TMI Blog1989 (2) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... rence shares of Rs. 10 each and 7,00,000 equity shares of Rs. 10 each. The issued, subscribed and paid up capital of the company is Rs. 57 lakhs consisting of 1,60,000 cumulative preference shares and 4,10,000 equity shares. These company petitions cover a total member of 5,000 equity shares. The petitioner purchased from the respective second respondent in the company petition, certain shares in the company at the prevailing market price through his brokers and forwarded the share transfer deeds duly executed by the transferor and the transferee together with the share certificates relating to the said shares, to the registered office of the company on July 12, 1979, and other data for registering the transfer and entering his name in the register of members of the company as the holder of the said shares. Subsequently, the company informed the petitioner that the transfer application was considered by the board of directors of the company and that they have declined to transfer the said shares in exercise of their powers under article 24 of the articles of association of the company read with section 111 of the Companies Act, 1956, and returned the respective share certificates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any petition was again taken up for trial and further witnesses were examined and documents marked. On behalf of the petitioners, P. Ws. 1 to 8 were examined and exhibits A-1 to A-15 were marked. On behalf of the respondents, exhibits B-1 to B-13 were marked and R. Ws. 1 and 2 examined. Applications Nos. 1109 of 1980, 610 of 1981 and 137 of 1982 were disposed of by this court by order dated September 30, 1988. By that order, among other things, the court refused to issue summons to the two directors of the respondent-company or to direct the company to disclose to the court the reasons for declining to register the transfer of shares applied for by the applicants. The remaining issues are as follows : (3)Is the refusal of the 1st respondent's board of directors to register the transfer of shares in favour of the petitioners capricious, mala fide or otherwise invalid or illegal as alleged ? (4)What, if any, reliefs are the petitioners entitled to? (5)Are the petitioners entitled to rectification of the register of members as prayed for? (6)What should be the order as to costs? Although section 21 of the Companies Amendment Act 31 of 1988 repeals section 155 of the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 155 of the Companies Act, 1956. Under that section, the court may rectify the register of shareholders if the name of any person is without sufficient cause entered in or omitted from the register of members of a company, or default is made, or unnecessary delay has taken place in entering on the register the fact of any person having ceased to be a member. The court is, in exercising this jurisdiction, competent to decide any question relating to the title of the person claiming to have his name registered and generally to decide all questions which may be necessary or expedient to decide for the rectification." No doubt, there is no specific discussion of this question in this judgment but the Supreme Court has proceeded on the basis that any person may move the court under section 155. In Sadashiv Shankar Dandige v. Gandhi Sewa Santaj Ltd. [1958] 28 Comp Cas 137 the Bombay High Court held that section 155 is the controlling section and gives the court an overriding power notwithstanding any previous order of the Central Government. Since section 155 has conferred on the court very wide powers to decide all questions, the preliminary objection raised by the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den is upon the person who alleges to the contrary to substantiate his allegations by evidence. See also Mathew v. Tekoy Rubbers (India) Ltd. [1988] ILR 2 Ker. 255 by which judgment of a Division Bench of this court confirmed the judgment of M. P. Menon J., in Mathew Micheal v. Teekoy Rubbers ( India ) Ltd. [1983] 54 Comp Cas 88 (Ker). At page 98 of 54 Comp Cas, M. P. Menon J., after reviewing the case law on this subject held as follows : "I would, therefore, have to proceed on the basis that in view of regulation 24, the directors in this case had a right to reject the transfer applications without giving reasons. There is a presumption that they have acted bona fide, in the interests of the company and the shareholders. This court cannot compel them to place their cards on the table, unless there is positive evidence to show that they have acted arbitrarily, capriciously or corruptly." In view of the fact that the petitioners were unable to adduce any positive evidence to show that the respondent had acted arbitrarily, capriciously or corruptly, the court is to draw a presumption in favour of the respondent that they have acted bona fide and in the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for listing shall, as a condition precedent, undertake to issue certificates in respect of shares lodged for transfer within a period of one month of the date of lodgment of transfer. Learned counsel for the petitioners also referred to the following paragraph in circular letter No. 9/37/SE/79 issued by Stock Exchange Division, Department of Economic Affairs, dated December 31, 1979 (page 462 of Circulars and Clarifications on Company Law by Bhargava Bhargava, 1985 edn.). "4. Recognised stock exchanges owe a duty to the investing public and they are advised to ensure that listed companies duly comply with listing requirements. Government, therefore, directs that recognised stock exchanges should specifically draw the attention of listed companies to the following mandatory requirements : ( a )that listed companies should register transfers, endorse calls and sub-divide and consolidate share certificates and return them to the parties concerned within two to three weeks of the date of lodgment and that in any case it is mandatory on them under the listing agreement to do so within a month." In In re Swaledale Cleaners Ltd. [1968] 3 All ER 619, Harman L.J. held as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion precedent for listing the company with the Madras Stock Exchange. From the circular letter of the Government of India referred to above, it is clear that all the concerned parties were also being reminded that the listed companies should register the transfers, etc., in any case within a month of the date of lodgment. On behalf of the company, the present President of the Madras Stock Exchange was examined as P.W. 7. From his evidence, it is clear that the company is a company listed in the Madras Stock Exchange since 1944. The original listing agreement was produced as exhibit A-12. Clause 12 of exhibit A-12 provides for contingencies where registering of shares is refused. To a specific question whether, according to that clause, the company had informed the President of the Stock Exchange regarding refusal, P.W. 7 replied that companies do not inform the Stock Exchange of the refusals unless and until required by the Stock Exchanges. P.W. 7 also stated that the advocate for the petitioner, by his letter dated January 26, 1987, wrote to the Stock Exchange about the refusal of transfer of shares by the company to the petitioners. On the basis of that information, the Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X
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