JUDGMENT : P.S. DINESH KUMAR, J. 1. These four appeals are directed against order dated August 26, 2014 passed by the Company Law Board, Mumbai, in Company Petition No. 13/111/CLB/MB/2014. 2. For the sake of convenience, parties shall be referred as per their status in the Company Petition. 3. Company Appeal No. 8/2014 is by M/s. S.M. Kannappa Automobiles Pvt. Ltd. [‘the Company’ for short] and its two Directors. Company Appeal No. 9/2014 is by respondents No. 7 to 10 in the Company Petition. Company Appeal No. 10/2014 is by the petitioners in the Company petition. Company Appeal No. 11/2014 is by respondent No. 6 in the Company petition. 4. Heard Shri S.S. Naganand learned Senior Advocate for the petitioners (Shri Bhupendra Rai and Shri Vijay Kumar Narang), Shri Dhyan Chinnappa, learned Senior Advocate for the Company (M/s S.M. Kannappa Automobile Pvt. Ltd.) respondents No. 2 and 4 (Shri C.K. Narotham and Shri Mohandas Pai respectively), Shri Aditya Sondhi, learned Senior Advocate for respondent No. 6 (Shri Sudarshan Kumar Manchanda) and Shri Srinivas Raghavan, learned Senior Advocate for respondents No. 7, 8, 9 and 10 (Shri Bharat Bhushan Narang, Chitra Narang, Vaibhav Narang and Sheetal Narang). Brief facts of the case: 5. M/s. Kannappa Automobile Pvt. Ltd. was incorporated on May 7, 1975 with an authorized capital of Rs. 10 Lakhs consisting of 10,000 equity shares of Rs. 100/- each. The issued and paid-up capital of the Company was Rs. 2,00,100/- consisting of 2001 equity shares of Rs. 100/- each. 6. The Company was originally started as a “Sole Proprietary Firm” by Shri S.M. Kannappa. Petitioners and sixth respondent decided to take over the said business. Right from the date of incorporation, two groups were holding 1000 shares each. Shri S.M. Kannappa, was holding one share till his death on June 3, 1986. His heirs sold the said ‘one’ share in favour of first petitioner. The first petitioner lodged transfer forms and the original share certificate seeking transfer of that ‘one’ share in his name. The Company informed that the share cannot be transferred in his name, but, transferred the said ‘one’ share in the name of S.M. Kannappa's Son Rajashekhar. His heirs sold the said ‘one’ share in favour of first petitioner. The first petitioner lodged transfer forms and the original share certificate seeking transfer of that ‘one’ share in his name. The Company informed that the share cannot be transferred in his name, but, transferred the said ‘one’ share in the name of S.M. Kannappa's Son Rajashekhar. Petitioner challenged the same in this Court in Company Petition No. 98/1990 and it was allowed vide common order and judgment dated August 16, 2006 holding that the transfer in the name of Rajashekar was illegal and directed the Company to enter the name of the first petitioner with respect to the said one share. The appeal filed by the Company against the order passed by the Hon'ble Company Judge stood dismissed by the Division Bench [O.S.A. No. 51/2006 and O.S.A. No. 45, 46/2006 decided on 22.03.2012]. The Special Leave Petition [SLP Nos. 18370-18372/2012 decided on 09.07.2012] filed against the order passed by the Division Bench also stood dismissed. 7. Petitioners learnt from the pleadings in Company Petition No. 98/1990, that the paid-up capital of the Company had been increased to Rs. 8,00,100/- and divided into 8001 shares of Rs. 100/- each. On verification, they learnt that 3000 shares each had been allotted to sixth and seventh respondents in the Board Meeting held on September 24, 1990. Petitioners moved the CLB [Company Law Board, Madras] invoking Section 111 of Companies Act, 1956 and their petition was dismissed vide order dated October 24, 1994. On appeal, this Court vide order dated February 29, 2012, based on the minutes of order filed by the parties, remitted the matter to the CLB for fresh consideration. 8. After remand, petitioners sought to amend the petition by adding certain grounds and prayers. Their prayer was rejected by the CLB [vide order dated October 17, 2012]. Petitioners challenged the same in this Court in Comp Appeal No. 25/2010 and this Court vide order dated January 28, 2014, set-aside the CLB's order and allowed the amendment. Respondents challenged the said order in SLP (Civil) No. 7258/2014. The Hon'ble Supreme Court of India disposed of the SLP [vide order dated April 11, 2014] holding that the amendment shall apply from the date it was granted. 9. Respondents challenged the said order in SLP (Civil) No. 7258/2014. The Hon'ble Supreme Court of India disposed of the SLP [vide order dated April 11, 2014] holding that the amendment shall apply from the date it was granted. 9. By the impugned order under challenge in these appeals, the CLB has directed the Company to issue shares on pro-rata basis to the petitioners with a further direction to sell the shares back to the Company at a price to be assessed by an independent valuer. Hence these appeals. 10. The substance of arguments advanced by Shri S.S. Naganand, learned Senior Advocate for the petitioners is, the CLB was not justified in directing the petitioners to sell the shares. He contended: (i) That ‘issue of shares’ by the Board of Directors of a Company is a fiduciary duty as laid down in Nanalal Zaver and Another vs. The Bombay Life Assurance Co. Ltd. AIR 1950 SC 172 . (ii) The Board has acted in a mala-fide manner as recorded by this Court in OSA No. 51/2006 [ILR 2012 Kar. 3489]. (iii) A similar modus operandi was adopted in the case of M/s Prakash Coachbuilders Pvt. Ltd. as noted in the judgment of this Hon’ble Court in Vijay Kumar Narang and Others vs. Prakash Coach Builders Pvt. Ltd. 2009 SCC Online Kar. 641. (iv) The Company had sufficient funds. In any event, the Company did not make any request for loan/investment with the petitioners. M/s Prakash Leasing Ltd. another listed company in which Bharat Bushan Narang, Vijay Kumar Narang and Mohandas Pai were directors, lent Rs. 6,00,000/- to the Company and shares were illegally issued in favour of sixth and seventh respondents. (v) Articles 6 and 7 of Articles of Association of the Company have to be read as a whole. 11. With these main submissions he prayed for allowing the appeal filed by the petitioners. 12. Substance of arguments advanced by Shri Dhyan Chinnappa, learned Senior Advocate on behalf of the Company, and its Directors is: (i) Petitioners have assailed the Board's decision to allot 6000 shares in favour of sixth and seventh respondents under Section 111(4) of the Companies Act, 1956. Initially, they did not plead the aspect of oppression. Therefore, petitioners' case under Sections 397 and 398 of the Companies Act, 1956 is barred by limitation. Initially, they did not plead the aspect of oppression. Therefore, petitioners' case under Sections 397 and 398 of the Companies Act, 1956 is barred by limitation. (ii) There is no agreement of parity/groups between the shareholders, nor the Company is a quasi-partnership. (iii) The allotment of 6000 shares by the Board of Directors is in accordance with Articles 6 and 7 of Articles of Association of the Company and the previous conduct of all parties. (iv) Adequate consideration was received by the Company for allotment of 6000 shares. (v) There is no breach of any fiduciary duty by the Board of Directors and the allotment of share was for a proper purpose. 13. Substance of argument advanced by Shri Srinivas Raghavan learned senior advocate for respondents No. 7 to 10 is: (i) Respondent No. 6, after allotment of 3000 shares has transferred the same in favour of his daughter Smt. Chitra Narang. Later he has changed his version with regard to allotment of shares. He being the beneficiary cannot maintain the Company Appeal 11/2014. (ii) Petition under Section 397 and 398 is barred by limitation. (iii) Article 7 of the Articles of Association does not mandate General meeting for allotment of shares. (iv) There is no duty cast upon the Board to offer shares to all shareholders on pro-rata basis. (v) In a petition under Section 111, it is not permissible for the CLB to enquire into the questions with regard to bona-fides and motive of parties while alloting shares. 14. With above submissions Shri Dhyan Chinnappa and Shri Srinivas Raghavan prayed for dismissal of petitioners' appeal and to allow their appeals. 15. Shri Aditya Sondhi, learned Senior Advocate for respondent No. 6 in substance, submitted that: (i) Respondent No. 6 was critically ill from 2006 and 2012 and during that period, Respondent No. 7 had deceptively transferred his 500 shares (in addition to the 3000 shares) belonging to the Respondent No. 6 and his family to the family members of the Respondent No. 7 without his consent. (ii) Respondent No. 6 was not involved in the business of the Company. (iii) In Para 12, the CLB has erroneously observed that Respondent No. 6 is indirectly supporting the case of the Petitioners and made certain other observations. 16. (ii) Respondent No. 6 was not involved in the business of the Company. (iii) In Para 12, the CLB has erroneously observed that Respondent No. 6 is indirectly supporting the case of the Petitioners and made certain other observations. 16. Shri Aditya Sondhi prayed that this Court may consider expunging the observations made against the Respondent No. 6 in Para 12, 20, 96 and 100 of the CLB’s order. 17. We have carefully considered the rival contentions and perused the records. 18. In nutshell, petitioners' case is, 6000 shares have been issued illegally and CLB's direction to retransfer the shares is unsustainable in law. The case of the Company and the appellants in Company Appeal No. 9/2014 is that the 6000 shares have been issued in accordance with law for the benefit of the Company. Therefore CLB's order holding that petitioner’s are entitled for allotment of shares is not sustainable in law. 19. According to the petitioners, initially shares were issued as follows: Shantilal Narang 500 shares Vijay Kumar Narang (Petitioner No. 2) Om Prakash 500 shares Bharath Bhushan Narang (Respondent No. 7) Bhupinder Rai 500 shares (Petitioner No. 1) M.L. Manchanda 500 shares Sudarshan Manchanda (Respondent No. 6) S.M. Kannappa 1 share Total 2001 shares 20. The one share held by S.M. Kanappa was sold on August 8, 1990 in favour of the first petitioner (Bhupinder Rai). He lodged the share certificate for transfer and the Company declined to transfer it in his favour. First petitioner approached this Court in Company Petition No. 98/1990. This Court has directed the transfer vide order dated August 16, 2006, affirmed by the Division Bench on November 11, 2009 and confirmed with the dismissal of SLP No. 18370-18372/2012 on July 9, 2012. 21. It was contended on behalf of the petitioners that they learnt about issuance of 6000 shares after going through the statement of objections filed in Company Petition No. 98/1990. Therefore, they approached the CLB in Company Petition No. 4/111/SRB/91 seeking rectification and the said petition was dismissed. Petitioners approached this Court in COM Appeal No. 5/2005 and the same was disposed off on February 29, 2012 in terms of the minutes of the order, remitting the matter to the CLB. After the remand, petitioners sought to amend the petition and to include certain grounds and prayers and the same was rejected by the CLB. However, this Court allowed the amendment. After the remand, petitioners sought to amend the petition and to include certain grounds and prayers and the same was rejected by the CLB. However, this Court allowed the amendment. The matter stood concluded with the Apex’s Court order dated April 11, 2014 in SLP (Civil) 7258/2014, directing that amendment shall be given effect from the date on which it was granted. 22. In the backdrop of these facts, the following question of law arises for our consideration: (i) Whether the direction issued against the petitioners to sell their shares originally held by them and the shares to which they are entitled on pro-rata basis out of 6000 additional shares, at a fair price to be assessed by an independent valuer is sustainable in law? 23. Though it was urged before us that CLB’s direction to issue shares to the petitioners on pro-rata basis may be set aside, we have not framed a question on that aspect because, under Section 10(F) of Companies Act 1956, we have to examine only the question of law. 24. The main argument advanced on behalf of the Company and the contesting Respondents is, the Company was run by professional Directors as on September 24, 1990 when 6000 shares were issued and the Directors have taken decision in the best interest of the Company. According to Shri Dhyan Chinnappa, the Company was in need of funds. First petitioner had left the Company and started a parallel business in the name M/s. Surya Coach Builders Pvt. Ltd. Hence, he had no interest in the welfare of the Company. Company had offered rights issue in the year 1987. The second petitioner did not even choose to apply for the rights issue. The Vijaya Bank had called upon the Company to increase the capital base. Therefore, the sum of Rs. 3 Lakhs each given by Respondent No. 6 and 7 were converted into equity shares. 25. It is not in dispute that first petitioner (Bhupinder Rai) had sought for transfer of one share held by S.M. Kannappa in his favour and the same was declined by the Company. After prolonged litigation, which ended in the Apex Court, that one share was directed to be transferred in his favour. 26. The 6000 equity shares have been issued in the meeting held on September 24, 1990. After prolonged litigation, which ended in the Apex Court, that one share was directed to be transferred in his favour. 26. The 6000 equity shares have been issued in the meeting held on September 24, 1990. It is the specific case of the petitioners that, issuance of 6000 equity shares was learnt from the statement of objections filed by the respondents in Company Petition No. 98/1990, which was presented on October 20, 1990, about one month after the date of issuance of 6000 equity shares. 27. As on the date of issuance of shares, Directors had knowledge of the fact that first petitioner had lodged ‘one share’ held by S.M. Kannappa for transfer in his favour and the same was declined by the company. 28. The letter written by Vijaya Bank on August 20, 1990 is produced as Annexure R1 and it reads as follows: “Ref. No. Branch: J.C. Road Bangalore-2 M/s. S.M. Kannappa Auto Pvt. Ltd. Bangalore. Dated: 22.8.1990 Dear Sirs, Reg: Credit Limits We are pleased to inform you that you have been sanctioned with an ad-hoc OLCC of Rs. 10.00 lakhs for a period upto Nov,1990 against hypothecation of paid stocks with 25 to margin. Further, you are requested to furnish the following: (1) Audited financial statements as at 31.3.1990. (2) You should undertake to increase the capital base and retain entire internal accruals as at 31.3.1990. (3) You are requested to invest the claim amount of Rs. 5.25 lakhs approx. to be received from KSRTC. (4) Stock statement should be submitted promptly. (5) You are requested to undertake to create mortgage in respect of building property at NMH Road/when the dispute is settled. Thanking you. Yours faithfully BRANCH MANAGER.” 29. The above letter has been replied by the Company on August 30, 1990 and it reads follows: “Ref: SMK/DIR/1089/90 The Manager Vijaya Bank J.C. Road Bangalore-560002 Dated: 30.08.1990 Dear Sir, Subject: OLCC Limited of Rs. 10 lakhs. Ref: Your Letter No. OR/947/90 dated 22.08.1990 *** ** *** With reference to the subject matter, we thank Vijaya Bank immensely for sanctioning an ad-hoc OLCC of Rs. 10 lakhs for a period up to November 1990 and agree as follows: (a) In connection with the same, as required by the Bank. We undertake to produce the financial statement of our company as at 31st March 1990 immediately on its signing by our Auditors. 10 lakhs for a period up to November 1990 and agree as follows: (a) In connection with the same, as required by the Bank. We undertake to produce the financial statement of our company as at 31st March 1990 immediately on its signing by our Auditors. (b) We undertake to increase the capital base and retain entire internal accruals as at 31.3.1990. If in any case it becomes not possible to increase the capital base, we undertake to obtain interest free loan from our shareholders/directors which will be retained to maintain the equity ratio. The same will not be returned till the Bank liabilities are discharged by us or without the consent of the bank. (c) The price increase claim amount as and when received from parties like K.S.R.T.C. will be retained in the company to build up reserves/internal accruals. (d) A stock statement will also be submitted periodically and promptly as stipulated and required by the Bank. (e) The company's building property which is under legal dispute, will be fully hypothecated as a security to the Bank on settlement of the dispute. At present, the dispute has been favourably settled in land tribunal and likely to be settled in the court shortly with similar result. Apart from the above, we will be pleased to comply with any other stipulations put forth by the bank or to furnish information needed. Thanking you once again. Yours faithfully For S.M. KANNAPPA AUTOMOBILES (P) LIMITED DIRECTOR.” 30. In the above letter, Para (b) is important, wherein the Company has undertaken to increase the capital base. Annexure R3 and R4 are the copies of the extracts of the account book. Annexure R3 is significant because there is record of entry of loan of Rs. 2 lakhs, 1 lakh and 3 lakhs on June 21, 1990. It was pointed out by Shri Naganand that the receipt of these amounts have been shown as ‘loan from shareholder’ in the cashbook Annexure R4. He also pointed out that only these three entries made in Annexure R4 with respect to the cheques are in a different handwriting than other entries. What is significant to note is, the Company has received the sum of Rs. 6 Lakhs from M/s Prakash Leasing Ltd., on June 21, 1990. However, on August 30, 1990 the Company has written a letter to Vijaya Bank undertaking to increase the capital base. What is significant to note is, the Company has received the sum of Rs. 6 Lakhs from M/s Prakash Leasing Ltd., on June 21, 1990. However, on August 30, 1990 the Company has written a letter to Vijaya Bank undertaking to increase the capital base. It was argued by Shri Naganand, that there is no reference to the sum of Rs. 6 Lakhs received in June 1990, in the said letter, which according to the Company was received from the shareholders, Respondent No. 6 and 7. 31. A Board Meeting was held on September 24, 1990. Subject No. 5 is with regard to issuance of further shares. The minutes recorded on this subject read as follows: Proceeding and Discussion Conclusion and Resolutions Name of dissenting and/or not 5. To consider and note issue of further share capital in the company The Chairman stated that the Vijaya Bank, J.C. Road, Bangalore-2, while sanctioning the ad-hoc OLCC limit of Rs. 10 lakhs (Rupees Ten lakhs only) had asked the company to increase its paid up capital and obtain personal guarantees of Sri. S.K. Manchandra and Sri. Bharat Bhushan Narang. He placed before the meeting letters dated 01.09.90 from Sri. S.K. Manchandra and Sri. Bharat Bhushan Narang, wherein they had requested the interest free loan of Rs. 3 lakhs each (Rupees Three lakhs each only) given by them during June 1990 may be converted into equity and shares of an equivalent value issued. It was stated in the letters that as Sri. S.K. Manchanda and and Sri. Bharat Bhushan Narang were being asked to give further personal guarantees they felt that it would be advisable to increase the paid up capital. The letter also contained a request that in case the Board chose not to allot shares against conversion of the loan, the loan of Rs. 3 lakhs each (Rupees Three Lakhs each only) may be repaid. Sri. T.V. Mohandas Pai requested the chairman to consider the matter at a later meeting after studying the provisions of the articles of association of the company. The chairman accordingly decided to consider the matter at the next meeting after further study. 32. It is relevant to note that Vijaya Bank in its letter extracted above did not ask for the personal guarantees of Respondent No. 6 and 7. Further, as recorded in the Minutes, the interest free loan of Rs. The chairman accordingly decided to consider the matter at the next meeting after further study. 32. It is relevant to note that Vijaya Bank in its letter extracted above did not ask for the personal guarantees of Respondent No. 6 and 7. Further, as recorded in the Minutes, the interest free loan of Rs. 3 Lakhs each was requested to be converted into equity shares and the same has been done in the subsequent Board Meeting. 33. Admittedly, the loan of Rs. 6 lakhs was received from M/s Prakash Leasing Ltd. There is no material on record to show that M/s Prakash Leasing Ltd. had consented to treat the loan as having been paid by Respondent No. 6 and 7. Both the Company and M/s Prakash Leasing Ltd are private limited companies and independent legal entities. It was argued by Shri Srinivas Raghavan and Shri Dhyan Chinnappa for the contesting Respondents that the irregularity, if any, in the loan transaction between the Company and M/s Prakash Leasing Ltd is outside the scope of this litigation and if such irregularity called for any legal action, it was for the respective parties to take suitable action. This argument is wholly untenable in view of the startling facts of the case. As recorded hereinabove, parties were fighting for ‘one share’ held by S.M. Kannappa. They have litigated for that ‘one share’ till the Apex Court. A careful perusal of the letter written by the Vijaya Bank, Company’s reply to the Bank, the account extracts and the Minutes of Meeting leads us to an irresistible conclusion that the professional Directors of the Company have allotted 6000 shares illegally in favour of Respondent No. 6 and 7 by treating the loan amount received from M/s Prakash Leasing Pvt. Ltd. as consideration to the detriment of petitioners and the CLB has rightly directed the Company to issue shares in favour of petitioners on pro-rata basis. 34. Shri Naganand, for the petitioners has placed reliance on the following passage in Nanalal Zaver and Another vs. The Bombay Life Assurance Co. Ltd. AIR 1950 SC 172 : “It is well established that directors of a company are in a fiduciary position vis-a-vis the company and must exercise their power for the benefit of the company. 34. Shri Naganand, for the petitioners has placed reliance on the following passage in Nanalal Zaver and Another vs. The Bombay Life Assurance Co. Ltd. AIR 1950 SC 172 : “It is well established that directors of a company are in a fiduciary position vis-a-vis the company and must exercise their power for the benefit of the company. If the power to issue further shares is exercised by the directors not for the benefit of the company but simply and solely for their personal agg-zrandisement and to the detriment of the company, the court will interfere and prevent the directors from doing so. The very basis of the court's interference in such a case is the existence of the relationship of a trustee and of cestui que trust as between the directors and the company.” Argued that directors are in a fiduciary position qua the Company and therefore they are required to act with utmost good faith. 35. In the case on hand, no material is placed on record to show that the sum of Rs. 6,00,000/- was paid for and on behalf of the Respondents No. 6 and 7. It is not disputed that the said amount was received from M/s. Prakash Leasing Pvt. Ltd. This fortifies the argument made on behalf of the petitioners. 36. Shri Naganand has next relied on the following passage from Dale and Carrington Investment Pvt. Ltd. and Another vs. P.K. Prathapan and Others, (2005) 1 SCC 212 : “......The fiduciary capacity within which the Directors have to act enjoins upon them a duty to act on behalf of a company with utmost good faith, utmost care and skill and due diligence and in the interest of the company they represent. They have a duty to make full and honest disclosure to the shareholders regarding all important matters relating to the company. It follows that in the matter of issue of additional shares, the Directors owe a fiduciary duty to issue shares for a proper purpose. This duty is owed by them to the shareholders of the company. They have a duty to make full and honest disclosure to the shareholders regarding all important matters relating to the company. It follows that in the matter of issue of additional shares, the Directors owe a fiduciary duty to issue shares for a proper purpose. This duty is owed by them to the shareholders of the company. Therefore, even though Section 81 of the Companies Act, 1956 which contains certain requirements in the matter of issue of further share capital by a company does not apply to private limited companies, the Directors in a private limited company are expected to make a disclosure to the shareholders of such a company when further shares are being issued. This requirement flows from their duty to act in good faith and make full disclosure to the shareholders regarding affairs of a company. The acts of Directors in a private limited company are required to be tested on a much finer scale in order to rule out any misuse of power for personal gains or ulterior motives. Non-applicability of Section 81 of the Companies Act in case of private limited companies casts a heavier burden on its Directors. Private limited companies are normally closely held i.e. the share capital is held within members of a family or within a close-knit group of friends. This brings in considerations akin to those applied in cases of partnership where the partners owe a duty to act with utmost good faith towards each other.” (Emphasis Supplied) Contended that the professional directors have not acted in good faith. 37. Shri Raghavan, has relied upon the following passage from Ammonia Supplies Corporation (P) Ltd. vs. Modern Plastic Containers (P) Ltd. (1998) 7 SCC 105 : “......There could be no doubt any question raised within the peripheral field of rectification, it is the court under Section 155 alone which would have exclusive jurisdiction. However, the question raised does not rest here. Shri Raghavan, has relied upon the following passage from Ammonia Supplies Corporation (P) Ltd. vs. Modern Plastic Containers (P) Ltd. (1998) 7 SCC 105 : “......There could be no doubt any question raised within the peripheral field of rectification, it is the court under Section 155 alone which would have exclusive jurisdiction. However, the question raised does not rest here. In case any claim is based on some seriously disputed civil rights or title, denial of any transaction or any other basic facts which may be the foundation to claim a right to be a member and if the court feels such claim does not constitute to be a rectification but instead seeking adjudication of basic pillar some such facts falling outside the rectification, its discretion to send a party to seek his relief before the civil court first for the adjudication of such facts, it cannot be said such right of the court to have been taken away merely on account of the deletion of the aforesaid proviso. Otherwise under the garb of rectification one may lay claim of many such contentious issues for adjudication not falling under it. Thus in other words, the court under it has discretion to find 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” Argued that the Court has to find out whether the dispute raised is one really for rectification. This authority does not support his contention because it is not in dispute that petitioners have approached the CLB seeking rectification with a specific case that 6000 shares have been illegally issued. 38. Shri Raghavan has also placed reliance on Sangaramsinh P. Gaekwad vs. Shantadevi P. Gaekwad, (2005) 123 Comp Cas 566, Nanalal Zaver and Another vs. The Bombay Life Assurance Company Ltd. AIR 1950 SC 172 and Needle Industries (India) Ltd. Others vs. Needle Industries Newey (India) Holding Ltd. and Others, (1981) 3 SCC 333 and contended that Board of Directors have allotted shares for proper purpose and without mala-fides. 39. Admittedly the Company was managed by Professional Directors. They are required to be more prudent as they shall be dealing with the assets of the Company and the rights of the shareholders. 39. Admittedly the Company was managed by Professional Directors. They are required to be more prudent as they shall be dealing with the assets of the Company and the rights of the shareholders. The contention that Directors have allotted shares without any mala-fides has been found to be factually incorrect by the CLB and this Court can only examine a question of law under Section 10F of the Companies Act. Hence these authorities also do not support his argument. 40. Shri Dhyan Chinnappa has placed reliance on the following passage in Hungerford Investment Trust Ltd. vs. Turner Morrison and Company Limited, C.P. No. 274 of 1967, High Court of Calcutta: (Para 81 and 82) “As at present advised, I would hold that Article 137 of the new Limitation Act, 1963, applies to an application under Section 397 or Section 398 of the Companies Act. I would, therefore, hold that events that happened prior to November 28, 1964, will be barred by the application of Article 137 of the Limitation Act of 1963, being more than three years before the date of the filing of this petition on November 28, 1967, but others are within the limitation.” Argued that Article 137 in Schedule I of the Limitation Act is applicable to cases of oppression and mismanagement and therefore CLB could not have entertained the petition. 41. In reply Shri Naganand, placing reliance on the following passage in Shanker Dastidar vs. Smt. Banjula Dastidar, AIR 2005 Cal. 121 : “......The damage may continue even after the cause of action is complete. This is dependent on facts of each case. The question is to be decided on facts as to whether the cause of action is complete and it is the damage out of the injury or the cause of action that is continuing or the cause of action is not complete but is continuing and it is not the damage that was continuing. In fact, the damage may also continue along with the cause of action, but the continuation of the damage would not have the effect of cessation of the continuation of the cause of action....” (Emphasis Supplied) Contended that cause of action is a bundle of facts and in this case the damage caused by illegal allotment of shares is a continuing cause of action. He argued that as held in the underlined portion in the above authority, the illegal allotment of 6000 shares has not only deprived the petitioners of their legitimate right for allotment of shares but also benefits flowing there from. 42. It is not in dispute that petitioners approached the CLB seeking rectification. The prayer made in the Original Petition prior to amendment reads as follows: “17. The Petitioners therefore prays that this Hon’ble Court may be pleased to declare that the said purported allotment of 6000 shares in favour of the respondents 6 and 7 at the meeting of the Board stated to have been held on 24-9-1990 as void, illegal and in operating and direct rectification of the Register of Members of the Company by deleting the names of Respondents 6 and 7 from the Register of Members to the extent of 3,000 shares each allotted to them on 24-9-1990 and thus render justice.” 43. In our considered view, the above prayer is self contained. Therefore, the argument that the allegation of ‘oppression and mismanagement’ is barred by time need not be gone into and answered. 44. The CLB has recorded reasons in Para-103, for directing the petitioner to sell their shares by holding thus: “I have given my serious thoughts to the third option mentioned above. It is true that normally, where a party is found guilty, the Board should avoid to pass an order directing the aggrieved party to sell his shares to the defaulter party, because this may amount to a premium to a dishonest party. But in the peculiar facts and circumstances of the case, in my considered opinion the third option seems to be just and appropriate.....” (Emphasis Supplied) 45. Thus the CLB was convinced that the transfer of 6000 shares to respondent no. 6 and 7 was illegal. However, for reasons recorded, it has directed the petitioners to sell their shares. 46. First petitioner has fought his legal battle for more than 20 years and won, commencing with Company Petition No. 98/1990, ending with disposal of with SLP No. No. 18370-18372/2012 decided on July 9, 2012. 47. As recorded hereinabove, parties were fighting for ‘one share’ held by S.M. Kannappa in order to get the control over the management. On September 18, 1990, first petitioner had lodged that ‘one’ share and transfer forms seeking transfer in his name. 47. As recorded hereinabove, parties were fighting for ‘one share’ held by S.M. Kannappa in order to get the control over the management. On September 18, 1990, first petitioner had lodged that ‘one’ share and transfer forms seeking transfer in his name. His request was turned down and the share was transferred in favour of S.M. Kannappa's son, Rajashekar. Immediately thereafter, on September 24, 1990, Company has allotted 6000 shares in favor of respondent no. 6 and 7. 48. The sequence of events demonstrate that allotment of 6000 shares was devised to defeat the controlling interest of first petitioner and his associates over the company. Professional Directors are appointed for efficient management of the company, but the real owners of the company are the share holders. Prudential discharge of their fiduciary duties is not negotiable. They are obliged to safeguard the interest of the shareholders, but the directors in-charge, in this case have failed to do so. 49. Therefore, in our considered opinion, allotment of 6000 shares within one week from the date of first petitioner lodging his application for transfer of S.M. Kannappa's ‘one’ share, lacks bona-fides and is manifestly illegal. Hence, the view taken by the CLB to direct the petitioners to sell their shares would amount to placing premium on the illegal act. It is settled that justice should not only be done, but also seen to be done. 50. In Dale and Carrington Investment Pvt. Ltd. and Another vs. P.K. Prathapan and Others, (2005) 1 SCC 212 , it is held that if a finding of fact is perverse and based on no evidence, it can be set aside in appeal even though the appeal is permissible only on the question of law. The perversity of the finding itself becomes a question of law. 51. In the case on hand, the CLB has come to the conclusion that transfer of 6000 shares in favour of respondent no. 6 and 7 is illegal (Para 93). We have carefully perused CLB’s order and concur with its view so far its conclusion that allotment of 6000 shares in favour of respondent no. 6 and 7 is illegal. 52. In the case on hand, the CLB has come to the conclusion that transfer of 6000 shares in favour of respondent no. 6 and 7 is illegal (Para 93). We have carefully perused CLB’s order and concur with its view so far its conclusion that allotment of 6000 shares in favour of respondent no. 6 and 7 is illegal. 52. The direction issued by the CLB against the petitioners to sell the shares was sought to be supported by learned Senior Advocates for the respondents by placing reliance on Smt. Claude-Lila Parulekar vs. Sakal Papers Pvt. Ltd. and Others, (2005) 11 SCC 73 . The said judgment is on the facts of that case. In our view, in the facts and circumstances of this case, for the reasons recorded hereinabove, CLB’s direction to sell the shares is not sustainable. Issuance of an illegal direction by the CLB is a question of law and we accordingly answer the question framed by us in the negative. 53. Now we are left with the prayer made in COMPA No. 11/2014 for expunction of observations contained in paras no. 12, 20, 96 and 100 of the impugned order. Shri Aditya Sondhi, has contended that remarks made against respondent no. 6 are uncalled for and illegal and sought for their expunction. We have carefully perused the said paragraphs. In Para-12, the CLB has only recorded the facts contained in the additional reply filed by respondent no. 6. In Para-20, the CLB has held that respondent no. 6 cannot be allowed to take inconsistent pleas and the pleadings contained in reply dated 24.07.1992 shall not be read and no reliance shall be placed on them. 54. In Para-96, it is stated that respondent no. 6 has transferred his entire shareholding to respondent no. 7 to 10 and they are the majority shareholders of the Company. In Para-100, there is no aspersion against respondent no. 6. 55. In our view, contents of paras 12, 29, 96 and 100 cannot be construed as adverse observations against respondent No. 6 and do not affect him in any manner. Therefore, in our considered view, expunction is unnecessary. 56. In view of the above, the following: ORDER: 1. In Para-100, there is no aspersion against respondent no. 6. 55. In our view, contents of paras 12, 29, 96 and 100 cannot be construed as adverse observations against respondent No. 6 and do not affect him in any manner. Therefore, in our considered view, expunction is unnecessary. 56. In view of the above, the following: ORDER: 1. COMPA No. 10/2014 filed by the petitioners is allowed in part and that portion of the impugned order directing the petitioners to sell their shares held by them and the shares they are entitled to get on pro-rata basis at a fair price in favour of respondent no. 7 to 10 and all consequential directions namely Direction Nos. (ii), (iii) and (iv) are set aside. 2. COMPA No. 8/2014 filed by M/s S.M. Kannappa Automobiles Pvt. Ltd is dismissed. 3. COMPA No. 9/2014 filed by respondent nos. 7 to 10 is dismissed. 4. COMPA No. 11/2014 is disposed of with observation contained in Para-55. No costs.