MOOL CHAND SHAH Vs. CHETAN CONSULTANTS P. LTD.

JUDGEMENT

(1.) IN this order, I am considering the issue as to whether a person who is not a member/creditor of a company and against whom no relief has been sought could be permitted to intervene in a proceeding under Section 397/398. The facts of the case are: the interveners claiming to be majority shareholders have filed this instant application, in terms of Section 405 of the Act, seeking for permission to intervene in the present proceedings as respondents. When this application was mentioned on March 5, 2008, the petitioners did not oppose the application, while the respondent opposed the said application. On the day I passed the following order:

(2.) THIS order was taken on appeal by the respondents before the Bombay High Court, which while setting aside the order of this Board dated March 5, 2008, remanded the matter for decision on the application for intervention. Accordingly, this application was heard on December 10, 2008.

(3.) SHRI Sarkar, senior advocate appearing for respondents Nos. 1 and 2 4 submitted: The application is not maintainable. Interveners are rank outsiders. On their own admission, no share in their name has been registered and as such they are not shareholders of the company. This application is a collusive application to aid and help the petitioners in the present proceeding and as such the application is not a bona fide one, but has been filed for an oblique purpose. Their claim for 1,200 shares is based on the memorandum of understanding which had come to an end long time back as the interveners had failed to comply with various terms of the memorandum of understanding. They cannot even enforce the memorandum of understanding as the same has become time barred and the very fact that they never attempted to get the shares registered in their names for over ten years would indicate that the interveners knew very well that the memorandum of understanding had come to an end and could not be enforced. Even otherwise, the company was not a party to the memorandum of understanding and as such the terms of the memorandum of understanding are not binding on the company.