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2018 (12) TMI 1546 - AT - Companies LawPower to refuse registration of transfer of shares in the Company to outsiders - sufficient cause - Board of Directors of Synthite Industries, which at the time concerned was deemed public company and which was in the process of conversion into a private company power to refuse registration of transfer of shares in the Company to outsiders - Held that:- Admittedly Article 24 of the Articles of Association was existing as a contract between the Appellant Company and the respective Respondents 10. Apart from that, Sub-Section (4) of Section 58 of the Act, itself provides for an Appeal if the public company “without sufficient cause refuses to register the transfer of securities. It is obvious that if there is sufficient cause, the transfer can be refused. In the facts and circumstances of the present matter, looking to the above discretion, we are satisfied that the Appellant Company had sufficient cause to apprehend that Respondents No.10 in these Appeals were acting with a design and the original Petitioners had not purchased the share with bona fide object of investment. Respondent No.10 – Beena George held 2,640 shares of ₹ 100/- each in the Appellant Company but transferred just 25 shares. Appellant submitted that this could not be said to have been done with the bona fide object of trading but is rather attempt at introducing outsiders in the Appellant Company to get control and to create obstruction in the process which had been initiated by the Appellant Company of converting itself back to private limited company from a public limited company. We find the reason recorded by the Company to refuse to record transfers is based on reasonable apprehensions recorded in the letters sent to Petitioner. We do not wish to impose our wisdom on that of the Board of Directors which cannot be said to be arbitrary on lacking in bona fides. The decision was in interest of Company. Going through the reasons recorded by the learned NCLT for allowing the Compny Petition, we do not find that the Impugned Orders are well reasoned. For reasons discussed above, we find that the Petitions deserve to be rejected.
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