TMI Blog2018 (10) TMI 1859X X X X Extracts X X X X X X X X Extracts X X X X ..... d the board meetings, and secondly original share certificates are not enclosed. As stated supra, it is not in dispute that the impugned shares were issued to respective Transferors and those shares were purchased by the petitioners for consideration by investing huge amount. The petitioner is admittedly shareholder and Director of the Company. And there are no rival claims by any party with regard to impugned transfer of shares. It is true that the Article 5 of the Articles of Association says that original share certificates has to be enclosed with Share Transfer Form. Since the Transferors themselves have furnished sworn affidavits/ indemnity bonds, as stated supra, by declaring that they have lost original share certificates and the Company was requested to issue Duplicate share certifies directly to the petitioner, as they have sold the shares in question, Company cannot again insist to produce original share certificates in question to effect impugned transfer of shares. The other contentions for refusal that there are several criminal/ civil cases filed by the petitioner and he is not attending the Board Meetings, he will create problems for smooth functioning of affairs of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded into 5,000 (Five Thousand) Equity Shares of ₹ 100/- (Rupees One Hundred only) each, with power to increase or reduce the capital of the Company. Its main object is to carry on the business of Hotel, Restaurant, Caf , tavern refreshment room and boarding and lodging, etc. 2) The Petitioner is an existing shareholder and all the Director/ members of the Company and Board are related/ family members of the Petitioner. The other Directors Mr. Mohamed Shereef Moideen Kunhi Kunhimahin and Mr. Moideen Kunhi Moideen Kunhi Kunhimahin are own brothers of the Petitioner. 3) The Petitioner has purchased 20,000 equity shares (Registered Folio No. 14) of the first respondent Company from one Mr. Shahul Hameed, on 10.04.2015, for a total consideration of ₹ 39, 15,000/- (Rupees Thirty Nine Lakhs Fifteen Thousand Only). The Petitioner has complied with all the necessary / statutory formalities as laid down in law for transfer of shares. After purchasing the said shares, the Petitioner has also given public notice in Kannada language in Samyukta. Karnataka newspaper on 11.07.2015, and in English language in The Indian Express newspaper on 11.07.2015. Mr Shahul has signed affida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. 3. It is alleged that there were several criminal assaults / acts committed by respondent-2 and other Directors and their family members on the Petitioner and his family members. Accordingly, the Petitioner and his family members had lodged criminal complaints before the jurisdictional police stations, which were duly investigated and accordingly the FIRs have also been registered by the jurisdictional police stations. The following details are details of FIRS are appended below: FIR No. Date Police Station Petitioner Sections of IPC 741/13 10.12.2013 Vidya Nagar, Kasara od Ameena Nazifa W/0 Petitioner 143,147,148,341, 324,326,294B 92/14 06.02.2014 Vidya Nagar, Kasara od Ahamed Nizar K.M. 1 143,147,148,323, 324, 294, 149 114/ 14 28.01.2014 Vidya Nagar, Kasara od Ahamed Nizar K.M. 420, 468 446/ 14 12.08.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner is existing shareholder and one of the directors of the Company. The Company is not in knowledge of impugned transfer of shares. Even the purported Affidavit of Mr. T. Shahul Hameed dated 10.04.2015 was not executed in the manner provided under law , and it was not sworn and signed before any prescribed authority. Therefore, the document is not admissible in evidence. The so called share purchase agreement or the purposed share transfer form does not disclose The details of shares proposed to be transferred thereunder. Even the newspaper publications do not disclose the description of shares purchased by the Petitioner. The paper publications did not disclose for what purpose they were issued. c. It is stated that the Company has not received letter dated 13.08.2015 from the petitioner. Even otherwise, no share certificate were admittedly enclosed to the letter, which was also confirmed by subsequent letter dated 15.09.2015. The non-receipt of share certificate/ s has also been communicated to the Petitioner vide letter dated 30.10.2015. It is stated that the Petitioner vide his letter dated 19.11.2015, for the firsts time, intimated the Company about the acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed by him. f) The averments regarding relationship of the Petitioner to the other directors including the second respondent herein, and regarding incorporation of the Company by the Petitioner's father, and the directorship of the Petitioner along with that of the others are all admitted as true. However, it is categorically denied that there was any kind of power struggle, after the death of the Petitioner's father. In fact, it is the Petitioner alone, who has been cantankerous with evenly other family member. The rest of the family members have faced no problems either in their relationship with one another or in the affairs of the first respondent Company. The Petitioner is not willing to adopt a non-confrontational attitude, and used to pick quarrels at the drop of a hat with every other Director. g) The Petitioner has initiated many civil and criminal cases against the second respondent, and other family members. However, initiation of several criminal/ civil cases initiated by the petitioner, creating an atmosphere of mutual mistrust, ill-will and bad blood amongst the Petitioner and other family members. The admission of the Petitioner that there are several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mother of the Petitioner. It is not in dispute that the Board of Directors is empowered to consider request for share transfer such power cannot be exercised arbitrarily. He has relied upon judgments of the Hon'ble Gujarat High Court in Smt. Bina Banza and Ors. Vs. Dulowjan Tea Co. (P) Ltd. (2) Since the Petitioner has admittedly invested ₹ 63,61,875/- towards purchase of a total 32,500 equity shares of the Company, it cannot be refused to transfer the shares on mere technical grounds especially in the absence of any case, transferor has no objection for the same. 9. Shri K.V Satish, learned Counsel for Respondent, while pointing out various averments made in the Common Counter, as briefly stated above, has also filed written Arguments dated 07.12.2017, by inter alia contending as follows: 1) The share transfers in question do not disclose the share certificates number, folio number, name and address of the transferee, not attested by any witnesses, original share certificates were not enclosed by the Petitioner, etc. Non-receipt of share certificate was also communicated to the Petitioner vide order dated 30.10.2015. As per Rule 6 of the Companies (Share Capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may also decline to register any transfer of shares on which the Company has a lien. The Directors may decline to recognize any instrument of transfer unless: a. The instrument of transfer is accompanies by the Certificate of the shares to which it relates; and b. Such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. If the Directors refusal to register transfer of any shares, they shall within two months after the date on which the transfer was lodged with the Company; send to the transferor and transferee notice of the refusal. Section 56 and 58 of the Companies Act, 2013, deals with transfer and transmission of securities, and the appeal to the Tribunal. As per Section 56(1), a Company shall not register transfer of securities of the Company unless proper instrument of transfer in such form as may be prescribed, stamped, dated and executed by or on behalf of the transferor and transferee specifying the name, address and occupation of the transferee has been delivered to the Company by the transferor and the transferee within a period of 60 days from the date of execution along with certificate relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a letter dated 13.08.2015 by requesting the Company to transfer shares of 20,000 (Registered Folio No. 14) equity shares purchased from Mr. T. Shahul Hameed, and another 12,500 equity shares purchased from Mr. P.A Ibrahim Haji (Registered Folio No.06) by enclosing Share Transfer form in SH-4 along with Share Transfer Agreements etc followed by remainders dated 15.09.2015 and 29.10.2015. 13. The Company has rejected transfer of shares vide letter dated 30.10.2015 by citing two reasons for rejection. One is there are criminal/ civil cases being filed by the Petitioner and not attended the board meetings, and secondly original share certificates are not enclosed. As stated supra, it is not in dispute that the impugned shares were issued to respective Transferors and those shares were purchased by the petitioners for consideration by investing huge amount. The petitioner is admittedly shareholder and Director of the Company. And there are no rival claims by any party with regard to impugned transfer of shares. It is true that the Article 5 of the Articles of Association says that original share certificates has to be enclosed with Share Transfer Form. Since the Transferors themsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner is arbitrary and unjustifiable. Personal and family issues will not come in the way of law taking its own course. And all the grounds raised for such rejections are hereby rejected as not tenable. Therefore, the Company petition deserves to be allowed. 17. In the result, C.P. No.01/16 (T.P No. 96 of 16) is allowed with following directions: 1) We hereby set aside letter dated 30.10.2015 directing the respondents to register the transfer of 20,000 equity shares of Mr. T. Shahul Hameed (Registered Folio No. 14) in the name of the Petitioner with effect from lodgement of share transfer request on 13.08.2015; 2) Directed the respondents to rectify the register of shareholders by incorporating the name of the Petitioner in place of Mr. T. Shahul Hameed in respect of 20,000 equity shares (Registered Folio No. 14); 3) Directed the respondents to register the transfer of 12,500 equity shares of Mr. P.A. Ibrahim Haji (Registered Folio No. 06) in the name of the Petitioner with effect from lodgement of share transfer request on 13.08.2015, 4) Directed the respondents to rectify the register of shareholders by incorporating the name of the Petitioner in place of Mr. P.A. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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