2012 (4) TMI 312 - Board - Companies Law

Transmission of shares and to rectify the register of members - The petitioner is kept completely in the dark as to the status of the company, position of fixed assets, present valuation of the assets etc. Section 109A of the Companies Act is clear as to transmission of shares to the legal heirs in case of members who have appointed a nominee - it is settled law that the board of directors of the company even should not make any roving enquiry - When the petitioner does not have locus standi, there is no valid petition in the eyes of law. By continuing with the petition without any locus standi, the petitioner has abused the process of law - respondent No. 1 is not empowered to decide this issue of succession under the law and is bound to rely upon the succession certificate issued by a competent authority designated for this purpose From the perusal of documents filed by the petitioner along with the petition it is seen that he addressed letters dated February 15, 2010, February 17, 2010 and July 12, 2010 to the company requesting transmission of shares on the ground that he is the only legal heir of deceased shareholder - The said fact has been concealed by the petitioner and tried to obtain the orders from this Bench keeping in the dark, and this Bench presumes that the said act is with a mala fide intention and with ulterior motive, and this Bench can dismiss the petition even on that ground. However, the matter is decided on merits - . The stand of the respondent is absolutely correct and this Bench cannot interfere in absence of required documents as per the law or articles of the company - Petition is dismissed

Summary

Issues:
1. Transmission of shares held by deceased shareholder to legal heir.
2. Locus standi of the petitioner to file the petition.
3. Validity of succession certificate and authority to claim shares.
4. Compliance with company law regulations for transmission of shares.
5. Interpretation of articles of association regarding transmission of shares.

Issue 1: Transmission of shares held by deceased shareholder to legal heir
The petitioner sought directions for the transmission of 150 equity shares held by his late mother to him as the legal heir. He provided the succession certificate obtained under the Administrators General Act, 1963, along with the request for transmission. The petitioner argued that the company should transmit the shares to legal heirs as per Section 109A of the Companies Act and the company's Articles of Association. The respondent, however, contended that the petitioner did not have the required authority to claim the shares and failed to provide necessary documents for transmission. The respondent emphasized the need for compliance with legal procedures and the company's articles for transmission of shares.

Issue 2: Locus standi of the petitioner to file the petition
The respondent challenged the locus standi of the petitioner to file the petition, citing that the certificate issued by the Deputy Administrator General was restrained, rendering the petitioner ineligible to claim the shares. The respondent argued that the petitioner abused the legal process by continuing with the petition without the required authority. The respondent relied on legal precedent to support the argument that a person without locus standi cannot challenge an action, highlighting the importance of legal standing in such matters.

Issue 3: Validity of succession certificate and authority to claim shares
The petitioner claimed to be the only surviving heir of the deceased shareholder based on the succession certificate issued by the Deputy Administrator General. However, the respondent pointed out that the certificate was restrained by the same authority, making it invalid in the eyes of the law. The respondent emphasized the necessity of a valid certificate from the designated authority for claiming transmission of shares. The petitioner's failure to produce additional supporting documents further weakened the claim to the shares.

Issue 4: Compliance with company law regulations for transmission of shares
The petitioner argued that the company was obligated to transmit the shares to legal heirs without making roving inquiries. The respondent, on the other hand, highlighted the need for adherence to company law regulations and proper documentation for transmission of shares. The respondent contended that the petitioner's actions were aimed at circumventing legal procedures and harassing the company, leading to the dismissal of the petition.

Issue 5: Interpretation of articles of association regarding transmission of shares
The Articles of Association of the company provided for the transmission of shares to legal heirs in the absence of a will, as per the petitioner's claim. However, the respondent emphasized that the petitioner's claim lacked the necessary supporting documentation and a valid succession certificate. The respondent argued that without the required documents, the petitioner could not be considered the legal heir entitled to claim the transmission of shares. The Bench ultimately dismissed the petition, citing the petitioner's failure to meet the legal requirements for claiming the shares.

This detailed analysis of the judgment covers all the issues involved comprehensively, highlighting the arguments presented by both parties and the ultimate decision of the Bench.