Calcutta High Court
Manglesh Jalan vs Subarnarekha Trade & Tea Industries ... on 3 March, 2017
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
OD-34 & 35
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APO 33 of 2015
With
ACO 12 of 2015
MANGLESH JALAN
-Vs-
SUBARNAREKHA TRADE & TEA INDUSTRIES LIMITED & OTHERS
-AND-
APO 34 of 2015
With
ACO 14 of 2015
CP 309 of 2013
MANGLESH JALAN
-Vs-
ASSAM'S FERTILISERS PVT. LTD & OTHERS
Appearance
Mr Jishnu Saha, Sr Adv.
Mr A. K. Mukherjee, Adv.
Ms S. Mukherjee, Adv.
... for the appellant
Mr Sakya Sen, Sr Adv.
Ms L. Sinha, Adv.
... for the respondents.
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE Date: March 3, 2017.
The Court:- The appellant is aggrieved by the orders passed by the Company Law Board in two sets of petitions filed under Sections 397 and 398 of the Companies Act, 1956. Both petitions have been dismissed on 2 the ground that the matters complained of by the appellant herein pertained to past and concluded transactions in respect whereof the appellant did not lodge any contemporaneous protest. The similar but independent orders on the two petitions also recorded that the change that had been brought about by the impugned transactions in the shareholding were a part of a family settlement carried out by the deceased father of the appellant and the principal respondent.
The two companies, Subarnarekha Trade & Tea Industries Ltd and Assam's Fertilisers Pvt. Ltd, have virtually no business other than their joint ownership, in the ratio of 2:1, of a valuable immoveable property at upmarket 12, Burdwan Road comprising land admeasuring in excess of 24 cottah. The petitions filed by the appellant herein did not refer to any other business being conducted by the two companies save notionally owning the Burdwan Road property.
The grievance of the appellant was that shortly after the death of the appellant's father on May 21, 2009, the appellant discovered that the shareholding composition in the two companies had been altered which implied that the appellant had virtually no say in the Burdwan Road property and brother Mukesh had complete control over the same. The appellant complained that no notice of such change in the shareholding composition in either company was issued to or received by the 2 3 appellant; nor did the appellant get any notice for any general meeting that was necessary for the issuance of further shares in Subarnarekha.
The change in the shareholding composition in Subarnarekha appears to have been brought about in 2007, during the lifetime of the father of the warring brothers, by the issuance and allotment of further shares. Some cash consideration of a nominal amount was shown to have been paid by Mukesh against the further shares in Subarnarekha issued to him. In Assam's Fertilisers, the shares held by an HUF controlled by the father were rearranged or transferred to Mukesh such that Mukesh gained overwhelming control of the company.
The CLB perceived the defence taken by Mukesh to be that late father Mahabir Prasad, as the patriarch of the family and in control of its business and assets, had made the arrangement such that some of the assets and companies of the family would go to appellant Manglesh and others to brothers Mukesh and Mukul. Mukul was not made a party to the proceedings before the CLB nor did he show any interest to join therein. On a query from this Court, it is submitted on behalf of the appellant that Mukul and Mukesh jointly stay at the Burdwan Road property.
The appellant argues that the orders impugned are without any reason. According to the appellant, the decisions of the CLB are not based on any material before it. The orders are criticised for the use of 3 4 such expressions therein as the appellant "was aware" of the transactions and the appellant "acquiesced therein." The appellant asserts that it was not demonstrated on affidavit by Mukesh or otherwise that the appellant herein was aware of the changes in the shareholding composition of the two companies prior to July, 2009. The appellant reiterates that the appellant had no occasion to look into the functioning of the two companies or how its books or records were maintained till the appellant faced resistance from Mukesh in seeking to assert rights in respect of the Burdwan Road property.
The CLB accepted Mukesh's contention that the changes in the shareholding pattern of the two companies were brought about at the behest of the father and as a part of a family arrangement supervised by the father. The CLB also noticed that the shareholders had no right to proportionate allotment and that the companies were family companies which were solely controlled and managed by Mahabir Prasad till his death.
In the circumstances, on the factual appreciation of the manner in which the business of the two companies was conducted, the CLB held that the settlement brought about by changing the shareholding compositions in the two companies could not be "perceived (to be) harsh or burdensome."
4 5
An appeal under Section 10F of the Act of 1956 is entertained on questions of law. Though it is now recognised that a final order without recording any reasons would be susceptible to a challenge under Section 10F of the Act, the orders impugned herein pertaining to the two companies are not completely bereft of reasons. In any event, how the mind of the CLB was applied to the matters in issue is evident from the orders. It is possible that this Court may have approached the matter differently had the adjudication been taken up by this Court; but that is not the object of an exercise in the limited scope of Section 10F of the Act. Indeed, it is apparent from the nature of the action launched by the appellant before the CLB that the companies were of no concern to the appellant herein, but the property held by the companies was.
Classically, a petition under Section 397 of the said Act has to make out a case for just and equitable winding-up of the company before, as an alternative, the reliefs sought may be taken up for consideration. It is evident that the sole and only object of the appellant herein was to go for the property.
The CLB does not appear to have committed any grave error in noticing the general manner in which family businesses are conducted through companies in the Indian context with a patriarch ruling the roost and having complete say. On the basis of what was on display before it, the CLB perceived the two impugned transactions to have been 5 6 under the aegis of the deceased father of the warring brothers and concluded during his lifetime as a part of a family arrangement. Since that was a possible view that could have been taken in the circumstances, the orders do not call for any interference in this limited jurisdiction.
APO 33 of 2015 with ACO 12 of 2015 and APO 34 of 2015 with ACO 14 of 2015 are dismissed.
There will be no order as to costs.
(SANJIB BANERJEE, J.) G.S. Das 6