TMI Blog1962 (8) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... e only question which has to be decided by it under section 111 of the Companies Act, 1956. No ground is made out before us which would justify as in reopening the finding and in reappraising the evidence, on what is essentially a question of fact. Appeal dismissed. - 491 OF 1961 - - - Dated:- 27-8-1962 - P.B. SINHA, S.J. IMAM, K. SUBBA RAO, J.C. SHAH, N. RAJAGOPALA AYYANGAR AND J.R. MUDHOLKAR, JJ. A.V. Viswanatha Sastri, M.M. Gkarekhan and I.N. Shroff for the Appellant. JUDGMENT Shah, J. Naval Sorabjee Bathena and his wife Dinbai, respondents in this appeal, purchased on January 28, 1958, 20 shares of the Amalgamated Electricity Company Ltd., hereinafter called the company, from one D. K. Kamdin and forwarded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he register of members and also the requisite endorsement on the share certificates and to submit the same to the committee of directors for sanction and for signatures in token of authentication. On December 26, 1957, the articles of association were modified by the company and under clause 58 the board of directors could in their "absolute and un-controlled discretion decline to register or acknowledge any transfer of shares". But the office of the appellant "lost sight of this change in the articles" and followed the practice which was previously in vogue and entered the transfer in question in the register of members and made endorsements on the certificate but when the transfers were placed before the committee of directors for approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n force, at their own discretion, to decline to register or acknowledge any transfer of shares, and in particular to decline in any case in which the company has a lien upon the shares or any of them, or whilst any moneys in respect of the shares desired to be transferred or any of them remain unpaid. But by section in of the Companies Act (1 of 1956) an order refusing to register a transfer of shares is subject to an appeal to the Central Government at the instance of the transferor or transferee. In such an appeal the Central Government may after causing reasonable notice to the company and also to the transferor and the transferee and after giving them a reasonable opportunity to make their representations, if any, in writing, by order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the exercise of the discretion is mala fide , arbitrary or capricious and that it is in the interest of the company that the transfer should be registered. Some entries were admittedly posted in the books of account and even an endorsement was made on the share certificate it is true that neither the entries in the books nor the endorsements on the share certificates were authenticated by a competent authority to sanction or approve the transfer. The case of the company was that on account of inadvertence of the staff the earlier practice which prevailed in the company was followed but that there was no decision of the board of directors to sanction the transfer, no intimation of the posting of entries or endorsement on the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment was capricious and mala fide and could not be supported." The company in its written statement submitted substantially two grounds for refusing to register the transfers in favour of the respondent (1) that there were several disputes between the company and the first respondent and that one of such disputes had resulted in court proceedings which had reached this court. It is common ground that these disputes related to the right of the company to recover certain charges from the consumers, and (2) that it was apprehended that the first respondent had purchased the shares with "ulterior motives to create trouble in the general meetings of the company." No particulars were furnished in support of the submission that the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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