Bombay High Court
Mr. Pratik B. Mehta & Ors vs Uniform Offset Private Limited & ... on 31 October, 2012
Bench: Anoop V.Mohta
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY APPEAL NO. 5 OF 2012
IN
CLB COMPANY PETITION NO. 78 OF 2007
Mr. Pratik B. Mehta & Ors. ... Appellants
V/s.
Uniform Offset Private Limited & Ors. ... Respondents
Mr. Cyrus Ardeshir a/w Ms. Faiza Dhanani,
i/by Dhruve Liladhar & Co., for the Appellants.
None for the Respondents.
CORAM : ANOOP V. MOHTA, J.
DATE : 31 OCTOBER, 2012
ST
.
ORAL JUDGEMENT :
. Heard finally.
2. None appeared for the Respondents even at the time of
admission of the present Company Appeal u/s. 10F of the Companies
Act, 1956, (for short "the Companies Act"), and the interim order
was passed by this Court on 3rd August, 2012, in following terms :
"Heard the learned Advocate for the Applicants.
None for the Respondent, though served.
The Appeal is placed for hearing and final disposal
on 29th August, 2012. In the meantime the
Respondents are restrained from selling, alienating,
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encumbering, transferring or creating any third
party rights and/or interests in respect of the shares
held by them in the Respondent No.1 Company to
any person other than Appellants. Company
Application is accordingly disposed of."
3. The Company Appeal is listed today for final hearing. Even
today, none appeared for the contesting Respondents, though served.
4. The Appellants/Original Petitioners are the registered holder
and owner of 3,300 shares of Rs.100/- each. The Appellants/Original
Petitioners together hold about 30% equity shares, more than 10% of
the total shareholding of and in the Company. It appears that the
Appellants/Original Petitioners and the contesting Respondents are
the family members and a dispute arose amongst them. A Company
Petition was filed by invoking provisions of Sections 397 and 398 of
the Companies Act.
5. The contesting Respondents in their reply to the Company
Petition, in para 6, admitted that the Appellants/Original Petitioners
are holding about 30% of equity shares whereas the contesting
Respondents are holding about 68% of equity shares and outsiders
are holding about 2% equity shares.
6. I am inclined to allow this Company Appeal solely on this
ground as the learned Member of the Company Law Board, (for
short "the Board"), rightly considered the scope and purpose of the
provisions, as referred and dealt with in following rules, but rejected
the application solely on this technical ground stating that "not
maintainable in view of the above rules".
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"23. ............................................ The petitioner while applying
under sections 397 must hold the requisite number of shares at the
time of filing of petition. The nature of provisions of Section 399(1)
is not procedural but it is a part of substantive law and, therefore,
the requirements of Section 399(1) should be construed as
mandatory. The word shall used therein is considered to be
imperative in nature and it has to be interpreted as mandatory
having regard to the text and context of the statute irrespective of
the fact whether any prejudice is caused. In terms of Section 399 of
the Act the members fulfilling the requirements thereof have the
right to allege oppression and mismanagement in the affairs of the
Company and can file Petition in terms of the said Sections. In view
of the aforesaid unambiguous provisions of the Act, Petitioners are
required to satisfy the CLB that petitioner(s) individually or together
hold the requisite percentage of shares in the Company. It is the
requirement of the law that Petition under Sections 397 and 398 has
to accompany documentary evidence in proof of eligibility and status
of petitioner(s) that the voting power held by each of them is as per
provisions of Section 399 of the Act. In other words Petitioner(s)
has/have to meet the requirement u/s 399 either in terms of the
number/percentage of shares or in terms of number of shareholders.
In the present case the petitioners do not have the requisite
qualification u/s 399 of the Act to maintain the Company Petition
u/s. 397 / 398 of the Act. However, it is noted that the P-2's
application for transmission / transfer of his late father's 2385 shares
is yet to be refused by the R-1 Company.
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24. Considering the facts and circumstances of this case it is noted
that the R-2's other preliminary objections regarding the
maintainability of the Company Petition are also correct, in fact, the
Petitioners do not have any cause of action in view of the allegations
of misuse of the Company's assets, infrastructure and other resources
for the Petitioners own businesses, the R-1 Company's profitability in
the absence of R-2 has been not only reduced to NIL rather the R-1
Company's losses are increasing year after year. In such facts and
circumstances of the case R-2 was constrained and was justified to
call an EOGM for voluntary Winding up of the R-1 Company."
7. The learned Counsel appearing for the Appellants/Original
Petitioners pointed out that no reason whatsoever given referring to
this admitted position on record with respect to the shareholding of
the Appellants/Original Petitioners. There is force in the contentions
so raised. The Board has not at all dealt with the aspect, which,
according to me, goes to the root of the matter while deciding the
maintainability of the Company Petition.
8. Another factor, though recorded by the Board, yet failed to
consider that Bipin C. Mehta, who admittedly expired after filing of
the Company Petition, had transferred his shares to these legal heirs,
just cannot be overlooked 30% overall shareholding of the
Appellants/Original Petitioners. The situation was totally different on
the date of filing of the Company Petition, specially in view of the
admitted position so recorded. The Board ought to have considered
the date of filing of the Petition, as well as the admissions so given by
the contesting Respondents, before rejecting the Company Petition in
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such a fashion on the ground of maintainability. The order is
contrary to the law and the record. They are awaiting transfer order
to be passed by the majority.
9. In my view, this rejection itself goes to the root of the matter
as ultimately that resulted into dismissal of the Company Petition
even on merits. Therefore, taking overall view of the matter, I am
inclined to remand the matter by keeping all points open for all the
parties. The Board shall reconsider the matter by giving opportunity
to the parties to put up their case on merits also.
(i) Resultantly, impugned order dated 13th
September, 2011 passed by the Board in
Company Petition No.78 of 2007 is quashed and
set aside. The matter is remanded for rehearing
on all points. The Appeal is allowed accordingly.
(ii) The interim order already granted by this Court
on 3rd August, 2012 shall continue to operate
until further orders. However, liberty is granted
to the parties to apply for further reliefs and/or
modification of the interim relief already
granted.
(iii) No costs.
( ANOOP V. MOHTA, J. )
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