2001 (9) TMI 1187 - Board - Companies Law

Summary

Issues:
- Petition seeking splitting of joint shares in a company.
- Dispute over joint shareholding and voting rights.
- Legal requirements for splitting joint shares in a public limited company.

Analysis:
1. The petitioner filed a petition under Section 111 of the Companies Act, seeking to split 3,738 fully paid up equity shares held jointly with the second respondent in a company. The petitioner expressed concerns about potential misuse of voting rights by the second respondent. The company requested share transfer forms and certificates for splitting the shares, which the petitioner alleged the second respondent was withholding to prevent the split.

2. The respondents opposed the petition, stating that the petitioner unlawfully took company records and share certificates. They argued that the petitioner failed to comply with mandatory requirements for splitting joint shares, including submitting transfer deeds and certificates. The respondents contended that the petitioner was not entitled to the relief sought in the petition.

3. The petitioner's counsel argued that splitting joint shares did not require consent from the other holder or submission of original certificates. They cited legal precedents supporting the division of joint holdings to enable effective exercise of voting powers by joint holders. However, the respondents' counsel maintained that the petitioner's request was not maintainable under Section 111A due to non-compliance with legal requirements.

4. The Company Law Board considered the submissions and legal precedents. It noted that the petitioner did not obtain consent from the second respondent or submit required documents for splitting the shares. Referring to a previous case, the Board held that a company is not obligated to divide and allot shares among joint holders without proper documentation. The Board concluded that the relief sought by the petitioner could only be granted through a partition action or mutual agreement.

5. The Board distinguished the legal precedents cited by the petitioner, emphasizing that the specific circumstances of those cases were not applicable to the current dispute. Ultimately, the Board dismissed the petition, stating that the relief sought could not be granted based on the petitioner's non-compliance with legal requirements. The petition was dismissed without costs.