Share transfer refusal cannot rest on minor deed defects or internal authorisation objections; statutory reference is required for broader contravention grounds.

Refusal to register share transfers was found unjustified where objections based on alleged lack of internal investment authorisation and minor transfer-deed defects were treated as insubstantial, and prima facie board resolutions satisfied the statutory requirement. Defects such as stamping, occupation details, and witness particulars were not material, though refusal was sustained for 2,400 shares on technical grounds of missing witness signature and late lodgment. Returning share certificates to transferors while retaining the transfer instruments was held improper and contrary to commercial practice. Where refusal rested on alleged contravention beyond mere registration formalities, a statutory reference to the Company Law Board was required before refusal.

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Issues: (i) Whether the refusal to register the impugned shares on the grounds of alleged non-compliance with the internal investment authorisations and defects in the transfer deeds was justified; (ii) Whether the company was justified in returning the share certificates to the transferors and retaining the instruments of transfer; (iii) Whether a reference to the Company Law Board was required under Section 22A(4)(c) of the Securities Contracts (Regulation) Act, 1956; (iv) Whether the applicants were entitled to relief and costs.

Issue (i): Whether the refusal to register the impugned shares on the grounds of alleged non-compliance with the internal investment authorisations and defects in the transfer deeds was justified.

Analysis: The objection based on want of authorisation under Sections 292 and 372 of the Companies Act, 1956 was treated as a matter of internal management, and the board resolutions of the transferee companies were held to be in prima facie compliance with the statutory requirements. The objection that the transfer deeds were improperly stamped was rejected because a blank transfer signed by the transferor is treated as executed when completed by the transferee, and stamping at that stage was found sufficient. The objection that the occupation of a company transferee was not stated was held to be unsubstantial, and the absence of the witness's name, where the witness signature was legible, was treated as good delivery. Only the 2,400 shares rejected for want of witness signature and for lodgment beyond validity were sustained.

Conclusion: The refusal was not justified except in respect of the 2,400 shares, and the remaining refusals could not be sustained.

Issue (ii): Whether the company was justified in returning the share certificates to the transferors and retaining the instruments of transfer.

Analysis: The share certificates were required to be returned to the person lodging the documents, and the established commercial practice and the investor-protection circulars required prompt return of defective documents to the concerned party. Returning the certificates to the transferors while retaining the transfer instruments was held to be contrary to law, commercial practice, and fairness, and likely to create avoidable third-party complications.

Conclusion: The company was not justified in returning the share certificates to the transferors and retaining the transfer deeds.

Issue (iii): Whether a reference to the Company Law Board was required under Section 22A(4)(c) of the Securities Contracts (Regulation) Act, 1956.

Analysis: The grounds founded on defects relating only to registration formalities fall within Section 22A(3)(a), but a refusal based on alleged contravention of Sections 292 and 372 of the Companies Act, 1956 falls within the wider contravention clause and required a reference before refusal. The company could not rely on that ground without making the statutory reference.

Conclusion: A reference to the Company Law Board was required, and the refusal on that ground was not sustainable without it.

Issue (iv): Whether the applicants were entitled to relief and costs.

Analysis: Since the refusals were largely unsustainable and the company's conduct created avoidable complications and risk of third-party rights, the applicants were entitled to consequential directions for registration, retrieval or replacement of certificates, public notice, vacation of interim restraint, and costs.

Conclusion: The applicants were entitled to the reliefs granted, with costs.

Final Conclusion: The appeals were substantially allowed, the impugned shares were directed to be registered in favour of the respective applicants except for the 2,400 shares sustained on technical grounds, the related ancillary application was disposed of, and costs were awarded against the company.

Ratio Decidendi: A refusal to register transfer of shares cannot be sustained on internal-management objections where the transferee's board authorisation is prima facie valid and the transfer deed defects are not material, but a refusal based on contravention of law beyond mere registration formalities requires compliance with the statutory reference procedure.

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