Present: 1. Shri S. Balasubramanian, Vice-Chairman.
2. Shri K.K.Balu, Member.
IN THE MATTER OF COMPANIES ACT, 1956 (1 OF 1956)
AND
IN THE MATTER OF THE M/S CIRLACS DATA SYSTEMS LIMITED HAVING ITS REGISTERED OFFICE AT 91, SECOND FLOOR, THIRD STREET, KARPAGAM AVENUE, R.A. PURAM, CHENNAI-600028
PETITIONER:
S. Sivakumar
1. Cirlacs Data Systems Limited
2. Mrs. Suganthi Raghavan
PRESENT ON BEHALF OF
PARTIES:
1. Shri D.B. Saxena, Advocate ... for Petitioner.
2. Shri K.Ravi, Chartered Accountant and
Authorised Representative ... for Respondents.
O R D E R
(DATE OF HEARING: 11.07.2001)
S. BALASUBRAMANIAN:
1. In this petition filed under Section 111A of the Companies Act, 1956 (“the Act”), the petitioner has sought for rectification of the register of members of M/s Cirlac Data Systems Limited in respect of 40,000 shares said to be illegally transferred in the name of the second respondent.
2. According to the petitioner, he was allotted 40,000 shares in the Company of Rs.10/- each sometime in 1995 and no share certificates had been issued to him. However, it had come to his knowledge that his name in respect of these 40,000 shares had been deleted from the register of members and the name of the second respondent had been entered therein. According to the petitioner, he never executed any transfer instrument nor he had received any consideration for the same. Since the share certificates had not been issued, the Managing Director of the Company Shri V.N. Mohan, being the brother of the second respondent who is also a director of the Company had manoeuvred to alter the register of members perhaps by execution of forged transfer deeds as if signed by the petitioner. Therefore, the petitioner has sought for rectification of register of members to enter his name in respect of these 40,000 shares.
3. In the reply, the Company has submitted that the petitioner who was a director in the Company till 1997 desired to go out of the Company on settlement of his account and at that time he had also transferred all these 40,000 shares to the second respondent for a consideration of Rs.20,000/-. Accordingly, the name of the second respondent has been entered in the register of members in respect of these 40,000 shares.
4. During the pendency of the proceeding, the petitioner has filed a criminal case against the second respondent and also the Managing Director of the Company alleging that they had forged the signature of the petitioner in the transfer instruments and the criminal case is pending.
5. Shri Saxena, Advocate appearing for the petitioner submitted that the respondents have set up a plea that the shares held by the petitioner were transferred to the second respondent, in which case the burden is upon the respondents to prove the alleged transfer of shares, in support of which, Shri Saxena referred to Muniyamma and others Vs. Arathi Cine Enterprise Pvt. Ltd. and others (OSA No.16 of 1990 and OSA No.19/2000 High Court of Karnataka) to show that “It is the party who asserts existence of certain facts or wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person, the burden of proof of that fact lies on the person who asserts it”. He further pointed out that at no time, the Company had issued and delivered share certificates in respect of the 40,000 shares. The petitioner never executed any transfer instruments in favour of the second respondent nor has he received any consideration for the shares. Therefore, if the Company relies on any instrument of transfer signed by the petitioner, the same is a forged one and not binding on the petitioner. He further submitted that whether the alleged transfer instrument complies with the provisions of Section 108 in all respect can be seen only when the instrument of transfer is produced. But in spite of the demand of the petitioner for production of the transfer deed, the respondents have refused to produce the same on the ground of pendency of the criminal case. Therefore, he submitted that the reluctance of the respondents to produce the transfer instruments would indicate that the alleged signature of the petitioner on the instrument of transfer is a forged one. He further pointed out that pendency of criminal proceedings need not be a bar in the CLB considering the petition on the basis of the pleadings and pass an order, for which he relied on [2000] CLA-BL Supp. 46 (SC) Medchl Chemicals & Pharma (P) Ltd. Vs. Biological E Ltd. and Others and 1990 68 CC 324 Atul Mathur V. Atul Kalra and another to show that “both criminal law and civil law remedy can be pursued in diverse situations.” Shri Saxena has emphasised that the Company Law Board only has jurisdiction to adjudicate the issue of transfer of shares and that the criminal court has no authority to resolve this issue. In this connection, he relied on AIR 1987 SC 535 – Pandurang v. State of Maharashtra to state that “what can be done only by at least two Judges cannot be done by one Judge. Even if the decision is right on merits, it is by a forum which is lacking in competence with regard to the subject matter. Even a ‘right’ decision by a ‘wrong’ forum is no decision. It is non-existent in the eye of law. And hence a nullity.”
6. Shri K. Ravi, Authorised Representative, appearing for the respondents submitted that the petition is not maintainable in terms of Section 111A in as much as the petitioner being the transferor has no locus standi to file this petition. Further since the transfer had taken place as early as in 1997, the petition should have been filed within the period of two months and since it has not been done so the petition is time barred. He submitted that at the time of settlement of his dues when he parted ways with the Company in 1997, on valuable consideration, the petitioner transferred these shares to the second respondent by executing proper instrument of transfer and the Company has acted on that instrument. Further, the allegation that no such share certificate had been issued is also wrong in as much as the petitioner himself was a director for five long years after the allotment of shares and at no time he had complained of non-issue/delivery of share certificate to him. The learned Authorised Representative further pointed out that the petitioner filed the criminal case only after filing of the instant petition and that the criminal case has already come up for hearing. Since the production of instrument of transfer in the present proceeding would prejudicially affect the respondents in the criminal case, they are not in a position to furnish any copy to the petitioner even though they are willing to show the instrument of transfer to this Bench. He also submitted that since the decision of the criminal court on the genuineness of the signature of the petitioner on the instrument of transfer would settle the dispute once for all, it would be appropriate that this Bench defers the matter till the criminal case is disposed of. He also undertook that if the criminal court were to come to the conclusion that the instrument of transfer is a forged one, the Company would immediately restore the name of the petitioner on the register of members and also hand over the share script in respect of these shares.
7. We have considered the pleadings and arguments of both the sides. It is an admitted fact that the petitioner filed a criminal case after filing of the present petition. The only complaint in the petition is that the Company has transferred the shares to the second respondent without the authority of the petitioner and without paying any consideration and if the respondents rely on any transfer instrument, the same is forged one. Therefore, to determine the right of the petitioner to get into the register of members, we have to give a finding as to whether the signature appearing in the instrument of transfer is that of the petitioner or not. In other words, we have to give a finding whether the signature is a forged one as claimed by the petitioner. We have seen the original instrument of transfer and we are not in a position to categorically come to the conclusion as to whether it is the genuine signature of the petitioner or a forged one. In a summary proceedings under Section 111A it is not possible for us to make any roving enquiry into this matter. Since the criminal court is already seized of the matter, taking into consideration the undertaking given by the learned counsel for the respondent that in case the criminal court comes to the finding that the signature is forged, the Company would restore the name of the petitioner in respect of these 40,000 shares and also deliver the share certificates thereon, we are of the view that we should leave the matter of determination of the genuineness of the signature of the petitioner on the instrument of transfer to the criminal court. Accordingly, we dispose of this petition with the direction that the Company should re-enter the name of the petitioner on the register of members and deliver the share certificates to him in case the criminal court comes to a finding that the signature of the petitioner on the instrument of transfer is a forged one.
8. No order as to cost.
(K.K. BALU) (S.BALASUBRAMANIAN)
Dated this the 31st day of July, 2001