1966 (4) TMI 41 - HC - Companies Law

Summary

Issues Involved:
1. Whether respondent No. 1 company made any default or caused unnecessary delay in entering the Corporation's name in its register of members.
2. Whether the proper remedy for the Corporation was to file an appeal under section 111 of the Companies Act.
3. Compliance with section 108 of the Companies Act for the transfer of shares by the Corporation.

Issue-Wise Detailed Analysis:

1. Default or Delay in Registering the Corporation's Name:
The primary issue was whether respondent No. 1 company defaulted or delayed in entering the Corporation's name in its register of members. The Corporation claimed ownership of 15,790 shares, which vested in it under section 7 of the Life Insurance Corporation Act, 1956. Despite several attempts and correspondence, respondent No. 1 company refused to register the shares in the Corporation's name. The court concluded that respondent No. 1 company indeed caused unnecessary delay and defaulted in entering the Corporation's name, thereby justifying the need for rectification under section 155 of the Companies Act.

2. Proper Remedy Under Section 111:
Respondent No. 1 company argued that the Corporation should have filed an appeal under section 111 of the Companies Act instead of a petition under section 155. The court rejected this argument, stating that the jurisdiction under section 155 is independent of section 111. The Corporation had initially filed an appeal under section 111 but abandoned it due to a suit filed by respondent No. 1 company in the Calcutta High Court. The court held that it was not necessary for the Corporation to file another appeal under section 111 after the dismissal of the suit and that the petition under section 155 was appropriate.

3. Compliance with Section 108:
Respondent No. 1 company contended that the Corporation did not comply with section 108 of the Companies Act, which requires a duly stamped and executed instrument of transfer. The court noted that the shares vested in the Corporation by operation of law, not by an act of parties, and thus, section 108 did not apply. The court emphasized that the second proviso to section 108(1) allows for the registration of shares transmitted by operation of law without the need for a stamped instrument of transfer. The court found that the Corporation's case fell under this proviso, and respondent No. 1 company's refusal to register the shares was unjustified.

Conclusion:
The court allowed the petition and directed respondent No. 1 company to rectify its register of members by entering the Corporation's name in respect of the shares and deleting the names of respondents Nos. 2 and 3. The court also directed respondent No. 1 company to file the notice of rectification with the Registrar of Companies, Calcutta, within 30 days. Additionally, the court ordered respondent No. 1 company to pay the Corporation's costs, quantified at Rs. 250, due to the unnecessary delay caused.