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2018 (3) TMI 1707 - Tri - Companies LawRegistration of transfer of equity shares - refusal on the ground that the first respondent-company had decided in its board meeting on October 26, 2016 to refuse registration as the lodgement is in violation of article 23A of the articles of association of the first respondent-company - sufficient cause or not - sub-section (4) of section 58 of the Companies Act, 2013 - Held that:- It is an admitted fact that the petitioner has purchased 25 equity shares of ₹ 10 each from the tenth respondent which constitutes 0.02 per cent. of the overall shareholding of the first respondent-company. By acquiring such fraction of shares by the petitioner in the first respondent-company, there are no chances of hostile takeover of the first respondent-company by the petitioner. Therefore, this contention of the first respondent-company stands rejected. Rejection of the registration of the transfer of shares in favour of the petitioner also on the ground that the petitioner-company is running the same business and is a competitor - Held that:- There is nothing on record to suggest that there has been any instance which goes to show that, the petitioner-company as a competitor has derived benefits which were otherwise, to be enjoyed by the first respondent-company - a perusal of copy of the articles of association placed in the typed set filed with the petition reveals that article 23A stood deleted from the time when the first respondent-company became the deemed public company, and the respondents have also admitted that the first respondent-company is a public company. Therefore, the reliance on article 23A which is not the part of the articles of the first respondent is misconceived and the said ground taken by the respondents' stands rejected. There can be various reasons which may constitute "sufficient cause" for refusal of the registration of the transfer of shares in a public company. In other words, every case is to be seen in the light of its facts and circumstances in order to determine whether reasons on the basis of which the registration has been refused are constituting "sufficient cause" or not. Thus, the discretion of the directors is to be tested as the opinion on fair and sensible manner in the interest of the company as held in Bajaj Auto Ltd. v. N. K. Firodia [1970 (9) TMI 55 - SUPREME COURT OF INDIA]. The decision dated October 26, 2016 of the board of directors by which the registration of transfer of shares of the first respondent-company in the name of the petitioner has been refused is the respondent-company and respondents Nos. 2 to 9 are directed to register the transfer of 25 equity shares of ₹ 10 each in the name of the petitioner by entering its name in the register of members of the first respondent-company and by omitting the name of the transferor, viz., the tenth respondent, viz., Beena George therefrom within ten days from the date of this order - petition disposed off.
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