ST. MARY'S HOTEL PVT. LTD. AND ORS. Vs. T.O. ALEYAS AND ORS.
Supreme Court of India (Division Bench (DB)- Two Judge)
Special Leave Petition (Civil), 30483 of 2015, Judgment Date: Sep 27, 2016
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION (CIVIL) NO. 30483 OF 2015
ST. MARY’S HOTEL PVT. LTD. AND ORS. ...PETITIONERS
VERSUS
T.O. ALEYAS AND ORS. ...RESPONDENTS
WITH
SPECIAL LEAVE PETITION (CIVIL) NO. 30589 OF 2015
J U D G M E N T
RANJAN GOGOI, J.
1. In view of the elaborate hearing that has taken place we are of the
view that our eventual decision to dismiss both the special leave petitions
should be supported by the brief reasons therefor.
2. The petitioners could be conveniently described as the ‘Abraham
Group’ and the respondents as the ‘Aleyas Group’. Both are branches of the
same family. The dispute relates to the shareholding of the two groups in
St. Mary’s Hotel Private Limited (hereinafter for short ‘the Company’),
which inter alia owns two hotel properties in the State of Kerala.
3. The Company was incorporated in the year 1996 and with the passage of
time while the Abraham Group consisting of T.O. Abraham and Binu Zacharia
held 8,00,000 shares, the Aleyas Group consisting of T.O. Aleyas and Bobby
Kuriakose held 7,00,000 shares. There was a Resolution of the Board dated
17.04.2002 which is claimed by the Aleyas Group to be pursuant to an
earlier decision that all the 5 branches of the family should hold equal
shares in the company. Consequently, there were some transfers made by the
said Resolution. It appears that in the said Board meeting dated
17.04.2002 it was also resolved that 2,20,000 shares would be transferred
by Bobby Kuriakose to T.O. Abraham. The aforesaid decision alone i.e.
transfer of 2,20,000 shares from Bobby Kuriakose to T.O. Abraham alongwith
decisions taken in the Extraordinary General Meeting dated 25.04.2003;
Notice of Board Meeting dated 03.06.2003 and Notice of Extraordinary
General Meeting dated 03.06.2003 and the decisions taken in the said
meetings were challenged. The aforesaid decisions pertain to induction and
removal of Directors pursuant to the transfer of shares as per the
Resolution dated 17.04.2002. The Company Law Board (for short ‘ the CLB’)
by its judgment and order dated 5.2.2013 in Company Petition No.
30/2003[CHE] while granting the other reliefs sought, disposed of the said
company petition filed by the Aleyas Group upholding the validity of
transfer of 2,20,000 shares from Bobby Kuriakose to T.O. Abraham.
Aggrieved, the Aleyas Group moved the High Court of Kerala by way of an
appeal under Section 10F of the Companies Act, 1956. The High Court,
notwithstanding the fact that the challenge before it pertained only to the
transfer of 2,20,000 shares, (all other directions of the CLB were in
favour of the Aleyas Group) set aside the entire of the Resolution dated
17.04.2002, the effect of which was that the decisions with regard to
transfer of shares to members of other branches of the family, which were
not questioned before the CLB and hence the High Court, were also set
aside. This was by judgment dated 31.03.2015 passed in Company Appeal No.4
of 2013.
4. The findings of the High Court as recorded in paragraphs 40, 41 and
43 of its judgment dated 31.03.2015 may conveniently be reproduced herein
to appreciate the reasons for the conclusions recorded in the said judgment
dated 31.03.2015.
“40. The CLB, at the earlier point, found that there was no material to
find that one fifth of the shares should be allotted to each families of
the sons of Kuruvila Onnittan nor was there evidence with respect to the
decisions taken on 17.4.2002. The situation remains as such even now.
Presently, the CLB found that the fact that Bobby Kuriakose did not take
proceedings against the transfer of shares, even after a sufficiently long
period of time of its registration and intimation to the ROC, stands
against his plea of the transfer being bad. It was also found that,
despite T.O. Abraham having not proved the consideration, that was of no
consequence and that alone cannot lead to a conclusion that, no such
transfer took place. After noticing the admission of Bobby Kuriakose, that
share certificates and blank transfer forms were handed over to T.O.
Abraham, the Tribunal finds that “it must have been done with some
understanding between the parties”. Theory of parity amongst the five
branches, appears to be a figment of imagination of the petitioners and
hence the transfer of 2,20,000 shares from Bobby Kuriakose to T.O. Abraham,
could not be declared null and void, is the finding of the CLB.
41. We cannot, but say that, the said finding has been entered on mere
surmises and conjectures and the Tribunal has not looked into the evidence
of such transfer, as per the provisions of the Companies Act or otherwise.
No presumption could have been raised under Section 195, since the minutes
book was absent. Neither of the parties substantiated their conflicting
contentions of parity and transfer to the Managing Director with any other
evidence. Even after the remand, specifically directing the Tribunal to
conduct an enquiry, the parties rested contend, slinging mud on each other.
No evidence at all was let into substantiate the conflicting contentions
and they remained in the realm of statements and assertions. We would not
elaborate on the decisions placed under Section 111 since the delay was
projected to contest the parity sought by Abraham group and the
rectification of the register conferring 20% on each family. Having found
against parity, delay aspect would be inconsequential.
43. We feel that the CLB’s findings upholding the transfer and the
decision on 17.04.2002 is based on no evidence. We are unable to agree
with the CLB that the transfer effected and affirmed by the Board on
17.04.2002 was valid. We are unable to agree with either of the
conflicting contentions of the parties for absolute lack of evidence.
Neither can the contention of parity, allegedly decided on 28.11.2001, be
upheld nor can the contention of the majority being validly transferred to
the Abraham group on 17.4.2002 be countenanced. Both the decisions remain
in the realm of hypothesis. The transfer effected to the Managing Director
himself is found to be oppressive, insofar as there being absolutely no
explanation or evidence as to how a shareholder, having substantial
interest in the company, transferred majority shares to the Managing
Director, thus rendering himself a rank minority. There were also
considerable amounts, more than 57 lakhs outstanding as loans to be repaid
by the company to Bobby Kuriakose. The decisions taken are not properly
taken at the Board Meeting as per the provisions of the Companies Act. The
decision in toto on 17.4.2002 would have to go. In such circumstance we
restore the parties to the position that existed on 19.10.2001 with T.O.
Abraham and T.O. Aleyas holding 3 lakh shares each and Binu Zacharia and
Bobby Kuriakose holding 5 and 4 lakh shares respectively.”
5. In the aforesaid circumstances, the Aleyas Group filed Review
Petition No. 434 of 2015 before the High Court seeking review of the order
dated 31.03.2015. By the impugned order dated 09.10.2015 passed in the
Review Petition (subject matter of challenge in SLP(C) No. 30589 of 2015)
the order dated 31.03.2015 was reviewed and interference made by the said
order with the entire of the Resolution dated 17.04.2002 was corrected and
confined to the issue of transfer of 2,20,000 shares from Bobby Kuriakose
to T.O. Abraham alone.
6. Having considered the grounds on which the High Court had thought it
proper to reverse the decision of the CLB, details of which have been set
out herein above, we are of the view that the exercise of jurisdiction
under Section 10F of the Companies Act, 1956 by the High Court to interfere
with the order of the CLB cannot be faulted. If the subject matter of the
appeal before the High Court was limited to the validity of the transfer of
2,20,000 shares from Bobby Kuriakose to T.O. Abraham, the interference made
with the entire of the Resolution dated 17.04.2002 thereby invalidating the
other share transfers, not under challenge before the High Court, was
clearly an error apparent on the face of the record. The correction made
in the exercise of the review jurisdiction was, therefore, justified and
will not call for any interference.
7. Consequently and for the reasons aforesaid both the special leave
petitions will have to be dismissed, which we hereby do.
………………..................,J.
(RANJAN GOGOI)
………………..................,J.
(PRAFULLA C. PANT)
NEW DELHI
SEPTEMBER 27, 2016.