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TMI Blog2018 (10) TMI 1859X X X X Extracts X X X X X X X X Extracts X X X X ..... Shahul Hameed in respect of 20,000 equity shares (Registered Folio No. 14); to direct the respondents to register the transfer of 12,500 equity shares of Mr. P.A. Ibrahim Haji (Registered Folio No.06) in the name of the Petitioner with effect from lodgement of share transfer request on 13.08.2015, to direct the respondents to rectify the register of shareholders by incorporating the name of the Petitioner in place of Mr. P.A. Ibrahim Haji in respect of 12,500 equity shares (Registered Folio No.06), etc." 2. Brief facts, as mentioned in the Company Petition, are as follows: 1) M/S. Vintage Hotels Private Limited is a Company (herein after referred to as Company) registered under the Companies Act, 1956. Its Authorised Share Capital is Rs. 5,00,000/- (Rupees Five Lakhs only) divided into 5,000 (Five Thousand) Equity Shares of Rs. 100/- (Rupees One Hundred only) each, with power to increase or reduce the capital of the Company. Its main object is to carry on the business of Hotel, Restaurant, Café, tavern refreshment room and boarding and lodging, etc. 2) The Petitioner is an existing shareholder and all the Director/ members of the Company and Board are related/ family me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sters and records. Since the Company did not respond to the above letter. the Petitioner sent two reminders dated 15.09.2015 and 29.10.2015. 6) It is stated that the Company by letter dated 30.10.2015, while accepting that share transfer request of the Petitioner has been received, request for the same has been rejected on the following reasons: a) That the Petitioner has not acted in the best interest of the first respondent Company in the capacity oi a Director. The Petitioner has created hurdles in the working of Company. The Petitioner has not attended Board meetings. b) The Petitioner has made criminal allegations against the other Directors of the Company. c) The share certificates have not been enclosed with share transfer form as required under article 6. 3. It is alleged that there were several criminal assaults / acts committed by respondent-2 and other Directors and their family members on the Petitioner and his family members. Accordingly, the Petitioner and his family members had lodged criminal complaints before the jurisdictional police stations, which were duly investigated and accordingly the FIRs have also been registered by the jurisdictional police stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is not maintainable under law or on facts. It lacks bona fide and barred by laches and limitation. There is a delay in filing the Company Petition. However, the delay was condoned by the Tribunal by applying the provisions of Section 434 of the Companies Act, 2013. However, Section 434 is not enforced and thus delay was not permissible. b. It is admitted that the Petitioner is existing shareholder and one of the directors of the Company. The Company is not in knowledge of impugned transfer of shares. Even the purported Affidavit of Mr. T. Shahul Hameed dated 10.04.2015 was not executed in the manner provided under law , and it was not sworn and signed before any prescribed authority. Therefore, the document is not admissible in evidence. The so called share purchase agreement or the purposed share transfer form does not disclose The details of shares proposed to be transferred thereunder. Even the newspaper publications do not disclose the description of shares purchased by the Petitioner. The paper publications did not disclose for what purpose they were issued. c. It is stated that the Company has not received letter dated 13.08.2015 from the petitioner. Even otherwise, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s spelt out in the Company's letter dated 30.10.2015 are all valid grounds and the Board of Directors of the Company have exercised its powers under Article 6 of the Articles of Association after due consideration of all relevant factors. It is for the Petitioner to prove that the rejection of transfer of shares in the name of the Petitioner does not hold merit as claimed by him. f) The averments regarding relationship of the Petitioner to the other directors including the second respondent herein, and regarding incorporation of the Company by the Petitioner's father, and the directorship of the Petitioner along with that of the others are all admitted as true. However, it is categorically denied that there was any kind of power struggle, after the death of the Petitioner's father. In fact, it is the Petitioner alone, who has been cantankerous with evenly other family member. The rest of the family members have faced no problems either in their relationship with one another or in the affairs of the first respondent Company. The Petitioner is not willing to adopt a non-confrontational attitude, and used to pick quarrels at the drop of a hat with every other Director. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is pending with the Company, question of enclosing original certificates do not arise. Lacunae as pointed out by the respondent in execution of documents in question can be rectified, and he is ready to rectify them subject to satisfaction of respondents, and they are not fatal to the case. The Petitioner has never filed any case against the second respondent, who is mother of the Petitioner. It is not in dispute that the Board of Directors is empowered to consider request for share transfer such power cannot be exercised arbitrarily. He has relied upon judgments of the Hon'ble Gujarat High Court in Smt. Bina Banza and Ors. Vs. Dulowjan Tea Co. (P) Ltd. (2) Since the Petitioner has admittedly invested Rs. 63,61,875/- towards purchase of a total 32,500 equity shares of the Company, it cannot be refused to transfer the shares on mere technical grounds especially in the absence of any case, transferor has no objection for the same. 9. Shri K.V Satish, learned Counsel for Respondent, while pointing out various averments made in the Common Counter, as briefly stated above, has also filed written Arguments dated 07.12.2017, by inter alia contending as follows: 1) The shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written instrument in the prescribed form signed both by the transferor and the transferee and the transferor shall be deemed to remain the holder of the shares until the name of the transferee is entered in the Register of Members in respect thereof. The Directors may decline to register any transfer of shares, to a person of whom they do not approve, and may also decline to register any transfer of shares on which the Company has a lien. The Directors may decline to recognize any instrument of transfer unless: a. The instrument of transfer is accompanies by the Certificate of the shares to which it relates; and b. Such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. If the Directors refusal to register transfer of any shares, they shall within two months after the date on which the transfer was lodged with the Company; send to the transferor and transferee notice of the refusal. " Section 56 and 58 of the Companies Act, 2013, deals with transfer and transmission of securities, and the appeal to the Tribunal. As per Section 56(1), a Company shall not register transfer of securities of the Company unle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 drawn on Federal Bank Limited, Kasaragod Branch. An affidavit by way of Indemnity Bond dated 23.07.2015 was also executed by the transferor by requesting to issue duplicate share certificates in the name of the Petitioner as the original share certificates have been lost or mislaid etc. 12. Subsequently, the Petitioner also addressed a letter dated 13.08.2015 by requesting the Company to transfer shares of 20,000 (Registered Folio No. 14) equity shares purchased from Mr. T. Shahul Hameed, and another 12,500 equity shares purchased from Mr. P.A Ibrahim Haji (Registered Folio No.06) by enclosing Share Transfer form in SH-4 along with Share Transfer Agreements etc followed by remainders dated 15.09.2015 and 29.10.2015. 13. The Company has rejected transfer of shares vide letter dated 30.10.2015 by citing two reasons for rejection. One is there are criminal/ civil cases being filed by the Petitioner and not attended the board meetings, and secondly original share certificates are not enclosed. As stated supra, it is not in dispute that the impugned shares were issued to respective Transferors and those shares were purchased by the petitioners for consideration by investing huge am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding the I.A. Therefore, the Company Petition is deemed to be filed within the limitation. 16. In view of the above facts and circumstances of the case, and also taking into consideration of law as stated supra, are of considered view that the action of respondents in refusing to effect impugned shares in favour of the petitioner is arbitrary and unjustifiable. Personal and family issues will not come in the way of law taking its own course. And all the grounds raised for such rejections are hereby rejected as not tenable. Therefore, the Company petition deserves to be allowed. 17. In the result, C.P. No.01/16 (T.P No. 96 of 16) is allowed with following directions: 1) We hereby set aside letter dated 30.10.2015 directing the respondents to register the transfer of 20,000 equity shares of Mr. T. Shahul Hameed (Registered Folio No. 14) in the name of the Petitioner with effect from lodgement of share transfer request on 13.08.2015; 2) Directed the respondents to rectify the register of shareholders by incorporating the name of the Petitioner in place of Mr. T. Shahul Hameed in respect of 20,000 equity shares (Registered Folio No. 14); 3) Directed the respondents to re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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