Sanjay Goel vs Majestic Builcon Pvt. Ltd. & Ors

Majestic Buildcon Pvt. Ltd. & Ors. ...Respondents

Present:

For Appellant : Mr. Pawan Sharma and Ms. Arpita Yadav, Advocates

For 1st Respondents: Mr. Sumant Batra, Mr. Devendra Singh, Advocates Mr. Karighna Jaiswal, CS

ORDER

21.02.2018 This appeal has been preferred by the appellant (hereinafter

referred to as the 'petitioner') against the order dated 30th November, 2017

passed by the National Company Law Tribunal, New Delhi Bench (hereinafter

referred to as the 'Tribunal') in C.P. No. 70(ND)/2017 whereby and whereunder

the application preferred by the petitioner under Section 241 read with Section

242 of the Companies Act, 2013 has been rejected on the ground of delay and

also on merit.

2. Learned counsel appearing on behalf of the appellant submits that shares

were transferred in the year 2007, 2009 and 2010 without following the

substantive provision of Articles of Association. Reliance has been placed on

Article 11 of Articles of Association, which reads as follows: 2

"Article 11

"Any member desiring to sell any of his shares must

notify the Board of Directors of the number of shares,

the fair value and the name of the proposed transferee

and the Board must offer to the other shareholders the

share offered at the fair value and if the offer is

accepted, the shares shall be transferred to the

acceptor and if the shares or any of them are not so

accepted within one month from the date of notice to the

Board the Members proposing transfers shall, at any

time within three months afterwards, be at liberty,

subject to Articles 12 and 13 hereof, to sell and transfer

the shares to any persons at the same or at higher

price.

In case of any dispute, regarding the fair value of

the share it shall be decided and fixed by the

Company's Auditor whose decision shall be

final."

3. It is submitted that the Tribunal without calling for the relevant records

relating to share transfer deeds and share certificate from the respondents and

without taking into consideration the facts that there is a continuous cause of

Company Appeal (AT) No. 56 of 2018 3

action of alleged illegal transfer of shares dismissed the application on the

ground of delay and on merit.

4. We have heard the learned counsel for the appellant and perused the

record. Article 11 relates to a member desiring to sell any of his shares, which

is required to be notified by the Board of Directors giving the number of shares,

fair value and the name(s) of the proposed transferee etc. In the present case, it

is alleged that transfer and acquisition of 50,000 shares of 3rd respondent and

90,000 shares of 5th to 9th Respondents in favour of 2nd respondent were illegal

and were made without following the procedure. It is further alleged that non-

transfer of plot of 300 sq. mt. by 2nd respondent to the 1st respondent company

amounts to alleged siphoning of the funds to the said company.

5. It is not in dispute that the shares were transferred by 3rd respondent to

4th respondent in the year 2007. 3rd respondent also sold its share to 4th

respondent on 1st June, 2007 as he was unable to pay the subscription money.

Those shares subsequently transferred by 4th respondent to 10th to 12th

respondents in the year 2009. The transfer of the shares by 3rd respondent to

the 4th respondent in the year 2007 could have been objected to at the very

threshold particularly when the annual returns were filed by the company for

the year 2009, 2010 and 2011 on 5th January, 2012, 11th July, 2012 and 22nd

February, 2013 respectively. Admittedly, no action were taken by the appellant

and he raised the grievances after about 7 to 10 years of transfer of shares, that

too by preferring an application under Section 241 read with Section 242 in the

year 2017.

Company Appeal (AT) No. 56 of 2018 4

6. Section 433 of the Companies Act, 2013 relates to 'limitation' and reads

as follows:

"Limitation - The provisions of the Limitation Act, 1963

(36 of 1963) shall, as far as may be, apply to proceedings

or appeals before the Tribunal or the Appellate Tribunal,

as the case may be."

7. In the present case as all the allegations have been made after more than

7 to 10 years of transfer of shares and there is no continuous cause of action,

we hold that application under Section 241 read with Section 242 is barred by

limitation. For the reasons aforesaid, we are not going into the merit of the

allegation as made by the appellant. The appeal is accordingly dismissed. No

cost.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice Bansi Lal Bhat ] Member (Judicial)

/ns/uk

Company Appeal (AT) No. 56 of 2018