DANKHA DEVI AGARWAL (DEAD) THROUGH LRS. versus TARA PROPERTIES PVT. LIMITED AND ORS.

Citation: [2006] SUPP. 4 S.C.R. 582 · Decided: 17-08-2006 · Supreme Court of India · Bench: B.P. SINGH · Disposal: Disposed off

Judgment (excerpt)

A 
DANKHA DEVI AGARWAL (DEAD) THROUGH LRS. 
v. 
TARA PROPERTIES PVT. LIMITED AND ORS. 
AUGUST 17, 2006 
B 
[B.P. SINGH AND AL TAMAS KABIR, JJ.] 
Companies Act, 1956-Sections 286, 397 and 399-Fradulent transfer 
of shares belonging to a majority shareholder by minority shareholders with 
a view to wrest control over the management and affairs of the company-
C Board of Directors allotted unsubscribed authorised capital with a view to 
regain control over the company-Minority shareholders were removed from 
Directorship of the company by passing a Resolution in an Extra-ordinary 
General Meeting of the Company-Suit filed by the majority shareholder 
allegedly to declare the purported transfer of shares to the minority 
D shareholders as null and void~Minority Shareholders forged the signature 
of the majority shareholder and withdrew the suit by filing an application-
Application filed by the majority shareholder for recalling the order of 
withdrawal of the suit was dismissed by the High Court---Correctness of-
Held, on facts, there are certain suspicious ciru..::mstances under which the 
suit has been withdrawn-Hence, High Court is directed to decide the 
E application for recalling the order afresh. 
Application by minority shareholders for setting aside the Board 
Resolution of removing them from Directorship of the company and the issue 
of remaining unsubscrib.ed shares was allowed by High Court---Correctness 
F of-Held, since the decision of the High Court has not been seriously contested 
on behalf of the company, the appeal is dismissed. 
A company was incorporated with appellant, her husband and her two 
sons as shareholders by allotting 10 shares to each to them. They became 
the first Directors of the Company. The appellant was allotted 3000 additional 
G shares for leasing out her land in favour of the company and thereby became 
a majority shareholder. The appellant transferred part of her shares to the 
wives and children of her two sons and retained the remaining shares with 
her maintaining herself as a majority shareholder. The elder son, with a view 
to wrest control over the management and affairs of the company, is alleged 
to have forged the signatures of the appellant and transferred her shares to 
H 
582 
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DANKHA DEVI AGARWAL (DEAD) THROUGH LRS. ' TARA PROPERTIES PVT. LTD. 
583 
himself and his wife. On discovery of the fraud and other irregularties, the A 
Board of Directors passed a Resolution and allotted the unsubcribed shares 
of the authorised share capital to appellant's husband and her younger son. 
The company held an Extra-ordinary General Meeting in which the elder son 
and his wife were removed from Directorship of the company by passing a 
Resolut:on. 
The appellant filed a suit before High Court for a declaration that the 
purported transfer of her shares to her elder son and his wife-respondent-
was null and void and that she was the sole and absolute owner of the shares 
ofthc company. The husband of the appellant died. The respondents forged 
B 
the signatures of the appellant and got the suit dismissed by the High Court C 
without her knowledge. When the appellant came to know that her suit has 
been dismissed as withdrawn based on her forged signatures, she filed an 
application before the High Court for recalling the orders. Single Judge 
dismissed the application and the appeal preferred by her was also dismissed 
by the Division Bench of the High Court. Hence an appeal filed by the appellant 
before this Court against the respondents. 
D 
During the pendency of the Civil appeal before this Court, the appellant 
died. The respondents filed an application before High Court for setting aside 
the Board Resolution of removal from Directorship of the Company and the 
allotment of remaining unsubscribed shares. A Company Judge of the High 
Court allowed the application. The Company preferred an appeal which was E 
dismissed by the Division Bench of the High Court. Hence an appeal filed by 
the company against the respondents. 
The appellant contended that the respondents had forged her signature 
and illegally transferred her shares to themselves without her knowledge with F 
a view to wrest control over the management and affairs of the company; that 
respondents also forged her signature and filed an application for withdrawal 
of her suit without her consent; and that the advocate of the respondents 
represented falsely as the advocate of the appellant before the High Court 

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