Company Law Board
Gopalkrishna Sengupta vs Hindustan Construction Company on 17 May, 2002
Equivalent citations: [2002]112COMPCAS166(CLB)
ORDER
1. In this order we are considering the letter dated October 29, 1999, addressed to the Chairman, Company Law Board (CLB) by Shri G. K. Sengupta (petitioner), as ordered on March 28, 2002, by the Division Bench of the Bombay High Court in Crl. Writ Petition No. 1572 of 2001.
2. Before we proceed to consider the aforesaid letter, it will be relevant to give the factual background of the dispute which is for consideration before us. The same is as follows :
The petitioner filed a petition under Section 111 of the Companies Act, 1956 ("the Act"), praying for the rectification of the share register of the respondent-company, namely, Hindustan Construction Company Limited by incorporating the names of the petitioner and his son in respect of the shares certificate number 72893 in respect of 50 equity shares of the respondent-company. The petition was contested by the respondent-company by filing an affidavit dated February 17, 1992, along with a transfer instrument dated July 17, 1991, in respect of the transfer of the said shares in question. The matter was considered by this Board (CLB) which vide order dated May 8, 1992, dismissed the petitioner's petition/appeal. Instead of filing an appeal against the said order the petitioner permitted the same to become final and filed criminal cases against the respondent-company and also various applications under different provisions of the Criminal Procedure Code (Cr. P. C.) alleging mainly that the respondent-company has filed a fictitious affidavit and resorted to forgery by filing a fabricated transfer deed. From the material which is available before us we find that the police have been investigating the matters and filing reports from time to time before the Metropolitan Magistrate, 38 Court, Ballard Pier, Bombay. On October 29, 1999, the petitioner wrote a letter addressed to the Chairman, Company Law Board, inter alia, praying to institute legal proceedings against the respondent-company for filing the fictitious affidavit dated February 17, 1992, and also for supplying certified true copy of the forged transfer instruments without having the same with them. The petitioner also preferred another application under Section 113 of the Act before this Board praying that the respondent-company may be directed to deliver the said 50 shares to the petitioner which he had purchased from the market and sent for transfer in his and his son's name. The said application was dismissed vide order dated December 14, 2001, on the ground that the said provision was not applicable there being no allotment of shares in this case for invoking Section 113 of the Act. The petitioner thereafter filed a writ petition being Criminal Writ Petition No. 1381 of 2000, inter alia, praying that the respondent-company be ordered to produce the certified true copy of the transfer instrument executed on July 17, 1991. On November 28, 2001, the petitioner filed another letter with the Western Bench praying to proceed against the respondent-company, under Section 195(1)(b) of the Criminal Procedure Code and Sections 193, 196 and 199 of the Indian Penal Code. The petitioner also filed another writ petition, namely, Criminal Writ Petition No. 1572 of 2001 before the Bombay High Court, inter alia, praying that an enquiry be conducted against the respondent-company and to direct it to produce the proof of delivery to the petitioner of his valuable security and not to transfer the petitioner share to any other party. Vide order dated March 28, 2002, the Division Bench of the Hon'ble court directed this Board to decide the petitioner's letter/application dated October 29, 1999, within eight weeks from the said date. This is how the matter has come up before us.
3. On the said order being served, vide notice dated April 9, 2002, this Board directed the respondent-company to file an affidavit within two weeks in reply to the letter/application dated October 29, 1999, with a copy of the said affidavit to the petitioner who was also directed by the same notice to file a rejoinder to the reply filed by the respondent-company. On April 24, 2002, the petitioner wrote to the Bench Officer of this Board stating that the respondent-company has not filed any reply to the application, hence, the matter may be proceeded with under Section 195 of the Criminal Procedure Code read with Sections 193 to 196 of the Indian Penal Code. The respondent-company filed its reply on April 24, 2002, and served the copy on the petitioner on April 25, 2002. The petitioner sent a letter dated April 29, 2002, to the Bench Officer of this Board stating, inter alia, that the reply filed by the respondent-company was belated as it was not filed by April 23, 2002, and hence, cannot be taken into consideration. However, if the same is taken into consideration, the petitioner be permitted to file a rejoinder. It was further stated that as the affidavit dated February 17, 1992, has been revealed to be fictitious in the criminal proceedings initiated by the petitioner, this Board will proceed to lodge a complaint before the appropriate forum in respect thereof. On April 15, 2002, a notice was sent by registered post to the parties fixing May 6, 2002, for the hearing of the application. On the said date neither the petitioner nor his counsel were present, the respondent-company was, however, represented by its company secretary as well as counsel. As this Board did not want to proceed in the absence of the petitioner and wanted to ensure that the time-limit fixed by the Hon'ble High Court, vide order dated March 28, 2002, was complied with, it fixed May 8, 2002, for hearing and got the notice served on the petitioner and his counsel by special messenger. On the said date both the parties were present along with their counsel. On behalf of the petitioner it was contended that in case the company's affidavit dated April 24, 2002, is being considered, then the petitioner should be given at least seven days time to file a reply. Counsel for the respondent-company, however, stated that whatever has been stated in the reply is on the basis of the record of this case and hence, he shall be arguing on the merits on the material on record and will not rely upon the affidavit filed on April 24, 2002. The petitioner and his counsel had, therefore, no objection to proceed with the hearing and consequently we have heard the petitioner-in-person as well as his counsel and also counsel for the respondent-company.
4. On behalf of the petitioner it was submitted that from the various reports submitted in the criminal proceedings which are on the record it would be evident that the affidavit dated February 17, 1992, was a false and a fictitious affidavit and the copy of the transfer deed dated July 17, 1991, was a fabricated document. Consequently, proceedings should be initiated against the respondent-company under Section 195 of the Criminal Procedure Code and Sections 193 to 196 and 199 of the Indian Penal Code. It was further submitted that a similar request had been made by the petitioner vide his letter dated November 28, 2001, submitted before this Board and also in the letter dated April 24, 2002.
5. Counsel for the respondent-company submitted that the petitioner had in the proceedings under Section 111 of the Act raised similar objections and had also filed a rejoinder to the affidavit dated February 17, 1999. The matter was considered by the Board in the order dated May 8, 1992, and the petition was dismissed on the merits. As the petitioner had not filed any appeal against the said order, the same had become final and the petitioner is, therefore, estopped in law from raising the same objections over and over again even after a lapse of about ten years. In the various criminal proceedings initiated by the petitioner and which are still pending and also in the criminal writ petitions filed before the High Court, the petitioner had raised the same issue and in none of those proceedings has the petitioner been able to get any order holding the affidavit to be false or transfer deed fabricated. The petitioner has in his letters addressed to this Board and other authorities not only made allegations against the then Chairman of the Board but has also made allegations against his own counsel, the investigating agency as well as the learned magistrate and imputed motives to them. It has been further submitted that the Division Bench of the Bombay High Court in its order dated March 28, 2002, had only directed this Board to consider the letter/application dated October 29, 1999, and the petitioner cannot be permitted to expand the scope by introducing letters dated April 24, 2002, April 29, 2002 and May 8, 2002, and raising other matters beyond the scope of the proceedings.
6. We have heard the parties at some length and have also perused the record of this case. At the very outset, it may be pointed out that the letter dated October 28, 1999, was not in the required format of an application as per Form No. 2 of regulation 17 of Company Law Board Regulations, 1991, which requires that the application shall be verified with an affidavit in the manner laid down in regulation 14. Besides, the Company Law Board (Fees on Application and Petition) Rules, 1991, prescribes that every interlocutory application made to the Board shall be accompanied by a fee of Rs. 50. In this case, the petitioner has not paid the required court fees and application money. Besides, copies of this letter have been sent to as many as 14 authorities. Accordingly, this letter was not dealt with as an application by this Board. However, as the Hon'ble High Court has directed this Board to consider the said letter, we have considered the same on its merits.
7. In the letter dated October 29, 1999, the petitioner has made allegations not only against the investigating authorities who had investigated the criminal proceedings but has also made baseless, irresponsible and unfounded allegations against the then chairman of Company Law Board and has, inter alia, made two prayers which are as follows :
(i) To issue a show-cause notice to the respondent-company as to why no legal proceedings under appropriate law for filing the fictitious affidavit dated February 17, 1992, may not be instituted.
(ii) To show cause why legal proceedings should not be instituted against the respondent-company for supplying the certified true copies of the forged transfer instrument executed on July 17, 1991, without having the same with them.
8. In the affidavit filed on February 17, 1992, the respondent-company had stated, inter alia, that after the company returned the original share certificates and the transfer form to the petitioner, the same share certificate was lodged with the company along with fresh transfer forms signed by the transferor. Without realising that this was the same share certificate the transfer was approved in the routine course by the board of directors and the petitioner's shares now stand in the name of Pritika S. Prabhu Desi. According to the petitioner, the said statement was false to the knowledge of the respondent-company who despite knowing that the shares belonged to the petitioner who had rectified the defects was feigning ignorance. Similarly, the transfer deed signed by the petitioner was dated August 1, 1989, whereas the transfer deed which was filed before this Board in the Section 111 proceedings along with the affidavit dated February 17, 1992, were fabricated documents. So far as this contention is concerned, it may be mentioned that the same objection was taken by the petitioner in its rejoinder and also before this Board while the petition under Section 111 of the Act was being heard. Despite the petitioner's objection, this Board had considered and rejected the petitioner's petition on the merits. The said order was not challenged in appeal and the order has become final. Similarly, in the various criminal proceedings which the petitioner initiated and also in the criminal writ petition filed by the petitioner before the High Court, these points were repeatedly raised but from no authority or from any court has the petitioner been able to get any order or any categorical finding that the stand taken by the respondent-company was knowingly false or that any fabrication was done by the respondent-company or any transfer instrument was tampered with. The petitioner has failed to show us any categorical finding by the metropolitan magistrate trying the criminal proceedings or the investigating agency to substantiate the allegation made by the petitioner. The petitioner has invited the attention of the Board to a report of the inspector investigating the complaint made by the petitioner dated October 4, 1999. We have perused the same but do not find any categorical finding to the said effect. On the contrary, the report states that some discreet enquiry may be made as the prospect of the share certificate being lost in transit cannot be ruled out. The petitioner has also placed strong reliance upon the order dated September 10, 1999, by the Additional Chief Metropolitan Magistrate in support of his case. We have also perused the same carefully but find that there is no categorical finding either regarding the false affidavit or the fabrication of the transfer deed. However, as the petitioner has placed strong reliance on the relevant part of this order, the same is extracted and quoted below :
"Over all, after having gone through the report made under Section 202 of the Criminal Procedure Code and investigation made under Section 156(iii) of the Criminal Procedure Code and on careful perusal of entire record of all the aforesaid case, I find that whatever allegations made by the complainant has got significant substance. He lost his valuable 50 equity shares and he did not know where his shares presently lie. One step ahead, I could say that somehow he has been financially victimized. Therefore, in order to give justice to the complainant and to adjudicate the matter in its totality and finality, I feel that, it becomes necessary to find out as to where 50 equity shares which the complainant had purchased at present lie. To achieve this the best remedy provided under Section 94 of the Criminal Procedure Code requires to be invoked. Before passing any process order in the present matter, once 50 equity shares and their whereabouts are known, the entire problem and gist of litigation would definitely come to an end."
9. From the extract of the order quoted above, it cannot be inferred that there was any finding in respect of the filing of a false and fictitious affidavit or the fabrication of the transfer deed as alleged by the petitioner. It is noteworthy that on the basis of the aforesaid order, search was conducted by the Assistant Police Inspector at Hircon House (share department), Hindustan Construction Co. Ltd., L. B. S. Marg, Vikhroli (E), Mumbai, and the report which is a part of the record reads as follows :
"As per the search warrant the below mentioned place were searched, but share certificate bearing Certificate No. 72893, Distinctive No. 6084601 to 6084650 for 50 shares of Hindustan Construction Co. Ltd. or any transfer deed relating towards the said share certificate or any incriminating document pertaining to the said share certificate was not found,"
10. It is obvious, therefore, that even in the criminal proceedings it has not been substantiated that the respondent had filed a fictitious affidavit or had fabricated the transfer deeds.
11. The Company Law Board while exercising its power under Section 111 of the Act has mainly to see whether the refusal to register the name of the transferee in members share register was refused by the company for sufficient cause. It cannot act as an investigation authority to investigate the allegation raised on the affidavit dated February 17, 1992, filed by the respondent-company or to investigate whether the signatures of the transferor and the transferee on the transfer deed are forged or fabricated. The same cannot be determined in summary proceedings before the Company Law Board. In this view of the matter, we are unable to hold on the basis of the material on record before us that the affidavit dated February 17, 1992, was a false and fictitious affidavit or to come to the finding that the transfer instruments were forged. Therefore, the prayer made by the petitioner in his letter dated October 29, 1999, could not be allowed by us nor any directions could be given for instituting appropriate proceedings against the respondent-company on the allegations made in the aforesaid letter which as already stated above are not substantiated from the material on record before us.
12. That apart there is another aspect of the matter. In the criminal proceedings, the statement of the petitioner-complainant, company secretary, the transferee's representative and the share brokers have been recorded. From the said statements, it appears that the shares which were initially in the physical form have changed hands and the transferee whose name was initially recorded is also no longer on record.
13. The petitioner and his learned counsel have strongly urged that appropriate orders are required to be passed by us under Sections 193 to 196 and 199 of the Indian Penal Code read with Section 195(1)(b)(i). So far as this submission is concerned, we do not find any such prayer or request made in the letter dated October 29, 1999, which is under consideration before us as directed by the Hon'ble High Court. However, in the letters dated November 28, 2001, April 24, 2002 and May 8, 2002, the petitioner has prayed for the proceedings under the aforesaid sections be initiated against the respondent-company. The petitioner has strongly pressed that while deciding this matter, the aforesaid provisions can also be taken into consideration by us. As far as this submission is concerned, though we were not called upon to pass any order in respect of the subsequent letters written by the petitioner in which he has sought to invoke the aforesaid provisions of the Criminal Procedure Code read with the provisions of the Indian Penal Code, however, we may point out that none of these provisions would be applicable in our view as there is no finding by any authority much less by the Company Law Board that the respondent-company has fabricated false evidence or used evidence knowing the same to be false. Unless there is a categorical finding with respect to the same, the provisions of Sections 193 to 196 and 199 of the Indian Penal Code will not be applicable.
14. Having considered the various aspects of the matter, we are of the view that the issue whether the affidavit dated February 17, 1992, and the transfer deed dated July 17, 1991, were false and fabricated was for consideration before the Board which passed an order on the merits on May 8, 1992. The same matter was in issue in the various criminal cases filed by the petitioner which are pending adjudication, therefore, the petitioner is abusing the process of the law by writing letters to the Company Law Board after a lapse of seven or eight years and raising the same issue again and again knowing fully well that this Board is not empowered under the Company Law Board Regulations, 1991, in the facts of the present case to review its order or grant any relief to the petitioner as prayed for in the letter dated October 29, 1999, or the subsequent letters written by the petitioner and we decide accordingly.