Company Law Board Cases 2002

COMPANY LAW BOARD CASES 2002

1. TRANSFER OF SHARES

[2002] 39 SCL 963 (CLB - MUM.)

COMPANY LAW BOARD, WESTERN REGION BENCH, MUMBAI

Arun Kumar Mallick

v.

Hindustan Lever Ltd.

JUSTICE A.K. BANERJI, CHAIRMAN AND C.R. DAS, MEMBER

CP. NO. 9/111A/CLB/WR/2001

JUNE 28, 2002

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on transfer - None of impugned 1075 shares, belonging to petitioner had been transferred out of Register of Members of respondent-company in spite of fact that transfer deeds in respect of 700 shares, forming part of impugned shares had been lodged by various transferees - No wrong entry had been made in Register of Members which required rectification - Whether when impugned shares continued to stand in name of petitioner in Register of Members, relief prayed for by petitioner was in nature of a declaration regarding his title to impugned shares - Held, yes - Whether such relief fell outside ambit of rectification within meaning of section 111A(3) - Held, yes - Whether petition was to be dismissed as being not maintainable under section 111A(3) - Held, yes

[2002] 39 SCL 970 (CLB - MUM.)


Asha Purandare

v.

Integrated Controls (P.) Ltd.

JUSTICE A.K. BANERJI, CHAIRMAN AND C.R. DAS, MEMBER

COMPANY PETITION NO. 8/111/CLB/WR/2001

MAY 8, 2002

Section 111 of the Companies Act, 1956 - Transfer of shares - Power to refuse registration and appeal against refusal - Whether refusal to register can be considered to be due to sufficient cause only when a company refuses to register transfer of shares on grounds that transfer is in violation of provisions of the Securities and Exchange Board

of India Act, 1992 or Regulations made thereunder, or provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 or any other law for time being in force - Held, yes - Whether minor typographical omission can be said to be sufficient cause for refusal by company to register transfer of shares in name of petitioners - Held, no

[2002] 38 SCL 207 (CLB - CHENNAI)COMPANY LAW BOARD, SOUTHERN REGION BENCH, CHENNAI

Ashok Kumar Puri

v.

Vision Technology India Ltd.

S. BALASUBRAMANIAN, VICE CHAIRMAN AND K.K. BALU, MEMBERC.P. NOS. 4/111A/SRB AND 67/163/SRB/2001DECEMBER 10, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Company did not effect transfer of shares in petitioner’s name on ground that ownership of shares was in dispute - Civil Court had categorically given a finding that petitioner purchased impugned shares which were lodged for transfer and, therefore, vacated injunction order - Though appeal was pending, there had been no order of stay against registration of transfer in favour of petitioner - Whether company should register transfer of shares in favour of petitioner, subject to ultimate decision of High Court in pending appeal proceedings - Held, yes

[2002] 35 SCL 292 (CLB - MUM.)


Dinesh Gandhi & Mrs. Bakula Gandhi

v.

Bayer Diagnostics India Ltd.

A.K. BANERJI, CHAIRMAN AND C.R. DAS, MEMBER

CP NO. 20 OF 1999

AUGUST 6, 2001

Section 111A, read with section 108 of the Companies Act, 1956 - Rectification of register of member on transfer - Respondent-company duly intimated stock exchange and shareholders regarding change of company’s name - After getting approval of stock exchange company cancelled old share certificates from cut off date 14-8-1995 and issued new shares in changed name of company - Respondent-company also sent new share certificates to respondent 2 and his name stood recorded in register in September 1995 itself - Petitioners, carrying on investment activities, claimed that they purchased shares from respondent 2 in 1991 but could not lodge same for transfer as certificates were misplaced and it was only in October 1995 those were lodged with respondent-company - Respondent-company requested petitioners to submit new share certificates issued - However, it was only in January 1999 petitioner filed instant petition seeking direction for transfer of shares - Whether where no

proper explanation had been given as to why petitioners waited for more than 3 years even after respondent-company returned documents, specifically in view that petitioner were not lay investors, it was to be held that instant petition suffered from laches on part of petitioner - Held, yes - Whether since instant case did not involve issue of duplicate shares, it was not obligatory on part of respondent-company to issue new share certificates to existing/prospective shareholders only after collecting back old share certificates - Held, yes - Whether since respondent-company had not refused to record petitioners’ names but only required that proper and valid transfer documents be filed, it could not be said that it had acted without sufficient cause and was not legally justified in refusing to accept share certificates, same being bad delivery - Held, yes

[2002] 38 SCL 298 (CLB - MUM.)COMPANY LAW BOARD, WESTERN REGION BENCH, MUMBAI

Bharat K. Gajjar

v.

Castrol India Ltd.

A.K. BANERJI, CHAIRMAN AND C.R. DAS, MEMBERCOMPANY PETITION NO. 13 OF 2000OCTOBER 31, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares and debentures - Rectification of register on - Petitioner, in a suit, had prayed for return of share certificate in respect of shares of respondent-company held in his name and for a declaration that share transfer From submitted by second respondent (N.S.) was forged and should not be acted upon - In terms of court’s decision, shares certificates were returned on 30-1-1989 but continued to show name of second respondent as registered holder - Petitioner woke up to this fact after 5½ years - After a further unexplained delay of 5½ years, instant petition for rectification of register was filed - Whether if petitioners were to file a suit in civil court praying for rectification of register of members, suit would be hopelessly time-barred as cause of action to file a suit for rectification arose on receipt of letter dated 30-1-1989 from respondent- company enclosing share certificates or at latest when petitioners discovered said fact - Held, yes - Whether it would have been justified to dismiss petition since what could not have been availed of in a suit could not be availed of in petition under section 111A - Held, yes - Whether, however, in view of fact that respondent-company had no objection in rectifying register in respect of said shares, respondent-company was to rectify its register of members accordingly - Held, yes

[2002] 38 SCL 544 (CLB - KOL.)COMPANY LAW BOARD, EASTERN REGION BENCH KOLKATA

Calcutta Security Printers Ltd.

v.

Calcutta Phototype Co. Ltd.

A.K. BANERJI, CHAIRMAN AND C.R. DAS, MEMBERCP NO. 266 (111A)/(ERB) OF 2001FEBRUARY 28, 2002

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Managing director of petitioner-company DB and that of respondent-company, VB, were brothers - DB owned 3600 shares of respondent-company - It was alleged by respondent that through a letter ‘DB’ requested respondent-company to issue duplicate shares as original shares were untraceable - On same day, through a board meeting a resolution was passed and duplicate shares were issued - ‘VB’, managing director of respondent-company, allegedly hand-delivered

above shares and got a receipt - Thereafter, by a letter petitioner sent 3,450 shares as a gift to VB’s two daughters - It was stated in said letter that these gifts were made through board’s resolution - Interestingly all three correspondences from DB, i.e., letter requesting duplicate share, receipt of duplicate share and gift letter, were typed out on a manual typewriter on a plain sheet of paper, with DB’s signatures under a rubber stamp in name of petitioner-company - DB alleged that it was a fraud by VB to acquire petitioner’s shares, that he had not requested for any duplicate shares and that he had still got original shares with him - Whether since respondent had not proved that gift had been approved by board’s resolution of petitioner-company and since respondent had not answered a question as to how could board of directors of respondent-company had approved issue of duplicate shares on same day on which request was made and also since alleged gift was not backed by any ‘instrument’, it was clear that transfer of 3,450 shares was made by respondent-company at back of petitioner, by using skillfully created signatures to demand duplicate shares first and thereafter to have them transferred - Held, yes - Whether, therefore, respondent-company was to be directed to cancel impugned transfer of 3,450 shares and restore said shares to petitioner, from date on which impugned transfer was made - Held, yes

[2002] 35 SCL 312 (CLB - KOL.)

Company Law Board, Eastern Region Bench, Kolkata

Shyama Prasad Murarka

v.

Calcutta Stock Exchange Association Ltd.

S. BALASUBRAMANIAN, VICE CHAIRMAN AND C.R. DAS, MEMBER

COMPANY PETITION NO. 3(111A)/ERB/1998

SEPTEMBER 13, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register of member on transfer - Petitioner purchased share of respondent - Stock Exchange, paid consideration money to transferor and lodged same along with necessary documents, with company (stock exchange) for registration of transfer - After about 6 months from date of lodgement, company repeatedly requested petitioner to pay consideration money for effecting transfer - On his protest, application for transfer was rejected - Petitioner approached Company Law Board - Company claimed that petition was not maintainable and further that sale was never effected since there was an existing lien on share in question at time of sale on account of transferor being indebted to company - Whether contention that though company slept over request for transfer for two months, transferee had no remedy under section 111A was acceptable - Held, no - Whether claim cases pending against transferor prior to date of transfer could defeat instant transfer when cases were decided against transferor after date of sale - Held, no - Whether lien over share on account of member’s debts and liabilities as alleged by company could arise only in case company had no prior notice of an equitable interest already credited out of share - Held, yes - Whether in view of prior equitable interest of petitioner arising herein, company had no lien and could not claim any lien over share under article 39 of its articles of association to defeat rights of petitioner - Held, yes - Whether principle of caveat emptor had no application in instant case and company’s refusal was opposed to articles of association - Held, yes

[2002] 37 SCL 789 (CLB - CHENNAI)

COMPANY LAW BOARD, SOUTHERN REGION BENCH, CHENNAI

S. Sivakumar

v.

Cirlacs Data Systems Ltd.

S. BALASUBRAMANIAN, VICE-CHAIRMAN AND K.K. BALU, MEMBER

C.P. NO. 12/111A/SRB OF 2000

JULY 31, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Company had transferred impugned shares in favour of second respondent - Petitioner, claimed that he was owner of these shares and transfer instrument contained his forged signature - During pendency of proceeding, he also filed a criminal case alleging forging of his signature - Criminal case was still pending - Whether in a summary proceeding under section 111A it was not possible for CLB to make any roving enquiry into genuineness of signature and such matter was to be left to criminal court - Held, yes - Whether it was only to be directed that in case criminal court came to a finding that signature of petitioner on instrument of transfer was a forged one, company should re-enter name of petitioner on register of members and deliver the share certificates to him - Held, yes

[2002] 40 SCL 321 (CLB - MUM.)


Col. Gurnam Singh Gujral

v.

Indian Hotels Co. Ltd.


COMPANY PETITION NO. 11/111A/CLB/WR OF 2002

JUNE 10, 2002

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Petitioner acquired certain number of shares from a broker and lodged same with company for transfer in his name - Company not being aware of notice that said shares were stolen shares, in good faith, transferred same in petitioner’s name - Subsequently, one ‘K’ informed company that 150 shares which were lodged by him for transfer had not been returned duly transferred in his name - Company, on verification, noticed that transfer of said 150 shares had been effected in petitioner’s name on basis of forged transfer deeds and, therefore, restored ownership in name of ‘K’ - Petitioner claimed relief under section 111A, in instant petition, without making ‘K’ and brokers involved in transaction parties to petition - Whether ‘K’ was entitled to have his say in matter and without impleading these parties, petition was bad in law for non-joinder of necessary party - Held, yes - Whether petitioner’s letter, to BSE, wherein he acknowledged that said 150 shares were stolen and sold by BSE broker and that he should be paid out of investors’ protection fund, amounted to an admission on part of petitioner that impugned shares were stolen - Held,

yes - Whether petition was not maintainable under section 111A since said section contemplates rectification of register on transfer and such was not case in instant petition - Held, yes - Whether also petition was barred by limitation as same had been filed after over two years from date of rectification of register restoring name of ‘K’ - Held, yes

[2002] 40 SCL 364 (CLB - N. DELHI)

COMPANY LAW BOARD, NORTHERN REGION BENCH, NEW DELHI

Dr. Mahesh Batra

v.

Gajaraj Beverages (P.) Ltd.

JUSTICE A.K. BANERJI, CHAIRMAN AND S. BALASUBRAMANIAN, VICE CHAIRMAN

COMPANY PETITION NOS. 19 TO 22/111/99 AND 6/111/2000

SEPTEMBER 6, 2002

Section 111 of the Companies Act, 1956 - Transfer of shares - Power to refuse registration and appeal against registration - Instant petitions were filed by petitioner for rectification of register of member of respondent-company and for restoration of petitioner’s name therein on ground that respondent in an illegal and unauthorised manner, without specific authority or consent from petitioner, transferred all shares of petitioner by way of mutual exchange with shares of ‘F’ which was a defunct group company - Respondent filed xerox copy of minute book’s extract alleging that petitioner was present and attended meeting when transfers were discussed and that transfers were made on petitioner’s request through letter written to chairman - Respondent also filed xerox copy of statement of petitioner’s mother made before police wherein she stated that transfers were effected on petitioner’s wishes and denied petitioner’s allegation - Petitioner disputed all these documents as forged and fabricated relying on forensic laboratory report filed in criminal proceedings which were still pending for adjudication - Whether while exercising summary jurisdiction under section 111, CLB could be called upon to decide such complicated questions where allegations of fraud, fabrication of documents and forgery were alleged and dispute was based on question of title and denial of transactions - Held, no - Whether such disputes could only be decided by a civil court - Held, yes - Whether, therefore, in facts and circumstances of case, petitions were to be dismissed with observation that if so advised, parties might get their disputes adjudicated before an appropriate forum - Held, yes

[2002] 40 SCL 356 (CLB - MUM.)


Rajesh Ahuja

v.

Reliance Industries Ltd.


COMPANY PETITION NO. 3/111A/CLB/WR/2002

AUGUST 13, 2002

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Petitioner purchased certain shares of respondent-company and lodged original share certificate along with duly executed transfer deeds with respondent-company - Respondent-company informed petitioner that it did not receive share certificate and that shares were transferred to third parties on forged transfer deeds - Petitioner obtained a decree declaring himself owner of impugned shares - Parties, in whose names disputed shares were registered, either failed to respond to instant petition or had no objection in effecting transfer in petitioner’s name - Whether company was to be directed to cancel disputed shares and reissue same to petitioner and register them in petitioner’s name and pay all consequential benefits like bonus, dividend, etc. - Held, yes

[2002] 40 SCL 327 (CLB - MUM.)


A. Nitin Capital Services Ltd.

v.

Larsen & Toubro Ltd.


COMPANY PETITION NOS. 43 TO 49/111A/CLB/WR/1999 AND NOS. 9 TO 11/111A/CLB/WR/2000

AUGUST 13, 2002

Section 111A, read with section 108, of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Petitioner sent duly executed and stamped instrument of transfer for 1640 shares to respondent-company along with original share certificates which was returned on ground that signature of transferor was not tallying - Petitioner resubmitted set of instrument of transfer - However, same was lost in transit - Company received objection for effecting transfer in respect of 600 shares from registered holders - Original share certificates were still lying with respondent - Whether respondent-company was to be directed to transfer those shares for which no objection was received in name of petitioner within 30 days from date of receipt of order with all consequential benefits accruing from said shares and rectify Register of Members accordingly - Held, yes - Whether in respect of disputed shares, petitioner could take such action as might be legally advised - Held, yes

[2002] 38 SCL 154 (CLB - CAL.)COMPANY LAW BOARD, EASTERN REGION BENCH, CALCUTTA

Debasish Dutta

v.

B.G. Somadder & Sons (P.) Ltd.

S. BALASUBRAMANIAN, VICE CHAIRMAN AND C.R. DAS, MEMBERCOMPANY PETITION NO. 254(111)/ERB OF 2001FEBRUARY 15, 2002

Section 111, read with section 186, of the Companies Act, 1956 - Transfer of shares - Power to refuse registration and appeal against refusal - Petitioner had requested company for transmission of shares held in his deceased father’s name, along with copy of death certificate - Company did not seem to have replied this letter at all - Whether since company had not sent any intimation in regard to transmission of shares within a period of two

months, petitioner had right to apply to CLB for relief - Held, yes - Whether since company had not been able to establish as to why petitioner could not be considered as a legal heir entitled to get shares transmitted in his favour and there was no other claim in respect of these shares, it was appropriate that these shares should be transmitted in favour of petitioner - Held, yes - Whether transmission of shares could be left hanging on plea of company that it had only one director - Held, no

[2002] 38 SCL 277 (CLB - KOL.)COMPANY LAW BOARD, EASTERN REGION BENCH, KOLKATA

Deccan Cements Ltd.

v.

Geekay Exim (India) Ltd.

A.K. BANERJI, CHAIRMAN AND C.R. DAS, MEMBERCOMPANY PETITION NO. 21 (111A)/ERB/2001APRIL 8, 2002

Section 111A of the Companies Act, 1956 - Transfer of shares and debentures - Rectification of register on transfer - Petitioner advanced Inter Corporate Deposits (ICD) to first respondent-company - Second and third respondents pledged a number of shares of first respondent-company as collateral security deposits against said ICD - First respondent-company defaulted in repayment upon which petitioner forwarded share certificate together with instrument of transfer to first respondent-company for effecting transfer in name of petitioner - Whether, petitioner being a pledgee was entitled to invoke proviso to sub-section (2) of section 111A - Held, yes - Whether, in instant case, reason for refusal by company to register transfer of shares in name of petitioner did not fall within meaning of sufficient cause - Held, yes - Whether pendency of criminal proceedings filed by petitioner under section 138 of the Negotiable Instruments Act for recovery of money were, in no way, concerned with transfer of shares under section 111A and could not be deemed to be parallel proceedings - Held, yes - Whether, therefore, shares were to be transferred in name of petitioner - Held, yes

[2002] 40 SCL 766 (CLB-Mum.)

Company Law Board, Western Region Bench, Mumbai

Pushpaben Kalyanbhai Vasa

v.

Grasim Industries Ltd.

A.K. Banerji, Chairman and C.R. Das, Member

Company Petition No. 5/111A/CLB/WR/2002

July 18, 2002

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Subsequent to loss of share certificates, petitioner requested respondent-company to issue duplicate share certificates in lieu thereof - Company, however, informed petitioner that aforesaid shares had been lodged by respondent No. 2 for transfer in his name - Further, out of 728 shares reported as lost, duplicate share certificates had already been issued by company for 578 shares except for impugned 150 shares - Whether under section 111A CLB has jurisdiction to

adjudicate only when there is a refusal of transfer of shares on sufficient cause and/or pass an order for rectification of register of members on transfer and in instant case none of above two criteria existed - Held, yes - Whether CLB has no power to pass any order under section 111A for issue of duplicate share certificates - Held, yes - Whether, therefore, petition seeking a direction to respondent- company for issue of duplicate share certificates was to be dismissed - Held, yes

[2002] 40 SCL 770 (CLB-MUM.)


Gopalkrishna Sengupta

v.

Hindustan Construction Co. Ltd.


C.A. NO. 29/111A/CLB/WR/1990

MAY 17, 2002

Section 111 of the Companies Act, 1956 - Transfer of shares - Power to refuse registration and appeal against refusal - Whether CLB, while exercising its power under section 111, has mainly to see whether refusal to register name of transferee in members’ share register was for sufficient cause and it cannot act as an investigation authority to investigate allegation raised in affidavit filed by respondent-company contesting petition under section 111 or to investigate whether signature of transferor and transferee on transfer deed were forged or fabricated and same cannot be determined in summary proceedings before CLB - Held, yes - Whether petition made by petitioner to CLB to hold that affidavit filed by respondent-company was false and fictitious could be allowed - Held, no


Bhuwaneshwar Nath Nigam

v.


JUSTICE A.K. BANERJI, CHAIRMAN AND S. BALASUBRAMANIAN, VICE CHAIRMANCP NO. 35/111A/CLB/WR/99JANUARY 23, 2002

Section 111 of the Companies Act, 1956 - Transfer of shares - Power to refuse registration and appeal against refusal - Petitioner filed petition under section 111 alleging that his shares had been transferred fraudulently on basis of forged signature and fraudulent attestation of same and, thus, transfer was void ab initio - Whether where there was some minor difference in signature of transferor on transfer deeds pertaining to shares and a warning was issued as required under clause 12A(1)(i) of the Listing Agreement but transferor did not respond to said notice, respondent- company could not be legally blamed for transferring said shares in names of transferees - Held, yes - Whether where there was no difference in signature and shares certificates were accompanied by valid transfer

deeds duly stamped and executed on behalf of transferor as per provisions of section 108 of the Act and signatures of transferor were attested by proper authority, respondent-company was justified in transferring same without any further intimation to petitioner - Held, yes - Whether where shares had been dematerialised and that apart respondent-company had also furnished names and addresses of concerned transferees including NSDL to petitioner but despite same petitioner had not initiated any steps to implead them as parties to proceedings, petitioner was justified in alleging that transfer was void - Held, no

Circulars and Notifications - Circular No. 3/93 (No. 3/4/92 CLC. V, dated 22-3-1993

[2002] 37 SCL 830 (CLB - N. DELHI)

COMPANY LAW BOARD NORTHERN REGION BENCH, NEW DELHI

Abhipra Capital Ltd.

v.

JCT Electronics Ltd.

A.K. BANERJI, CHAIRMAN AND S. BALASUBRAMANIAN, VICE-CHAIRMAN

C.P. NO. 18/111/1999

MARCH 4, 2002

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Petitioner bought certain shares of respondent-company - When shares were lodged with company for rectification of register, company returned same on account of difference in signatures of transfer or - Petitioner addressed original shareholder for execution of fresh transfer deed - But, request letter returned undelivered - Original shareholder was made a party to instant petition but she did not file any reply - Whether, since original holder had not so far sought for any duplicate certificates or there was no other claimant in respect of these shares and original share certificates in respect of impugned shares were with petitioner, it would be appropriate to direct that shares were to be registered in name of petitioner - Held, yes


Jitendra J. Bhabhera

v.

Forbes Gokak Ltd.

A.K. BANERJI, CHAIRMAN AND C.R. DAS, MEMBERCOMPANY PETITION NO. 50 OF 2000JUNE 7, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares and debentures - Rectification of register on - Petitioner sent shares certificates along with duly executed transfer deed to respondent-company for transfer in his name - Consignment was lost in transit - Petitioner filed a suit whereby petitioner was held to be owner of said shares and company was restrained to transfer said shares in name of any other person without petitioner’s consent - Company had already transferred said shares in second respondent’s name prior to said restraining order - Whether respondent-company was to be directed to rectify register of members recording petitioner’s name in place of

respondent No. 2 and also to pay all consequential benefits including dividend to petitioner for those shares - Held, yes

[2002] 40 SCL 679 (CLB-MUM.)


Kosha Chandravadan Parikh

v.

Krishna Mingranite Ltd.


COMPANY PETITION NOS. 34, 37 AND 38 OF 2000

JUNE 7, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Company refused to transfer shares on ground that signature of transferor differed from signature recorded with company and transfer deed bore inadequate stamps and that petition under section 111A was time-barred - Whether signing of transfer deed by petitioner as one of partners of firm was legal as shares could not be held in name of partnership firm - Held, yes - Whether transfer of shares can be refused only on grounds as stipulated in sub-section (3) of section 111A and on no other ground transfer of shares can be refused - Held, yes - Whether, on facts, there was no merit in pleas of respondent-company and registration of shares in question was to be ordered - Held, yes


Mani Credit Capital (P.) Ltd.

v.


A.K. BANERJI, CHAIRMAN AND C.R. DAS, MEMBERCOMPANY PETITION NO. 42 OF 2000OCTOBER 31, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - In March, 1997 petitioner advanced money through ‘P-1’ to company ‘R-2’ for three months - ‘R-2’ forwarded 12,500 shares of company ‘R-1’ stood in name of its sister concern ‘R-3’ as security - On 2-5-1997, ‘P-1’ exercising available option, lodged impugned shares for transfer in its name subject to an obligation to retransfer said shares, if loan was repaid - Share transfer agent in view of order of High Court dated 22-5-1997 for winding up of ‘R-2’ expressed its inability to transfer shares - On other hand, Provisional Administrator was also appointed by ‘R-3’ - Subsequently, due date of repayment had expired - Instant petition for transfer of shares was filed - In meantime High Court sanctioned a scheme proposed by Provisional Administrator of ‘R-3’ which provided that securities lodged prior to 21-5-1997 did not require certification for transfer - Further, company ‘R-1’ acknowledged petitioner’s ownership over impugned shares - Whether since impugned shares were lodged prior to cut off date as stipulated by High Court, no further inquiry or certification was required, provided they were otherwise in order - Held, yes - Whether company ‘R-1’ should have registered transfer of impugned shares in favour of petitioner - Held, yes

[2002] 40 SCL 930 (CLB - MUM.)


Amarjeet Singh

v.


S. BALASUBRAMANIAN, VICE-CHAIRMAN AND C.R. DAS, MEMBER

COMPANY PETITION NO. 2/111A/CLB/WR/2002

AUGUST 13, 2002]

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Petitioner sent certain share certificates to respondent-company for consolidation/transfer - Petitioner was intimated that said shares had been transferred in name of ‘C’ - Petitioner approached CLB after a lapse of more than five years from date of intimation - Whether case was hopelessly time-barred and, therefore, deserved to be dismissed on ground of limitation alone - Held, yes

[2002] 35 SCL 444 (CLB - KOL.)

COMPANY LAW BOARD, EASTERN REGION BENCH, KOLKATA

McDowell & Co. Ltd.

v.

Shaw Wallace & Co. Ltd.

S. BALASUBRAMANIAN, VICE-CHAIRMAN AND C.R. DAS, MEMBER

COMPANY PETITION NO. 106 (111A) ERB/2001

SEPTEMBER 13, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on transfer - Respondent-company refused registration of transfer of its equity shares in favour of petitioner on grounds that conduct of petitioner was not bona fide, investment was motivated by ulterior factors and considerations and it was a direct competitor - Petitioner claimed that refusal was without sufficient cause and grounds of refusal were arbitrary, vague, untenable and without any basis in law - Whether grounds of refusal as given by respondent came within ambit of section 111A so as to entitle respondent to refuse registration of transfer of shares in petitioner’s favour - Held, no


Mrs. S. Seetha

v.

Satyam Computer Services Ltd.

S. BALASUBRAMANIAN, VICE CHAIRMAN AND K.K. BALU, MEMBERC.P. NO. 109/113(3)/(SRB)/2000 AND 6/111A/(SRB)/2001JULY 13, 2001

Section 111A, read with section 113, of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Factum of purchase of impugned shares by petitioner was not in dispute - In a letter to earlier holder of these shares written on 31-8-1994, share transfer agent informed that they had received all relevant documents from petitioner - However, company denied to transfer shares in name of petitioner on ground that duplicate shares had already been issued to earlier holder - Whether if duplicate certificate had been issued before 31-8-1994, there was no need for share transfer agent to have issued letter dated 31-8-1994 and no duplicate certificate could have been issued after 31-8-1994, since share transfer agent was in possession of original share certificate as was evident from his letter dated 31-8-1994 - Held, yes - Whether company/transfer agent had acted in a negligent manner - Held, yes - Whether, therefore, petitioner was entitled to have her name entered as owner of impugned shares in register of members and also to bonus shares declared so far subsequent to purchase by petitioner - Held, yes

[2002] 37 SCL 793 (CLB - N. DELHI)

COMPANY LAW BOARD, NORTHERN REGION BENCH, NEW DELHI

Pyariben M. Shah

v.

NIIT Ltd.

A.K. BANERJI, CHAIRMAN AND S. BALASUBRAMANIAN, VICE-CHAIRMAN

C.P. NO. 3/111 OF 2000

JANUARY 17, 2002

Section 111A of the Companies Act, 1956 - Transfers of shares - Rectification of register on - Petitioner’s grievance was that she bought shares of respondent-company and lodged original share certificate in 1995 along with valid transfer deeds with company for transfer of shares in her name, but those were not transferred - However, during pendency of instant petition, company had issued duplicate shares purchased by petitioner and also issued duplicate bonus share on original shares to petitioner - Whether since duplicate shares in question were not recorded in name of petitioner till 15-5-2000, petitioner could not be treated to be a legal holder until shares were registered in her name - Held, yes - Whether, since, name of transferor existed in company’s record as owner of shares till 15-5-2000 bonus shares issued for years 1995 and 1999 was rightly issued by company in name of transferor and if petitioner had any claim pertaining to bonus shares for years 1995 and 1999 issued to transferor in respect of said shares, she could proceed against transferor at appropriate forum - Held, yes

[2002] 35 SCL 424 (CLB - KOL.)


Khurshid Alam

v.

P. Pagnon Co. P. Ltd.


COMPANY PETITION NO. 03(111) ERB/2000

SEPTEMBER 4, 2001

Section 111 of the Companies Act, 1956 - Transfer of shares - Power to refuse registration and appeal against refusal - A shareholder of respondent-company bequeathed entire block of shares held by him to petitioner allegedly through a Will - Other legal heirs accepted said Will and approached company to register transmission of shares in favour of petitioner - On company’s failure to register same, petitioner referred dispute to a religious society, as he belonged to same religion, and also pursued his case with Registrar of Companies and Regional Director but failed - Then he approached CLB - Company alleged that Will was not genuine and board of directors called for a probate or succession certificate - It also claimed that petition before CLB was barred by limitation as society, Registrar and Regional Director could not be construed as court - Whether genuineness of Will could be doubted on ground that it surfaced after a long time, even though none of legal heirs who had been excluded therefrom in respect of shares had raised any such doubt or challenged same - Held, no - Whether board of directors were unjustified in calling for probate or letters of administration when same was not required to be obtained in respect of a Will executed by a mohammaden - Held, yes - Whether in interest of justice, in view of fact that even though proceedings before aforesaid body or authority could not strictly be construed as proceedings before any court yet proceedings were being pursued bona fide, it would be unjustified to dismiss petition on ground of latches or delay - Held, yes - Whether issues involved were so complicated and conduct of petitioner was such that CLB could not use discretionary powers to entertain this petition and adjudicate upon issues involved therein - Held, no - Whether in circumstances, petitioner was heir and had a valid title to those shares standing in his father’s name by operation of law and petition under section 111 was to be allowed - Held, yes

[2002] 37 SCL 651 (CLB-CHENNAI)


Maruti Udyog Ltd.

v.

Pentamedia Graphics Ltd.

S. BALASUBRAMANIAN, VICE CHAIRMAN AND K.K. BALU, MEMBER

C.P. NO. 14/111A/SRB/2001

NOVEMBER 7, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on transfer - One C, Chairman of P Ltd., had deposited share certificates of respondent-company together with signed blank transfer deeds with petitioner-company on account of advances made by petitioner and on C’s failure to pay, petitioner had enforced security by seeking transfer of impugned shares in its favour - Whether apart from grounds mentioned in section 111A, a public company can refuse to register transfer of shares on any other grounds whatsoever - Held, no - Whether mere stop-transfer advice at C’s instance was insufficient cause for refusing to register transfer in respect of impugned shares in petitioner’s favour - Held, yes

Section 82 of the Companies Act, 1956 - Shares - Nature of - Whether unlike other movable goods, in normal commercial practice, when shares are pledged with blank transfer forms, the pledgor has the option of retaining the shares without registering the transfer in his name or getting the shares registered in his name; registering the shares in the name of the pledgor does not in any way constitute a sale requiring notice to be given to the pledgor - Held, yes

[2002] 40 SCL 715 (CLB - KOL.)


R. S. Software (India) Ltd.

v.

G. Ravi

S. BALASUBRAMANIAN, VICE CHAIRMAN AND C.R. DAS MEMBER

COMPANY PETITION NO. 184 (111A) ERB OF 2001

AUGUST 20, 2002

Section 111A, read with section 116, of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Respondent informed petitioner- company about alleged loss of 12,000 shares, claimed to have been bought by him but lost along with duly executed transfer deeds before lodgement for registration of transfer - However, registered shareholders claimed that original shares were still being held by them - In instant petition, company sought following reliefs : (a) direction upon Police Authority to investigate into matter inasmuch as there had been serious attempt being made by respondent making false claim for personations of bona fide shareholders; (b) direction for protecting interest of shareholders and issuance of notice upon respondent; and (c) order for imprisonment as specified under section 116 if contention of respondent was found to be false - Whether CLB has jurisdiction to adjudicate only when there is a refusal for transfer of shares on sufficient cause and/or pass an order for rectification of register of members on transfer - Held, yes - Whether under section 116 CLB has got no power to order for imprisonment of respondent as sought for in petition - Held, yes - Whether, therefore, prayers of petitioner did not fall within provisions of section 111A and, as such, petition was to be dismissed - Held, yes

[2002] 36 SCL 722 (CLB-N. DELHI)

COMPANY LAW BOARD NORTHERN REGION BENCH, NEW DELHI

Indglobal Investment & Finance Ltd.

v.

Rajasthan Breweries Ltd.

A.K. BANERJI, J., CHAIRMAN AND S. BALASUBRAMANIAN, VICE-CHAIRMAN

COMPANY PETITION NO. 8/11/2000

MAY 3, 2001

Section 111A, read alongwith section 41, of the Companies Act, 1956 - Transfer of shares - Rectification of register on transfer - Petitioner-company lent some money to respondent-company to be repaid with interest over a period of time - Amount was not repaid but shares were allotted in lieu thereof - There was, however, no written request, or written agreement, for allotment of shares to petitioner, as required under section 41 - Petitioner sought rectification of register on ground that allotment was invalid in law - Whether non-compliance with provisions of law, i.e., section 41, was a sufficient cause to order rectification of register of members - Held, yes - Whether company was to be directed to rectify register of members by deleting names of petitioner and other two companies in respect of shares - Held, yes


Sanjeev Joy

v.

Pereira & Roche (P.) Ltd.

S. BALASUBRAMANIAN, VICE-CHAIRMAN AND K.K. BALU, MEMBERCP NO. 11/111/SRB/2000 AND C.P. NO. 1/111/SRB/2001DECEMBER 10, 2001

Section 111 of the Companies Act, 1956 - Transfer of shares - Power to refuse registration and appeal against refusal - Original shareholder died leaving behind him a registered will bequeathing 25 shares in favour of grandchildren - Will got probated in competent court - Wife of deceased’s brother submitted that she purchased 19 equity shares forming part of impugned 25 shares from deceased - Whether since probate duly granted by competent court conclusively established validity of Will, until it was revoked, deceased’s grandchildren would be entitled to impugned shares subject to outcome of probate revocation proceedings initiated before civil court by wife of deceased’s brother - Held, yes


Sanmukhlal Rangildas Ghael

v.

Reliance Petroleum Ltd.

C.R. MEHTA AND C.R. DAS, MEMBERCOMPANY PETITION NOS. 16 TO 33 OF 2000JANUARY 18, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares and debentures - Rectification of register on transfer - Company issued triple option convertible debentures - One of options available to debenture holders was entitlement of two freely tradeable warrants against each debenture - Warrant holders had a right to get shares allotted by exercising right as and when called upon to do so by company on payment of amount due on such shares and, in case, warrant holders did not exercise their option for allotment of shares, their right was extinguishable - Petitioner- warrant holders did not exercise their rights for shares at price offered by company - Therefore, Board of Directors allotted shares to promoters at said price - Petitioners filed petitions for issuance of direction to company to allot in their favour shares in lieu of tradeable warrants held by them on payment of consideration along with interest - Whether provisions of section 111A were not applicable in present case inasmuch as relief sought for was not in respect of transfer of any share or debenture but in respect of tradeable warrants which were neither shares nor debentures - Held, yes - Whether since petitioners had not subscribed for shares, question of allotment of any shares or inclusion of their names in register of members did not arise and, hence, question of rectification of register of members did not arise - Held, yes


Sham Sunder Kukreja

v.


A.K. BANERJI, CHAIRMAN AND C.R. DAS, MEMBERJUNE 7, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Petitioner, being second named joint holder of impugned shares, sent share certificate to respondent-company for purpose of splitting said share certificate - Despite receipt of share certificate and repeated letters from petitioner, company did not send back share certificate - Further, inspite of stop transfer notice from petitioner, impugned shares were transferred in second respondent’s name - Whether second holder of impugned shares had all rights as an investor to move petition and as such non inclusion of first joint holder was not fatal to instant petition - Held, yes - Whether it was crystal clear that fraudulent means were adopted in transferring impugned shares - Held, yes - Whether respondent-company had to accept responsibility for loss of share certificate since same was lost from its custody - Held, yes - Whether registration of transfer in favour of second respondent was an act of negligence on part of company since transfer was registered despite stop transfer instruction from petitioner - Held, yes - Whether, however, in view of fact that dematerialisation of shares of company had taken place and identity of impugned shares had been lost, it was proper to direct respondent-company to pay price of impugned shares instead of directing it to rectify register of members - Held, yes


Sourabh H. Bora

v.

Raasi Cement Ltd.

S. BALASUBRAMANIAN, VICE CHAIRMAN AND K.K. BALU, MEMBERC.P. NO. 10/111 (SRB)/1999JULY 12, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Petitioner purchased shares of company from second and third respondents - Company refused to register petitioner’s name as various proceedings were pending between these parties - In meantime a division of a company was taken over by another company who refused to acquire impugned shares in view of these disputes - Before Civil Court these parties entered into compromise and other company agreed to purchase all these shares - Whether company should register those shares in name of petitioner as agreed upon by parties in compromise and thereafter other company would purchase all these shares both from petitioner and respondents - Held, yes


Xavier Joseph

v.

Indo-Scottish Brand (P.) Ltd.

S. BALASUBRAMANIAN, VICE CHAIRMAN AND K.K. BALU, MEMBERC.P. NO. 8/111A (SRB)/1999NOVEMBER 9, 2001

Section 111 of the Companies Act, 1956 - Transfer of shares - Power to refuse registration and appeal against refusal - It was alleged that in past, petitioner, son of a shareholder, entered into factory premises and vandalised company properties - Board of directors decided that no new shareholder, even close relatives of existing shareholders, would be admitted as members - Further, articles of association and regulations of company provided discretion to Board in case of registration of transfer/transmission of shares - On death of petitioner’s father company declined to effect transfer of shares in favour of petitioner, but offered to pay value of shares - Whether where a company is a private limited company having small number of shareholders, and if admission of a member would result in disharmony among members, refusal to register transmission of shares can be considered to be bona fide and in interest of company - Held, yes


Zurich India Mutual Fund

v.


S. BALASUBRAMANIAN, VICE CHAIRMAN AND K.K. BALU, MEMBERC.P. NO. 12/111A/SRB/2001DECEMBER 10, 2001

Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - In respect of 300 shares lodged by petitioner for transfer in their name, company intimated petitioner that duplicate shares had already been issued against these shares on request of registered holders - Company had given back these shares as a bad delivery after limitation period was over - Whether company could be directed to register transfer of these shares - Held, no - Regarding another 200 shares, company claimed that shares certificates were not sent to them - There was no evidence to show that petitioner had actually sent or delivered shares certificates to company - Whether it could be conclusively held that it was company’s failure to register transfer of impugned shares in petitioner’s name - Held, no

2. MEMORANDUM OF ASSOCIATION

[2002] 39 SCL 323 (CLB - CHENNAI)

COMPANY LAW BOARD SOUTHERN REGION BENCH, CHENNAI

Ishita Properties Ltd., In re

K.K. BALU, MEMBER

COMPANY APPLICATION NO. 222/18/SRB/2002

AUGUST 9, 2002

Section 18 of the Companies Act, 1956 - Memorandum of association - Alteration to be registered within three months - CLB made order on 16-5-2001 confirming transfer of registered office from State of Karnataka to NCT of Delhi - Order of CLB, which was required to be filed before Registrar of Companies, NCT of Delhi and Haryana, on or before 16-8-2001, was filed by company only on 3-10-2001 after a delay of one month and 18 days - In normal course, proceedings connected with order dated 16-5-2001 of CLB would have become void and inoperative on expiry of one month from expiry of period of three months mentioned in section 18 - However, in present case, company was faced with a piquant situation - While company could file certified copy of order of CLB with Registrar of Companies, Karnataka, within three months of order of CLB, it failed to do so with Registrar of Companies, NCT of Delhi and Haryana - Whether against this background and going by true spirit of relevant provisions of Act, mere failure to file a certified copy of order of CLB with Registrar of Companies to whose State registered office was so shifted, could not vitiate proceedings connected with order dated 16-5-2001 of CLB - Held, yes

3. ISSUE OF CERTIFICATE OF SHARES


Smt. Susheela Ostwal

v.


K.K. BALU, MEMBERCOMPANY PETITION NO. 387/113(3)/SRB/2001DECEMBER 10, 2001

Section 113 of the Companies Act, 1956 - Issue of certificate of shares - Limitation of - Petitioner was holder of 100 shares covered under impugned share certificate - Company had announced bonus shares but had not issued same to petitioner - One ‘K’ filed civil suit as well as appeal before High Court claiming to be purchaser of original 100 shares and sent legal communications to company not to issue bonus shares in petitioner’s name until issue was decided by High Court in appeal filed by him - Subsequently, appeal was dismissed by High Court - Whether company should issue bonus shares in favour of petitioner - Held, yes

4. COMPANY DEPOSITS

[2002] 38 SCL 117 (CLB.- MUM.)COMPANY LAW BOARD, WESTERN REGION BENCH, MUMBAI

BCC Finance Ltd., In re

C.R. DAS, MEMBERCOMPANY APPLICATION NO. 2762/45 QA (2)/CLB/WR/2001MARCH 28, 2002

Section 58A of the Companies Act, 1956 - Public deposits - Whether applicant’s prayer seeking direction to company to make repayment of deposits held by applicant in company was liable to fail where premature payment had already been made by company to concerned parties as per applicant’s instructions contained on reverse side of duly discharged FDRs - Held, yes

[2002] 36 SCL 330 (CLB - CHENNAI)


Smt. Pushpa Singh

v.

BPL Limited

K.K. BALU, MEMBER

C.A. NO. BPL 18/58A(9)/SRB/2001

DECEMBER 21, 2001

Section 58A of the Companies Act, 1956 - Company Deposits - Applicant had made a fixed deposit with company - Company did not pay deposit amount which together with interest thereon on ground that it had appropriated same towards dues of S, a partnership firm, in which applicant was a partner - S was dealer for products manufactured by company and consequent upon termination of dealership agreement, company had filed a suit for recovery of certain dues of ‘S’ and appropriated deposit of applicant towards part of suit claim - Whether applicant could have no remedy before Company Law Board in view of facts that a civil suit which was prior in time was pending for adjudication, deposit amount was appropriated before its maturity and instant application was made after more than five years of appropriation - Held, yes

[2002] 40 SCL 346 (CLB - MUM.)


Cable Corpn. of India Ltd., In re.

C.R. DAS, MEMBER

APPLICATION NO. EXTENSION/CABLE/58A(9)/CLB/WR/2002

AUGUST 9, 2002

Section 58A of the Companies Act, 1956 - Public deposits - CLB granted permission to company for repayment of deposits in a phased manner over a period of 4½ years - After one year company filed an affidavit affirming that it could not make repayment of entire amount of deposits towards first instalment due to acute shortage of funds and that it had been trying its best to infuse funds into its operation through sale of its surplus lands - Company prayed for extension of time for at least 9 months for payment of first instalment and further affirmed that it would not seek further extension of time in repayment of remaining instalments - Whether company’s request was to be granted - Held, yes

[2002] 40 SCL 720 (CLB - CHENNAI)


Girija Smelters Ltd.

v.

Saraswathi Finance Corpn.

K.K. BALU, MEMBER

C.A. NO. 22 OF 2002 AND C.A. NO. GSL.1/58A(9)/SRB/2001

JULY 31, 2002

Section 58A of the Companies Act, 1956, read with rules 3, 4, 4A and 6 of Companies (Acceptance of Deposit) Rules, 1975 - Public deposits - Company had neither published advertisement under Rule 4 inviting deposits from public nor filed any statement under Rule 4A - Copies of receipts were not in accordance with Rule 6 - Receipts and conformation of account from books of company showed that monies advanced to company were in nature of loans repayable on demand - Whether on failure to comply with statutory requirements monies advanced could not be considered as deposits for purpose of section 58A - Held, yes - Whether, as a result, such depositors could not seek intervention of CLB for repayment of amounts so advanced - Held, yes

[2002] 36 SCL 533 (CLB - CHENNAI)


V. Srinivas

v.

Machines & Machine Tools (P.) Ltd.

K.K. BALU, MEMBER

C.A. NO. MMT 1-2/58A(9)/SRB/2001

NOVEMBER 16, 2001

Section 58A of the Companies Act, 1956, read with rule 2 and rule 3 of the Companies (Acceptance of Deposit) Rules, 1975 - Public deposits - Applicants had lent to respondent-company amount by way of unsecured loan, which was repayable with interest at rate of 18 per cent per annum within one month from date of demand made by applicants - Company failed to repay principal amount and interest in spite of repeated demand and legal notice - Applicants claimed such unsecured loan to be ‘deposits’ for purpose of section 58A by virtue of rule 2(b) of Companies (Acceptance of Deposits) Rules and hence application was filed under section 58A on account of that

non-repayment - Whether in order to attract section 58A, it is required to be seen whether a deposit was invited or accepted by company from public or from its members in accordance with Companies (Acceptance of Deposits) Rules - Held, yes - Whether in a particular case, loan may include deposit but every loan is not a deposit - Held, yes - Whether since company had neither furnished to applicants receipts for amounts received by it in manner prescribed under rule 6 and unsecured loans extended by applicants to company did not satisfy statutory requirements, unsecured loans in instant case could not be said to be ‘deposit’ for purpose of section 58A - Held, yes

[2002] 40 SCL 939 (CLB - Chennai)


Manipal Finance Corpn. Ltd., In re

K.K. BALU, MEMBER

C.A. NOS. 152 and 153 (SRB) OF 2002

JULY 3, 2002

Section 58A of the Companies Act, 1956, read with section 45QA of the Reserve Bank of India Act, 1934 - Public deposits - Whether activities of non-banking financial companies accepting deposits from public are excluded from purview of section 58A and these activities are regulated by provisions of Chapter IIIB of RBI Act, 1934 - Held, yes - Whether, therefore, application to CLB by non-banking financial companies seeking sanction of scheme for repayment of deposits received from public is to be considered under section 45QA of the RBI Act, 1934 - Held, yes

Section 45QA of the Reserve Bank of India Act, 1934 - Public deposits - Whether for seeking sanction of CLB for a scheme to make repayment of all deposits matured and yet to be matured, statute has specifically conferred right to apply to CLB on depositors only and no such application under section 45QA(2) can be made by a company which has not repaid its deposits on date(s) of maturity - Held, yes

[2002] 35 SCL 717 (CLB - CHENNAI)


Edpuganti Bapanaiah

v.

Nagarjuna Finance Ltd.

K.K. BALU, MEMBER

C.A. NO. 344/634A/SRB/2001 IN C.P. NO. 35 OF 2000

AUGUST 21, 2001

Section 58A of the Companies Act, 1956 - Company deposits - Respondent-company had committed default in repayment of deposits to a large number of depositors and Company Law Board (CLB) had passed order under

section 58A directing company that deposits be repaid together with interest within 36 months from date of maturity at 30 per cent of principal amount with interest thereon during first year, 35 per cent of principal amount with interest during second year and balance of principal amount and interest during third year; all payments were to be made in order of date of maturity of deposits and were to be spread over all months in each year during 2002, 2003 and 2004; company should not have waited till last date of year - Applicant’s deposit matured on 28-4-2001, but company did not pay interest and principal claiming that it was to become due only on 27-4-2002 - Whether in terms of scheme in said order of CLB, company could wait till last date of year and its claim that first instalment became due only on 27-4-2002 was correct - Held, no - Whether provisions of section 634A could be invoked in instant case and orders of CLB could be enforced by it in same manner as if it was a decree made by a Court - Held, yes

5. DEFINITION OF COMPANY SECTION 3

[2002] 38 SCL 131 (CLB. - CHENNAI)COMPANY LAW BOARD, SOUTHERN REGION BENCH, CHENNAI

G. Venkitapathy

v.

Prakathi Spinners (P.) Ltd.

S. BALASUBRAMANIAN, VICE CHAIRMAN AND K.K. BALU, MEMBERCP NO. 18/111/SRB OF 2001FEBRUARY 7, 2002

Section 3 of the Companies Act, 1956 - Company - Definition of - Whether where by Companies (Amendment) Act, 2000, with effect from 14-12-2000, section 3(1)(iii) is inserted prohibiting a private company from inviting or accepting deposits from persons other than its members, directors or their relatives, non-insertion of such prohibition in articles of association of an existing private company would ipso facto change its character into a public company and such company can accept deposits from persons other than its members, directors and their relatives - Held, no

Section 111 of the Companies Act, 1956 - Transfer of shares - Power to refuse registration and appeal against refusal - It was found that number of transferors intimated Board about their intention to sell their shares in favour of company - Board considered same and fixed rate - Board resolved to send communication to all members about intention of transferors - None of existing members was willing to purchase impugned shares - Board advised transferors to sell their shares to any person of their choice and send requisite papers and certificates to give effect to transfer of shares - None challenged acts of Board - Subsequently, Board approved transfer of shares in favour of respondents - Whether since transfer of impugned shares was in accordance with articles of association, it was legal and, therefore, required to be upheld - Held, yes

6. DEBENTURE

[2002] 40 SCL 725 (CLB - CHENNAI)


Deepak Jain

v.

Vijaya Leasing Ltd.

K.K. BALU, MEMBER

C.A. NO. VLL. 1-4/117C/SRB OF 2002 C.A. NO. VCC. 1-3/117C/SRB OF 2002

SEPTEMBER 5, 2002

Section 117C, read with section 58A(9) of the Companies Act, 1956 and section 45QA of the Reserve Bank of India Act, 1934 - Debenture redemption reserve - Creation of - Whether if a company fails on date of maturity to redeem debentures, CLB is empowered to entertain application from debenture-holders - Held, yes - Whether provisions of section 117C are applicable to all debentures whether issued prior to or after insertion of this section with effect from 13-12-2000 - Held, yes

Documents

Company Law Board Cases 2002