1975 (11) TMI 180 - HC - Companies Law

Summary

Issues Involved:

1. Application under Section 155 of the Companies Act, 1956, for rectification of the share register.
2. Bar of limitation.
3. Jurisdiction of the Company Law Board.
4. Validity of transfer deeds due to uncancelled stamps.
5. Application of the Sick Textile Undertakings (Nationalisation) Act, 1974.
6. Res judicata and alternative remedies.

Issue-wise Detailed Analysis:

1. Application under Section 155 of the Companies Act, 1956, for rectification of the share register:

The petitioners applied under Section 155 of the Companies Act, 1956, seeking rectification of the share register of the respondent company, Luxminarayan Cotton Mills Ltd., to register the shares in their names. They had acquired the shares for valuable consideration, lodged the transfer deeds with the respondent company, and paid the relevant transfer fees. However, the company failed to register the transfers or communicate any refusal within the stipulated period, leading the petitioners to seek redress through the Company Law Board and subsequently through the court.

2. Bar of limitation:

The petitioners contended that their application was not barred by limitation, citing a Supreme Court decision in Vasudev Ramchandra Shelat v. Pranlal Jayanand Thakar, which held that the title to shares could be complete even if the transfer was not registered due to technical defects. The court agreed, stating that the power under Section 155 should be liberally exercised to do justice, and the petitioners' application was timely given their diligent pursuit of remedies.

3. Jurisdiction of the Company Law Board:

The respondent company argued that the Company Law Board had no jurisdiction to condone the delay in filing the appeal under Section 111 of the Companies Act, 1956. However, the court noted that the Company Law Board had indeed condoned the delay and that the petitioners' application under Section 155 was valid. The court emphasized that the Company Law Board's jurisdiction was limited to examining the reasons for rejecting the transfer, not determining the title to the shares.

4. Validity of transfer deeds due to uncancelled stamps:

The Company Law Board had dismissed the petitioners' appeal on the ground that the transfer deeds were not duly stamped, as the stamps were not cancelled. The court acknowledged this formal defect but deemed it insufficient to bar the petitioners' application under Section 155. The court referred to several precedents, including In re Coronation Tea Co. Ltd., to support its decision that the petitioners' title to the shares was not in dispute and that the defect was merely technical.

5. Application of the Sick Textile Undertakings (Nationalisation) Act, 1974:

The respondent company argued that the petitioners had no locus standi due to the Nationalisation Act, which vested the company's assets in the National Textile Corporation. The court rejected this argument, clarifying that the corporate existence of the company was unaffected by the Act, and the petitioners were entitled to seek rectification of the share register under Section 155.

6. Res judicata and alternative remedies:

The respondent company contended that the petitioners' application was barred by res judicata and that they had already availed of an alternative remedy under Section 111 of the Companies Act, 1956. The court dismissed these arguments, citing the decision in Mani Mohan Mukherjee v. Jalpaiguri Cinema Co. Ltd., which held that an application under Section 155 was not barred by limitation or res judicata. The court emphasized that the petitioners' diligent pursuit of remedies and the formal defect in the transfer deeds did not preclude their right to seek rectification.

Judgment:

The court ordered the rectification of the share register as requested by the petitioners, subject to the return and re-submission of the transfer deeds and share scripts within specified timeframes. The court did not award costs, noting the petitioners' failure to cancel the stamps on the transfer deeds.