9911796707
TMI Blog1957 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... med the petitioners that they declined to register the transfer of the shares in their names. No reasons were assigned. Both the petitioners then moved the Central Government in appeal under section 111 of the Companies Act and by an order passed on November 13,1956, the Central Government ordered the respondent company to effect registration in their book of the hundred shares transferred to each of the petitioners. Nevertheless it appears the shares were not transferred, and ultimately the petitioners have had to move this court under section 155 of the Companies Act. The petitioners have also alleged that after the order of the Central Government dated November 13, 1956, they forwarded the share scrips with the transfer deeds and the transfer fees to the opponent company by registered post, but acceptance of the registered cover was refused. Both the petitioners also alleged that subsequently they went personally to the office of the company and requested the company to transfer the shares in their names. The opponent company did not deny that the registered letter reached their office, but the position they have taken up is that they were unable to accept delivery of a se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In my opinion, this contention overlooks the powers of the court under section 155, sub-section (3), which are of the widest amplitude, particularly clause ( b ) of sub-section (3) which gives the court the power in the following words; " generally may decide any question which it is necessary or expedient to decide in connection with the application for rectification." I am unable to hold that section 155 is dependent upon section in. On the contrary it appears to me that section 155 is the controlling section and gives the court an overriding power notwithstanding any previous order of the Central Government. It would be meaningless to give the court a general power to decide any question including any question relating to the title of a person as is given by section 155(3) and then indirectly cut off that power by giving the Central Government the same power to decide the same question in appeal first. The contention, in my opinion, fails. The second contention, however, is more important. It was urged that the company having regard to their powers under the Act as also under their articles of association, could not refuse to register the transfer of the shares in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any shares either at par or at a premium, for such time and for such considerations as the directors may see fit" would be inapplicable. In fact, these words can only be used in the context of a new issue of capital and not in the context of a transfer of capital already issued. But the company has dealt with the subject of transfer and transmission of shares in articles 38 to 43 as the heading of the part containing those articles would show, and one would expect that if a power to refuse registration of shares was reserved by the company, such power would find place among those articles, but none of these articles were referred to at the Bar or deal with the subject. In the absence of any express provision in the articles themselves, no doubt regulation 21 of Table A would apply by virtue of section 28, but regulation 21 merely refers to the transfer of shares not being fully paid up shares and to no other shares and it is admitted here that the shares in the present case were fully paid up shares and therefore regulation 21 would be out of place. In fact, article 40 of the company's articles gives an almost identical power as is contained in regulation 21. But article 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised that that cannot be done in a summary proceeding. Thus the provision will be rendered otiose in most cases. This could not be the intention of the Legislature. In the present case, moreover, the company's pleadings do not clearly deny the fact of execution of the transfer deeds. The relevant pleading of the company in this behalf is contained in paragraphs 5 and 6 of their replies in each case. No doubt, there is the general denial that the allegations in paragraph 5 of the petitions are denied. In paragraph 5 the petitioners recited that they had taken the transfer for cash consideration. But there is no more specific plea than that. The only specific plea was that it was denied that "any cash consideration was passed for the same and that too to the extent of rupees one thousand. In fact the value of the shares was very much low at that time and there was no real buyer for these shares in the market." The company further pleaded that the relations between the petitioner and the managing partner of the managing agency (opponent No. 2 in the petition) being strained, "N.A. No. 2 (managing partner of the managing agency) became suspicious of the whole transaction and was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case. Only the consideration was disputed. In Devakumar's Case ( supra ) the dispute which was before the court was whether certain resolutions of the company were valid and intra vires and whether there could be a valid transfer of shares in pursuance of such resolutions, and the court held that such issues arising between the parties could not be properly decided in a summary proceeding. In Smt. Savitadevi Jhunjhunwala's Case ( supra ) though the reported decision was not placed before me there appears to have been a controversy under several heads raised before the court and the court remarked that a regular investigation would have to be held and, therefore, it directed the parties to proceed in a regular manner by way of a suit. In my opinion, these were cases where the controversy raised regarding the transfers was of a type which involved detailed investigation whereas in the present case, except the plea regarding want of consideration and the plea that the transfer took place at a date 8 days earlier than the date shown upon the face of the document, there was substantially no other plea properly raised on behalf of the company which needs investigation. Regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate of posting, or by registered post, or by leaving it at its registered office. In the face of this clear provision of the Act itself, I do not see how article 39 which limits the mode of sending to only one of the three modes prescribed in the section can be justified. In my opinion, the petitioners were well within their rights to send the shares by registered post as they admittedly did. The plea of the company that they suspected that there might be nothing in the envelopes and that, therefore, they were justified in asking the postal authorities to give them open delivery in the presence of the senders, is, in my opinion, frivolous. There was no material before the company on which they could have reasonably suspected that the envelopes contained nothing. This was nothing but an objection raised for the sake of raising an objection and is certainly not indicative of bona fides on the part of the company, especially when one considers the strained relationship between the petitioners and the principal persons in charge of the management of the company. The only other objection which remains to be dealt with is that the transferors not being parties to these pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
