1970 (5) TMI 36 - HC - Companies Law

Transfer of Shares Power to refuse registration and appeal against refusal, Powers of Court to rectify register of members, Powers of Court to rectify

Issues Involved:

1. Maintainability of petitions under Section 155 of the Companies Act after availing remedy under Section 111.
2. Adequacy of stamping on shares and transfer deeds.
3. Entitlement to dividends from shares purchased.
4. Jurisdiction of the court under Section 155 to grant dividends.

Detailed Analysis:

1. Maintainability of Petitions under Section 155 of the Companies Act:

The appellant contended that once the respondent had availed the remedy under Section 111 of the Companies Act by appealing to the Central Government, the petitions under Section 155 were not maintainable. The court rejected this contention, stating that the remedies under Sections 111 and 155 are not mutually exclusive. The court emphasized that the present petitions under Section 155 were not an appeal or revision against the Central Government's order but were independent requests to rectify the register of members. The court referenced the cases of *Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala* and *Arjan Singh Bir Singh v. Panipat Woollen & General Mills Co. Ltd.*, concluding that these precedents did not support the appellant's argument. Thus, the court upheld the maintainability of the petitions under Section 155.

2. Adequacy of Stamping on Shares and Transfer Deeds:

The appellant argued that the shares and transfer deeds were not properly stamped initially and could not be stamped later to rectify the deficiency. The court dismissed this contention as it was not raised before the learned single judge and required factual investigation. The court noted that determining the adequacy of stamping involved mixed questions of fact and law, which could not be addressed for the first time in a Letters Patent Appeal. Therefore, this objection was found to be without merit and rejected.

3. Entitlement to Dividends from Shares Purchased:

The appellant challenged the award of dividends from 1950 to the respondent in C.O. No. 64 of 1960, arguing that the respondent was only entitled to dividends from the date of purchase, March 21, 1955. The court agreed with this contention, modifying the judgment to entitle the respondent to dividends from March 21, 1955, up to and including 1960-61, but not prior to that date. This modification was based on the principle that the transferee is entitled to dividends only from the date of purchase of the shares.

4. Jurisdiction of the Court under Section 155 to Grant Dividends:

The appellant argued that the court lacked jurisdiction under Section 155 to order the payment of dividends. The court rejected this argument, stating that when it is determined that the respondent is entitled to have the shares transferred and registered in his name from the date of purchase, it is incidental and consequential to decide on the payment of dividends from that date. The court found that the petitions explicitly claimed dividends in paragraph 21, and Section 155 even allows for the payment of damages. Hence, the court concluded that it had the jurisdiction to grant dividends.

Conclusion:

The appeals were dismissed except for the modification regarding the entitlement to dividends in C.O. No. 64 of 1960, where the respondent was entitled to dividends from March 21, 1955, instead of 1950. No other contentions were raised by the appellant, and no order as to costs was made.

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