1997 (6) TMI 363 - Board - Companies Law

Summary

Issues:
1. Transmission of shares in the names of legal heirs and representatives.
2. Applicability of Article 35 of the articles of association.
3. Limitation period for filing an appeal under Section 111(3) of the Companies Act, 1956.

Detailed Analysis:

1. The appeal was filed for the transmission of shares in the names of legal heirs and representatives of the deceased member. The appellants sought directions under Section 111(3) of the Companies Act, 1956. The deceased member held shares jointly with others, and the appellants obtained a succession certificate as the legal heirs. The respondent company refused to transmit the shares jointly held, citing Article 35 of the articles of association, leading to the appeal. The appellants argued that the shares should be transmitted to them as legal representatives, not as a sale or transfer, and that the refusal was unjustified.

2. The respondent company relied on Article 35 of the articles of association, which specified the procedure for transmission of shares upon the death of a shareholder. The article restricted the recognition of title to sell or transfer shares to specific persons. The respondent contended that the refusal was justified under this provision. However, the appellants argued that the restriction in Article 35 did not apply to the transmission of shares to legal heirs and representatives.

3. The issue of the limitation period for filing the appeal was also addressed. The respondent claimed that the appeal was barred by limitation as it was filed beyond the two-month period from the refusal letter. However, the Company Law Board held that the petition was not hit by the limitation prescribed under the Limitation Act, 1963. The Board extended the logic regarding the time limit specified in Section 111(3) of the Companies Act, allowing the appeal to proceed despite the delay in filing.

In conclusion, the Company Law Board dismissed the appeal, stating that the shares could not be transmitted to the legal heirs and representatives under the specific provisions of Article 35 of the articles of association. The Board upheld the restriction in the articles and ruled that the appellants could not be recognized as holders of the shares in question. The appeal was deemed unsuccessful, and no costs were awarded.