Tajinder Singh Bhathal vs Mrf Limited

NATIONAL COMPANY LAW APPELLATE TRIBUNAL CHENNAI BENCH (APPELLATE JURISDICTION) Company Appeal (AT) (CH) No. 94/2023 (IA No.1191/2023) IN THE MATTER OF: 1. Mr. Tajinder Singh Bhathal, Adult, Indian Inhabitant, Bunglow No. 25, Konarkvilla, Talera Park co. Housing society, opp. Dr. Erin Nagarwala High School, Kalyani Nagar Pune - 411006, Maharashtra, India ... Appellant Versus 1. MRF Limited, a Company incorporated under the Companies Act, 1956 having its Registered office at New No.114 (Old No.124), Greams Road, Chennai-600006, Tamil Nadu, India ... Respondent No. 1

2. К. В. Munivenkata Reddy, Adult, Indian Inhabitant, No. 1, Konena Agrahara, H.A.L.P.O, Bangalore- 560017, Karnataka, India ... Respondent No. 2

3. Kumar V Jahgirdar, Adult, Indian Inhabitant, #78, 1st Floor, Osborne Road, Bengaluru-560042, Karnataka, India and/or Flat No. 3, Natasha Penta, Infantry Road Cross, Bangalore - 560001. ... Respondent No. 3

Comp. App (AT) (CH) No. 94 / 2023 Page 1 of 11 Present:

For Appellant : Mr. Agam H Maloo & Mr. Prakar Tandon, Advocates For Respondents : Mr. M.Vijayan, Advocate for King & Partridge For R1 Ms. Chinna Abraham for Ms. Prapti Mehta, Advocates for R2

JUDGMENT

(Hybrid Mode)

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

Precisely, in order to clarify the facts, we are required to deal with, the

minor issues, which were the subject matter for consideration in the company

petition which was adjudicated, by the Ld. NCLT, Chennai Bench, in a

proceeding being Company Petition No. 106/(CHE)/2021, which ultimately

stood rejected by the Impugned Order dated 10.08.2022.

The facts that are relevant for this Company Appeal, are that, as back as in

the year 1987, Late Shri. Iqbal Singh Bhathal is said to have purchased 100 equity

shares of MRF limited having a face value of Rs.10/- each, bearing Folio No.

B02990, in the name of his son, the Appellant Shri. Tejinder Singh Bhathal and

Late Smt. Satwant Kaur Bhathal, mother of the Appellant. The Appellant

contends that he was not aware of the investments thus made by his father in his

name, by virtue of the purchase of the aforesaid equity shares with effect from

27.02.1987, but however he was made conscious of the aforesaid

transaction/purchase of the shares only when on 16.10.2018, he was called upon

for the purposes of collecting the information, as to whether he happens to be the

Comp. App (AT) (CH) No. 94 / 2023 Page 2 of 11 holder of 100 equity shares of MRF company, since they have been transferred

to the Investor Education and Protection Fund (IEPF). It is upon the said

information being imparted to the Appellant, he had written to the Respondent,

for issuing of Duplicate Share Certificates, of the said shares in lieu of, the share

certificate, which have been lost bearing Share Certificate No. 168061 and

168062. Thereafter, in response to the communication made on 16.10.2018, the

MRF is said to have written a reply on 15.11.2018, reiterating the earlier reply

given by them way back on 03.06.1996, and had also enclosed the letter dated

03.06.1996. In the letter of 03.06.1996, it was mentioned by MRF Company that

the original share certificates that were claimed to be lost by the Appellant, are

available and they are with M/s. Fair Growth Investments Limited Mumbai,

requiring for rectification of the deficiencies along with the transfer deed. The

MRF also stated therein that they had denied to issue the Duplicate Share

Certificates to the Appellant against the Original Share Certificates Bearing No.

168061 & 168062 claimed to have been lost since the original share certificates

are still available. On receipt of the letter dt. 15.11.2018 from MRF, the Appellant

filed a First Information Report bearing FIR No. LR02053122018 on 06.12.2018,

with the Crime Branch of Pune, Maharashtra for loss/theft of the said 100 shares

and besides the registration of the FIR, he has also written to the MRF for

intimation, enclosing therewith the copy of the FIR and praying for, necessary

guidance on the appropriate procedure to be adopted, for the purposes of issuance

of the Duplicate Share Certificate. He further submitted that, if the Appellant did

Comp. App (AT) (CH) No. 94 / 2023 Page 3 of 11 not receive the letter in response to the aforesaid communication, he will have to

resort to the appropriate remedies available to them under law.

While this dispute was being pursued, as against one another apparently by

various correspondences, which has been brought on record, during the

intervening period the ultimate controversy, which emerged was that, when the

Appellant made the request for deletion of the name of Mrs. Satwant Kaur Bathal

(his mother) in the share certificate and also re-affirmed that the shares have never

been sold, mortgaged, pledged or otherwise encumbered or disposed of, by him

and that, the said share certificates were either been lost/misplaced or had been

destroyed, MRF intimated him that they have received an objection from

Mr.K.Munivenkata Reddy (R-2), the lodger of the transfer documents stating that

he is the owner of the said 100 shares and no duplicate share be issued without

his consent.

Ultimately, the controversy resulted into the institution of a civil suit,

which was filed by Respondent No. 02, being O.S. No. 7586/2019, which was

instituted before the court of the Hon'ble Civil Judge, Bengaluru, claiming a relief

by way of a title over the 100 equity shares of the MRF, which were owned by

the Appellant jointly with his deceased mother.

In the light of the provisions contained under Section 430 of the Companies

Act, in matters falling under the jurisdictions of NCLT/NCLAT civil suits shall

not be entertained, and therefore a civil suit with regards to the aforesaid

controversy was not maintainable. Still the Appellant filed a civil suit on

Comp. App (AT) (CH) No. 94 / 2023 Page 4 of 11 24.01.2020 in Civil Court Senior Division, Pune in RCS 123/2020 wherein, the

Appellant has claimed his title over the 100 equity shares of the MRF, which were

owned by the Appellant jointly, with his deceased mother. The said suit remained

pending and during its pendency, the Appellant instituted the proceedings, by way

of a company petition being Company Petition No.106 (CHE)/3/2021, preferred

before the Ld. Adjudicating Authority on 28.07.2021.

When the proceedings of the company petition was being conducted, it was

found that in the proceedings instituted by the Appellant under Section 59 of the

Companies Act, the Appellant has sought multi-fold reliefs, the cognizance of

which has been taken by the Ld. Adjudicating Authority in the Impugned Order.

But we at this stage are refraining ourselves to venture into the propriety of the

reliefs sought for, because the reliefs thus claimed by the Appellant are yet to be

adjudicated on merits and any finding if recorded by us, on merits of the issue

may have an adverse bearing on the proceedings of the company petition itself.

When the petition dated 28.07.2021 was filed before Ld. NCLT, Chennai, the

petitioner made a statement before the Ld. Tribunal with regard to the pendency

of the suits, and the relevant extract of Para 42 and 43 of the said petition has

been extracted by the Ld. Tribunal, while passing the Impugned Order, observing

thereof that, owing to the bar created under Section 430 of the Companies Act,

2013, the civil suit ought not to have been instituted or if instituted already, should

not have at all been carried parallel to the proceedings of the company petition.

Comp. App (AT) (CH) No. 94 / 2023 Page 5 of 11

During the pendency of the company petition, the Appellant undertook,

that he would withdraw the suit, which was filed by him before the Ld. Civil

Court, Senior Division, Pune. Further, by an order of 16.02.2022, the Ld.

Adjudicating Authority specifically directed the Appellant to file a memo giving

the details with regards to the other connected matters pending in various other

forums, which has been preferred by the Appellant, and in compliance, thereto,

the memo was filed bearing SR No. 2846, it stood as preferred on 27.04.2022.

In giving the details of the pending matters, the Appellant has also referred

to the pendency of a civil suit being Civil Suit No. R.C.S. 123/2020, which was

shown to be pending before the Hon'ble Civil Court, Senior Division, Pune, as

well as the details of other suits, which were preferred by the Respondent and

other affected persons, qua the controversy pertaining to the transfer of shares.

In the memo dated 27.04.2022 pursuant to the order of 16.02.2022, as it

was rendered in the company petition, the facts reveal that the Appellant was

unable to comply with the undertaking which was given on 28.07.2021 in para

42 and 43 of the petition with regards to the pendency of the suit and its

withdrawal. Thus, based on the contents of the memo submitted by the Appellant,

the Ld. Adjudicating Authority came to the conclusion that, since only a

memorandum has been preferred, the civil suit is still shown to be pending and

no documents have been filed by the Appellant to prove that he has filed an

application for the purpose of withdrawal of the Civil Suit No. R.C.S. 123/2020,

and since there is no document of the civil court on record to prove the withdrawal

Comp. App (AT) (CH) No. 94 / 2023 Page 6 of 11 of the suit, it is to be held that the Appellant has not complied with the earlier

conditions/undertaking, given in the Company Petition in Para 42 and 43, to the

effect that, he would be withdrawing the suit, and accordingly proceeded to pass

the impugned order, dismissing the petition of the Appellant on the ground that

the Appellant cannot be permitted to resort to two parallel remedies

simultaneously for the redressal of his grievance, which is of a like nature based

on the same subject matter and the cause of action too.

The Ld. Counsel for the Appellant has submitted that, though admittedly

they undertook to withdraw the suit and they had also filed a memo in that regard

before the Ld. Civil Court, but no orders were passed on the same, and the said

suit was, as per his submission, dismissed as withdrawn only on 13.08.2022, after

passing of the Impugned Order and thus the embargo which was created by

Section 430 of the Companies Act, now stood eradicated because of subsequent

dismissal of suit, and therefore the proceedings initiated by him by way of

company petition under Section 59 of the companies Act, ought to have been

decided on its merits.

The dismissal of the Company Petition on 10.08.2022, cannot be legally

faulted, because admittedly on that date the Appellant was pursuing two

simultaneous remedies, one by way of the Company Petition and the other, by

way of a civil suit, which was pending despite of the undertaking given by the

Appellant to withdraw the same. Though the withdrawal memo was filed, but no

orders were passed till the Company Petition was taken up by the Ld. Tribunal

Comp. App (AT) (CH) No. 94 / 2023 Page 7 of 11 on 10.08.2022 and orders were passed dismissing the company petition, on the

ground that civil suit is being simultaneously pursued.

But we cannot be oblivious of the fact, and ignore it, that when the civil

suit was placed before the Lok Adalat, for hearing on 13.08.2022, on the

withdrawal memo preferred by the Appellant, the 'Civil suit' being

RCS/123/2020 was permitted to be 'dismissed' as 'withdrawn'. Since the

dismissal of the suit happened on 13.08.2022, 3 days later than the date of

dismissal of Company Petition, a very peculiar situation has emerged that, on one

hand, the company petition under Section 59 was dismissed on 10.08.2022

because of the reason of the pendency of the civil suit, which was undertaken by

the Appellant to be withdrawn and for which the Appellant has already filed a

withdrawal application and on the other hand, the civil suit is RCS/123/2020 got

dismissed as withdrawn on 13.08.2022 an application of the Appellant. Thus, the

Appellant has been deprived of pursuing any of the remedies because of the

dismissal of the company petition by the impugned order of 10.08.2022 and

because of the civil suit being dismissed on 13.08.2022 as withdrawn.

It is a settled preposition of law constitutionally mandated, that a right to

judicial remedies is a right which is safeguarded by Article 21 of the Constitution

of India, and under this right, nobody could be deprived of availing the judicial

remedies before the competent Court of Law for redressal of his grievances,

which in the instant case falls to be within an ambit of Section 59 of the

Companies Act. But the same was denied by the Ld. Adjudicating Authority on

Comp. App (AT) (CH) No. 94 / 2023 Page 8 of 11 account of the pendency of the civil suit, but we cannot ignore the fact which has

been brought on record, that when this company appeal was being considered, it

is a fact which is not denied, that on the withdrawal memo was filed in the civil

suit except that the Lok Adalat dismissed the suit as withdrawn only on

13.08.2022 after the Company Petition got dismissed. If that be the case, a

scenario has emerged where the Appellant has, lost both of his legal remedies to

pursue the matter. A right to judicial remedy, is a right envisaged under the

Constitution, which cannot be deprived of, merely because of a minor procedural

error or procedural technicalities and because of the fact that, the application for

withdrawal of the suit was considered subsequently, by the Hon'ble Civil Court

on 13.08.2022 for which the Appellant cannot be held responsible. We will have

to bear in mind that even the subsequent order passed in the suit on the withdrawal

application, will too have a similar effect of overriding the restrictions contained

under Section 430 of the Companies Act. As of now, when we are considering

this appeal there is no pending suit as such. If that be the situation the Appellant

ought to be permitted to resort to the process of redressal of his grievances

permissible by way of a process known to law and that would be by way of the

preferring of the company petition under Section 59 of the Companies Act.

Hence, we are of the view that owing to the implications of the order passed

on 13.08.2022, since in the light of the undertaking given by the Appellant before

the Ld. Adjudicating Authority to withdraw the suit, the same has been withdrawn

though marginally at a later stage, in that eventuality, minor procedural

Comp. App (AT) (CH) No. 94 / 2023 Page 9 of 11 technicalities should not create any hurdle as such against the Appellant for,

depriving him for all times to come, from resorting to his judicial remedies.

Therefore, as the suit has been withdrawn on 13.08.2022, the Company Petition

No. 106(CHE)/2021, as preferred by the Appellant under Section 59 of the

Companies Act, ought to have been considered on its merit.

Be that as it may, the dismissal of the Company Petition cannot be faulted,

but then we have to balance the equities, and while doing so, we feel it apt that

the Impugned Order of dismissing the company petition on the ground that there

was a pending civil suit being Civil Suit No. R.C.S. 123/2020 which was not

withdrawn at the relevant time despite of the undertaking given in Para 42 and 43

of the application dated 28.07.2021 needs to be set aside as it is very much

apparent from the records that the Appellant did show his bonafide by filing an

application for withdrawal of the suit, which was later on considered and the suit

stood withdrawn on 13.08.2022. In that eventuality, in order to carve out an

exception, to enable the Appellant to resort to the appropriate legal remedies

available to him under law, the Impugned Order would stand quashed and as a

consequence of the order of dismissal of Civil Suit No. R.C.S. 123/2020 by the

Hon'ble Civil Court, Senior Judge, Pune, the proceedings of the Company

Petition No.106(CHE)/2021 as preferred before the Special Bench of Ld. NCLT

Chennai, would revive back to be decided on merits.

But considering the fact that, the three Respondents have been forced, for

unnecessarily, to engage themselves in litigation due to the procedural

Comp. App (AT) (CH) No. 94 / 2023 Page 10 of 11 discrepancy on the part of the Appellant, they could be compensated by the

Appellant with the cost of Rs.5000/- each (Ten Thousand Only) which is to be

remitted by the Appellant to the Respondent within a period of two weeks from

the date of receipt of the certified copy of this Judgment, and it is only upon,

placing the proof of remittance of the cost, the proceedings of the Company

Petition No. 106(CHE)/2021, would revive back and the same would be decided

exclusively on merits in accordance with law.

Subject to the aforesaid the 'Company Petition' stands 'allowed' and the

'Impugned Order' under challenge would stand 'quashed'.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Jatindranath Swain] Member (Technical)

24/12/2024 SN/TM/MS

Comp. App (AT) (CH) No. 94 / 2023 Page 11 of 11