1996 (11) TMI 321 - HC - Companies Law

Summary

Issues:
1. Interpretation of section 621 of the Companies Act, 1956 regarding the requirement for a complaint in writing for taking cognizance of an offense.
2. Duty of the company and its officers under section 113 of the Companies Act, 1956 to transfer shares within a specified period.
3. Dispute regarding the designation of the managing director of the company.

Analysis:
1. The first issue in this case revolves around the interpretation of section 621 of the Companies Act, 1956, which specifies the conditions under which a court can take cognizance of an offense. The petitioner argued that since the shares were not transferred to the respondent's name, she did not qualify as a shareholder under the Act, and therefore, no complaint could be filed by her. However, the court rejected this contention, emphasizing that the respondent had purchased the shares and had the right to have them transferred in her name. The court held that accepting the petitioner's interpretation would defeat the purpose of the provision, allowing companies to evade liability for non-transfer of shares.

2. The second issue pertains to the duty imposed on companies and their officers under section 113 of the Companies Act, 1956, to transfer shares within a specified period. The court noted that the respondent had purchased the shares and sent them for transfer, making her the rightful owner. The court emphasized that the company and its officers had a duty to transfer the shares within two months, failing which they could be fined. The court dismissed the petitioner's argument that the respondent did not qualify as a shareholder, reiterating that she had paid for the shares and was entitled to their transfer.

3. The final issue concerns the dispute regarding the designation of the managing director of the company. The petitioner contested that Shri P.C. Chako was not the managing director of the company, and therefore, the court erred in taking cognizance against him. However, the court noted that the respondent had identified petitioner No. 2 as the managing director in the complaint and supporting statement. The court found no reason to doubt these allegations, especially when supported by the respondent's statement under section 200 of the Code. Consequently, the court held that summoning petitioner No. 2 as the managing director was not erroneous.

In conclusion, the court dismissed the petition, finding it without merit and upheld the impugned order summoning the petitioners based on the allegations and evidence presented before the Judicial Magistrate.