Y. K. Sabharwal, J.

( 1 ) A petition filed by the appellant under Sections 397,398, 402 and 403 of the Companies Act, 1956 (for short the Act ) against Kamal Oil and Allied Industries Ltd. (for short the Company ) and other respondents having been dismissed by learned Single Judge, this appeal has been preferred TO. By the impugned judgment dated 7th February, 1984, the learned Single Judge has held that considering the averments in the written statement there is serious dispute between the parties as to whether the shares in favour of appellants were transferred rightly and validly in accordance with Section 108 of the Act and that the decision of such a question is clearly beyond the scope of Section 397 and /or 398 of the Act and the remedy of the party lies in approaching a civil suit. The petition was held not to be maintainable and was accordingly dismissed.

( 2 ) the facts in detail have been noticed in the judgment under appeal and we do not think it necessary to again notice herein detailed facts. We would notice only such facts in brief which are necessary to understand the point in issue, namely, the dismissal of the company petition at the preliminary stage on the ground of dispute having been raised by the respondents challenging the validity of appellants being members of the company.

( 3 ) THERE is no doubt that if the appellants are not the members of the Company they would be ineligible to maintain a petition undersections397and 398 read with Section 399 of the Act. The question, however, is if the appellants are shown as Members of the Company on the Register of Members maintained by the Company and are also shows as members in the return filed by the Company with the Registrar of the Companies, can they still be non-suited at the preliminary stage on a plea taken by the Company and the other respondents that the shares were not rightly and validly transferred in their favour in accordance with question is clearly beyond the scope of Section 397 and/or 398 of the Act and the remedy of the party lies in approaching a civil suit. The petition was held not be maintainable and was accordingly dismissed.

( 4 ) THE facts in detail have been noticed in the judgment under appeal and we do notthink it necessary to again notice herein detailed facts. We would notice only such facts in brief which are necessary to understand the point in issue, namely, the dismissal of the Company petition at the preliminary stage on the ground of dispute having been raised by the respondents challenging the validity of appellants being members of the Company.

( 5 ) THERE is no doubt that if the appellants are not the members of the Company they would be ineligible to maintain a petition undersections397and 398 read with Section 399 of the Act. The question, however, is if the appellants arc shown as Members of the Company on the Register of Members maintained by the Company and are also shown as members in the return filed by the Company with the Registrar of the Companies, can they still be non-suited at the preliminary stage on a plea taken by the Company and the other respondents that the shares were not rightly and validly transferred in their favour in accordance with Section 108 of the Act.

( 6 ) THE aforesaid question will have to be examined also keeping in view the provisions of Section 164 ofthe Act. Section 164, inter alia, stipulates that the Register of Members, and the Annual Returns, Certificates and Statements REFERRED TO to in Sections 159, 160 and 161 shall be prima facie evidence of any matters directed or authorised to be inserted therein by the Act. Briefly facts are that the respondents in their written statement had raised disputes on the question of the appellants purchase of the shares of the Company. According to the appellants they had purchased 81% shares ofthe Company from the respondents to whom they made payment of Rs. 11. 34 lakhs. The receipt of Rs. 11. 34 lakhs by the respondents is not in dispute.

Click Here to Read the rest of this document