Court affirms transfer of preference shares, rejects undervaluation claim. No costs awarded.

The Court upheld the Company Law Board's order directing the transfer of preference shares from Respondent No.2 to Respondent No.1, rejecting the argument that the shares were redeemed or converted into corporate debt. The Court dismissed claims of contraventions of laws and guidelines in the transfer process and rejected the argument that the transferred shares were undervalued, emphasizing that the share value is a matter between the parties involved. The company's appeal was dismissed, and no costs were awarded.

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Issues:
Challenge to order passed by Company Law Board under Section 111A(2) of the Companies Act, 1956 regarding transfer of preference shares. Interpretation of share redemption and corporate debt conversion under Section 80 of the Act. Allegation of transfer contravention by Respondent No.2. Dispute over the price of transferred shares and its impact on the company.

Analysis:
The appeal challenged an order by the Company Law Board (CLB) regarding the transfer of 5,00,000 preference shares held by Respondent No.2 to Respondent No.1. Respondent No.1 sought registration of the transfer, which the Appellant objected to. The CLB directed the transfer of shares to Respondent No.1 and rectification of the register of members. The Appellant argued that the shares were redeemed and converted into a corporate debt under a compromise scheme, extinguishing transferability. However, the Court found that the compromise did not amount to redemption or debt conversion, as Respondent No.2 remained a preference shareholder under the scheme.

The Appellant also contended that Respondent No.2 breached laws and RBI guidelines by transferring the shares to Respondent No.1. The Court dismissed this argument, noting the lack of specific contraventions cited. Additionally, the Appellant claimed that the transferred shares were undervalued at Rs. 5,000, undermining their worth. The Court held that the value of shares is a matter between the parties involved and not binding on the company, thus rejecting this contention. Ultimately, the company's appeal was dismissed, and no costs were awarded in the case.

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