High Court of KeralaDivision BenchReview petitions dismissed / rejected; no order...

R.P. Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012

Case / Petition Number:RP Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012

Case Details & Bench

Court
High Court of Kerala
Hon'ble Judges
  • K. Vinod Chandran
  • C. Jayachandran
Judgment Date
2022-11-21
Court Decision / Holding
Review petitions rejected; no order as to costs.
Final Disposition
Review petitions dismissed / rejected; no order as to costs.

Parties to the Case

Appellants / Petitioners

  • PRADEEP PACHIKARA
  • SAJU M.C
  • ROBY VILLA
  • STATE OF KERALA
  • M.M. CHACKO
  • JOSEPH SIJO
  • JAMES SUBIN
  • THOMASKUTTY K.C
  • SHINE AUGUSTINE
  • MATHEW T. LUKE

Respondents

  • SELECT SECURITIES LIMITED, KOCHI
  • PRINCE GEORGE
  • BINNY C. THOMAS
  • SHEKHAR M.
  • SURESH YEZHUVATH
  • LISA JOSE
  • J. KURIENNELLANICKAL
  • M/S. DOHA BANK
  • M/S. SELECT STOCK BROKERS LIMITED
  • M/S. SELECT DERIVATIVES AND COMMODITIES (INDIA) LTD.
  • JOHNKUTTY JAMES
  • AJITH P K APARNA
  • ANIL GEORGE
  • MENON SREEKUMAR
  • PHILIP L. P
  • SAINTSON MATHEW
  • VINOD KUMAR OP
  • THOMAS JOSEPH
  • ROBY K.R.
  • MINISTRY OF CORPORATE AFFAIRS
  • SAJU M.C
  • M.M. CHACKO
  • JOSEPH SIJO
  • JAMES SUBIN
  • THOMASKUTTY K.C
  • SHINE AUGUSTINE
  • MATHEW T. LUKE
  • MINISTRY OF CORPORATE AFFAIRS

Legal Representation & Advocates

Counsels for Petitioners

  • • PRADEEP PACHIKARA (Party-In-Person)
  • • UMMUL FIDA LAKSHMI
  • • SREEDHAR
  • • BINU V V
  • • VEETTIL VALAPPIL
  • • S.K. PREMJITH MENON
  • • P.J.STEPHEN
  • • MANEKSHA D.

Counsels for Respondents

  • • SRI JOSEPH KODIANTHARA
  • • SRI B.PREMNATH
  • • SRI PAULOSE C ABRAHAM
  • • ADVOCATES FOR RESPONDENTS
  • • B PREMNATH (E)
  • • SARATH M.S.
  • • JOSEPH KODIANTHARA (SR.)

Case Synopsis & Summary

Two review petitions arise from Company Law Board proceedings concerning a 2006–2007 strategic tie-up with Doha Bank and a proposed sale of shares in Select Securities Ltd. The petitioners, minority shareholders holding 25.021% in total, alleged oppression and mismanagement under sections 397 and 398 of the Companies Act, 1956, claiming that the MoU with Doha Bank and successive share transfers unlawfully altered control, harmed minority interests, and violated provisions of the Companies Act (e.g., Section 42(1)) and the non-compete/price undertakings. The CLB found no oppression or mismanagement and allowed mechanisms for reallocation of shares, while the High Court approved those orders. The petitions questioned the legality of share transfers effected via blank transfer forms, the irrevocable undertakings to transfer shares at not less than Rs.60, and a non-compete fee, contending that these actions breached multiple provisions and FEMA. The High Court, in rejecting the petitions, held that the transfer process and MOUs were not in contravention of the statutory framework and that there was no error apparent on the face of the record; it relied on established lines of authority (Perry Kansagra, Vasudeva Ramachandra) to delineate the scope of a review and declined to re-open merits. The petitions were dismissed with no costs."

Provisions of Law Cited

Sections 397 and 398 of the Companies Act, 1956 (oppression and mismanagement)Section 10F of the Companies Act?Section 42(1) of the Companies Act, 1956Section 399 of the Companies Act, 1956Section 108 of the Companies Act, 1956Section 42(1)FEMA (Foreign Exchange Management Act, 1999)

Legal Doctrines & Maxims

  • Error apparent on the face of the record
  • Self-evident errors (Perry Kansagra principle)
  • Distinction between title to get on the register and actual transfer of shares (Vasudeva Ramachandra v. Pranlal Jayanand Thacker)
  • Void ab initio (context of transfer forms and undertakings)
  • Litigant not being prejudiced by act of Court (referenced in Perry Kansagra)

Submissions & Arguments

Contentions of Appellants / Petitioners

The applicants contend that the CLB/High Court orders were vitiated by oppression and mismanagement concealed by share transfers to a strategic investor, without proper notice or compliance with the Companies Act. They argue that transfers were effected through blank transfer forms and irrevocable undertakings to sell at a floor price of Rs.60, implying circumvention of S.42(1) and non-compliance with proper transfer procedure. They challenge the validity of the MoU and the resulting 80% stake for the investor, asserting violations of statutory protections for minority shareholders under Sections 397–399 and misapplication of the law. They rely on precedents to show that errors in judgment, if evident on the face of the record, could be corrected, but emphasize that the standard requires self-evident errors. They seek relief that includes setting aside transfers or restoring shareholding, or other equitable remedies under CLB directions.

Contentions of Respondents

The respondents defend the transfer and valuation framework, arguing there was no oppression or mismanagement and that the minority petitioners voluntarily undertook to transfer shares, signed irrevocable undertakings, and handed over blank transfer forms to facilitate a strategic investment. They point out that the MoU contemplated a staged investment culminating in majority control by the 8th respondent’s associated company and that the petitioners were aware, attended AGMs, and accepted the sale terms. They contend the CLB/Board acted within the law; there is no breach of Section 42(1) or Section 108. They submit that FEMA and other enactments were not violated, and that the remedy of review is misapplied, as no self-evident error occurred that would warrant interference by the High Court.

Cited Precedents (5)

Case NameCitationTreatmentExplanation
Vasudeva Ramachandra v. Pranlal Jayanand ThackerAIR 1974 SC 1728PositiveUsed to emphasize the distinction between the title to get on the register and actual transfer of shares, supporting the hierarchy of enforcement of rights.
Bobby Kuriakose v. St. Mary's Hotels P Ltd.2016 (194) Comp Cas 364 (Ker)DistinguishedApplied to distinguish the present facts; not applicable due to the absence of original share certificates as in that case.
Perry Kansagra v. Smriti Kansagra(2019 (2) KHC 107)PositiveCited to articulate the standard for review jurisdiction, i.e., that an error must be self-evident to be corrected on review.
Smriti Madan Kansagra v. Perry Kansagra2017 SCC OnLine Del 7007 : (2017) 237 DLT 728Mentioned OnlyReferenced in the discussion on whether the review is an appropriate remedy; not controlling the outcome.
Kansagra v. Perry Kansagra(2017) 237 DLT 728 (Del)Mentioned OnlyCited in the context of the Perry Kansagra discussion on review standards; treated as part of the background authorities.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN MONDAY, THE 21[ST] DAY OF NOVEMBER 2022 / 30TH KARTHIKA, 1944** ## **RP NO. 101 OF 2021** **AGAINST THE ORDER/JUDGMENTCo.Appeal 7/2012 OF HIGH COURT OF** ## **KERALA** ## **REVIEW PETITIONER/S:** PRADEEP PACHIKARA AGED 47 YEARS PACHIKARA HOUSE, KOLANI.P.O., THODUPUZHA, IDUKKI DISTRICT, KERALA-685584. BY ADV PRADEEP PACHIKARA(Party-In-Person) ## **RESPONDENT/S:** - 1 M/S.SELECT SECURITIES LIMITED, KOCHI, S.T.REDDIAR AND SONS, BUILDING, VEEKSHANAM ROAD, KOCHI-682035. - 2 PRINCE GEORGE CHAIRMAN, M/S.SELECT SECURITIES LIMITED, S.T.REDDIAR AND SONS, BUILDING, VEEKSHANAM ROAD, KOCHI-682035. - 3 BINNY C.THOMAS, MANAGING DIRECTOR, M/S.SELECT SECURITIES LIMITED, S.T.REDDIAR AND SONS, BUILDING, VEEKSHANAM ROAD, KOCHI682035. - 4 SHEKHAR.M, DIRECTOR, M/S.SELECT SECURITIES LIMITED, S.T.REDDIAR AND SONS, BUILDING, VEEKSHANAM ROAD, KOCHI-682035. - 5 SURESH YEZHUVATH, DIRECTOR, M/S.SELECT SECURITIES LIMITED, S.T.REDDIAR AND SONS, BUILDING, VEEKSHANAM ROAD, KOCHI-682035. - 6 LISA JOSE, DIRECTOR, M/S.SELECT SECURITIES LIMITED, S.T.REDDIAR AND SONS, BUILDING, VEEKSHANAM ROAD, KOCHI-682035. - 7 J.KURIEN NELLANICKAL, DIRECTOR, M/S.SELECT SECURITIES LIMITED, S.T.REDDIAR AND SONS, BUILDING, VEEKSHANAM ROAD, KOCHI-682035. R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **2** - 8 M/S.DOHA BANK, GRAND HAMAD AVENUE, P.O.BOX.3818, DOHA, QATAR. - 9 M/S.SELECT STOCK BROKERS LIMITED, NEW NO.53, 2ND FLOOR, 1ST MAIN RD., C I T NAGAR WEST, CHENNAI-600035. - 10 M/S.SELECT DERIVATIVES AND COMMODITIES (INDIA) LTD., S.T.REDDIAR AND SONS, BUILDING, VEEKSHANAM ROAD, KOCHI-682035. - 11 JOHNKUTTY JAMES, KUMBILUVELIL NETTANACKAL, CHELACOMPU.P.O., KARUAKACHAL, KOTTAYAM-686540, KERALA. - 12 AJITH.P.K., APARNA, TC.50/1605, AYANTHOLE, THRISSUR-680003. - 13 ANIL GEORGE, ABU VILLA, PRIYADARSINI ROAD, ALUVA, KERALA-683101. - 14 MENON SREEKUMAR, SREEVALSOM, DESOM.P.O., ALUVA, KERALA-683101. - 15 PHILIP.L.P., PANJIKARAN, PLOT NO.90, NORTH GIRINAGAR, ERNAKULAM682020. - 16 SAINTSON MATHEW, ACKARAPPADAM, SOUTH PARAVOOR, ERNAKULAM-683513. - 17 VINOD KUMAR OP., CHEMPILAYATHIL HOUSE, VALLAMKULAM EAST, THIRUVALLA, KERALA-689541. - 18 THOMAS JOSEPH, PUTHENANGADI HOUSE, MANNARKAYAM, KANJIRAPPALLY-686506, KERALA. - 19 ROBY.K.R., ROBY VILLA, NEAR S.B.H.S, CHANGANACHERRY-686101. - 20 MINISTRY OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA, B-1 WING, 2ND FLOOR, PARAYAVARAN BHAVAN, CGO COMPLEX, LODHI ROAD, NEW DLEHI-110003. - 21 SAJU.M.C., MLAKUZHIYIL HOUSE, MUTTOM.P.O., THODUPUZHA, IDUKKI DIST., KERLA-685587. - 22 M.M.CHACKO, MLAKUZHIYIL HOUSE, KUDAYATHOOR.P.O., THODUPUZHA, IDUKKI DIST., KERALA-685590. - 23 JOSEPH SIJO, R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **3** MLAKUZHIYIL HOUSE, KUDAYATHOOR.P.O., THODUPUZHA, IDUKKI DIST., KERALA-685590. - 24 JAMES SUBIN, MLAKUZHIYIL HOUSE, KUDAYATHOOR.P.O., THODUPUZHA, IDUKKI DIST., KERALA-685590. - 25 THOMASKUTTY.K.C., KUDAKUTHIYIL HOUSE, PERUNAI.P.O., CHANGANACHERRY, KOTTYAM DIST., KERALA- 686102. - 26 SHINE AUGUSTINE, MADACKAL HOUSE, KUDAYATHOOR.P.O., THODUPUZHA, IDUKKI DIST., KERALA-685590. - 27 MATHEW T.LUKE, THOOKANKOTIL HOUSE, MUTTOM.P.O., THODUPUZHA, IDUKKI DIST., KERALA-685587. BY ADVS. B.PREMNATH (E) BINU V V VEETTIL VALAPPIL SARATH M.S. S.K.PREMJITH MENON(K/572/2002) MANEKSHA D.(K/000478/2005) P.J.STEPHEN(K/474/2004) THIS REVIEW PETITION HAVING BEEN FINALLY HEARD ON 21.11.2022, ALONG WITH RP.1034/2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **4** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN MONDAY, THE 21[ST] DAY OF NOVEMBER 2022 / 30TH KARTHIKA, 1944 RP NO. 1034 OF 2022** ## **AGAINST THE ORDER/JUDGMENTCo.Appeal 7/2012 OF HIGH COURT OF** ## **KERALA** ## **REVIEW PETITIONER/S:** - 1 SAJU M.C AGED 45 YEARS MLAKUZHIYIL HOUES, MUTTOM.P.O, THODUPUZHA, IDUKKI DISTRICT, KERALA. - 2 ROBY VILLA, NEAR S.B.H.S, CHANGANACHERRY- 686 101. - 3 STATE OF KERALA B-1 WING, 2ND FLOOR, PARAYAVARANBHAVAN, CGO COMPLEX, LODHI ROAD, NEW DELHI-110003. - 4 PRADEEP PACHIKKARA, PACHIKARA HOUSE, KOLANI P.O, THODUPUZHA, IDUKKI DISTRICT, KERALA 685 584. - 5 M.M. CHACKO MLAKUZHIYIL HOUSE, KUDAYATHOOR PO, THODUPUZHA, IDUKKI DIST, KERALA - 685 590. - 6 JOSEPH SIJO, MLAKUZHIYIL HOUSE, KUDAYATHOOR P O, THODUPUZHA, IDUKKI DIST., KERALA - 685 590. - 7 JAMES SUBIN , MLAKUZHIYIL HOUSE, KUDAYATHOOR P O, THODUPUZHA, IDUKKI DIST, KERALA - 685 590. - 8 THOMASKUTTY K.C, KUDAKUTHIYIL HOUSE, PERUNAI PO, CHANGANACHERRY, KOTTAYAM DIST. KERALA - 686 102. R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **5** - 9 SHINE AUGUSTINE, MADACKAL HOUSE, KUDAYATHOOR P O, THODUPUZHA, I DUKKI DIST, KERALA 685 590. - 10 MATHEW T. LUKE, THOOKANKOTIL HOUSE, MUTTOM PO, THODUPUZHA, IDUKKI DIST. KERALA -685 587. BY ADVS. UMMUL FIDA LAKSHMI SREEDHAR BINU V V VEETTIL VALAPPIL S.K.PREMJITH MENON(K/572/2002) P.J.STEPHEN(K/474/2004) MANEKSHA D.(K/000478/2005) ## **RESPONDENT/S:** - 1 SELECT SECURITIES LIMITED KOCHI S.T. REDDIAR & SONS, BUILDINGS, VEEKSHANAM ROAD, KOCHI-682 035. - 2 PRINCE GEORGE,CHAIRMAN, M/S. SELECT SECURITIES LIMITED, S.T. REDDIAR & SONS, BUILDINGS, VEEKSHANAM ROAD, KOCHI - 3 BINNY C. THOMAS, MANAGING DIRECTOR, M/S. SELECT SECURITIES LIMITED, S.T. REDDIAR& SONS BUILDINGS, VEEKSHANAM ROAD, KOCHI-682 035. - 4 SHEKHAR M. DIRECTOR, M/S. SELECT SECURITIES LIMITED, S.T. REDDIAR& SONS BUILDINGS, VEEKSHANAM ROAD, KOCHI 682 035. - 5 SURESH YEZHUVATH, DIRECTOR, M/S. SELECT SECURITIES LIMITED, S.T. REDDIAR & SONS, BUILDINGS, VEEKSHANAM ROAD, KOCHI 682 035. - 6 LISA JOSE, DIRECTOR, M/S. SELECT SECURITIES LIMITED, S.T. REDDIAR & SONS, BUILDINGS, VEEKSHANAM ROAD, KOCHI 682 035. - 7 J. KURIENNELLANICKAL , DIRECTOR, M/S. SELECT SECURITIES LIMITED, S.T. REDDIAR& SONS, BUILDINGS, VEEKSHANAM ROAD, KOCHI-682 035. - 8 M/S. DOHA BANK, GRAND HAMAD AVENUE, P.O. BOX.3818, DOHA, QATAR. - 9 M/S. SELECT STOCK BROKERS LIMITED, R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **6** NEW NO.53, 2ND FLOOR, 1ST MAIN RD., CIT NAGAR WEST, CHENNAI-600 035. - 10 M/S.SELECT DERIVATIVES AND COMMODITIES (INDIA) LTD ST.REDDIAR & SONS BUILDINGS, VEEKSHANAM ROAD, KOCHI682035. - 11 JOHNKUTTY JAMES, KUMBILUVELILNETTANACKAL, CHELACOMPU PO, KARUAKACHAL, KOTTAYAM-686 540, KERALA. - 12 AJITH P K APARNA, TC50/1605, AYANTHOLE, THRISSUR-680003. - 13 ANIL GEORGE ABU VILLA, PRIYADARSINI ROAD, ALUVA, KERALA - 683 101. - 14 MENON SREEKUMAR, SREEVALSOM, DESOM PO., ALUVA, KERALA 683 101. - 15 PHILIP.L.P, PANJIKARAN, PLOT NO 90, NORTH GIRINAGAR, ERNAKULAM 682 020. - 16 SAINTSON MATHEW ACKARAPPADAM, SOUTH PARAVOOR, ERNAKULAM - 683 513. - 17 VINOD KUMAR OP. CHEMPILAYATHIL HOUSE, VALLAMKULAM EAST, THIRUVALLA, KERALA 689 541. - 18 THOMAS JOSEPH, PUTHENANGADI HOUSE, MANNARKAYAM, KANJIRAPPALLY- 686 506, KERALA. BY ADVS. B.PREMNATH (E) SARATH M.S. JOSEPH KODIANTHARA (SR.) THIS REVIEW PETITION HAVING BEEN FINALLY HEARD ON 21.11.2022, ALONG WITH RP.101/2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **7** ## **K.VINOD CHANDRAN & C.JAYACHANDRAN, JJ.** ## **--------------------------------------------R.P Nos.101 of 2021 & 1034 of 2022 in Company Appeal No. 7 of 2012** ## **--------------------------------------------Dated this the 21[st] November, 2022** ## **O R D E R** ## **K.Vinod Chandran, J.** Disputes between some share holders; together constituting 25.021% of the total paid up capital of the Company, and the Directors, were adjudicated by the Company Law Board (for short 'CLB') in an application filed by the said share holders under S. 397 and S.398 of the Companies Act, 1956 (for brevity the Act'). The dispute arose regarding a strategic tie up proposed by the promoters of the Company, with Doha Bank, respondent No.8, who was to be brought as an investor. To facilitate the same an Extraordinary General Body Meeting (in short 'EGM') was called, on 11.12.2006, in which the Company increased its authorized share capital from 2.5 crores to 3 crores. In a meeting of the Directors, on 05.02.2007, the 2[nd] respondent was also authorized to enter into a Memorandum of Understanding (for short 'MoU') with the 8[th] respondent. The Directors agreed to sell their share R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **8** holding to any party, in part or full, for a prize not less than Rs.60/-, and the appellants too executed undertakings dated 05.02.2007 in favour of the 2[nd] respondent authorizing him, irrevocably, to transfer their shares also on the aforesaid condition, again to any party. The MoU entered into between the Company and the 8[th] respondent stipulated sale of 49% of the stake in the Company immediately and at a later stage 20%; approved by the Board of Directors on 21.02.2007. 2. Later, on the demand made by the 8[th] respondent, the second stage investment was raised to 31%, ensuring an 80% stake to be conceded to the strategic tie up investor. A revised MoU was also entered into on 24.01.2007, on which date the appellants 1 and 2, who are the review petitioners herein expressed their unwillingness to sell their shares and instituted a suit before the Munsiff's Court, Ernakulam, in which an order of injunction was passed against the Company and its Directors. The order of injunction stood vacated on 11.10.2007, with the dismissal of the suit, and the transfer of shares was approved by the Board of Directors on 29.10.2007. The appellants then approached the Company Law Board terming the transfer of shares as illegal and R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **9** fraudulent, which resulted in the appellants being reduced to a minority status. 3. The CLB framed four issues, all of which were found against the appellants. It was found that there was no oppression and mismanagement insofar as the respondent 2 to 7, the Directors having neither worked against the interest of the Company nor caused any prejudice to the appellants. The appellants were found to be quite aware of the terms of the MoU entered into with the 8[th] respondent and they had willingly agreed to the transfer of shares making the subsequent revocation, a mere attempt to raise unsubstantiated allegations of illegal deprivation of shareholdings. The delay in transfer of shares beyond the sixmonth period was found to be for reason only of the injunction obtained by the appellants and despite an allegation of proper notice having not been received, the 2[nd] appellant had attended the AGM in which the strategic tie up was proposed and resolved. The Tribunal after rejecting the contentions of the appellants, to bring a quietus to the dispute, enabled the appellants to either get back their shares from the 8[th] respondent; which the 8[th] respondent willingly agreed to, or in the event of their confirming the sale R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **10** made in favour of the 8[th] respondent, enabling them to sell the balance shares held by the petitioners, either to the 8[th] respondent-Bank or to the party respondents. The term of noncompete insisted upon by the 8[th] respondent, for which a fee was received and accepted by the Board of Directors on 31.03.2007 was held to be not binding on the appellants for reason of the appellants having not agreed to such a term. The non-compete fee was only based on the restriction imposed on the promoters and they alone were entitled to the same, held the Tribunal. This Court found that there was no question of law arising in the above appeal to bring it within the ambit of S.10F of the Act, despite which the merits of the matter was gone into, only considering the elaborate arguments addressed before Court. This Court fully approved the orders of the Tribunal. 4. The appeal was filed by eight shareholders who together had shareholdings above 10%. The review petitions are filed by only two of the appellants in which they have raised grounds which are purportedly errors apparent on the face of the record. The review petitioners are also not the original promoters of the Company. The errors on the face of the record, highlighted R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **11** before us by the learned Counsel Sri.S.K. Premjith Menon, appearing for one of the review petitioners are available in the memorandum. It was urged that the appellants had handed over the shares of the Company, for transfer to the Doha Bank, but the transfer was effected to the 2[nd] and 7[th] respondents. The second ground urged was that the issuance of shares to subsidiary companies was hit by S.42(1) of the Companies Act which was in fact raised and pleaded before the CLB in para 27 of the Company Petition. This Court having considered in detail the validity of a transfer effected by way of blank transfer forms, failed to appreciate that there was no consideration passed, making the sale _abinitio_ void. While the finding of this Court was that the shares were delivered along with the blank transfer forms to the 2[nd] respondent, it was the finding of the CLB that the delivery was effected to the 1[st] respondent, the Company. The party-in-person who was the other review petitioner also urged the above grounds and in addition argued that the order of the CLB and this Court were in violation of the FEMA (Foreign Exchange Management Act, 1999) and other enactments. _Bobby Kuriakose v. St. Mary's Hotels P Ltd. [2016 (194) Comp cases 364 (Ker)]_ was relied on to R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **12** argue that the share transfers on the basis of blank transfer form is hit by S.108 of the Act. _Perry Kansagra v. Smriti Madan Kansagra (2019 (2) KHC 107)_ was relied on to argue that a misconception of fact or law, by a Court could also enable review especially going by the principle of a litigant not being prejudiced by the act of Court. 5. Sri Joseph Kodianthara, Senior Counsel appeared for the Company and the Directors, instructed by Sri B.Premnath, Sri.Paulose C Abraham appears for the 8[th] respondent. It was pointed out that even according to the review petitioners the undertaking executed by them was to transfer the shares to any person and it is in that context that the shares were transferred to the 2[nd] respondent as a nominee of the 8[th] respondent. It is also pointed out that the two review petitioners together cannot be said to have held 10% shares of the Company and the review filed is incompetent for the said ground and also on the ground that they are attempting to get the matter reheard. 6. An appeal is a continuation of the proceedings before the lower Court/Tribunal and necessarily the majority status of the appellants, as per the Companies Act has to be maintained in the R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **13** appeal and also in a review filed from the order in appeal. In the present case, the petitioners before the Tribunal, all of whom joined in appeal, had 25.021% of the total paid up capital of the Company. The shareholding of the individual applicants is available in the appeal memorandum in a tabulated form in paragraph 6. The review petitioner in R.P No. 101/2021 has 4.85% of shares individually, by himself and along with another of the appellants, the 6[th] appellant, 8.25% joint shareholding. The review petitioner in R.P No.1034/2022 has only 2.68% of the shareholding. The total shareholding of both the review petitioners come to 7.53%; below the 10% requirement as per the Companies Act to maintain an application for oppression and mismanagement as provided under Section 399 of the Act. There can be no severance of the joint holding of 8.25%; the review petitioner in RP. No101/2021 has together with the 6[th] respondent, who has not joined him in the review petition. In such circumstances, the review petitioners who were in a minority even before the disputed strategic tie up, cannot raise a contention of their status being rendered a minority; which even otherwise they were, at the time, when the strategic tie up was mooted. R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **14** 7. As far as the ground regarding errors apparent on the face of the record, we are not convinced that they fall under a misconception of law or fact; based on which this Court in the appeal or the CLB in the Company Application ruled against the appellants/petitioners. The transfer of shares was originally accepted by the review petitioners who also signed an undertaking to that end based on a resolution of the Board of Directors in which the appellants agreed to the transfer of shares to any person and not specifically Doha Bank. The undertaking signed by the review petitioner in R.P 101/2021 is available in page 188 of the appeal memorandum. The specific undertaking that too an irrevocable authorization, is as extracted herein below: _“I do hereby irrevocably authorise MR Prince George. Chairman and Director of the Company to negotiate and to enter into agreement with any party or parties for selling my above shares in Select Securities Ltd. in part or full for a price not less than Rs.60/per share during any time within 6 months from the date of this undertaking.”_ Along with the undertaking they handed over the share certificates together with the blank transfer forms to the 2[nd] respondent, the Chairman of the Company. The sale was to be effectuated after negotiation with the strategic investors. Hence the petitioners now cannot take up a contention that the transfer effected to the 2[nd] R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **15** respondent, which in any event is, as a nominee of the 8[th] respondent, was not an authorized transfer. As far as the issue regarding the blank transfer forms, the order under review has specifically dealt with it elaborately, also on the strength of binding precedents of the Hon'ble Supreme Court. The clear distinction between 'the title to get on the register' and ' full property on the shares’ drawn by the Hon'ble Supreme Court in _**Vasudeva Ramachandra v. Pranlal Jayanand Thacker AIR 1974 SC1728**_ was emphasized. While the former was an antecedent right, the latter was an enforcement of that right by effecting the actual transfers in the Registers of the Company. When the appellants had executed blank transfer forms and handed over the same along with original share certificates to the 2[nd] respondent for the purpose of facilitating the strategic tie up; there is no question of any revocation or scope for an allegation that the transfer itself was effected to another person than that intended by the transferor; especially in the context of the only condition being the consideration not falling below Rs.60/- and the transferee having not been specified either in the transfer form or in the undertaking executed by the applicant. The decision in _Bobby Kuriakose_ (supra) R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **16** dealing with Section 108 of the Act was in the circumstance of the absence of the original share certificates; not applicable in the instant case. 8. As far as violation of S.42(1), this Court has in the order under review specifically found that the matter was not pleaded or urged before the CLB. The review petitioners contend that they urged it in paragraph 27 of the Company Petition. But for stating that transfer was effected to the 7[th] respondent, there is no violation of Section 42(1) pointed out or even, a ground raised that such transfers were illegal. Be that as it may, if there is a transfer effected in violation of the Companies Act, the consequences will follow; but it does not prejudice the review petitioners in any manner. There was also no contention raised of the order of the CLB, or the actions of the Directors being in violation of FEMA or any other enactments, before the CLB or this Court, when the appeal was earlier heard. As to the delivery of the documents, admittedly the shares were handed over along with an undertaking, irrevocably authorizing the 2[nd] respondent to transfer the shares at a price not lower than Rs.60/-. The appellants had also handed over blank transfer forms, as is the practice, noticed R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **17** in the judgment under review. After negotiation, obviously the transfer is effected by delivering the shares to the Company along with the duly filled up transfer forms, which concludes the transfer, by making appropriate entries in the register maintained by the Company. The ground raised as to whether the shares were handed over to the Company or the 2[nd] respondent is a clear fallacy since the 2[nd] respondent is the Chairman of the Company. We also record the submission of the respondents that the shares were eventually sold at a price of Rs.61/- and despite communications to accept the consideration for the sale of their respective shareholdings; the review petitioners have refused to receive it. We make it clear that the review petitioners and any of the appellants, even now would be entitled to receive it or it will be open for them to exercise any of the alternate options conceded to them by the CLB. ## 9. We notice para 17 of _Perry Kansagra_ (supra). **17.** We have gone through both the judgments of the High Court in the instant case and considered rival submissions on the point. It is well settled that an error which is required to be detected by a process of reasoning can hardly be said to be an error apparent on the face of the - record. To justify exercise of review jurisdiction, the error must be self evident. Tested on this parameter, the exercise of jurisdiction in the present case was not correct. The exercise undertaken in the present case, in our considered view, was as if the High Court was sitting in appeal over the earlier decision dated 17-2-2017 [ _Smriti Madan_ R.P Nos.101/2021 & 1034/2022 in Co.Appeal No.7/2012 **18** _Kansagra_ v. _Perry Kansagra_ , 2017 SCC OnLine Del 7007 : (2017) 237 DLT 728] . Even assuming that there was no correct appreciation of facts and law in the earlier judgment, the parties could be left to challenge the decision in an appeal. But the review was not a proper remedy at all. In our view, the High Court erred in entertaining the review petition and setting aside the earlier view dated 17-2-2017 [ _Smriti Madan Kansagra_ v. _Perry Kansagra_ , 2017 SCC OnLine Del 7007 : (2017) 237 DLT 728] . Having so concluded, the logical course in the circumstances would be to set aside the judgment under appeal and permit the respondent to challenge the judgment dated 17-2-2017 [ _Smriti Madan Kansagra_ v. _Perry Kansagra_ , 2017 SCC OnLine Del 7007 : (2017) 237 DLT 728] . But such a course would entail further litigation and therefore, we have considered the matter from the standpoint of second issue as well. ## (underlined for emphasis) Obviously we are not sitting in appeal and there are no errors apparent on the face of the record which can be said to be selfevident as has been declared in _Perry Kansagra (supra)_ . The review petitions hence would stand rejected. No order as to costs. Sd/- **K.VINOD CHANDRAN, JUDGE** Sd/- **C.JAYACHANDRAN, JUDGE** jma