SHAMBHU A. PAI PANANDIKER Vs. MARPOL P. LTD.

JUDGEMENT

(1.) THE present application is filed praying this Bench to implead the applicant as respondent No. 24 in the above company petition and sought direction to rectify the register of the company in order to reflect the applicant's shares as mentioned in the will. Counsel appearing for the applicant -trust submitted that the applicant -trust is a beneficiary under the will of the late Mr. Atmaram Pai Panandiker under his Public Testament (Will) dated September 30, 1993 and is entitled to the shares of this company belonging to the late director. The applicant trust was unaware of its being the beneficiary under the will which makes it a substantial shareholder in the respondent -company. It is submitted that despite entitlement of the trust to the shares of the respondent -company, the shares were not transmitted to it. The respondent -company transmitted the shares to the 5 sons of the late Mr. Atmaram Pai Panandiker in 2004. This was patently illegal and the transmission was done in direct contravention of the trust's rightful ownership of shares under the will. However, the applicant trust had no knowledge of either the transmission or the will at that time. Based on an inquiry initiated by one of its directors, the board of respondent -company realised its inadvertent mistake and resolved to reverse the illegal transmission on September 13, 2010, in the course of its board meeting on the said date. The respondent -company subsequently sent a letter dated September 14, 2010, informing the applicant trust of the mistake made in the transmission of shares as well as entitlement of the applicant trust to the shares. The board of the respondent -company appears to have been deceived into illegal transmission of shares. These shares should have been transmitted to the applicant trust. It is pertinent to mention that the trust came to know of the will for the first time and its entitlement to the shares under the aforementioned will only on September 14, 2010, vide the letter of the respondent -company dated September 14, 2010. The respondent -company has recognised the suppression and fraud involved in the instant case and that two directors have already agreed to part with the illegally transmitted shares on learning of the nature and character of the transmission to them. It is imperative that the respondent -company is directed to rectify its register and cancel the illegal transmission of shares which rightfully belong to the applicant trust. The directors that are holding the illegally transmitted shares must be directed to return the same at the earliest. It is submitted that the case of the petitioner must be looked at critically to realise how the instant suppression was material. The recent stand of the petitioner is indicative of two factions within the company where one faction is that of respondents Nos. 3 and 5, which is in majority with 50.05 per cent. shares and the other faction consists of the remaining brothers and their families with the latter attempting to gain majority through the instant case. Thus, if the will was not suppressed the faction of respondents Nos. 3 and 5 would have a clear majority as they control the Trust and the premise of the instant petition, i.e., of illegal control would not be tenable. The instant petition deserve to be dismissed on the ground of fraud and suppression as the will would materially alter the ground realities and the petitioner would be unable to contend that the faction of respondents Nos. 3 and 5 were guilty of illegal dilution to take over control of the company. The applicant is a substantial shareholder in the respondent -company and holds the balancing shares which would determine the control of the company. The applicant is a necessary party before the instant tribunal, as its shareholding would have a substantial impact on the outcome of the instant case. Furthermore, the entire controversy for control of the respondent -company cannot be resolved without the applicant being a party. It is submitted that the applicant is a necessary and a proper party and its presence would enable this Bench to effectively and completely adjudicate upon and settle all questions involved in the instant case. Therefore, it is prayed that the hon'ble Bench be pleased to implead the applicant as respondent No. 24 in the present proceedings.

(2.) RESPONDENTS Nos. 6, 7 and 23 filed their reply and submitted that the present application is filed by the applicant seeking to implead as respondent No. 24 in the present company petition, for rectification of register of the respondent -company and for various other reliefs. We say that a copy of the application was served upon our advocates on or about September 15, 2010. Our advocates by their letter dated September 18, 2010, addressed to the advocates for the applicant sought inspection of the documents referred to and/or relied upon by the applicant in the application. As no response was forthcoming, vide letters dated September 27, 2010 and October 7, 2010, our advocates once again requested for inspection as sought for in the earlier letter. It is submitted that in response to the above the advocates for the applicant belatedly by their letter dated October 16, 2010 (received by our advocates on October 18, 2010) purported to fix appointment for inspection between October 18 -20, 2010, time to be fixed by our advocates as the matter/the application was scheduled to come up for hearing on October 21, 2010. The said letter was replied by our advocates vide letter dated October 19, 2010, thereby stating that inspection fixed was at a short notice and was only to create a false record and nothing else. Thereafter, vide letters dated November 10, 2010 and November 20, 2010, our advocates once again sought inspection of the documents. The same has not been responded to till date. Surprisingly on December 2, 2010, the advocates for the applicant by their letter of even date gave notice that the above application will be moved on December 8, 2010, for hearing. Also by the said letter, notice was also given that the applicant was ready to give inspection of documents "as per convenience of our advocates" and in respect thereto were requested to contact Mr. A.A. Khan, advocate at the numbers mentioned therein. Repeated attempts were made to contact Mr. A.A. Khan who when finally contacted informed our advocates that the documents of which inspection is to be given were not available and the same are expected only on Monday, December 6, 2010. All the above facts were recorded by our advocates vide their letter dated December 3, 2010. The applicant is only creating a false record purporting to offer inspection and nothing else. Despite repeated requests and reminders the applicant/their advocates have not given inspection of documents referred to and/or relied upon in the present application and therefore the application be dismissed with costs and/or they are now estopped from relying upon the same. We crave leave to file a further affidavit as and when inspection of documents is given by the applicant. At the outset the application as taken out by the applicant is an abuse of process of law and is contrary to the basic principles of law and not maintainable. The reliefs as sought, the applicant has to file appropriate/different proceedings before the court of competent jurisdiction and not file an application in the present petition and hence the reliefs as prayed for, the applicant cannot and ought not be granted and the application be dismissed in limine. Admittedly on their own showing the shares stood transmitted to the five sons of late Mr. Atmaram Poi Palondicar in the year 2004. The cause of action to apply for reversal of transmission arose in 2004 and therefore the applicant ought to have filed appropriate proceedings within 3 years from the transmission of shares, i.e., by 2007 and therefore the present application is barred by the law of limitation. The contention in the present application feigning ignorance about the transmission is patently false and to say the least, far fetched. The deponent by making such false statement has rendered himself liable for perjury and an attempt to mislead this hon'ble Tribunal. The applicant is a trust of which respondents Nos. 3 to 5 are trustees. The same persons, viz., respondents Nos. 3 to 5 are also legal heirs of late Mr. Atmarama X. Poi Palondicar. The same three persons, viz., respondents Nos. 3 to 5 are the transferees of the shares of the said late Mr. Atmarama X. Poi Palondicar, have paid amounts to the trust being value of shares transmitted in their names. The trust after having received the entire consideration of the shares (which is suppressed by the applicant) from the five sons of late Mr. Atmarama X. Poi Palondicar, cannot claim the shares again without any justification or cogent reasons. The present application is therefore liable to be dismissed with costs. It is submitted, that the preliminary condition for rectification of register of the company is that an instrument of transfer or intimation of transfer should be received by the company, which instrument/intimation has till date to our knowledge not been received and therefore, on this count alone the present application deserves to be dismissed with cost. Without prejudice to the above, it is submitted that the application is made on the basis of a will, which is admittedly not probated and no probate has been granted by a court of competent jurisdiction in regard of the will in question. The will which is not probated is not admissible in evidence as per the provisions of the Indian Succession Act, 1925 and hence cannot be relied/looked upon. On this count alone also the present' application deserves to be dismissed with costs as it has no legs to stand. It is submitted that respondent No. 3 with whom the deponent is colluding and conniving, had informed all that the applicant -trust cannot hold shares in any private limited company and therefore the said shares have to be sold only to the HUFs of five sons of late Mr. Atmarama Poi Palondicar. Respondent No. 3 had in fact calculated the share of each and value thereof, which was paid and accepted by the applicant -trust. Even otherwise the present application is in the nature of rectification of register of the members of the company. The applicant therefore, should adopt the procedure prescribed under the Companies Act for the same and cannot bypass the prescribed procedure.

(3.) THE petitioners have filed an application being C.A. No. 189 of 2010 under regulation 44 of the Company Law Board Regulations, 1991, seeking dismissal of Company Application No. 143 of 2010. Shri Rahul Chitnis, learned counsel for the petitioners submitted that on or about July 21, 2008, the applicants filed the above petition under sections 397, 398, 402 and 403 of the Companies Act, 1956, against the respondents complaining the acts of oppression and mismanagement of the affairs of the company.