1989 (11) TMI 256 - HC - Companies Law

Summary

Issues:
1. Interpretation of section 154 of the Companies Act regarding mandatory vs. directory requirements for closure of register of members.
2. Validity of closure of register of members and refusal to register share certificates.
3. Definition of "newspaper" under section 154 and compliance with publication requirements.
4. Impact of non-compliance with section 154 on refusal to register shares.
5. Compliance with section 108(1A)(ii)(a) requirements in Writ Petitions Nos. 3543 to 3545 of 1983.

Analysis:
1. The judgment involved writ appeals against an order of the Company Law Board under section 111 of the Companies Act, 1956. The key issue revolved around the interpretation of section 154 of the Act to determine whether its requirements for closure of register of members are mandatory or directory. The learned judge held that the requirements are mandatory in nature, emphasizing the importance of publication in a newspaper for such closures.

2. The Company Law Board had directed the company to transfer share certificates to the petitioners, which led to the appeals. The refusal to register the share certificates was based on the company's claim of closure of registers. However, it was found that the closure did not meet the Act's requirements, rendering the refusal improper and invalid.

3. The definition of "newspaper" under section 154 was a crucial aspect of the case. The judgment highlighted the necessity of publication in a newspaper circulating in the district of the company's registered office. The court emphasized that the Daily Official List of Stock Exchange Limited did not qualify as a newspaper for the purpose of compliance with section 154, as it did not meet the circulation and news content criteria.

4. Non-compliance with the mandatory requirements of section 154 had a direct impact on the refusal to register the shares. The failure to publish the closure notice in a proper newspaper with adequate circulation rendered the refusal to register the share certificates improper and unlawful.

5. The judgment also addressed the contention related to compliance with section 108(1A)(ii)(a) requirements in specific writ petitions. However, this contention was deemed irrelevant once the non-compliance with the mandatory closure requirements of section 154 was established, as it directly affected the validity of the refusal to register the shares.

In conclusion, the appeals were dismissed with costs, as the closure of registers did not satisfy the Act's requirements, leading to the improper refusal to register the shares. The judgment emphasized the mandatory nature of section 154 requirements and the significance of proper publication in a newspaper for closures of registers of members in a company.