Shri Hasmukh Kanubhai Shah vs Aurobindo Pharmaceuticals Limited

NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI (APPELLATE JURISDICTION) Company Appeal (AT) (CH) No. 97/2023 (IA No. 1211/2023) In the matter of: Shri. Hasmukh Kanubhai Shah Having office at M/s. Shrinathji Hume Pipe Factory, At Dhokalia, Post Bodeli District, Chotaudepur, Gujarat, India ....Appellant V Aurobindo Pharmaceuticals Ltd. Situated at Plot No. 2, Maitri Vihar, Amirpet, Hyderabad - 500038, Telangana ....Respondent No.1 KFin Technologies Private Limited Situated at Plot No. 31/32, Karvy Celenium, Tower-B, Gachibowli, Financial District, Hyderabad - 500032 ....Respondent No.2

Present :

For Appellant : Ms. Natasha Dhruman Shah, Advocate For Respondents : Mr. Y. Suryanarayana, Advocate for R1 JUDGMENT

(Hybrid Mode)

Per: Justice Sharad Kumar Sharma, Member (Judicial):

1. In the instant Company Appeal, the Appellant claims himself to be the

holder of 500 shares in the Respondent No. 1 Company and contends that

through he was allotted the said 500 shares, the said share certificates were

actually handed over to him and that only a Delivery Memo dated 31.03.2025

Comp. App. (AT) (CH) No. 97/2023 Page 1 of 9 was received by him, which has been utilized by him as to be a document to

establish that, he was a holder of the shares, in Respondent No. 1 Company.

2. In the instant Company Appeal, the Appellant questions the propriety

of the impugned order dated 25.04.2023 as it was passed IA (CA) / 103 /

2022 in Company Appeal (IB) / 9 / 59 / HDB / 2022. The Appellant had

filed the said Application before Ld. NCLT, Hyderabad, in Company Appeal

(IB) / 9 / 59 / HDB / 2022, which was also filed by the Appellant under

Section 59 of Companies Act, 2013. The said application had been filed for

seeking condonation of delay of 308 days that has chanced in filing the

Company Appeal, which was rejected by Ld. Tribunal by virtue of the

impugned order.

3. The contention of the Appellant is that, the Appellant happens to be

the rightful shareholder of the 500 shares of Respondent No. 1 Company and

he contends that the said shares were allotted to him, by virtue of Folio No.

APL004523, and that, no Share Certificate was actually issued or handed

over to the Appellant till the date of filing of the proceedings under Section

59 of the Companies Act, 2013.

4. He contends and admits too in the pleadings, that vide email dated

10.08.2015, the Appellant for the first time was intimated that, the said 500

shares had been wrongfully transferred to a third party.

Comp. App. (AT) (CH) No. 97/2023 Page 2 of 9

5. The Appellant contends that the Appellant had issued notices on

07.04.2016 to the Respondents, which was replied by them on 11.05.2016,

replying that the shares had been transferred to the third Party as back as in

1998, and that as a very vague reply was extended by the Respondent on the

controversy pertaining to the alleged transfer of shares, he filed a

Commercial Civil Suit No. 90 / 2019 before the Court of Principal Senior

Civil Judge, Commercial Court, Vadodara, on 14.06.2019.

6. It is an admitted case of the Appellant that, after the response dated

11.05.2016 of Respondent No. 1 Company he became aware of the alleged

illegal transfer of the shares, and owing to the legal advice, which was

extended, he had opted to file a Commercial Civil Suit, being Commercial

Civil Suit, being Commercial Suit No. 90 / 2019, before the Court of

Principal Senior Civil Judge, Commercial Court, Vadodara, which was

instituted on 14.06.2019, seeking a recovery of Rs.3 Crores from the

Respondents in lieu of share value and the interest that would be payable on

it. The said suit was dismissed by an order of 05.10.2021 of the Ld.

Commercial Court on the ground, that the proceedings drawn before the

Commercial Court on 14.06.2019, was barred by limitation, having

computed the period of limitation from the date when the Appellant had

received the response to the notice given by him.

Comp. App. (AT) (CH) No. 97/2023 Page 3 of 9

7. The said finding, which has been recorded by the Judgment of

05.10.2021 dismissing the suit filed by the Appellant herein by the

Commercial Court, was on the ground of limitation and that would amount

to be an adjudication of the controversy on merits by a Court created under

law. Since, the proceedings before the Commercial Court was invoked by

the Appellant, the Appellant would be bound by the outcome of the

proceedings of Commercial Civil Suit No. 90 / 2019, and at this belated

stage, the Appellant cannot take an excuse to submit that the Commercial

Court did not have any jurisdiction to decide the controversy and

particularly, when the Appellant himself had invoked the jurisdiction and

had also faced the consequences of it by virtue of the Judgment which was

rendered on 05.10.2021, which has been accepted by him, without any

further challenge being given to it.

8. As per case of the Appellant, on the advice extended to him, the order

of 05.10.2021, as it was rendered in Suit No. 90 / 2019, was not challenged,

and that stands good and valid in the eyes of law, as against the Appellant.

Instead, at a very belated stage, the Appellant had chosen to prefer an Appeal

in Company Appeal (IB)/9/59/HDB/2022, under Section 59 of the

Companies Act of 2013, on the basis of the Notice of 07.04.2016, pertaining

to the controversy relating to the transfer of shares. The proceedings of the

said Appeal were carried before the Ld. Adjudicating Authority i.e. the Ld.

Comp. App. (AT) (CH) No. 97/2023 Page 4 of 9 NCLT, Hyderabad, and the same was dismissed by the Impugned Order

dated 25.04.2023, holding thereof that, the proceedings would not be

maintainable having been preferred at a belated stage with the delay of 308

days, in filing the Company Appeal.

9. The argument of the Ld. Counsel for the Appellant is that, the

Appellant would be entitled for the grant of benefit of provisions contained

under Section 14 of the Limitation Act, owing to the fact that the proceedings

preferred by the Appellant by way of Commercial Civil Suit No. 90 of 2019

was under a wrong advice and under a bonafide belief and hence, the period

which was spent in pursuing the proceedings before the Commercial Court,

deserves to be excluded while determining the aspect of limitation in the light

of the provisions contained under Section 14 of the Limitation Act, to be read

with Section 433 of the Companies Act, 2013, as the same would be

attracted.

10. Having heard the Ld. Counsel for the Appellant, this Appellate

Tribunal is of the view that, the Appellant cannot take the benefit of the

exclusion of the period, which was used up by him in instituting and pursuing

the proceedings of the Commercial Suit that is from 14.09.2019, till it was

decided i.e. on 05.10.2021, because, he had instituted the proceedings and

pursued the same. The issue of the judgment and the judgment was rendered

Comp. App. (AT) (CH) No. 97/2023 Page 5 of 9 on merits. It may be noted that the Principal Senior Civil Judge rejected the

plaint with the following observation:

`` ORDER The present suit stands dismissed under Section 3 of the Limitation Act read with Order 7, Rule 11(d) of the Civil Procedure Code as time barred. Hence, plaint is rejected as time barred.

This order be treated as a decree of rejection of plaint under Section 2(2) of the Civil Procedure Code.

Order pronounced in the open Court today on 5th day of October, 2021.''

11. The decision thus rendered therein, since being a decision on merits,

will stand, in the eyes of law, against the Appellant, because, the same has

not been put to challenge and once the decision of 05.10.2021 was a decision

on merits solicited by the Appellant himself, it will not provide him with an

alibi to seek exclusion of time from the limitation period under Section 14 of

the Limitation Act, 1963.

12. There is yet an another important feature, which is to be taken into

consideration, that in the finding, which has been recorded by the Ld.

Tribunal in Para 10 of the Impugned Order, it has been observed that, the

Appellant had the knowledge of the transfer of the said shares as back as on

11.05.2016, that the suit before the Commercial Court was instituted much

beyond the period of limitation as prescribed under Article 137 of the

Limitation Act, 1963, that the Commercial Court dismissed the said Suit as

Comp. App. (AT) (CH) No. 97/2023 Page 6 of 9 barred by limitation, and that seeking a condonation of delay which has

already been rejected by a competent Court on 05.10.2021, would be

tantamount to settling on Appeal over the order of the Civil Court which is

not provided in law.

13. If that be the situation where the suit before the Commercial Court

itself has been held to be barred by limitation, then quite obviously, the

period of limitation even if it is determined from 11.05.2016 for the purposes

of the Company Appeal, as preferred before Ld. NCLT, would too be barred

by limitation and hence, the aspect of condonation of delay which has been

considered by the Ld. Tribunal in the impugned order of dismissing the

Appeal on the ground that, it was barred by Limitation cannot be said to be

suffering from any apparent defect for the reason being;

(a) That the proceedings of the Commercial Court were solicited by

the Appellant himself;

(b) The Appellant had instituted the proceedings before the

Commercial Court itself after the expiry of the period of limitation

as contemplated under Article 137 of the Limitation Act, 1963;

(c) The Appellant had voluntarily contested the proceedings of the

Commercial Court and has invited the Judgment of 05.10.2021, on

merits;

Comp. App. (AT) (CH) No. 97/2023 Page 7 of 9

(d) The Judgment which was rendered by the Commercial Court on

05.10.2021, held that the suit, was barred by limitation and that the

said Judgment will amount to be a Decree standing against the

Appellant unless challenged and turned down by the Competent

Appellate Forum, and since the Appellant has not put a challenge

to it, then, for all practical purposes, the question of limitation will

always stand against the Appellant and the same cannot be

permitted to be recurringly agitated by a preference of a subsequent

Appeal under Section 59 of the Companies Act, 2013, before Ld.

NCLT.

14. The period of limitation as prescribed under Section 433 of the

Companies Act, 2013, to be read with Section 3 & Section 5 of the Limitation

Act, 1963, has to be determined from the date when the knowledge was

attributed to the Appellant, about the so called wrongful transfer of shares,

which apparently in the instant case is 11.05.2016, if that be so, the period

of limitation for the purposes of an Appeal under Section 59 of the

Companies Act, 2013, would have expired long back and the Appeal would

too be barred by limitation. Hence, the findings that has been recorded by

the Ld. Tribunal, dismissing the Appeal holding it to be barred by limitation

does not suffer from any apparent error, because, the Appellant under no set

Comp. App. (AT) (CH) No. 97/2023 Page 8 of 9 of circumstances would be entitled for the extension of benefit under Section

14 of the Limitation Act, 1963.

15. Apart from the above, the Appellant by his own conduct would be

bound by the Judgment and Decree rendered on 05.10.2021 by the

Commercial Court which will always operate as a constructive res judicata

against the Appellant. Thus, holding the Appeal to be barred by

limitation by Ld. NCLT does not call for any interference and the instant

Company Appeal (AT) (CH) No. 97 / 2023, for the aforesaid reasons, would

stand dismissed. All pending interlocutory Applications, would stand closed.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Jatindranath Swain] Member (Technical)

24/10/2025

SR / MS / RS

Comp. App. (AT) (CH) No. 97/2023 Page 9 of 9