Vijay Kumar Agarwal & Ors. Vs Juhu Hotel Pvt. Ltd. & Ors. (NCLAT Delhi)
Summary: The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Yogesh Khanna, Member (Judicial), and Mr. Ajai Das Mehrotra, Member (Technical), dismissed an appeal filed by Vijay Kumar Agarwal and others against the NCLT Mumbai Bench-I order dated 27 May 2025. The underlying company petition, CP No. 526/MB/2019, had been instituted under Section 59 of the Companies Act, 2013, along with Sections 241 and 242, seeking rectification of the register of members and relief concerning alleged oppression and mismanagement. The NCLT dismissed the petition as barred by limitation. The appellants challenged that finding, contending that the alleged fraudulent transfer of shares had become known to them only after receiving correspondence from the Registrar of Companies in December 2018.
The dispute concerned shares originally registered in the name of Roshanlal Agarwal in Juhu Hotel Pvt. Ltd. Roshanlal died intestate on 23 April 1972. According to the appellants, share certificates belonging to him had been seized by the Income Tax Department during pending tax proceedings, preventing his legal heirs from seeking transmission of shares into their names. They alleged that the shares were fraudulently transferred to Mrs. Krishna Kumari in 1998 while the certificates remained in departmental custody. They also alleged that Anil Kumar Agarwal had approached the Income Tax Department in March 2000 seeking removal of the attachment and transfer of the shares. The appellants maintained that the circumstances surrounding the alleged transfer and the continued withholding of share certificates justified postponing the commencement of limitation.
The appellants explained that income-tax proceedings had continued for several years and that they had pursued various steps to protect their interests. They issued a public notice on 14 October 2006, approached the Economic Offences Wing in 2010 and 2011, and subsequently filed a criminal complaint under Section 156(3) of the Code of Criminal Procedure in December 2016. They relied particularly on a letter from the Registrar of Companies dated 12 December 2018, asserting that this correspondence revealed the fraudulent transfers in favour of Mrs. Krishna Kumari and Mark Buildtech Pvt. Ltd. They argued that the company petition filed in January 2019 was therefore within the limitation period, and that the earlier proceedings before investigative and other authorities should also be considered.
The NCLT had rejected this explanation after examining the history of disputes concerning the shares. It noted the existence of litigation dating back to 1971 and 1975, a public notice issued in 2006 and complaints made in 2011 specifically alleging misappropriation and unlawful transfer of the shares. The NCLT considered these events inconsistent with the assertion that the appellants first discovered the alleged wrongdoing in December 2018. It also observed that the petitioners had not pursued the available company-law remedy for transmission or rectification of the register within the relevant limitation period. The NCLT accordingly dismissed the company petition as time-barred, while refraining from determining disputed legal title to the shares, which involved complicated factual issues.
Before the NCLAT, the appellants relied upon Section 17 of the Limitation Act, 1963, which postpones commencement of limitation in specified cases involving fraud, mistake or fraudulent concealment until the circumstances are discovered or could have been discovered with reasonable diligence. The Appellate Tribunal, however, found that the appellants had admittedly been aware of the disputed dealings substantially earlier. In particular, the 2006 public notice showed knowledge of another person’s claim to the shares, while complaints and correspondence in 2010 and 2011 demonstrated awareness of the alleged unlawful transfers. Despite this knowledge, the appellants approached the company-law forum only in 2019. The Tribunal held that receipt of additional confirmation from the Registrar of Companies in December 2018 could not create a fresh starting point for limitation.
The NCLAT relied on P. Radha Bai and Others v. P. Ashok Kumar and Another, (2019) 13 SCC 445, in which the Supreme Court explained that Section 17 does not cover every form of fraud or mistake. Rather, its protection concerns fraudulent conduct or concealment that prevents a party from knowing the facts necessary to pursue a legal remedy. Once a claimant is aware of those antecedent facts, limitation commences. Applying this principle, the NCLAT concluded that the appellants’ knowledge in 2006 and, at the latest, 2011 defeated their attempt to rely upon the December 2018 correspondence. It found no illegality in the NCLT’s order and dismissed Company Appeal (AT) No. 197/2025. Pending interlocutory applications, IA Nos. 4892, 4893 and 4894 of 2025, were also disposed of. The decision underscores that allegations of fraud do not indefinitely suspend limitation where the claimant has long possessed sufficient knowledge to initiate proceedings.
Cases Discussed:
1. P. Radha Bai and Others Vs P. Ashok Kumar and Another (Supreme Court); (2019) 13 SCC 445 — Relied upon by the NCLAT for the principle that Section 17 of the Limitation Act applies to fraud or concealment that prevents discovery of the material facts needed to pursue legal proceedings. Once those facts become known, limitation commences.
FULL TEXT OF THE ORDER OF NATIONAL COMPANY LAW APPELLATE TRIBUNAL
The Appellant is aggrieved by the impugned order dated 27.05.2025 passed by Ld. NCLT Mumbai Bench I in CP No. 526/MB/2019 whereby the petition under section 59, 241 & 242 of the Companies Act, 2013 for oppression and mismanagement and rectification of Register of Members was dismissed on the ground of being barred by limitation.
2. It is argued the impugned order dated 27.05.2025 suffers from infirmities as it erroneously records the petition being confined only Section 59 of the Companies Act, 2013, based on the oral submission made by the Ld. Counsel for the petitioner. It is submitted the appellants were not aware of the order dated 29.01.2025 wherein a statement was recorded as “the petition can be decided or confined to Section 59 of the Companies Act, 2013”.
3. It is alleged the impugned order passed is only confined to section 59 of Act of 2013, which does not prescribe any time limit for filing application for rectification of Register and that the Ld. NCLT had failed to appreciate that during the pendency of Income Tax proceedings, Mr Roshanlal on 23.04.1972 passed away intestate. The Share certificate(s) pertaining to Mr Roshanlal were in possession of the Income Tax Department and the appellants being heirs of Mr Roshanlal were unable to apply to the Respondent Company/R-1 to add their names, to the register of members.
4. It is the case of the appellant that Respondent No.3 (Mrs Krishna Kumari) acquired the shares in the year 1998 in a fraudulent manner during the period the share certificate of Mr. Roshanlal was seized by Income Tax Department. Between the years 1972 to 2006, the income tax proceedings continued and were being defended by the appellants as legal heirs of Mr. Roshanlal. In 1999, the appellants had cleared/ paid the tax liabilities. It is argued the Income Tax Department refused to hand over the share certificates pertaining to Mr. Roshanlal’s share, owing to non-payment of interest and subsequently in 2006, appellants came to know that Mr. Anil Kumar Agarwal/RespondentNo.2 was seeking transfer of the company M/S Juhu Hotel Pvt Limited/ Respondent No.1 to a third party, thus, the appellants/LRs got issued a Public Notice dated 14.10.2006.
5. In 2008, appellants visited the office of Sub-Registrar to enquire about the agreement pertaining to transfer of R-1 Company. However, upon inspection, appellants found there was no change in the name of company i.e. M/s Juhu Hotel Pvt Ltd.
6. Appellants lodged a complaint in the year 2010 before the EOW, Mumbai Unit III, alleging fraud, misappropriation and criminal breach of trust for illegal transfer of shares.
7. Admittedly, R-2 Mr Anil Kumar Agarwal wrote a letter dated 21.03.2000 to the Income Tax Department inter alia calling upon the Department to lift the attachment order on Mr. Roshanlal’s Share(s) and requested to transfer the said shares in his name allegedly by suppressing/concealing and without the knowledge of the appellants. This fact came into knowledge of the appellants only in the year 2011.
8. On 04.07.2011 the appellants again approached EOW, Mumbai and between 2012-2014, the EOW had recorded the statement of Appellant and on 03.01.2014 it held the matter was of civil nature and closed the complaint..
9. Since no action was taken by Police / EOW, hence, on 26.12.2016 the appellants filed a criminal complaint before the Metropolitan Magistrate under Section 156(3) Cr PC. Vide Order dated 01.06.2017, the criminal complaint was allowed and Police was directed to investigate the matter, which is still pending.
10. It is argued there are no findings in the impugned order with respect to the continuation of the investigation or as to the cause of action whether it is continuing or recurring.
11. It is argued on 12.12.2018 ROC (R-8) had responded to the letter dated 21.09.2018 sent by the appellants alongwith the Share Certificate pertaining to Mr Roshanlal shares and demonstrated the illegal and fraudulent transfer in favour of R-3. i.e Mrs Krishna Kumari and R-6 ( M/s Mark Buildtech Pvt Ltd) and that the limitation period shall begin only with effect from 12.12.2018 when such letter of ROC was received. The petition was subsequently filed by appellants in the year 2019 before Ld.NCLT Mumbai.
12. It is submitted limitation is a question of law and the fact which supports the appellants case is they were pursuing remedies before the appropriate authorities, including ROC, a quasi judicial body.
13. Learned NCLT vide its impugned order held as follows:-
23. It is undisputed fact that Roshanlal Agarwal was registered shareholder of the Respondent No. 1 Company on date of his death on 23rd April, 1972 and shares registered in name of Roshanlal Agarwal were transferred in name of Respondent No. 3 on 15.05.1998. The present petition was filed on 29th January 2019. It is the case of the Petitioners that the alleged fraud was discovered by them in December 2018 upon receipt of a letter dated 12th December 2018 from Respondent No. 8 in response to Petitioner No. 1’s letter dated 21st September, 2018. The Petitioner has pleaded that they had no firm knowledge of status of shares of Roshanlal Agarwal prior to that.
24. It is trite law that, in case of fraud, the limitation runs from the date of knowledge or the date when the fact could have been known with reasonable diligence by the Petitioner and a petition ought to be filed within 3 years from such date of knowledge.
25. It is contention of the Respondents that the present Company Petition is barred by limitation as the Petitioners have slept over their rights time and again despite the knowledge that time was running against them to file appropriate proceedings in a court of competent jurisdiction. The Respondents have contended that the Petitioner, including other legal heirs of Roshanlal Agarwal ought to have filed an application for transmission of shares registered in the name of Roshanlal Agarwal within 3 years of his demise i.e. by 22nd April, 1975. The Respondents have also placed on record following events to contest the submission of Petitioner No. 1 that the legal heirs of Roshanlal Agarwal came to know about the transfer of shares from the name of Roshanlal Agarwal only upon receipt of letter dated 12th December 2018 from Respondent No. 8 ROC and they had no knowledge prior to that.
a) Correspondence dated 16.6.1969 between Chamanlal and Roshanlal shows that Chamanlal had disputed Roshanlal’s rights in the various assets of the Firm, which included the shares in Respondent 1 which were in Roshanlal’s name;
b) Suit No. 8817 of 1971 was filed on17.11.1971 in the City Civil Court by Roshanlal against Chamanlal, Respondent No. 3 and others, in relation to his alleged directorship in Respondent No. 1 before his demise on 23.4.1972;
c) A Suit No. 466 of 1975 was filed on 28.5.1975 before the Hon’ble Bombay High Court by Roshanlal’s heirs including one Mr. Akshani Kumar (the eldest son of Roshanlal) and Petitioner Nos. 1 and 2 herein (being Plaintiff Nos. 3 and 5 therein respectively) against Chamanlal, inter alia, seeking dissolution of the Firm and settlement of accounts and all assets which included the shares of Respondent No. 1. An affidavit was filed on 1.10.1975 by Akshani Kumar in this Suit, inter alia, referring to the shares of Respondent No. 1 allegedly held by Roshanlal. This suit was dismissed on 11.6.1992;
d) Petitioner No. 1 issued a public notices on 14.10.2006 in Bombay Samachar and Free Press Journal cautioning the public against dealing in shares of Respondent No. 1 held by Respondent No. 2. The Petitioners were clearly aware that Respondent No. 2 was claiming title to Roshanlal’s shares on the date of public notice;
e) Petitioner No. 1 lodged a complaint on 4.7.2011 with the EOW against Respondent Nos. 2 and 3, alleging misappropriation, unlawful and illegal transfer of Roshanlal’s shares and criminal breach of trust and this complaint was dismissed on 8.9.2011 by EOW informing Petitioner No. 1 that his complaint prima facie did not disclose any cognizable offence, and that, since the same did not come under the EOW’s ambit, he may approach the competent authority for redressal of such grievance;
f) On 29.10.2011, Petitioner No. 1 filed a further complaint with the EOW stating therein various facts and allegations pertaining to the said shares. On 3.1.2014, EOW informed Petitioner No. 1 that it is closing the enquiry into his complaint as the same was of a civil nature;
g) On 5.12.2012, Petitioner No. 1 wrote to the Commissioner of Police claiming that the aforesaid shares had been illegal and unlawfully transferred, who subsequently transfers the complaint to the EOW;
26. It is undisputed fact that the present petition has been filed after about 46 years of demise of Roshanlal Agarwal and prior to filing of present petition. The Petitioner No. 1 had only issued a Notice dated 24th November, 2018 to Respondent No. 1 thereby seeking rectification of the register of members of this Respondent, however, no documentation was submitted by the Petitioners with this Respondent in support of their claim for rectification of the register of members till date in terms of clause 5 of the Articles of Association of the Respondent Company which provides that “The executors or administrators of a deceased sole holder of shares shall be the only persons recognised by the Company as having any title to the share. Provided nevertheless that it shall be lawful for the Directors to dispense with the production of probate or letters of administration or such other legal representation upon such terms as to indemnity or otherwise as the Directors may deem fit…..”.
27. The Petitioners had knowledge of shares standing in name of their deceased father as is evident from the pleadings in Civil Suit no. 466 of 1975 filed on 28.5.1975 before the Hon’ble Bombay High Court by Roshanlal’s heirs including one Mr. Akshani Kumar (the eldest son of Roshanlal) and Petitioner Nos. 1 and 2 herein (being Plaintiff Nos. 3 and 5 therein respectively) against Chamanlal, inter alia, seeking dissolution of the Firm and settlement of accounts and all assets which included the shares of Respondent No. 1. Akshani Kumar had stated at para 5 (page 3 thereof) of affidavit dated 18.10.1975 affirmed by him seeking appointment of court receiver, that
“………I say that the partnership had a substantial interest in the Juhu Hotel Private Ltd. which was doing a flourishing business in Bombay……….” Further, at para 2 of the Civil Suit plaint, it is stated that “The shares of the limited company and any interest in other concerns, having been paid for and acquired out of partnership funds are assets of the partnership”. These averments clearly show that the Respondents have conceded that the shares, in question, were acquired out of funds of partnership firm and thus constituted property of the partnership firm. Accordingly, the petitioners had complete knowledge of existence of these shares in name of the Ratanlal Agarwal as property of partnership firm and had sought dissolution of the partnership assets and settlement of deceased Ratanlal Agarwal’s account. However, the petitioner didn’t take any action to file appropriate application seeking transmission of these shares in their name at that time also.
28. Petitioner No. 1 issued a public notices on 14.10.2006 in Bombay Samachar and Free Press Journal cautioning the public against dealing in shares of Respondent No. 1 held by Respondent No. 2 stating that “I understand that one Mr. Anil Kumar Agarwal is claiming to be the 100% shareholder of the company Juhu Hotels Pvt. Ltd. and is negotiating to deal with the shares of Juhu Hotels Pvt. Ltd. and consequently the property described in the schedule hereunder written. Public is hereby cautioned not to enter into any agreement or deal with in any manner with the said 49% shares of Juhu Hotels Pvt. Ltd. belonging to my father late Roshanlal Agarwal and now belonging to me……..” This shows the clear admission of the Petitioner No. 1 that he had knowledge of existence of shares in the name of his deceased father and claim of Respondent No. 2 over those shares, however the petitioners failed to take any action to seek transmission of those shares in his name at that time also or approach this Tribunal.
29. Even thereafter, Petitioner No. 1 had knowledge as can be observed from a complaint on 4.7.2011 with the EOW against Respondent Nos. 2 and 3, alleging misappropriation, unlawful and illegal transfer of Roshanlal’s shares. It is pertinent to note letter dated 15.7.2011sent by Sr. Inspector, EOW Unit III to the Petitioner No. 1 to attend his office referring to application dated 4th July 2011in respect of misappropriation and wrongful unlawful and illegal transfer of 101 Shares of Juhu Hotel Pvt. Ltd. belonging to the estate of late Mr Roshanlal. This clearly demonstrates existence of knowledge of fraud, alleged to be perpetrated against the Petitioners by Respondent No. 2 and 3, on part of the Petitioners. It is pertinent to note that complaint was dismissed on 8.9.2011 by EOW informing Petitioner No. 1 that his complaint prima facie did not disclose any cognizable offence, and that, since the same did not come under the EOW’s ambit, he may approach the competent authority for redressal of such grievance. Even at this occasion also, the petitioners failed to take any action to seek transmission of those shares in his name at that time also or approach this Tribunal.
30. Even thereafter, though the Petitioners have approached EOW again on 29.10.2011 and Commissioner of Police on 5.12.2021 in relation to illegal transfer of these shares, the petitioners failed to take any action to seek transmission of those shares in his name at that time also or approach this Tribunal.
31. It has been argued by the Petitioner that, in or around 1965, the Income Tax Department seized and attached the Roshanlal Shares, owing to certain Income Tax proceedings initiated against Roshanlal and Chamanlal, and during the pendency of the Income Tax proceedings, Roshanlal passed away intestate on 23rd April 1972. As the share certificate pertaining to the Roshanlal Shares were in the possession of the Income Tax Department, the heirs of Roshanlal were unable to apply to the Respondent No.1 Company to add their name to the share certificate and the Register of Members. By 2004, the income tax issues were sorted out by the heirs of Roshanlal. However, the Income Tax Department refused to release the share certificates pertaining to the Roshanlal Shares. In the course of this agitation, the Petitioners were shocked to discover a letter dated 21st March 2000, addressed by Respondent No. 2 (through the Respondent No. 1 Company) to the Income-Tax Department, wherein, Respondent No. 2, sought for lifting of the attachment order over the said Shares. Even if this explanation for the not seeking transmission of shares of deceased Ratanlal Agarwal in name of his legal heirs is accepted, the Petitioners, having become aware of alleged fraudulent conduct of the Respondent No. 2 and 3 in the year 2004 itself, failed to take any action to seek transmission of shares in their name, dehors share certificate in their possession, or approach this Tribunal in case the Respondent Company would have refused to register transmission at that time.
32. The events discussed at para 27 to 31 clearly contradicts the claim of the Petitioner No. 1 that he came to know about the fraudulent transfer of shares registered in name of his father only on receipt of a letter dated 12th December 2018 from Respondent No. 8 to cross the bar of limitation. Accordingly, we are of considered view that the present petition has been filed beyond the period of 3 years from the date of knowledge of fraud alleged to have been perpetrated by the Respondent No. 2 and 3 against them, hence, the petition is barred in terms of law of limitation.
33. Nonetheless, the events stated para 27 to 30 lends some credence to the submission of Respondent No. 2 and 3 that a verbal settlement may have arrived at between the parties in relation to shares of deceased Roshanlal Agarwal, as no aggrieved person, having access to qualified lawyers, would fritter his legal rights in a manner, the Petitioners have done. It can not be comprehended that the Petitioners were not aware of legal remedy available in terms of Section 58 of the Act of 2013 read with clause 5 of the Articles of Association of Respondent No. 1 company, which specifically provides for timebound transmission of shares in the name of legal heirs of a deceased shareholder. We appreciate that the Petitioners have challenged the existence of any such settlement by placing arguments against existence of any such settlement, since the issue of rights over shares of deceased Ratanlal Agarwal involves complex facts, we refrain from deciding the legal title in relation to those shares in the present proceedings, as the same can only be decided by a Civil Court.
34. In view of the above, Company Petition No. 526 of 2019 is dismissed as barred by limitation and disposed of accordingly. Consequently, MA 1094 of 2019 seeking interim relief also stands disposed of
14. It is the submission of the learned senior counsel for the appellant that the Ld. NCLT had failed to correctly apply Section 17 of the Limitation Act which postpones the commencement of the limitation period until the fraud is discovered. It is submitted the fraud was discovered only on 21.09.2018 when the appellants came to know through a letter of ROC which referred to the transfer of shares in favour of Respondent No.3, Ms Krishna Kumari and Respondent No.6, Mark Buildtech Pvt Ltd. Heard.
15. We are not inclined to accept the submission made by the learned senior counsel for appellant that they came to know about the alleged fraud only on 12.12.2018. The appellant themselves have admitted in year 1998 the shares certificates were acquired by Respondent No.3 and in 2006 the appellants came to know the Respondent No.2 was seeking to transfer R1 company to a third party. Further in 2010 the appellant lodged a complaint qua illegal transfer of shares and rather admitted that Respondent No.2, Mr. Anil Kumar wrote a letter dated 21.03.2000 to the Income Tax Department inter alia calling upon it to lift the attachment order on Mr. Roshan Lal shares and to transfer those shares in his name. This fact came to the knowledge of the appellant in the year 2011 itself as stated in the appeal. Thus, since 2006 the appellants were aware of the fact the shares are either transferred or in process of further being transferred but came forward to challenge such transfer only in 2019 alleging that they came to know of shares certificate in the name of Respondent No.3 only in the year 2018 itself. The appellants have relied upon Section 17 of the Limitation Act and it reads as under:-
17. Effect of fraud or mistake.—(1) Where, in the case of any suit or application for which a period of limitation is prescribed by this Act,—
(a) the suit or application is based upon the fraud of the defendant or respondent or his agent; or
(b) the knowledge of the right or title on which a suit or application is founded is concealed by the fraud of any such person as aforesaid; or
(c) the suit or application is for relief from the consequences of a mistake; or
(d) where any document necessary to establish the right of the plaintiff or applicant has been fraudulently concealed from him,
the period of limitation shall not begin to run until the plaintiff or applicant has discovered the fraud or the mistake or could, with reasonable diligence, have discovered it; or in the case of a concealed document, until the plaintiff or the applicant first had the means of producing the concealed document or compelling its production:
16. A bare perusal of the Section 17 would clarify the period of limitation shall not begin to run until the plaintiff or applicant has discovered the mistake or could, with reasonable diligence, had discovered it. Now admittedly, the appellants have been taking action qua illegal transfer of shares since the year 2011 but never came forward before the appropriate forum viz the Company Law Board or Ld. NCLT for rectification of the register of members till 2019. Further it is pertinent to note the shares were not in the name of the appellant’s father Mr. Roshan Lal but rather purchased from the money belonging to a partnership firm of which Mr. Roshan Lal and Chaman Lal, both were partners.
17. In P Radha Bai and others Vs P Ashok Kumar and Another (2019) 13 Supreme Court Cases 445 the Hon’ble Supreme Court had held Section 17 does not encompass all kinds of frauds and mistakes and it only encompasses those fraudulent conduct or act of concealment of documents which have the effect of suppressing the knowledge entitling a party to pursue its legal remedy. Once a party becomes aware of the antecedent facts necessary to pursue a legal proceedings, the limitation period commences.
18. Thus where the appellants were aware of transfer as far as back in 2006 and lastly in the year 2011, can’t now allege the limitation would start on receipt of a letter dated 12.12.2018 of Respondent No.8.
19. Thus considering the above fact and submission, we find no illegality in the impugned order and we are not inclined to accept this appeal. The appeal is accordingly dismissed.
20. Pending application i.e. IAs No.4892, 4893 and 4894/2025 are also disposed of.
