Judgment : This Company Appeal is filed, under Section 10F of the Companies Act, 1956 (hereinafter called the “Act”), against the order of the Company Law Board, Chennai Bench, Chennai (hereinafter called the CLB), in C.P. No.4 of 2010 dated 25.05.2012. 2. As the contentions urged in this appeal are limited only to a few of the issues raised before the CLB, the facts, to the extent relevant for adjudication of this appeal, need alone be noted. M/s.Anita Impex Limited (A-4), a U.K. based Company incorporated on 05.10.1993 in London, deposited Rs.25.00 lakhs with the Rajasthan State Electricity Board (RSEB) in the year 1997, and entered into an agreement with them for establishing and maintaining a generating station with 150 MW capacity in Sirohi or Jodhpur in the State of Rajasthan. The said agreement required a company to be incorporated in India under the Act, and the power generated by the said company to be purchased by the RSEB. Pursuant thereto, Marudhar Power Private Limited (which later changed its name to VS Lignite Power Private Limited – R-1) was incorporated on 10.10.2001. The registered office of R-1 was located at Jodhpur in the State of Rajasthan, till it was later shifted to Hyderabad in the State of Andhra Pradesh. Certain other agreements were entered into, which included an agreement for transmission and supply of power. This agreement executed on 13.03.2002 was to subsist for a period of 15 years which, the appellants claim, is still in force. They rely on a letter obtained under the Right to Information Act, (a copy of which has been enclosed along with C.A.No.992 of 2012), in this regard. A Memorandum of Understanding (MOU) was also entered into between R-1 and the Rajasthan Mineral Development Corporation Limited (RMDC). 3. Appellant No.2 (A-2) is the wife of appellant No.1 (A-1), and appellant No.3 (A-3) is his father and the power of attorney-holder of A-1, 2 and 4. The Memorandum of Association of R-1, at the time of its incorporation, stipulated that its authorised share capital was Rs.50.00 lakhs; its registered office was at Jodhpur; and its objects were to generate and supply electricity by setting up thermal, hydro, gas, diesel and oil power plants. The Memorandum of Association of R-1, at the time of its incorporation, stipulated that its authorised share capital was Rs.50.00 lakhs; its registered office was at Jodhpur; and its objects were to generate and supply electricity by setting up thermal, hydro, gas, diesel and oil power plants. The subscribed and paid up capital of R-1, as on the date of its incorporation, was Rs.1.00 lakh divide into 10,000 shares of Rs.10/- each, i.e., 5000 shares each having been subscribed to by A-1 and A-2. A resolution was passed by the Board of Directors of R-1 on 03.04.2002 authorizing A-3 to enter into an MOU with respondent No.8 (R-8). On 3.4.2002 A-3 sought the participation of R-8 for the “Development, Construction, and Operation of the project while at the same time maintaining continuing financial interest in the project”. An MOU dated 03.04.2002 was entered between A-3 (who was authorized by, and represented all, the appellants) and R-8 represented by respondent No.2 (R-2). Covenant 1.2 of the said MOU required A-3 to transfer 76%, of their share holding in R-1 to R-8; in consideration of the promises made by A-3, R-8 was required to subscribe to 40 lakh shares of R-1 and then transfer these shares to A-3 in a phased manner to commensurate with the construction of the project as per the terms mentioned therein. All the shares were to be transferred not later than the commissioning of the power project. On 8.4.2002 an MOU was entered into between R-1 and the RMDC for supply of fuel for the proposed electricity project. 4. In their petition before the CLB, the appellants contended, among others, that R-2, 3 and 8 had allegedly transferred the balance 24% of their shares; they had removed A-1 from the post of Director; and they had unauthorisedly increased the authorized and paid up capital of R-1 multifold. They contended that A-1 and A-2 held 5000 shares each, A-3 held 100 shares and A-4 held 2,50,000 shares of Rs.10/-each in R-1. They contended that A-1 and A-2 held 5000 shares each, A-3 held 100 shares and A-4 held 2,50,000 shares of Rs.10/-each in R-1. The respondents contended, before the CLB, that A-3 and A-4 had not been allotted 100 shares and 2,50,000 shares of Rs.10/- each respectively; the Board resolution of R-1 dated 03.04.2002 showed that their paid up capital, as on 02.04.2002, was only Rs.1.00 lakh which was fully subscribed by A-1 and A-2; A-4, being a foreign entity, could never have held shares in R-1 without complying with the foreign exchange laws; while Form-2 was filed showing allotment of 2,50,000 equity shares in cash on 10.10.2001, there was no bank account for R-1 on 10.10.2001; the appellants transferred their shares on consideration being paid to them in the year 2006; the project contemplated in the MOU dated 03.04.2002 got frustrated; the permissions granted in the year 1999 were not renewed, as the project did not commence within the cut off date period; after the original project was abandoned, a totally new project was taken up by R-2 and R-3, and was established at a different place; it is this project which is operational; R-8 was not obliged to transfer 40 lakh shares, as the “development, construction and operation” did not start; approximately Rs.700 crores was invested in the new project; the respondents, and other power consumers, had provided equity/preference capital of Rs.174 crores; the balance was sourced by lenders; and the appellants played no role financially, managerially, technically or administratively in the implementation of the new project. 5. The CLB, in its order in C.P. No.4 of 2010 dated 25.05.2012, held that the petitioners were not entitled to any relief; and there could be no judicial intervention to grant reliefs based on the MOU. The CLB advised both parties to sit across the table, and settle the issue on the performance of mutual obligations, rather than agitating the ten year old dispute again before the civil court. The Company Petition was dismissed subject to the said observations. Aggrieved thereby, the petitioners before the CLB have invoked the jurisdiction of this Court under Section 10-F of the Act. 6. The Company Petition was dismissed subject to the said observations. Aggrieved thereby, the petitioners before the CLB have invoked the jurisdiction of this Court under Section 10-F of the Act. 6. Elaborate oral submissions were made by Sri S. Ravi, Learned Senior Counsel appearing on behalf of the appellants, Sri L. Ravichander, Learned Senior Counsel appearing on behalf of R-1 to R-8, and Sri S. Prabhakar, Learned Counsel appearing on behalf of R-20. Detailed written arguments were submitted by Mrs. Sangeeta Bhaskar, Learned Counsel for the appellants, Sri Ch. Ramesh Babu, Learned Counsel for R-1 to R-8, and Sri S. Prabhakar, Learned Counsel for R-20. 7. Sri S. Ravi, Learned Senior Counsel, would submit that the appellants have restricted their challenge to the order of the CLB on two grounds; firstly that the transfer of their shares, without their having executed share transfer deeds and without their being paid any consideration, is illegal; secondly, the purported initial increase in authorized share capital, in the EGM allegedly held on 29.09.2004, was without notice to the appellants (who are the shareholders), no such meeting was held and, therefore, any resolution passed in this regard is illegal. While the first ground is referable to Section 111(4) of the Act, the second is contended to be an act of oppression requiring redressal under Section 397 of the Act. 8. It is wholly unnecessary for this Court, therefore, to examine any of the other questions decided by the CLB, including that, for breach of the conditions, the appellants had to seek specific performance of the MOU dated 03.04.2002, before the Civil Court; removal of A-1, as a director, did not necessitate interference; as the project proposed by the respondents was a non-starter, the appellants’ entitlement of 40.00 lakh shares, and all other claims based on the MOU, were rendered otiose; the remedy for implementation of the MOU, or to seek compensation for breach of the obligation, was to approach the Civil Court; and the complaint, seeking implementation of the terms of the MOU, was beyond the scope of an enquiry under Sections 397 of the Act. 9. 9. This Court is also not required, therefore, to examine the submissions of Sri L. Ravichander, Learned Senior Counsel, that the project contemplated, in the MOU dated 03.04.2002, was abandoned and the land, purchased from funds brought in by R-2, R-3 and R-8 for the said project, remains vacant till date; under the MOU, the appellants were entitled to 40 lakh shares only during construction of the project which never commenced; commencement and completion of the project was a condition precedent for payment of consideration; and the appellants had taken contradictory stands as to the company in which they were entitled to 40 lakh shares. I. PRELIMINARY OBJECTIONS: 10. Preliminary objections are raised by the respondents to the maintainability of the appeal on the grounds that (a) as this Court had admitted the appeal only on two questions of law, none of the other questions of law can be examined; (b) the appeal is restricted only to the appellants claims against R-1 to R-8, as they had given up all claims that would affect the other respondents and, except for their claim for rectification of the register of members, all other contentions must be deemed not to have been pressed; and (c) a composite application, under Section 111 and 397 of the Act, cannot be filed before the CLB. It is convenient to examine preliminary objections (a) and (c) at the outset, and objection (b) after adjudicating the contentions urged, by learned counsel on either side, on merits. (i) WHEN APPEAL IS ADMITTED ONLY ON TWO QUESTIONS, CAN OTHER QUESTION OF LAW BE EXAMINED? 11. It is convenient to examine preliminary objections (a) and (c) at the outset, and objection (b) after adjudicating the contentions urged, by learned counsel on either side, on merits. (i) WHEN APPEAL IS ADMITTED ONLY ON TWO QUESTIONS, CAN OTHER QUESTION OF LAW BE EXAMINED? 11. It is contended on behalf of the respondents that, when the appeal was admitted, only two questions of law were framed; this Court had directed issuance of notices to the respondents on those two questions of law; thereafter, during the course of the hearing, certain additional questions of law were sought to be agitated by the appellants; unless this Court formulates new questions of law and directs issuance of notices to all the respondents, or even the contesting respondents, on the new questions of law urged on behalf of the appellants, any adjudication on such questions would vitiate the appeal; principles of fairness would necessitate issuance of notice, on the new questions of law, to all the parties concerned; there is no discernible or perceptible question of law in either of the two questions formulated by the appellants; and both the questions formulated by the appellants are actually disputed questions of fact disguised and projected as questions of law. 12. The contentions urged on behalf of the appellants is that, even if they fail to identify questions of law, it is the duty of the Court to frame such questions; Section 10F of the Act does not stipulate any such restrictions, and none can be read into it; the purpose of putting the respondents on notice is to ensure that they are not caught by surprise, and are not prejudiced; even though this Court had admitted the appeal on questions “a” and “c” nothing precluded the appellants from canvassing the other questions of law; this Court is not precluded from hearing the appeal as long as the contentions urged are questions of law; no prejudice was caused to the respondents thereby, as an elaborate counter was filed by them touching upon all aspects of the case, and even more elaborate oral submissions were addressed on behalf of the respondents. 13. Ten questions of law were formulated by the appellants in their memorandum of appeal. This Court, while admitting the appeal by its order dated 06.08.2012, noted two questions of law which, according to it, arose for consideration in the appeal. 13. Ten questions of law were formulated by the appellants in their memorandum of appeal. This Court, while admitting the appeal by its order dated 06.08.2012, noted two questions of law which, according to it, arose for consideration in the appeal. Accordingly, notice was issued by this Court to the respondents. 14. It is only “on a question of law, arising out of the order of the Company Law Board”, does an appeal lie to this Court under Section 10-F of the Act. When a question is raised before the CLB and is dealt with by it, it is clearly one arising out of its order. When a question of law is raised before the CLB, but is not dealt with by it, it must be deemed to have been dealt with and is, therefore, one arising out of its order. When a question is not raised before the CLB, but the CLB deals with it, that will also be a question arising out of its order. It is only when a question of law is neither raised before the CLB, nor considered by it, will it not be a question arising out of its order notwithstanding that it may arise on the findings given by it. Stating the position compendiously, it is only a question that has been raised before or decided by the CLB that can be held to arise out of its order. (CIT v. Scindia Steam Navigation Co. Ltd., ( AIR 1961 SC 1633 ); and Sri Ramdas Motor Transport Ltd. v. Devarapalli Surya Rao (2005) 127 Comp Cas 336 (AP-DB). A concrete question of law having a direct bearing on the rights and obligations of the parties, which may by founded on the decision of the CLB, is one which arises out of its order even if it is not raised or argued before the CLB at the hearing. A question raised before the CLB, even if not expressly dealt with by it, would still be a question which arises out the order of the CLB. The phrase "arising out of" may, therefore, include questions of law arising on facts as found by the CLB. (Nupur Mitra v. Basubani Pvt. Ltd (1999) Vol.35 CLA 97 (DB); Estate of the Late A.M.K.M. Kamppan Chettiar v. Commissioner of Income Tax, Madras (SC) (1969) 72 ITR 403 (SC). 15. The phrase "arising out of" may, therefore, include questions of law arising on facts as found by the CLB. (Nupur Mitra v. Basubani Pvt. Ltd (1999) Vol.35 CLA 97 (DB); Estate of the Late A.M.K.M. Kamppan Chettiar v. Commissioner of Income Tax, Madras (SC) (1969) 72 ITR 403 (SC). 15. A question of law, that arises out of the order of the CLB, may be a simple one having its impact at one point, or it may be a complex one trenching over an area with approaches leading to different points therein. Such a question might involve more than one aspect, requiring it to be tackled from different standpoints. All that the Section (10-F) requires is that the question of law, which the court is called upon to decide, must be a question which was in issue before the CLB. Where the question itself was under issue, there is no further limitation imposed by the Section that the appeal should be limited to those aspects of the question which had been argued before the CLB. It will be an over-refinement of the position to hold that each aspect of a question is itself a distinct question for the purposes of the Section. (CIT v. Ogale Class Works Ltd., ( AIR 1954 SC 429 ); Zoraster& Co. v. CIT ( AIR 1961 SC 107 )and Scindia Steam Navigation Co. Ltd. (supra).Where the question is sufficiently specific, there is no ground for holding that only those contentions can be argued in support of it which had been raised before the CLB. It is competent for the Court, in such a case, to allow a new contention to be advanced provided it is within the framework of the question. (CIT v. Scindia Steam Navigation Co. Ltd. (supra). 16. Both the questions relating to the rectification of the Register of Members, and the illegal increase of authorized share capital in the EGM allegedly held on 29.9.2004, on which submissions were made and the decision of this Court invited, were raised before, and were decided by, the CLB. As long as the contentions urged before this Court fall within the framework of the questions of law which were in issue before the CLB, such questions can be examined in an appeal under Section 10-F of the Act. As long as the contentions urged before this Court fall within the framework of the questions of law which were in issue before the CLB, such questions can be examined in an appeal under Section 10-F of the Act. Accepting the submission, that these two questions of law do not specifically and unambiguously fall within the framework of the ten questions of law raised in the memo of appeal, would require this Court to hold that each aspect of the said ten questions of law is itself a distinct question of law, which would be an over-refinement of the scope of an appeal under Section 10-F of the Act. 17. A second appeal lies to the High Court, under Section 100 CPC, from any decree passed in appeal by the Court subordinate to it, if the case involves any substantial questions of law. Supposing, in a memo of appeal, three substantial questions of law have been formulated, but when the matter comes up for hearing, if the learned Judge is of the opinion that, additionally, some more substantial questions of law would arise, then he has the power, under Section 100 CPC, to examine them, but only after the parties are appraised of the additional substantial question/questions of law formulated, so that they may advance arguments on those questions of law as well. The very purpose of formulation of substantial question of law by the Court, under Section 100 CPC, is to grant an opportunity to the other side to come prepared to address on that question of law. (AmarSingh v. Dalip Singh (D) By LRs (2012) 4 SCALE 177). 18. Unlike Section 100(4) CPC no obligation, statutory or otherwise, is cast on the appellate Court under Section 10-F of the Act to formulate questions of law. Formulation of questions of law by this Court, while admitting an appeal under Section 10-F of the Act, is more a matter of practice than in compliance of any statutorily prescribed procedure. This Court can admit the appeal if it is satisfied that any question of law arises out of the order of the CLB. Formulation of questions of law by this Court, while admitting an appeal under Section 10-F of the Act, is more a matter of practice than in compliance of any statutorily prescribed procedure. This Court can admit the appeal if it is satisfied that any question of law arises out of the order of the CLB. Merely because this Court has chosen to identify a couple of such questions at the stage of admission of the appeal, would not disable it later from adjudicating upon any other questions of law which may arise out of the order of the CLB, more so those questions which, broadly, fall within the ambit of the questions of law formulated by the appellants in their memo of appeal. Exercise of power by this Court, under Section 10-F, is limited to an examination of those questions of law which arise out of the order of the CLB, and is not confined only to those questions of law noticed by it while admitting the appeal. No statutory provision either under the Act, or the Rules and Regulations made thereunder, have been brought to the notice of this Court which require it to limit its examination only to the questions identified by it, as questions of law, at the stage of admission of the appeal. 19. The submission that the respondents would be denied a reasonable opportunity of being heard, if this Court were to entertain any other questions not formulated at the stage of admission, needs only to be noted to be rejected. Such an interpretation placed on Section 10-F, would necessitate this Court to conduct a detailed hearing of the appeal even at the stage of admission and identify all possible questions of law, which may arise out of the order of the CLB, before ordering notice to the respondents; and, after the respondents have entered appearance, elaborately hear counsel on either side on the very same questions of law all over again. An elaborate and detailed twin hearing, on the same questions of law, is not contemplated by Section 10-F of the Act. The only limitation placed on the exercise of the appellate power of this Court, under Section 10-F of the Act, is that the questions of law should arise out of the order of the CLB. 20. An elaborate and detailed twin hearing, on the same questions of law, is not contemplated by Section 10-F of the Act. The only limitation placed on the exercise of the appellate power of this Court, under Section 10-F of the Act, is that the questions of law should arise out of the order of the CLB. 20. Sri L. Ravichander, Learned Senior Counsel, does not complain of not being given adequate time to put forth his submissions on the questions of law urged on behalf of the appellants. The submission, on the other hand, is that the respondents cannot be called upon to answer the questions of law, urged on behalf of the appellants during the course of hearing of the appeal, unless the Court has formulated such questions of law at the stage of admission; or, after formulating the “questions of law”, the Court has put the respondents on notice. It is not as if the respondents were caught unawares, and were denied an opportunity of being heard, on these questions. The elaborate final hearing of this appeal spread over more than two months, and adjournments were often granted at the request of the Learned Senior Counsel for the respondents also. Both Sri L. Ravichander, Learned Senior Counsel and Sri S. Prabhakar, Learned Counsel appearing on behalf of the respondents have made elaborate submissions, both oral and written, on both the aforesaid questions of law on which Sri S. Ravi, Learned Senior Counsel for the appellants, had put forth his submissions. The objection of the respondents in this regard does not, therefore, merit acceptance. (ii) COMPOSITE APPLICATION UNDER SECTIONS 111 AND 397 OF THE ACT: 21. It is contended, on behalf of the respondents, that a composite application under Section 111, read with Sections 397 of the Act, is not maintainable; the relief under Section 111 cannot be, simultaneously, pressed into service along with the relief under Section 397 as the very word “rectification” indicates that the person, seeking rectification, is not a member of the company as on the date of the presenting of a petition before the CLB; and the object of prescribing a 10% share-holding, as a pre-requisite for seeking relief under Section 397, is only to prevent frivolous petitions from being filed before the CLB. It is submitted on behalf of the appellants that the CLB routinely entertains composite petitions under Sections 111 and 397 of the Act; filing of such composite petitions was examined by the Delhi High Court in Charanjit Khanna v. Khanna Paper Mills Ltd. (CO.A. (SB) 9/2011, dated 20.04.2011 (Delhi High Court); and Section 111 does not prescribe any minimum shareholding. 22. Regulations 13 and 14 of the Company Law Board Regulations, 1991, (hereinafter called the CLB Regulations), require the petition to be prepared in Form I in Annexure II. Regulation 16 requires, among others, the petition to set forth concisely, under distinct heads, the grounds and the nature of the reliefs prayed for. Regulation 20 provides for plural remedies and, thereunder, a petition shall be based upon a single cause of action, and may seek one or more reliefs provided that they are consequential to one another. Form I, in Annexure II of the CLB Regulations, requires the petitioners to furnish details of the petition; the facts of the case; and the relief sought for, which can include more than one relief. The documents, to be annexed to the petition, are detailed in Annexure III of the CLB Regulations. It is evident from Regulation 20 of the CLB Regulations, which provides for plural remedies, that a composite petition, seeking reliefs both under Section 111 and 397, can be filed before the CLB. All that is required, in case a composite petition is filed, is that the documents relating to the reliefs sought for, both under Section 111 and 397 of the Act, should be annexed thereto. Serial No.23 of Annexure III to the CLB regulations requires production of documentary evidence in proof of the eligibility and status of the applicants to file a petition invoking the jurisdiction of the CLB under Section 397 of the Act. The annual returns (in Annexure P-10 and P-12) are the documentary evidence in proof of the appellants plea that they are members of R-1, their names are reflected in the Register of Members, and they are eligible and have the status to file the petition. 23. Rule 3 (1) of the Company Law Board (Fees on Applications & Petitions) Rules, 1991 (hereinafter called the “fees Rules”), stipulates that every petition made to the CLB shall be accompanied by the appropriate fee specified in the Schedule to the Rules. 23. Rule 3 (1) of the Company Law Board (Fees on Applications & Petitions) Rules, 1991 (hereinafter called the “fees Rules”), stipulates that every petition made to the CLB shall be accompanied by the appropriate fee specified in the Schedule to the Rules. At serial No.9 of the Schedule is the fee prescribed for a petition under Section 111, and at serial No.27 is the fee prescribed for a petition under Sections 397. If a composite petition is filed, all that the “Fees Rules” require is for separate fees to be paid for the reliefs sought for under Sections 111 and 397 of the Act. 24. Neither the “CLB Regulations” nor the “Fees Rules” prohibit, either explicitly or by necessary implication, a composite petition being filed. It cannot be said, as a proposition of law, that no composite petition under Sections 111 and 397 of the Act is maintainable. In a large number of petitions, filed under Section 397, the primary allegation of oppression is that the faction in control of the company has either intentionally reduced the rival faction to less than 1/10th of the total number of members of the company or has removed the names of rival faction from the Register of members. In such cases, where the allegation of oppression is inexplicably intertwined with the issue of maintainability of the petition under Section 399 of the Act, a composite petition has to be held to be maintainable. To ask a petitioner to file two separate petitions in such circumstances would be unfair.(Charanjit Khanna (supra). 25. Compelling a petitioning shareholder to first file a petition seeking relief under Section 111 and if, and only after, he succeeds therein to file a petition under Section 397 of the Act, would enable an unscrupulous majority to oppress the minority shareholders by removing their names from the Register of members, and force them to undergo the ordeal of first seeking an adjudication under Section 111 and, only after they succeed therein, to file a fresh petition under Section 397 of the Act. This would not only cause needless and undue delay in the minority shareholders obtaining relief against an oppressive majority, but would also result in multiplicity of legal proceedings. This would not only cause needless and undue delay in the minority shareholders obtaining relief against an oppressive majority, but would also result in multiplicity of legal proceedings. On the other hand, if a composite petition is held maintainable, the CLB can first decide the petitioners’ entitlement to the relief under Section 111 of the Act and, if the relief under Section 111 is granted and the petitioners are thereafter found to satisfy the requirements of Section 399, to examine the allegations of oppression under Sections 397 of the Act. If, however, the petitioners are held disentitled to the relief under Section 111, and thereby do not fulfil the shareholding qualification under Section 399, the CLB cannot be said to have acted illegally if it refuses to examine the petitioner’s plea of oppression under Section 397 of the Act. This Court may not be understood to have held that this is the only course which the CLB should adopt. Suffice it to hold that adoption of the aforesaid procedure would not fall foul of the provisions of the Act, the Rules and the Regulations made thereunder. 26. This contention, that a composite petition is not maintainable, was neither urged before the CLB nor was it called upon to examine and decide the said issue. Whether this Court would have jurisdiction to examine such a contention, raised for the first time in an appeal under Section 10-F of the Act, is debatable. The present appeal is preferred, not by the respondents (including respondent No.20), but by the petitioners before the CLB. It does not stand to reason that the contention, of a composite company petition not being maintainable before the CLB, should be examined, in an appeal under Section 10-F, at the behest of a person who has not even chosen to prefer an appeal against the said order. Viewed from any angle the submission that a composite petition, seeking reliefs both under Sections 111 and 397 of the Act, is not maintainable does not merit acceptance. II. SCOPE OF AN APPEAL UNDER SECTION 10-F: 27. Viewed from any angle the submission that a composite petition, seeking reliefs both under Sections 111 and 397 of the Act, is not maintainable does not merit acceptance. II. SCOPE OF AN APPEAL UNDER SECTION 10-F: 27. It is submitted on behalf of the respondents that, on preponderance of probabilities, this Court would not entertain an appeal under Section 10F on grounds of erroneous findings of fact, however gross the error may seem to be; a finding can be said to be perverse only when it is altogether against the evidence on record; mere perception, of absence of adequate evidence, in support of a finding, would not render the findings perverse; and the appellants have failed to establish that the conclusions reached by the CLB are on total lack of evidence leading to inconclusive conclusions of perversity. 28. As submissions have also been put forth on questions of fact, and the inferences to be drawn from the various documents referred to by the CLB in the order under appeal, it is necessary to examine the scope of an appeal under Section 10-F of the Act which permits an appeal to the High Court, from an order of the CLB, only on a question of law i.e. the CLB is the final authority on facts unless such findings are perverse, based on no evidence or are otherwise arbitrary. The jurisdiction of this Court is restricted to the question whether, on the facts as noticed by the CLB and as placed before it, an inference can reasonably be arrived at that such conduct was against probity and good conduct or was mala fide or for a collateral purpose or was burdensome, harsh or wrongful. This court would interfere under Section 10-F if such conclusions are (a) against the law or (b) arise from a consideration of irrelevant material or (c) omission to consider relevant material.(V.S. Krishnan v Westfort Hi Tech Hospital Ltd (2008) 3 SCC 363 ). It is, ordinarily, not open to the appellate court to substitute its own discretion for that of the CLB. However if the CLB has acted unreasonably or capriciously, or has ignored relevant facts or has adopted an approach which is incorrect, the appellate court is not only empowered, but is under a duty to interfere with the exercise of discretion by the CLB. However if the CLB has acted unreasonably or capriciously, or has ignored relevant facts or has adopted an approach which is incorrect, the appellate court is not only empowered, but is under a duty to interfere with the exercise of discretion by the CLB. (Nupur Mitra (supra); The Printers (Mysore) Pvt. Ltd. v. Pothan Joseph ( AIR 1960 SC 1156 );Registrar of Trade Marks v. Ashok Chandra Rakhit ( AIR 1955 SC 558 ). 29. This Court, while exercising jurisdiction under Section 10-F, would not re-appreciate the evidence analysed by the CLB. (M. Palanisamy v. S.V.T. Spinning Mills (P) Ltd (2011) 101 CLA 346 (Mad). A finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence or if it is unreasonable and perverse, but where there is evidence to consider, the decision of the CLB is final even though the High Court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. 30. In between the domains occupied respectively by questions of fact and of law, there is a large area in which both these questions run into each other forming enclaves within each other. The questions that arise for determination in that area are known as mixed questions of law and fact. These questions involve first the ascertainment of facts on the evidence adduced, and then a determination of the rights of the parties on an application of the appropriate principles of law to the facts ascertained. The ultimate finding on the issue must, therefore, be an inference to be drawn from the facts found on the application of the proper principles of law and, in such cases, an inference from facts is a question of law. In this respect mixed questions of law and fact differ from pure questions of fact in which the final determination, equally with the finding or ascertainment of basic facts, does not involve the application of any principle of law. The proposition that an inference from facts is one of law will be correct in its application to mixed questions of law and fact, but not to pure questions of fact. When the finding is one of fact, the fact that it is itself in inference from other basic facts will not alter its character as one of fact. The proposition that an inference from facts is one of law will be correct in its application to mixed questions of law and fact, but not to pure questions of fact. When the finding is one of fact, the fact that it is itself in inference from other basic facts will not alter its character as one of fact. The High Court lacks jurisdiction to entertain an appeal on grounds of erroneous findings of fact, however gross the error may seem to be, for, if the question to be decided is one of fact, it does not involve an issue of law. If the finding recorded by the CLB is one of law, or a mixture of law and fact, the High Court can examine its correctness, but if it is purely one of fact the jurisdiction of the High Court is barred. (Deity Pattabhiramaswamy v. S. Hanymawa ( AIR 1959 SC 57 ); Mattulalv. RadheLal ( AIR 1974 SC 1596 ); Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28 (SC); and BipinVadilal Mehta v. Ramesh B.Desai (1998) 92 Comp Cas 910 (Guj). 31. It is within this limited area that the facts of the present case and the contentions urged, both for and against the impugned order, must be examined. For convenience sake, the submission of Counsel on either side on merits, is broadly categorized under two major heads (1) Rectification of the Register of Members; and (2) illegal initial increase of authorised share capital of R-1. III. RECTIFICATION OF THE REGISTER OF MEMBERS: SCOPE OF SECTION 111 OF THE ACT: 32. It is necessary, at the outset, to examine the scope of enquiry by the CLB when its jurisdiction is invoked, seeking rectification of the register of members, under Section 111 of the Act. 33. It is submitted on behalf of the appellants that, merely because the respondents had raised a dispute, does not oust the jurisdiction of the CLB requiring the matter to be examined by the Civil Court; it is the duty of the CLB to examine whether or not the said procedure mandated by law has been complied with; and the question of law raised in this appeal, relating to this aspect, does not involve appreciation/reappreciation of evidence. It is submitted on behalf of the respondents that the CLB had rightly held that the claim of appellants involved examination of complicated questions of fact and law; it had, therefore, declined to grant them relief under Section 111 of the Act, and had relegated them to seek appropriate remedies before a Civil Court; and the CLB is not expected to conduct a roving enquiry into the disputed questions of fact presented before it. 34. Section 111(4) of the Act is in pari-materia with Section 155(1) of the Act as it stood before its repeal by the Companies (Amendment) Act, 1988 with effect from 31.05.1991. Under Section 111(4)(a) if the name of any person (i) is, without sufficient cause, entered in the register of members of a company; or (ii) after having been entered in the register is, without sufficient cause, omitted therefrom; or (b) default is made, or unnecessary delay takes place, in entering in the register the fact of any person having become, or ceasing to be, a member; the person aggrieved or any member of the company or the company may apply to the CLB for rectification of the register. The remedy provided by Section 111 of the Act is summary in nature. (Ammonia Supplies Corporation (P) Ltd. v. Modern Plastic Containers Pvt. Limited (AIR 1994 Delhi 51 (FB); Soma Vati Devi Chandv. Krishna Sugar Mills Ltd. (AIR1966 P & H 44); In Re: DhelakhatTea Co. Ltd. ( AIR 1957 Cal 476 ); Punjab Distilling Industries Ltd. v. BiermansPaper Coating Mills Ltd. (1973) 43 Comp Cas 189 (Del-DB); Public Trustee v. RajeshwarTyagi ( AIR 1972 Del 302 (DB); Anil Gupta v. Delhi Cloth and General Mills Co. Ltd. (1983) 54 Comp Cas 301 (DEL); Vishnu Dayal Jhunjhunwalla v. Union of India (1989) 66 Comp Cas 684 (All-DB); RaoSaheb Manilal Gangaram Sindore v. Western India Theatres Ltd. (1963) 33 Comp Cas 826) (Bom). 35. The words “without sufficient cause” in Section 111 means anything done in contravention of the Act and the Rules, or omitting to do anything which ought to have been done under the Act and the Rules. Without sufficient cause, the name of a person can neither be entered in the register of members nor can it be omitted therefrom. 35. The words “without sufficient cause” in Section 111 means anything done in contravention of the Act and the Rules, or omitting to do anything which ought to have been done under the Act and the Rules. Without sufficient cause, the name of a person can neither be entered in the register of members nor can it be omitted therefrom. (T.G. Veera Prasad v. Sree Rayalaseema Alkalies and Allied Chemicals Ltd (1999) 98 Comp.Cas.806 (AP);andAmmonia Supplies Corporation (P) Ltd. v. Modern Plastic Containers Pvt. Limited ( AIR 1998 SC 3153 ). ‘Rectification’implies a prior existence of an error, mistake or defect. The Register kept by the company has to be shown to be wrong or defective. The term ‘rectification of the Register’implies that the Register, either in what is or what is not upon it, is wrong. (Ammonia Supplies Corporation (P) Ltd. (supra); T.P. Mukherjee's Law Lexicon, Fifth Revised Edition; and Venkataramaiya'sLaw Lexicon, 2nd Edn.). The burden is on the applicant to show this error.To qualify as a “rectification”, every procedure prescribed under the Act, before recording the name in the Register of the Company, has to be stated to have been complied with by the applicant; or at least that part as required by the Act, coupled with the assertion that Company has not complied with the provisions of the Act and the Rules. The CLB may generally decide any matter which is necessary or expedient in connection with the rectification andexamine, on the facts of each case, whether an application is for rectification or for something else. It is only if it is found that the matter in question does not fall under Section 111, may the CLB direct a party to have his rights adjudicated by a Civil Court.(Ammonia Supplies Corporation (P) Ltd. (supra); T.G. Veera Prasad (supra). 36. Under Section 111 it is the CLB alone which has exclusive jurisdiction to decide any question raised within the peripheral field of “rectification”. 36. Under Section 111 it is the CLB alone which has exclusive jurisdiction to decide any question raised within the peripheral field of “rectification”. The discretion of the CLB to send a party to seek his relief before the civil court first for the adjudication of facts, (in case the claim is based on some seriously disputed right or title, denial of the transaction or other basic facts which may be the foundation to claim a right to be a member), is not taken away, more so if the CLB feels that such a claim does not constitute a rectification, but an adjudication of basic facts falling outside the realm of rectification. Otherwise, under the garb of rectification, an applicant may lay a claim of many such contentious issues for adjudication not falling under it. The CLB has the discretion to ascertain whether the dispute raised is really for rectification or is of such a nature that, unless decided first, it would not come within the purview of rectification. It is not as if the CLB, as soon as complex or complicated questions are raised in a petition under Section 111, becomes functus officio. (Public Passenger Services Ltd. v. M. A. Khader ( AIR 1966 SC 489 ); GulabraiKalidas Naik v. Laxmidas Lallubhai Patel of Baroda (1978) 48 Comp Cas 438 (Guj); and Ammonia Supplies Corporation (P) Ltd. (supra). 37. Section 111(4) spells out the limitation under which the CLB has to exercise its jurisdiction. Though it has exclusive power to decide all matters pertaining to the rectification of the Register of members, the CLB has to act within the four corners of the Act and the Rules. If the question raised relates to rectification, all matters raised in connection therewith should be decided by the CLB under Section 111 of the Act. If the CLB finds that it is called upon to adjudicate upon a matter not falling under Section 111, it may direct the party to get his right adjudicated by the Civil Court. Where exclusive jurisdiction is conferred on the CLB, under various Sections of the Act, the jurisdiction of the Civil Court is impliedly barred. (Ammonia Supplies Corporation (P) Ltd. (supra). 38. It is evident from Section 111(7)(a) that the question relating to title can also be examined by the CLB. Where exclusive jurisdiction is conferred on the CLB, under various Sections of the Act, the jurisdiction of the Civil Court is impliedly barred. (Ammonia Supplies Corporation (P) Ltd. (supra). 38. It is evident from Section 111(7)(a) that the question relating to title can also be examined by the CLB. The question is not whether the CLB lacks jurisdiction but whether it can, in its discretion, decline to exercise it where disputed and complicated questions are involved requiring examination of extensive oral and documentary evidence. The CLB should record a finding whether the case comes within the purview of Section 111 of the Act or not. In case it comes to such a conclusion, it can then treat the affidavits on record as examination-in chief of the deponents and may summon them for being cross-examined as, under Section 10(E) of the Act, the CLB is empowered to summon witnesses.(Punjab Distilling Industries Ltd. (supra); and M/s.Ammonia Supplies Corporation Private Ltd. (supra); T.G. Veera Prasad (supra). 39. The distinction between clauses a(ii) of Section 111(4) on the one hand, and clause (b) of Section 111(4) on the other, must be borne in mind. Default or delay, in entering in the Register of members the fact of any person having become a member, would fall under clause(b) of Section 111(4) of the Act, and deletion of the name of a member from the Register of Members, without sufficient cause, would fall within the ambit of clause (a)(ii) of Section 111(4). Where the company defaults or unnecessarily delays entering the name of a person in the Register of Members, such a person would be entitled to invoke the jurisdiction of the CLB questioning the action of the company in not entering his name therein. If, in such a case, the company were to dispute the claim of the said person, to have his name entered in the Register of members, the burden of proof would rest on such a person to establish that he is entitled to have his name entered therein either on the ground that he was allotted shares by the Company or that shares had been transferred in his favour by an existing member of the Company or that he was issued share certificates by the Company. Clause (a)(ii) of Section 111(4) of the Act is attracted only in cases where the name of a person has already been entered in the Register of members but the company, without sufficient cause, has later deleted his name there from. The initial burden to prove that his name was entered in the Register of members is, undoubtedly, on the person who invokes the jurisdiction of the CLB. Existence of the name of a person, in the Register of members, presupposes that he is a member or a shareholder of the company to the extent of the shares indicated against his name in the said Register. Once the petitioner adduces sufficient evidence to establish, or the company admits, that his name was entered in the Register of members, the onus then shifts to the company to prove that deletion of the member’s name from the Register of members was with sufficient cause. The burden cannot be continued to be placed on the member, who has invoked the jurisdiction of the CLB, to establish that his name was illegally removed from the Register of members, for it is only the Company, of which the person is a member, which can delete his name from the Register. 40. In Ammonia Suppliers Corpn. (supra)the appellant claimed to have invested to the extent of 50% of the share capital of the respondent; the payment made by them was not adjusted by the respondents towards its shares; the Balance Sheet of the appellant showed the said investment; the accounts of the appellant, which was audited, took notice of this investment; and this investment was also subjected to income-tax assessment. The respondent contended that no shares were transferred by them in favour of the appellant; the claim, if at all, of the appellant having advanced amounts to the Managing Director of the respondent, was time-barred; at no point of time did the appellant become entitled to be its share-holder; the shares of the respondent could only be transferred with the permission of the Board of Directors; there was no such permission; in order to become a member, or to purchase the shares of a company, a procedure is prescribed under the Act which has to be followed before the shares can be transferred; and there was neither any such plea by the appellant, nor was any such proceeding undertaken for the transfer of shares in their favour. It is in this factual background that the Supreme Court observed: “…… in order to qualify for rectification, every procedure as prescribed under the Companies Act before recording the name in the register of the Company has to be stated to have been complied with by the applicant - at least that part as required by the Act - and assertion of what not complied with under the Act and the Rules by the person or authority of the respondent-Company before the applicant claims for the rectification of such Register. The Court has to examine on the facts of each case whether an application is for rectification or something else…….” 41. Ammonia Suppliers Corporation (supra) was a case which arose under Section 155 (1)(b) before its omission by the Companies Amendment Act, 1988 w.e.f. 31.3.1991. Section 155(1)(b) is in pari-materia with the present Section 111(4)(b) of the Act. As the appellant therein claimed that he was entitled to have his name entered in the Register of members, the burden was placed on him to show that he was so entitled; and to establish that all procedural requirements prior thereto, including issuance by the company of a share certificate in his favour, had been complied with. As is detailed hereinafter, in the present case the names of the appellants were shown, in the annual returns (annexures P.10 and 12), to have been entered in the Register of members of R-1. As is detailed hereinafter, in the present case the names of the appellants were shown, in the annual returns (annexures P.10 and 12), to have been entered in the Register of members of R-1. As the appellants deny having executed any share transfer deeds in favour of R-4 and R-8, it was for the respondents (either R-1 Company or the alleged transferees – R-4 and R-8) to establish that the appellants had, indeed, transferred their shares in favour of respondent Nos.4 and 8, after complying with the mandatory provisions of Sections 108 and 108(1-A) of the Act and the Rules made thereunder. 42. It must also be borne in mind that a petition, under Section 111 of the Act, cannot be disposed of straight away merely stating that, as complex and complicated questions of fact are raised, the matter ought to be decided by way of, and the party ought to be relegated to, a Suit. If a mere assertion on the part of the respondent, that complicated issues have to be examined, were to be accepted they could easily oust the jurisdiction of the CLB. If the jurisdiction under Section 111 is to be construed as limited only to those cases where there is not much of a dispute or where parties agree or where there is consent or where there is merely a formal objection, the very purpose sought to be achieved, by introducing sub-section (7)(a), would be defeated. (GulabraiKalidas Naik (supra). The jurisdiction of the CLB cannot be ousted by a mere assertion, and it can examine whether the said assertion is made only to oust its jurisdiction or the assertions are such which would require a detailed examination of the evidence. In the former the CLB would proceed with the adjudication of the petition. In the later it would be justified, in the exercise of its discretion, to reject the petition and relegate the parties to a regular civil suit. (Punjab Distilling Industries Ltd. (supra); and M/s.Ammonia Supplies Corporation Private Ltd. (supra). 43. It would not suffice for the CLB merely to reproduce the arguments of the Counsel for the parties, refer to certain documents, and then record a finding that complicated questions of fact cannot be decided by it. (Punjab Distilling Industries Ltd. (supra); and M/s.Ammonia Supplies Corporation Private Ltd. (supra). 43. It would not suffice for the CLB merely to reproduce the arguments of the Counsel for the parties, refer to certain documents, and then record a finding that complicated questions of fact cannot be decided by it. The CLB should record a finding whether the procedure prescribed, under the Act and the Rules, have been complied with or not before recording the name of the transferee in, and deleting the name of the transferor from, the Register of members of the Company. The CLB should examine whether, on the basis of the material on record and on perusal of the affidavits and circumstantial evidence, it can be concluded that, without sufficient cause, the names of the respondents have been entered in the Register of members of the Company after omitting the names of the appellants.(T.G. Veera Prasad (supra). 44. On the question whether the CLB (Court) should direct the person, who has invoked its jurisdiction under Section 111 (Section 155 ) of the Act, to file a Suit merely because the company stated that the dispute raised involved complicated questions of fact, the Supreme Court, in Ammonia Suppliers Corpn. (supra), observed : “….. the Court should have examined itself to see whether even prima facie what is said is a complicated question or not. Even dispute of fraud, if by a bare perusal of the document or what is apparent on the face of it on comparison of any disputed signature with that of the admitted signature the Court is able to conclude no fraud, then it should proceed to decide the matter and not reject it only because fraud is stated…… “ ..…. We have gone through the judgment of the High Court. It has rightly held the law pertaining to the jurisdiction of 'court' under Sec. 155 and even referred to some of the documents of the appellant but concluded since they are disputed and said to be forged hence it directed for seeking leave if advised for suit. We feel it would have been appropriate if the Court would have seen for itself whether these documents are disputed and if any document is alleged to be forged, whether it said to be so only to exclude the jurisdiction of the Court or it is genuinely so. We feel it would have been appropriate if the Court would have seen for itself whether these documents are disputed and if any document is alleged to be forged, whether it said to be so only to exclude the jurisdiction of the Court or it is genuinely so. Similarly we feel appropriate while deciding this the Court should take into consideration the submissions for the respondents, whether it would come within the scope of rectification or not in the light of what we have said above……” (emphasis supplied) (i) BURDEN OF PROOF: 45. It is contended on behalf of the respondents that the burden is on the appellants to show that, every procedure prescribed under the Act, was followed before recording the name of the appellants in the Register of members; the appellants did not discharge the burden; a party who approaches a Court/Tribunal should establish his case by adducing positive evidence in his favour, and cannot take advantage of the weakness in the other side’s evidence; the case of the party who invokes the aid of law must stand on its own legs; “he who asserts a state of affairs to exist should prove the same” and “he who would lose if no evidence is adduced by either side has the burden to prove his case”(Sri John Woodroffe & Syed Amir Ali’s Law of Evidence – 18th edition – Volume III – page 3825);the CLB had rightly placed the burden on the appellants to prove that they are the owners of the shares, they are in possession of the original share certificates, and their names had been removed from the Register of Members without sufficient cause; the CLB, having noted that the appellants had not given any explanation for non-production of the original share certificates, held that the appellants could not rely upon the weakness of the respondent’s case, and seek relief of rectification under Section 111 of the Act; and this Court, while exercising power under Section 10(F) of the Act, would not embark on an enquiry of facts unless it is satisfied that the burden of proof was duly discharged by the appellants before the CLB. 46. 46. It is submitted on behalf of the appellants that, as their shareholding in R-1 has not been disputed by the respondents, admitted facts need not be proved; in the absence of denial that A-1 to A-4 are the shareholders of R-1, there was neither any need for the appellants to prove that their names were borne out in the Register of R-1 nor was it an issue which the CLB was required to consider; the only question which the CLB was required to examine was whether the appellants had executed the share transfer deeds; and, as it is the respondents who claim that these shares were transferred in favour of R-4 and R-8, the burden of proof shifts, and it is for them to establish conclusively that such transfer was effected on the basis of valid documents as mandated by law. 47. The authorized share capital of R-1, before the EGM allegedly held on 29.09.2004, was Rs.50,00,000/-. It is evident, from the reply statement filed by respondents 1 to 3 before the CLB, that this share capital of Rs.50,00,000/-was held as under: Total 5,00,000 Rs.10/- Rs.50,00,000 48. As the statements of the respondents can be used against them, but cannot be used in their favour accepting them to be correct statements, (MahendraManilal Nanavati v. Sushila Mahendra Nanavati ( AIR 1965 SC 364 ), the admission of R-1 to R-3, in their reply statement filed before the CLB, that A-1 to A-4 held shares in R-1 should be accepted as proof of their shareholding. An admission, unless explained, furnishes the best evidence. (Broadway Centre v. Gopaldas Bagri ( AIR 2002 Cal 78 ); Ramj Dayawala & Sons (P) Ltd. v. Invest Import ( AIR 1981 SC 2085 ); Marudanayagamv. Sola Pillai (AIR 1965 Madras 200). 49. Let us now examine whether or not the appellants have discharged the burden of establishing that they were shareholders of, and their names were entered in the Register of members of, R-1; and whether or not the CLB has failed to consider the relevant material on record, including the documentary evidence placed before it by the appellants to show that they were allotted shares, and their names were entered in the Register of members of R-1. (ii) APPELLANTS 1 AND 2 BECAME THE SHAREHOLDERS, OF THE FIRST RESPONDENT, AS SUBSCSRIBERS TO THE MEMORANDUM OF ASSOCIATION: 50. (ii) APPELLANTS 1 AND 2 BECAME THE SHAREHOLDERS, OF THE FIRST RESPONDENT, AS SUBSCSRIBERS TO THE MEMORANDUM OF ASSOCIATION: 50. It is submitted on behalf of the respondents that, on the date of filing of the Company Petition, the appellants were not members of the Company; they did not produce the share certificates evidencing ownership of shares; in the absence of the original share certificates, coupled with the fact that the appellants had no explanation to offer for the non-production of the said certificates, they were not entitled to seek rectification of the entries in the Register of Members. 51. Section 13(4)(b)&(c) of the Act stipulates that no subscriber of the memorandum shall take less than one share; and he shall write opposite his name the number of shares he takes. Section 41 (1) provides that the subscribers of the Memorandum of a company shall be deemed to have agreed to become the members of the company and, on its registration, shall be entered as members in its Register of members. Each subscriber to the MOU irrevocably agrees to take from the company the number of shares placed opposite to his signature, and he becomes a member ipso facto whether his name is entered in the Register or not. In the case of subscribers to the memorandum neither allotment nor entry on the register is necessary. (NupurMitra v. Basubani Pvt. Ltd (supra);Ghosh on Indian Companies Act (3rd Edition), Page 114 and 115). 52. Prior to its amendment, by the resolution allegedly passed in the EGM held on 29.09.2004, Clause V(a) of the Memorandum of Association of R-1 showed its share capital to be Rs.50,00,000 divided into 5 lakh equity shares of Rs.10/-each. The subscription clause of the said Memorandum notes that A-1 and A-2 were desirous of being formed into a company pursuant to the MOU; and they had respectively agreed to be the members holding shares in the capital of the company as shown opposite their respective names. Both A-1 and A-2 had subscribed to 5000 shares each and, in terms of Section 41(1), must be deemed to have become the members of R-1. As has been detailed, hereinafter, the annual returns (Annexure P-10 & P12) show that they were members, and their names were entered in the Register of members, of R-1 when its AGM was held both on 25.09.2004 and 29.09.2005. As has been detailed, hereinafter, the annual returns (Annexure P-10 & P12) show that they were members, and their names were entered in the Register of members, of R-1 when its AGM was held both on 25.09.2004 and 29.09.2005. (iii) APPELLANTS 3 AND 4 BECAME MEMBERS OF THE 1ST RESPONDENT ON THEIR BEING ALLOTTED SHARES: 53. It is submitted on behalf of the respondents that the burden was on A-4 to prove that 2,50,000 shares had been legally allotted for a legal consideration; A-4 did not produce any document, despite being called upon to do so; the contention of A-4 that, since they were shown as a share holder in the balance sheet of R-1 on 31.3.2005, it need not produce its share certificates does not hold water, as secondary or collateral evidence on any aspect can only be received if a proper explanation is given for their inability to produce primary evidence; and, at any rate, this issue could not have been adjudicated in a summary manner by the CLB. 54. Section 75(1) of the Act stipulates that, whenever a company having a share capital makes any allotment of its shares, it shall, within thirty days thereafter, (a) file with the Registrar a return of allotment stating the number and nominal amount of the shares comprised in the allotment; the names, addresses and occupation of the allottees; and the amount, if any, paid or due and payable on each share. Section 75(4) stipulates that, if default is made in complying with the Section, every officer of the company who is in default shall be punishable with fine which may extent to five thousand rupees for every day during which the default continues. 55. Allotment of shares means the division of the entire share capital into definite shares - each of a particular value, and also of different classes, and an assignment of such shares singly or numerously to different persons. Allotment means the appropriation out of the previously unappropriated capital of a company of a certain number of shares to a person. Till such allotment, the shares do not exist as such. It is on allotment, in this sense, that the shares come into existence. It is the first step which is followed by the issue of shares. (NupurMitra v. Basubani Pvt. Ltd (supra); In re: Calcutta Stock Exchange Assocn. Till such allotment, the shares do not exist as such. It is on allotment, in this sense, that the shares come into existence. It is the first step which is followed by the issue of shares. (NupurMitra v. Basubani Pvt. Ltd (supra); In re: Calcutta Stock Exchange Assocn. Ltd. ( AIR 1957 CAL 438 ); Sri Gopal Jalan & Co. v. Calcutta Stock Exchange Association Limited ( AIR 1964 SC 250 ). The expression 'issue' with regard to shares may bear various meanings according to the context. Thus shares may have been issued which have been allotted, but for which no certificates have ever been issued. (NupurMitra v. Basubani Pvt. Ltd (supra); GopalPaper Mills v. I.T. Commissioner, Calcutta ( AIR 1970 SC 1750 ); Buckley "On the Companies Act" (13th Edition) at page 128). 56. Annexure R2 is the return of allotment, in Form No.2 dated 28.03.2002, which shows 100 shares had been allotted by R-1 to A-3. Annexure R5 is the return of allotment, in Form No.2 dated 1.11.2001 filed before the Registrar of Companies by R-3 as the manager of R-1. The said return of allotment records that 2,50,000 equity shares of Rs.10/- each had been allotted to A-4. It is only when shares are allotted by a company does Section 75(1)(a) require it to file, with the Registrar of Companies, a return of allotment. The fact that such a return of allotment was filed by R-3, on behalf of R-1, is an acknowledgement on their part that they had allotted 2,50,000 shares of Rs.10/- each to A-4. An admission in pleadings as to the execution of a document dispenses with the necessity of proof of its execution, (ValluriJaganmohini Seetharama Lakshmi v. Kopparthi Ramachandra Rao ( AIR 1994 AP 284 (DB), and admission of the documents means the admission of the facts contained in the documents. (SitaramMotilal Kalal v. Santanuprasad Jaishanker Bhatt ( AIR 1966 SC 1697 ). The contents of Form No.2 dated 1.11.2011 (Annexure R-5) should, therefore, have been accepted by the CLB, and A-4 must have been held to be a member of R-1 as it was allotted 2,50,000 shares by them. Whether or not A-4 had applied for allotment of shares in R-1 is wholly irrelevant as the return of allotment, in Annexure R5, shows that 2,50,000 shares of Rs.10/-each were allotted to them by R-1. 57. Whether or not A-4 had applied for allotment of shares in R-1 is wholly irrelevant as the return of allotment, in Annexure R5, shows that 2,50,000 shares of Rs.10/-each were allotted to them by R-1. 57. Sri S. Prabhakar, Learned Counsel for R-20, would submit that this sum of Rs.25,00,000/-is, in fact, stated to be the security deposit given by A-4 to RSEB on 6.8.1997, while applying for a license; this amount was paid on 10.10.2001, even before R-1 was incorporated; and the CLB took note of the affidavits filed on behalf of the respondents and, on preponderance of probabilities, held that A-4 had ceased to be a shareholder of R-1. As noted hereinabove, R-1 was incorporated on 10.10.2001. The Return of allotment, in Form II (Annexure-R-5), filed by R3 before the Registrar of Companies on 1.11.2001, (much before the MOU dated 03.04.2002), records that 2,50,000 shares of Rs.10/- each had been allotted to A4 on 10.10.2001 (the date on which R-1 was incorporated). If, as submitted on behalf of the respondents, this sum of Rs.25.00 lakhs was the security deposit given by A-4 to the RSEB on 6.8.1997, R-1 was not prohibited by law from allotting its shares to R-4, and treat the said security deposit as a deposit given by R-1 to the RSEB. The expenses incurred by a company prior to its incorporation, called pre-incorporation or preliminary expenses, are reflected in the balance sheets of the company and are written off over a period of time. It is wholly unnecessary for this Court to delve further on this aspect as these were also matters which the CLB ought to have, but had failed to examine. (iv) REGISTER OF MEMBERS AND ANNUAL RETURNS: 58. Section 150(1) of the Act requires every company to keep a Register of its members, and enter therein (a) the name and address, and the occupation, if any, of each member; (b) in the case of a company having a share capital, the shares held by each member, (distinguishing each share by its number except where such shares are held with the Depository), and the amount paid or agreed to be paid as consideration for those shares; (c) the date on which each person was entered in the Register as a member; and (d) the date on which any person ceased to be a member. Sub-section (2) stipulates that, if default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to Rs.500 for every day during which the default continues. 59. In terms of Section 84(1) of the Act, a share certificate is prima facie evidence of the title to a share. A share certificate does not merely entitle the shareholder, whose name is found on it, to interest on the share held, but also to participate in certain proceedings relating to the company. (VasudevRamchandra Shelat v. Pranlal Jayanand Thaker ( AIR 1974 SC 1728 ). A shareholder means the holder of shares. It is a common term used, and only means the person who holds the shares by having his name on the register. (M/s. Howrah Trading Co. Ltd. v. Commissioner of Income-tax, Central Culcutta ( AIR 1959 SC 775 ). The rights conferred by shares are all rights against the company, and no person can exercise his rights as a shareholder vis-à-vis the company, or be recognized by the company as a member, unless and until he is placed on the register of members. (In Re Rose v. Inland Revenue Commissioners (1952(1) ALL ER 1217). Title to shares is based upon entries in the share register, and certificates of holdings of shares are merely prima facie evidence of the existence, on a share register, of entries at the date on which the certificate was given. A share certificate is not, in any sense, evidence at a later date of the proper title to shares at that later date, and in order to prove title it is necessary to go to the share register. (International Credit and Investment Co. (Overseas) Ltd v. Adham (1994) 1 BCLC 66). The company recognises no person except one whose name is on the register of members. (M/s. Howrah Trading Co. Ltd. (supra). The intention of the Legislature is to ensure a register of members which reflects reality at any particular point of time. That is why the Legislature has extended this right, to seek rectification of the Register of members, to any member of the Company without compelling him to show a particular or a special prejudice caused to him by an incorrect or a wrong register of members. That is why the Legislature has extended this right, to seek rectification of the Register of members, to any member of the Company without compelling him to show a particular or a special prejudice caused to him by an incorrect or a wrong register of members. (KillickNixon Ltd. vs Dhanraj Mills Pvt. Ltd. (1983) 54 Comp Cas 432 (Bom-DB). If there is no dispute that the name of a person is recorded as a member, in the Register of members of a company, it is wholly unnecessary for such a person to adduce evidence to establish that he is a member of the company, or to produce the share certificates as documentary proof of his being a “member” of the company. 60. Section 159(1) of the Act requires every company having a share capital, within sixty days from the date on which an AGM is held, to prepare and file with the Registrar of companies a return containing the particulars specified in Part I of Schedule V as they stood on that day regarding, among others, “the register of its members, its shares, and its members both past and present.” Section 159(2) stipulates that the annual return shall be in the Form set out in Part II of Schedule V. Clause V(a) of Part I of the form requires a list, containing the names and addresses of all persons who, on the date of the company’s last AGM, were members of the company, to be furnished. Clause V of Part II of the Form requires the company to furnish details of all the shares held by the shareholders at the date of the AGM; the ledger folio of the share-holder, his name, the type of shares, and the number of shares held by him. 61. Section 161(1)(a) of the Act requires a copy of the annual return, filed with the Registrar under Section 159, to be signed both by a director and by the manager or secretary of the company or, where there is no manager or secretary, by two directors of the company one of whom shall be the managing director where there is one. Section 161(2) stipulates that there shall be filed with the Registrar, along with the annual return, a certificate signed by the signatories of the return stating (a) that the return states the facts as they stood on the day of the AGM correctly and completely; and (aa) that, since the date of the last annual return, the transfer of all shares and the issue of all further certificates of shares have been appropriately recorded in the books maintained for the purpose. Under Section 162(1), if a company fails to comply with the provisions contained in Sections 159, 160 or 161, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues. 62. The annual return filed by R-1, (Annexure P-10 – for the AGM dated 25.09.2004), records A1, A2 and A4 to be the shareholders of R-1 holding 5000, 5000 and 2,50,000 shares respectively. The annual return filed by R-1, (Annexure P-12 – for the AGM dated 29.09.2005), reflects the shareholding of A1 to A4.Clause V of Part II of the said annual return shows A-1 and A-2 to be holding 5000 shares each; A-4 to be holding 2,50,000 shares; and A-3 to be holding 100 shares in R-1. Certification of the annual return (in Annexure P-10 and P-12) by the respondents that the annual returns stated the facts, as they stood on the date of the AGM, correctly and completely and, since the last date of annual return, the transfer of all shares had been appropriately recorded in the books maintained for the purpose, is acknowledgment by them that A-1 to A-4 were the shareholders of R-1 on the dates of both the AGMs dated 25.09.2004 and 29.09.2005. 63. A1 and A2 were the shareholders of R-1 from the date of its incorporation on 10.10.2010, (as subscribers to the Memorandum and Articles of Association), holding 5000 shares each. Annexure R2 - return of allotment (Form No.2 - dated 28.03.2002), shows that A3 was allotted 100 equity shares on 8.3.2002. Annexure R5 - return of allotment (Form No.2 - dated 01.11.2001) shows that A-4 was allotted 2,50,000 equity shares of Rs.10/- each on 10.10.2001. Annexure R2 - return of allotment (Form No.2 - dated 28.03.2002), shows that A3 was allotted 100 equity shares on 8.3.2002. Annexure R5 - return of allotment (Form No.2 - dated 01.11.2001) shows that A-4 was allotted 2,50,000 equity shares of Rs.10/- each on 10.10.2001. That the names of all the appellants were entered in the Register of Members is evident from the Annual returns in Ex.P-10 & P-12 for the AGMs held on 25.09.2004 and 29.09.2005 respectively. It is also evident from Annexure P-34 that the names of all the appellants continued to be shown in the Register of Members of R-1 till the alleged transfer of their shares on 31.07.2006 and 31.08.2006 respectively. As the appellants had adduced evidence to establish that their names had been properly entered in the Register of Members of R-1, the burden shifted on the respondents, and the CLB should have called upon them to show that deletion of the appellants names, from the Register of Members, was with sufficient cause. 64. The case of the appellants, in short, is that they had not transferred their shares; they had not executed any share transfer deeds in favour of either R-4 or R8 or R2; they did not receive any consideration for the alleged transfer; and deletion of their names, from the Register of members, is illegal. It is only if it is established that the appellants had transferred their shares to R-4 and R-8 can deletion of the appellants names, and entry of the names of R-4 and R-8, in the Register of Members of R-1 be said to be valid. Shares of a company can only be transferred if the transferor executes a share transfer deed in favour of the transferee. 65. As the respondents contend that the appellants had voluntarily transferred their entire share holding in favour of R-4 and R-8, and had exited from the company, it is necessary to refer, in brief, to the relevant provisions of the Act, and the Rules and Regulations made thereunder, regarding the mode and manner of transfer of shares from one person to another. The requirements of Section 108 necessitate compliance for a valid transfer of shares. (v) COMPLIANCE WITH SECTION 108 OF THE ACT NECESSARY FOR A VALID TRANSFER OF SHARES. 66. The requirements of Section 108 necessitate compliance for a valid transfer of shares. (v) COMPLIANCE WITH SECTION 108 OF THE ACT NECESSARY FOR A VALID TRANSFER OF SHARES. 66. A “member” is defined in Section 41 of the Act to be one who agrees to become a member of a company, and whose name is entered in its Register. An application, for the registration of the transfer of shares, is to be made either by the transferor or the transferee. Registration of transfer of shares is restricted until the instrument of transfer, duly stamped and executed by the transferor and transferee, has been delivered to the company. (Ammonia Supplies Corporation (P) Ltd. (supra). A transfer is incomplete until registered. The transferee does not become the legal owner until his name is entered on the register in respect of these shares. (Vasudev Ramchandra Shelat (supra); Palmer's Company Law (21st edition-1968, p. 334). Section 108 does not prescribe the mode of transfer, but lays down the provisions for "registration" of a transfer. In other words, it presupposes that a transfer has already taken place. (VasudevRamchandra Shelat (supra). 67. Before the name of any transferee is registered, the procedure has to be shown to have been followed. An application is to be made either by the transferor or the transferee for registering the name of the transferee as a member or shareholder of the company by placing before it a duly stamped and signed document both by the transferor and the transferee. Similar is the position under Section 111 that, before power is exercised for rectification, the essential ingredients exist. Section 108 gives a mandate to a company not to register the transfer of shares unless a proper instrument of transfer, duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee, has been delivered to the company along with certificates relating to the shares, (Ammonia Supplies Corporation (P) Ltd. (supra); T.G. Veera Prasad (supra),or if no certificate is in existence, along with the letter of allotment of the shares. Section 108 (1-A) requires every instrument of transfer of shares to be in such form as may be prescribed. Section 108 (1-A) requires every instrument of transfer of shares to be in such form as may be prescribed. Section 108(1-A)(a) stipulates that every such form shall, before it is signed by or on behalf of the transferor and before any entry is made therein, to be presented to the prescribed authority being a person already in the service of the Government, who shall stamp or otherwise endorse thereon the date on which it is so presented. Clause (b) of Section 108(1-A) requires every instrument of transfer in the prescribed form, with the date of such presentation stamped or otherwise endorsed thereon after it is executed by or on behalf of the transferor and the transferee and complete in all other respects, to be delivered to the company within two months from the date of such presentation. 68. Rule 5A of the Companies (Central Government’s) General Rules and Forms, 1956, (hereinafter called the “CG Rules and Forms”) stipulates that, for the purposes of clause (a) of sub-section (1A) of Section 108, the prescribed authority shall be the Registrar of Companies, or such other authority as the Central Government may specify. Rule 5A(2) stipulates that an instrument of transfer shall be in Form 7-B. Sub-rule (3) of Rule 5A stipulates that, when an instrument of transfer is presented to the prescribed authority, he shall forthwith stamp or otherwise endorse thereon the date of such presentation, affix his signature thereto and return the instrument to the party presenting the same. The share transfer form, in Form 7-B, requires the names of the transferor and the transferee to be stated therein. Both the transferor and the transferee are required to affix their signature thereon in the presence of witnesses. The signature of the transferor is also required to be attested by a Magistrate or a Notary Public or a Special Executive Magistrate or a similar authority holding a Public Office and authorized to use the seal of his office. The said transfer form is also required to be affixed with the prescribed stamps before it is signed by the transferor and before any entry is made therein; and to be presented to the prescribed authority i.e. the Registrar of Companies who is required to stamp or otherwise endorse thereon the date on which it was so presented. The said transfer form is also required to be affixed with the prescribed stamps before it is signed by the transferor and before any entry is made therein; and to be presented to the prescribed authority i.e. the Registrar of Companies who is required to stamp or otherwise endorse thereon the date on which it was so presented. Clauses (a) and (b) of Section 108(1), Rule 5A of the CG Rules and Forms, and Form 7-B of Appendix 1 thereto, necessitate compliance while effecting transfer of shares. 69. For transfer, inter vivos of shares, a duly stamped transfer deed is an absolute necessity. (Jayanthilal Purshottamdas Patel vs Gordhandas Desai Private Ltd. (1968) 38 Comp. Cas. 405 (Bom). The words "shall not register" in Section 108 are mandatory in character, and are strengthened by the negative form of the language emphasizing the prohibition against transfer without complying with the provisions of the Act. (MannalalKhetan v. Kedar Nath Khetan ( AIR 1977 SC 536 ).The transfer of shares is truly complete and the transferee becomes a shareholder in the true and full sense of the term, with all the rights of a shareholder, only when the transfer is registered in the company's register. (LIC of India v. Escorts Ltd ( AIR 1986 SC 1370 = (1986) 1 SCC 264 ). 70. Pursuant to the order of the CLB, in C.A. No.58 of 2010 in C.P. No.4 of 2010 dated 22.03.2010, inspection of the documents of R-1 was caused, by the counsel for the appellants and the respondents, on 08.04.2010. The inspection report, submitted to the CLB (Annexure R1) details the response of R-1 to R-3 to the list of documents sought for by the appellants. Item 16 of the said report relates to the transfer deeds, for transfer of the shares of the appellants, and the evidence of payment of consideration. The Inspectors remarks, there against, is that no document relating to the transfer deed, as well as evidence to show that it had been misplaced, was produced. Sl.No.20 of the inspection report relates to the transfer deeds said to have been executed by A-1 and A-2 dated 31.08.2006; and Sl.No.21 relates to the transfer deed allegedly executed by A-4 in favour of R-4, and evidence of consideration having been paid. Sl.No.20 of the inspection report relates to the transfer deeds said to have been executed by A-1 and A-2 dated 31.08.2006; and Sl.No.21 relates to the transfer deed allegedly executed by A-4 in favour of R-4, and evidence of consideration having been paid. Against both these items the Inspectors, after noting the response of R-1 that the transfer deeds were presently misplaced, remarked that no document, relating to the transfer deeds as well as evidence for misplacing the same, were produced. Sl.No.24 relates to the transfer deeds for the alleged transfer of the entire share holdings of the appellants. While the response thereto by the respondents is that they are presently misplaced, the Inspectors have remarked that no record relating to the transfer deeds, as well as evidence for misplacing the same, was produced. The CLB failed to consider the inspection report (Annexure – R.1), and the remarks of the Inspectors therein that the respondents had not produced any evidence to show either the execution of, or the misplacing of, the share transfer deeds. 71. The respondents have also not chosen to furnish details of the date on which the share transfer forms were presented before the prescribed authority – Registrar of Companies, the person who attested the said share transfer forms, and the date on which it was delivered by R-4 and R-8 respectively to R-1. As compliance with Section 108 of the Act is mandatory and, in the absence of any evidence on record to show that the provisions of Sections 108 and 108(1)(a), Rule 5A of the CG Rules and Forms and Form 7-B thereof were complied with, the conclusion of the CLB, that the appellants had transferred their shares to R-4 and R-8, is based on no evidence and is perverse. (vi) PAYMENT OF CONSIDERATION FOR TRANSFER OF SHARES: NO PROOF: 72. The appellants submit that the CLB accepted the incredible contention that R-4 had paid Rs.25.00 lakhs in cash for purchase of shares from A-4; and R-4 had been inserted only to avoid the requirement of production of receipts by R-8. 73. In the absence of proof of consideration having been paid, and non-production of the share transfer forms by R-1, the bona fides of the respondents’ claim, of the appellants having transferred all their shares to R-4 and R-8, is suspect. 73. In the absence of proof of consideration having been paid, and non-production of the share transfer forms by R-1, the bona fides of the respondents’ claim, of the appellants having transferred all their shares to R-4 and R-8, is suspect. All that R-4 states in his reply statement filed before the CLB, regarding payment of consideration for the purchase of 2,50,000 shares from A-4, is that he had borrowed Rs.25,00,000/- from a friend and had, after the entire transaction was completed, returned the said amount through banking channels. Neither has the name of the friend been furnished, nor is the manner of payment through banking channel stated, in the reply statement. While R-4 would state that he was paid Rs.25,00,000/- by R-8, vide cheque No.026512 drawn on Bank of Maharashtra, for effecting transfer of shares in its favour, neither has the date of the said cheque nor the date of its realization been stated. Curiously, no reference is made in the reply statements of the respondents of any consideration having been paid for the transfer of shares by A-1 to A-3. As R-8 claims to have directly purchased the shares of A-1 to A3, payment of consideration to them should have been reflected in its books of accounts. As the share transfer form, in Form 7-B, requires details of the consideration also to be furnished, failure to do so would render the share transfer form incomplete, and bereft of the stipulated particulars. 74. Despite viewing the assertion, of consideration having been paid by R-4 to A-4, with suspicion the CLB relegated the appellants to the remedy of a civil suit holding that these were complicated questions of fact. Failure on the part of the respondents, to furnish details of even the basic facts necessary to establish that A-1 to A-4 had transferred their shares or that R-4 and R-8 had paid consideration to them cannot, by any stretch of imagination, be held to be complicated questions of fact incapable of being examined in summary proceedings under Section 111 of the Act. (vii) FAILURE TO PRODUCE THE MINUTES BOOK OF SHAREHOLDERS MEETINGS, AND THE MEETINGS OF THE BOARD OF DIRECTORS: ITS CONSEQUENCES: 75. (vii) FAILURE TO PRODUCE THE MINUTES BOOK OF SHAREHOLDERS MEETINGS, AND THE MEETINGS OF THE BOARD OF DIRECTORS: ITS CONSEQUENCES: 75. It is submitted, on behalf of the appellants, that the only document produced by the respondents, in support of their plea that the transfer of shares was approved in the Board of Directors meeting attended by R-2 and R-3, is the so called minutes of the meeting (Annexures - R.25 and R.26); the purported minutes, of the said meetings dated 15.06.2006 and 31.08.2006, were not produced from the “minutes book”, and appear to be photo-copies of some pages, without authentication and pagination; there are also differences between both these minutes; the requisite primary evidence in proof of transfer of shares by the appellants was not available; and there were no notices or agenda for the Board meetings. 76. The maintenance of books of accounts, minute books etc., is the collective responsibility of the Board of Directors as the general administration of the company vests in them. The Board of Directors are duty-bound, in the management of the affairs of the company, to ensure that the statutory and other records of the company are maintained in accordance with the provisions of law. It is the duty of each and every director to explain why he should not be held responsible for the loss, non- maintenance and non-availability of the minutes books. (Technical Consultancy House v. Kuldip Raj Narang (1989) 66 Comp Cas. 410 (Delhi). 77. Section 193(1) of the Act requires every company to cause the minutes of all proceedings of every general meeting, and of all proceedings of every meeting of its Board of Directors, to be kept by making, within thirty days of the conclusion of every such meeting, entries thereof in the books kept for that purpose with their pages consecutively numbered. Section 193 (1A) requires each page of every such book to be initialed or signed, and the last page of the record of proceedings of each meeting in such books to be dated and signed. Section 193(1B) prohibits the minutes of the proceedings of a meeting from being attached to the minutes book by pasting or otherwise. The “minutes”, in loose sheets, is in violation of Section 193(1B) of the Act. Such “loose sheets” cannot cure the defect in the recording of the minutes nor override the statutory provision. (GlucoSeries Pvt. Ltd. In re. Section 193(1B) prohibits the minutes of the proceedings of a meeting from being attached to the minutes book by pasting or otherwise. The “minutes”, in loose sheets, is in violation of Section 193(1B) of the Act. Such “loose sheets” cannot cure the defect in the recording of the minutes nor override the statutory provision. (GlucoSeries Pvt. Ltd. In re. (1987) 61 Comp Cas.227) (Cal). Section 193(6) stipulates that, if default is made in complying with Section 193 in respect of any meeting, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees. Section 194 stipulates that the minutes of meetings, kept in accordance with the provisions of Section 193, shall be evidence of the proceedings recorded therein. Under Section 195 where minutes of the proceedings of any general meeting of the company, or of any meeting of its Board of directors, have been kept in accordance with the provisions of Section 193 then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings there at to have duly taken place. (M.S. Madhusoodhanan v. Kerala Kaumudi (P) Ltd., (2003) 117 Com Cas 19 (SC); KillickNixon Ltd. (supra). 78. The only way to prove that a particular resolution was passed at a meeting of the Board of Directors of a company is if the minutes book, in which the said resolution was recorded as having been passed, is produced in Court as that alone can form evidence of the fact under Section 194 of the Act. (Escorts Limited v. Sai Autos (1991) 72 Comp Cas. 483) (Delhi). The presumption arising under Section 195 is rebuttable by adducing contrary evidence. If a proper minutes book is kept, and proceedings of meetings are duly recorded, it shall be deemed that the meeting has been duly called, held and all proceedings there at to have duly taken place. If the minutes are not recorded or signed in the prescribed manner, and within the prescribed period, it is then presumed that it is not properly kept and will not be receivable in evidence. (B. Sivaraman v. Egmore Benefit Society Ltd (1992) Vol.75 Comp Cas.198) (MAD). 79. If the minutes are not recorded or signed in the prescribed manner, and within the prescribed period, it is then presumed that it is not properly kept and will not be receivable in evidence. (B. Sivaraman v. Egmore Benefit Society Ltd (1992) Vol.75 Comp Cas.198) (MAD). 79. The first respondent failed to produce the minutes book, and it is only photostat copies, that too in loose sheets, of the alleged minutes of the board meeting, stated to have been held on 15.06.2006 and 31.08.2006, which were produced before the CLB as Annexures R.25 and R.26. Annexure R-25 records that the Board of Directors of the first respondent, in their meeting dated 15.06.2006, had resolved to approve the transfer of shares by A-4 to R-4. Annexure R-26 records that, in the Board meeting dated 31.08.2006, the shares of A-1 to A-3 were transferred in favour of R-8, and shares of R-4 were transferred to R-8. While Annexure R.25 contains the head “minutesbook”, Annexure R.26 does not. Annexure R-25, i.e., the minutes of the Board meeting dated 15.06.2006 is at variance with Annexure R-34 i.e., the Annual return for the AGM held on 17.07.2007 which records that the aforesaid transfer of shares were registered on 31.07.2006. Annexure – R-1 inspection report reveals that R-1 did not keep any minutes book, and only loose sheets called “minutes” were made available for inspection. As R-1 failed to keep a minutes book, in accordance with Section 193 of the Act, the presumption under Section 195, of a meeting of the Board of Directors having been validly held, would not be attracted. In the absence of a proper minutes book being maintained, either for the general meetings of shareholders or for the meetings of the Board of Directors, reliance placed by the respondents on the loose-leaf sheets, which they claim to be the “minutes” of meetings of the Board of Directors, (Annexure R-25 and 26), in support of their contention that A-1 to A-4 had transferred all their shares, is misplaced. The CLB, before declining to entertain an application for rectification of the register of members, should assign valid reasons for its conclusion that the issues raised involved disputed and complicated questions of fact which require detailed investigation and examination of both oral and documentary evidence. A mere statement, that complicated question of fact arise, would not do. (Muniyammav. The CLB, before declining to entertain an application for rectification of the register of members, should assign valid reasons for its conclusion that the issues raised involved disputed and complicated questions of fact which require detailed investigation and examination of both oral and documentary evidence. A mere statement, that complicated question of fact arise, would not do. (Muniyammav. Arathi Cine Enterprises (P) Ltd (1993) 77 Com.Cas 97 (Kan-DB); E.V. Swaminathan v. K.M.M.A Industries & Roadways (P) Ltd (1993) 76 Com. Cas. 1 (Mad); andNupur Mitra (supra). Even in summary proceedings under Section-111, the CLB is not disabled from exercising its power under Section 10-E (4-C) of the Act to summon documents, enforce attendance of witnesses and to examine them on oath. (viii) CONTEMPORANEOUS DOCUMENTS, FILED BEFORE THE CLB BY THE RESPONDENTS, DO NOT ESTABLISH THAT APPELLANTS HAD TRANSFERRED THEIR SHARES: 80. The case of the respondents, in short, is that, acquisition of 2,50,000 shares in R1 by Anita ImpexLimited (A4) is illegal as they did not bring in money for such acquisition through normal banking channels; Annexure R-I -Balance Sheet of Anita Impex Limited (A4) dated 31.12.2006 does not reflect investment in R-1; the CLB was justified in not give credence to transactions tainted with illegality, and in violation of the foreign exchange laws; there is sufficient circumstantial evidence to show that the appellants’ had transferred their entire share holding in, and had chosen to exit from, R-1; the appellants were aware that the share transfer deeds were lost when the shares of R1 were dematerialized by NSDL; the material available before the CLB were (a) Board resolution dated 03.04.2002; (b) MOU dated 03.04.2002; (c) Form No.2; (d) Balance Sheet of A-4; (e) affidavits of R-4 and R-6; (f) Legal review Report of M/s.Khaitan & Co; and (g) dematerialization of shares by NSDL; and the CLB has appreciated the evidentiary value, has analyzed each and every document, and has given cogent reasons for rendering a finding that preponderance of probabilities was in favour of the respondents. 81. 81. As the CLB held that there was no record to show that A-4 had brought in Rs.25 lakhs to the account of the company in a legally permitted manner; A-4 is not a party to the MoU nor is it referred to as a shareholder in Annexure P-11 Board resolution; the respondents were compelled to acknowledge and own the allotment to A-3 and A-4 in view of the substantial investment of Rs.26 crores made by R-2 and R-3 in the company after the signing of the MoU; it is necessary to examine whether these findings of the CLB are based on the material on record, bearing in mind the limited scope of an appeal under Section 10 F of the Act. (ix) VIOLATION OF FOREIGN EXCHANGE LAWS BY APPELLANT NO.4: 82. Annexure R-2 – the Balance Sheet of A-4 dated 31.12.2006 – not only reflects their investments for the year 2006, but also for the year 2005, both of which show that A-4 had invested 100 pounds in their subsidiary i.e., Anita Impex (Alcester) Limited. The submission, urged on behalf of the respondents, that the investment of 2,50,000 shares in R1 company, is not reflected in the Balance Sheets of A-4 either as at 31.12.2005 or as at 31.12.2006, is, therefore, valid and justified. While the CLB, in the order under appeal, holds that the investment of 2,50,000 shares by A4 in R1 is not in a legally permitted manner, no reference is made by it to any specific statutory provision which renders such an investment, by A-4 in R1, illegal. The CLB has also not examined whether, for violation of the foreign exchange laws if any, the name of A4 necessitates automatic deletion from the Register of members though their name were entered in the Register of members even prior to the AGM held on 25.09.2004, (Annexure P-10), and continued to remain in the Register of members till the alleged transfer of their shares on 31.07.2006. 83. R-3 filed the return of allotment, of 2,50,000 shares to A-4, on 01.11.2001 i.e., four months priorn to the MoU dated 03.04.2002 (Annexure P-19). 83. R-3 filed the return of allotment, of 2,50,000 shares to A-4, on 01.11.2001 i.e., four months priorn to the MoU dated 03.04.2002 (Annexure P-19). As R-2 and R-3 claim to have invested Rs.26 crores only after the MoU dated 03.04.2002, the finding of the CLB that they were compelled to own allotment of shares to A-3 and A-4 because of the substantial investment made by them in R-1, is a perverse finding. 84. Section 8(1) of the English Companies Act, 1947 prohibited any person in the United Kingdom, except with the permission of the treasury, to issue any security; or, whether in the United Kingdom or elsewhere, to issue any security which is registered, or is to be registered, in the United Kingdom unless the requirements stipulated there under were fulfilled.Section 18(1) & (2) of the said Act, which fell for consideration in Re Transatlantic Life Assurance Co Ltd (1979 (3) ALL ER 352), read thus:- “(1) The title of any person to a security for which he has given value on a transfer thereof, and the title of all persons claiming through or under him, shall, notwithstanding that the transfer, or any previous transfer, or the issue of the security, was by reason of the residence of any person concerned other than the first mentioned person prohibited by the provisions of this Act relating to the transfer or issue of securities, be valid unless the first mentioned person had notice of the facts by reason of which it was prohibited. (2) Without prejudice to the provisions of subsection (1) of this Section, the Treasury may issue a certificate declaring, in relation to a security, that any acts done before the issue of the certificate purporting to effect the issue or transfer of the security, being acts which were prohibited by this Act, are to be, and are always to have been, as valid as if they had been done with the permission of the Treasury, and the said acts shall have effect accordingly. 85. While examining the scope of Sections 8(1) and 18(1) & (2), it was held:- “……..In my judgment counsel for the company is correct in submitting that this section, by necessary inference, presupposes that the purported issue of a security in manner prohibited by the 1947 Act is wholly invalid. 85. While examining the scope of Sections 8(1) and 18(1) & (2), it was held:- “……..In my judgment counsel for the company is correct in submitting that this section, by necessary inference, presupposes that the purported issue of a security in manner prohibited by the 1947 Act is wholly invalid. Were this not so, I could see no point in the provisions of S 18(1) which, when applicable, by their terms operate to validate the title to such a security of a person who has given value on taking a transfer thereof. Were this not so, I could likewise see no point in the provisions of S.18(2) which empower the Treasury to issue a certificate, inter alia, retrospectively validating acts purporting to effect the issue of a security in manner prohibited by the 1947 Act. The very use by the legislature of the phrase ‘purporting to effect’, in S.18(2), in my judgment further illustrates that the acts which purport to effect in a prohibited manner do not in fact operate to effect that issue ab initio. In these circumstances, on a bare reading of the Act, I would conclude that the purported issue of 200,000 ordinary shares by the company in March 1974 was wholly invalid and void……” (emphasis supplied) 86. No statutory provision, under any law in force in India, similar to Sections 8(1), 18(1) and (2) of the English Companies Act, 1947 has been referred to by the CLB in the order under appeal, nor has any such provision been brought to the notice of this Court. R-1 never took any steps to annul those shares, and no proceedings was ever brought to annul the issue of shares. It is only if the allotment is proved to be void, and prohibited by law, would rectification be impermissible. Reliance placed on Re Transatlantic Life Assurance Co. Ltd. (supra) is, therefore, of no avail. 87. The deponent of the affidavit, filed in support of the reply statement of respondents 1 to 3 before the CLB, is Sri S. Kishore (R-2). The return of allotment (Annexure R5 dated 01.11.2001), which reflects 2,50,000 shares having been allotted to Anita Impex Limited (A4), was signed and filed before the Registrar of Companies by Sri K.A. Sastry (R-3). 87. The deponent of the affidavit, filed in support of the reply statement of respondents 1 to 3 before the CLB, is Sri S. Kishore (R-2). The return of allotment (Annexure R5 dated 01.11.2001), which reflects 2,50,000 shares having been allotted to Anita Impex Limited (A4), was signed and filed before the Registrar of Companies by Sri K.A. Sastry (R-3). Clause 1.9 of the Legal Review Report, of Khaitan & Company dated 26.10.2006 (Annexure R17), (whereunder details of the Directors interest in other companies is referred to), shows that both Sri S. Kishore (R2) and Sri K.A. Sastry (R-3) were the Directors of Anita Impex Limited (A4). If the contents of Clause 1.9 of the Legal Review Report of M/s. Khaitan & Company dated 26.10.2006 is to be taken as true, then both R2 and R3, as directors of Anita Impex Limited (A-4), may also have to bear responsibility for the alleged flouting of foreign exchange laws by Anita Impex Limited (A4). In this context reference can, usefully, be made to Dale & Carrington Invt. (P) Ltd. v P.K. Prathapan ( AIR 2005 SC 1624 )wherein the Supreme Court held:- “……This brings us to the issue regarding locus standi of Prathapan and Prathapan's family to maintain the petition under Sections 397 and 398 of the Companies Act and their failure to obtain permission of the Reserve Bank of India as per Section 29 of the Foreign Exchange Regulation Act. So far as the question of permission of the Reserve Bank of India under FERA is concerned the same can be obtained ex-post facto. This stands concluded by judgment of this Court in Life Insurance Corporation of India v. Escorts (1986) 1 SCC 264 ). The statute does not provide any time limit for obtaining the permission. We cannot lose sight of the subsequent development in this connection. FERA stands repealed and the statute brought in force by way of replacement of FERA, i.e. the Foreign Exchange Management Act (FEMA), does not contain any such requirement……..” “……..It is to be further noted that the entire scheme regarding purchase of shares in the name of mother of Prathapan was suggested by Ramanujam himself. He saw to it that the shares were transferred by the company in the name of Prathapan and his wife. He saw to it that the shares were transferred by the company in the name of Prathapan and his wife. The company has recorded the transfer and corrected its Register of Members in this behalf which, in fact, led Ramanujam to file a petition for rectification of the Register of Members as a counterblast to the petition filed by Prathapan under Sections 397/398 of the Companies Act. It is not open to Ramanujam now to raise the question of FERA violation, more particularly in view of his having recorded the transfer of shares in the name of Prathapan and his wife Pushpa in the records of the Company. This also answers the objection regarding locus standi of Prathapan and his wife to file the Sections 397/398 petition before the Company Law Board. Since they were registered as shareholders of the company on the date of filing of the petition and they held the requisite number of shares in the company, they could maintain the petition……..” (emphasis supplied) 88. While violation of the foreign exchange laws by a foreign company, investing in the shares of an Indian Company, may render them liable for prosecution, it is only if the allotment of shares to A-4 (as reflected in Annexure R5 dated 01.11.2001), and the annual returns in Ex.P10 and P12, (which show that the name of A-4 was entered in the Register of Members of R-1), are declared a nullity may it, perhaps, result in automatic deletion of their name from the Register of members. Noorder or proceeding bears the brand of invalidity on its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity, and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders. (Smith v. East Elloe Rural District Council (1956] 1 All ER 855); PuneMunicipal Corporation v. State of Maharashtra ( 2007 (5) SCC 211 ). No order can be ignored unless a finding is recorded that it is illegal, void or not in consonance with the law.Thisprinciple is equally true even where the ‘brand of invalidity’ is plainly visible: for there also the order can effectively be resisted in law only by obtaining the decision of the court. (PuneMunicipal Corporation (supra). No order can be ignored unless a finding is recorded that it is illegal, void or not in consonance with the law.Thisprinciple is equally true even where the ‘brand of invalidity’ is plainly visible: for there also the order can effectively be resisted in law only by obtaining the decision of the court. (PuneMunicipal Corporation (supra). If an order is void or ultra vires it is enough for the court to declare it so and it collapses automatically. A declaration merely declares the existing state of affairs and does not ‘quash’ so as to produce a new state of affairs. (PuneMunicipal Corporation (supra); and State of Punjab v. GurdevSingh ( AIR 1992 SC 111 ). It is only if a statutory provision, whether expressly or by necessary implication, requires such proceedings to be so held, can a Court/Tribunal declare it to be a nullity. It is made clear that this Court has neither held that A4 has violated foreign exchange laws, in investing in 2,50,000 shares in R1, nor that such an investment by them is a nullity, for these are matters which need to be examined by the CLB, in the first instance, while adjudicating afresh the claim of the appellants, including A-4, for rectification of the Register of members of R-1 under Section 111 of the Act. (x) LEGAL REVIEW REPORT OF M/s. KHAITAN & COMPANY: 89. At the request of R-8, M/s. Khaitan & Company conducted a legal review of R-1. (x) LEGAL REVIEW REPORT OF M/s. KHAITAN & COMPANY: 89. At the request of R-8, M/s. Khaitan & Company conducted a legal review of R-1. The legal review report dated 26.10.2006 (Annexure –R17) starts with a caveat that M/s. Khaitan & Company assumed the genuineness of all signatures, the authenticity of all documents/information submitted to them as original, and the conformity of the copies or extracts submitted to them with that of the original documents, were assumed unless it was reasonably apparent from the face of such documents that the conformity was in question; to the extent possible, they had relied upon documents and records maintained by R-1; where such documents/records were not available for review, they had relied upon the veracity of the statements made by the management of the company; they had assumed that the documents submitted to them by the company, in connection with any particular issue, were the only documents relating to such issue; they had not independently validated the information furnished to them with any external source including local, registry and regulatory authorities or any such other external source; and, as regards corporate filings with the Registrar of Companies, they had verified the information, wherever possible, from the copies of various returns kept by the Company, and the original receipts evidencing the filing of such returns. 90. The Executive Summary, of the Legal Review Report submitted by M/s. Khaitan & Company, records that R-8 held all the shares of R-1, including 10 shares held through its nominee – R-2. Clause 1.14 of the Report states that the company is required to maintain registers including the register and index of members; and they had examined the said statutory registers, and had found them to conform to legislative requirements. Clause 1.15 refers to the significant and relevant extracts of the minutes of the shareholders meetings. Among the meetings referred to therein is the EGM allegedly held on 29.9.2004 wherein authorization is said to have been accorded for the increase in Authorized Capital to Rs.1.75 Crores. Clause 1.15 of the Report does not even state that R-1 was maintaining a minutes book, of the meetings of the shareholders, in compliance with Section 193 of the Act. Among the meetings referred to therein is the EGM allegedly held on 29.9.2004 wherein authorization is said to have been accorded for the increase in Authorized Capital to Rs.1.75 Crores. Clause 1.15 of the Report does not even state that R-1 was maintaining a minutes book, of the meetings of the shareholders, in compliance with Section 193 of the Act. Clause 1.16 of the report, which details the significant and relevant extracts of the minutes of the Board meetings, does not even refer to any minutes book, of the meetings of Board of Directors, being maintained by R-1 in accordance with Section 193 of the Act. Among the extracts of the board meetings referred to therein, is the board meeting allegedly held on 25.9.2004 wherein the directors are stated to have resolved to issue a notice for convening the EGM and seek authorization to increase the Authorized Capital of R-1; the Board meeting dated 15.6.2006 (Annexure– R-25); and the Board meeting dated 31.8.2006 (Annexure R-26). 91. From the Executive Summary of the report, it is evident that, when M/s. Khaitan & Company undertook the exercise of legal review of R-1, the entire share holding of A-1 to A-3 had already been transferred to R-8; and the entire shareholding of A-4 had already been transferred to R-4, and again by R-4 to R-8. It is evident, from the disclaimer in their report, that M/s Khaitan & Co had merely accepted the extracts of the minutes, of both the Board of Directors meetings and the meeting of the shareholders, furnished to them. The Legal Review Report does not even refer to any share transfer deeds having been executed by A-1 to A-4 transferring their entire share-holding in R-1, let alone that they had verified/inspected the share transfer deeds relating to the alleged transfer of shares by A-4 to R-4; and the alleged transfer of shares from A-1, 2 & 3 to R-8. The finding of the CLB, that there was contemporaneous verification of the share transfer deeds by Khaitan & Co, is based on no evidence. (xi) DEMATERIALISATION OF THE SHARES OF THE 1ST RESPONDENT: 92. The finding of the CLB, that there was contemporaneous verification of the share transfer deeds by Khaitan & Co, is based on no evidence. (xi) DEMATERIALISATION OF THE SHARES OF THE 1ST RESPONDENT: 92. In para 4(c) of their reply statement, filed before the CLB, R-1 to 3 stated that the agreement with LB Holding Mauritius II Limited (hereinafter called “LBHML”) required R-1 to take steps to dematerialize its equity shares, and to hold it in electronic form; for this purpose R-1 entered into an agreement with National Securities Depositories Limited (NSDL) on 25.1.2007; the process of dematerialization involved surrendering the original share certificates, and verification of the share transfer forms; after due verification, NSDL had permitted R-1 to demat their shares; this necessitated movement of the original documents from the company’s office to other offices; during this time, the file containing the original share transfer forms, and a cover containing the share certificates, got misplaced; and, since the shares of R-1 had already been dematerialized after NSDL gave its approval, there was no need to take any further action. 93. Shares of a company are dematerialized in terms of the provisions of the Depositories Act, 1996. Section 7(1) thereof required NSDL to register the transfer of shares in the name of the transferee on receipt of intimation from the participant. It is only the transfer of shares, effected after 25.01.2007 (the date of the agreement between R-1 and NSDL), which were required to be registered by NSDL, that too if the transferor had earlier entered into an agreement with it to have his shares dematerialized. By 25.01.2007 the entire share holding, hitherto held by A-1 to A-4 in R-1, stood in the name of R-8, and R-2 as the nominee of R-8. Consequently it is only the share certificates of R-8 which were required to be surrendered, in terms of Section 6(1) of the Depositories Act, to R-1. Section 6(2) required R-1, on receipt of the share certificate from R-8, to cancel the share certificate and substitute, in its records, the name of NSDL as the registered owner in respect of these shares, and inform NSDL accordingly. Section 6(3) required NSDL, on receipt of information from R-1, to enter the name of R-8 in its records as the beneficial owner of the shares originally held by A-1 to A-4. 94. Section 6(3) required NSDL, on receipt of information from R-1, to enter the name of R-8 in its records as the beneficial owner of the shares originally held by A-1 to A-4. 94. The provisions of the Depositories Act or the byelaws made thereunder, which required the share transfer deeds allegedly executed by A-1 to A-4 to be produced before NSDL, has neither been referred to by the CLB in the order under appeal, nor has any such provision been brought to the notice of this Court. Likewise no proceedings of NSDL, of its having perused the share transfer deeds allegedly executed by A-4 in favour of R-4, or the share transfer deeds allegedly executed by A-1 to A-3 in favour of R-8 and R-2 as its nominee, has been referred to in the order of the CLB, much less was any documentary proof in this regard been placed before it. There is no evidence on record, (other than the self-serving assertions of the respondents in their reply statements), to show that the share transfer deeds, allegedly executed by A-1 to A-4, were produced before NSDL for its verification; or to establish that NSDL had examined the share-transfer deeds executed by the appellants in favour of R4 and R8. The finding of the CLB, that NSDL had verified the share transfer deeds allegedly executed by A-1 to A-4, is based on no evidence and is perverse. (xii) REPLY STATEMENTS OF RESPONDENTS 4 AND 6: 95. Reliance is also placed by the respondents on the reply statements of R-4 and R-6, filed before the CLB, in support of their contention that A-1 to A-4 had transferred their shares, and had executed share transfer deeds in favour of R-4 and R-8. In his reply statement, R-4 states that he was the whole time director and President, Corporate Affairs of R-8; he was inducted into the Board of the Directors of R-1 as an additional director on 17.09.2007 and continued to be the Director of R-1 on the date of filing of the reply statement. R-6 also admits, in his reply statement filed before the CLB, that he was inducted as a Director into the Board of R-1 on 05.04.2008. R-6 also admits, in his reply statement filed before the CLB, that he was inducted as a Director into the Board of R-1 on 05.04.2008. The CLB has not assigned any reason for accepting the untested reply statements of R-4 and R-6, (though they were not subjected to cross-examination by the appellants), who were the Directors of R-1 when they filed their reply statements before it. The reply statements of R-4 and R-6 do not reflect compliance by them of the statutory and mandatory requirements of Section 108 and 108(1-A) of the Act, or the procedure in Rule 5-A of the CG Rules and Forms and Form 7-B thereof, before their names were entered in the Register of members of R-1 as transferees of the shares, allegedly transferred to them by A-1 to A-4. (xiii) LOSS OF COPIES OF SHARE TRANSFER DEEDS: NO PROOF: 96. Except for a vague and bald assertion, in their reply statements, that the share transfer forms were lost when the shares of the first respondent were being dematerialized, no evidence was placed on record, by the respondents, before the CLB regarding the action, if any, taken by them on coming to know of the loss of these documents; whether any complaint was lodged with the police informing them that these statutory records were lost, etc. (xiv) NO EVIDENCE: 97. The appellants and the respondents have placed documentary evidence, before the CLB, in support of their respective pleadings. While the appellants filed Annexure P-1 to P-41, the respondents filed Annexure R-1 to R-26. Where both the parties have led evidence, the burden of proof would assume secondary importance. (RamjiDayawala & Sons (P) Ltd. (supra). It is a cardinal rule, in the Law of Evidence, that the best available evidence should be brought before the Court. In weighing the evidence, the Court (CLB) can take note of the fact that the best available evidence has not been given and draw an adverse inference. (In Re: Vadlamudi Kutumba Rao(AIR 1957 AP 595). 98. Neither the Legal Review Report of M/s. Khaitan & Company, nor dematerialization of shares of R-1 by NSDL, show that the share transfer deeds, allegedly executed by A-4 in favour of R-4, and A-1 to A-3 in favour R-8 were verified by them. (In Re: Vadlamudi Kutumba Rao(AIR 1957 AP 595). 98. Neither the Legal Review Report of M/s. Khaitan & Company, nor dematerialization of shares of R-1 by NSDL, show that the share transfer deeds, allegedly executed by A-4 in favour of R-4, and A-1 to A-3 in favour R-8 were verified by them. Annexure 25 and Annexure 26, the alleged minutes of the meeting of Board of Directors of R-1 dated 15.06.2006 and 31.08.2006 respectively, are “loose sheets”, and do not form part of a “minutes book” required to be maintained by R-1 under Section 193 of the Act. These “loose sheets” have, therefore, no evidentiary value. The findings recorded by the CLB that the appellants had executed share transfer deeds, and had transferred their shares in R1 in favour of R4 and R8, is based on no evidence and is perverse. Except for the self serving assertions in the reply statements filed by R-4 and R-6, (both of whom were the Directors of R-1), there is no other evidence on record to show that the appellants had executed share transfer deeds, and had transferred their shares in favour of R-4 and R-6. The CLB has not assigned reasons for accepting the version of R-4 and R-6 that the appellants had executed share transfer deeds and had transferred their shares, and to disbelieve the assertions of the appellants, in their rejoinder, that they neither executed share transfer deeds nor transferred their shares. 99. The CLB has not assigned reasons for accepting the version of R-4 and R-6 that the appellants had executed share transfer deeds and had transferred their shares, and to disbelieve the assertions of the appellants, in their rejoinder, that they neither executed share transfer deeds nor transferred their shares. 99. It is contended, on behalf of the respondents, that the findings of the CLB cannot be said to be perverse, as to draw it within the net of a “question of law”; these findings need not be set side, even if another view is possible on the facts; this Court would come to the conclusion that appreciation of pleadings, and the evidence recorded by the CLB, is perverse only if the findings are altogether against the evidence on record; mere perception, of absence of adequate evidence in support of a finding, cannot render such findings perverse; the appellants had failed to establish that the conclusions reached are based on total lack of evidence leading to an inconclusive conclusion of perversity; even if two views are possible the High Court, exercising powers under Section 10F of the Act, would not substitute its own findings of fact when there is no perversity; this Court lacks jurisdiction to reverse any conclusion of fact, except to ascertain whether there is material evidence on record to justify such findings; a finding of fact cannot be reversed even if there is a possibility of a different conclusion on the evidence; proper legal tests have been correctly applied by the CLB; and, in such circumstances, the findings of fact of the CLB should be accepted without further enquiry. 100. This Court is conscious, and need not be reminded, that the judge, even when he is free, is still not wholly free. He is not to innovate at pleasure. He is not a knight-errant roaming at will in pursuit of his own ideal of beauty or of goodness. He is to draw his inspiration from consecrated principles. He is not to yield to spasmodic sentiment, to vague and unregulated benevolence. He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to ‘the primordial necessity of order in social life’. Wide enough in all conscience is the field of discretion that remains. (Benjamin Cardozo’s ‘The Nature of the Judicial Process, Yale University Press (1921); and The Newabgani Sugar Mills Co. He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to ‘the primordial necessity of order in social life’. Wide enough in all conscience is the field of discretion that remains. (Benjamin Cardozo’s ‘The Nature of the Judicial Process, Yale University Press (1921); and The Newabgani Sugar Mills Co. Ltd. v The Union of India ( AIR 1976 SC 1152 ). 101. If a finding of fact is perverse, and is based on no evidence, it can be set aside in appeal even though the appeal is permissible only on a question of law. The perversity of the finding itself becomes a question of law. (Dale & Carrington Invt. (P) Ltd. (supra). The High Court would be justified in quashing the impugned order if it is satisfied that the said order is not based on any evidence at all. But the conclusion that the impugned order is not supported by any evidence must be reached after considering the question as to whether probabilities and circumstantial evidence do not justify the said conclusion. (Board of High School & Intermediate Education v. Bagleshwar Prasad ( AIR 1966 SC 875 ). ‘No evidence’ does not mean total dearth of evidence. It extends to any case where the evidence, taken as a whole, is not reasonably capable of supporting the finding, or where no tribunal could reasonably reach that conclusion on that evidence. This ‘no evidence’ principle has something in common with the principle that perverse or unreasonable action is unauthorized and ultravires. It also has some affinity with the substantial evidence rule which requires that findings be supported by substantial evidence on the record as a whole. Lord Denning MR, in AshbridgeInvestments Ltd Vs. Minister of Housing and Local Government (1965) 2 All ER 371), put ‘no evidence’ at the head of the list of vitiating errors, saying:- “……The court can interfere with the Minister’s decision if he has acted on no evidence; or if he has come to a decision to which on the evidence he could not reasonably come; or if he has given a wrong interpretation to the words of the statute; or if he has taken into consideration matters which he ought not to have taken into account, or vice versa; or has otherwise gone wrong in law. It is identical with the position when the court has power to interfere with the decision of a lower tribunal which has erred in point of law……” (Administrative Law: H.W.R. Wade & C.F. Forsyth Ninth Edition; Burns Philp India Ltd., West Bengal v. The Commissioner of Prohibition & Excise, Hyderabad (Judgment in W.P.No.32098 of 1998, dated09-07-2001). 102. If the judgment of the CLB was given in a cursory and cavalier manner, and it has not gone into the real issues which were germane for a decision on the controversy involved, the High Court can go into the depth of the matter. (Dale & Carrington Invt. (P) Ltd. (supra). 103. Where the CLB, ignoring relevant evidence, side tracking the approach to be adopted in the matter, and overlooking various relevant considerations, has exercised its discretion, the appellate court can and ought to interfere as discretion is to be exercised according to reason and fair play, and not on its whim and caprice. “Discretion” means sound discretion guided by law. It must be governed by rule, not by humour; it must not be arbitrary, vague, and fanciful, but legal and regular. (RamjiDayawala & Sons (P) Ltd. (supra); R.V. Wilkes; CRAIES STATUTE LAW, 6th Edn., p. 273).Thefindings recorded by the CLB is not supported by any legally acceptable evidence, and has been arrived at without considering the relevant statutory provisions and the material on record. The evidence adduced by the respondents, taken as a whole, is not reasonably capable of supporting the finding of the CLB that the appellants had transferred their shares to R-4 and R-8. No Court/Tribunal could have reasonably reached the conclusion, which the CLB did, on the material evidence on record before it. (xv) ADMISSION OF THE APPELLANTS THAT THEY HAD TRANSFERRED 76% OF THEIR SHAREHOLDING TO R-8 – ITS EFFECT: 104. It is contended on behalf of the respondents that the admission of the appellants that they had sold 76% of their shares leads to the only irresistible logical conclusion that they had the transfer deeds and share certificates of all their shares, and they had parted with 76% of the share certificates; and, failure of appellants to produce the remaining share certificates relating to 24% of their shareholdings, disentitles them from seeking rectification of the Register of Members. 105. 105. In the order under appeal, the CLB noted that, while the appellants had admitted that they had transferred 76% of their shareholding in respondent No.1 to respondent No.8, the particulars of such transfer was not forthcoming; the appellants had contended that the respondents had illegally transferred the balance 24% shares held by them; the respondents had contended that the appellants had voluntarily transferred their entire share holding; on the probabilities of the case, it was evident that the appellants had preferred to exit from R-1 after transferring their shares to R-8; the dispute, if any, was regarding receipt of consideration; and, if at all there was a plea that no consideration was paid, it was for the appellants to take up the issue, of unpaid consideration by R-1, before the Civil Court. 106. It is true that the appellants, who claim to have transferred 76% of their share holdings in favour of R-8, have not stated when they had transferred such shares or the manner in which they were transferred. They have also not furnished any evidence regarding their remaining 24% share holding in R-1. The case of R-1, however, is not that the appellants had transferred 76% of their shares in favour of R-8 and had retained 24%, but that the appellants had transferred all their shares and had exited from the company. Other than the self-serving reply statements of R-4 and R-6 no other evidence was placed either before the CLB or this Court except “loose sheets”, termed as copies of the minutes of the board meetings, relating to the aforesaid transfer of shares. As the appellants, on their own volition, accept that they had transferred 76%, of their shareholding in R1, in favour of R8 (though there is no evidence on record to show the mode and manner of such transfer or proof of their holding 24% of the remainder), they must be held to have waived their right to seek rectification of the Register of Members to the extent of 76% of their share holding. The CLB shall confine its examination to the entitlement of the appellants, for rectification of the Register of Members, only in relation to 24% of their original share holding in R-1. (xvi) DELAY AND LACHES: 107. The CLB shall confine its examination to the entitlement of the appellants, for rectification of the Register of Members, only in relation to 24% of their original share holding in R-1. (xvi) DELAY AND LACHES: 107. It is submitted, on behalf of the respondents, that the appellants, having come to know that the respondents had lost the original transfer deeds and share certificates, had filed this petition; the delay, in approaching any judicial forum, would vouch-safe the said fact; the appellants started correspondence in the year 2006, stopped it in 2007, again resumed it in 2008, and again stopped and approached the CLB in 2009; and the conduct of the appellants, in maintaining silence for a long period of time, indicates their illegal motives. The appellants would, however, submit that the respondents remained silent till the year 2008, and deliberately did not respond to any correspondence; and the CLB had refused relief on its mere ipsi dixit. 108. In the order under appeal the CLB, after noting the appellants’ contention that they came to know of the increase in authorised and paid up capital, and allotment of shares to others, only during December, 2006 when an advertisement was released relating to the initial public offer proposed by R-1, held that, evidently and admittedly, the appellants became aware of the happenings in R-1 as early as in the year 2006; the respondents had sent a reply in 2008 stating that the alleged rights under the MOU, as regards R-1, had been completely extinguished as the substratum of the MOU could not be implemented, and it was four years since the 150MW project was dropped; the respondents had also stated that the appellants had existed from R-1 by selling their shareholdings and relinquishing their directorship in R-1; thereafter also the petitioners did not care to initiate any proceedings before the CLB; there was no explanation for the long delay of more than two years in filing the petition; and the petitioners were guilty of unexplained delay and laches. 109. It is no doubt true that an application for rectification of the Register of Members can be defeated by unexplained delay, (CuddaloreConstruction Co. Ltd., In re: Somasundar Pillai (T.V.) v. Official Liquidator (1967) 37 CC 440 (Mad); Nupur Mitra v. Basubani Pvt. Ltd (supra), and lapse of time coupled with the recognition of the transferee as a shareholder. 109. It is no doubt true that an application for rectification of the Register of Members can be defeated by unexplained delay, (CuddaloreConstruction Co. Ltd., In re: Somasundar Pillai (T.V.) v. Official Liquidator (1967) 37 CC 440 (Mad); Nupur Mitra v. Basubani Pvt. Ltd (supra), and lapse of time coupled with the recognition of the transferee as a shareholder. In such cases the transfer may be rendered incapable of being impeached. (Re Paradise Motor Co., Ltd (1968) 2 ALLER 625); Buckley on The Companies Acts (13TH Edition) at pp.810-811). It must, however, be borne in mind that, even if there is some delay, that, by itself, would not deprive the erstwhile share holder of the right to obtain rectification of the register where the entire procedure adopted is unfair, unreasonable and surreptitious (FarhatSheikh v. Escman Metalo Chemical Pvt. Ltd. (1991) 71 Company Cases 88 (Cal); and NupurMitra (supra). The scope of Section 111, as set out in the notes on clauses in the Bill which preceded the Companies (Amendment) Act, 1988, is that "there is no limitation period provided for making the application for rectification of Register of Members under sub-section (4). (SimretKatyal v. Bhagwan Das & Co. (P) Ltd. (1994(1) Com. LJ 442 (CLB); Nupur Mitra (supra). 110. In Re ISIS Factors Plc, Dulai v. ISIS Factors Plc (2003) EWHC 411 (Ch), (reliance on which is placed by the respondents), while considering an application seeking rectification of the Register of Members, it was held: - “………Essentially two points were raised by way of defence: delay and prejudice. As regards delay, it was accepted by Mr. Davidson that until February 1999, which was just over seven years after the December meeting, Mr Dulai did nothing to assert ownership of the 10,000 shares which he claims to have bought. During that time he neither received nor asked for a share certificate, any annual accounts or any notices of any shareholders or directors meetings. Aware that he could obtain information from Companies House in relation to the financial and other affairs of ISIS Factors, he took no steps to obtain any from that source. He received the letters of August 1992 making a call on him but chose to ignore them. By sitting back and doing nothing for seven years until the day arrived, if it ever should, when it suited him to enforce his rights, Mr. He received the letters of August 1992 making a call on him but chose to ignore them. By sitting back and doing nothing for seven years until the day arrived, if it ever should, when it suited him to enforce his rights, Mr. Dulai was failing to display the need for promptitude which is ordinarily a requirement of some seeking the grant in his favour of the court’s discretion. That is certainly the case where specific performance is claimed. It is difficult to see why the position should be different merely because the claim is for relief under s. 359. Delay of this length would without more have led me to refuse relief. Given these circumstances I am of the view that rectification of the ISIS Factors’ register (whether in exercise of the court’s discretion under s. 359(2) or as part of the working out of a decree of specific performance) would be to the manifest prejudice of LSB which purchased that control in ignorance of Mr Dulai’s claims and on the footing that it was acquiring the whole of that company’s issued share capital. On that further ground, therefore, I would have declined to grant the relief claimed…..” (emphasis supplied) 111. In Re ISIS Factors Plc, Dulai67 the delay was of nearly a decade, and there was no satisfactory explanation there for; and, after judiciously considering the long delay of a decade, the Court declined to grant relief holding that the claim was barred by latches. No period of limitation is prescribed for rectification of the Register of Members under Section 111(4) of the Act. Even if the provisions of the Limitation Act are presumed to be applicable, to proceedings before the CLB, an application would be barred under Article 137 thereof only if it is filed three years after the appellants came to know of their right to sue. The time for an application for rectification, to become barred under the provision of Article 137 of the Limitation Act, 1963, begins to run only after the applicant comes to know of his right to sue. (NupurMitra3; and ShaMulchand & Co. v. Jawahar Mills Ltd. ( AIR 1953 SC 98 ). Mere delay of two years, by itself, would not necessitate rejection of an application for rectification of the register of members. 112. (NupurMitra3; and ShaMulchand & Co. v. Jawahar Mills Ltd. ( AIR 1953 SC 98 ). Mere delay of two years, by itself, would not necessitate rejection of an application for rectification of the register of members. 112. Waiver, acquiescence or laches are insufficient to defeat the right of the applicant to seek rectification of the register of members unless there is an abandonment of his right inducing another to change his position to his detriment. In the last case, the applicant would be barred by estoppel. (NupurMitra (supra)and ShaMulchand (supra). The CLB has not assigned any reason why it considered the unexplained delay of two years so inordinate, and of such a magnitude, as to disentitle the appellants from being granted the relief sought for. This Court may not be understood to have held that every application, filed with an unexplained delay of two years, should be entertained by the CLB. All that is being held is that, while rejecting an application either for rectification of the register of members under Section 111(4), or for oppression under Section 397, of the Act the CLB should assign reasons in support of its conclusion that the delay of two years, in filing an application before it, would be fatal. (xvii) CONTRADICTORY STAND OF THE APPELLANTS: 113. It is contended on behalf of the respondents that all disputed questions of fact were relegated by the CLB to the Civil Court primarily because A-1 to A-3 were speaking with many tongues; at one place they denied receiving the share certificates, at another they said that they had transferred 76% of their shares immediately after the MOU, and in yet another place they denied transferring any shares at all; the reluctance of A-1 to A-3 to produce their share certificates was, primarily, held against them; similar was the case with A-4, besides the fact of their investments not being reflected in their balance sheet after the alleged transfer; the maxim “allegans contraria non est audiendus – he is not to be heard who alleges things contradictory to each other” squarely applies to the facts of this case; the appellants have been contradicting themselves many a time on the issue of the shares which they had transferred to the respondents; and, as the claim of the appellants is a bundle of contradictions, it was rightly rejected by the CLB. 114. 114. As noted hereinabove where the finding is one of fact, the fact that it is itself in inference from other basic facts will not alter its character as one of fact. Factual inferences to be drawn from findings of fact are not questions of law, and cannot be examined in appellate proceedings under Section 10-F of the Act. It is wholly inappropriate for this Court, therefore, to examine (a) the inferences to be drawn from the appellants plea that they had transferred 76% of their shares to R-8; (b) the contradictions between their pleadings on the one hand, and the letters addressed by them to the respondents from 08.12.2006 onwards, on the other; (c) the inconsistencies, if any, between the contents of the MOU dated 03.04.2002 and their pleadings; (d) the non-participation of the appellants in the affairs of R-1; (e) the evidence of R4 that he paid consideration in cash, and had raised the money through cash, being supported by the reply of R-6 etc. As it has been conferred the power, to appreciate evidence and record findings of fact, the CLB, while examining the petition afresh on the aforesaid two questions, shall, in the light of the statutory and other provisions referred to hereinabove and the observations made in this order, also consider the submissions of Learned counsel on either side on the factual inferences to be drawn from the documentary evidence on record. (xviii) SHOULD THIS COURT ADJUDICATE ON THE MERITS OF THE CLAIM FOR RECTIFICATION OF THE REGISTER OF MEMBERS? 115. It is submitted on behalf of the appellants that this Court should adjudicate the appellants claim, for rectification of the Register of members, on its merits. It needs to be borne in mind that the jurisdiction exercised by this Court, under Section 10-F of the Act, is only if a question of law, and not of fact, arises for consideration from the order of the CLB. While failure of the CLB to consider relevant material is a question of law which would necessitate its order being set aside, this Court would exceed its jurisdiction under Section 10-F if it were to re-appreciate, or appreciate afresh, the evidence on record including the material which the CLB has failed to consider, and pass orders on merits. While failure of the CLB to consider relevant material is a question of law which would necessitate its order being set aside, this Court would exceed its jurisdiction under Section 10-F if it were to re-appreciate, or appreciate afresh, the evidence on record including the material which the CLB has failed to consider, and pass orders on merits. The power to appreciate, and record findings of, facts is conferred on the CLB under Section 10-E read with Section 111 and Sections 397 of the Act. It is not open for this Court to usurp the powers of the CLB, and re-appreciate the evidence on record, in an appeal under Section 10-F of the Act. Suffice it to observe that the CLB has failed to examine the relevant provisions of the Companies Act, the Rules and regulations made thereunder, the relevant provisions of the Depositories Act, the relevant foreign exchange laws, the relevant clauses of the Memorandum and Articles; the statutory returns which form part of the material on record etc, which necessitates its order being set aside. IV. INCREASE IN AUTHORISED SHARE CAPITAL: 116. It is contended on behalf of the appellants that grounds (g) and (h) in the memorandum of appeal are the questions of law raised regarding the validity of increase in the authorized share capital; as no EGM was held on 29.09.2004, no approval was granted by the general body for the initial increase in authorized share capital; and, consequently all subsequent increases in authorized share capital are illegal. 117. As several contentions are urged by Counsel on either side on this question, it is convenient to classify them under different sub-heads. (i) IS APPROVAL OF THE COMPANY LAW BOARD REQUIRED TO BE OBTAINED ONLY AFTER THE REGISTERED OFFICE OF A COMPANY IS SHIFTED FROM ONE STATE TO ANOTHER? 118. 117. As several contentions are urged by Counsel on either side on this question, it is convenient to classify them under different sub-heads. (i) IS APPROVAL OF THE COMPANY LAW BOARD REQUIRED TO BE OBTAINED ONLY AFTER THE REGISTERED OFFICE OF A COMPANY IS SHIFTED FROM ONE STATE TO ANOTHER? 118. It is contended on behalf of the appellants that the EGM dated 29.9.2004 could not have been held in the registered office at Jodhpur in the State of Rajasthan as the order of the CLB, confirming shifting of the registered office of R-1, was passed five months prior thereto on 29.4.2004; it is only after the registered office of a company is shifted from one state to another, is confirmation required to be obtained from the CLB; and the very fact that the CLB had, by its order dated 29.4.2004, granted approval for shifting of the registered office goes to show that the registered office of R-1 must have been shifted from Jodhpur to Hyderabad prior to 29.4.2004, and not thereafter. 119. I find considerable force in the submissions urged on behalf of respondents, that this question should not be examined in the present appeal, filed under Section 10F of the Act, as it has been raised for the first time before this Court. As noted hereinabove a question of law, which has neither been raised before the CLB nor decided by it, cannot be said to be a question of law arising out the order of the CLB, and cannot be examined in an appeal filed under Section 10-F of the Act. 120. Even otherwise Section 17(1) of the Act enables a company, by a special resolution, to alter the provisions of its memorandum so as to change the place of its registered office from one State to another. Section 17(2) stipulates that the alteration of the provisions of the memorandum, relating to the change of the place of its registered office from one State to another, shall not take effect unless it is confirmed by the CLB on a petition. Section 17(5) enables the CLB to make an order confirming the alteration on such terms and conditions, if any, as it thinks fit. Section 17(5) enables the CLB to make an order confirming the alteration on such terms and conditions, if any, as it thinks fit. Section 18(1)(b) requires a company to file with the Registrar a certified copy of the order of the CLB, made under Section 17(5), confirming the alteration, within three months from the date of the order together with a printed copy of the memorandum as altered. The Registrar is required, there under, to register the same and certify the registration under his hand within one month. Section 18(2) stipulates that the certificate shall be conclusive evidence that all the requirements of the Act, with respect to the alteration and the confirmation thereof, have been complied with, and thenceforth the memorandum as so altered shall be the memorandum of the company. Section 18(3) stipulates that, where the alteration involves a transfer of the registered office from one State to another, a certified copy of the order confirming the alteration shall be filed by the company with the Registrars of each of the States, and the Registrars of each such States shall register the same and shall certify under their hand the registration thereof. Section 19(1) stipulates that no such alteration, referred to in Section 17, shall have any effect until it has been duly registered in accordance with the provisions of Section 18. 121. The CLB is required, under Section 17(2) of the Act, merely to confirm alteration of the Memorandum of Association relating to the change of the registered office of the company from one State to another. An order of confirmation by the CLB, under Section 17(2), does not presuppose that the registered office of the company has already been shifted from one State to another. The only condition prescribed, for invoking the jurisdiction of the CLB under Section 17(2), is that a special resolution has been passed by the company to alter the provisions of its memorandum so as to change the place of its registered office from one State to another. It is only after the CLB confirms the alteration; a certified copy of the order of the CLB, confirming the alteration, is filed with the Registrar of Companies; and the Registrar certifies it under his hand; would alteration of the Memorandum of Association have effect. It is only after the CLB confirms the alteration; a certified copy of the order of the CLB, confirming the alteration, is filed with the Registrar of Companies; and the Registrar certifies it under his hand; would alteration of the Memorandum of Association have effect. While the CLB confirmed the alteration of the Memorandum of R-1, relating to the change of its registered office from Jodhpur to Hyderabad, on 29.4.2004, registration and certification, of the said alteration by the Registrar, was only on 10.01.2005. It is only after 10.01.2005 was the 1st respondent entitled to shift its registered office. Shifting of the registered office of R-1, from one State to another, prior thereto would have fallen foul of the statutory stipulations aforementioned. 122. In any event the order of the CLB dated 29.4.2004, confirming the alteration of the memorandum of association, does not, ipso facto, necessitate the conclusion that R-1 had shifted its registered office from Jodhpur to Hyderabad prior thereto. The appellants have not adduced any evidence before the CLB to show that R-1 had, in fact, shifted its registered office from one State to another prior to 29.9.2004 when the EGM of R-1 was allegedly held. Even otherwise it is only an AGM which is required, under Section 166(2), to be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated. No statutory provision, which requires an EGM to be held only at the registered office of the company, has been brought to the notice of this Court. This submission, therefore, necessitates rejection. (ii) IS THE FINDING OF THE CLB THAT AN EGM OF THE 1ST RESPONDENT WAS CONVENED AND HELD ON 29.09.2004 BASED ON NO EVIDENCE? 123. No statutory provision, which requires an EGM to be held only at the registered office of the company, has been brought to the notice of this Court. This submission, therefore, necessitates rejection. (ii) IS THE FINDING OF THE CLB THAT AN EGM OF THE 1ST RESPONDENT WAS CONVENED AND HELD ON 29.09.2004 BASED ON NO EVIDENCE? 123. It is contended on behalf of the appellants that the very first increase of the authorized capital in R-1, from Rs.50.00 lakhs to Rs.1.75 crores, which was allegedly approved in the EGM held on 29.09.2004, was demonstrably false; as the very first increase of authorized capital is illegal, all subsequent increases in authorized capital, (that purportedly took place on 25.10.2006, 07.03.2007 and 06.02.2008), are also illegal; all further allotment of shares would also be rendered illegal; an EGM could have been summoned only by a prior board meeting of the company; the appellants had filed their rejoinder before the CLB denying any such meeting having been held at their residence; the CLB has not assigned any reason why it chose to believe the affidavit of Sri Arvind Kumar Sanghvi, and disbelieve the assertion of the appellants in their rejoinder; to establish their contention that the EGM of R-1 was held at Jodhpur on 29.09.2004, the respondents should have produced copies of the notice convening the meeting of the Board of Directors; copies of the notices issued by the company to their shareholders for convening the EGM dated 29.9.2004; proof of dispatch of such notices; production of documents such as postal receipts or register maintained for inward and outward despatch of documents from the company; and service of notice on A-1 to A-3 for summoning the meeting of the shareholders of R-1; the “minutes” of the meeting of the Board of Directors resolving to summon the EGM; the original “minutes book” containing the signed copies of the minutes, along with the attendance register of the members present at the meeting; the attendance register for the said EGM; the signed minutes recorded in the “minutes books”, for the shareholders meetings, in accordance with Sections 193 and 194 of the Act; and proof of travel to Jodhpur by Sri Arvind Kumar Sanghvi to attend the EGM purportedly held on 29.09.2004. 124. 124. It is further submitted, on behalf of the appellants, that, as they had not been invited either to participate in the meeting of the Board of Directors or for the EGM purportedly held on 29.09.2004, they could not have produced any evidence to establish to the contrary, except to deny on oath; the inspection report shows dearth of material even at the registered office of R-1; in the absence of a police complaint, having been lodged by them regarding loss of documents, the contention of the respondents that these documents were lost would not put their case on a better footing; if holding of the meeting dated 29.09.2004 is not proved, the consequence thereof is that there was no increase of authorized share capital on that date; if the foundation of the respondents case is removed, the edifice would collapse; and, consequently, all subsequent increases in authorized share capital would be illegal. 125. It is contended on behalf of the respondents that all the statutory records of the company were in the registered office at Jodhpur (i.e., the residence of the appellants) till it was shifted to Hyderabad in January, 2005; the conduct of the EGM on 29.09.2004 was proved by the affidavit of Sri Arvind Kumar Sanghvi, a contemporaneous shareholder, who had confirmed the meeting at the residence of appellant No.1, and the presence of appellants 1 and 3; thereafter the appellants confirmed the meeting and its minutes before the CLB, but contended that the signed minutes were on white paper, and not in a “minutes book”; going even by their own case, the appellants had transferred 76% of their shareholding to R-8; the MOU provides that R-8 can bring in funds, and get the shares allotted in its discretion; and, in any event, the appellants cannot complain in respect of the increase in the authorized capital and paid-up capital post their exit. (iii) STATUTORY AND OTHER PROVISIONS APPLICABLE TO THE ALTERATION OF THE MEMORANDUM OF ASSOCIATION, FOR INCREASE OF THE AUTHORISED SHARE CAPITAL, IN AN EXTRA-ORDINARY GENERAL MEETING: 126. In the case of a company having share capital, Section 13(4) of the Act requires the Memorandum of Association to state the amount of share capital with which the company is to be registered, and the division thereof into shares of a fixed amount. In the case of a company having share capital, Section 13(4) of the Act requires the Memorandum of Association to state the amount of share capital with which the company is to be registered, and the division thereof into shares of a fixed amount. Under Section 94(1) of the Act, a limited company having share capital may, if so authorised by its articles, alter the conditions of its memorandum so as to increase its share capital by such amount as it thinks expedient by issuing new shares. Section 94(2) stipulates that the powers conferred by Section 94 shall be exercised by the company in a general meeting, and shall not be required to be confirmed by the Court. 127. Section 169 of the Act relates to the calling of an EGM. Section 170(1)(ii) stipulates that the provisions of Section 171 to 186 shall, unless the Articles of the company otherwise provide, apply with respect to general meetings of a private company which is not a subsidiary of a public company. Clause 30 of the Articles of R-1, which relates to the notice of general meetings and the explanatory statement, enables the directors, if they think fit, to convene a general meeting, other than the AGM of the company, by giving a notice thereof being not less than three days in accordance with the provisions of law. Though Section 171(1) provides for a general meeting of the company to be called by giving notice of not less than 21 days, Clause 30 of the Articles of R-1 would prevail, and a notice of three days would suffice for convening an EGM. However, as the Articles do not provide otherwise, the provisions of Sections 172 and 173 of the Act would necessitate compliance for convening an EGM of R-1. Section 172(1) stipulates that every notice, of the meeting of the company, shall specify the place and the day and the hour of the meeting, and shall contain a statement of the business to be transacted thereat. Section 172(2)(i) stipulates that a notice, of every meeting of the company, shall be given to every member of the company in any manner authorized by sub-sections (1) to (4) of Section 53. Section 173 (1)(b) stipulates that all business transacted at an EGM shall be deemed to be special. Section 172(2)(i) stipulates that a notice, of every meeting of the company, shall be given to every member of the company in any manner authorized by sub-sections (1) to (4) of Section 53. Section 173 (1)(b) stipulates that all business transacted at an EGM shall be deemed to be special. Section 173(2) stipulates that, where any items of business to be transacted at the meeting are deemed special, there shall be annexed to the notice of the meeting a statement setting out all material facts concerning each such item of business. As the resolution, for increase of the authorized share capital of R-1, is stated to have been passed in the EGM allegedly held on 29.09.2004, Sections 172 and 173 of the Act necessitated compliance. 128. A notice of the general meeting, as stipulated under Section 172(1), must be “duly” given. (M.S. Madhusoodhanan (supra).It is essential that the notice of the meeting, and of the business to be transacted thereat, should be given to all persons entitled to participate; and if a member, whom it is reasonably possible to summon, is not summoned, the meeting cannot be said to have been duly convened even if the omission is accidental. A meeting of the directors is not duly convened unless due notice has been given to all the directors. The business put through at a meeting, not duly convened, is invalid. (ParmeshwariPrasad Gupta v The Union of India ( AIR 1973 SC 2389 ); and Halsbury'sLaws of England, Vol. 6 p. 315, Article 626 and Vol. 9, p. 46). For want of proper or sufficient notice, or other defect in procedure, a resolution is not effective. (V.G. Balasundaram v. New Theatres Carnatic Talkies Pvt. Ltd. (1993) 77 Comp Cas. 324 (MAD);In re: Self Help Private Industrial Estate Private Ltd., [1972] 42 Comp Cas 605 (Mad); Parikh Engineering and Body Building Co. Ltd., In re [1975] 45 Comp Cas 157(Patna). 129. Clause 23 of the Articles of R-1, which relates to alteration of capital, stipulates that Regulations 44 to 46 of Table (A) of the Act would apply. Regulation 44 of Table (A) enables a Company, from time to time, by ordinary resolution to increase the share capital by such sum as may be specified in the resolution. Clause 28 of the Articles, which relates to AGMs, stipulates that the provisions of Section 166 of the Act shall apply. Regulation 44 of Table (A) enables a Company, from time to time, by ordinary resolution to increase the share capital by such sum as may be specified in the resolution. Clause 28 of the Articles, which relates to AGMs, stipulates that the provisions of Section 166 of the Act shall apply. Clause 29 provides for when an EGM can be convened and empowers the directors, whenever they think fit, to convene an EGM. Clause 31 of the Articles, which relates to the proceedings of general meetings, stipulates that Regulations 49 to 55 of Table (A) of the Act would apply. Regulation 49(1) of Table (A) stipulates that no business shall be transacted at any general meeting unless a quorum is present thereat. Regulation 49(2) stipulates that, in the case of a private company, two members present at the meeting shall be the quorum. Clause 54 of the Articles, which relates to the quorum for a meeting of the directors, stipulates that the quorum, for necessary transaction of the business of directors, shall be two or 1/3 of the total number of directors whichever is higher. Clause 62 of the Articles relates to notices, and stipulates that service of any document or notice, by the Company on its members, shall be effected in accordance with the provisions of Section 53 of the Act. Section 53(1) of the Act stipulates that the document may be served by a company, on any member thereof, either personally or by sending it by post to his registered address or, if he has no registered address in India, to the address, if any, within India supplied by him to the company for the giving of notices to him. The two modes of service of notice envisaged under Section 53 of the Act, are personal service and service by post. There is no other mode envisaged. Under Section 53(2)(a), where a document is sent by post, service thereof shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the document. Section 53(2)(b)(i) stipulates that such service shall be deemed to have been effected, in the case of a notice of a meeting, at the expiration of forty eight hours after the letter containing the same is posted. Section 53 (2) is a rebuttable presumption which the court must raise provided the basic facts, namely, the due posting of the document is proved. Section 53 (2) is a rebuttable presumption which the court must raise provided the basic facts, namely, the due posting of the document is proved. (M.S. Madhusoodhanan (supra).Even proof of service of notice, by certificate of posting, cannot be readily accepted and may be viewed with suspicion. Judicial notice has been taken that certificates of posting are notoriously “easily” available now, which was seen as a possible, but a rare, occurrence earlier (L.M.S. Ummu Saleema v. B.B. Gujaral ( AIR 1981 SC 1191 ); ShivKumar v. State of Haryana (1994) 4 SCC 445 ); M.S. Madhusoodhanan (supra). (iv) AFFIDAVIT OF SRI ARVIND KUMAR SANGHVI: 130. Before the CLB, R-1 to R-3 stated that it is only after the authorized capital was increased, did R-1 allot 12 lakh equity shares of Rs.10/-each at par to R-8 on 30.09.2004 against the share application money brought in by them. They relied on a third party affidavit, of Sri Arvind Kumar Sanghvi, in support of their contention that an EGM was held on 29.09.2004 at the then registered office of R-1 (i.e., the residence of appellant No.1). In his affidavit, Sri Arvind Kumar Sanghvi stated that he was a shareholder of R-1 for three years between December, 2002 and December, 2005; he received a notice, for the convening of the 3rd AGM of the company, on 30.08.2004; however the notice did not include the business for increasing the authorized share capital of the company; he immediately called up R-2 and told him that he was not honouring his commitment; R-2 informed him that, since he was meeting A-1 for the AGM, the company would convene an EGM; the EGM was convened at the registered office of R-1 in Jodhpur, (the residence of A-1), on 29.09.2004 to increase the authorized capital from 50 lakhs to 1.75 crores; he attended the meeting which was also attended by the 1st and 3rd appellants; and the meeting passed the resolution for increasing the authorized capital. 131. Clause 1.16 of the Legal Review Report, of M/s Khaitan & Company (Annexure R-17), refers to a Board of Directors meeting allegedly held on 25.9.2004 wherein it was resolved to issue a notice for convening the EGM, and seek authorization to increase the authorized capital of the company. 131. Clause 1.16 of the Legal Review Report, of M/s Khaitan & Company (Annexure R-17), refers to a Board of Directors meeting allegedly held on 25.9.2004 wherein it was resolved to issue a notice for convening the EGM, and seek authorization to increase the authorized capital of the company. Notice to all the Directors, that a meeting of the Board of Directors is being convened, is essential for the validity of any resolution passed thereat and, if no notice is given to one of the Directors of the Company, the resolution passed at the said meeting is invalid.(Parmeshwari Prasad Gupta (supra). Whether or not such a Board meeting was held is in dispute as the “minutes book” of the meetings of the Board of Directors was not produced, and A-1, (who was admittedly a director of R-1 till he ceased to be a director from 02.12.2004 -Annexure P-29 – Form No.32), claims not to have been informed of either the Board of Directors meeting allegedly held on 25.9.2004 or the EGM allegedly held on 29.9.2004. Curiously while Sri Arvind Kumar Sanghvi, in his affidavit filed before the CLB, claims to have received a notice on 30.08.2004, relating to the AGM held on 25.9.2004, he has not referred to any notice having been received by him for the EGM convened on 29.9.2004. His affidavit is silent regarding the manner in which the EGM was convened; the mode and manner in which he was intimated thereof; and whether or not a notice was issued to him, in terms of Clause 62 of the Articles and Section 53 of the Act, for calling the EGM allegedly held on 29.09.2004. If, as contended by the respondents, a Board of Directors meeting was held on 25.9.2004, and it was resolved therein to issue a notice for convening the EGM, receipt of the notice for convening the EGM, and the mode and manner in which he was intimated thereof, should have been referred to by Sri Arvind Kumar Sanghvi in his affidavit filed before the CLB. As noted hereinabove an inspection was caused on the directions of the CLB, and an Inspection report (Annexure R-1) was filed before it. As noted hereinabove an inspection was caused on the directions of the CLB, and an Inspection report (Annexure R-1) was filed before it. Serial No.12 of the report lists the documents sought for by the appellants i.e., a copy of the notice, proof of dispatch of the notice, and the minutes of the EGM dated 29.09.2004 against which the Inspectors have remarked that proof of notice, and dispatch thereof, was not produced; and the minutes were shown on “plain paper”, and not in the minutes book. 132. As only members can participate in a general meeting of the company, the affidavit of Sri Arvind Kumar Sanghvi that only three members had participated in the EGM dated 29.09.2004 i.e., appellants 1 and 3 and himself is an admission that appellant No.3 was also then a shareholder of R-1. While A-1 and A-3 assert that no such meeting was held, more so at the residence of A-1, the affidavit of Sri Arvind Kumar Sanghvi is the basis for the respondents assertion that an EGM took place on 29.09.2004. The CLB erred in law in placing on the appellants the burden to prove what, according to them, is a non-existent event. The CLB has not assigned reasons why it chose to believe the version of R-1 to R-3, (as pleaded in their reply statement based on the third party affidavit of Sri Arvind Kumar Sanghvi), and to disbelieve the version of A-1 to A-4, (in their rejoinder), that no such meeting was held. (v) POWER OF THE CLB UNDER SECTION 10-E (4-C) OF THE ACT AND REGULATION 24 OF THE CLB REGULATIONS: 133. The CLB cannot exercise the powers of a Civil Court under the Civil Procedure Code, 1908, except what is stipulated under Section 10E(4C) of the Act. (B.SubbaReddy v. S.S.Organics Ltd. (2009) 151 Comp Cas 190 (AP). Section 10-E (4-C) of the Act confers powers on the CLB, (which are vested in a Court under the CPC), to compel production of documents as evidence. (B.SubbaReddy v. S.S.Organics Ltd. (2009) 151 Comp Cas 190 (AP). Section 10-E (4-C) of the Act confers powers on the CLB, (which are vested in a Court under the CPC), to compel production of documents as evidence. Regulation 24 of the CLB Regulations empowers the CLB, before passing orders on the petition, to require the parties to produce such further documentary or other evidence as the CLB may consider necessary (a) for the purpose of satisfying itself as to the truth of the allegations of the petition; or (b) for ascertaining any information which, in its opinion, is necessary for the purpose of enabling it to pass orders on the petition. In the light of the conflicting and opposite stands, taken by the appellants and the respondents in their respective pleadings, the only manner in which the CLB could have ascertained the truth was to exercise its powers under Section 10-E(4-C) of the Act and Regulation 24 of the CLB Regulations; summon the records from R-1, (which is its custodian), including copies, if any, of the notices sent to the members informing them that an EGM was being convened; documentary proof of such notices having been sent to all the members; copies of the explanatory statement which should have been annexed with the said notices, etc. 134. Section 10-E(4-C) of the Act also enables the CLB to enforce attendance of witnesses, and to examine them on oath. The CLB could have exercised its powers, under Section 10-E(4-C), to summon Sri Arvind Kumar Singhvi (a third party to the proceedings before it) and subject him to cross-examination by the appellants. The purpose of cross-examination is to place all facts before the CLB to enable it to come to a just decision on the competing cases, and to enable the party to take out material which will help or otherwise show the probability in laying down its defence. This valuable statutory right is also a part of the basic principles of justice and fairness. (Sanjay Cotton Co. v. Omprakash Shioprakash ( AIR 1973 BOM 40 ). (vi) SECTION 399: SHARE HOLDING QUALIFICATION TO BE SATISFIED IS ON THE DATE ON WHICH THE ACT OF OPPRESSION TOOK PLACE: 135. The requirement of qualification shares is relevant only at the time of institution of proceedings. (Sanjay Cotton Co. v. Omprakash Shioprakash ( AIR 1973 BOM 40 ). (vi) SECTION 399: SHARE HOLDING QUALIFICATION TO BE SATISFIED IS ON THE DATE ON WHICH THE ACT OF OPPRESSION TOOK PLACE: 135. The requirement of qualification shares is relevant only at the time of institution of proceedings. (JawaharSingh Bikram Singh Private Limited v. Sharda Talwar (1974) 44 Comp Cas 552 (Del-DB); Rajahmundry Electric Supply Corporation Ltd. v. A.Nageswara Rao ( AIR 1956 SC 213 ); S.Varadarajanv. Venkateswara Solvent Extraction (P) Ltd. (1994) 80 Comp Cas 693 (MAD); and Dale & Carrington Invt. (P) Ltd. (supra). In cases where the main issue is of oppression, which requires appreciation of evidence, the company petition cannot be thrown out on the ground of maintainability as the equitable jurisdiction of the CLB is invoked.(V.L. Sridharan v. Econo Valves P. Ltd (2010) 158 Comp.505 (Mad)). 136. Section 397(1) of the Act enables members of a company to complain to the CLB if the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members. In the case of a company having share capital, Section 399(1)(a) of the Act stipulates that any member, or members, holding not less than 1/10th of the issued share capital of the company, shall alone have the right to apply to the CLB under Section 397 of the Act. A complaint by members, of oppression under Section 397, can be entertained by the CLB only if the complainants satisfy the qualification shareholding stipulated under Section 399(1)(a) of the Act. 137. For the purpose of deciding the eligibility of a member of a company, to maintain a petition under Sections 397 of the Act, the qualification, in respect of the requisite shareholding in the company, of such person, prior to the act of oppression complained of, has to be taken into consideration, and not the qualifying shares thereafter. If the date of presentation of the petition is taken as the relevant date, it could defeat the very purpose of the legislative enactment of Section 397 of the Act, as the overbearing majority shareholders can simply, by highhanded action and by oppressive methods, dismember the minority shareholders and leave them with no remedy, as the dismembered minority shareholders would then, technically, not qualify for maintaining a petition under Section 399 of the Act, being not members at all. As the minority shareholders can complain only after the acts have occurred, and when they have been removed from the membership of the company, Section 399 should be so understood and interpreted so as to further the object of the relief to be given in a situation governed by Section 397 of the Act, and not to foreclose the options of an aggrieved person and deny the very relief sought to be extended to the complaining minority shareholder/s.(Mr. Vijayan Rajes v. M.S.P. Plantations Private Limited (2009) 151 CC 413 (Kar-DB). 138. As noted hereinabove, prior to the alleged increase in authorized share capital, purportedly approved by the shareholders of R-1 in the EGM held on 29.09.2004, the authorized and paid up share capital of R-1 was Rs.50,00,000/- divided into 5 lakh shares of Rs.10/- each. While A-1 to 4 held 2,60,100 shares of Rs.10/- each i.e., for Rs.26,01,000/-, the other two shareholders i.e., Sri Arvind Kumar Sanghvi held 2,39,800 shares of Rs.10/-each for Rs.23,98,000/-and Sri Suresh Bhai Pandya held 100 shares of Rs.10/- each for Rs.1000/-. It is evident, therefore, that A-1 to A-4 held 52.2% of the then issued and paid up capital of R-1. Even if the appellants are held to have waived 76% of their share holding, and are presumed to hold only 24% thereof, they would still be left with 62,640 shares of Rs.10/-each i.e., for Rs.6,26,400/-i.e., approximately 12.53% of the then issued and paid up share capital of R-1, which is still more than the qualification share holding of 10% of the issued and paid up capital stipulated under Section 399 of the Act. The appellants must be held to have fulfilled the prescribed qualification of holding 10% of the issued share capital of R-1 to maintain the application under Section 397 of the Act provided, of course, that the 2,50,000 shares allotted by R-1 to A-4 is held to be valid. If the locus standi of the appellants can be justified on the basis of admitted facts, by reference to other statutory provisions, it would not be proper to reject their claim only on the basis of the case made out by them. Where the fact that the appellants are members of the company is not in dispute, their locus standi to move the application cannot be doubted. (NupurMitra (supra). 139. Where the fact that the appellants are members of the company is not in dispute, their locus standi to move the application cannot be doubted. (NupurMitra (supra). 139. Let us now examine preliminary objection (b) that the appellants, having given up the appeal against some of the shareholders, cannot question the validity of the initial increase in authorised share capital in the EGM held on 29.09.2004. (vii) SHAREHOLDERS WHO ARE PARTIES WERE GIVEN UP: 140. (NupurMitra (supra). 139. Let us now examine preliminary objection (b) that the appellants, having given up the appeal against some of the shareholders, cannot question the validity of the initial increase in authorised share capital in the EGM held on 29.09.2004. (vii) SHAREHOLDERS WHO ARE PARTIES WERE GIVEN UP: 140. Sri L. Ravichander, Learned Senior Counsel, would submit that the appellants had, during the course of arguments, given up the appeal against the respondents, (other than those who had entered appearance through Counsel and those on whom notices in the appeal were served); no order, which would affect the respondents who were given up, can be passed by this Court without hearing them; it needed to be brought on record that Counsel for R-1 to R-8 had filed a memo stating that R-16, who had executed a vakalat in favour of his Counsel during the hearing before the CLB, did not continue the engagement; thus, along with the other respondents, even R-16 was unrepresented before this Court; the appellants’ plea regarding the alleged illegal increase in authorized share capital cannot be divested from the present facts scenario wherein several shareholders have a considerable stake in R-1; the said issue cannot be agitated after a conscious exclusion of the shareholders of the company from the present appeal proceedings; while it may be debatable whether the shareholders of a company are required to be made parties to the Company Petition, the appellants had themselves arrayed the shareholders of R-1 as parties, and had subsequently given them up; the appellants cannot, therefore, be permitted to address arguments on the issue concerning the alleged unauthorized increase of authorized share capital of R-1, and on other issues which could adversely affect their shareholding; having given up the appeal against some of the shareholders, the appellants cannot make the very same claim against the company, and thereby its shareholders; the effect of abandonment of the appeal against the other respondents is that all other reliefs, except relief (a) and (b) in the Company Petition, are given up; relief (a) relates to alleged non payment of consideration to the appellants in the form of transfer of 40 lakhs shares; the appellants, during the hearing, conceded that such prayers cannot be made in a petition under Section 397; and, therefore, the only relief that survived was relief (b). 141. 141. On the other hand Sri S. Ravi, Learned Senior Counsel appearing on behalf of the appellants, would submit that in a petition under Section 397 of the Act, especially where the issue relates to illegal acts, it is the company which alone is a necessary party; it is impossible to add all the shareholders, especially in a public limited company, as respondents either in the petition before the CLB or in the appeal filed before this Court; it is the case of the appellants that the respondents, who had not chosen to appear in Court, must be deemed to have been served as notices of the appeal had been dispatched to all the respondents; postal receipts had been produced; and none of the envelopes were returned unserved (C.C. Alavi Haji v. Palapetty Muhammed (2007) 6 SCC 555 ); the respondents were, in fact, served but chose to wait; and it was several days after the Court reserved the matter for judgment that some of them sought permission to file written submissions. 142. Sri Ch. Ramesh Babu, Learned Counsel, took notice at the stage of admission, and later entered appearance on behalf of respondents 1 to 8. Sri S. Shiva Shankar, Learned Counsel, entered appearance on behalf of respondent No.9 and Sri K. Surender, Learned Counsel, entered appearance on behalf of respondents 14 and 15. Sri S. Prabhakar, Learned Counsel, put forth his submissions on behalf of the implead petitioner (respondent No.20). The parties, who were not represented in the proceedings before this Court, are respondents 10 to 13 and 16 to 19. 143. While admitting the appeal on 6.8.2012, this Court permitted the counsel for the appellants to take out notices on the respondents and, accordingly, notices were taken out by registered post acknowledgement due. A memo was filed by the counsel for the appellants of having sent notices to the respondents by registered post acknowledgement due. While the notice sent by registered post to respondent No.10 was returned unserved with the endorsement “left”, notices sent by registered post to respondents 11 to 13 and respondents 16 to 19 were neither returned undelivered nor has any proof, of service of notice on them, been filed by the appellants. 144. While the notice sent by registered post to respondent No.10 was returned unserved with the endorsement “left”, notices sent by registered post to respondents 11 to 13 and respondents 16 to 19 were neither returned undelivered nor has any proof, of service of notice on them, been filed by the appellants. 144. In this appeal the appellants filed an application, in C.A.No. 835 of 2012, seeking interim directions to the respondents to maintain status quo on the shareholding, the Board of Directors, and the fixed assets of the company during the pendency of the appeal. When Sri S. Ravi, Learned Senior Counsel for the appellants, sought an interim order in C.A. No.835 of 2012 this Court pointed out that all the respondents had not been served, and it would be inappropriate for this Court to pass any interim order in C.A. No.835 of 2012 when it had, by its earlier order dated 6.8.2012, directed notices to be served on the respondents. At that stage Sri S. Ravi, Learned Senior Counsel, stated that the appellants were not pressing for any interim relief against such of those respondents on whom notice has not been shown to have been served. However, on the suggestion of Sri L. Ravichander, Learned Senior Counsel, it was agreed that, instead of orders being passed in C.A.No.835 of 2012, the appeal itself would be taken up for hearing. 145. During the course of final arguments in C.A.No.10 of 2012 Sri S. Ravi, Learned Senior Counsel, contended, among other grounds, that the initial increase in authorized share capital is illegal. The objections raised thereto by Sri L. Ravichander, Learned Senior Counsel, was that, if this Court were to hold the initial increase in authorized share capital to be illegal, even those respondents on whom notices had not been served would be adversely affected thereby. Sri S. Ravi, Learned Senior Counsel, however, contended that, since the appellants had filed a memo to show that notices had been sent to the respondents by registered post, the fact that notices were not returned unserved must require this Court to deem that notices had been served on those respondents also. 146. Where the sender has dispatched the notice by post with the correct address written on it, the principles incorporated in Section 27 of the General Clauses Act, 1897 can profitably be imported. 146. Where the sender has dispatched the notice by post with the correct address written on it, the principles incorporated in Section 27 of the General Clauses Act, 1897 can profitably be imported. Nevertheless, it would be without prejudice to the right of the addressee to show that he had no knowledge that the notice was brought to his address. In this situation service of notice is deemed to have been effected on the addressee unless he proves that it was not really served, and that he was not responsible for such non-service. (C.C.AlaviHaji (supra); K.Bhaskaranv. Sankaran Vaidhyan Balan (1999 Cri LJ 4606). Section 27 of the General Clauses Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. When applied to communications sent by post, Section 114 of the Evidence Act enables the Court to presume that, in the common course of natural events, the communication would have been delivered at the address of the addressee. The presumption that is raised under Section 27 of the General Clauses Act is a far stronger presumption. While Section 114 of the Evidence Act refers to a general presumption, Section 27 refers to a specific presumption. (C.C.AlaviHaji (supra). 147. It is wholly unnecessary for this Court to delve on this aspect any further as the CLB is merely being directed, by this order, to re-examine the appellants’ claim that the initial increase in authoried share capital was illegal, in the light of the statutory provisions, returns and documents referred to hereinabove; and, if need be, on summoning and examining the records/documents statutorily required to be maintained by R-1 under the Act and the Rules and Regulations made there under. It is only if the CLB, after its adjudication afresh, were to hold that the initial increase of authorized share capital is illegal, can respondents 10 to 13 and 16 to 19 be said to be adversely affected provided, of course, that the notices sent were not received by them. It is only if the CLB, after its adjudication afresh, were to hold that the initial increase of authorized share capital is illegal, can respondents 10 to 13 and 16 to 19 be said to be adversely affected provided, of course, that the notices sent were not received by them. The interests of all the respondents, including those who have entered appearance through counsel before this Court, would be adequately safeguarded if the CLB were to put them on notice afresh, and give all of them an opportunity of being heard, before passing orders on those issues which it is now required to examine. (viii) CONTENTION OF THE RESPONDENTS THAT THE OBJECT OF SECTION 397 IS NOT TO RAKE UP THE PAST BUT TO REDEEM THE FUTURE, AND THATEQUITY IS NOT IN FAVOUR OF THE APPELLANTS: 148. (viii) CONTENTION OF THE RESPONDENTS THAT THE OBJECT OF SECTION 397 IS NOT TO RAKE UP THE PAST BUT TO REDEEM THE FUTURE, AND THATEQUITY IS NOT IN FAVOUR OF THE APPELLANTS: 148. It is submitted on behalf of the respondents that, in respect of the increase in authorized and paid up capital of R-1 on 25.10.2006, 7.3.2007 and 6.2.2008, the appellants cannot have any grievance as they had already transferred their shares prior thereto on 15.6.2006 and 31.8.2006; they were not even members of R-1 when the aforesaid increase in authorized and paid up capital was approved by the share holders in the general meeting; the new project, set up by the company, is at a cost of Rs.900 crores with participation of leading banks and financial institutions in India; the project has commenced generation of electricity; having abandoned the project and the company long back, by transferring all their shares in the company, the appellants cannot be permitted to now claim a share in the company and, thereby, take advantage of the tremendous growth achieved by R-1 from a small company to a multi-crore company; there is no equity in their favour; a petition, under Section 397 of the Act, is founded on principles of equity; the object of Section 397 of the Act is only preventive in nature so as to bring to an end the oppression on the part of the controlling shareholders, and not to allow its continuance to the detriment of the aggrieved shareholders of the company; the remedy is not intended to enable the aggrieved shareholders to set at naught what has already been done by the controlling shareholders in the management of the affairs of the company; the conduct of the appellants showed that they were attempting to blackmail the respondents, which is established by Annexure P-23; the appellants avaricious approach is clear from their shifting stands; while they started demanding Rs.4 crores, they later increased the demand to Rs.100 crores; the petition was filed before the CLB only to arm twist the respondents; the object behind filing the Company Petition before the CLB is, admittedly, to reach a fair, reasonable and acceptable via media to run the company in a fair manner; the appellants had, impliedly, condoned all the actions of the respondents, including increase in authorized share capital, and the subsequent allotment of shares; the CLB rightly came to the conclusion that the appellants were disentitled from claiming equitable reliefs; as the jurisdiction conferred under Section 10-F also involves exercise of the equitable jurisdiction, this Court ought to take into consideration the equities involved in the case, even while adjudicating the appeal under Section 10-F; this is a clear case of chance litigation; and the CLB had rightly concluded that the appellant had not come to the Court with clean hands. 149. While the submission of Sri L. Ravichander, Learned Senior Counsel, that the appellants cannot have any grievance with regards the subsequent increase in share capital, after they existed from the company on 31.7.2006 and 31.8.2006 respectively, does not merit acceptance as the very transfer of shares of A-1 to A-4 in favour of R-8 and R-4 is in doubt, and necessitates further examination by the CLB, it is wholly unnecessary for this Court to examine the validity of the increase in authorized and paid up share capital of R-1 subsequent to the EGM held on 29.9.2004, firstly because their validity would depend on the validity or otherwise of the initial increase in authorized share capital allegedly approved by the shareholders in the EGM held on 29.9.2004; and secondly because the question whether the CLB, under Section 397 of the Act, can rake up past events and declare the shares held by several share holders a nullity, is again a matter for it to examine in the exercise of its equitable jurisdiction under Section 402 of the Act. 150. 150. While examining the appellants’ contention that the initial increase in authorized share capital, in the EGM held on 29.09.2004, needs to be set aside, the CLB, even it is satisfied that the appellants have made out a case of oppression under Section 397 of the Act against the respondents, shall, while exercising its jurisdiction under Section 402 of the Act, bear in mind the submissions, urged on behalf of the respondents, that the purpose of Section 397 is not so much to rake up the past as to redeem the future;(ThakurPrem Singh v Thakur Hotel (Smile) Company Private Ltd. (AIR 1961 P&H 23); Re H.R.Harmer, Ltd. (1958) 3 All ER 689); ifan individual share holder is held to have a right to ask the CLB to set aside any transaction entered into by the Company with a third party on the mere ground that such transaction, though otherwise perfectly legal and valid and hence incapable of being avoided by the Company, was oppressive to the complaining shareholders or prejudicial to the interests of the Company, it would make it impossible for any outsider to deal with the Company and, far from advancing the interests of the Company, would be detrimental to its interests, for it would scare away persons dealing with the Company; Sections 397, far from conferring any power on the CLB to set aside or interfere with past and concluded transactions between a Company and third parties which are no longer continuing wrongs, confines the power of the CLB to making an order for the purpose of putting an end to oppression on the part of the controlling shareholders; the remedy provided by the Section is preventive in nature so as to bring to an end oppression on the part of controlling shareholders, and not to allow its continuance to the detriment of the aggrieved shareholders or the company; the remedy is not intended to enable the aggrieved shareholders to set at naught what has already been done by the controlling shareholders (MohanlalGanpatram v. Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd (AIR 1965 Gujarat 96); and a petition which is launched not with the genuine object of obtaining the relief claimed, but with the object of exerting pressure in order to achieve a collateral purpose, is an abuse of the process of court. (Re Bellador Silk Ltd. (1965) 1 All ER 667). 151. Ltd (AIR 1965 Gujarat 96); and a petition which is launched not with the genuine object of obtaining the relief claimed, but with the object of exerting pressure in order to achieve a collateral purpose, is an abuse of the process of court. (Re Bellador Silk Ltd. (1965) 1 All ER 667). 151. The CLB shall also bear in mind, the submissions urged on behalf of the appellants, that the remedy under Section 397 and 402 is potent and effective, as the power conferred on it is extremely wide; and it can pass such order as it thinks necessary for the purpose of putting an end to the oppression by the controlling shareholders; the nature of the order it can pass would depend on the state of affairs prevailing in the Company, and the nature of the restrictions required to put an end to such state of affairs; the necessity of interference, under these sections, may arise in an infinite variety of circumstances; and the Legislature has, therefore, left these matters to the discretion of the CLB. (Mohanlal Ganpatram (supra). 152. Suffice it to hold that the CLB shall consider afresh the validity or otherwise of the initial increase in authorized share capital, allegedly approved by the share holders in the EGM held on 29.9.2004; and, depending on its decision in this regard, examine the validity or otherwise of the subsequent increases in authorized share capital of R-1. It is only thereafter can the CLB exercise its equitable jurisdiction under Section 402 of the Act not only to protect the interests of the appellants, but also of the other shareholders who may well be bonafide purchasers of the shares of R-1 unaware of the disputes between the appellants on the one hand and the respondents on the other. CONCLUSION: 153. The order of the CLB, in C.P. No.4 of 2010 dated 25.05.2012, is set aside to the extent indicated hereinabove, and is remanded back for its consideration afresh. In respect of such of those questions decided by the CLB, which were not put in issue during the hearing of this appeal, the order of the CLB has attained finality and is, therefore, confirmed. In respect of such of those questions decided by the CLB, which were not put in issue during the hearing of this appeal, the order of the CLB has attained finality and is, therefore, confirmed. The CLB shall, after putting the appellants herein and respondents 1 to 20 on notice and after giving them an opportunity of being heard, pass orders, in accordance with law, within six months from the date of receipt of a copy of this order. The CLB shall also take into consideration the statutory provisions and observations of this Court, as has been extensively referred to in this order, while examining the company petition afresh. The Company Appeal is allowed to the extent indicated hereinabove. No order as to costs.