The main legal point established in the judgment is the discretionary relief of rectification under Section 111(4) of the Companies Act, 1956.

This company appeal impugns an order passed by the Company Law Board, Mumbai Bench, Mumbai (“CLB”) on petitions filed under Section 111(4) of the Companies Act, 1956 for rectification in the register of members. The petitions for rectification were filed in respect of eight different companies, who were arraigned respectively as Respondent No.1 in eight separate petitions. The facts of these eight petitions are more or less similar and considered hereinbelow in Company Appeal (L) No.41 of 2015 arising out of Company Petition No.19 of 2011 as a representative case.

2. The short facts of the Petitioner's case may be noted as follows :

(i) The Petitioner – Sulochana Neelkanth Kalyani (“Sulochana” or “Petitioner”) is one of the trustees of a private family trust known as “N.S. Trust”. This trust was settled by Mr. M.B. Hattarki, brother of Sulochana, under an Indenture of Trust dated 10 April 1999, the initial trustees of the trust being (1) Sulochana, (2) her late husband Dr. N.A. Kalyani (“Dr. Kalyani”), (3) Dilip Ganesh Karnik, now a retired Judge of this Court and then an advocate (“DGK”) and (4) Srikrishna Narhari Inamdar, a Chartered Accountant (“SNI”).

(ii) Respondent No.1 is a private limited company incorporated for the purposes of holding and / or facilitating investments of Dr. Kalyani, Sulochana and Respondent Nos.2, 3 and 4 herein, who are, respectively, son (“Gaurishankar”), daughterinlaw (“Rohini”) and grandson of Sulochana and Dr.Kalyani (“Viraj”) all of whom together form Kalyani family, which owns diverse business interests held by incorporated entities. The business interests are substantially owned and controlled through nine investment companies like Respondent No.1 herein. Nearly 98% of the share capital of each of these nine holding companies is held by S.N. Trust. 6800 shares of Respondent No.1, which constitutes 98% of capital, are accordingly acquired in the joint names of Dr. Kalyani, Sulochana, DGK and SNI. Under Section 153 of the Act, Respondent No.1 is not entitled to take cognizance of the trust. Accordingly, Dr. Kalyani, Sulochana, DGK and SNI have been joint shareholders of these shares and members of Respondent No.1 Company.

(iii) In or about 2005, Dr. Kalyani's health started failing. Gaurishankar having peculiar medical problems connected to his mental/physiological imbalances, preventing him from taking responsibility of looking after the family business, Rohini started acquiring a position of dominance, control and trust in the affairs of the business of Kalyani family. She was appointed as Managing Director of Kalyani Forge Limited, an important group company, and also became a Director of other group companies and started looking after the Kalyani family companies and business affairs. It is Sulochana's grievance that Rohini had illegally and/or wrongfully gained confidence of late Dr. Kalyani and Gaurishankar and placed herself in a position where she exercised undue influence over them.

(iv) Sometime later, unrest started in the family, when Dr. Kalyani and Sulochana started learning about the wrongdoings and illegalities committed by Rohini. With a view to maintain family amity and for other diverse reasons, including the deteriorating health of Dr. Kalyani, no legal action was initiated in the matter, though in January 2010, both Dr. Kalyani and Sulochana revoked two Powers of Attorney, which were earlier executed in favour of Gaurishankar and Rohini.

(v) In or about February/March 2011, the matters reached the stage of fullblown unrest, whereupon a search was caused to be taken in the records of various statutory authorities, including the Registrar of Companies, in respect of Kalyani family companies. Upon these inquiries, Sulochana claims to have gained knowledge of the following :

(a) Annual returns of Respondent No.1 for the year ending 31 March 2008 revealed a purported transfer of shares owned by the trustees (as transferors) in favour of Dr. Kalyani (as transferee);

(b) Annua