2017 (6) TMI 355 - Tri - Companies Law

Names of petitioners wrongly removed from the list of respondent company inspite of their obtaining succession certificate - rectification of list of members - transmission of shares - Held that - Section of law applicable is 59 of the Companies Act, 2013. No specific period of limitation is provided for transmission of shares under section 59 of the Companies Act, 2013. However, section 433 of the Companies Act, 2013 says that, for any proceeding or appeal before the Tribunal, provisions of the Limitation Act are applicable. There is no specific provision in the Limitation Act which governs in respect of transmission of shares. Therefore, Articles 113 and 137 of Limitation Act provides for three years limitation from the date on the right to sue accrue. In the case on hand, the right to sue the respondent company is 11.06.2012 on which date respondent company wrote a letter to the first petitioner. This petition was filed on 22nd October, 2013. Therefore, this petition is within time and it is not barred by limitation. In view of the above discussions, there shall be direction to the respondent company for transmission of first batch of 36 shares in the name of the petitioners 1 and 3 and second batch of 36 shares in the name of petitioners 3 and 4. In the result, this petition is allowed with following directions - (a) The respondent company shall transmit 25 equity shares which originally stand in the name of deceased Mukundbhai Saheba and second petitioner in the name of petitioner 1 and 3. (b) The respondent company before transmitting the 11 equity shares (58032153 to 58032163) which are originally in the name deceased Mukundbhai Saheba and 2nd petitioner shall give notice to Jitendra Sankalchand Gandhi and in case if no reply is received and if no objection is raised by Jitendra Sankalchand Gandhi within one month, transmission of those 11 shares also in the name of petitioners 1 and 3 can be effected. In case, Jitendra Sankalchand Gandhi raises any objection, the company shall inform him that he can resolve the dispute regarding the above said eleven equity shares of the respondent company in Civil Court, if it is within time.

Summary

Issues:
1. Rectification of the list of members by adding names of petitioners in the register of members.
2. Validity of the transmission of shares under Section 111 of the Companies Act, 1956 and Sections 58 & 59 of the Companies Act, 2013.

Analysis:
1. The petitioners, in this case, sought rectification of the list of members of the respondent company by adding their names as members. They had obtained a succession certificate from the City Civil Court at Ahmedabad in respect of the equity shares held by the deceased Mukundbhai Saheba, who was the legal owner of 36 equity shares of the respondent company. Despite multiple attempts to have their names registered as members, the respondent company remained silent, leading to the petition under Section 111 of the Companies Act, 1956.

2. The petitioners argued that the provisions of the Limitation Act did not apply to their case as the cause of action arose from the non-registration of shares despite their efforts and communications with the respondent company. The respondent company had failed to rectify the register of members by adding the names of the petitioners, even after they obtained a succession certificate. The petitioners requested the transmission of 36 equity shares to their depository account and the restoration of names for another lot of 36 equity shares.

3. The judgment delved into the history of the shares, including the issuance of bonus shares to the petitioners and attempts by an unscrupulous broker to illegally transfer shares using forged signatures. The respondent company was aware of these issues but failed to take action in rectifying the register. The court considered the legal aspects of transmission of shares under Section 111 of the Companies Act, 1956, and Sections 58 and 59 of the Companies Act, 2013.

4. The court analyzed the applicable laws and found that the petition was filed within the permissible time frame, not barred by limitation. It directed the respondent company to transmit the shares as requested by the petitioners. Specific directions were given regarding the transmission of shares, including notice to a third party claiming ownership and resolution of any disputes in the Civil Court if necessary.

5. In conclusion, the petition was allowed, and the respondent company was directed to transmit the shares as per the court's instructions, ensuring the rights of the petitioners as rightful members of the company were upheld in accordance with the provisions of the Companies Act.