1962 (8) TMI 20 - SC - Companies Law

This is an appeal with special leave under article 136 of the Constitution and normally the finding of the court or a tribunal against which an appeal is filed is not exposed to review on matters of appreciation of evidence. The very reasons submitted by the company in its written statement are capable of an inference that the action of the company was arbitrary and mala fide and that .inference has been raised by the authority competent in that behalf. The authority hearing the appeal had not overstepped the limits of its jurisdiction and has properly addressed itself to the only question which has to be decided by it under section 111 of the Companies Act 1956. No ground is made out before us which would justify as in reopening the finding and in reappraising the evidence on what is essentially a question of fact. Appeal dismissed.

Summary

Issues:
1. Refusal of a company to register transfer of shares.
2. Jurisdiction of Central Government in appeals under section 111 of the Companies Act.
3. Grounds for refusal to register transfer of shares.
4. Review of decisions by the Central Government.
5. Appeal against the decision of the Central Government.

Detailed Analysis:
1. The judgment deals with the refusal of a company to register the transfer of shares purchased by respondents. The company contended that the transfer was declined due to the absolute discretion granted under Article 58 of the articles of association. However, the Central Government allowed the appeal and directed the company to register the shares in the names of the respondents. The company appealed to the Supreme Court against this order with special leave.

2. The jurisdiction of the Central Government in appeals under section 111 of the Companies Act was examined. The court emphasized that the Central Government functions as a judicial tribunal in such matters. It was held that the Central Government can order the registration of a transfer if it finds that the company's refusal was mala fide, arbitrary, or capricious and not in the interest of the company.

3. The grounds for the company's refusal to register the transfer included past disputes with the first respondent and an apprehension of ulterior motives behind the share purchase. However, the Central Government found these grounds to be arbitrary and mala fide, leading to the decision in favor of registering the shares in the respondents' names.

4. The judgment highlighted the review process of decisions by the Central Government. It was noted that the Central Government properly addressed the relevant questions under section 111 of the Companies Act and did not overstep its jurisdiction. The court dismissed the appeal, stating that the Central Government's decision was based on facts and did not warrant a review.

5. The appeal against the decision of the Central Government was ultimately dismissed by the Supreme Court. The company was directed to pay the costs of the appeal to the respondents, excluding the costs of and incidental to the hearing before the court. The judgment upheld the Central Government's decision to register the shares in the respondents' names.