Pravinbhai Manibhai Patel vs Kanakbhai Ratilal Patel

[Arising out of order dated 21.09.2017 passed by National Company Law Tribunal, Ahmedabad Bench in IA No.19 of 2017 in TP No.123/397- 398/NCLT/AHM/2016]

IN THE MATTER OF:

Mr. Pravinbhai Manibhai Patel 8, Satyam Apartments, 13, Sampatrao Colony Alkapuri, Vadodara - 390 007 ...Appellant (Original Respondent No.2)

Versus

1. Mr. Kanakbhai Ratilal Patel 57 Wavetree Road, Streatham Hill, London SW 2 3 SL (UK) Having Local Address at C/o. Mr. Sureshbhai P. Patel "Panch Bungalows", Behind Pankaj Parikh's Hospital, Near Shastri Park, Anand - 388 001, Gujarat ...Respondent No.1 (Original Petitioner)

2. Mr. Ashish Pravinbhai Patel 8, Satyam Apartments, 13, Sampatrao Colony, Alkapuri, Vadodara - 390 007 Gujarat ...Respondent No.2 (Original Respondent No.3)

3. Balajikrupa Estates Private Limited 8, Satyam Apartments, 13, Sampatrao Colony, Alkapuri, Vadodara - 390 007 Gujarat ...Respondent No.3 (Original Respondent No.1)

Company Appeal (AT) No.386 of 2017 2

4. Rama Lifespace Private Limited 101, Yuva Complex, Near Dr. Batra's Clinic Gotri Road, Vadodara - 390 007 Gujarat ...Respondent No.4 (Original Respondent No.4)

5. Mr. Chimanbhai Dahyabhai Patel Box 40916, Nairobi 00100 KE Having local address at C/o. Mr. Pravinbhai Ratilal Patel 8, Satyam Apartments, 13, Sampatrao Colony, Alkapuri, Vadodara - 390 007 Gujarat ...Respondent No.5 (Original Respondent No.5)

6. Mr. Bhupendrakumar Ravjibhai Patel 19, Dwarika Society, Behind Narmada Guest House, Race Course Circle, Vadodara - 390007 Gujarat ...Respondent No.6 (Original Respondent No.6)

Present: Shri Tushar P. Hemani, Advocate and Shri Mohit R. Balani, CA for the Appellant

Shri Pavan S. Godiawala, Shri Shwetank Sailakwal, Shri M.S. Vishnu Sankar and Shri Vatsalya. S., Advocates for the Respondents

ORAL JUDGEMENT 07.05.2018

A.I.S. Cheema, J. : We have heard counsel for both sides. In this

matter, Company Petition was filed before the then Company Law Board

and came up as T.P. before NCLT, Ahmedabad Bench. Company Petition

Company Appeal (AT) No.386 of 2017 3

was filed by Respondent No.1 - Original Petitioner on 5th October, 2015

making grievances of oppression and mismanagement against the

Respondents in the Company Petition. Present Appeal is by Original

Respondent No.2 against Impugned Order dated 21.09.2017 of NCLT

permitting filing of consent letters which would enable Petitioner to

maintain petition.

2. It appears that the Petitioner is shareholder of 6.66%

shareholding. He required 10% of the shareholding or 18,000 shares

while he had only 12,000 shares. He filed petition claiming consent

letters of other shareholders are being attached. Subsequently, the

Original Petitioner filed application - Company Application No.19/2017

(Appeal Page - 66) proposing to add 2 of the Directors who had been left

out as Respondents 5 and 6 and further stated in the application (Para

- 4) as under:

"It is further respectfully submitted that, due to oversight the

consent letters supporting the petition was left out and has

not come up on record though stated in the petition at

paragraph (2) in Particulars of the Petitioner(s) at page 6 but

due to inadvertence and oversight the copy of the consent

letters could not be produced along with the "Exhibit 4" with

the Company Petition. It is most humbly submitted that, the

copy of the consent letters be permitted to be produced along

with the petition and necessary amendment be permitted to

Company Appeal (AT) No.386 of 2017 4

produce the copy of the consent letter at Exhibit 4 and permit

the applicant - Petitioner to number such copy of the consent

letters as page nos. 80A onwards as part of the Exhibit 4, A

COPY OF THE CONSENT LETTERS are marked as Exhibit

"I" to the present application."

3. In the Company Application, he had earlier mentioned :-

"(2) PARTICULARS OF THE PETITIONER(S)

Mr. Kanak Patel, is a son of Mr. Ratilal Manilal Patel, occupation :

business, being the equity shareholders holding 12,000 number of

equity shares of the "Company" residing at the address mentioned

in the cause title. The other members - shareholders of the

"Company" holding in aggregate 35,000 number of equity shares

of the Company being aggrieved and dissatisfied with the ongoing

acts and conducts of oppression and mismanagement of the erring

Respondents', gave consent to the Petitioner to initiate appropriate

complaint/petition before the Hon'ble Company Law

Board/Tribunal for ongoing oppression and mismanagement

committed by the erring Respondents' and accordingly the

Petitioner along with other dissenting members holding in

aggregate 47,000 Number of equity shares which are fully paid up

and are members of the "Company" hereby prefer the present

petition. The copy of the consent letters and audited balance

Company Appeal (AT) No.386 of 2017 5

sheet as made available are collectively marked as "Exhibit

4"."

4. The application was heard by NCLT and 2 Directors who had

been left out were permitted to join. Regarding that aspect, there is no

dispute being raised before us.

5. However, regarding the permitting of filing of the consent letters,

various disputes were raised before NCLT and are being raised before us.

The learned counsel for the Appellant - Original Respondent No.2 is

submitting that the Company Petition purported to file consent letters of

35,000 shares but, however, no such consent letters were attached with

the Company Petition. According to him, Petitioner subsequently

tendered the consent letters (copies of which have been filed at Page - 72

to 79 in the Appeal). Referring to these documents, it is argued that these

are undated documents and they were not even notarized. Referring to

the consent letters at Pages - 75 to 79, it is stated that even distinctive

numbers or folio number, etc. were not mentioned and they are relating

to one Surendra Patel having 1250 shares and thus the 3 persons

represented basically one shareholder and even the transmission had

not come on the record of the Company. The learned counsel referred to

his reply filed in NCLT (Appeal Page - 80) and claimed that the Appellant

had raised contentions on the ground that the concerned rules

applicable for filing the consent letters have not been followed. It is

argued that even if the then applicable CLB Regulations, 1991 are

Company Appeal (AT) No.386 of 2017 6

perused and Regulations 14, 15 and 18 are seen, the Annexure - III of

the Rules Item No.27 prescribes requirement of letter of consent as well

as statement of particulars to be given. Learned counsel submitted that

no doubt format for letter of consent is not there but the required

statement of particulars requiring certain particulars and details has not

been given. Against this, the learned counsel for the Respondent No.1 -

the Original Petitioner has submitted that Petitioner did not have any

intention to create documents or else when the application to bring on

record the letters of consent was filed, the Original Petitioner could have

easily entered the dates etc. but he did not do so. He states that

inadvertently, the letters of consent remained to be attached and thus

request was made to attach the same. The learned counsel for the

Respondent No.1 - Original Petitioner states that the persons whose

consent letters were tendered and have now been accepted are family

members of the Original Petitioner and the Petitioner had followed the

necessary rules as required by the Company Law Board Regulations and

thus on technicalities the petition should not be thrown out.

6. Coming to the Impugned Order, the learned NCLT has dealt with

the rival contentions raised and referred to the fact that the Company

Petition did mention regarding the attaching of the consent letters. It

observed in para - 7 and 8 as under:-

"7. It is the version of the Applicant herein that due to

inadvertence and oversight the Consent Letters of the

Company Appeal (AT) No.386 of 2017 7

other shareholders could not be enclosed along with

Exhibit 4 although it is stated as enclosed with Exhibit 4

of the main petition. The main objection of the Respondent

is that the Consent Letters were not in existence when the

Petition was filed and they were later on brought into

existence. The contention of the learned Counsel for the

Petitioner/Applicant is that the consenting shareholders

are none other than the family members of the original-

Petitioner and therefore the non-existence of Consent

Letters as on the date of filing of the Petition does not arise.

The controversy, whether the Consent Letters were in

existence as on the date of filing of the Petition or they were

brought into existence subsequently, is not an issue to be

adjudicated in this Application. Petitioner specifically

stated in the Petition that shareholders holding 35000

equity shares gave Consent Letters. A perusal of the

Consent Letters filed along with this Application show that

they do not bear any date. No doubt, they are not

notarized. The genuineness or otherwise of the Consent

Letters also need not be gone into in this Application.

8. Another aspect raised by the Respondent is that

the persons who gave Consent Letters are not there in the

List of shareholders. This is also a matter that need not be

Company Appeal (AT) No.386 of 2017 8

probed in this Application at this stage. When there is an

averment in the Petition that Consent Letters were filed

and when they were not in fact filed, and when it is stated

by the Applicant that it was due to oversight, in such

circumstances, there is no point in refusing the request of

the Petitioner to file Consent Letters. The question whether

the filing of the Consent Letters, after the filing of the

petition, is sufficient compliance of Section 399 of the

Companies Act, 1956 or not, is also a matter that need not

be gone into in this Application. The proposed

Amendment, namely the filing of the Consent Letters, is

not against the pleadings on record. The proposed

Amendment is not going to change the cause of action. The

proposed Amendment is not going to cause any prejudice

to the contentions of the Respondents. Respondents are at

liberty to contend that valid consent is not there and the

Consent Letters are not valid, and the contention, that

consent Letters filed subsequently and not filed along with

the Petition, cannot be taken into consideration in deciding

the eligibility aspect."

7. Thus the NCLT did not go into the various controversies being

raised and stated that those were not the issues for the purpose of

adjudicating the application and it kept open the doors for Respondents

Company Appeal (AT) No.386 of 2017 9

(including present Appellant) to raise the dispute regarding valid

consent. What NCLT in effect has done is to accept the consent letters

on record and the grievances raised by Respondents have been left open.

8. The learned counsel for the Appellant has submitted that the

NCLT should have decided these contentions and the Appellant could

not be made to face the Company Petition unless the Original Petitioner

complies with the requirements as were prescribed under Section 399 of

the old Companies Act, 1958. We find that the NCLT has exercised

discretion and taken on record the consent letters tendered by the

Original Petitioner which Petitioner claimed to have been left out

inadvertently at the filing though Petition claimed that the same were

being filed. It will not be appropriate for us to interfere with the

Impugned Order on the discretion exercised and the contentions being

raised regarding the maintainability can be dealt with even at the time

of final disposal of the Company Petition. When the learned NCLT takes

up the matter to finally decide the Company Petition, even if at that

stage, NCLT comes to the conclusion in the Final Judgement that there

was any technical difficulty or defect in presentation it can decide the

same before deciding or dealing with the merits, and act accordingly.

9. One other contention raised by the learned counsel for the

Appellant is that in Para - 9 of the Impugned Order, the NCLT has

decided the question of limitation. We find that what Para - 9 of the

Impugned Order states is that Company Petition was filed on 5th October,

Company Appeal (AT) No.386 of 2017 10

2015, and the new Companies Act, 2013 came into force on 01.06.2016

and that under the old Act, there was no provision which said that the

provision of Limitation Act was applicable. This does not mean that the

learned NCLT has closed its doors to the averments which are open for

the present Appellant namely - whether or not there were delay and

latches.

10. There is no substance in the present appeal. The appeal is

dismissed. No order as to costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Balvinder Singh] Member (Technical) /rs/gc

Company Appeal (AT) No.386 of 2017