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TMI Blog2009 (10) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... y by invoking the provisions of section 111 of the Act; but who failed before the Company Law Board as per the :order impugned in this appeal. 2. The appellants are the petitioners in Company Petition No. 494 of 2008 (J. R. Srinivas v. Sri Gururaja Enterprises (P.) Ltd. [2009] 152 Comp. Cas. 681), before the Company Law Board, Additional Principal Bench at Chennai, who had invoked the rectification jurisdiction on the premise that the register showing the names of the members of the first respondent-company was flawed and was not in accordance with law; that a good number of shares, i.e., as many as 4,55,000 shares which had been held by an erstwhile member by name Maruthi L. Shanbhag had been transferred in favour of respondents Nos. 2 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the present appeal to get over the order. 5. Appearing for the appellants, Sri. C. M. Poonacha, learned counsel, would vehemently urge that a question of this nature can very much constitute a subject-matter for examination of the correctness or otherwise of the register disclosing the names of the members of the company; that the Company Law Board instead of examining the petition in its proper perspective, had embarked upon to opine that the ownership in the shares had already stood transferred prior to the death of the erstwhile owner ; that such a conclusion is not warranted in law and therefore the appeal merits examination by this court in exercise of appellate jurisdiction under section 10F of the Act. 6. It is also-submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y correct in opining that the ownership in the shares had stood transferred even before the demise of the transferor ; that by operation of law, the moment the share forms were signed by the transferor after receiving due consideration from the transferee and scrips were also delivered, the ownership gets transferred and therefore the very premise is not tenable and the Company Law Board has only recognised this position and absolutely there is no need to interfere with the impugned order in this appeal. 9. It is also submitted that with regard to the question of pre-emptive rights of the members being affected, Sri Vivekananda would submit that if at all any one had such right, it is only the first appellant, who, was a member of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the simple reason that, the first appellant being a party to the decision to transfer shares, in the sense, for change in the register, the name of the erstwhile owner to substitute the names of respondents Nos. 2 and 4, on the basis of the transfer forms lodged by respondents Nos. 2 and 4, is definitely estopped from contending to the contrary even assuming that at the time of such a decision, pre-emptive rights of the members of the company was not in issue, for the simple reason that the first appellant even while acting as a member of the board and as part of the management, had failed to protect the interest of the shareholders of the company, in the sense, to keep alive their right of pre-emption as against a third party non-member, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of correctness or legality of respondents Nos. 2 and 4 acquiring ownership to shares can be examined only before a civil court that too only at the instance of the competitors or contenders and not at the instance of a third party like the first appellant herein, though the first appellant is a member of the first respondent-company. 13. There is a great distinction between the first appellant being a member of the company and having locus to maintain a petition for rectification within the scope of section 111 of the Act and the first appellant being entitled to challenge the legality of the claim for ownership put forth, by the second and the fourth respondent, on the basis of the transfer forms sent by the erstwhile owner/member ..... X X X X Extracts X X X X X X X X Extracts X X X X
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