2018 (2) TMI 414 - Tri - Companies Law

Rectification of the Register of Members of the Company - Transfer of shares - Held that - Actions of the R1 and R2 would prove that the share of the petitioner has been transferred without his concurrence and the name of the petitioner has been deleted from the Register of Members without sufficient cause. Since, the transfer to R3 has been made by the Company knowing fully well that one more duplicate certificate is in existence and the transfer was made on the basis of the earlier duplicate share certificate, this Bench has no hesitation to declare that the petitioner has made out a case for ordering the rectification of Register of Members and that the transfer was made on forged documents and it is null and void. Since the first transfer to R3 is made on the forged documents, the question of non-joinder of party will not arise, therefore the preliminary objections of the R1 and R2 in this connection should fail. Further, the R3 ought to have contested the matter independently by filing the proof of payment made to the petitioner, but he has adopted the written statement of the R1 and R2 which shows the collusion between the R1, R2 and R3. If the transfer from R3 to Smt. S.M. Vijila is genuine, she should have approached this Tribunal suo motu in order to protect her interest in the shares, but she also failed to do so. Allow the petition and direct the Company to rectify the Register of Members by deleting the name of Mrs. S.M. Vijila and restore the name of the petitioner in that place within 30 days from the date of the receipt of this order.

Summary

Issues Involved:
1. Validity of the transfer of shares from the petitioner to R3.
2. Alleged forgery and collusion in the transfer of shares.
3. Non-joinder of necessary parties.
4. Rectification of the Register of Members.

Detailed Analysis:

1. Validity of the Transfer of Shares:
The petitioner contended that he never transferred the shares to R3. The respondents, R1 and R2, asserted that the petitioner transferred his shares via a transfer deed signed on 06.09.2003, accompanied by a letter from R3 requesting the transfer and a No Objection Certificate (NOC) from the petitioner. The tribunal noted discrepancies in the company’s procedures, particularly the lack of a bona fide act by the company in insisting on a NOC without producing any such letter requesting it. The company’s failure to reject the transfer deed presented with the earlier duplicate share certificate, despite issuing a second duplicate, was highlighted as a procedural lapse.

2. Alleged Forgery and Collusion:
The petitioner alleged that the deletion of his name from the Register of Members was based on forged documents, with active collusion from R3. The tribunal found that the company’s actions, such as transferring shares based on an outdated duplicate certificate and failing to file the share transfer deed for the subsequent transfer to Mrs. S.M. Vijila, lacked bona fide. The tribunal also noted the improbability of R3 paying ?75,000 in cash without a stamped receipt, further suggesting collusion and lack of genuine transaction.

3. Non-joinder of Necessary Parties:
R1 and R2 argued that the petition should be dismissed for non-joinder of Mrs. S.M. Vijila, who was not made a party to the proceedings despite being the current holder of the shares. The tribunal dismissed this preliminary objection, stating that since the initial transfer to R3 was based on forged documents, the issue of non-joinder of Mrs. S.M. Vijila did not arise. The tribunal also noted that Mrs. S.M. Vijila did not approach the tribunal to protect her interest, indicating a lack of genuine interest in the shares.

4. Rectification of the Register of Members:
The tribunal concluded that the petitioner had made a valid case for rectification of the Register of Members. It was determined that the transfer to R3 was made on forged documents and thus null and void. Consequently, the tribunal directed the company to rectify the Register of Members by deleting the name of Mrs. S.M. Vijila and restoring the name of the petitioner within 30 days from the receipt of the order.

Conclusion:
The tribunal found significant procedural lapses and lack of bona fide actions by the company in handling the transfer of shares. The petitioner’s claim of forgery and collusion was upheld, leading to the directive for rectification of the Register of Members in favor of the petitioner. The tribunal dismissed the preliminary objections regarding non-joinder of parties and emphasized the importance of genuine transactions and adherence to proper procedures in share transfers.