COMPANY LAW BOARD, CHENNAI BENCH
Rajendra G. Patel
Sanghi Industries Ltd.
KANTHI NARAHARI, JUDICIAL MEMBER
CP No. 377 of 2012
Date of Pronouncement – 28.09.2012
1. The present application is filed u/s 163(6) of the Companies Act, 1956 praying this Bench to allow the petitioner to inspect, inter alia, all the Registers including Register of Members, Register of Share Application, Register of Transfer and copy of Certificates and other documents in terms of provisions of Section 163 of the Act, since incorporation of the company. Shri P. Sriram, learned PCS appearing for the petitioner submitted that the petitioner is a shareholder and member of the company holding one hundred equity shares of Rs. 10/- each. The petitioner with intent to inspect the statutory records of the company in terms of Section 163 of the Act, visited the Registered Office of the company on 01.02.2012 at 12 noon. When the petitioner visited it was observed that there is no display of name, address and the location of the company for easy identification. After so much of efforts, the petitioner was able to contact the company secretary of the company over phone, Thereafter, the petitioner sent an e-mail to the company seeking inspection of the registers and records. The petitioner had corresponded through e-mail to the company’s e-mail address but there is no response from the company. As a last effort, the petitioner sent an e-mail on 07.02.2012 requesting the respondent company to permit the petitioner for inspecting the registers and records. The company remained silent and did not reply to his e-mail. In view of the reasons, having no other alternate, the petitioner approached this Bench seeking directions to the respondents to provide inspection to the petitioner as per law.
2. The respondent company filed a counter to the application. Shri Gowtham Kumar, learned counsel appearing for the respondent company submitted that the petitioner approached this Bench with unclean hands and not entitled to any discretionary relief, more so, for any relief that would make the petitioner entitled to be in possession of confidential and important records of the company. He further submitted that the petitioner acquired one hundred equity shares only in the week ended 27.01.2012 at an investment of Rs. 1,600/-only and it appears that the shares have been acquired to only harass the company by seeking several documents for inspection. The petitioner, by attempting to look into the records with the Registrar and Share Transfer Register is in fact seeking to surreptitiously gather information regarding the beneficial owners and all other confidential information regarding the members of the company which the petitioner wants to get hold of only to act against the interests of the company and its shareholders in which he has become a shareholder. He further submitted that as regards the legal position and the precedents referred to and relied upon by the petitioner, it is submitted that the rights conferred under Section 163(6) are neither absolute nor unqualified. Therefore these rights are discretionary which are subject to orders of this Bench. The petitioner, under the guise of being a shareholder, is seeking to assist the competitors and persons who have been acting against the interests of the respondent company. If the petitioner is seeking for any right as a shareholder, then the same would be available to the petitioner. In view of the reasons stated above, the application is liable to be dismissed.
3. Heard the learned the PCS and the counsel for the parties and perused the pleadings, documents filed therein. There is no dispute by the respondent that the petitioner is not a shareholder. Furthermore, the respondent admitted the fact that the petitioner has acquired one hundred shares for a consideration of Rs. 1,600/-. from the application, it is evident that the petitioner made several attempts to the company seeking inspection of the statutory registers and records of the company. It is also not in dispute that the respondent company replied to the petitioner, from the extract of the correspondence made in the application by the petitioner, it is revealed that the company in their reply to the petitioner admitted the fact that he acquired one hundred shares in January, 2012 investing approximately Rs. 1,600/-. Further it is stated by the company that “within three days from the date of such recent and meagre investment, you have approached the Registrar of Companies, Andhra Pradesh, the Registered Office of the company and Registrars and Share Transfer Agents of the company and verified/tried to verify various sensitive records of the company. You have already sent us requests for inspection for records of the company in a very insistent and aggressive tone. We are unable to fathom the reasons for your sudden interest in the company and your attempts to gain access to sensitive records. In order to protect our company from any possible misuse of such sensitive data, we must know the reasons behind your request. Hence you are requested to intimate us the objective of your request for enabling us to look into the requests.” The petitioner, in his reply dated 07.02.2012 made to the company, clarified and relied upon a decision of the CLB wherein it was held that “a person seeking copies of the documents is not required to disclose his purpose. His statutory right cannot be denied even if his purpose is hostile to the company”. The stand of the company that the petitioner soon-after acquiring the shares in the company sought to inspect the documents without mentioning the purpose is totally unjustified and uncalled for. The statute provides a right to the member or debenture-holder for inspection of the statutory registers and records as contemplated u/s 163 of the Act. The inspection is allowed to a member or debenture-holder without fee and any other person on payment of such sum as may be prescribed for each inspection. The member or debenture-holder is also entitled to the extracts from any Register, index or copy referred to in sub-section (1) of Section 163 of the Act without fee or additional fee as the case may be. There is no bar to a member or debenture-holder seeking inspection or inspecting the documents irrespective of the fact as to when he became a member of the company. The right to inspect the documents of the company is a mandatory provision and failing to provide the same to a member or debenture-holder, the statute empowers the CLB to compel an immediate inspection of the documents or direct that the extract required shall forthwith be allowed to be taken by the person requiring it. As per the said provision, the petitioner approached this Bench by filing an application seeking directions to the respondent to provide for an inspection of the registers and records of the company. The stand of the respondent at para 10 of their counter contending that the rights conferred under sub-section (6) of Section 163 of the Act are neither absolute nor unqualified is a complete misinterpretation of the spirit behind this provision. The respondent company completely failed in discharging their statutory obligation. In view of the above reasons, 1 hereby direct the respondent company to allow the petitioner to inspect the statutory registers and records as prayed in sub-para (a) and (b) of para 8 of the application subject to provisions of Section 163 of the Companies Act, 1956, on any working day during the working hours. The petitioner shall intimate the company well in advance seeking the date and time of inspection of the documents, registers etc. With the above directions, the application is allowed only in respect of sub-para (a) and (b) of para 8 of the application. Accordingly, CP No.377/2012 stands disposed of. No orders as to costs.