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TMI Blog2016 (8) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... l in resisting the rectification of the Register of Members of M/s. Metro Infrastructure Development Limited. One M/s. GNB Credit Private Limited (hereinafter referred to as GNB ) filed a petition under Section 111A of the Companies Act, 1956 against the appellant company seeking reliefs of rectification of Register of Members regarding share certificates covering 90 shares in the name of the petitioner by setting aside the refusal of registering the transfer of the said 90 ordinary shares. The Company Law Board (in short CLB ) refused registration of the transfer of shares on the ground that the conduct of one of the shareholders is detrimental to the benefit and interest of the company and has relied upon Article 5 of the Memorandum and Articles of Association which empowers the Board in the name of the petitioner. The company further contended that the transfer forms were not duly stamped and they were not submitted to the company within two months from the date of presentation as envisaged under Section 108(1A)(b)(ii). A dispute was raised with regard to the character of the company, that is to say, the public limited company or the private company and depending on an answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 19th April, 2012, an application under Section 634A was filed by the petitioner for enforcement of the order dated 10th August, 2010. Pursuant to the order dated 16th August, 2011 passed by this Court in an application for amalgamation, M/s. GNB Credit Private Limited has been amalgamated with M/s. Bengal Tools Ltd, the respondent company and all rights, title and interest of the said GNB including the right to continue with any proceeding has been transferred to the respondent company. On the basis of the aforesaid, the respondent company as successor-in-interest of the said GNB filed an application for enforcement of the order dated 10th August, 2010 before the Company Law Board (hereinafter referred to as CLB ). The GNB purchased 90 ordinary shares of and in the appellant Company and sent the original share certificates along with duly stamped transfer deeds for transfer of the shares in its name, but the appellant company, without sufficient cause, had refused to effect the transfer of shares. The respondent company herein instituted proceedings under Section 111A of the Act for rectification of Register of Members in respect of the said shares and this CLB, vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said orders, as the respondent company is the successor-in-interest of the said GNB and is entitled to all right, title and interest of GNB in respect of the said 110 equity shares, but the respondent company has failed to do so. The respondent company is continuing to disobey the directions contained in the said orders and is committing contempt of the orders passed by this CLB. The appellant appears to have contended before the CLB that the order dated 19th April, 2012 was obtained by GNB by suppression of the fact that it stood amalgamated with the respondent company on and from 1st April, 2010 and also, the 90 ordinary shares stood transferred to and vested in the appellant company on and from the transfer date or the appointed date, i.e., 1st April, 2010. Further, the said GNB had no locus to contest the appeal being A.C.O. NO.157 of 2010 preferred by the appellant company against the order dated 10th August, 2010 passed by this CLB in C.P. No.304 (111A)/ERB/2006. The order dated 19th April, 2012 has been obtained by the said GNB by perpetrating fraud on the Hon ble High Court at Calcutta and the appellant company. The appellant company refused to effect the transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany deliberately failed to comply with the same. The appellant appears to have contended before the CLB that the orders dated 10th August, 2010 and 19th April, 2012 are in respect of 90 shares, whereas the respondent Company has sought relief in respect of 110 shares. The fact of merger of GNB with the respondent company has neither been disclosed to the appellant company nor was it brought to the notice of the Hon ble High Court during the pendency of the appeal being APO No.391 of 2010. It was the duty of GNB and the respondent Company to inform the Hon ble High Court in seisin of APO No.391 of 2010 about the order dated 19th April, 2012 and the scheme of Amalgamation for the merger of GNB with the respondent Company. The appellant Company was informed by the respondent company for the first time about the merger of GNB with the respondent Company in June, 2012. GNB did not have the locus to contest APO No.391 of 2010 on and from 19th April, 2012. The order dated 19th April, 2012 is inexecutable and the CLB has acted illegally in directing the appellant to register the shares in favour of the respondent Company. The CLB in the impugned judgment allowed rectification on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad 135 @140). The decision of a co-ordinate Bench in APO No. 227 of 2014 with ACO No.119 of 2014 (M/s. Jay Bee Properties Private Limited Ors. Vs. Sri Pawan Kumar Budhia Ors.) dated 22nd December, 2015 relied upon by Mr. Ratnanko Banerjee, the learned Senior Counsel appearing on behalf of the Company has considered similar issues. Section 108(1) of the Act of 1956 declares, in its material part, that A company shall not register a transfer of shares in the company, unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation, if any, of the transferee, has been delivered to the company along with the certificate relating tot he shares , or if no such certificate is in existence, along with the letter of allotment of the shares The first proviso to such sub-section deals with the loss of an instrument of transfer and permits the company to register the transfer by seeking an indemnity, if thought fit. The second proviso to the sub-section excludes the operation of the substantive provision for registering, inter alia, shares transmitted by operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on similar grounds as cited by the appellants herein. This court held, at page 169 of the report, as follows: In my view, when the second application was made by Project to record such transfer Peerless was obliged to record such transfer and their refusal on the ground of non-compliance of section 108 was not tenable and the Company Law Board was right in rejecting such plea. In my view, such application although in technical sense was an application under section 108(1) second proviso read with section 109. The same was nothing but an intimation to the company of the scheme of compromise so that the company could rectify their register. The documentation contemplated in section 108 was not required to be done and such plea of Peerless was not tenable and the Company Law Board rightly rejected the same. In the special leave petition arising from the judgment of this court in Peerless General Finance Investment Company Limited vs. Poddar Projects Ltd. Anr., the Hon ble Supreme Court did not address the legal issue and left it open. But the Supreme Court did not set aside the finding on the legal question rendered by this court. The said decision is reported at 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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