2010 (10) TMI 917 - Board - Companies Law

Issues Involved:
1. Legality of the transfer of shares.
2. Authority of the constituted attorney.
3. Allegations of forgery and fraud.
4. Compliance with statutory provisions for share transfer.
5. Validity of the petition under section 111(4) of the Companies Act, 1956.

Detailed Analysis:

1. Legality of the transfer of shares:
The petitioners claimed that the transfer of 40% shares of petitioner No. 1 to respondent Nos. 2 and 5 and 5% shares of petitioner No. 2 to respondent No. 4 were "ab initio void and illegal." They alleged that these transfers occurred without their consent and knowledge. The petitioners also maintained that they had never handed over their original share certificates to anyone. The respondents countered by presenting a declaration-cum-confirmation dated March 13, 2006, signed by petitioner No. 1, which stated that he transferred his shares as a benami holder without consideration. The Board found this declaration credible and ruled that the transfer was legal and valid.

2. Authority of the constituted attorney:
The respondents challenged the authority of the constituted attorney representing the petitioners, arguing that petitioner No. 1 had no authority to appoint an attorney on behalf of petitioner No. 2. The petition was filed without proper authority, and the petitioners avoided subscribing their signatures to avoid scrutiny. The Board did not find sufficient grounds to dismiss the petition on this basis alone but noted the irregularity.

3. Allegations of forgery and fraud:
The petitioners alleged that their signatures were forged on the transfer documents. The respondents refuted this, stating that petitioner No. 1 had signed various documents in his capacity as a director, and his signatures on the disputed documents matched those on record. The Board concluded that the petitioners failed to prove the forgery allegations in any competent court of law and found the respondents' evidence more credible.

4. Compliance with statutory provisions for share transfer:
The petitioners argued that the statutory provisions for the transfer of shares were not complied with, citing several legal precedents. However, the Board held that the declaration-cum-confirmation by petitioner No. 1, stating he was a benami holder, allowed the transfer without further formalities. The Board also noted that the second petitioner had legally transferred her shares by signing the share transfer deed on May 2, 2001.

5. Validity of the petition under section 111(4) of the Companies Act, 1956:
The main issue for consideration was whether the petitioners were entitled to the reliefs sought under section 111(4) of the Companies Act, 1956. The Board examined whether the names of the respondents were entered in the register of members without sufficient cause. The Board found that the names of respondent Nos. 2, 4, and 5 were entered with sufficient cause based on the declaration-cum-confirmation and other evidence presented. Consequently, the petitioners failed to establish their claims, and the petition was dismissed.

Conclusion:
The Board dismissed the petition, ruling that the transfer of shares was legal and valid, the petitioners failed to prove forgery or fraud, and the statutory provisions were complied with. The petitioners' claims were not substantiated, leading to the dismissal of the petition with no order as to costs.

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