9911796707
TMI Blog1997 (9) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... into an unregistered agreement regarding transfer of shares of the company in favour of N. Ravindran, which subsequently became infructuous on account of breach of the agreement as well as lapse of time. 4. On May 2, 1996, the applicant and 21 other shareholders of the company holding 1,261 fully paid equity shares made a written requisition to the company to convene an extraordinary general meeting to transact the business specified supra. The company did not accede to the request of the applicant on the plea that the applicant and certain other requisitionists are not shareholders of the company. Meantime, on November 7, 1996, the applicant demanded duplicate share certificates, as he had lost or misplaced the original certificates. But the company did not issue the duplicate share certificates. Thereafter, the applicant along with five other members sent on January 11, 1997, a valid requisition to the company calling for an extraordinary general meeting in accordance with the provisions of the Act. But the company never convened the meeting in terms of the requisition dated January 11, 1997. It has, therefore, become impracticable for the applicant to call for an extraordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, 1997 (document No. 6 annexed to the application), submitted by the applicant and five other members was not in conformity with Section 169(4), as the requisitionists save M. Palaniyandi and M. Sundar Raj were not shareholders of the company. Moreover, Shri Palaniyandi was holding 30 shares and Shri Sundar Raj 20 shares which did not constitute 10 per cent. of paid up capital of the company. The subjects for which the meeting was requisitioned were invalid, infructuous and incapable of being considered in an extraordinary general meeting. The directors of the company were elected at the annual general meeting held on September 3, 1996, and they are not liable for retirement until the next annual general meeting. The accounts for the years ended March 31, 1995, and March 31, 1996, were duly considered and adopted at the annual general meeting of the company held in the year 1995, and on September 30, 1995, respectively. The annual return made up to September 30, 1996, was filed with the Registrar of Companies, Chennai on November 29, 1996. The general body cannot reconsider the accounts which had already been passed. Further, copies of the accounts can be secured by any shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enied. The alleged transfer of shares is in violation of Articles 5 to 10 of the articles of the company. The alleged transfer of 304 shares in favour of N. Ravindran is illegal and not binding upon the applicant. The applicant continues to be a member of the company and entitled to invoke the provisions of Section 186 of the Act. 9. Counsel for the applicant further submitted that the letter of requisition submitted by the applicant and 21 others (document No. 1 annexed to the application) was duly signed by the applicant and B. Mohandas for themselves and on behalf of other requisitionists. It satisfied the requirements of Section 169 of the Act. The company had also ignored the letter of requisition dated January 11, 1997, submitted by the applicant and five other members (document No. 6 annexed to the application). Both the letters of requisition were not considered by the company making it impracticable to convene the meeting. 10. In support of his above averments, counsel for the applicant has relied upon the following decisions : (a) CWT v. Sumitra Devi Jalan [1974] 96 ITR 35 ; [1975] Tax LR 436 (Cal) (headnote of Tax LR) : Mere delivery of shares along with bla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equences of loss through wrong registration of transfer or registration on the authority of a stranger or a fictitious person, must fall on the company . (d) Amrit Kaur Puri v. Kapurthald Flour, Oil and General Mitts Co. P. Ltd. [1984] 56 Comp Cas 194 (P H) (headnote) : Where the articles of association of a private limited company restrict the transfer of shares by a shareholder to a person who is not a shareholder, by providing that the shares can be so transferred only if an existing shareholder is not willing to purchase the same at a price, to be fixed, according to the procedure prescribed in the articles, and in case of dispute about the price also a procedure is provided and the articles further provide that the transferor shall send a notice to the company that he wants to transfer the share, if he intends to transfer the same to the name of a person other than a shareholder, and that, if the directors within the space of six months of receipt of the notice find a shareholder willing to purchase the share, they shall give notice to the proposing transferor in that regard, the transferor shall be bound upon payment of the price so fixed to transfer the shares to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder as well as director. Form No. 32 (annexure R-6) and annual return (annexure R-12) being public documents strengthen the company's plea. In this regard he cited the case Mrs. Rashmi Seth v. Chemon (India) (P) Ltd. [1992] 3 Comp LJ 89 ; [1995] 82 Comp Cas 563 (CLB) to state that the facts stated in the annual return are prima facie evidence of correct and complete facts. 12. The applicant having ceased to be a shareholder and director of the company has no remedy to call for an extraordinary general meeting under Section 186 of the Act, but necessarily seek rectification of the register of members under Section 111 of the Act as held in the case of Ved Prakash v. Iron Traders (Private) Ltd. [1961] 31 Comp Cas 122 (Punj) and approach the competent court for the alleged forgery of the instruments of transfer. Moreover, in a petition under Section 186 for an order directing the holding of a general meeting the court will hot go to the extent of rectifying the register of members as decided in Shrimati Jain v. Delhi Flour Mills Company Ltd. [1974] 44 Comp Cas 228 (Delhi). 13. The letter of requisition (Document No. 1 annexed to the application) does not comply with the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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