9911796707
|
Home
Issues Involved:
1. Condonation of delay in filing appeals under Section 111 of the Companies Act, 1956. 2. Merits of the refusal by the Board of Directors (BOD) to register the transfer of shares. Detailed Analysis: 1. Condonation of Delay in Filing Appeals: The petitioner challenged the Company Law Board's (CLB) decision to condone the delay in filing appeals under Section 111 of the Companies Act, 1956. The petitioner argued that there was no specific provision for condonation of delay in Section 111 or the Rules framed under the Act. They contended that Section 637B, which allows for condonation of delay, was not applicable as it did not explicitly cover appeals. The respondent countered that Section 637B, which contains a non obstante clause, applies to appeals as well. They cited precedents, including Nagendranath Dey v. Suresh Chandra Dey (AIR 1932 PC 165), to support the argument that an application under Section 637B includes an appeal. The CLB had exercised its discretion to condone short delays to avoid undue hardship, and this discretion should not be interfered with by the court under Article 226 of the Constitution. The court concluded that Section 637B applies to proceedings before the CLB, and the Board's discretion to condone the delay was justified. The court rejected the petitioner's contention that the delay could not be condoned. 2. Merits of the Refusal by the BOD to Register the Transfer of Shares: The petitioner argued that the BOD's refusal to register the transfer of shares was justified as it was not in the company's interest to allow the transfer, given the high price offered by a person allegedly attempting to corner the shares. They relied on various legal precedents to assert that the BOD's decision, made in good faith and based on legal advice, should not be interfered with by the CLB. The respondent argued that the BOD's refusal was not based on bona fide reasons and that the high price paid for the shares was not a valid ground for refusal. They cited the Supreme Court's decision in Luxmi Tea Co. Ltd. v. Pradip Kumar Sarkar (1990) 67 Comp. Cas. 518, which held that the BOD of a public limited company could not refuse to transfer shares unless such power was explicitly provided in the Act or the Articles of Association. The court noted that the CLB had thoroughly examined the reasons provided by the BOD and found them insufficient. The CLB observed that the high price paid for the shares was not detrimental to the company and that there was no material evidence to suggest that the transferees were acting on behalf of the person allegedly attempting to corner the shares. The court agreed with the CLB's findings and held that the BOD's refusal was not justified. The court also addressed the petitioner's argument that the CLB could not substitute its views for those of the BOD. It concluded that the CLB had correctly applied Article 20 of Table A of the Companies Act, 1913, and found no merit in the petitioner's contention. Conclusion: The court dismissed the petitions, upholding the CLB's decision to condone the delay in filing appeals and its order to register the transfer of shares. The company was directed to comply with the CLB's order within two weeks.
|
