2018 (12) TMI 1767 - Tri - Companies Law

Allotment and transfer of share - It is stated that the petitioner had already submitted the transfer instrument duly executed by the petitioner as directed by the respondent No.1 company but the respondent No.1 company first denied the transfer on the ground of non-inheritance of the said right and later on, on the ground that the relevant documents were not provided before 26.09.2007 - condonation of delay in filing appeal - HELD THAT - The instant prayer made under Section 58 of the Companies Act, 2013 is in the nature of Appeal as contemplated in sub-section (4) of Section 58 and the application for condonation of delay is maintainable in the Appeal. The petitioner had been pursuing the genuine cause of seeking the letter of Administration before the District Judge in the application filed in the year 2007 which was decided after a period of 5 years, in the year 2012. The delay thus cannot be said to be malicious or contumacious but rather bonafide. The application for condonation of delay is thus allowed. The arrangement as well as the later correspondence of respondent No. 1 company clearly brings out that transfer of share is involved and thereby Section 58(4) of the Act would become applicable. In view of this position, the applicability of Section 59 of the Act is not being examined. The respondent No.1 company without sufficient cause refused to register the transfer of shares consequent to the arrangement between the respondent no.1 company and the erstwhile respondent No.2 company whereby the father of the petitioner/his legal heirs were entitled to receive equivalent shares of respondent company No.1 from respondent company No.2 - the petition is maintainable in law and the contentions raised by the respondent No.1 and 2 companies in respect of the maintainability of the petition cannot be accepted. Under the provisions of Section 58 (5) of the Act, we direct that the transfer shall be registered by the respondent No. 1 company and the respondent No.1 company shall comply with such order within a period of ten days on receipt of the order - Application disposed off.

Summary

Issues Involved:

1. Jurisdiction of the Tribunal under Section 58(4) of the Companies Act, 2013.
2. Condonation of delay in filing the petition.
3. Maintainability of the petition under Section 58 of the Companies Act, 2013 and Section 397 of the Companies Act, 1956.
4. Entitlement of the petitioner to 60,000 equity shares.
5. Compliance with procedural requirements for transmission of shares.

Detailed Analysis:

1. Jurisdiction of the Tribunal under Section 58(4) of the Companies Act, 2013:

The Tribunal examined whether it had jurisdiction to entertain the petition under Section 58(4) of the Companies Act, 2013. The respondents argued that the petition sought "allotment of shares" rather than "transfer of shares," which is not within the scope of Section 58(4). The Tribunal found that the arrangement between respondent No.1 and respondent No.2 involved a transfer of shares, not an allotment, and thus Section 58(4) was applicable. The Tribunal concluded that it had jurisdiction to hear the petition.

2. Condonation of Delay in Filing the Petition:

The petitioner sought condonation of a 328-day delay in filing the petition, attributing the delay to wrong legal advice. The Tribunal considered the Supreme Court judgments in *Improvement Trust, Ludhiana v. Ujagar Singh & Ors.* and *Concord of India Insurance Co. Ltd. v. Nirmala Devi and Ors.*, which allow for leniency in cases of genuine mistakes or wrong legal advice. The Tribunal found the delay to be bona fide and allowed the application for condonation of delay.

3. Maintainability of the Petition under Section 58 of the Companies Act, 2013 and Section 397 of the Companies Act, 1956:

The respondents argued that the petition was not maintainable under Section 58(4) or Section 397. The Tribunal observed that the petitioner did not provide detailed submissions to prove applicability under Section 397. Therefore, the petition was not maintainable under Section 397. However, the Tribunal found that the petition involved a transfer of shares, making it maintainable under Section 58(4). The Tribunal dismissed the respondents' objections regarding maintainability.

4. Entitlement of the Petitioner to 60,000 Equity Shares:

The petitioner claimed entitlement to 60,000 equity shares based on an agreement between respondent No.1 and respondent No.2, which allowed eligible shareholders to receive shares at ?2 per share. The Tribunal noted that the petitioner had submitted the required documents and applied for letters of administration. Despite the deadline of 26.09.2007, the Tribunal found that the respondent No.1 company had extended this deadline and acknowledged the petitioner's compliance. The Tribunal held that the petitioner was entitled to the 60,000 shares.

5. Compliance with Procedural Requirements for Transmission of Shares:

The Tribunal reviewed the procedural compliance by the petitioner, who had submitted necessary documents and letters of administration. The Tribunal found that the respondent No.1 company had acknowledged the petitioner's compliance and extended the deadline for submission. The Tribunal directed respondent No.1 to register the transfer of 60,000 shares in favor of the petitioner upon payment of ?2 per share to respondent No.2. The petitioner was also directed to execute a transfer deed for the respondent No.3's entitlement as per the letters of administration.

Conclusion:

The Tribunal concluded that the petition was maintainable under Section 58(4) of the Companies Act, 2013, and allowed the condonation of delay. The Tribunal directed respondent No.1 to transfer 60,000 shares to the petitioner and instructed the petitioner to comply with the terms of the letters of administration regarding the respondent No.3's entitlement. The objections raised by respondents No.1 and 2 were dismissed.