2011 (2) TMI 1271 - HC - Companies Law

Transfer of shares - respondents with a clear undertaking authorizing the respondents to sell or transfer the said pledged shares - However, when respondents presented said shares for transfer with appellant on 18-3-1997, which was record date for issuance of bonus shares, appellant refused to issue any shares to respondents Held that - the appellant-company had declared the bonus shares in the ratio of one bonus share for every two equity shares, respondents would be entitled to 31,850 bonus shares as well as compensation at the rate of Rs. 275 for each of 31,850 bonus shares.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Interim reliefs/directions sought in various applications.
3. Stay of proceedings under section 138 of the Negotiable Instruments Act.
4. Challenge to the order passed by the Company Law Board (CLB) under section 10F of the Companies Act, 1956.

Condonation of Delay in Filing the Appeal:
The judgment begins with an application for condonation of delay in filing the appeal, which is granted for reasons stated, leading to the disposal of the application.

Interim Reliefs/Directions Sought:
Several applications were filed seeking interim reliefs/directions. However, as the main appeal was planned to be disposed of on the same day, no further orders were deemed necessary for these applications, resulting in their disposal.

Stay of Proceedings under Section 138 of the Negotiable Instruments Act:
An application was made by respondents seeking a stay of proceedings initiated against them by third parties under section 138 of the Negotiable Instruments Act. The court dismissed this application, stating that no relief could be granted against third parties in the present context.

Challenge to Order Passed by the Company Law Board:
The main appeal challenged an order passed by the Company Law Board under section 10F of the Companies Act, 1956. The case involved the illegal issue of bonus shares by the appellant-company to another entity, leading to a dispute with the respondents who had pledged shares. The court found in favor of the respondents, upholding the CLB's direction for the appellant-company to issue bonus shares and pay compensation. The judgment analyzed various legal aspects, including the plea of limitation, rectification of share register, and entitlement to damages. Ultimately, the court directed the appellant-company to issue bonus shares, pay compensation, and simple interest on the sum awarded. The judgment concluded by disposing of the appeal with the specified observations and directions.