Directors owe fiduciary duties to shareholders, and attempts to evade liabilities through sham transactions and resignations are ineffective.

( 1 ) THE petitioners in the above Company Application seek to execute the order dated 8. 6. 2004 of the Company Law Board (CLB) under the provisions of section 634-A of the Companies Act, 1956 through this Court as the Executing Court since the Company against which the order is passed has its registered office within the jurisdiction of this Court and its life-time director, respondent No. 2 in the Company petition, resides within the jurisdiction of this court. The applicant-Company has taken out the above Chamber Summons being Chamber summons No. 1061 of 2006 for raising the attachment and staying the execution. The life-time Director being respondent No. 2 has taken out another Chamber Summons for setting aside the warrant of attachment and staying the execution.

( 2 ) IT is the case of the applicant-Company (which is a Company other than respondent no. 1-Company in the Company petition) that it is the owner of the premises sought to be attached and that the 1 st respondent-Company in the Company Petition is not the owner and does not own the property and, therefore, the property of the applicant-Company cannot be attached in execution of the order/decree of the CLB in favour of respondent no. 1-Company in the above Company petition. It is the case of respondent No. 2 to the Company Petition, the life time Director of respondent No. 1-Company, that the order is passed only against the Company and not against him and hence, the warrant of attachment issued be set aside and the execution be stayed.

( 3 ) CERTAIN events and dates that have transpired with regard to the flat which is attached as also with regard to the conduct of the Director of respondent No. 1- company in the above Petition require to be considered.

( 4 ) THE attached flat is shown to have been purchased initially under an unregistered agreement for purchase of the said flat by the wife of respondent No. 2, from one ramesh Shah, on 14. 6. 1977. The flat has since stood in the name of the wife of respondent no. 2 in the records of the Society. The document for the said flat is an agreement on a stamp paper of Rs. 5/-, which is not registered. Of course, at that time, the document for purchase of flat in the Co-operative society was not required to be compulsorily registered. However, since the document has remained unregistered, the execution specifically by the wife of respondent No. 2, cannot be seen. The transfer has taken place from one Ramesh Shah to the wife of respondent No. 2, who is Geeta Shah. The relationship between the parties is not known or shown. Whether the consideration shown in the consideration clause of the document came for her funds and whether she had any funds, independent of her husband, is also not shown. In fact, it cannot be seen whether the consideration shown in the document represents an adequate consideration, which would have been the market value of the flat at the time of the transaction. All that can be seen from the document is that it was executed in June, 1977 since the share certificate for the flat shows an entry to that effect. The wife of respondent No. 2 is shown as an owner of the attached flat and is shown to have continued such ownership until the year 2000 from the next entry in the share certificate.

( 5 ) THE second entry in the share certificate shows that the flat is transferred to her son Dhawal Shah on 13. 9. 2000. The document of transfer in the year 2000 is not produced. A mere entry in the share certificate cannot confer title upon the son of respondent No. 2 as the owner of the said flat. The said son is the co-director of respondent No. 2. He is shown to have transferred the said flat to the applicant in Chamber Summons no. 1061 of 2006 under a registered but inadequately stamped Deed of Transfer dated 10. 8. 2000. An entry of the said transfer is made in the share certificate for the said flat on 11. 8. 2005. e. five years after the purported transfer.

( 6 ) THE said Transfer Deed i