Indian Kanoon - Search engine for Indian Law

1. This is a petition filed under Section 111(4) of the Companies Act, 1956 (hereinafter referred to as "the Act"), seeking rectification of the register of members of the first respondent company by declaring the petitioners to be the members and deleting the names of respondents Nos. 3 to 17 from the register of members, in respect of the shares impugned in the petition.

2. A brief of the petition is stated herebelow :

According to the petitioners, the second respondent along with his associate, Shri K. N. Seshadri, promoted the company in November, 1978, with the main object of carrying on the business of construction and operation of theatres, cinema halls, business complexes, auditoriums, etc. The initial capital was brought in by the promoters, their relatives and associates. The company had initially allotted 6,410 equity shares in the capital of the company, which was increased to 10,000 equity shares in 1985. The petitioners were allotted 3,590 shares. Though the company issued and allotted share capital, it never issued share certificates to the members. Some time in 1983, on account of differences between the second respondent and Shri K. N. Seshadri, and the interference of respondents Nos. 3 to 6, the second respondent could not proceed with the theatre project, which was under construction.

4. In view of orders of the High Court of Karnataka in Company Petition No. 62 of 1988 (see [1991] 72 Comp Cas 555), preferred by some of the members, directing respondents Nos. 3 to 6 to rectify the register of members, the petitioners have approached this Bench under the amended provisions of Section 111 of the Act for rectification of the register in respect of the impugned shares.

5. According to respondents Nos. 3 to 6, the petitioners have sold their shares to respondents Nos. 3 to 6 in the year 1986, for valuable consideration and made the payment by cheques, which were encashed by the petitioners. The petitioners were paid in total Rs. 3,59,000 being the value of the impugned shares held by them as on February 24, 1986. They had also duly executed the necessary share transfer forms in favour of respondents Nos. 3 to 6 and lodged the transfer deeds duly stamped with the company. The company registered the transfers in favour of these respondents in the year 1986. The petition is mala fide and collusive between the petitioners and the second respondent who are closely related.

11. Counsel for the petitioners sought for rectification of the register of members by virtue of the orders of the High Court of Karnataka in Company Petition No. 62 of 1988 (see [1991] 72 Comp Cas 555), granting the relief of rectification of the register of members in favour of some members. The petitioners not being represented before the High Court of Karnataka, no relief was granted in their favour. The facts of Company Petition No. 62 of 1988 (see [1991] 72 Comp Cas 555), before the High Court of Karnataka are similar to this petition.

"The petitioners could choose any time to approach the Company Law Board as long as the cause of action was a continuing cause of action."

(3) Kotah Transport Limited v. State of Rajasthan [1967] 37 Comp Cas 288 (Raj) :

"The Limitation Act has no application to a petition for rectification of register of members."

(4) Simret Katyal v. Bhagawandas and Co. Pvt. Ltd. [1994] 1 Comp LJ 442 (CLB) :

"There is no limitation of time for rectification of the register under Sub-section (4) of Section 111."