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TMI Blog1995 (3) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Board classified the appeals into three categories : (i)that there are certain appeals in which there was no delay at all; (ii)certain appeals in which there was delay; and (iii)certain other appeals have been forwarded to the Board within the prescribed time, but reached the Board a little late. On an overall consideration of the matter it held that in order to avoid undue hardship to the appellants before it, the CLB was inclined to condone the 'short delay'. 3. Attacking this finding, the learned counsel for the petitioner urged that there is no specific provision for condonation of delay in the matter of an appeal filed under section 111 of the Act on any ground including one of hardship. Elaborating his submission, the learned counsel for the peti- tioner stated that section 111 provides for power to refuse registration and also the appeal that could be filed against such refusal. The decision as to refusal of registration of transfer of any share should be commu-nicated within two months from the date of delivery of intimation of such refusal and if there is any default in complying with the aforesaid provision, the company and every officer of the company would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union of India [W.A. No. 1335 of 1988, dated 9-1-1991], wherein this Court held that what is required in the relevant provision is to make an appeal and not actual presentation of an appeal. The moment the party concerned despatches such an appeal by post, it must be deemed that such an appeal has been made. Based on that principle enunciated by this Court, the learned counsel contended that in these cases there is no difficulty at all in coming to the conclusion that appeals had been made within that time. 5. Since at least in one of the cases I have to decide that question as to whether an appeal is in time or not, I need not embark upon a discussion on the aspect as to when an appeal is said to have been filed. I would rest content by referring to the provisions of the Act to find out in cases of time barred appeals whether any delay in filing them could be condoned. 6. Section 111(4) of the Act enables a transferee who has purchased shares and applies for registration and on intimation of refusal by a company can prefer an appeal as provided therein within a period of two months thereof. Such an appeal will have to be filed before the Central Government. At the relevant time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of the company to allow the transfer of shares; that as long as reasons had been assigned by the authority concerned and those reasons are germane to the refusal of the transfer of the shares and such exercise of power is bona fide, it would not at all be open to the CLB to interfere with such a matter and in this context relied upon the following decisions : (1)Coalport China Company (John Rose & Co.) Ltd., In re [1895-9] All E.R. Rep. 2021; (2)Weinberger v. Inglis [1918-19] All E.R. Rep. 1263; (3)Smith & Fawcett Ltd., In re [1942-1] All E.R. 542; (4)Charles Forte Investments Ltd. v. Amanda [1963-2] All E.R. 940 that it was not at all open to the CLB to substitute its views to that of the BODs of 'Company' who had ample authority under the Articles of Association to refuse to transfer the shares and such power as long as exercised by them in a proper manner could not be interfered with by any authority; that the CLB had misdirected itself in wrongly casting the burden upon the petitioner that it should prove that its decision was valid, while it should have placed such onus upon the transferee; that a commercial reality is within the knowledge of BODs and not of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sold at an exorbitant price, but he countered the same by pointing out that there was enough material to show that the company itself has sold certain shares at Rs. 1,000 while the shares transferred was only of the value of Rs. 950 and thus contended that the interference by the CLB in this regard was perfectly in order. 10. The CLB in this case after referring to article 20 of Table-A of Companies Act, 1913 held that the petitioner had not made out a case to establish that the first respondent in each of these cases are undesirable persons warranting refusal of registration of transfer of shares in their name. They noticed that the reason given in the letter of refusal is that the consideration of transfer is high. They went through the legal opinion placed before them also. They were of the opinion that the high consider-ation paid for the transfer is not justifiable ground for refusing to register the shares. They referred to the forfeited shares having been issued by the company at a high price of Rs. 1,000 per share and also its earlier decision in Appeal No. 9/77 that it is not for the company or its management to sit in judgment as to in the shares of which company and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted and that right of the transferee cannot be defeated by the company or by its Directors except in pursuance of power vested in them in this behalf, which is specifically provided for - it may be residuary, but it should be provided for and traceable to some provision either in the Act or in the Articles of Association of the company. The registration of a transferred share cannot be refused arbitrarily or for any collateral purpose and can be refused only for a bona fide reason in the interest of the company and the general interest of the shareholders. If neither a specific nor residuary power of refusal has been so provided, such power cannot be exercised on the basis of the so-called undeclared inherent power to refuse registration. In view of the declaration of law made by the Supreme Court in these cases it is not necessary to refer to the decisions relied upon by the learned counsel for the petitioner in any detail. 13. In the present case, the reason given by the BODs is that the shares had been sold at a high price and therefore it would not be in the interest of the company to allow the transfer. Possibly what lurked in their minds was that Ratnavarma Padival had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an contend that the view taken by the CLB in this regard is in any way is incorrect. 15. The contention advanced on behalf of the petitioner that the CLB could not have decided the matter sitting in the arm chair of the BODs of 'Company' since commercial reality is not within their knowledge, but that of the Company. I do not think this argument has any substance because the CLB considered the scope of article 20 and was of the view that unless it could have held that except in case of matters personal to the transferees, on no other ground could they have refused to transfer the shares, particularly when there are fully paid up shares. However, learned counsel for the petitioner wanted me to read article 20 in a different manner. He wanted me to split the article into two categories : The Directors may decline to register : (a)any transfer of shares, not being fully paid shares, to a person to whom they do not approve. or (b) any transfer of shares on which the company has a lien. Contention of this nature is futile. Even on the basis of the argument of the learned counsel, the language of article 20, the company could not have refused to register transfer of shares, firstly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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