9911796707
TMI Blog2010 (4) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... intainable. Company Appeal No. 6 of 2009 is against an order of the Company Law Board dated 29-4-2009 dismissing an application for a review of the order dated 20-3-2009. 3. The question of law that arises in the above appeals is whether the remedy of an appeal lies under section 111A of the Companies Act, 1956 in respect of allotment of shares made by a public company. I have answered the question in the negative. 4. I must answer this question only on precedent. I find it covered in the respondents favour by a judgment of a learned Single Judge of this Court in the case of Gopal Krishan Banga v. Poona Industrial Hotel Ltd. [1999] 22 SCL 90 (Bom.). The appellant relied upon a subsequent judgment of another learned Single Judge of this Court in the case of Finolex Industries Ltd. v. Anil Ramchand Chhabria [2008] 144 Comp. Cas. 7381 (Bom.). I consider myself bound by the judgment in Gopal Krishan Banga's case (supra) for two reasons. Firstly, the attention of the learned judge in Finolex Industries Ltd.'s case (supra) was not invited to the judgment in Gopal Krishan Banga's case (supra). Secondly Gopal Krishan Banga's case (supra) dealt with a case of allotment of shares as does t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an application raising a preliminary objection as to the maintainability of the company petition. It was contended that as the first respondent, i.e., public company the allotment of shares by it cannot be challenged under the provisions of section 111A of the Companies Act. 8. By the impugned order dated 20-3-2009 the preliminary objection was upheld and the company petition was dismissed. All the applications were taken up and accordingly disposed of. 9. The appellant sought a review of the order on the ground that the Company Law Board had not taken into consideration the judgment of another learned single judge of this Court in the case of Finolex Industries Ltd. (supra) and the previous orders of the Company Law Board. 10. The learned member of the Company Law Board indeed ought to have considered the judgments of this court as well as the previous orders of the Company Law Board. It is, however, not necessary for this court to consider the orders of the Company Law Board as, admittedly, the entire controversy is dealt with by the two judgments of this court. I will, therefore, restrict myself to the two judgments both of learned single judges of this court. 11. Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order; or (b) direct rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved. (6) The [Tribunal], while acting under sub-section (5), may, at its discretion, make- (a) such interim orders, including any orders as to injunction or stay, as it may deem fit and just; (b) such orders as to costs as it thinks fit; and (c) incidental or consequential orders regarding payment of dividend or the allotment of bonus or rights shares. (7) On any application under this section, the [Tribunal] - (a) may decide any question relating to the title of any person who is a party to the application to have his name entered in, or omitted from the register; (b) generally, may decide any question which it is necessary or expedient to decide in connection with the application for rectification. (8) The provisions of sub-sections (4) to (7) shall apply in relation to the rectification of the register of debenture-holders as they apply in relation to the rectification of the register of members. (9) If default is made in giving effect to the orders of the [Tribunal] under this section, the company and every officer of the company who is in def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the instrument of transfer or the intimation of transfer, as the case may be, is delivered to the company, the transferee may appeal to the [Tribunal] and it shall direct such company to register the transfer of shares.] [(3) The [Tribunal] may, on an application made by a depository, company, participant or investor or the Securities and Exchange Board of India, if the transfer of shares or debentures is in contravention of any of the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) or regulations made thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) or any other law for the time being in force, within two months from the date of transfer of any shares or debentures held by a depository or from the date on which the instrument of transfer or intimation of the transmission was delivered to the company, as the case may be, after such inquiry as it thinks fit, direct any depository or company to rectify its register or records.] (4) The [Tribunal] while active under sub-section (3), may at its discretion make such interim order as to suspend the voting rights before making or completing such inquiry. (5) The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 is restricted only to the private companies and, therefore, it will not apply in case of respondent-company. 5. It is to be seen here that before its amendment in 1995 section 111 applied to private companies as well as public limited companies. A perusal to the provisions of section 111 shows that an appeal has been provided to the Company Law Board by sub-sections (1) and (2) of section 111 against refusal by the company to register the transfer of share. Sub-section (4) of section 111 also provides for an appeal, but that appeal is in relation to wrong entries made in the register of members. Therefore, the right of appeal which is provided by sub-section (4) of section 111 is in cases which are not covered by sub-sections (1) and (2). Therefore, the scheme of section 111 shows that a right of appeal was given to the transferees against wrong transfer of shares or refusal of the company to transfer the share and right of appeal was also given to any member of the company when a wrong entry is made in the register of members. Therefore, obviously when the company allots shares and a consequential entry is made in the register, a member could raise objection and challenge that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r whether the matter ought to be referred to a larger bench to resolve the conflicting judgments. 14. In my view, the matter ought to be decided only on precedent. The judgment in Gopal Krishan Banga's case (supra) dealt with an identical question, namely, whether an allotment of shares by a public company can be challenged under section 111A. In Finolex Industries Ltd.'s case (supra), the question that was dealt with was whether a refusal by the company to record a transmission of shares of a deceased member in the name of his heirs can be challenged under the provisions of section 111A. The learned judge answered the question in the affirmative. The observations of the learned judge however are indeed wide enough to cover even cases of allotment although the question did not arise in that case. I would, therefore, have considered myself bound by the judgment even on the question before me. However, the attention of the learned judge who decided the case of Finolex Industries Ltd. ( supra) was not invited to the judgment of the other learned Single Judge in Gopal Krishan Banga's case (supra) which had been delivered earlier. Had the learned judge's atten- tion been invited to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have to be such that section 111A provides additional benefit to the shareholders in public companies which they already enjoyed and continue to enjoy under section 111 of the Act. Only then would be proviso give effect to the intention of the Legislature. The interpretation cannot be such as to deny the right of appeal to shareholders of a public company on the basis of the mode of transfer or transmission. At the same time it should not leave the shares held in depositories without a remedy of appeal. Substitution of the term 'intimation of transfer' with 'intimation of transmission' would remove the right of appeal given to shares held by depositories. This is not the intention of the Parliament. 18. . . . By virtue of provisions of section 28 of the Act it cannot be held that section 111A(3) is restricted to rectification of the register only in transfer matters. This would mean that no remedy of rectification is available in case of loss of shares, bad deliveries, theft and forgery. This would be in derogation of the law for the time being in force. Remedy provided in section 111A(3) is in addition to the remedy provided in section 111(4). It is, therefore, held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
