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Issues:
- Interpretation of Regulation 20 of Table A of the Companies Act, 1913 - Competence of the board of directors to reject transfer of shares - Maintainability of petitions under section 155 of the Companies Act, 1956 - Alternative remedy under section 111 of the Act - Laches in approaching the Court - Statutory period of limitation for filing applications under section 155 Interpretation of Regulation 20 of Table A of the Companies Act, 1913: The petitioners sought rectification of the register of members to include their names as holders of equity shares they had purchased. The board of directors rejected the transfer applications citing it would not be in the interest of shareholders and the company. The respondent's counsel relied on Regulation 20 of Table A of the Companies Act, 1913, which allows directors to decline registration of transfers under specific conditions. However, the High Court found that a similar situation in a previous case involving the respondent-company led to a direction by the Company Law Board to register the shares applied for transfer, indicating the board's decision was beyond its competence. Maintainability of petitions under section 155 of the Companies Act, 1956: The respondent's counsel raised a technical objection regarding the maintainability of the petitions under section 155, arguing the petitioners had an alternative remedy through an appeal to the Central Government under section 111. However, the High Court noted that the law provides the option for aggrieved parties to seek relief either through an appeal or by approaching the Court under section 155, making both remedies independent. The Court rejected the objection based on the availability of an alternative remedy. Laches in approaching the Court and Statutory period of limitation: The respondent's counsel also argued that the petitioners had delayed approaching the Court, causing laches. The High Court examined whether there was a statutory period of limitation for filing applications under section 155. As the Companies Act did not prescribe a limitation period, the Court referred to the Limitation Act, 1963, which sets a three-year limitation under Article 137 for applications without specific limitations. The Court held that the present applications were filed within the limitation period and rejected the objection based on laches. The Court directed the respondent to rectify the register of members and awarded consolidated costs to the petitioners. Conclusion: The High Court, after considering the interpretation of Regulation 20 of Table A, the competence of the board of directors, the maintainability of petitions under section 155, and the objection regarding laches, ruled in favor of the petitioners. The Court set aside the board's decision, directing the respondent to rectify the register of members and awarding costs to the petitioners.
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