TMI Blog2006 (2) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... APPEAL NOS. 942 AND 943 OF 2006 - - - Dated:- 2-2-2006 - S.B. SINHA AND P.K. BALASUBRAMANYAN, JJ. M.N. Krishnamani and Praveen Kumar for the Appellant. Soli J. Sorabjee, K.K. Mani, V.M. Shiva Kumar and Tekraj Vasandi for the Respondent. JUDGMENT S.B. Sinha, J. - Leave granted in both the special leave petitions. 2. These appeals arising out of a common judgment and order dated 30-12-2004 passed by the High Court of Madras in C.M.A. Nos. 3188 and 3223 of 2004, were taken up for hearing together and are being disposed of by this common judgment. 3. The factual matrix of the matter, however, would be noticed from Civil Appeal arising out of S.L.P. (Civil) No. 5260 of 2005. 4. The Appellant herein took a loan of a sum of Rs. 4.5 crores from respondent No. 1 in the year 1996. By way of security, respondent Nos. 2 to 4 pledged 25,92,800 shares in favour of respondent No. 1. Respondent No. 1 on or about 2-1-2001 lodged the sa id share certificate pledged by respondent Nos. 2 to 4 along with the share transfer forms with the appellant for transferring the said shares in its name on the ground that there had been delay in repayment of the said loan. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 108 of the Act are read as a whole, it would be evident that the time specified therein is mandatory in character. It was argued that appellant had dis- cretion in registering the shares in terms of section 108(1C) of the Act and if the same was not done, inter alia, on the ground that the provisions of the Act had not been complied with insofar as the obligations for registration of shares were not complied with within the time stipulated, the Company Law Board and cones- quently the High Court must be held to have committed an error in exercising their jurisdiction. It was submitted that the High Court also erred in distinguishing the decision of this Court in Mannalal Khetan v. Kedar Nath Khetan [1977] 2 SCC 424, inter alia relying on or on the basis of the decision of a learned Single Judge of the Karnataka High Court in Mukundlal Manchanda v. Prakash Roadlines Ltd. [1991] 72 Comp. Cas. 575. 8. It was submitted that the principle of waiver which had been relied upon by the High Court was not available, inasmuch as if on an earlier occasion, the appellant registered 2,99,800 shares in ignorance of law, it cannot be expected to commit the same mistak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered in its own name, the date on which the instrument of transfer relating to such share is executed by it and the instrument of transfer of such form duly completed in all respects is delivered to the company within two months from the date so stamped or endorsed. Section 108(1D) again provides for a non obstante clause whereby the Central Government has been conferred with the power to extend the period mentioned in those sub-sections by further time as it may deem fit, it is of the opinion that it is necessary so to do to avoid hardship in any case. Section 111 empowers the company to refuse registration upon assigning reasons therefor. Sub-section (3) of section 111 provides for an appeal to the Company Law Board against such an order. 12. A company may refuse to register shares for various reasons. In this case, however, the shares being freely transferable refusal for transfer can be made only on limited grounds. Some such grounds may be that the transfer is mala fide or transferee is not a bona fide investor or transfer is not permissible in terms of one or the other provisions of the Articles of Association or the same is otherwise prohibited in law e.g., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir jurisdiction in considerations of justice. It is a well-known fact that often to enforce the law to its letter produces manifest injustice, for frequently equitable and human considerations, and other considerations of a closely related nature, would seem to be of a sufficient calibre to excuse or justify a technical violation of the law." (p. 212) 15. In Mohan Singh v. International Airport Authority of India [1997] 9 SCC 132, this Court observed : "17. The distinction of mandatory compliance or directory effect of the language depends upon the language couched in the statute under consideration and its object, purpose and effect. The distinction reflected in the use of the word shall or may depends on conferment of power. In the present context, may does not always mean may. May is a must for enabling compliance of provision but there are cases in which, for various reasons, as soon as a person who is within the statute is entrusted with the power, it becomes duty to exercise. Where the language of statute creates a duty, the special remedy is prescribed for non-performance of the duty. In Crates on Statute Law (7th Edn.), it is stated that the Court will, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state as to how they would be prejudiced by the act of respondent No. 1 in not filing the application for registration of transfer of shares within the aforementioned period. The appellants have, indisputably, filed suits. In para 10 of the plaint filed by appellant No. 1, in O.S. No. 3742 of 2003, it was categorically stated : ". . .Even though the plaintiff cannot have an objection on the transfer, the plaintiff is concerned about the value at which the second defendant is attempting to transfer the equity shares in its favour. . . ." 19. On their own saying, thus, they were not prejudiced. In fact, they had no objection in registering the shares. The only objection was with regard to the value thereof. It is also not in dispute that they, in fact, registered 2,99,800 pledged shares, although they were also presented after a period of two months without any demur whatsoever. The appellants, therefore, must be held to have waived their right. The pledge of shares is not in dispute. 20. The fact that the appellant had taken a loan of Rs. 4.5 crores is also not in dispute. Furthermore, we are of the opinion that by reason of the impugned judgment no injustice as such has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
