2010 (7) TMI 817 - Board - Companies Law

Issues Involved:
1. Entitlement to transmission of shares.
2. Legality of share transfer to the second respondent.
3. Requirement of a succession certificate for transmission of shares.
4. Rectification of the share register.

Detailed Analysis:

1. Entitlement to Transmission of Shares:
The petitioner sought the transmission of shares held by her deceased parents in her name under section 111A read with section 111(4) of the Companies Act, 1956. She claimed that her parents held 4,920 shares in Folio No. 12/1014 and 4,920 shares in Folio No. 12/1015. The company had already transmitted the shares in Folio No. 12/1015 in her name upon submission of requisite documents. However, for the shares in Folio No. 12/1014, the company required a court order, as the shares had been transferred to the second respondent, which the petitioner challenged as fraudulent due to her parents' death in 1994 and 1990, respectively.

2. Legality of Share Transfer to the Second Respondent:
The petitioner argued that the transfer of shares to the second respondent was illegal and fraudulent since her parents had passed away long before the alleged transfer in 2005. The company initially received the transfer documents from the second respondent on 23-11-2005 but returned them due to a signature mismatch, requesting an affidavit for signature change. Upon resubmission on 22-12-2005, the company found the documents in order and effected the transfer. The second respondent admitted that the shares were brought to him by the granddaughter of the registered holder for a loan and expressed no objection to reverting the shares back to the original holder.

3. Requirement of a Succession Certificate for Transmission of Shares:
The judgment emphasized the necessity of a succession certificate to prove the petitioner's entitlement to the shares. The petitioner submitted affidavits and a relinquishment deed from her siblings but did not provide a succession certificate. The court noted that the petitioner did not mention her deceased brother Ashok P. Lalwani or his daughter Renu Ashok Lalwani, who also had a claim to the shares. Given the public nature of the company, the court could not presume the family background and required a formal succession certificate to validate the claim.

4. Rectification of the Share Register:
The court directed the company to rectify the share register by restoring the shares in Folio No. 12/1014 to the name of the original holder, late Parmanand T. Lalwani, and deleting the second respondent's name. The petitioner was granted liberty to reapply for the transmission of shares with a valid succession certificate, including all legal heirs in the application.

Conclusion:
The petition was disposed of with a directive for the company to rectify the share register by restoring the shares to the original holder. The petitioner was instructed to obtain a succession certificate to prove her entitlement to the shares and reapply for their transmission. The court highlighted the importance of formal legal documentation in resolving disputes over share ownership and transmission.

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