Illegal Share Transfer Set Aside under Companies Act, 1956

The tribunal found that the transfer of 500 shares was illegal and violated the Companies Act, 1956. The shares were transferred based on a private transaction unrelated to the company, and the transfer was set aside. The company was directed to rectify the Register of Members, reinstate the Petitioner's shares, issue share certificates, and pay litigation costs.

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Issues Involved:
1. Whether the Company Petition is time barred.
2. Whether share certificates for 500 shares have been issued by the 1st Respondent Company to the Petitioner.
3. Whether the Petitioner has transferred her 500 shares held in 1st Respondent Company to Respondent No.4 for liquidating the amount of loan advanced by Mrs. Thangam.
4. Whether the resolution dated 23.09.2009 passed by the Board of Directors of 1st Respondent Company to transfer 500 shares held by the petitioner in 1st Respondent company to Respondent No.4 is legally tenable.
5. Reliefs.

Issue-wise Detailed Analysis:

Issue No. i:
The Petitioner claimed to have learned about the share transfer on 14.07.2014, upon receiving a reply to her legal notice dated 2.6.2014. The Respondents argued that the shares were transferred on 23.9.2009, making the petition time-barred as it was filed on 26.8.2015. However, the tribunal found that the Petitioner was unaware of the transfer until 14.7.2014 and thus, the petition was filed within the limitation period. The objection of the Respondents was rejected.

Issue No. ii:
The Respondents claimed that share certificates were sent to the Petitioner immediately after the allotment, but failed to provide proof of dispatch. The tribunal noted that no evidence was presented to show that fresh share certificates were issued after the company's name change. Thus, the Respondents failed to prove that the share certificates were issued to the Petitioner.

Issue No. iii:
The Petitioner sent a notice on 20.6.2014 requesting the share certificates. The Respondents replied on 8.7.2014, claiming the shares were transferred to Respondent No.4. However, the Respondents' defense contained contradictions, and no evidence was provided to prove that the Petitioner executed a transfer deed. The tribunal found no proof that the Petitioner transferred her shares to Respondent No.4.

Issue No. iv:
The tribunal found that the Board of Directors' resolution dated 23.9.2009 to transfer the Petitioner's shares to Respondent No.4 was not based on any valid document and violated Section 108 of the Companies Act, 1956. The Respondents failed to verify the purported transfer deed's authenticity, and no evidence was provided to show the Petitioner requested the transfer.

Conclusion:
The tribunal concluded that the transfer of 500 shares was illegal and violated Section 108 of the Companies Act, 1956. The Petitioner's shares were transferred on the pretext of an alleged loan from Mrs. Thangam, which was a private transaction unrelated to the company. The legal heirs of Mrs. Thangam could have sought loan recovery through civil court, but not through share transfer.

Order:
1. The resolution dated 23.9.2009 transferring the Petitioner's shares to Respondent No.4 is set aside.
2. The 1st Respondent Company and its Board of Directors are directed to rectify the Register of Members by removing Respondent No.4's name and reinstating the Petitioner's name for 500 shares, along with any accrued benefits since 23.9.2009.
3. The 1st Respondent Company and its Board of Directors are directed to issue share certificates for 500 shares to the Petitioner within 10 days of receiving the order.
4. The 1st Respondent Company and its Board of Directors are directed to pay Rs. 50,000 as litigation costs to the Petitioner within three weeks of receiving the order.

The order was pronounced in open court in the presence of counsel for both parties. The file shall be consigned to record after due completion.

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