2010 (9) TMI 914 - Board - Companies Law

Issues Involved:
1. Entitlement of the petitioner to have the register of members rectified to reflect the transfer of shares.
2. Legality of the refusal by the respondent company to register the transfer of shares.
3. Requirement of legal documents (probate, letters of administration, succession certificate) for the transfer of shares.

Issue-Wise Detailed Analysis:

1. Entitlement of the petitioner to have the register of members rectified to reflect the transfer of shares:
The petitioner filed a petition under section 111 of the Companies Act, 1956, seeking directions to rectify the register of members of respondent No. 1 company to reflect the transfer of shares from late Mr. Baldev Enand to the petitioner. The petitioner argued that Mr. Baldev Enand had gifted the shares to him in May 2005 and had duly signed and witnessed the share transfer deeds, which were also attested by a Notary Public in the USA. Despite repeated reminders and submission of necessary documents, the respondent company failed to register the transfer. The petitioner maintained that the transfer was a bona fide inter vivos transaction and not a case of succession, thus the request for rectification was justified.

2. Legality of the refusal by the respondent company to register the transfer of shares:
The respondents opposed the relief sought by the petitioner, arguing that the petitioner failed to produce mandatory documents before the death of Mr. Enand. They contended that the petitioner was trying to take advantage of his own fault and that it was beyond the Company Law Board's purview to ascertain changes in Mr. Enand's signature. The respondents claimed that the petitioner should seek probate, succession certificate, or letters of administration. However, the judgment noted that the respondents had initially accepted the signature changes due to Mr. Enand's illness and had not alleged forgery or fraud. The refusal to register the transfer based on technical objections was deemed unjustified, as the petitioner had complied with section 108 of the Companies Act, 1956, and there were no rival claims or allegations of forgery.

3. Requirement of legal documents (probate, letters of administration, succession certificate) for the transfer of shares:
The respondents insisted on obtaining legal documents such as probate, letters of administration, or succession certificate to transfer the shares after Mr. Enand's death. The judgment clarified that this case involved an inter vivos transfer, not a transmission, and the shares were movable properties with exclusive rights of the holder. The petitioner had already sent all necessary documents for the transfer before Mr. Enand's death. The insistence on legal documents for the transfer was deemed misplaced, as the petitioner had fulfilled all requirements under section 108 of the Companies Act, 1956. The respondents' actions were seen as an attempt to deprive the petitioner of his rightful claim without substantial grounds.

Conclusion:
The judgment directed respondent No. 1 company to rectify the register of members by deleting the name of late Mr. Baldev Enand and inserting the petitioner's name for the 140 shares. The company was ordered to pay all benefits accrued thereon to the petitioner within thirty days of receiving all relevant documents. The petitioner was instructed to send the original share transfer forms, certificates, and relevant documents to the respondent company by registered post and furnish an indemnity bond as required. The petition was disposed of with no order as to costs.

← Previous Next →