1. The Petitioners have filed the above captioned Company Petition by invoking the provisions contained in Sections 397, 393 read with Sections 402 and 403 of the Indian Companies Act, 1956 (“Act” in short) complaining therein various acts of oppression and mis-management purportedly committed by the Respondent Nos. 2 to 8 in the affairs of Respondent No. 1 Company (“Company” in short). The Petitioners have sought various reliefs as contained in the relief clause of the petition.

2. In order to crystallize the points for determination, it is necessary to refer few facts emerging out from the pleadings of the Parties here as under:—

2.1 The Respondent No. 1 Company on its incorporation on 28/11/1947 acquired the business of erstwhile Mehboob Productions, a sole proprietary concern owned by fate Mehboob Ramzan Khan, the legendary filmmaker of the Indian film industry. For sake of convenience, the family tree of late Mr. Mehboob Khan founder of the Company is described below:—

2.2 According to the Articles of Association (hereinafter referred to as “AOA” in short) of the Company, late Mehboob Ramzan Khan was a permanent director of the Company and was entitled to hold office of the director until his death or resignation. Late Mehboob Ramzan Khan was the Chairman cum Managing Director of the Company since its incorporation. Apart from him, late Mr. Ayub M. Khan father of the Respondent Nos. 3 and 4 and Mrs. Sardar Akhtar wife of Mehboob Khan were the directors on the Board of the Company.

2.3 The Company owns an immovable property admeasuring 16,693 sq. feet at Village Bandra, Hill Road, Bandra (West), Mumbai 400050. The company is engaged in the business of making of films and T.V serials shooting and organizing the events etc. on the said property. Around 1954, commercial premises on some part of the said property was built and thereafter in 1960 residential premises was constructed on some part of the same property. Late Mr. Mehboob Khan was residing in the residential premises since then, although no board resolution was passed by the company to this effect.

2.4 After the demise of Mehboob Ramzan Khan, in June, 1964 the Board of Directors of the Company was reconstituted and the reconstructed Board of Directors comprised of the following directors:

a. Late Mrs. Sardar Akhtar Mehboob Khan;

b. Late Mr. Ayub Mehboob Khan;

c. Mr. Shaukat Mehboob Khan (Respondent No. 7) and;

d. Mr. Iqbal Mehboob Khan (Respondent No. 8)

2.5 Thus, the Company was/is a closely held family company wherein all the members of the Company are the descendents of late Mehboob Ramzan Khan. In 1966-1967, the Respondent No. 8 was appointed as Managing director of the Company.

2.6 In or around 1966-1967, Respondent Nos. 2 and 8 and fate Ayub M. Khan shifted from the family home at Marine Drive and started residing in the residential premises of the Company. However, Respondent No. 7 continued to stay at the family home at Marine Drive. In 1980, the Respondent Nos. 3 and 4 left the residential premises occupied by them alongwith their father fate Ayub M. Khan and started residing at an alternative accommodation provided by their father. Respondent Nos. 5 and 6 were occupying the Company's flat at Marine Drive since 1984 which was a teased accommodation. On sale of the flat, they were given compensation for vacating the flat.

2.7 One of the sons of Late Mehboob Khan, late Ayub M. Khan was a Shareholder and member of the Company holding an aggregate of 1132 equity shares. As indicated above, he was also a Director of the Company alongwith the Respondent Nos. 7 and 8 herein. In the year 1953, late Ayub M. Khan had married one Ms. Rahat Ara under the Shari at Law, Petitioner Nos. 1 and 2 are the children from the said wedlock. The said marriage of late Ayub M. Khan with Ms. Rahat Ara was dissolved in the year 1965. The second marriage of late Ayub M. Khan was performed with the Petitioner No. 3, Ms. Farida Khan in the year 1966. The said marriage was registered under the Special Marriage Act, in the year 2004. Petitioner No. 1, Mr. Mebhoob Ayub Khan and Petitioner No. 2 Ms. Yasmin Ayub Khan are the children of late Mr. Ayub M. Khan from his second marriage of Late Ayub M. Khan with Ms. Farida Ayub Khan.

2.8 During life time of Mr. Mehboob Ramzan Khan, no dispute arose between any shareholders of the Company. After his death the differences between his legal heirs/family members of late Mr. Mehboob Khar started cropping up. On 21/01/1992, late Ayub M. Khan addressed a letter to the Company requesting that his shares be held jointly with Mr. Mebhoob Ayub Khan and Ms. Yasmin Ayub Khan in respect of 854 equity shares out of his 1034 shares viz. 726 equity shares in joint name with Mr. Mehboob Ayub Khan under Folio No. 24 and 128 equity shares in joint name with Ms. Yasmin Ayub Khan under Folio No. 25. On 9/05/1992, the Board of Directors of the Company comprising of late Ayub Mr. Khan and Respondent Nos. 7 and 8, passed a Resolution unanimously approving the request as contained in the said letter dated 21/01/1992. The Respondent No. 7 the Chairman for the said meeting was authorized by the minutes of the meeting to endorse the names of Mr. Mebhoob Ayub Khan and Ms. Yasmin Ayub Khan on the share certificates and place their names in the Register of Members effectuating the request as per the said letter dated 21/01/1992. In or around 2003, the Register of Members of the Company was rectified by the Company in terms of the Resolution passed on 9/05/1992 thereby giving full effect to the request mentioned above made by Late Ayub M. Khan.

2.9 In addition to the above, Late Ayub M. Khan also nominated his widow i.e Ms. Farida Ayub Khan in respect of the 98 equity shares and the necessary entries in the Register of Nominations were made accordingly.

2.10 It is the case of the Petitioners that in the year 1992-1993, the Respondent No. 2 made an unsuccessful attempt to sell her shares to one Mr. Karim Maredia initially at the rate of Rs. 1,60,000/- and subsequently at the rate of Rs. 2,50,000/- per share for which she entered into a MOU and Supplementary MOU on 22/09/1993 and 21/12/1994 respectively. She also allegedly received an advance amount from Mr. Maredia who was running a company namely Sagar Builders and wanted to develop the studio land for residential and commercial purpose. Under the Agreement, the Respondent No. 2 also handed over 57 share certificates to the said Mr. Kareem Maredia.

2.11 In 2003-2004, Respondent Nos. 2 and 7 entered into agreements with Mr. Karim Meredia for joint development of the Company's property. There was division of opinion on the sard issue between the shareholders, some of the shareholders were in favour of disposing of the property and some of them were opposing the same. Therefore, the first round of litigation began in the year 2003 when the Respondent No. 2 filed a petition against the Company and late Mr. Ayub M. Khan challenging the joint shareholding of late Ayub with Mr. Mebhoob Ayub Khan and Ms. Yasmin Ayub Khan respectively alleging that such joint shareholding was ultra-vires being in breach of the AOA of the Company. However, Respondent No. 2 failed to get any reliefs.

2.12 On 10/12/2003, the Respondent No. 2, along with Respondent No. 7 as a consenting party, filed a petition being Company Petition No. 108 of 2003 under the provisions of Sections 397 and 398 of the Act alleging oppression and mismanagement. According to the Petitioner's case, the purpose of filing the petition was in fact to seek a division of the assets of the Company and thus the petition was a strategically planned decision to enable the said Karim Maredia/Sagar Builders to take over the Company and the said Land and to pressurize the dissenting shareholders. Vide order dated 11/03/2005 the Ld. Presiding Chairman was pleased to dispose of Respondent No. 3's said Petition holding that no case of oppression and/or mismanagement was made out. However the Ld. Presiding Chairman directed that any proposal for the development of the said land should be approved by the general body of the Company by way of a special resolution.

2.13 It appears that after the dismissal of the aforesaid Company Petition, another C.P bearing No. 1757 of 2008 came to be filed in the CLB Principal Bench Delhi challenging the Board Resolution passed on 9/05/1992 during the life time of late Ayub M. Khan, However, the said Ayub M. Khan passed away on 14/03/2008 leaving behind his last will and Testament dated 17/9/2007 (the said Will) under which he bequeathed all his right, title and interest in the aforesaid 726 equity shares held in the joint names of himself and Mr. Mehboob Ayub Khan to Mr. Mehboob Ayub Khan, his right, title and interest in 128 equity shares held in the joint names of himself and Ms. Yasmin Ayub Khan to Yasmin Ayub Khan and the residue in favour of Ms. Farida Ayub Khan.

2.14 After the death of late Ayub M. Khan, the Petitioner Nos. 1 and 2 Mr. Mebhoob Ayub Khan and Ms. Yasmin Ayub Khan vide their letter dated 4/4/2008 applied for transmission of shares and rectification of Register of Members basing their claims on the basis of joint shareholding with late Ayub M. Khan as well as under the will as mentioned above.

2.15 On 17/04/2008, the Respondent Nos. 3 and 4 filed a Civil Suit bearing No. 726 of 2008 in the City Court, Dindoshi, Borivali challenging the will purportedly executed by late Ayub M. Khan in favour of Mr. Mebhoob Ayub Khan, Ms. Yasmin Ayub Khan and Ms. Farida Ayub Khan on the grounds stated therein.

2.16 On 24/04/2008, the Company replied to the letter dated 4/4/2008 of the Petitioner Nos. 1 and 2 Mr. Mebhoob Ayub Khan and Ms. Yasmin Ayub Khan informing them that the relevant papers and the necessary instructions had been asked for from the Company and after perusing the same the Company would give a detailed reply to the same. However, no reply was ever given to the said Petitioners.

2.17 On 26/08/2008, Respondent Nos. 3 and 4 filed another Suit bearing No. 2855 of 2008 in the Bombay High Court once again challenging the said will of late Ayub M. Khan. This Suit was akin to the said Suit bearing No. 726 of 2008 filed at the City Civil Court, Dindoshi, Borivali, except for adding a few extra prayer clauses to suit their convenience and to create a purported new cause of action. Ad-interim reliefs claimed in the said Suit inter alia included that the Company be restrained from transmitting, transferring or altering the status of the shares in the Register of Members of the said Ayub Khan on the basis of the said will which were refused by the Bombay High Court vide Order dated 25/11/2008 by the Hon'ble Mr. Justice A.S Oka in Notice of Motion No. 3384 of 2008 in the said Suit No. 2855 of 2008. However, it was observed in the said order by the Hon'ble Bombay High Court that “all transactions effected by the Defendants in respect of the suit property will be subject to further order which will be passed in Notice of Motion and suit”.

2.18 On 13/12/2008, a Board Meeting took place, whereat the ad-interim order passed in the Notice of Motion No. 3384 of 2008 in Suit No. 2855 of 2008 was discussed. In the course of deliberations, the Board noted that though no ad-interim relief was granted in favour of the Respondent Nos. 3 and 4 in the suit, however, it was made clear by the Hon'ble High Court of Mumbai that all the transactions effected by the defendants (which includes Company) in respect of suit property including the shares also would be subject to further orders which are to be passed in Notice of Motion and Suit. In view of this, it was decided by the Board that judgment would be followed very strictly and no action would be taken by the Company either transferring the shares-in-question or noting of nomination or payment of Dividend due on the shares-in-question of the Mr. Ayub Mehboob Khan. It was further decided that the amount of dividend payable and/or due on the shares-in-question of late Mr. Ayub Mehboob Khan would be retained by the Company as the Banks are not opening separate bank account marking lien in respect of the shares-in-question (shares).

2.19 While the said dispute was going on, on 5/03/2011 the Respondent Nos. 4 to 6 served a requisition for appointment as directors of the Company. However, the Respondent No. 3 opposed the appointment and suggested system of proportional representation. Being aggrieved by calling of the said EOGM, the Respondent No. 3 herein filed a Company Petition bearing C.P No. 30 of 2011 on 1/04/2011 under Section 397/398 of the Act praying therein to pass an order restraining the Respondents therein from holding EOGM. However, the CLB did not allow the prayer for restraining the Respondents therein to hold the EOGM. The EOGM was accordingly held in the afternoon on 7/04/2011 whereat the Respondent Nos. 3 to 6 were appointed as Directors on the Board of directors of the Company.

2.20 On 13/04/2011, the newly constituted Board held the Meeting of Board of Directors and passed certain resolutions. Pursuant to one of such resolutions passed in the sard Board Meeting for appointment of an expert suggesting the measures to making the Company's business more viable. On 3/06/2011, the Board of Directors had inter alia taken on record the report of Afzul Khan the Respondent No. 4, far consideration of the various difficulties and encumbrances on the property of the Company. The remedial actions were also suggested therein.

2.21 As indicated herein above, after the death of Mr. Ayub M. Khan, the Petitioners had made a request to the Respondents to transmit the impugned shares and rectify its Register of Members, however, inspite of repeated request of the Petitioners, the Company kept on pending their request pretending that since the will is under challenge in the Civil Suit No. 2855 of 2008 High Court therefore, the Company is not in position to accede their request. Finally, in the month of July, 2011 on the insistence of the Petitioners, the Company advised the Petitioners to approach the competent forum to obtain appropriate orders for transmission of impugned shares and rectification of the Register of Members. As a result thereof, on 5/9/2011 the Petitioners filed three Company Petitions being C.P No. 40, 41 and 42 of 2011 under Section 111A of the Companies Act, 1956 seeking rectification of Register of Members of the Company for bringing their names in the Register of Members of the Company in respect of the shares-in-question held by late Ayub M. Khan.

2.22 It is further case of the Petitioners that this was not the end of the illegal and oppressive acts committed by the Respondents towards them. They continued to commit other acts of oppression and in continuation thereof on 12/09/2011, a meeting of Board of Directors was held whereat the validity of the resolutions passed on 9/05/1992 was discussed-in-detail and after deliberations, it was decided that the resolution dated 9/05/1992 passed by the Company be cancelled and the Register of Members of the Company pertaining to the shares held by late Ayub M. Khan, be rectified. In compliance thereof, the names of the Petitioners were deleted from the Register of Members of the Company.

2.23 The Petitioners then levelled various charges upon the Respondents relating to acts of oppression and mismanagement as set out in the petition which may be summarized in the following manner:—

i. The Company without sufficient cause has illegally and in Contravention of the AOA of the Company refused to transfer the impugned shares held by late Mr. Ayub M. Khan of which they had become owners after his demise by operation of law to the Petitioners and rectify its Register of Members.

ii. The Company and its Board of Directors has deliberately with an oblique motive frozen the estate of late Mr. Ayub M. Khan and have illegally deprived the Petitioners from exercising their proprietary rights in respect of the impugned shares as a shareholders on frivolous and baseless reasons.

iii. The act of deleting the names of the Petitioner Nos. 1 and 2 from the Register of Members of the Company during the pendency of the C.P Nos. 40 to 42 of 2011 filed under Section 111 of the Act, by the Petitioners is nothing but undermining the authority of the Board. Therefore, such act is illegal, frivolous, mala fide and oppressive to the Petitioners.

iv. The Respondents have meticulously suppressed the Board resolutions from the Petitioners with an oblique motive.

v. The Respondents are illegally withholding the payment of dividend etc. of the Petitioners and thereby mismanaging the affairs of the Company.

vi. The Respondents are preventing the Petitioners from making inspection of the statutory documents to which the Petitioners were entitled under law.

vii. The Respondents made an attempt to sell the Company's assets without proper authority and/or Board resolutions in violation of AOA of the Company for their personal gains and to the determinant of the Company's interest as well as its stakeholders.

3. The Respondent Nos. 2, 3, 4 and 7 have filed their respective reply(s). In their replies, they have assailed the maintainability of the Company Petition inter alia on the grounds that firstly the Petitioners do not qualify to file the petition under Section 399 of the Act and as such they are Incompetent and have no locus to file the petition; that the complicated Question of law and fact are involved which cannot be adjudicated in the summary jurisdiction of the CLB and; lastly the past and concluded transaction cannot be re-agitated in a petition under section 397/398 of the Act hence, the petition is liable to be dismissed at the threshold stage itself. On merits, they have denied the charges levelled by the Petitioners against them relating to alleged acts of oppression and mismanagement. They have further justified their actions. The same shall be dealt hereinafter, while dealing with the arguments advanced by the Ld. Counsel representing their respective parties. To the reply filed on behalf of the Respondents, a rejoinder has been filed on behalf of the Petitioners. To the Rejoinder, the said Respondents have filed their Sur-Rejoinder.

4. The Respondents Nos. 5, 6 and 8 have not preferred to file any reply. However, they participated in the proceedings of the petition, through their Ld. Counsel.

5. It is pertinent to mention here that on behalf of the Petitioners three Company Applications being C.A Nos. 35/2012, 205/2012 and 251/2013 came to be filed during the pendency of the petition. On the other side, the Respondent Nos. 3, 4 and 6 filed Company Application being C.A No. 42 of 2014 seeking permission to place on record the alleged documents. It is allowed. The prayers in the Company Application Nos. 35 and 205 of 2012 and 251 of 2013 thereby challenging the maintainability of the petition shall also be dealt with hereinafter.

6. I have heard the Ld. Counsel appearing for the respective parties at length. I have gone through the Written Submissions filed by them as also the case laws referred to in support thereof.

7. Dealing with the first preliminary objection, the Ld. Counsel appearing on behalf of Respondent Nos. 3 and 4 vehemently argued that the petition is not maintainable as the Petitioners were not members of the Company on the date, the petition was filed. According to the Ld. Counsel, their names did not exist in the Register of Members of the Company on the date of filing of the petition therefore, they have no locus to file the petition. It was therefore contended that the petition deserves to be dismissed at the threshold stage without entering into the merits of the petition. To support his contention, the Ld. Counsel appearing on behalf of Respondent Nos. 3 and 4 has placed on reliance upon the following decisions:

i. T.J Thomas v. Rev. C.S Joseph [1987] 62 comp Case 504 [Kerala].

ii. Killick Nixon Ltd. v. Bank of India (Bombay) [1985] 57 Com Cases 831.

iii. Prafulla Kumar Raut v. Orient Engr. Works Pvt. Ltd. [1986] 60 Comp Cases 65 (Orissa).

iv. Vedh Prakash v. Iron Traders Pvt. Ltd. [1960] AIR (Punjab) 427.

v. Gulabrai Kalidas Naik v. Laxmidas Laflubhai Patel [1977] 47 Comp Cas 151 (Guj).

8. Responding to the above preliminary objection it was argued on behalf of the Petitioners that after death of a member his LRs. are entitled to maintain under Section 397/398 of the Act, even though they are not registered as members. The Ld. Counsel placed reliance on Articles 25 to 28 of Table A or the Act which deals with Che transmission of shares. He also placed reliance upon a decision in the case of World Wide Agencies (P) Ltd. v. Margarat T. Desor [1990] 1 Supreme Court Cases 536.

9. I have considered the rival submissions and examined the citations referred to above. At the outset, it would be relevant to refer to the Articles 25 to 28 of Table A which is here as under:

“25(1) On the death of a member the survivor where the member was a joint holder and his legal representatives where he was a sole holder, shall be the only persons recognized by the company as having any title to his interest in the shares.

(2) Nothing in clause (1) shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons.

26(1) Any person becoming entitled to a share in consequence of the death or insolvency of a member may, upon such evidence being produced as may from time to time properly be required by the Board and subject as hereinafter provided, elect, either

(a) ta be registered himself as holder of the share; or

(b) to make such transfer of the share as the deceased or insolvent member could have made.

(2) The Board shall, in either case, have the same right to decline or suspend registration as it would have had, if the deceased or insolvent member had transferred the share before his death or insolvency.

27.(1) If the person so becoming entitled shall elect to be registered as holder of the share himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects.

(2) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing a transfer of the share.

(3) All the limitations, restrictions and provisions of these regulations relating to the right to transfer and the registration of transfers of shares Shall be applicable to any such notice or transfer as aforesaid as if the death or insolvency of the member had not occurred and the notice, or transfer were a transfer signed by that member.

28. A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to the same dividends or other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company:

Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the share and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share, until the requirements of the notice have been complied with.”

10. Now, I will reproduce the relevant extract of the decision in the case of World Wide Agencies (P) Ltd. (Supra):

The High Court held that this is fallacy, that in the case of persons having blank transfer forms, signed by members, it is the members themselves who are shown on the register of members and they are different from the persons with the blank transfer forms whereas in the case of legal representatives it is the deceased member who is shown on the register to members and they are different from the persons with the blank transfer forms whereas in the case of legal representatives it is the deceased members who is shown on the register and the legal representative are in effect exercising his right. A right has devolved on them through the death of the member whose name is still on the register. In our Opinion, therefore, the High Court was pre-eminently right in holding that the legal representatives of deceased member whose name is stilt on the register of members are entitled to petition under sections 397 and 398 of the Act.

11. From bare reading of the said Articles of Table “A” and the above referred decision, I have no hesitation to hold that the Petitioners being the heirs of late Ayub M. Khan are competent to file the petition under Section 397/398 of the Act. Further, in view of the law laid down in the case of Worldwide Agencies (P) Ltd. (Supra) by the Hon'ble Apex Court, in my opinion, the decision cited by the Petitioners need not to be discussed individually. For the reasons discussed above, I hold that the Petitioners have locus standi to file the present petition and the petition is maintainable.

12. Dealing with the next preliminary objection as to maintainability of the petition, it was argued on behalf of the Respondents that the CLB on account of its summary jurisdiction is not entitled to decide the complicated questions of law and the facts involved in this case. Placing reliance upon the decision in the cases of Kamladevi Mantri and v. Grassim Industries (1990) 69 Comp Cases 188 and Durga Finance Ltd. v. Rungta Irrigation Ltd. [200] 60 SCL 551, the Ld. Counsel Mr. Krishna urged that admittedly the Petitioners' claim is based on a will purportedly executed by Late Ayub M. Khan which is sub-judice in the Civil Suit No. 2855 of 2008 pending before the Hon'ble Bombay High Court and hence complicated questions of facts and law are involved in this case. Furthermore, Mr. Krishna contended that there is a serious dispute and difference between the Parties relating to division of company's asset on the basis of their shareholding and various proceedings are pending in the Court and hence such disputes cannot be decided in a summary jurisdiction as held in the case of Delstar Commercial and Financial Ltd. v. Sarvottam Vinijay Ltd. [2003] 113 Comp Cases 642. It was, therefore, contended that this forum has no jurisdiction to try and maintain the said petition. To support his contention, the Ld. Counsel has relied upon the following decisions in addition to the cases referred to above:

a. Public Passenger Services v. M.A Khadar [1966] AIR SC 489.

b. Punjab Distilling Industries v. Biermans Paper Coating Mills Ltd. [1973] 43 Comp Cases 189 (Delhi).

13. Having considered the aforesaid submissions, I have come to the conclusion that this preliminary objection is also without substance. In the case of Ammonia Supplies Corporation Pvt. Ltd. v. Modern Plastic Containers Pvt. Ltd. [1994] ILR 1 Delhi 371, it has been held by the Hon'ble Apex Court that even in the cases of fraud, if by a bare perusal of the petition and the documents annexed thereto, the CLB is able to conclude that prima facie no case of fraud is made out, then it is entitled to proceed with the matter and not reject it, only because fraud is stated in the petition. This view has been re-iterated by various High, Courts in other cases.

14. In light of the law laid down in the Ammonia Supplies (supra), I have analyzed the facts of the case in hand. In the present case, the Petitioner Nos. 1 and 2 have claimed the title of the impugned shares on the basis of joint shareholding alongwith late Ayub M. Khan, in addition to his claim based on will purportedly executed by Sate Ayub in Khan in their favour thereby bequeathing the impugned shares in their favour. The claim of the Petitioner No. 3 is based only on basis of the will purportedly executed by late Ayub M. Khan in her favour. Though, the will is sub-judice in the Civil Court but despite, I do not find that any complicated question of facts and law is involved in the facts of this case. I, therefore, hold that this preliminary objection too is devoid of merits. I am of the view that the law cited by the Respondent Nos. 3 and 4 in this regard is inapplicable to the facts of this case.

15. The Ld. Counsel appearing for Respondent Nos. 3 and A, Mr. Vibhav Krishna next submitted that the Board of Directors of the Company has wide powers to rectify the entries in the Register of Members and alter the same. To support his contentions, he has placed reliance upon the following decisions:

i. First National Reinsurance Company Ltd. v. Greenfield [1921] 2 KB 260 @ 279.

ii. In Re: London and Mediterrean Bank Wrights case [1871] 7 CH 55.

iii. P.V. Damodara Reddi v. Indian National Agencies, Ltd. [1945] II MLJ 432 @ 434.

16. Referring the decision in the case of In The Matter Of: v. Biva Pyne [2010] 153 Com Cases 49 wherein it is held that there is no bar for a Company to alter its Register of Members provided it has sufficient cause, the Ld. Counsel argued that the Company had legally passed the resolution on 12/09/2011 by which the names of Petitioner Nos. 1 and 2 were deleted from the Register of Members.

17. In continuation of his arguments, the Ld. Counsel then argued that once name of a member already deleted, the Court would not inquire into the reasons for deletion of their names and in this regard he has relied upon the decisions in the case of Harish Ratilal Shah v. Vikrant Tyres Ltd. [1982] 52 Comp Cases 125. The Ld. Counsel next argued that if a director had participated in the meeting in which such a resolution was passed, he is estopped from challenging such resolution at the subsequent stage. To support has contention, the Ld. Counsel has relied upon the decisions in the cases of J.R Srinivas v. Sri Gururaja Enterprises Pvt. Ltd. [2010] 157 Com cases 46 and Mukundlal Manchanda v. Prakash Roadlines [1991] 72 Comp Cases 575

18. In addition to the above, placing reliance upon the decisions in the cases of Seth Mohanlal Ganpatram v. Jute Mills Ltd. [1964] 34 Comp cases 777 (Guj) and Northern project Ltd. v. Blue Coast Hotel & Resort Ltd. [2009] 148 Com Cases 279 (Goa), Mr. Krishna appearing on behalf of the Respondent Nos. 3 and 4 argued that past and concluded transactions cannot be adjudicated by the CLB in a petition filed under Section 397/398 of the Act. According to him, the names of the members have already been deleted from the Register of Members by passing a resolution on 12/09/2011 and hence, this issue cannot be allowed to be re-agitated in a petition filed under Section 397/398 of the Act. He, therefore, contended that this petition is liable to be dismissed being not maintainable for the reasons stated above.

19. I have carefully considered the rival submissions and perused the records. I have carefully examined the Articles 25 and 28(f) of the AOA of the Company and the provisions contained in Section 111(4) of the Act.

20. Upon a critical analysis of the said Articles of the AOA of the Company, it is clear that in case of death of any one or more of the joint registered holders of any shares, the survivors shall be the only person recognized by the company having any title to or interest in such shares. Further, Article 28(f) comes into place, in the case of a will. From examination of the provisions contained in Section 111(4), it is evident that if the name of any person is, without sufficient cause, entered in the Register of Members of the Company, the person aggrieved, or any members of the company, or the company may apply to the CLB for rectification of the Register. From a plain reading of Section 111(4) of the Act, it becomes further clear that any person the Company itself or its Board of Directors are not at all entitled to delete the names of the Petitioners merely by passing a Board Resolution. Keeping in view the aforesaid provisions, I am of the opinion that in case, the Respondent No. 1 Company and its management felt aggrieved by the resolution dated 9/05/1992 passed by the Company, in compliance of which at the request of later Ayub M. Khan the names of the Petitioners were added as joint holders in respect of the shares-in-question, the Company ought to have applied for rectification of Register of Members as provided in Section 111(4). It may also be noted that one of the resolutions passed on the said date i.e 12/09/2011 itself suggests that “the Register of Members be rectified accordingly immediately with the permission, if and when required of the appropriate court/legal authority. The said part of resolution clearly authorizes the Respondent No. 1 Company and/or its management to approach the Competent Judicial Forum i.e the CLB by way of filing a petition under Section 111(4) of the Act to get their names deleted from the Register of Members. The Board therefore, itself was not competent and empowered to delete the names of the Petitioners merely by passing such resolutions on 12/09/2011. Further, from careful examination of the decisions, it may be seen that the law laid down in the case of First National Reinsurance Co. Ltd. [1921] 2 KB 260 279, is that an application to the court is required where there is a dispute with respect to the rectification of the Register of Members. Similarly, in the case of P.V Damodar Reddy's [1945] II MLJ 432, it has been held that in case of dispute of any wrong entry, the Company on its own cannot rectify the register of Members. The proper course of action, therefore, was to make an application to the CLB for rectification of Register of Members under Section 111(4) of the Act. Therefore, the decisions affirm the views expressed by me in this judgment. Similarly, it is a trite that the doctrine of estoppel, as contended by the Respondents' Counsel, does not apply against law. Further, the issue of rectification of Register of Members cannot be said a concluded transaction. As such, the law laid down in the cases of Harish Ratilal Shah (Supra), J.R Srinivas (Supra), Manchanda (Supra), Seth Mohanlal Ganpatram (Supra) etc. referred to above do not apply having regard to facts of the case in hand.

21. Further, From perusal of the facts of the case of Smt. Biva pyne's case [2010] 153 Com Cases 49, it may be noted that Article 55 of the said case is akin to the Article 25 of the present case which provides that in case of the death of joint holder of shares, the Company's obligation was only to regard the other joint holder as the owner of the shares. In the said case, the CLB gave effect to Article 55 by not transmitting the shares to the window of the deceased as she was not a joint holder with respect to the same. In the present case, the Petitioners are asking for a similar reliefs from the CLB to direct the Company to give effect to Article 25 of the AOA by deleting the name of Ayub Khan as well as transfer of the shares in favour of the Petitioners being joint shareholders. Therefore, the said decision referred to by the Ld. Counsel for the Respondents is not applicable to the facts of this case.

22. In the case of H.P Gupta's case AIR [1971] SC 206:— it was held that the AOA of the Company constitute a contract between the Company and the Shareholders and the Parties are bound to observe the provisions of the same. Similarly, in the case of V.B Rangraj's case the issue before the court was whether a private agreement imposing restrictions on transfer of shares which are not included in the AOA can be a binding agreement. The court held that such agreement are not binding and the AOA of the Company will be binding on its members. Therefore, keeping in view the law laid down in the said cases, the Company was bound to follow Article 25 and 28(f) and it is not entitled to deny the registration/transmission of shares and rectification of Register of Members on any other ground not contemplated in the AOA of the Company. In the present case, I am of the view that the Company ought to have followed Article 25 and delete the name of late Mr. Ayub Khan as well as transmit 726 and 128 shares to the Petitioners respectively.

23. Further, I am not inclined to accept the contention advanced by the Ld. Counsel appearing for the Respondent Nos. 3 and 4 that since late Mr. Ayub M. Khan had admitted in his Affidavits that the inclusion of the names of the Petitioner Nos. 1 and 2 in respect of shares-in-question does not amount to sale or transfer of shares, therefore, the names of the Petitioner Nos. 1 and 2 as joint shareholders has to be considered as a nomenclature only. I am also not impressed with the contention of Mr. Krishna that since the said transfer of shares was made in contravention of the Article 28 of the AOA of the Company therefore, the same is void and liable to be ignored. Further, assuming for the sake of arguments that, the sard stand taken by the Respondent Nos. 3 and 4 is correct, even the Company and/or the said Respondents were not empowered under law to pass the resolution dated 12/09/2011 and they ought to have approached the CLB under Section 111(4) for deletion of the names of the Petitioners. It is further to be kept in mind, that the names of the Petitioner Nos. 1 and 2 as joint holders alongwith their father late Ayub M. Khan existed over than 19 years. They did not make any objection in the past 19 years not approached any judicial forum to get the Register of Members rectified by deleting the names of the Petitioners as a joint share holder. After a lapse of period of 19 years when the said Respondents came into the control of the management of the Company, they in connivance with other shareholders malafidely passed the resolution on 12/09/2011 declaring that the resolution passed on 9/05/1992 was illegal and void. Their aforesaid action, in my view, is unacceptable being malafide on the face of it. In my opinion, the Respondent Nos. 3 and 4 herein were not entitled to review/recall the resolution passed on 9/05/1992. In a decision rendered by Hon'ble High Court of Allahabad the case of Ram Govind Misra v. Allahabad Theatres Pvt. Ltd. [1989] 66 Comp Cas 358 (All), it has been laid down that if the shares are held in the joint names and one of the shareholders dies, it is the surviving shareholder to whom the entire rights and privileges with respect of such shares solely belong to and not to the legal heirs and/or the representatives of the deceased shareholder. This view has been further confirmed in another decision in the case of Smt. Jayalakshmi Acharya v. Kal Electronics and Consultants Pvt. Ltd. [1997] 90 Comp Cas 200 (CLB). For the reasons discussed hereinabove, relying upon the decision in the case of Ram Govind Misra (supra), I have no hesitation to hold that the resolution passed by the Company in its meeting held on 12/09/2011 was in itself violation of the provision contained in Section 111(4) of the Act, therefore, it cannot be allowed to sustain. It is further held that the preliminary objections raised by the Respondents as to maintainability of the petition are without any merits. The same are hereby rejected.

24. Having held that the petition is maintainable, now, I shall proceed to deal with the specific charges levelled by the Petitioners upon the Respondents as to the acts of oppression and mismanagement in the case. The First charge levelled by the Petitioners upon the Respondents relating to alleged acts of oppression and mismanagement is that the Respondents failed to recognize the Petitioners as the shareholders and thereby acted in flagrant breach of the mandate of the AOA of the Company. The Ld. Counsel submitted that undisputedly, the names of the Petitioners Nos. 1 and 2 were added as joint shareholders in the Register of Members and their names existed for a period over 19 years. It was also pointed out that the names of the said Petitioners were shown as joint shareholders in the Annual Returns of the Company filed with the Registrar of Companies. Moreover, the Petitioners are the only legal heirs entitled to the estate of late Mr. Ayub M. Khan including 1132 equity shares in the Company as the said Mr. Ayub M. Khan executed a will dated 17/09/2007 whereby the said Mr. Ayub Khan bequeathed the entire shareholding of 1132 shares in favour of the Petitioners in proportion of 726 to the Petitioner No. 1 and 128 to the Petitioner No. 2 and 278 shares to the Petitioner No. 3. The Ld. Counsel submits that in the case of the Petitioner Nos. 1 and 2, they were joined as joint shareholders representing the impugned shares after the demise of Ayub M. Khan on 14/03/2008. According to the Ld. Counsel, Article 25 of the AOA states that in case of joint shareholders upon the death of one of the shareholders, the surviving shareholder shall be the only person to be recognized by the Respondent No. 1 Company having title or interest in such shares. He submitted that Article 25 was, therefore, applicable to the Company and as such there cannot be any justification an the part of Company and other Respondents for not recognizing the Petitioner Nos. 1 and 2 as the shareholders being sole survivors as stated under Article 25 with respect to impugned shares under Folio Nos. 24 and 25.

25. According to Mr. Jagtiani, Article 25 of the AOA provides that the executors or administrators of a deceased member shall be the only person to be recognized by the company as having any title to the shares registered in the name of such members. In the present case, even if for the sake of arguments, it is presumed that joint shareholding of Petitioner Nos. 1 and 2 was improper and not enforceable in that case. Article 25 mandates the Company and its management to give full effect to article 25 which allows administrators and executors of a deceased member to be the persons having entitlement over the shares. Drawing my attention to the letter dated 4/04/2008, the Ld. Counsel pointed out that the executors have requested the Respondent No. 1 Company to give full effect to the will of Ayub M. Khan. Thus, there was a full and complete compliance of clause 25 of the AOA of the Company and the Company and its then management were under obligation to act upon the same in which the Company and its management has utterly failed.

26. Next point argued by Mr. Jagtiani is that the Company on 13/12/2008 passed a Board Resolution to freeze the estate of Mr. Ayub Khan. According to him, to pass this resolution, the Company and it's the then Board had taken shelter of the order dated 25/11/2008 passed by Mr. Justice Oka in the Civil Suit No. 2855 of 2008 pending in the Hon'ble High Court. The said order dated 25/11/2008 was passed in a Notice of Motion taken out in a suit hearing No. 2855 of 2008 filed by Respondent Nos. 3 and 4, wherein ad-interim reliefs were rejected by Hon'ble Mr. Justice Oka. The Ld. Counsel pointed out that a bare perusal of the said order dated 25/11/2008 would show that the said order deals with all the submissions of the Respondent Nos. 3 to 6 (Petitioners therein) and has refused the ad-interim relief as prayed for. The Ld. Counsel alleged that the Respondent No. 1 Company deliberately misinterpreted the said order dated 25/11/2008 and used that as a platform to pass the illegal resolution dated 13/12/2008 to freeze the estate of Ayub Khan. According to him, at the first instance the said resolution dated 13/12/2008 is illegal per se and the Board of Directors did not have any power to freeze the estate of Ayub Khan as that will tantamount to usurping the jurisdiction of the Testamentary Court which is not permissible under law.

27. The Ld. Counsel then argued that passing of resolution dated 12/09/2011 is also illegal by which the Company attempted to nullify the Board resolution dated 9/05/1992. The said resolution dated 12/09/2011 was later on cancelled and rescinded by a Board Resolution dated 23/11/2011. However, cancellation or rescission of Board Resolution does not wipe out the fact that the Board Resolution dated 12/09/2011 is itself per se illegal and bad in law. However, on 23/11/2011 a resolution was passed nullifying the resolution of 12/09/2011 and restoring status-quo-ante. It was argued that the Company and its then Board at the first instance could have never have passed such a resolution dated 12/09/2011 and having passed such a resolution by subsequent cancellation or rescission of the said resolution vide resolution dated 23/11/2011, it came to be ceased automatically. Despite, non-action of the Respondent No. 1 to give into effect the resolution dated 23/11/2011 is illegal, oppressive and hence, appropriate directions are required to be issued.

28. The Ld. Counsel further submitted that a bare perusal of the minutes in respect of the Board Meeting held on 12/09/2011 show that the Company has also passed various other resolutions having effect of giving the then Directors i.e Respondent Nos. 4 to 6 accommodation, travel allowances and various other benefits in the nature of refunding legal expenses without any rational or basis to themselves. Thus, it is incumbent on the part of this forum that appropriate orders may be passed and the Company be prohibited from passing such illegal and self serving resolutions.

29. The next charge levelled by the Petitioners is that the Respondent Nos. 3 to 6 have illegally deleted the names of the Petitioner Nos. 1 and 2 from the Register of Members of the Company based on the purported resolution dated 12/09/2011 passed by the Company at their behest. It is submitted that before deleting the Petitioner Nos. 1 and 2 from. The Register of Members of the Company, they were not given an opportunity of being heard and their names were deleted without any sufficient reason in flagrant violation of the provisions of the Act and principles governing the law of natural Justice.

30. The Ld. Counsel submitted that the only justification given by Respondent No. 3 to 6 to delete the names of Petitioner Nos. 1 and 2 from the Register of Members of the company is that the resolution of 9/05/1992 passed by the then Board of Directors allowing their names to be added as joint shareholders alongwith their father in Folio Nos. 24 and 25 was an illegal resolution. The Ld. Counsel pointed out that the said resolution dated 9/05/1992 was challenged by the Respondent Nos. 3 and 4 by way of filing a Company Petition being C.P No. 1757 of 2008 before the Principal Bench, New Delhi and the reliefs claimed there under were in the nature of declaration to nullify the said Board Resolution dated 9/05/1992. The Ld. Counsel further pointed out that in the said C.P the Respondent Nos. 3 and 4 did not get any interim relief and the said C.P is pending adjudication since then. Taking me through the order passed by the then Member, in respect of the Interim reliefs sought in the C.P No. 1757/2008, the Ld. Counsel tried to demonstrate that after failing to get an order from a competent court, the Respondent Nos. 3 and 4 took it upon themselves with the help of Respondent Nos. 5 and 6 to physically strike out the names of the Petitioner Nos. 1 and 2 from the Register of Members. According to the Ld. Counsel, this was done, undermining authority of Court of law and is a gross act of oppression. The Ld. Counsel contended that the illegality of deletion of the names of Petitioner Nos. 1 and 2 is aggravated by noncommittal stand and non-action by Respondent Nos. 2, 7 and 8 who acted as a mere spectators totally indifferent to the vulnerability and helplessness of the Petitioner Nos. 1 and 2 and thereby making themselves liable to an order in this petition.

31. Inviting my attention to the letter dated 16/11/2011 filed as Exh. VV alongwith the petition, the Ld. Counsel submitted that in fact the Petitioners joined the Respondent No. 8 to the then Board of Directors voicing his concern to the illegality perpetrated by the Respondent Nos. 3 to 6. The Ld. Counsel then invited my attention to the Notice dated 3/09/2011 which is available on the C.P No. 10/2011 for calling of the Board Meeting to be held on 12/09/2011 and submitted that on perusal of this notice, it can be seen that the board of Directors did not contemplate consideration of any resolution to give into effect of nullifying the 9/05/1992 resolution. It was only after when the notice in the three Company Petitions bearing Nos. 40 to 42 of 2011 filed by the Petitioner Nos. 1 to 3 respectively, were served on them, on or 3 and 9/09/2011, the Respondent No. 1 company through it's the then Board of Directors decided to play mischief by passing such an illegal resolution dated 12/09/2011. It was, therefore, argued that this was an afterthought of the Respondents No. 3 to 6 to pass a resolution in order to make the said CPs. as infructuous. The Ld. Counsel further submitted that the resolution dated 12/09/2011 did not give them unfettered discretion to delete the names of the Petitioner Nos. 1 and 2 without filing any appropriate application in the CLB. The Ld. Counsel added that if such an illegal action on the part of the said Respondents is allowed to continue, in that case, the provisions under Section 111(4) which provides to file an appropriate application before the CLB by a Company will be rendered nugatory.

32. Next point argued by the Ld. Counsel is that, Respondent Nos. 2, 7 and 8 when they came in power after removing Respondent Nos. 3 to 6 they were under an obligation to set right the illegality committed by them. The Petitioners subsequent to filing of this captioned petition, also wrote letters to Respondent No. 1 Company inter alia requesting the company to set right the illegality committed by the Respondent Nos. 3 to 6 by inserting the names of the Petitioner Nos. 1 and 2 in the Register of members, However, the Respondent Nos. 2, 7 and 8 although, passed a Board Resolution on 23/11/2011 nullifying the Board Resolution dated 12/09/2011. However, they deliberately did not place the said resolution before the CLB and only in the month of October, 2013, when the Respondent Nos. 2 and 7 filed their reply to the petition, they placed this resolution before it. The Ld. Counsel submitted that although the Petitioners had filed a C.A No. 35 of 2012 to get interim reliefs in the nature of restoration of status-quo-ante, as it existed prior to 5/09/2011, at that point of time, the Respondent Nos. 2, 7 and 8 were under an obligation to inform about the resolution dated 23/11/2011 but they deliberately and mischievously suppressed the resolution from the CLB and misguided and misled this Forum to arrive at incorrect and improper conclusion. According to the Ld. Counsel, there cannot be any justification for not showing the Board Resolution dated 23/11/2011 and the restoration of the names of Petitioner Nos. 1 and 2 were directly in question and this resolution had a direct effect on the propriety rights of the Petitioners being shareholders of the Company. It was therefore, contended that this conduct on the part of the said Respondents itself is an act of oppression and mismanagement which further-entitles the Petitioners to represent their interest on the Board of the Company, Based on the above, the Ld. Counsel has sought a direction thereby appointing the Petitioners on the Board of Directors of the Company.

33. Next complaint made by the Ld. Counsel appearing on behalf of the Petitioners is that resolutions dated 13/12/2008, 12/09/2011 and 23/11/2011 though passed by the Company, but as indicated above, these resolutions were never timely informed to the Petitioners. The resolution dated 13/12/2008 was not disclosed in various correspondence such as letters dated 12/01/2011, 6/07/2011, letter dated 7/07/2011 and letter dated 11/07/2011. He submits that Significance of the resolution dated 13/12/2008 under challenge is that by this resolution the company has frozen the estate of Ayub Khan and having passed such a resolution the Company ought to have informed the Petitioners who were the claimants of the estate of Ayub Khan. The resolution dated 13/12/2008 also came to the knowledge of the Petitioners after filing of the Company Petition Nos. 40 to 42 of 2011 on 4/10/2011. The very fact that the Company did not even bother to inform the Petitioners about passing of resolution dated 13/12/2008 is an act of oppression in itself as by that resolution company illegally dealt with the rights of the Petitioners and virtually closed all options of Petitioners requesting the company to act on the requests made by them. It was also argued that the Respondent No. 1 Company similarly did not disclose about Resolution dated 12/09/2011 Immediately to the Petitioners and the Petitioners came to know about the same whilst taking inspection of documents from the Respondent Nos. 3 and 4.

34. Another argument advanced by the Ld. Sr. Counsel is that the Company passed a Board resolution on 23/11/2011 nullifying the Board resolution dated 12/09/2011. According to the Ld. Sr. Counsel, the Petitioners came to know about this resolution dated 23/11/2011 only in the month of October 2013. As such, throughout this period, the Company and its directors meticulously suppressed all the Board Resolutions deliberately with oblique motive. It is, further submitted on behalf of the Petitioners that there cannot be any justification for non disclosure of 23/11/2011 resolution and the only reason for its non disclosure is malafide attitude and irresponsible conduct on the part of Respondent Nos. 2, 7 and 8. This only shows that the Company keeps the Petitioners in the dark about any resolution passed by it touching upon the rights of the Petitioners.

35. The Ld. Counsel then invited my attention to the AOA of the Company and submitted that a bare perusal of the Articles of Association of the Respondent No. 1 Company, it may be noted that Respondent No. 1 Company has adopted contents of Table A and as such clause 29 of Table A is also applicable to Respondent No. 1 Company. For the sake of easy reference, clause 28 of Table A is reproduced ad verbatim herein below:

“28. A person becoming entitled, to a share by reason of the death or insolvency of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company”.

36. Referring the said provision it was argued by Mr. Jagtiam is that the Respondents deliberately with an oblique motive passed a resolution on 13/12/2008 and pursuant to the said decision, they are not making payment of dividend etc. to the Petitioners without any sufficient reason and this Further constitute an act of oppression towards the Petitioners, Inviting my attention to clause 28 of the Table A of the AOA, it was argued that the non-payment of dividend by the Company and its management to the Petitioners is in violation of clause 28 of Table A which is adopted by Company and thus such action on the part of Respondent No. 1 Company is per se illegal and malafide. It was therefore contended that the Company and its present management should be mandated to clear the dividend of the Petitioners forthwith and the company should be directed to pay the future dividend as it would be paid to other shareholders.

37. Responding the above arguments, the Ld. Counsel appearing on behalf of the Respondent Nos. 2 and 7 Mr. Mustafa Doctor submitted that the resolutions dated 13/12/2009 was passed on account of the pending litigation between the two branches of late Ayub khan's family and the disputes between them regarding the title to the shares of late Ayub Khan. He submitted that as the Company and Respondent Nos. 2 and 7 did not wish to side with either branch of late Ayub Khans' family, it was not decided not to disburse dividend on late Ayub Khan's shares to either branch, but to deposit the same in a separate bank account. According to the Ld. Counsel, this was done, firstly in order to remain neutral in the disputes between the two branches of late Ayub Khan and secondly to protect the Company from any possible claim against it by either branch of the Ayub Khan's family. Mr. Doctor, therefore submits that there was no malafide intent or oblique motive behind the resolution dated 13/12/2009 as is suggested by the Petitioners.

38. Mr. Doctor further submitted that the resolution dated 12/09/2011 was passed when the Respondent Nos. 3 to 6 were in a majority on the Board of the Company. Subsequently, after removal of the Respondent Nos. 3 to 6, the said resolution has been rescinded by Respondent Nos. 2, 7 and 8 vide another resolution dated 23/11/2011 and hence, the allegation in this regard no longer survives. It is argued that the Respondent Nos. 2 and 7 have thus shown their bonafides by passing resolution dated 23/11/2011 ensuring that the Respondent Nos. 3 to 6 were not permitted to mis-use their majority position on the Board to settle their personal scores with the Petitioners.

39. It is next argued that the Respondent Nos. 2 and 7 being neutral in the disputes between the heirs of late Ayub M. Khan did not recognize either of the two contesting groups as shareholders. However, at all material time, the company and the Respondent Nos. 2 and 7 have been willing to abide by the orders of the courts in the pending legal disputes with respect to the ownership of late Ayub Khan's shares. It is next argued that the claim of the Petitioners for proportionate representation on the Board of Directors is unfounded. According to the Ld. Counsel, the AOA of the company do not provide for proportionate representation. In the alternative, it was submitted that until such time, the heirs of late Ayub Khan do not resolve their dispute with regard to their entitled of his shares, the question of appointing a person on the Board from that branch of the family of late Mehboob Khan does not arise.

40. Responding to the allegation that, the Respondent Nos. 2 and 7 had suppresses the Board resolution dated 23/11/2011, it was argued that the omission to disclose the Board resolution dated 23/11/2Oil was not on account of any malafide/ulterior intention and/or motive. The said omission was only on account of inadvertence and oversight. Having passed the said resolution on 23/11/2011, the Respondent Nos. 2 and 7 had no reason to suppressed it. In any event, the said Board resolution was disclosed by Respondent No. 7 in his affidavit dated 15/07/2013 filed in the present petition. It was, therefore, argued that the present petition does not make out any case of oppression and mismanagement and is thus, liable to be dismissed.

41. On behalf of Respondent No. 8, it was argued that as per settled proposition of law, no party can be permitted to travel beyond its pleading and sine the Petitioners have not chosen to file any additional pleadings, despite having sufficient opportunity to do so regarding the events that happened after filing of the petitions therefore, they are not entitled to place reliance on such events. The Ld. Counsel submits that the Petitioners in the course of their submission levelled certain allegations against the present Board of Directors of the company including the Respondent No. 8. However, none of these allegations were raised in the pleading filed by the petitioners, therefore, the petitioners are not entitled to raise such pleas for the first time only at the stage of arguments. The Ld. Counsel has placed reliance in the case of Kalyan Singh Chouhan v. C.P Joshi. joshi [2011] 11 SCC 786, in support of the above proposition. In this regard, he also referred to the decisions in the cases of Ram Sarup Gupta (dead) by LRs. v. Bishun Narain Inter College [1987] 2 SCC 555; Bachaj Nahar v. Nilma Mandal [2008] 17 SCC 491; Kashi Nath (Dead) Through Lrs. v. Jaganath [2003] 8 SCC 740 etc.

42. It was next argued on behalf of Respondent No. 8 that the until the shareholding pattern of the company is crystallized, the Petitioners' claim as to their right of transmission of shares, right to be recorded as a member in the Books of company, right to attend the meetings and right to receive dividends etc., cannot be considered and allowed by the company. It was therefore, argued that no case of oppression and mismanagement is made out as alleged by the Petitioners.

43. On behalf of the Respondent Nos. 3 and 4 the Ld. Counsel strenuously argued that the petition filed by the Petitioners under Section 397/398 of the Act is nothing but in the nature of rectification of Register of Members which relief cannot be allowed, pending High Court Suit No. 2855 of 2008. Placing reliance upon the decisions in the cases of [1] Sikkim Bank Ltd. v. R.S Choudhary [2000] 102 Com Cases 387 [ii] Ansar Khand v. Finecore Cables Pvt. Ltd. [2007] 79 CLA 412 [iii] Sri Parmeshwari Prasad Gupta v. Union Of India [1974] 44 Com Cases 1 (SC) Kuldip Singh Dhillon v. Pargaon Utility Financier Pvt. Ltd. [1986] 60 Comp Cases 1075 (P & H) [v] Kshounish Chowdhary v. Kero Rajendra Monolethie Ltd. [2002] (110) Com Cases 441 [vi] D. Ramakrishna Rao v. L.R.R Hacherles [2000] 99 Com Cases 327 (CLB) (vii) Mahabir Prasad Jalan v. Bhajrang Prasad Jaian [2000] 102 Com Cases 81 (Calcutta), it was urged that the Respondent Nos. 2, 7 and 8 by misusing their dominant position as the majority shareholders, without notice to the Respondent Nos. 3 and 4 held an illegal Board Meeting on 23/11/2011 and passed invalid resolutions immediately after removing them in the EOGM held on the same day. It was further submitted that as per the Articles of the Company, which are binding upon members of the Company as held in the case of V.B Rangraj v. Gopalkrishna [1992] 27 Com Cases 201 SC and H.P Gupta v. Hiralal . [1971] AIR SC 206. failing to serve the requisite notice of 7 days by the Company for holding the Board Meeting on 23/11/2011 at 4.30 p.m and passing the resolution thereat is, therefore void, non-est and ineffective. It was also argued that the Petitioners are not entitled to take any advantage of the illegal and invalid resolution passed on 23/11/2011. He further submitted that the resolution dated 12/09/2011 was validly passed by the Board of Directors and it is completely binding on the members as held in the case of Chetkar Jha v. Vishwanath Prasad Verma [1969] 2 SCC 217 to support the same. Referring the decision in the case of M.S Kumanan v. S.S.M Processing Milts Ltd. [2004] 122 Com Cases 504 and Ansar Khan v. Fine Core Cables Pvt. Ltd. [2007] 2 Comp LJ 298, he argued that annual returns filed by the Company cannot be said a conclusive proof to prove their title and ownership with respect to the shares.

44. Having considered the submissions, it deems appropriate to first consider the validity of the resolution passed on 13/12/2008 by the Company or which date the Respondent Nos. 2, 7 and 8 were the directors on the Board of the Company. By the said resolution, the Board of Directors of the Company, keeping in view of the ad-interim order dated 25/11/2011 passed by the Hon'ble Bombay High Court in Suit No. 2855 of 2008 thereby making it clear that all the transactions effected by the Defendants in the said suit property Including the shares would be subject to further orders which are to be passed in Notice of Motion and the said Suit, decided not to consider the transfer of shares not to pay the amount of dividend to the Petitioners as prayed by them in respect of the shares-in-question held by late Mr. Ayub M. Khan and it further decided that the amount of dividend would be deposited in the Bank account marking lien in respect of the shares-in-question.

45. Upon a critical analysis of the aforesaid facts, it is clear that the then Board of Directors of the Company, while passing the said resolution on 13/12/2008 has assigned the reasons to reach at its decision which appears to me to have boon taken as a precautionary measure by the Board of Directors in order to avoid any kind of contempt proceedings. Therefore, in my considered view, although the said decision was oppressive to the Petitioner Nos. 1 and 2 herein but it does not suffer from any malafide on the part of the then Board of Directors. The bonafides of the said Respondents are further evident when they passed another resolution dated 23/11/2011 and made a statement before the Board that they are willing to abide by any order passed by this Bench.

46. Now, coming to the consideration of resolution dated 12/09/2011 when the Respondent Nos. 3 and 6 were on the Board of Directors of the Company. By the said resolution, it was decided to delete the names of Petitioner Nos. 1 and 2 from the Register of Members of the Company. In my view, this resolution is clearly malafide and oppressive for two reasons. Firstly, because, no leave was taken by the Company as required under Section 111(4) of the Act and secondly, because the Petitioner Nos. 1 and 2 were admittedly the joint holders in respect of 726 and 128 shares and their names existed for over a period of 19 years in the Register of Members of the Company. As indicated above, it is a settled law, that if the shares are held in the joint names and one of the shareholders dies, it is the surviving shareholder to whom the entire rights and privileges with respect to such shares solely belong to and not to the legal heirs or the representatives of the deceased shareholder. This view has been confirmed by the law laid down by the Hon'ble High Court as well as by the CLB in the cases of Ram Govind Misra (Supra) and Smt. Jayalakshmi Acharya (Supra).

47. I have also examined the authorities cited on behalf of the Respondent Nos. 3 and 4. In my view, the ratio laid down in the cases cited on their behalf to support their contentions is undisputed. However, looking into the facts of the case in hand, the said authorities, in my considered view, are inapplicable. It may be mentioned here that I did not find any illegality in the EOGM held on 23/11/2011 whereat the Petitioners were removed as the directors from the Board of Directors of the Company and the Respondent Nos. 2, 7 and 8 were inducted in their place. It is thus clear that at the time, the Board Meeting was held on 23/11/2011, the Respondent Nos. 3 and 4 were no more directors. The newly inducted directors who were entitled to raise objections as to the service of notice did not raise any such objection. In the Board meeting all the newly appointed Directors were present and they took the decisions unanimously. Therefore, the contention advanced on behalf of the Respondent Nos. 3 and 4, that the Board Meeting held on 23/11/2011 was illegal as the 7 days advance notice in terms of the AOA was not served, is without merits, looking into the fact that at the time of meeting they were no more directors of the Company. Even assuming for the sake of arguments that the Board Meeting held on 23/11/2011 is bad-in-law for want of requisite notice as contended by Petitioners, the resolutions passed thereat in my opinion are not oppressive. In my considered view the decisions taken are in the best interest of the Company and interest of all the shareholders has been taken care of in the said decisions. The wrongs committed by the Respondent Nos. 3 and 4 during their tenure as Directors have been set right by the present Management, Furthermore, the resolution dated 23/11/2011 passed by the Company, in so far as it relates to rescinding the resolutions dated 12/09/2011, by which the names of the Petitioners were deleted from the Register of Members, has not been implemented till date. This confirms the bonafides on the part of the present management. On behalf of the Company, it has stated through its Counsel that the Company will comply with the orders passed by the CLB.

48. It is to be noted that the CLB has already allowed the petition filed by the Petitioners Nos. 1 and 2 being CP. Nos. 40 to 42 of 2011 filed under Section 111 of the Act and has directed the Company to transmit the impugned shares in their favour and to release all the benefits accrued thereon subject to compliance of certain directions as contained therein. However, the petition filed by the Petitioner No. 3 being CP No. 41 of 2011 has been disposed of with liberty to revive the petition after conclusion of the Suit No. 2855 of 2008. The Company is supposed to comply with the directions as per the orders passed in the said petitions. Keeping in view the order passed in the CP. Nos. 40 and 42 of 2011, I am therefore of the opinion, that the major grievances made by the Petitioners in this petition have already been brought to an end and no further direction(s) is required to be issued in this connection.

49. Now, I proceed to consider the last two complaints made by the Petitioners against the Respondents in the present petition.

50. According to the Petitioners' case, the Respondents have illegally prevented them from proving with inspection of the statutory documents of the Company to which they were entitled to being successors of late Ayub Kahn and/or joint shareholders of the company as per provisions of the companies Act.

51. I have considered this allegation also. Since their entitlement to the snares was in dispute therefore, the company did not allow them inspection of the documents. Taking into consideration the said fact, I am unable to accept the contention of the Petitioners Counsel that the conduct on the part of the Respondents to refuse the inspection of the documents tantamount to an act of oppression. I, therefore, do not find any force in this allegation made by the Petitioners, it is, therefore rejected.

52. The last complaint made by the Petitioners is that the Respondents made an attempt to dispose of the assets of the Company without any proper authority and Board resolution to the detriment of the interest of the company and the Petitioners as minor shareholders.

53. The Ld. Counsel submitted that the Petitioners are not interested in dealing with the property of the Company in any manner and they would wish to continue the legacy left behind by the legendary film maker Mr. Mehboob R. Khan. It was, therefore, submitted that appropriate directions may be passed against the company and its management restraining them from dealing with the assets/land of the company without the leave of the court. It was also submitted that if the CLB decides to grant the said relief, in that eventually one of the representatives of the petitioners may be given a seat on the Board of Directors of the company to enable them to have a say in the mater. It was also submitted that the decision to appoint the representative of the Petitioners should be left open to them as per their own choice. The Ld. Counsel submitted that the Respondent No. 8 who is the Managing Director of the Company as on date has always advocated the submission of proportionate representation and therefore, the Petitioners are entitled to such a relief.

54. In the alternative, it was argued that the Board has got the requisite powers under Section 397/393 read with 402 of the Act to pass appropriate orders having effect of dividing the Company's land based on the shareholding of each of the member of the Company, According to the Ld. Counsel, late Mehboob R. Khan distributed his shares among the family members in order to give every member of the Company, the share of the asset/land of the company and as such, the majority rule cannot apply to the facts and circumstances of the present case, therefore, the Petitioners should be given a right to put their version in the decisions that would be taken by the company with respect to dealing with its land. The Ld. Counsel submitted that on this ground also, the Petitioners are entitled to proportionate representation on the board of the directors of the company.

55. Answering the above submissions, it was argued by the Ld. Counsel appearing for the Respondent Nos. 2 and 7 that the Respondent No. 2 had entered into an agreement dated 22/09/1993 with Karim Meredia for a proposed sale of her shares in the Company subject to the conditions set out therein. The Ld. Counsel pointed out that Clause 2 and 3 of the said Agreement specifically referred to and recognizes the pre-emption clause contained in the Articles of Association of the Company and requires compliance of the same. The Ld. Counsel submitted that immediately after execution of the said agreement, Respondent No. 2, in compliance with the Articles of Association of the Company, informed the Company of the said agreement vide a letter dated 22/09/1993 and thereafter. Several letters were exchanged between the Company and Respondent No. 2 in this regard.

56. It is next argued that the Respondent No. 2 and Karim Meredia executed a Supplemental MOU dated 21/12/1994 revising the consideration as recorded in the agreement dated 22/09/1993. Respondent No. 2 once again by a letter dated 10/02/1995 gave the notice of the same to the Company.

57. It is contended on behalf of the Respondents that both these agreements were eventually abandoned. Respondent No. 2 had however at all relevant times made a full disclosure of the same to the Company and had acted in complete and absolute conformity with the articles of the Company at every stage. The Ld. Counsel submitted that the allegations of any clandestine dealing is, therefore, wholly fallacious and misleading.

58. It was next submitted that the Respondent Nos. 2 then entered into a Memorandum of Understanding dated 2/05/2003. A similar Memorandum of Understanding dated 29/08/2003 was also entered into between Respondent No. 7 and Karim Meredia for a proposed joint development of the Company's land, proportionate to their respective shareholding in the Company. The Ld. Counsel pointed out that Clause 4 of aforesaid MOU's specifically makes the proposed development contingent on Karim Meredia entering into similar agreements with 75% of the shareholders of the Company. He submitted that as Karim Meredia failed to do so, the said MOUs were also abandoned.

59. Next point argued by the Ld. Counsel is that the aforesaid MOUs once again were made keeping in mind the rights of the other shareholders to refuse Meredia's proposal for development of the property. According to him, no rights were created in his favour with respect to any part of the property and the entire agreement was contingent upon his obtaining the necessary majority consent from the other shareholders of the Company.

60. It was further submitted that the agreements between Respondent Nos. 2 and 7 and Karim Meredia have all been abandoned and are no longer enforceable. According to him, the said Karim Meredia being well aware of this fart had made no claim thereunder for a period of almost 10 years, till he suddenly filed Suit No. 2 of 2013 before the Hon'ble Bombay High Court seeking specific performance of the aforesaid agreements. The Ld. Counsel submits that it is Respondent No. 2 and 7's case that the aforesaid suit was filed in collusion with Respondent Nos. 3 to 6. By an ad-interim order dated 26/03/2012 a Ld. Single Judge of the Hon'ble Bombay High Court has inter alia reached a finding that the said agreements were indeed abandoned and/or unenforceable. However, Karim Meredia preferred an appeal from the order dated 26/03/2012, which was dismissed by an order dated 18/07/2013.

61. It was argued by the Ld. Counsel that the Respondent Nos. 2 and 7 are vigorously contesting the suit filed by Karim Meredia in the Hon'ble High Court and have been successful in obtaining favourable orders in those proceedings. The Ld. Counsel submitted that the allegation of any collusion and or wrong doing on the part of Respondent Nos. 2 and 7 as is alleged against them in relation to the said Meredia and/or the property of the Company and/or the interest of the Company being compromised by their continuing on the board of directors of the Company is wholly untenable and baseless and deserves to be rejected.

62. In addition to above, it is submitted that the allegations regarding the agreements with Karim Meredia, are all state allegations with regard to matters that occurred almost 10 years prior to the filing of the present petition. It is further submitted that the Company's property is adequately protected by three orders of this Hon'ble Tribunal viz. order dated 11/03/2005 passed in Company Petition No. 108 of 2005, order dated 7/04/2011 in Company Petition No. 30 of 2011 and order dated 23/11/2011 passed in Company Petition No. 97 of 2011.

63. The Ld. Counsel appearing on behalf of the Respondent No. 8 pointed out that in the said C.P No. 108 of 2005, the Hon'ble Principal Bench, by its Order dated 11/03/2005, has already passed appropriate directions in respect of the and of the Company and the issue therefore is no longer res-integra. The Hon'ble Principal Bench, in its detailed order, has held that: (i) a division/fragmentation of land writ be against the interests of the Company; and (ii) no development of the property can be approved except by way of special resolution of the General Body of the Company.

64. The Ld. Counsel submitted that in view of the aforesaid Order of the Hon'ble Principal Bench, any effective resolution in respect of the Company's land was possible only if two-thirds of the shareholders of the Company are able to reach an amicable settlement. The Ld. Counsel submitted that the Respondent No. 8 had in fact attempted to bring about such a settlement by making a proposal on affidavit and inviting counter proposals from the other shareholders. While some of the other shareholders made counter-proposals, the Petitioners chose not to participate in this process. It was, therefore submitted that the said accusation made by the Petitioners against the Respondents is baseless, frivolous and liable to be rejected.

65. I have given my anxious thoughts to the rival contentions. I would like to refrain myself from expressing any view in respect of the allegations made by the Petitioners for an attempt of sale of the company's asset without proper authority and resolution for the reasons. Firstly, there is already an order existing in this regard, passed by CLB in the earlier Company Petition being C.P No. 108 of 2005. Secondly, the suit fried by Mr. Karim Meredia is pending before the Hon'ble High Court for specific performance and pending the suit, it would not be appropriate to express any view as to the validity of the MOUs and/or any issue connected therewith and lastly the will is under challenge in which the estate of late Ayub Khan is to be determined. For these reason I, do not find any force in the accusation made by the Petitioners against the Respondents. The Respondents have taken clear stand that they have no intention to go ahead with the alleged MOUs entered into between Mr. Karim Meredia on the one side and Respondent Nos. 2 and 7 on the other side. Therefore, the charges levelled by the Petitioners upon the Respondents as to malafide attempt made by them in respect of the sale of Company's assets also fails.

66. The conclusion is that the grievances of the Petitioner Nos. 1 and 2 with respect to non-transmission of 726 and 128 shares respectively held by them as joint shareholders alongwith late Ayub M. Khan and seeking rectification of Register of Members, release of dividend etc. have already been brought to end as their Company Petitions being C.P Nos. 40 and 42 of 2011 have been allowed and appropriate directions in this regard have already been passed. In so far as other grievances raised in this petition are concerned, the Petitioners have failed to substantiate such grievances and therefore, nothing survives to be adjudicated in this petition.

67. Concluding the arguments, Mr. Jagtiani Sr. Advocate representing the Petitioners referred the decisions in the cases of M.S.D.C Radharamanan v. M.S.D Chandrasekara Raja [2008] 6 SCC 750; K.N Bhargava v. Trackparts of India Ltd. [2001] CLB V. 104 and Delstar Commercial and Financial Ltd. v. Sarvottam Vlnijaya Ltd. [2001] 3 Comp LJ 442 CLB and argued that even in cases where the oppression is not established, with a view to protect the interest of the Company and its shareholders, depending on the facts of a case, suitable order(s) may be passed in the exercise of powers, conferred upon the CLB by virtue of section 402 of the Act. The Ld. Counsel submitted that looking into the facts of the present case that the decedents of late Mehboob R. Khan do not have good terms inter-se and keep on changing their stand in their personal interest. It was therefore prayed that the Company be directed to allow the Petitioners to represent on the Board based on their proportionate shareholdings to watch their interest. He submitted that this is also necessary keeping in view the doctrine of corporate democracy and the corporate governance.

68. I have considered the submissions. Doctrine of Corporate democracy describes how companies ought to be run, directed and controlled. It is about supervising and holding to account those who direct and control the management. Corporate Governance deals with the rights and responsibilities of a company's management, its board, shareholders and various stakeholders. Corporate governance includes the structures, processes, cultures and systems that engender the successful oppression of the organizations. Direction and control of corporate bodies are the basic activities of the Board of Directors. These activities lay the foundation for future progress of business. Corporate governance is the framework that ensures accountability. Once it is in place, companies are free to go about their way in creating shareholder value and registering the growth, in fact, Corporate governance is a philosophy and mechanism that involves processes and structure which facilitate the creation of shareholder value through management of the corporate affairs. Corporate governance arms at protecting the individual and collective interest of all the stakeholders. Corporate governance can therefore be described as the process, system, structure and mechanisms used to direct, control and manage the business affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long-term shareholder value. It mainly focuses on the interests of other stakeholders.

69. Having regard to the facts of the case, I am not inclined to issue any direction as prayed by the Ld. Counsel appearing for the Petitioners herein, to bring any of them on the Board of the Directors of the Company. Yet, it is expected from the present management to consider as to whether one or two persons from the two branches of late Mr. Ayub Mehboob Khan could be given a chance alternatively and/or on rotational basis to represent their Group on the Board of Directors for a fixed term of one year or two years, as the management deems fit and proper. However, it is made clear that this should not be construed as a direction. It is a mere suggestion and it is left open to the wisdom of the shareholders as to who should be on the Board of Directors of the Company keeping in their mind the paramount interest of the Company.

70. The C.P stands disposed off in the above terms with no order as to costs, C. As also stand disposed off in the above terms. Interim order, if any, stands vacated.

71. Let copy of the order be issued to all concerned as per rules.