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TMI Blog1963 (1) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... on was made by him for the transfer of these shares and the relevant share certificate was also presented to the company the matter of transfer of these shares was considered by the board of directors of the company in their meeting held on the 12th March, 1961, but they rejected the application for transfer. Thereupon, Sita Ram filed an appeal under the provisions of section in of the Act with the Secretary, Ministry of Finance. Central Government, Department of Company Law Administration, New Delhi. The Deputy Secretary to the Government of India in the Department of Company Law Administration, by his order dated the 13th July, 1962, accepted the appeal and directed the company to register the transfer of the aforesaid shares in the name of Sita Ram within a period of ten days from the date of receipt of the order. Messrs. Indian Industries Company, which are the managing agents of the company, implemented the order of the Deputy Secretary on the 28th July, 1962. The present petition is directed against the transfer of shares so made in pursuance of the order dated the 13th July, 1962, It is alleged that the transfer entries were effected by the managing agents without referrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and that the petitioner has no locus standi to challenge it. In particular, it is urged that in view of this order of the Central Government the petition is not maintainable under section 155 of the Act. A detailed reply is given on the merits also. The issues framed are as follows : "(1)Whether the petitioner has locus standi to file the petition? (2)Whether the petition under section 155 of the Act, 1956, is maintainable in view of the orders of the Central Government under section 111 of the Act ? (3)Was the transfer of ten shares in favour of respondent No. 2 made by the managing partner of the managing agents of the respondent company; and if so, is this transfer valid ? (4)Whether the company has valid reason for excluding respondent No. 2 from being a registered shareholder of the company ? (5)Whether Sita Ram was excluded by the directors mala fide and for the collateral purposes? (6)Relief." The parties desired that the first two issues, on which no evidence was required, may be disposed of first, and this prayer was accepted by the order dated the 9th November, 1962. Issue No. 1. The objection, so far as this issue is concerned, appears to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controls section 111 or whether these are alternative remedies, one of which only may be pursued to the exclusion of the other. The contention advanced by Mr. F.C. Mittal, on behalf of the petitioner, is that whether or not any appeal has been filed or decided by the Central Government under section in, the court under section 155 has the overriding power to rectify the register of members. The authorities relied upon by him in this connection are Sadashiv Shanka Dandige v. Gandhi Sewa Samaj Ltd. [1958] 28 Comp. Cas. 137 ; AIR 1958 Bom 247, 248, 249 , In re Coronation Tea Co. Ltd. [1962] 32 Comp. Cas. 137 ; AIR 1961 Cal 528, 529 and Mt. Nazamunnessa Begum v. Vidyasagar Cotton Mill Limited [1963] 33 Comp. Cas. 36 ; AIR 1962 Cal 380, 385, 386 . The two latter cases merely follow the case first cited. In that case the respondent company refused to register the transfer of certain shares in favour of the two applicants, who then moved the Central Government under section 111 and an order was made by the Central Government directing the respondent company to effect registration in their book of transfers. The company did not comply with that order and accordingly the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned judge following his previous decision as also the case, Sadashiv Shankar Dandige v. Gandhi Sewa Samaj Limited [1958] 32 Comp. Cas. 137. The learned judge quite rightly observed that it was not incumbent upon the party to prefer an appeal provided by section m and that it may very well choose to come directly to the court. It is thus clear that in the two Calcutta cases the question which falls for decision under issue No. z in the present case, that is, whether the petition under section 155 is maintainable in view of the orders of the Central Government under section 111 of the Act, did not arise. Very serious consequences would ensue if the view urged by Mr. Mittal is allowed to prevail. For instance, suppose that the Central Government (as in the present case) makes an order directing the company to register the transfer. This has to be done within ten days of the receipt of the order, and in case of breach, heavy penal consequences are incurred under sub-section (9) by the company and every officer of the company who is in default. Suppose again that the company complies with the order of the Central Government beyond the period of ten days and is thus in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and redress would be available under section 155( i )( b ). However, it is unnecessary to express any firm opinion on this question, which is not before me. Then it is argued that under the articles of association of the company (copy annexure "A"), vide articles 33 to 38, it is the function of the board of directors to register the transfer of shares, while in the present case the transfer was registered by the deputy managing partner of the managing agency firm. I do not see how this circumstance can affect the issue. Under clause (3) of section 2 of the Act, the term "officer" includes, inter alia , the managing agent and where the managing agent is a firm, any partner in the firm. Under clause (31) of section 2, the term "officer who is in default" in relation to any provision referred to in section 5, has the meaning specified in that section. Section 5 lays down that "for the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression" officer who is in default" means any officer of the company who is knowingly guilty o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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