1 coapp47-10.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVILJURISDICTION COMPANY APPEAL NO.47 OF 2010 IN CLB COMPANY PETITION NO.69 OF 2008 Crompton Greaves Ltd. .. Appellant Versus Akula Gouri Shanker, S/o. Vittal and Ors. .. Respondents Mr.Rahul Chitnis with N.Rajani i/b. V.Deshpande & Co. for appellant Mr.Omer K. Shaikh with Vikas Salvi for respondent No.1. CORAM : S.C.DHARMADHIKARI, J. 9th September 2011. P.C.: 1] Heard Mr.Chitnis on behalf of appellant who is aggrieved and dis-satisfied with the order dated 28th September 2010 passed in Company Petition No.69 of 2008 by the Company Law Board (CLB). 2] That company petition was filed invoking jurisdiction of CLB under section 111A of the Companies Act, 1956. 2 coapp47-10.doc 3] The appellant is the respondent No.1 whereas the first respondent to this petition is original petitioner. He stated that he purchased 800 equity shares of the appellant company and after purchasing these shares, he sent them for transfer along with necessary certificates in his name on 30th May 1998 through courier. The appellant – original first respondent acknowledged the same on 10th June 1998 but transferred only 50 shares under two folio numbers in favour of first respondent – original petitioner. Balance 750 shares were not shown to have been transferred and entered in the records in favour of the original petitioner and, therefore, he gave notice for such transfer and thereafter filed a civil suit. In that civil suit, an interim application was filed and certain interim orders restraining the appellant before me from transferring shares in favour of third party was passed. That order was passed and extended from time to time and, thereafter, the suit was allowed and ex parte decree was passed. That the appellant before me filed an application to set aside the ex parte decree and that application came to be dismissed. Aggrieved by that dismissal, the Civil Revision Application / petition was filed before the Andhra 3 coapp47-10.doc Pradesh High Court, which was allowed with costs. 4] The Special Leave Petition against the order also came to be dismissed. Thereafter, the suit was heard finally and finding that the civil court lacked jurisdiction that the original petitioner had a remedy under section 111A to approach CLB and on this finding the suit came to be dismissed. Ultimately, subject company petition was filed and after hearing both sides, the same has been allowed. 5] Mr.Chitnis, learned Counsel appearing in support of the appeal submitted that the question of law that arise for consideration of this Court is that CLB did not peruse the deeds in their entirety. The CLB arrived at a conclusion that the deeds are not genuine by not referring to their contents which had material particulars such as dates, stamps but that were found at the last folio page. Therefore, there was no question of the original petitioner succeeding before the CLB. The document being not genuine, the appellant did not record the transfer. Further, the finding that the appellant before this Court had colluded with original respondent No.2 and together they deprived original petitioner of 4 coapp47-10.doc the rights in the shares, has been recorded, without adverting to factual materials and when there was absolutely no proof of such collusion. Therefore, the further direction to pay costs demonstrates complete perversity in the order of the learned Member of the CLB. For all these reasons, this appeal be entertained. 6] On the other hand, learned Counsel appearing for contesting respondent No.1 had supported the impugned order and contended that there is no question of law which arise for consideration of this Court from the said order. He, therefore, prays that the appeal be dismissed. 7] After hearing both sides at some length and perusing with their assistance the impugned order, I am of the opinion that CLB has not committed any perversity while allowing the company petition. It referred to the fact that the original petitioner has proved that the company had knowledge of respondent No.1 having purchased the said shares. He had addressed a letter and a notice in that behalf. The first respondent – appellant also reverted back 5 coapp47-10.doc which shows that they had knowledge of purchase of shares. However, they did not take any action on the ground that the documents submitted were not genuine. Now that exercise had been undertaken by the CLB by scrutinising oral and documentary evidence. In this case, they were the only documents placed before the CLB. Therefore, when the CLB concludes that the transferee in whose favour the transfer has to be recorded does not appear before it and original respondent No.1 – appellant before me, viz., the company had knowledge of transfer, then, there was no occasion to refuse the transfer and record it in the Register maintained in that behalf. The transfer deeds have been perused. It is not as if as Mr.Chitnis would like this Court to believe that the earlier folios and pages have been perused but not the penultimate and last one. The entire set of documents were placed and it is clear that the original respondent No.2 did not come forward to deny the allegations whereas the original petitioner filed photocopies of transfer deeds along with share certificates where his name and signature appears in transferee column and the date is also mentioned on the reverse side. The share transfer deeds have been adequately stamped, correctly valued and duly signed 6 coapp47-10.doc by the transferors therein, whose signatures even tallied with the specimen signatures existing in the records of the first respondent company. In such circumstances, consistent with the materials produced that the CLB concluded that refusal to transfer shares in favour of contesting respondent No.1 before this Court is not justified and requires to be corrected and interfered with. Precisely that is done by the impugned order and I do not find any question of law arising therefrom. This court in its appellant jurisdiction, which is limited, cannot undertake re-appreciation and re-appraisal of the factual material. In such circumstances, appeal fails and is dismissed. 8] However, I find substance in the complaint of Mr.Chitnis that the CLB should not have recorded a finding against the appellant and particularly that it has acted deliberately and at the instance of original respondent No.2 or that the company was utterly negligent. The exercise undertaken by the appellant before me may not be justified in law or that it can be faulted with otherwise but there was no occasion for passing remark and particularly of collusion and negligence. In these circumstances, the final direction to pay costs 7 coapp47-10.doc quantified at Rs.25,000/- also cannot be upheld as that is essentially based on the conclusion recorded above. For all these reasons, that part of the order requires to be interfered with. The remarks against the appellant company and particularly of collusion and negligence shall stand excluded from the order and direction to pay costs quantified at Rs.25,000/- is also set aside. Rest of the order of the CLB is maintained and upheld and with this modification in the impugned order, the appeal is dismissed. (S.C.DHARMADHIKARI, J)