Section 111 - Power to refuse registration and appeal against refusal. - Companies Act, 1956

Power to refuse registration and appeal against refusal. [1] [111. (1) If a company refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a member in, or debentures of, the company, it shall, within two months from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal. (2) The transferor or transferee, or the person who gave intimation of the transmission by operation of law, as the case may be, may appeal to the [2] [Tribunal] against any refusal of the company to register the transfer or transmission, or against any failure on its part within the period referred to in sub-section (1), [3] either to register the transfer or transmission or to send notice of its refusal to register the same. (3) An appeal under sub-section (2) shall be made within two months of the receipt of the notice of such refusal or, where no notice has been sent by the company, within four months from the date on which the instrument of transfer, or the intimation of transmission, as the case may be, was delivered to the company. (4) If ___ (a) the name of any person ___ (i) is without sufficient cause, entered in the register of members of a company, or (ii) after having been entered in the register, is without sufficient cause, omitted therefrom; or (b) default is made, or unnecessary delay takes place, in entering in the register the fact of any person having become, or ceased to be, a member [including a refusal under sub-section (1)], the person aggrieved, or any member of the company, or the company, may apply to the [4] [Tribunal] for rectification of the register. [5] (5) The 1[Tribunal], while dealing with an appeal preferred under sub-section (2) or an application made under sub-section (4) may, after hearing the parties, either dismiss the appeal or reject the application, or by order ___ (a) direct that the transfer or transmission shall be registered by the company and the company shall comply with such order within ten days of the receipt of the order; or (b) direct rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved. (6) The 1[Tribunal], while acting under sub-section (5), may, at its discretion, make, (a) such interim orders, including any orders as to, injunction or stay, as it may deem fit and just; (b) such orders as to costs as it thinks fit; and (c) incidental or consequential orders regarding payment of dividend or the allotment of bonus or rights shares. (7) On any application under this section, the [6] [Tribunal] ___ (a) may decide any question relating to the title of any person who is a party to the application to have his name entered in, or omitted from, the register; (b) generally, may decide any question which it is necessary or expedient to decide in connection with the application for rectification. (8) The provisions of sub-sections (4) to (7) shall apply in relation to the rectification of the register of debenture holders as they apply in relation to the rectification of the register of members. (9) If default is made in giving effect to the orders of the 1[Tribunal] under this section, the company and every officer of the company who is in default shall be punishable with fine which may extend to [7] [ten thousand rupees], and with a further fine which may extend to [8] [one thousand rupees] for every day after the first day after which the default continues. (10) Every appeal or application to the 1[Tribunal] under sub-section (2) or sub-section (4) shall be made by a petition in writing and shall be accompanied by such fee as may be prescribed. (11) In the case of a private company which is not a subsidiary of a public company, where the right to any shares or interest of a member in, or debentures of, the company is transmitted by a sale thereof held by a Court or other public authority, the provisions of sub-sections (4) to (7) shall apply as if the company were a public company: Provided that the [9] [Tribunal] may, in lieu of an order under sub-section (5), pass an order directing the company to register the transmission of the right unless any member or members of the company specified in the order acquire the right aforesaid within such time as may be allowed for the purpose by the order, on payment to the purchaser of the price paid by him therefor or such other sum as the 1[Tribunal] may determine to be a reasonable compensation for the right in all the circumstances of the case. (12) If default is made in complying with any of the provisions of this section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to [10] [five hundred rupees] for every day during which the default continues. (13) Nothing in this section and section 108, 109 or 110 shall prejudice any power of a private company under its articles to enforce the restrictions contained therein against the right to transfer the shares of such company.] [11] [(14) In this section "company" means a private company and includes a private company which had become a public company by virtue of section 43A of this Act.] ------------------------------- Notes:- [1] Substituted by the Companies (Amendment) Act, 1988, section 16, w.e.f. 31-5-1991. Prior to the substitution the section read as under: "111. Power to refuse registration and appeal against refusal. (1) Nothing in sections 108, 109 and 110 shall prejudice any power of the company under its articles to refuse to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a member in, or debentures of, the company. (2) If a company refuses, whether in pursuance of any power under its articles or otherwise to register any such transfer or transmission of right, it shall, within two months from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be. If default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues. (3) The transferor or transferee, or the person who gave intimation of the transmission by operation of law, as the case may be, may, where the company is a public company or a private company which is a subsidiary of a public company, appeal to the Central Government against any refusal of the company to register the transfer or transmission, or against any failure on its part, within the period referred to in sub-section (2), either to register the transfer or transmission or to send notice of its refusal to register the same. (4) An appeal to the Central Government under sub-section (3) shall be made (a) in case the appeal is against the refusal to register a transfer or transmission, within two months of the receipt by him of the notice of refusal; and (b) in case the appeal is against the failure referred to in sub-section (3), within two months from the expiry of the period referred to in sub-section (2). (4A) Every appeal under sub-section (3) shall be made by a petition in writing and shall be accompanied by such fee not exceeding fifty rupees as may be prescribed by the Central Government. (5) The Central Government shall, after causing reasonable notice to be given to the company and also to the transferor and the transferee or, as the case may require, to the person giving intimation of the transmission by operation of law and the previous owner, if any, and giving them a reasonable opportunity to make their representations, if any, in writing, by order, direct either that the transfer or transmission shall be registered by the company or that it need not be registered by it; and in the former case, the company shall give effect to the decision within ten days of the receipt of the order. (5A) Before making an order under sub-section (5) on an appeal against any refusal of the company to register any transfer or transmission, the Central Government may require the company to disclose to it the reasons for such refusal, and on the failure or refusal of the company to disclose such reasons, that Government may, notwithstanding anything contained in the articles of the company, presume that the disclosure, if made, would be unfavourable to the company. (6) The Central Government may, in its order aforesaid, give such incidental and consequential directions as to the payment of costs or otherwise as it thinks fit. (7) All proceedings in appeals under sub-section (3) or in relation thereto shall be confidential, and no suit, prosecution or other legal proceeding shall lie in respect of any allegation made in such proceedings, whether orally or otherwise. (8) In the case of a private company which is not a subsidiary of a public company, where the right to any shares or interest of a member in, or debentures of, the company, is transmitted by a sale thereof held by a Court or other public authority, the provisions of sub-sections (3) to (7) shall apply as if the company were a public company: Provided that the Central Government may, in lieu of an order under sub-section (5), pass an order directing the company to register the transmission of the right unless any member or members of the company specified in the order acquire the right aforesaid within such time as may be allowed for the purpose by the order, on payment to the purchaser of the price paid by him therefor or such other sum as the Central Government may determine to be a reasonable compensation for the right in all the circumstances of the case. (9) If default is made in giving effect to the order of the Central Government within the period specified in sub-section (5) or to a direction of that Government given under the proviso to sub-section (8), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one thousand rupees, and with a further fine which may extend to one hundred rupees for every day after the first during which the default continues." [2] Substituted for "Company Law Board" by the Companies (Second Amendment) Act, 2002, w.e.f a date yet to be notified. [3] Fees prescribed is Rs. 500. On notification of the commencement of the amendment, power will be transferred to the National Company Law Tribunal. [4] Substituted for "Company Law Board" by the Companies (Second Amendment) Act, 2002. w.e.f a date yet to be notified. [5] See e-Form No. 21 of General Rules Forms. [6] Substituted for "one thousand rupees" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [7] Substituted for "Company Law Board" by the Companies (Second Amendment) Act, 2002. w.e.f a date yet to be notified. [7] Substituted for "one thousand rupees" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [8] Substituted for "one hundred" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [9] Substituted for "Company Law Board" by the Companies (Second Amendment) Act, 2002, w.e.f. a date yet to be notified. [10] Substituted for "fifty rupees" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [11] Inserted by the Depositories Act, 1996, w.r.e.f. 20-9-1995.