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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.

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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

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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

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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

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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

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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

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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

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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.