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Issues:
1. Share qualifications of petitioners in the main application under sections 397 and 398 of the Companies Act, 1956. 2. Validity of consents given by shareholders supporting the petitioners. 3. Authority of directors to rectify the share register without notice or recourse to legal provisions. 4. Obligations of the company regarding cancellation of adhesive stamps on share transfer deeds. 5. Impact of subsequent events on the validity and maintainability of the petition. Analysis: 1. The main issue in this case revolves around the share qualifications of the petitioners initiating proceedings under sections 397 and 398 of the Companies Act, 1956. The petitioner argued that certain shareholders lacked the necessary qualifications due to irregularities in the transfer of shares, leading to the company rectifying the registration. However, the respondent contended that the petitioners had the required qualifications at the time of filing the main petition. 2. Another issue raised was the validity of consents given by shareholders supporting the petitioners. The petitioners claimed that some shareholders had signed blank documents without fully understanding the purpose of the petition. However, annexure B to the petition indicated that the shareholders had been informed of and consented to the contents of the petition under sections 397 and 398 after due explanation. 3. The authority of directors to rectify the share register without notice or following legal provisions was also contested. The respondent argued that directors cannot unilaterally delete names from the register without proper procedures, citing the case law of P. V. Damodaran Reddi v. Indian National Agencies Ltd to support their position. 4. The obligations of the company regarding the cancellation of adhesive stamps on share transfer deeds were discussed, emphasizing that the company should have refused to register shares if stamps were not cancelled. The company's action of deregistering shares without legal recourse was deemed improper. 5. Lastly, the impact of subsequent events on the validity and maintainability of the petition was considered. Referring to the case of Rajahmundry Electric Supply Corpn. Ltd v. A. Nageswara Rao, the court held that the validity of a petition is judged based on the facts at the time of presentation, and subsequent events like withdrawal of consent do not affect the petition's maintainability. In conclusion, the court dismissed the application, stating that the petitioners were not entitled to the order sought. The costs were directed to be in the cause, concluding the judgment.
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