Shri Shiv Raj Singh vs Kempty Konstruction Private Limited & ...

Shri Shiv Raj Singh ...Appellant Vs. Kempty Konstruction Private Limited & Ors. . . .Respondents

Present: For Appellant: - Mr. Manish Jam, Mr. Rakesh Wadhwa and Mr. Siddharth Sharma, Advocates.

For Respondents: - Mr. Mukesh Sukhija, Advocate for Respondent no.2. Ms. Aparna Mudiam, Assistant Registrar of Companies for Respondent no.5

ORDER

06.10.2017-

l.A. No. 544 of 2017:

An application for condonation of delay has been filed by the

appellant to condone the delay of three days in preferring the appeal.

Having heard learned counsel for the appellant and learned

counsel for 2nd Respondent and Assistant Registrar appearing on behalf

of Registrar of Companies and on being satisfied with the grounds

shown therein, the delay of 3 days in preferring the appeal is condoned.

I.A. No. 544 of 2017 stands disposed of.

Company Appeal (AT) No. 292 of 2017:

This appeal has been preferred by the appellant against the order

dated 10th July, 2017, passed by National Company Law Tribunal -2-

(hereinafter referred to as "Tribunal") New Delhi Bench, whereby and

whereunder the application preferred by the appellant under Sections

397 and 398 read with Sections 111, 402 and 403 of the Companies

Act, 1956 (now Section 241 of the Companies Act, 2013) alleging

'oppression and mismanagement' has been rejected.

2. According to the appellant, action on the part of the 2nd Respondent-

Shri Kamal Jain is oppressional to the appellant and the company. It

is submitted that the 2nd Respondent was Chartered Accountant of the

Company and having knowledge of all facts claimed to be

Member/Director of the company without any basis. It is also

submitted that the 'Memorandum of Understanding' of which the

Tribunal has taken note of, is not in existence and the Tribunal failed to

notice the aforesaid fact. It is also alleged that the 2nd Respondent

misused his fiduciary relationship as Chartered Accountant and at his

best 3rd and 4th Respondents were illegally inducted as the directors of

the company, as shareholders. Later on based on alleged 'Memorandum

of Understanding', the 2nd Respondent claimed to be 'shareholder' of the

company and illegally shown his name in the record.

3. Learned Counsel appearing on behalf of the appellant also

submitted that apart from the provisions of Sections 397 and 398, the

petition was also filed under Section 111 read with Sections 402 and

403 of the Companies Act, 1956 and, therefore, the Tribunal was bound

to decide the validity of shares issued in favour of the 2nd Respondent. -3-

It is submitted that the alleged transfer of shares were not issued in its

proper perspective.

4. Learned counsel appearing on behalf of the 2nd Respondent

referring to paragraph no. 13 of the impugned order dated 10th July,

2017 submitted that Form-32 along with his resignation letter was duly

uploaded with the Registrar of Companies and, therefore, the Tribunal

rightly held that the application, at the instance of the appellant, was

not maintainable because of suppression of Memorandum of

Understanding.

5. In this regard, it is desirable to refer the observations made by the

Tribunal in paragraph no. 13 of the impugned order, as quoted below: -

"13. From the pleadings on record, documents

relied, and upon hearing arguments addressed by

the Ld. Counsels, this Bench is of the opinion that

the resignation of the petitioner cannot be opined

as being fraudulent. His allegations of removal as

a Director of the respondent company are also

without any legs to stand upon. Form 32 along with

his resignation letter was duly uploaded with the

ROC. It is the easiest of the allegations to deny a

document as being forged or the digital signatures

being misused by any other person. This has to be -4-

seen in conjunction with the other ancillary facts.

There is no denial to the execution of the MOU

which clearly acknowledges money being received

by the petitioner with the understanding that upon

failure to return the loan, respondent no. 2 would

be entitled to transfer the same to himself The

petitioner has nowhere denied taking financial

assistance, nor having executed the MOU. Further,

he has not been able to show that he has failed to

liquidate the loan. Under such circumstances, it

cannot be said that the transfer of 998 shares was

not for valuable consideration received. As per the

Annual Return filed for the year 2007-2008, it has

clearly been reflected that while Respondent no. 2

holds 998 shares, the petitioners shareholding is

"zero". This return bears the digital signatures of

the petitioner as well as the Company Secretary,

ShriA. K. Popli."

6. Having heard learned counsel for the parties, while we are not

inclined to interfere with the impugned order dated 10th July, 2017 for

the reasons recorded below, we are of the view that the matter relating

to transfer of shares can be decided independently, uninfluenced by any -5-

observations made by Tribunal in the impugned order dated 10th July,

2017.

7. According to appellant, the 2nd Respondent is not a member of

the company. He is not a shareholder. He was the Chartered Accountant

of the company who has illegally introduced and brought on the Board

of Directors the 3rd and 4th Respondents and taken various steps illegally

oppressive to the members and the company. If the stand taken by the

appellant that the 2nd respondent is not a member, the petition under

Sections 397 and 398 (now Section 241 of the Companies Act, 2013)

against the said Respondent is not maintainable. In so far as the

question of legality and proprietary of share is concerned, we are of the

viewthat such dispute cannot be decided in a petition under Sections

397 and 398 of the Companies Act, 1956. If the original shares are with

the appellant and appropriate form of transfer has not been signed by

him, or if signed, has lapsed, it is always open to the appellant to file an

application separately under Section 59 of the Companies Act, 2013 for

rectification of Register of Members by requesting the company to delete

the name of 2nd or other Respondent(s), if recorded. In case of refusal,

it was open to the appellant to move before the Tribunal against the

order of refusal.

8. For the reasons aforesaid, while we are not inclined to interfere with

the impugned order dated 10th July, 2017 passed by the Tribunal in

Company Petition No. 1 04(ND) /2011, allow the appellant to file an -6-

application under section 59 of the Companies Act, 2013 before the

company for deletion of the name of the persons whose names have been

wrongly included the 3rd and 4th Respondents. In such case, if the

appellant prefers any application within three months before the

company and the matter is not entertained or refused, it will be open to

the appellant to move before the Tribunal against such order. On such

petition, the Tribunal will consider the same on its merit after notice to

the parties uninfluenced by the impugned order dated 10th July, 2017.

9. The appeal stands disposed of with the aforesaid observations and

directions. No costs.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice A.I.S. Cheema) (Balvinder Singh) Member (Judicial) Member(Technical)

Ar