Ataus Sopan Malik Vs. Sekai Corporation Ltd., (Muhammad Khurshid Alam Sarkar, J.)

Case No: Company Matter No. 231 of 2018

Judge: Muhammad Khurshid Alam Sarkar, J

Court: High Court Division,

Advocate: Mr. Abu Jafar Mohammad Saleh, Advocate,

Citation: 2019(1) LNJ

Case Year: 2018

Appellant: Ataus Sopan Malik and others

Respondent: Sekai Corporation Limited and others

Subject: Companies Act

Delivery Date: 2019-11-27

 HIGH COURT DIVISION

(SPECIAL ORIGINAL JURISDICTION)

Muhammad Khurshid Alam Sarkar, J

 

Judgment on

02.12.2018

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Ataus Sopan Malik and others

. . .Petitioners

-Versus-

Sekai Corporation Limited and others

. . .Respondents

Companies Act (XVIII of 1994)

Section 43

In view of the fact that, the respondent nos. 2-4 have failed to pay off the consideration money as per the terms of the deed of transfer of shares executed on 25.03.2018, there has been no transfer of shares in the eye of law. Given the fact that the petitioners had put their signatures, on the deed of share-transfer on 25.03.2018 and on the Form-117 on 15.04.2018 believing that the respondent nos. 2-4 shall pay off the consideration money within the stipulated time, or, in the alternative, the petitioners shall encash the Bank Guarantee issued by the respondent nos. 2-4 in favour of the petitioners, but since, the said Bank Guarantee surfaced to be forged one, therefore, any one with ordinary prudence would be of the view that the execution of legal instruments were done by the transferees fraudulently. The instruments of transfer of shares, namely, Form-117 executed on 15.04.2018 showing the petitioners as the transferors and respondent nos. 2-4 as the transferees and, also, the deed of transfer dated 25.03.2018 are hereby declared to have lost their efficacy and the same are not binding upon the petitioners.                                                . . .(10 and 13)

Mr. Abu Jafar Mohammad Saleh, Advocate

. . . For the Petitioners

JUDGMENT

Muhammad Khurshid Alam Sarkar, J. This application under Section 43 of the Companies Act, 1994 (briefly, the Companies Act), has been filed by the petitioners with the expectation to have declarations from this Court that execution of share transfer instruments (the deed of transfer of shares dated 26.03.2018 and Form-117 dated 15.04.2018) showing transfer of 90% shares of the Sekai Corporation Ltd (hereinafter referred to as the respondent no. 1 or the company or the respondent no. 1-company) by the petitioners in favour of the respondent nos. 2-4, are not valid and the same are not binding upon the petitioners. Also, a direction has been sought from this Court upon the respondent no.1-company to rectify its Share-Register by deleting the names of the respondent nos. 2-4.

2.             In the petition, it is averred that the petitioners (who are three in number) are the shareholders and directors of the respondent no. 1-company, namely, Sekai Corporation Limited. The respondent no. 1 is a private company limited by shares incorporated under the Companies Act with registration no. 3-31383 dated 17.09.1996, respondent no. 2 is a businessman, respondent no. 3 is the wife of respondent no. 2, respondent no. 4 is the son of respondent nos. 2 & 3, respondent no. 5 is the Registrar of Joint Stock Companies & Firms (RJSC), respondent no. 6 is the divisional office of respondent no. 5, respondent no. 7 is the Agrani Bank Ltd, a banking company incorporated under the Banking Company Act, 1991, respondent no. 8 is a branch of Agrani Bank Ltd and respondent no. 9 is a businessman.  The company is engaged in the business of fish-processing and, also, in some other business as set out in Clause-III of the Memorandum of Association of the Company. The authorized capital of the company is Tk 10,00,00,000/- (ten crore) divided into 10,00,000 (ten lac) ordinary shares of Tk 100/- each. At the time of incorporation of the company, the subscriber-directors paid off money for 10,000 (ten thousand) shares of Tk 100/- each. As on 30.03.2010, the paid up capital of the company stood at Tk 8,09,50,000/- (eight crore nine lac and fifty thousand) only divided into 8,09,500 shares of Tk 100/- each and the paid up capital of the company remains same as on 30.03.2018. According to the annual summary of the 1st Annual General Meeting (AGM), the shareholding structure of the company, as on 30.03.2010, stood as follows:

Sl.

Shareholders

Number of Shares

1.

Mr. Mashruk Ahmed

24,285

2.

Mr. Ataus Sopan Malik

2,42,850

3.

A.R. Malik and Company Pvt. Ltd.

5,42,365

3.             Pursuant to Article 17 of the Articles of Association of the company, the petitioner no. 1 entered into an agreement with the respondent no. 2 for transfer of entire shares of the company with all its assets and liabilities on 25.03.2018. According to the aforesaid agreement, the respondent no. 7 was supposed to give a Bank Guarantee of Tk 10,00,00,000/- (ten crore) 6 (six) months within 01.04.2018 as the consideration of purchasing the shares of the company. The respondent no. 2 (Jayonta Kumar Sarker) then submitted a Bank Guarantee being no. AGBL/BG/03/18/228 dated 28.03.2018 against his own bank account of Agrani Bank Limited, Principal Branch, Motijheel having its validity for 06 (Six) months to the petitioner no. 1, Ataus Sopan Malik. The petitioners then transferred their 90% shares of the company (Sekai corporation Limited) to the respondent nos. 2-4 and 10% of the shares of company to respondent no. 9 in good faith within the time-frame stipulated in the agreement dated 25.03.2018. Accordingly, the Memorandum and Articles of Association of the company has been amended on 07.05.2018.

4.             When the petitioner no. 1 presented the aforesaid Bank Guarantee under no. AGBL/BG/03/18/228 dated 28.03.2018 to the Bank for encashment on 02.07.2018, it was verbally informed by the Bank that the said Bank Guarantee is false and fabricated. Then, one Md. Ashraf Ud Dowlah, on behalf of the petitioner, lodged a criminal case being no. 11 dated 04.07.2018 with Motijheel Police Station under Sections 467/468/471/406/420/109 of Penal Code. After lodging the case, police arrested 4(four) accused persons and forwarded them to the concerned Court on 04.07.2018 with an application for police remand. Before the learned Magistrate, Dhaka, the brother of accused no. 2 of the afore-mentioned criminal case, Shohel Ahmed and the brother of suspected accused A M Fazlul Fakir, Abu Mohammed Jahangir Kabir admitted that their brothers committed the alleged offences and created the aforesaid forged Bank Guarantee.

5.             Meanwhile, when the petitioner no. 1 submitted an application to the Agrani Bank Limited, Principal Branch to inform the former in writing about the reason for refusal of non-encashment of the Bank Guarantee being no. AGBL/BG/03/18/228 dated 28.03.2018 furnished by respondent no. 02, the Bank replied on 11.07.2018 stating that the Bank Guarantee is a forged one and there is no existence of the same in the Bank’s record. The petitioners, thereafter, served a legal notice through their lawyer upon the respondent nos. 2-4 on 03.07.2018 to take necessary steps to cancel the illegal share transfer by fraudulent Bank Guarantee. When the petitioner no. 1 contacted the respondent no. 2, the respondent no. 2 gave a written undertaking dated 03.07.2018 with a promise to settle the matter within 15 (fifteen) days, but they did not comply with their promise. It is stated that though the instruments of transfer of shares of the company were fraudulently taken by the respondent nos. 2-4 from the petitioners, the original share certificates have never been handed over to the respondent nos. 2-4. Under the circumstances, the petitioners have been compelled to file this petition before this Court under Section 43 of the Companies Act for rectification of Share-Register of the company.

6.             Mr. Khan Mohammad Shameem Aziz, the learned Advocate for the petitioners, submits that no consideration was made or paid by the respondent nos. 2-4 to the petitioners against the transfer of shares, as per the agreement for, their Bank Guarantee was not genuine and it was made only to deceive the petitioners and, therefore, there was no transfer in the eye of law. He submits that it is the settled principle of law that fraud vitiates everything and in view of the fact that, he continues to submit, there is voluntary admission by the respondent no. 2 that no consideration money has been paid, a declaration from this Court is required to the effect that the Form-117 signed on 13.05.2018 by the petitioners in favour of the respondent nos. 2-4 and the deed of transfer of shares  executed on 26.03.2018 by the petitioners in favour of the respondent nos. 2-4 are no more in existence and shall not be binding upon the petitioners so that the respondents can never claim that they hold any share of the company. He, thereafter, prays for a direction upon the respondent no. 1-company to rectify its Share-Register by deleting the names, of the respondent nos. 2-4, as they are unlawfully and illegally holding 90% shares of the company in paper.

7.             After hearing the learned Advocate for the petitioners, it was felt by this Court that for an effective and fair disposal of this matter, Mr. Jayonta Kumar Sarker, who is the respondent no. 2 in this matter, should be produced before this Court to find out the veracity of the petitioners’ claim as to non-payment of consideration money against the share-transfer in favour of the aforesaid respondent nos. 2-4 and, accordingly, on 11.11.2018 an Order was passed by this Court directing the Jailor of Dhaka Central Jail, Keranigonj to produce the respondent no. 2 before this Court. On 19.11.2018, the respondent no.2 was produced before this Court and when this Court asked the respondent no.2 about the allegation of fraudulent transfer of shares brought against him by the petitioners, in reply thereto, he was harping to explain his position as to why he could not pay the money, such as non-payment of dues from others, insufficient time to arrange funds from friend etc. He made a prayer before this Court that if he is granted a couple of months time, then he will be in a position to pay off the money to the petitioners. Now, the question before me is whether his explanations as to the non-payment of consideration money for purchasing the shares, can be taken in to the consideration by this Court in adjudication upon an application under Section 43 of the Companies Act.

8.             In an application under Section 43 of the Companies Act, 1994, upon examination of the documentary or/and oral evidence when it would be found that (i) the legal instruments used for share-transfer, namely, Form-117 and deed of transfer of shares, have been executed lawfully, (ii) the consideration for transfer of share has been made/paid and (iii) the share-certificate/s have been handed over to the transferees, this Court would take the said transfer of shares to be valid.

9.             Let me now see whether the deed of transfer of shares & the Form-117 were executed lawfully or unlawfully.

10.         In this case, it is evident that the respondent nos. 2-4 promised to pay off the consideration money through Bank Guarantee and, later on, the same revealed to be a fake and forged one. The sum and substance of the transaction is that although there were transfers of shares by executing the deed of transfer of shares and Form-117, the respondent nos. 2-4 have failed to pay off the consideration money against the aforesaid shares. From the oral admission made by the respondent no. 2 before this Court, it transpires to be an admitted fact that as per the agreement, no consideration was made to transfer the shares by the respondent nos. 2-4, other than furnishing the forged Bank Guarantee. It further transpires that when the petitioner no. 1, as informant, lodged a criminal case against the respondent nos. 2-4 with the Motijheel Police Station, the Police eventually managed to arrest the respondent no. 2 together with 3 (three) other suspected persons and they submitted a letter of undertaking before the Metropolitan Magistrate, Dhaka on 03.07.2018 to settle the matter within 15 (fifteen) days, but till date neither have they paid off the consideration money nor have they re-transferred the shares to the petitioners. The respondent no. 2 upon admitting the above fact requested this Court that if he is granted a further few months time, he will be in a position to pay off the consideration money. In view of the fact that, the respondent nos. 2-4 have failed to pay off the consideration money as per the terms of the deed of transfer of shares executed on 25.03.2018, there has been no transfer of shares in the eye of law. Given the fact that the petitioners had put their signatures, on the deed of share-transfer on 25.03.2018 and on the Form-117 on 15.04.2018 believing that the respondent nos. 2-4 shall pay off the consideration money within the stipulated time, or, in the alternative, the petitioners shall encash the Bank Guarantee issued by the respondent nos. 2-4 in favour of the petitioners, but since, the said Bank Guarantee surfaced to be forged one, therefore, any one with ordinary prudence would be of the view that the execution of legal instruments were done by the transferees fraudulently.

11.         Thus, I hold that the execution of the deed of transfer of shares on 25.03.2018 and Form-117 were done unlawfully and accordingly, the instruments of transfer of shares (the deed of share transfer dated 25.03.2018 and the Form-117 dated 15.04.2018) are liable to be declared to have lost their efficacy and not binding upon the petitioners.

12.         In the result, the application is allowed.

13.         The instruments of transfer of shares, namely, Form-117 executed on 15.04.2018 showing the petitioners as the transferors and respondent nos. 2-4 as the transferees and, also, the deed of transfer dated 25.03.2018 are hereby declared to have lost their efficacy and the same are not binding upon the petitioners.

14.          The respondent no.1-company shall rectify its Share-Registrar by deleting the names of the respondent nos. 2-4 who, in paper, are unlawfully and illegally holding 90% shares of