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2018 (7) TMI 1965 - Tri - Companies LawTransfer of shares - validity concerning transfer of shares belonging to petitioner No. 1 to his mother-respondent No. 2 Mrs. Smiti Golyan - Whether 466600 equity shares of Rs. 10/- each held by Yash Golyan have been illegally transferred at the instance of Respondent No. 3 Others to Mrs. Smiti Golyan-respondent No. 2? HELD THAT - When the facts of the present case are examined it becomes evident that no transfer deed was presented to the registrar. Respondent has miserably failed to show the existence of any transfer deed by adducing in any evidence. Therefore the mandatory provisions of Section 108 of the Act have been followed. Photocopies of 19 certificates (duplicate) have been produced by the respondent. It appears that the original were not produced before the Registrar of Companies. The backside of the certificate showing transfer endorsement in favour of respondent No. 2 on 14.02.2014 has not been endorsed by the Registrar of Company. It is further doubtful that after the silver jubilee marriage anniversary was celebrated at Kou Samui Thailand then how on 14.02.2014 these shares certificates duly signed by Mrs. Smiti Golyan were available in Delhi with respondent No. 1 company. No transfer of shares belonging to petitioner No. 1 has ever taken place in accordance with the provisions of Section 108 (1) (a) of Companies Act. It has also been established that so-called gift deed and the writings prepared on 23.01.2014 with a manipulated document cannot be regarded as an expression of free Will to gift 466600 shares to respondent No. 1 company reflected through 19 share certificates and the same is vitiated in the eyes of law. Petition allowed.
Issues Involved:
1. Legality of the transfer of 466,600 equity shares. 2. Allegations of fraud and illegal activities by the respondents. 3. Compliance with the provisions of the Companies Act, 1956 and Articles of Association. 4. Validity of the gift deed and transfer process. 5. Maintainability of the petition under Sections 397 and 398 of the Companies Act, 1956. Issue-wise Detailed Analysis: 1. Legality of the Transfer of 466,600 Equity Shares: The principal issue was whether the 466,600 equity shares held by the petitioner were illegally transferred to respondent No. 2. The Tribunal found that the transfer was not conducted in compliance with the mandatory provisions of Section 108 of the Companies Act, 1956, which requires a duly stamped instrument of transfer and the production of the share certificate or allotment letter. The respondents failed to produce any evidence of a proper transfer deed or compliance with the statutory requirements, leading to the conclusion that the transfer was illegal. 2. Allegations of Fraud and Illegal Activities by the Respondents: The petitioners alleged that the shares were fraudulently transferred without their knowledge or consent, and that the respondents had conspired to effect this illegal transfer. The Tribunal found that the respondents did not provide sufficient evidence to counter these allegations. The purported gift deed was found to be dubious, and the process of transfer was marred by inconsistencies and lack of proper documentation, reinforcing the claim of fraudulent activity. 3. Compliance with the Provisions of the Companies Act, 1956, and Articles of Association: The Tribunal noted that the transfer did not comply with the Articles of Association of the company, specifically Articles 12 to 27, which govern the transfer of shares. Additionally, the requirements under Section 108 of the Companies Act, 1956, were not met, as there was no proper instrument of transfer, and the necessary procedures for videoconferencing meetings were not followed. The respondents failed to produce evidence of a valid board meeting or proper documentation to support the transfer. 4. Validity of the Gift Deed and Transfer Process: The gift deed, which was the basis for the transfer, was found to be questionable. The Tribunal observed discrepancies in the signatures and the timing of the document's preparation and presentation. The gift deed did not fulfill the legal requirements for a valid gift under the Transfer of Property Act, 1882, as the acceptance by the donee was not properly documented, and the deed itself was not adequately proven to be genuine. 5. Maintainability of the Petition under Sections 397 and 398 of the Companies Act, 1956: The respondents argued that the petition was not maintainable as there were no allegations of oppression or mismanagement. However, the Tribunal held that an illegal transfer of shares constitutes an act of oppression. The Tribunal also rejected the argument that the matter should be adjudicated by a Civil Court, affirming its jurisdiction to decide the case under Sections 397, 398, 108, and 111A of the Companies Act, 1956. Conclusion: The Tribunal allowed the petition, directing the rectification of the member register to restore the petitioner's ownership of the 466,600 shares and ordering the respondents to hand over the share certificates. The respondents were also ordered to pay costs of Rs. 5,00,000 to the petitioner. The Tribunal's decision was based on the findings of non-compliance with statutory provisions, fraudulent activities, and the invalidity of the gift deed and transfer process.
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