1952 (9) TMI 28 - HC - Companies Law

Court denies rectification of shareholder register under Companies Act citing lack of evidence.

The court declined to rectify the register of shareholders under section 38 of the Companies Act in a case involving an alleged forged transfer document ... Power of court to rectify register of members Issues:Rectification of the register of shareholders under section 38 of the Companies Act based on alleged forged transfer document and subsequent cancellation by the respondent company.Analysis:The petitioner, a shareholder in the respondent company, sought rectification of the register of shareholders due to the respondent company's alleged unilateral cancellation of a transfer made by the petitioner. The petitioner claimed to have purchased 100 shares in 1948 and submitted the necessary documents for the transfer, following which his name was entered in the shareholders' register. However, the respondent company later claimed the transfer deed was forged, leading to the cancellation of the transfer. The petitioner contended that the cancellation was void and alternatively sought compensation if the transfer was indeed forged. The respondent company argued against the relief sought by the petitioner, claiming the transfer was bogus and the signature on the transfer form was forged.The court acknowledged the complexity of the matter, stating that a detailed investigation was necessary to determine the authenticity of the transfer and the subsequent cancellation. The court highlighted the need for proper evidence and enquiry, indicating that the issues raised were not suitable for summary proceedings. Citing the case law, the court emphasized that in cases involving complicated facts, a separate legal action would be the appropriate remedy. The court held that the discretion to rectify the register under section 38 of the Companies Act rested with them and, based on the circumstances of the case, declined to exercise that power. The petitioner was advised to pursue alternative legal remedies if wronged. Consequently, the petition was dismissed, and each party was directed to bear their own costs.In conclusion, the judgment underscores the importance of thorough investigation and proper evidence in cases involving disputed transfers and cancellations. It highlights the limitations of summary proceedings in addressing complex factual issues and emphasizes the availability of alternative legal remedies outside the scope of rectification under the Companies Act.