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Judgment
K.L. Manjunath, J.—The appellant - Company is questioning the legality and correctness of the order passed by the Company Law Board, Chennai in Company Application No. 1/2013 passed in Company Petition No. 102/2012. The respondents have filed the Company Petition under Section 399 of the Companies Act, 1956 and Regulation 44 of the Company Law Board Regulations, 1991.
The appellants filed an application to dismiss the Company Petition on the ground that the said petition is not maintainable. The Company Law Board after considering the case of both the parties came to the conclusion that the Company Petition cannot be dismissed at thresh hold and that the same has to be considered on merits by giving reasonable opportunity to both the parties to establish their case. Accordingly, Company Application No. 1/2013 filed by the appellants requesting the Company Law Board to dismiss the Company Petition, came to be rejected. Challenging the legality and correctness of the same the appellants have filed this writ appeal.
Heard the learned counsel for parties
The undisputed facts in this appeal are that the appellants - M.K. Dattaraj, M.D. Venkatalakshmi, M.D. Kasturiranga, M.D. Karthik along with respondents - are shareholders of M/s. Krishna Flour Mills (Bangalore) Private Limited. The only dispute is with regard to shares alleged to be transferred by M.K. Panduranga Setty, P. Vasantha, M.P. Shyam, M.S. Sharmila, M.P. Vikram, M.V. Ramavathi in favour of the appellants herein, i.e., M.K. Dattaraj, M.D. Venkatalakshmi, M.D. Kasturiranga, M.D. Karthik. It is the specific case of the appellants that the respondents, who have filed the Company Petition before the Company Law Board, have transferred their shares in favour of the appellants herein long back therefore, the Company petition filed by them is not maintainable, since they do not hold required number of shares in order to get their dispute adjudicated under Section 399 of the Companies Act. The petition filed by the appellants to dismiss the Company Application has been opposed by the respondents, contending that they have not transferred their share and they continue to be the shareholders of the appellant No. 1 - Company. In this background, the Company Law Board held that without giving an opportunity to the petitioners to prove that they are the shareholders it cannot be rejected at thresh hold. Accordingly, the application came to be rejected.
It is the specific contention of the appellants that the order of the Company Law Board is contrary to the decision rendered by this Court in Ultrafilter GMBH Vs. Ultrafilter (India) P. Ltd. and Another--> . Relying upon the aforesaid decision she submits that the Company Law Board was required to allow application of the appellants.
Per contra, the learned counsel for respondents submit that the Company Petition has been filed requesting the Company Law Board to declare that the alleged transfer of their shares in favour of the appellants, as null and void. Therefore, she contends that behind their back if the appellants herein have got transferred their share by playing fraud, the respondents could always maintain the petition and it is for them to show before the Company Law Board how their shares have been transferred by playing mischief. Therefore, she prays this court to dismiss the appeal.
Having heard the learned counsel for parties, the only point to be considered by us in this appeal is:
"Whether the rejection of the application filed by the appellant to dismiss Company Petition filed by the respondents as not maintainable is legal and valid?" 8. Admittedly, at an undisputed pointed of time the appellants and the respondents members of the joint family and they are admittedly shareholders of the company. According to the respondents they continued to be the shareholders and they have not transferred their shares in favour of the appellants and clandestinely without their knowledge the order has been obtained for transfer of the share. Therefore, respondents on their holdings the Company Petition is filed.
The contention of the appellants is that as on the date of filing of Company Petition before the Company Law Board the respondents were not shares holders, therefore, the petition is not maintainable. When the dispute is with regard to legally or illegally transfer of shares from the name of the respondents to the name of the appellants, the petition cannot be dismissed at thresh hold holding that such petition is not maintainable. Unless and until the opportunity is given to the respondents to show their shares have been illegally transferred to the name of the appellants, the petition cannot be dismissed at the thresh hold. In the light of the observation made by the Company Law Board at Para-11 of the order, we do not see any reason to interfere with the order of the Company Law Board.
In the result, the appeal is dismissed.