2000 (3) TMI 929 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the petitions under section 111A of the Companies Act.
2. Interpretation of the term "intimation of transfer" in section 111A(2).
3. Applicability of section 111(2) and section 111(4) to public limited companies.
4. Jurisdiction of the Company Law Board (CLB) to rectify the register of members.
5. Remedies available for non-registration of transmission of shares.

Issue-wise Detailed Analysis:

1. Maintainability of the petitions under section 111A of the Companies Act:
The appellants contended that the petitions were not maintainable under section 111A as it deals only with refusal to register the transfer of shares and not the transmission of shares by operation of law. They argued that the right of appeal would have been available under section 111(2) of the Act, which now applies only to private limited companies and deemed public companies under section 43A of the Act. The respondent's only remedy, according to the appellants, was by way of a civil suit. The Court, however, found that the CLB had jurisdiction to entertain the petitions under section 111A, as the provisions of section 111A should be read in conjunction with section 111, and the inaction of the appellants in registering the transmission of shares could be treated as a deemed refusal.

2. Interpretation of the term "intimation of transfer" in section 111A(2):
The CLB had interpreted the term "intimation of transfer" in the proviso to section 111A(2) to include "intimation of transmission," considering it a drafting error. The Court disagreed with this interpretation, stating that the CLB has no jurisdiction to draft provisions and must only interpret them. The Court held that the term "intimation of transfer" should not be substituted with "intimation of transmission" and that the provisions of the Depositories Act and the Companies Act should be harmonized to give effect to the intention of the Legislature.

3. Applicability of section 111(2) and section 111(4) to public limited companies:
The Court held that the remedies of appeal and rectification under sections 111(2) and 111(4) are available to public limited companies by virtue of section 111A(7), which makes applicable the provisions of sections 111(5), (7), (9), (10), and (12) to the proceedings under section 111A. The Court emphasized that the provisions of the Depositories Act are in addition to and not in derogation of any other law for the time being in force, thus preserving the rights and remedies already available to shareholders of public companies.

4. Jurisdiction of the Company Law Board (CLB) to rectify the register of members:
The Court held that the CLB has jurisdiction to rectify the register of members under section 111A(3) for all shares, whether held in depositories or in the form of share certificates. The CLB's jurisdiction is not limited to transfer matters but also includes transmission and other issues such as bad delivery, loss, theft, or forgery of shares. The Court overruled the CLB's conclusion in the case of Shashi Prakash Khemka, which had restricted the remedy of rectification to transfer matters only.

5. Remedies available for non-registration of transmission of shares:
The Court held that the absence of the term "intimation of transmission" in the proviso to section 111A(2) does not mean that no remedy of appeal is available for non-registration of transmission of shares. The Court interpreted the provisions in a manner that includes "intimation of transmission" by necessary implication, ensuring that the rights and remedies available to shareholders of public companies are preserved. The Court emphasized that the interpretation should harmonize the text of the proviso with the context of the whole statute, giving effect to the intention of the Legislature.

Conclusion:
The Court dismissed the appeals, upholding the CLB's direction to transmit the shares held by the deceased in the name of the respondent as per his entitlement in terms of the succession certificate dated 20-3-1997. The Court, however, overruled the CLB's reasoning regarding the "drafting error" and clarified the interpretation of the relevant provisions to ensure the preservation of shareholders' rights and remedies.