1981 (9) TMI 237 - HC - Companies Law

Shares warrants and entries in register of members, Transfer of Shares Power to refuse registration and appeal against refusal, Power to close register of members or debenture holders, Powers of Court to rectify register of members, Meetings and Proceedings - Presumptions to be where minutes duly drawn and signed

Issues Involved:
1. Maintainability of the Petition
2. Locus Standi of the Petitioner
3. Principles of Res Judicata or Issue Estoppel
4. Maintainability of Judge's Summons for Interim Relief
5. Legality of Entries in the Register of Members
6. Compliance with Estate Duty Act
7. Validity of Transfer of Shares Post-Death of a Shareholder
8. Compliance with MRTP Act

Detailed Analysis:

1. Maintainability of the Petition
The appellants argued that the petition was not maintainable because the reliefs sought were either impossible (registering shares in the names of deceased persons) or unnecessary (registering shares in the name of an uninterested party). The court found that the substance of the petition was to restore the status quo ante, and thus, the petition was maintainable.

2. Locus Standi of the Petitioner
The appellant contended that only an aggrieved person could file the petition. The court held that under Section 155 of the Companies Act, any member of the company could apply for rectification of the register, not just an aggrieved person. The language of the section was clear and did not support a limited interpretation.

3. Principles of Res Judicata or Issue Estoppel
The appellant argued that the petition was barred by principles analogous to res judicata because a similar suit was pending in the City Civil Court. The court noted that the relief sought under Section 155 (rectification of the register) was different from the relief sought in the civil suit (injunction), and thus, the petition was not barred.

4. Maintainability of Judge's Summons for Interim Relief
The appellants argued that interim relief was not maintainable in summary proceedings under Section 155. The court disagreed, stating that the inherent power to grant interim relief exists unless expressly barred by law. The absence of an express provision does not mean the court is powerless to grant interim relief.

5. Legality of Entries in the Register of Members
The petitioner's main grievance was that the entries were made during the period the register was closed and without obtaining a certificate from the Controller of Estate Duty. The court found that the provisions of Section 154 of the Companies Act were enabling and not prohibitive. The entries were not illegal merely because they were made during the closure period. Additionally, the court held that Section 84 of the Estate Duty Act did not apply to transmissions by operation of law, only to transfers.

6. Compliance with Estate Duty Act
The court held that neither Section 84 of the Estate Duty Act nor the company's articles of association prohibited the registration of transmissions by operation of law without an estate duty certificate. The company had acted on credible legal advice, and thus, the entries were not made "without sufficient cause."

7. Validity of Transfer of Shares Post-Death of a Shareholder
The court held that the transfer of shares relates back to the date of execution of the transfer deed. Therefore, the transfer in favor of a deceased person (Shantaben) was valid as it related back to the date when she was alive. The company had acted correctly by first registering the transfer in the joint names and then deleting Shantaben's name after her death.

8. Compliance with MRTP Act
The court found that the company had acted on legal advice that no permission was required for the transfer of shares as the company's capital had fallen below the threshold. The company was eventually deregistered under the MRTP Act, and thus, the entries were not made "without sufficient cause."

Conclusion:
The court allowed both appeals, setting aside the impugned order and holding that the entries in the register of members were not made "without sufficient cause." The petitioner's request for interim relief was denied, and the status quo was maintained. Respondent No. 1 was ordered to pay costs to the appellants.

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