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2019 (6) TMI 1032 - AT - Companies LawAppointment of Respondent Nos.3, 6, 7 and 8 as Directors in the first meeting - transfer of shares - HELD THAT:- If illegal transfer of 9040 shares to Respondent No.2 to 6 had been set aside, the privilege shares could not have been issued to them. We discard this argument. The reason for this is that although the NCLT while dealing alleged transfer of 9040 shares stated that the transfer of 9040 shares cannot be held to be valid and was liable to be set aside, what NCLT actually was doing was to direct following of procedure for rectification of register of members by omitting entry made without following proper procedure for making the entry. It is quite apparent and clear that the NCL was accepting that there has been a transfer with regard to ownership of these shares in 1998 itself. As such only the following of procedure for making entry in the register of members was the requirement which was to be duly conducted. The transferees had paid in 1998 will not lose right or title to the shares only because proper procedure was not followed by the company while taking note of the transfer. Consequently, there would be no justification to deprive them of subsequent rights issue. Appeal dismissed.
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