Company Law Board
Aska Investments Private Limited And ... vs The Grob Tea Company Limited And Ors. on 30 January, 2004
Equivalent citations: [2005]126COMPCAS603(CLB), (2004)2COMPLJ392(CLB), [2004]52SCL278(CLB)
ORDER
S. Balasubramanian, Chairman
1. In this order, I am considering three petitions, CP 72 of 2000 filed under Sections 397/398, CP 5(111A)ERB/2000 filed under Section 111A and CP 46 of 2001 filed under Sections 543/544 of the Companies Act (the Act) as all these petitions were heard together.
2. The petitioners claiming to hold 14.12% shares along with those who have given their consent have fled the petition CP 72/2000 under Sections 397/398 of the Companies Act, 1956 (the Act) with the main allegation that the respondent directors managing the affairs of M/S Grob Tea Company Limited (the company) are guilty of siphoning of the funds of the company to a tune of more than Rs. 1 crore. According to them, the Income Tax Authorities conducted a search and seizure operation and ordered a block assessment for 10 years as a result of which the company became liable to pay Rs. 66.28 lacs as tax towards undisclosed income and therefore, the undisclosed amount should have been more than Rs. 1 crore and this amount should have been siphoned of by the respondent directors. This is the main allegation in the petition.
3. The respondents have raised preliminary objection on the maintainability of this petition in terms of Section 399 of the Act, on the ground that the petitioners together with the consenting shareholders had acquired shares with a malafide intention of taking over the control of the company and in violation of SEBI (Substantial acquisition of shares and Take Over) Regulations (Take Over Regulations)). According to the respondents, they came to know of the petitioners acquiring the shares acting in concert only when they had disclosed their shareholdings in the petition. The company later on filed CP 5(111A)ERB/2000 under Section 111A (3) of the Act seeking for rectification of the Register of Members by deleting the names of the respondents in respect of shares acquired beyond 5% for their having contravened the provisions of Take Over Regulations. During the pendency of the proceedings, the petitioners filed CP 46 of 2001 invoking the provisions of Section 542 and 543 read with Schedule XI of the Companies Act against the respondents. All the petitions were heard together.
4. Since the maintainability of the petition CP 72/2000 has been challenged in terms of Section 399 of the Act, it is necessary to examine this section. In terms of this Section, to maintain a petition under Sections 397/398, in case of a company having a share capital the petition should be filed by members having 10% or more of the subscribed capital or constituting 10% of the total membership of the company or by a member/members who have obtained consent of the rest. In the present case, there are two petitioners and they have obtained the consent of 13 shareholders. The total percentage of shareholding held by the petitioners and the members who have given the consent account to 14.12%. Thus, on the day of presentation of the petition, the petitioners fulfilled the requirements of Section 399 of the Act. However, the respondents are questioning the validity of the shareholdings by the petitioners and their supporters. If, in a petition, the legality of the acquisition of the shares or the factum of holding shares, the strength on which the petition is filed, is challenged in terms of Section 399 of the Act, this Bench has to examine the same and give its findings, before proceeding with the merits of the case as held by this Board in Mega Resources v. Bombay Deying And Manufacturing Company Ltd (2002 CLJ 347) . Since the legality of the acquisition of the shares is also challenged independently and seeking for rectification of the register of members of the company in CP 5(111A)ERB/2000, I am dealing with that petition first as a finding on this petition would be material to decide the maintainability of the petition under Sections 397/98.
5. Since certain definitions of the Regulation are relevant in deciding this petition, I am extracting the same:
Regulation 7 reads:
(1) Any acquirer who acquires shares or voting rights which (taken together with the shares or voting rights, if any held by him) would entitle him to more than 5% shares or voting rights in a company, in any manner whatsoever, shall disclose the aggregate of his shareholding or voting rights in that company, to the company (2) the disclosures mentioned in sub Regulations (1) shall be made within 4 working days of (a) the receipt of disclosure of allotment of shares; or (b) the acquisition of shares or voting, as the case may be) (3) every company whose shares are acquired in a manner referred to sub Regulation (1), shall disclose to all the stock exchanges number of shares held by each of such persons referred above within 7 working days of receipt of information under sub Regulation (1)".
Regulation 2(1)(b) defines an acquirer as:
"Acquirer means any person, directly or indirectly, acquires or agrees to acquire shares or voting rights in the target company, or acquire or agrees to acquire control over the target company, either by himself or with any person acting in concert with the acquirer".
Regulation 2(e)(1) reads "persons acting in concert" would comprise of persons who with the common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal) directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company".
6. Shri Sarkar appearing for the petitioners in CP 5(111A)/2000 submitted: None of the respondents or those who have given letters of consent in CP 72/2000 held any shares in the company before December 1997. All of them started acquiring the shares thereafter acting in concert. They started acquiring the shares from 1997 in small lots at different times and when these shares came for registration, the company did not know that all these persons were acting in concert. They acquired more than 14% shares without disclosing the fact that they were acting in concert. Only from the details of shareholdings given in CP 72/2000, the company came to know that the petitioners and others therein were acting in concert in acquiring the shares in contravention of the provisions of SEBI (Substantial Acquisition of Shares) Regulation 1997 (Regulation) in acquiring shares. Immediately, not only a preliminary objection was raised on the maintainability of CP 72/2000, the company also filed the instant petition under Section 111A(3) of the Act seeking for rectification of the Register of Members. In terms of Regulation 7, the acquirers will have to disclose to the company their aggregate shareholding whenever their acquisition exceeds 5% within 4 days. The petitioners failed to disclose the same. As per the records of the company, their holding crossed 5% on or about 27.11.1998 but they did not disclose the same till the petition was filed in 2000. Therefore, their holding of shares in excess of 5% on or about 27.11.1998 but they did not disclose the same till the petition was filed in 2000. Therefore, their holding of shares in excess of 5% would be illegal land cannot vest any right in the petitioners in respect of those shares. From the details given in the petition about the respondents, it is abundantly clear that they were all acting in concert in acquiring the share. Further, their acting in concert is also evident from their admission. By a letter dated 22nd Feb. 2003, they have written to the SEBI Regularization Scheme 2002. Therefore, the respondents cannot claim that they had not acquired the shares acting in concert. In terms of Regulation 7, they should have disclosed to the company as soon as their acquisition exceeded 5% which they failed. In Bajoria v. Bombay Deying Limited (2002 1 CLJ 347) The CLB had decided that in case of non compliance with Regulation 7, shares acquired beyond 5% would be invalid and rectification of register deleting the shares so acquired could be ordered. It is a fact that in the present case the petitioners' group did not disclose to the company when their acquisition crossed 5%. Therefore, an order of rectification should be made in respect of the shares acquired beyond 5% in terms of Section 111A(3).
7. Shri Mitra appear for the respondents submitted: The respondents did not act in concert to acquire the shares. They have all acquired the shares individually and on their own. Just because they have all come together to file the petition under Section 397/398 does not mean that they were acting in concert. As shareholders, when they came to know of the siphoning of funds of the company, they have joined together to file this petition. Provisions of Regulation 7 are not at all applicable in this case for various reasons. Firstly, provisions of Regulation 7 are applicable only to individual acquirers and not to those acting in concert and none in the petitioners' group holds more than 5% shares, secondly, even if applicable to those acting in concert, disclosure is not mandatory and as such acquisition beyond 5% is not illegal and thirdly, that if there is any violation, the SEBI Act provides for penalty and the question of declaring the acquisition as invalid does not arise.
8. Elaborating these points, the learned Counsel submitted: In Regulation 7, there is no mention of persons acting in concert. It deals only with "acquirer" to mean individuals and none of the individuals from the respondents' group has acquired more than 5% shares. From Regulation 2(1)(b) which defines an "acquirer", it is evident that it consists of two parts- one relating to acquisition of shares simpliciter and the other relating to acquisition of shares with the intent to take control of the company. The definition of persons acting in concert as used in this Regulation, if read with the previous line in the Regulation, would apply only when persons, with a common objective of substantial acquisition of shares or voting rights for gaining control over the target company directly or indirectly, acquire shares or voting rights. The concept of persons acting in concert would not apply in case of acquisition of shares simpliciter and Regulation 7 deals only with acquisition of shares simpliciter and therefore "acquirer" means only an individual. The definition of control as given in Regulation 2(c) would mean the right to appoint majority of directors. In the present case, the respondent promoters hold more than 63% shares and as such there is no possibility of acquiring shares with the object of taking control of the company. It is Chapter III of the Take Over Regulations that deals with substantial acquisition. In terms of Regulation 10, no acquirer or persons acting in concert with him shall acquire more than 15% shares without a public offer. Therefore only this provision is mandatory. But Regulation 7 does not prohibit a person acquiring more than 5% shares and as such any excess over 5% cannot be held to be invalid. Non disclosure in terms of Regulation 7 may at the most would invite penal action under the Regulations/Act and nothing more. This is what the High Court of Andhra Pradesh has decided in Karamsad Investment Ltd. v. Nile Limited (108 Com. Cases 58) . Therefore, on the day of filing the petition, the petitioners validly held 14.12% shares in the company and in terms of the Judgment of Supreme Court in Rajamundry Electric Supply Corporation case (AIR 1956 SC 213) the maintainability of the petition is to be determined by the shareholding on the day of filing the petition. Even though this Board has held in Arun Kumar Bajoria v. Bombay Deying Limited (2001 4 CLJ 115) that non compliance of Regulation 7 would make the acquisition beyond 5% as invalid, in that case, there was an admission that the petitioners therein were acting in concert. In the present case, there is no such admission that the respondents' group had acted in concert in acquiring the shares. The assertion of the petitioner that the petitioners' group were acting in concert is mere a conjuncture and surmise. No doubt the respondents have applied to SEBI under Settlement Scheme only because of the complaint made by the company, that too, without prejudice. Therefore, this application cannot be considered to be an admission of the part of the respondents that they had acted in concert. Further, SEBI Authorities have already initiated an investigation into the acquisition on the basis of a complaint made by the company which is currently being adjudicated by an adjudicating officer under Section 15(I) of SEBI Act. In terms of Section 15 H, if the adjudicating officer come to the conclusion that the acquisition was in violation of Regulation 7, he can impose a penalty not exceeding Rs.5 lacs. Therefore, there is no question of declaring that the sahres acquired beyond 5% is invalid. Further, in terms of Section 111A(3), petition seeking for rectification has to be mad within two months of registration of transfer, but in the present case this petition has been filed after two years of registration of transfers and as such it is time barred and therefore should be dismissed.
9. Shri Sarkar arguing in rejoinder, submitted: This petition is not time barred. It has been filed within two months of the filing of CP 72/2000, from which petition the company came to know that the respondents were acting in concert. Further, in case of violation of statutory provision, limitation is not applicable. Therefore, this petition is not barred by limitation. This Board has categorically decided in Bombay Deying case that non disclosure as envisaged in Regulation 7 for acquisition beyond 5% shares would result in the shares acquired beyond 5% being declared as invalid. Section 111A(3) of the Companies Act empowers the CLB to direct rectification in case there is any violation of provisions of Regulations framed by SEBI in acquiring shares of a company. This is an independent power of the CLB. The petitioners cannot claim, after having sought relief under the SWEBI Settlement Scheme, that they have made this application would indicate that they were acting in concert in acquiring the shares. The contention of the petitioners that the provisions of Regulation 7 would apply only to individuals and not to persons acting in concert has no basis. Regulation 2(1)(b) cannot be broken into two parts. The term "acquirer" applies to both acquisition of shares simpliciter and also with the view to take control of the company. Therefore, the term "Acquirer" in regulation Regulations 7 not only applies to individuals but also to those acting in concert. The Securities Applies to individuals but also to those acting in concert. The Securities Appellate Tribunal has held in Mega Resources Ltd. v. SEBI (2002 3 CLJ 179) that Regulations 7 not only applies to individuals but also to persons acting in concert. Since SAT is specialized body to interpret the provisions of SEBI Act and Regulations, its interpretation of Regulation 7 has to be given utmost consideration as has been held by Supreme Court in Desh Bandhu Gupta v. Delhi Stock Exchange Association Ltd. (AIR 1979 SC 1049). The Andhra Pradesh High Court judgment in Nile case that violation of Regulation 7 exposes the acquirers only to penalty and nothing else cannot be taken as an authority as the High Court has remanded the case of Arun Kumar Bijoria v. SEBI (WP No. NO 331/2001) , the Calcutta High Court has held that compliance with Regulation 7 is mandatory. Since the registered office of the company is in Kolkota, the decision of the Calcutta High Court is binding on the CLB as held in State of Punjab v. Nathu Ram (AIR 1962 SC 89) .
10. I have considered the matter carefully. The petitioner has invoked the provisions of Section 111A(3) of the Act to seek rectification of the Register of Members of the Company in respect of the shares acquired by the respondents beyond 5% on the ground that the respondents had not complied with the provisions of Regulation 7 of the Regulation. The respondents' contention relating to their acquisition of shares in the company are manifold. According to them, they were not acting in concert while acquiring the shares, even otherwise Regulation 7 of the Take Over Code would apply only to individuals, that acquisition beyond 5% without disclosure in terms of Regulation 7 would not make such acquisition invalid as in terms of SEBI Act, the failure to disclose would result only a penalty being levied. In other words, according to the petitioners, the provisions or Regulation 7 are not mandatory. They have also taken a stand that the petition is time barred as in terms of Section 111A(3), petition for rectification has to be filed within 2 months from the date of registration of transfer.
12. It is on record that none of the individual respondents holds more than 5%. Therefore, the first issue for determination is whether the respondents had acted in concert in acquisition of shares. Originally, the petitioner had impleaded 20 respondents and by an application and by an application, it sought for addition of 4 more respondents on the ground that there had been inter-se transfers among the respondents including 4 more new respondents. The petitioner, by giving the details of the status of respondents with reference to each other, has alleged that they all had acted in concert in acquiring the shares in the company. The petitioner has also elided to the application made by the respondents to SEBI under its Settlement Scheme to substantiate its contention that the respondents had acted in concert. Individual replies to the petition have been filed by the 7th , 12th and 13th respondents adapting the reply of 11th respondent has file a reply on behalf of himself and for the 2nd, 3rd, 5th, 14th and 15th in his capacity as a director of 2nd, 3rd, and 5th respondents and as a constituted attorney for 14th and 15 respondents. 1st respondent has filed a reply affirmed by one Ram Avtar Mittal. 16th respondent has filed a reply for himself and for respondents 17th to 24, adopting the reply of the 1st respondent. Thus detailed replies have been filed only by the 11th respondent and the 1st respondent. From the replies as well the details of relationship given in the petition I find that there are two groups of respondents- Tulsian Group and Mittal group. It is quite obvious that with the common name of "Tulsian" and that they all have the common address namely, 15, Belvedere Road, Calcutta-27, respondents, on their own averment are directors in the respondent companies on behalf of which they have filed replies. Therefore, it is clear that respondents 2 to 15 belong to Tulsian group and therefore it has to be held that they had acquired the shares acting in concert with a common objective. In regard to Mittal group comprising of respondents 16 to 24, their close relationship has been detailed in the petition and the same is not disputed and from the very fact that the 16th respondent has filed a common reply on behalf of respondents 16 to 24, their close relationship has been detailed in the petition and the same is not disputed and from the very fact that the 16th respondent has filed a common reply on behalf of respondents 16 to 24 and has adopted the reply of the 1st respondent, it is evident that they all belong to a single group and it has to be held that they had acquired the shares acting in concert with a common objective. The only issue for consideration is whether both the groups together could be said to have acquired the shares acting in concert with each other as contended by the petitioners. In the petition, at paragraph 6(j) it is stated that close relatives of Mittal group are directors of 4th and 7th respondents, which are in Tulsian group, and this allegation has not been dealt with in the replies filed by the 11th respondent or the 1st respondent giving rise to the presumption that it is a fact. From the narration above, and also considering the fact that there has been inter-se transfer of shares between these tow groups, it is apparent that both the groups have acted in concert in acquiring the shares in the company. Even if no cognizance needs to be taken on the application filed by the respondents under the Settlement Scheme, it is evident that they had acted in concert in acquiring the shares.
13. Having concluded that these shares have been acquired acting in concert by the respondents, the next issue for consideration is whether the provisions of Regulation 7 of Take Over Code is attracted in this case. The contention of the respondents is that the term "acquirer" in 2(1)(b) does not include "persons acting in concert" in case of mere acquisition of shares beyond 5%. According to them, the Regulation 2(1)(b) contemplates two - one is that acquiring shares or voting rights in a target company and another is acquiring or agreeing to acquire control over the target company. The first situation would apply only to individuals while in the second situation it would apply to individual and also persons acting in concert with such individuals. In other words, the concept of persons acting in concert would arise only in case when the intention is to acquire control over the target company. In the present case, according to the respondents, the question of acquiring control over the target company does not arise since the promoter group holds more than 63% shares in the company. Since Regulation 7(1) talks of only "acquirer" it would mean only individuals and not those acting in concert.
14. I do not find any substance in this argument. The stand of the respondents that the words "either by himself or with the any person acting in concert with the acquirer" would apply only in case of an attempt to acquire the control of the company is not correct. Regulation 2(1)(b) has to be read as a whole. If it is done so, it would be clear that the term "acquirer" is an inclusive term covering persons acting in concert both in case of acquisition of shares simpliciter as well as with the intention to gain control of the company. In this connection, it is beneficial to refer to SAT decision in Mega Resources (Supra) wherein, with reference to Regulation 7, it has observed " On a combined reading of the above cited definitions, it is not possible to agree with shri Banerjee's submission that in view of the use of the word "acquirer" in singular and the absence of the word "acting in concert" in Regulation excluded an acquirer whose individual holding does not exceed 5%, from complying with the requirement of the Regulation. In the light of the definition of expression "acquirer" and "person acting in concert" and also taking into consideration the purpose of Regulation 7, I am of the view that acquisition of shares by persons acting in league, is very relevant and the disclosure of such concerted acquisition to the target company and the company in turn to the Stock-Exchange is in tune with the objective of the said disclosure..... In my view the shares acquired by all those persons acting in league has to be taken as a whole for the purpose of Regulation 7". If the interpretation of the petitioners were to be corr4ect, then, a number of individuals, even though acting in concert, could acquire 4.99% shares each in a target company and even avoid resorting to public offer in terms of Regulation 10. In terms of Regulation 7, any acquisition beyond 5% by persons acting in concert has to be disclosed, whether such acquisition would lead to acquiring the control of the company or not. It is immaterial that the promoters hold controlling shares in the company. Therefore, the contention that Regulation 7 would only to individuals and not to persons acting in concert, deserves to be rejected.
15. The next contention of the respondents is that non compliance with Regulation 7 cannot make the acquisition invalid as this Regulation is not mandatory unlike Regulation 10. According to them, under Regulation 10, there is a legal bar to acquire shares beyond 15% without making a public offer while non disclosure under Regulation 7 results only in a penalty. Similar contention has been considered by this Board in Bombay Deying case (2001 CLJ 115) , by Calcutta High Court in the case of Arun Kumar Bijoria v. SEBI and by Securities Appellate Tribunal in Mega Resources case. Before the SAT and the Calcutta High Court, it was contended that the provisions of Regulation 7 were not mandatory. The SAT observed "The appellants arguments that the requirement of Regulation (1) is not mandatory is also not tenable. The word "shall disclose" read in the light of the scheme of the regulations it should indicate that the provision is a mandatory requirement. Learned counsel for the appellants had also stated that the Act has not provided any penal consequences for non compliance of the Regulations, and as such, the Regulation is not mandatory is also not correct. Failure to make the requisite disclosure attracts monetary penalty as specifically provided in Section 15A(b) of the Act". Thus, the SAT held that disclosure in terms of Regulation 7 is mandatory. The Calcutta High Court, also after examining the object and purpose of the Regulation came to the conclusion "For the reasons already given above, I have no option but to hold that the requirement is mandatory as the same is for the benefit of the investing public". Similar view was expressed by this Board in Gujarat Machinery Manufacturers Ltd. v. Nile Limited (2000 5 CLJ 340). The petitioners have submitted that the Nile case was taken on appeal to Andhra Pradesh High Court and the Court has held that the provisions of Regulation 7 are not mandatory. I do not find any such categorical finding given by the court except to say that ;if the violation of the provisions of Regulation 7 is established, the legality of acquisition is not affected but it may expose the case to penalties under Regulation 45. Since there is a categorical finding that the provisions of regulation 7 are mandatory by SAT and Calcutta High Court under the jurisdiction of which the registered office of the company is located, I am bound by the decision that requirements of Regulation 7 are mandatory and any act in violation of a mandatory provision is invalid/illegal.
16. Another contention raised by the petitioners is that the adjudicating officer of SEBI is already investigating this matter in terms of Section 15(1) of SEBI Act and in the event the adjudicating officer comes to the conclusion that the provisions of Regulation 7 have not been complied with, SEBI can levy penalty and if the penalty is paid by the petitioners, it cannot be contended that the shares acquired by them are illegal. SEBI exercises powers under the SEBI Act and the CLB exercises its powers under the Companies Act and the consequences of such exercise of powers are different. In this connection, reference may be made to the observation of Calcutta High Court in Arun Kumar Bijoria's case wherein the court has observed "The statutory duties and obligations of the Company Law Board are not similar to the statutory duties and obligations of SEBI. Because one statutory body is discharging one of its duties and obligations, another statutory body, it cannot be said, would not discharge one of its own duties and obligations. If it is held by the Company Law Board that there has been a violation of Regulation 7 by the petitioner, the consequences of such holding would not be same or similar to the consequences of holding by SEBI". Section 111A(3) of the Act empowers a company to move the CLB to direct rectification of the Register of Members on the ground that acquisition of shares is in violation of the provisions of SEBI Act or the Regulations made there under and as such the company has moved this petition and therefore, this Bench has the powers to look into this complaint and pass appropriate order, not withstanding the powers of SEBI to look into the same complaint for appropriate orders.
17. Since I have held that the respondents had acted in concert in acquisition of shares in the company and that they should have complied with Regulation 7(1), which obviously they did not, their acquisition of shares beyond 5% is invalid as held by this Bench in Bombay Deying case (supra). The respondents have raised an objection that the petition is time barred as it has not been filed within 2 months of registration of transfer. It is true that in terms of Section 111A(3) of the Act, rectification has to be sought within two months of registration of transfer. In Bombay Deying case, on a similar plea, the Board took the view that the period of limitation could be computed from the date of knowledge also. It is extremely difficult for a company to find out that persons are acting in concert at the time of registration of transfers. It is one of the reasons why Regulation 7 requires disclosure to the company. In the present case, even now when the respondents are denying that they had acted in concert, they cannot contend that the company should have move this Board within two months of registration of transfers. Therefore, this petition is not barred by limitation.
18. Thus, it is established that the respondents, when acquiring the shares of the company acting in concert had failed to disclose their acquisition beyond 5% within 4 days of such acquisition as required by Regulation 7(1) and as such all acquisitions beyond 5% are invalid. Accordingly, in terms of Section 111A(3), I direct that the Register of Members of the company be rectified by removing the names of the respondents in respect of shares acquired beyond 5%. Since the respondents' holdings crossed 5% limit on or about 27.11.98, the rectification will be in respect of all the shares acquired thereafter. Accordingly CP 5(111A)ERB/2000 is disposed of in the above terms.
19. As far as CP 72/2000 is concerned, this petition has been filed by two shareholders who are the respondents 1 and 11 in CP 5(111A)/2000. They have obtained the consent of 5 individual shareholders and 8 companies. The very same persons are some of the other respondents in CP 5(111A)/2000. In that petition, I have already held that since their acquisition was acting in concert and that in view of their failure to disclose in terms of Regulation 7 of Takeover Regulations, their acquisition beyond 5% is invalid and to that extent the Register of Members of the company has to be rectified. In view of this, the legal shareholding of the petitioners together with those who have given consent in CP 72/2000, would be only 5% and as such they do not satisfy the requirements of Section 399. The petitioners have taken a stand that since on the day of filing the petition, they held more than 10% shares, in terms of the judgment of Supreme Court in Rajhamundri Electric Supply Corporation case (supra), the petition is maintainable. A similar contention was raised before this Board in Mega Resources case wherein this Board held that to maintain a petition under Sections 397/398, the shares on the strength of which the petition is filed should have been acquired legally and if the legality or the factum of holding such shares is impugned, then that issue should be decided first before entering into the merits of the case. In the present case, the legality of acquisition of shares have been impugned not only in the present proceedings but also by a separate petition under Section 111A(3) and this Bench has held that the shares beyond 5% were not legally acquired and as such the Register of Members requires to be rectified in respect of shares beyond 5%. Therefore, the shares acquired beyond 5% cannot be taken into account to consider the maintainability of the petition in terms of Section 399 of the Act. This being the case CP 72/000 is not maintainable in terms of Section 399. Accordingly, this petition is dismissed.
20. As per CP 46 of 2001 is concerned, it was filed in terms of Sections 406, 542 and 543 read with Schedule XI of the Act, during the pendency of the proceedings in the other two petitions. The main allegation in the petition is the same as in CP 72/2000 that the respondents therein were guilty of siphoning of the concealed income of the company as is evident from the income tax proceedings. Arguments were advanced on this allegation citing a number of judgments. Since CP 72/2000 has been dismissed as not maintainable, I have not gone into this allegations in that petition. One of the reliefs sought in that petition was to take action against the respondents therein in terms of Sections 542 and 543 read with Schedule XI of the Act. Now that CP 72/2000 has been dismissed, the issue of maintainability of CP 46/2001 requires consideration. Therefore, I have decided to defer this matter pending further hearing (SIC) a date to be notified.
21. In fine, in terms of the finding in CP 5(111A)ERB/2000, the company will rectify the Register of Members in respect of shares required by the respondents therein beyond 5% (SIC) CP 72/2000 stands dismissed as not maintainable in terms of Section 399 of the Act and CP 46/2001 is adjourned for further hearin(SIC)