevant one. On the other hand, the acceptance of COMPANY APPEAL (AT) NO. 326 OF 2019 10 explanation offered by a litigant / party is a material factor. If a party /

litigant exhibits a 'Sufficient Cause' for the delay in question, then an

Appropriate Authority may condone the delay and admit the main matter for

'Hearing' on merits.

32. One cannot brush aside a vital fact that in Law, a Lis' is to be decided

on merits and no party should be non-suited harping on technicalities and

also by adopting a pedantic approach.

33. There is no two opinion of the fact that although 'Day-Today'

explanation for 'Condonation of Delay' is not necessary, but 'Sufficiency of

Reason' must exist. As a matter of fact, the term 'Sufficient Cause' is not

defined in the 'Limitation Act, 1963', but the establishment of 'Sufficient

Cause' is a condition precedent for exercising the discretion by the 'Competent

Authority'.

34. At this juncture, a mere running of the Letter dated 11.01.2016 of the

1st Appellant / 1st Respondent addressed to the Respondent / Appellant

latently and patently indicates that the request of the Respondent dated

29.11.2011 was 'undelivered' and also it was mentioned that the Letter dated

11.10.2014 was never received by it etc.

35. In the present case, the Respondent / Company, is registered in West

Bengal has a registered office at Kolkata and that the 1st Respondent /

Appellant's Company registered office is situated at Ludhiana. Furthermore,

the Respondent / Applicant before the Tribunal had averred in the application

COMPANY APPEAL (AT) NO. 326 OF 2019 11 that 1st Appellant / Company had refused to register the 'Transfer of shares'

on 20.09.2016 and that the Respondent / Applicant had to collect documents

pertaining to year 2011, which were to be annexed along with the Application,

being necessary documents for arriving at a decision of the case.

36. Apart from that, the Respondent's stand is that documents were also

to be sent to Chandigarh, together with original of all the documents, as

enunciated by 'NCLT' Rules, 2016. In this background, according to the

Respondent / Applicant, the 'delay of 186 days' had occurred before the

Application was first filed in March, 2017. Also that the Tribunal had

exercised its discretion by allowing the CA No. 67/2017 subject to the deposit

of Rs. 25,000/- etc. and the same may not be interfered by this Tribunal, at

this stage in the interest of justice.

37. In the instant case on going through Impugned Order dated 23.09.2019

passed by the Tribunal, this Tribunal comes to a consequent conclusion that

the Tribunal had borne in mind the well settled principal in Law that when

the matter is 'fought on merits', the same is to be disposed of in accordance

with law etc. Viewed in this perspective, the Tribunal had allowed the delay

of condonation application in CA No. 67/2017 by passing the impugned order

dated 23rd September, 2019 by exercising its discretionary power based on

the facts and circumstances of the present case and the same, in the

considered opinion of this Tribunal requires no interference, because of the

COMPANY APPEAL (AT) NO. 326 OF 2019 12 reason the said order does not suffer from any material irregularity or patent

illegality in the eye of Law.

38. In view of the upshot, the Company Appeal (AT) No. 326 of 2019 fails

and the same is dismissed without costs. It is made quite clear that the

dismissal of present Appeal will not preclude the respective parties to raise

factual and legal pleas before the Tribunal at the time of hearing of Company

Petition. Connected Interlocutory Application No. 3631/2019 stands closed.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice Venugopal M.] Member (Judicial)

New Delhi

25th November, 2019

ss

COMPANY APPEAL (AT) NO. 326 OF 2019 13