Collateral challenge to registered articles barred in rectification proceedings under section 155, leaving transfer refusal intact.

In rectification proceedings under section 155 of the Companies Act, 1956, a transferee could not mount a collateral challenge to the validity of a registered and long-standing amended article governing refusal to register transfers. The registered articles were binding on the company and its members, and the scope of section 155 did not extend to reopening their validity in such proceedings. The court treated any challenge to the 1965 amendment as unnecessary for deciding the registration dispute and noted that the transferors themselves could not have maintained a time-barred challenge. The refusal to register the transfers therefore remained protected by the articles as registered.

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Issues: Whether, in proceedings for rectification of the register of members under section 155 of the Companies Act, 1956, the transferee-petitioners were competent to challenge the validity of the amended article governing refusal to register transfers.

Analysis: The amended articles, having been duly registered, were binding on the company and its members. The challenge raised by the transferees was only a collateral attack on a long-standing amendment made years earlier. The court held that, in an application under section 155, it was neither necessary nor expedient to decide whether the 1965 amendment was void or voidable, especially when the transferors themselves could not have maintained such a challenge in a time-barred suit. The scope of section 155 did not extend to reopening the validity of the articles in such collateral proceedings, and the refusal to register the transfers was protected by the articles as registered.

Conclusion: The petitioners were not competent to challenge the validity of the amended article in the rectification proceedings, and the refusal to register the transfers could not be assailed on that basis.

Ratio Decidendi: In rectification proceedings under section 155 of the Companies Act, 1956, a transferee cannot mount a collateral challenge to the validity of registered articles of association when those articles are binding on the shareholders and the issue is not necessary for deciding title to registration.

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