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TMI Blog2010 (8) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent-company for a valuable consideration from the shareholders of the company, viz., Dr. Hemendra Kumar Deb, Mrs. Bratati Deb, Ms. Malabika Sarkar and Dr. Subhasish Dey, as mentioned in Annexures P-A. Soon after transfer of shares, the petitioner sent a letter dated 20-1-2006 (Annexures P-C) along with the original share certificates duly filled in and stamped transfer deeds for transfer of shares in its name. In pursuance thereof, the petitioner received a letter dated 16-3-2006 (Annexures P-D) on 20-3-2006, from the company with an intimation that the company refused to register the transfer of shares in the name of the petitioner with the power conferred upon the board to refuse effecting transfer of shares under clause 5A of the memorandum and articles of association. Thereby the company returned the original share certificates and transfer deeds to the petitioner. Since the company refused to effect registration of the shares, despite the petitioner complying with all the requirements for transfer of shares in its name, the petitioner moved this petition with the above prayers before this Bench under section 111A of the Act stating that the respondent, which is registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rying to take over the management of the nursing home, saying so the petitioner denied averments of the reply affidavit filed by the respondent. 7. The respondent filed supplementary affidavit stating that this petitioner, showing itself as shareholder of the company, filed T.S. No. 1198 of 2006 on the file of the City Civil Court, 6th Bench, at Calcutta with prayer for a decree of permanent injunction restraining the respondent-company from changing the nature and character of the existing business to a guest house. A copy of the injunction application filed by the petitioner is referred to as Annexures R-B. Since the nursing home has not been running well due to financial stringency, the directors of the company passed a resolution by deciding to run a guest house business in annexe building of the main nursing home building. In furtherance of it, the company got trade licence, fire brigade licence, NOC from the health Department. The directors having decided to change the objects of the company, the board passed a resolution to that effect by holding an extraordinary general meeting on 30-6-2007, as referred to in Annexures R-C. Thereafter, as the company filed the relevant pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a private company ? Is section 111 or 111A of the Act applicable in the present case ? If it is a public limited company, can article 5A of the memorandum and articles of association empower the board to refuse registering transfer in the name of the petitioner ? Whether the share forms are sufficiently stamped or not ? What is the effect if the provisions of section 108 of the Act were not complied with at the time of lodgment of the share transfer forms ? Is this petitioner entitled to the reliefs sought ? 13. As to the first point, it being not in dispute that the respondent is a public limited company ; this Bench construed the respondent-company as a public limited company. The company being a public limited company, as to rectification of register of the shareholders, section 111A of the Act is applicable but not section 111 of the Act. 14. As to the second point, the power of refusal of registration in pursuance of the terms and conditions of the articles of association or otherwise being given in the case of private companies and companies converted into public companies under section 43A of the Act covered under section 111 of the Act, such power of refusal being c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court held as below : "17. However, even if a statute is directory in nature the same should be substantially complied with. What would satisfy the requirements of substantial compliance, however, would depend, upon the facts of each case." (p. 937) 17. In this judgment, it is nowhere laid any issue stating that the provisions of section 108 need not be complied with in effecting the transfer of shares. In that judgment, the context is otherwise to allow the petition even if the shares are lodged after a lapse of two months. In view of the same, since the Apex Court has not laid any ratio decidendi holding that the transfer is to be effected in the cases where transfer forms are lodged even after two months. 18. If the citation in the case of Mannalal Khetan v. Kedar Nath Khetan [1977] 47 Comp. Cas. 185 (SC) is read, the ratio decidendi in the case by the Apex Court is that the negative language of section 108 of the Act is mandatory in nature and it cannot be said that the provisions contained in this section are directory because non-compliance with the section is not declared as an offence. Section 629A of the Act prescribes the penalty where no specific penalty is provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not a technicality." 21. Here, the petitioner's counsel argued that the delay of lodgment not being taken as a point in refusal, the respondent's counsel, having not even taken it as pleading, could not question the same without pleading. This argument is not valid because it is for the petitioner to comply with the provisions of section 108 of the Act and then lodge them for effecting the same, it cannot be simply construed as being complied with just because the respondent failed to refuse on that ground or plead on it. Whenever any legal aspect comes up for consideration, it could be dealt with even without pleading. 22. In view of the above proposition of law, it cannot be said that the lodgment beyond the prescribed period of two months from the date of presentation as permissible, thereby lodgment of shares for effecting transfer is held as defective. 23. As to the fifth point, the respondent being a public limited company, the shares are freely transferable under section 111A of the Act. That being the case, the respondent cannot refuse effecting of transfer by invoking article 5 of the articles of association. At the same time, the petitioner is also to comply with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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