1988 (1) TMI 275 - HC - Companies Law

Summary

Issues Involved:
1. Entitlement to shares under a will.
2. Rectification of the share register under Section 155 of the Companies Act, 1956.
3. Transmission of shares from a foreign company to an Indian company.
4. Membership status in a company.
5. Compliance with formalities for share transfer.
6. Business liabilities and asset acquisition by an Indian company from a foreign company.

Issue-wise Detailed Analysis:

1. Entitlement to shares under a will:
The petitioner and the second respondent claim to be legal heirs of Ramavarma Valiakoil Thampuran, who left a will bequeathing his shares in Malayalam Plantations (Holdings) Limited (UK) to them in a 2:1 ratio. Thampuran held 3,750 shares in the company, and there is no dispute regarding the devolution of these shares as per the will.

2. Rectification of the share register under Section 155 of the Companies Act, 1956:
The petitioner seeks an order under Section 155 to rectify the share register of Messrs. Harrisons Malayalam Ltd., asserting that they are entitled to shares in this company due to the bequest. Section 155 empowers the court to rectify the register of members, while Section 150 mandates maintaining a register with specific details of each member.

3. Transmission of shares from a foreign company to an Indian company:
The petitioner claims that shares held by Thampuran in Malayalam Plantations (Holdings) Limited (UK) were acquired by Messrs. Harrisons and Crosfield (UK) Ltd., which later transferred these shares to the petitioner and the second respondent. However, there is no conclusive evidence in the records that the share certificates of Messrs. Harrisons & Crosfield (UK) Ltd. were obtained by the petitioner and the second respondent.

4. Membership status in a company:
According to Section 41 of the Companies Act, to be a member, one must agree in writing to become a member and have their name entered in the register of members. Both conditions are cumulative and must be satisfied. The court found no evidence that the petitioner and the second respondent satisfied these conditions to claim membership in Messrs. Harrisons & Crosfield (UK) Ltd.

5. Compliance with formalities for share transfer:
The petitioner and the second respondent needed to comply with formalities for the actual transmission/transfer of shares. The court could not ascertain with certainty from the available records if these formalities were met.

6. Business liabilities and asset acquisition by an Indian company from a foreign company:
Messrs. Harrisons and Crosfield (UK) Ltd.'s assets and liabilities in India were acquired by Messrs. Harrisons and Crosfield (India) Ltd., which later amalgamated with Malayalam Plantations (India) Ltd., now Messrs. Harrisons Malayalam Ltd. The court had to determine whether the shares held by the petitioner in Messrs. Harrisons and Crosfield (UK) Ltd. could be treated as shares of Messrs. Harrisons Malayalam Ltd. The court concluded that the shares held by Indian citizens in Messrs. Harrisons and Crosfield (UK) Ltd. could not be considered as business liabilities of Messrs. Harrisons and Crosfield (India) Ltd. or Messrs. Harrisons Malayalam Ltd.

Conclusion:
The court dismissed the petition, stating that even if the petitioner had obtained the shares of Messrs. Harrisons and Crosfield (UK) Ltd., they could not claim shares in Messrs. Harrisons Malayalam Ltd. Consequently, the court could not rectify the share register of the first respondent under Section 155 of the Companies Act. The petition was dismissed with no costs.