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2018 (10) TMI 1859 - Tri - Companies LawRegistration of transfer of Equity Shares - Section 111 of the Companies Act, 1956 R/ w Section 58 of the Companies Act, 2013 - HELD THAT:- 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 unless proper instrument of transfer in such form as may be prescribed, stamped, dated and executed by or on behalf of the transferor and transferee specifying the name, address and occupation of the transferee has been delivered to the Company by the transferor and the transferee within a period of 60 days from the date of execution along with certificate relating to the securities. 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 amount. The petitioner is admittedly shareholder and Director of the Company. And there are no rival claims by any party with regard to impugned transfer of shares. It is true that the Article 5 of the Articles of Association says that original share certificates has to be enclosed with Share Transfer Form. Since the Transferors themselves have furnished sworn affidavits/ indemnity bonds, as stated supra, by declaring that they have lost original share certificates and the Company was requested to issue Duplicate share certifies directly to the petitioner, as they have sold the shares in question, Company cannot again insist to produce original share certificates in question to effect impugned transfer of shares. The other contentions for refusal that there are several criminal/ civil cases filed by the petitioner and he is not attending the Board Meetings, he will create problems for smooth functioning of affairs of Company etc. are not all tenable, and they are liable to be rejected. It is settled position of law that a Company represented by its Board of Directors, cannot exercise its powers arbitrarily and those actions are always subject to judicial review. In any case, the Tribunal is empowered to have judicial review of the impugned action of rejection - 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. Petition allowed.
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