1993 (10) TMI 362 - Board - Companies Law

Summary

Issues Involved:
1. Validity of Transfer Instruments
2. Sufficient Cause for Registration
3. Rectification of Deficiencies
4. Application of Equity and Estoppel
5. Relief

Summary:

1. Validity of Transfer Instruments:
The company filed 11 petitions u/s 111(4) of the Companies Act, 1956, for rectification of its register of members, asserting that the transfer instruments were not "duly stamped" as required by Section 108(1) of the Act and Section 12 of the Indian Stamp Act. The instruments were either not canceled at all or were canceled by unauthorized employees. The respondents argued that the instruments were properly stamped and any defects could be rectified by paying the penalty.

2. Sufficient Cause for Registration:
The court held that the instruments in Lists A and C were not "duly stamped" as per Section 12 of the Indian Stamp Act, making the registration of these shares without sufficient cause. However, for instruments in List B, the court gave the benefit of the doubt to the respondents, holding that these instruments were duly stamped and registered with sufficient cause.

3. Rectification of Deficiencies:
The court rejected the respondents' plea for impounding the documents for adjudication by the Collector, stating that subsequent certification by the Collector would not fulfill the mandatory requirement of Section 108 of the Act. The court emphasized that compliance with the provisions of Section 108 is mandatory and any non-compliance renders the registration void.

4. Application of Equity and Estoppel:
Despite the respondents' arguments on equity and estoppel, the court held that there is no estoppel against the statute. The court acknowledged that the company had registered the shares, paid dividends, and offered rights PCDs to the respondents, but emphasized that the mandatory provisions of Section 108 override any equitable considerations.

5. Relief:
The court ordered the rectification of the register of members by removing the names of the respondents for shares covered in Lists A and C. However, the court allowed the respondents to retain the dividends received and directed the company to allot the rights PCDs to the respondents as renouncees. The additional rights PCDs were to be allotted to existing members who applied for additional rights. The respondents were also allowed to lodge the instruments afresh for consideration by the company.

Conclusion:
The court partially allowed the petitions, emphasizing strict compliance with statutory provisions while balancing equitable considerations for the respondents.