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2012 Supreme(Bom) 2066
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
MRS. ROSHAN DALVI, J.
Prabodh Jamnadas Kothari
Vs.
Vikram Jamnadas Kothari & Ors.
Notice of Motion No. 775 of 2012 in Suit No. 694 of 2012.
Decided on : 30th October, 2012.
Mr. D.D. MADON, Sr. Advocate a/w. Mr. DIPESH SIROYA a/w. Mr. A. THAKKAR for Plaintiff.
Ms. JYOTSNA PANDHI a/w. PURNIMA AWASTHI for Defendant No.11 for ROC.
Mr. DARIUS SHROFF, Sr. Advocate a/w. Mr. SATYEN VORA, Mr. KOZAN SHROFF Ms. NUPUR DESAI a/w. Mr. ROHAN UNDALE i/b. M. GANDHI & CO., for Defendant Nos. 1 & 2.
Mr. NITESH R. MISHRA i/b. YOGENDRA KANCHAN for Defendant No.4.
Mr. ARIF BOOKWALA, Sr. Advocate a/w. Mr. SNEHAL SHAH a/w. Mr. P.A. JAIN i/b. VIGIL JURIS for Defendant Nos. 5 to 10.
Mr. GAURAV JOSHI i/b. M. GANDHI & CO., for Defendant No.3.
Headnote:Code of Communidade, 1961 - Sections 10-E(4-C) and 111(4) - Company Court Rules, 1959, Rule 6 - Company Law Board’s jurisdiction.
Company Law Board has no jurisdiction to entertain an application for rectification of register of members alleging fraud or forgery. - In the application for rectification of register of members if the issues arose whether the applicant was the owner of the shares, whether there was fraud or forgery or there was dispute on the very title of the shares, those issues would be beyond the jurisdiction of the Companies Court an would have to be decided by the Civil Court. This would be upon the issues that arise in an application. It may be mentioned that an issue arises when a material fact is alleged and disputed.
Henc e mere mention of fraud may not take the matter out of the exclusive jurisdiction granted by the statute to the Company Law Board, but when the "very title to the shares" is challenged and the Court sees that that is at least prima facie shown, the Civil Court’s jurisdiction would not stand barred. [1999 (2) All MR 491 - Followed].
Code of Communidade, 1961 - Section 10-F - Company Law Board Regulation, 1991, Regulation 44 - Appeal against order of Chairman, CLB.
An appeal under Section 10-F of Act, against an order passed by Chairman, CLB, acting judicially or quasi-judicially, is maintainable. - The first question of law which arises in the present appeal is whether the impugned order is amenable to challenge under Section 10-F of the Act. It is now well-settled that in order to determine whether an order is a judicial order or a quasi -judicial order, the test is whether there is a lis or contest between two contending parties making rival claims and a statutory authority is required to adjudicate upon the rival contentions.
Section 10-F of the Act uses identical language and provides that "any person aggrieved by any decision or order of the Company Law Board made before the commencement of the Companies (Second Amendment) Act, 2002 may file an appeal to the High Court within sixty days from the date of communication of decision or order of the Company Law Board to him on any question of law arising out of such order..." It is therefore clear that the ambit of Section 10-F of the Act, by analogy, would include an appeal against any order, irrespective of its nature, so long as the test of a "question of law" being raised, is met.
The Plaintiff has sued for declaration of the estate of his deceased father and for his 1/2 share, right, title and interest therein in respect of the properties set out in Exhibit-C to the plaint.
2. Properties at item Nos. 1 and 2 are the main properties with which the parties are at dispute. Item No.1 relates to 49010 shares of KNK Trading Pvt. Ltd., stated to have been owned by the Plaintiff's father.
3. The Plaintiff's father has executed a Will in 2003 bequeathing the shares equally to his two sons the Plaintiff and Defendant No.1. The defendants claim that the shares are transferred to Defendant No.2, the wife of Defendant No.1 in 1999 itself. The Plaintiff has challenged the transfer as fraudulent. The Plaintiff has shown the annual returns of Defendant No.5 company which shows the transfer effected in the first year of the incorporation of the company itself. The very first annual returns filed under Section 169 of the Companies Act shows the transfer executed in the name of Defendant No.2 of 49000 shares (Whereas 49010 shares were actually transferred). The date of the transfer is not shown in the returns. It is contended that transfer has not taken place between the date of the first AGM and the date of filing of the returns. The date of the filing of the returns is not shown in the returns. All later documents follow therefrom. The Plaintiff has challenged all the documents emanating from the initial transfer. The Defendants have sought to show that the father of the Plaintiff and Defendant No.1 who was the Director of the company signed such returns from year to year as also his personal tax returns.
4. The Plaintiff claimed his share in that property, it being admittedly the biggest asset of the father.
5. There have been certain email exchanges between the Plaintiff and Defendant No.3 as late as on 1st June 2008 Defendant No.3 son of Defendant No.1 has emailed the Plaintiff not only the details about the property, but about the negotiations that he had for himself as also on behalf of the Plaintiff. That interesting email runs thus:
"As of now I met with 3 developers, they are offering me very less value as the reason given was too much density of tenants on the property, and kindly note that the property is not 147000sq feet but little over 118000 sq feet which I had told you as the front portion of the property was acquired by the govt for road widening purpose, its just that the bmc records are not updated of the same, people are ready to give us decent money for the property if we settle with the tenants and give them vacant plot with all required permissions to build, and kindly note too that I have been fair to you too till date and will continue to do so and never pressurized you to give me your share of the taxes and outgoings on the godown, though it is constantly burning a hole in my pocket, will update you of any new developments. "
6. Had the shares of the father been transferred as shown in the annual returns in 1999 itself such an email would never have been written by the defendant No.3. The admissions contained in the email is the circumstantial evidence prima facie showing that the transfer is not bonafide.
7. The very Will of the father which has been accepted by both the brothers, the Plaintiff as well as Defendant No.1, bequeathing to both of them the shares in Defendant No.5 company equally also shows that the father, until the date of the Will in 2003, held those shares.
8. The Plaintiff's share in that property, therefore, would require to be protected pending the Notice of Motion.
9. The property at item No.2 in Exhibit-C to the plaint is a flat at Marine drive which Defendants 1, 2 and 3 claim to have purchased in 2006 out of their own separate funds. The Plaintiff claims that that flat has been purchased from the amount received by the Defendants upon the sale of the property at item No.1 fraudulently and behind the back of the Plaintiff. Defendants 1, 2 and 3 have produced their ban
