1964 (6) TMI 35 - HC - Companies Law

Court dismisses rectification application, advises pursuing partition suit for relief under Companies Act

The court dismissed the application for rectification of the share register, highlighting the complexity of the issues related to partition and division ... Powers of Court to rectify register of members Issues Involved:1. Rectification of the share register of Stadmed Private Ltd.2. Entitlement and registration of 324 shares to the petitioner.3. Payment of Rs. 5,000 as damages to the petitioner.4. Compliance with Section 108 and Section 155 of the Companies Act, 1956.5. Allegations of misappropriation and nepotism.6. Partition and division of the shares and estate of the deceased shareholder.Issue-wise Detailed Analysis:1. Rectification of the Share Register:The petitioner sought rectification of the share register of Stadmed Private Ltd. to record her name for 324 shares out of 1,940 shares previously held by the deceased Gour Gopal Saha. The register was rectified on November 29, 1962, to include the names of the heirs, including the petitioner and the respondents, as joint holders. The petitioner's name was recorded last, allegedly preventing her from exercising voting rights as per Article 63 of the company's articles of association. The court noted that the rectification was done based on an application by the respondent No. 2 and the petitioner, and the petitioner's grievance was primarily about the order of names in the register.2. Entitlement and Registration of 324 Shares:The petitioner argued that she was entitled to 324 shares and that the company should register her name as the holder. However, the court pointed out that under Section 108 of the Companies Act, 1956, a proper instrument of transfer duly stamped and executed was required for the company to register the transfer. Since no such instrument was lodged, the company could not lawfully register the petitioner's name for the 324 shares. The court emphasized that the company is prohibited from registering a transfer without the required instrument of transfer.3. Payment of Rs. 5,000 as Damages:The petitioner claimed Rs. 5,000 as damages. However, the judgment did not provide a detailed analysis or ruling on this claim, focusing instead on the primary issue of share registration and the legal requirements under the Companies Act.4. Compliance with Section 108 and Section 155 of the Companies Act, 1956:The court highlighted that Section 108 mandates a proper instrument of transfer for share registration, which was not provided by the petitioner. Under Section 155, the court has the power to rectify the share register but cannot do so without compliance with Section 108. The court concluded that the company had not committed any default under Section 155(1)(b) as there was no instrument of transfer lodged by the petitioner.5. Allegations of Misappropriation and Nepotism:The petitioner alleged that respondent No. 2, in collusion with other directors, misappropriated company funds and engaged in nepotism. However, the court noted that no particulars were provided for these allegations and deemed them irrelevant to the determination of the application for rectification.6. Partition and Division of the Shares and Estate of the Deceased Shareholder:The petitioner's claim for 324 shares was linked to a broader issue of partitioning the estate of the deceased, which included other properties. The court stated that such matters should be resolved through a properly constituted suit for partition, not an application under Section 155. The court noted that the company could not undertake the division and allotment of shares among joint holders, as this would require an amicable partition or a court decree in a partition suit.Conclusion:The court dismissed the application for rectification of the share register, emphasizing that the petitioner's claims involved complex issues of partition and division of the deceased's estate, which could not be addressed under Section 155 of the Companies Act. The court suggested that the petitioner pursue a suit for partition for appropriate relief. The application was dismissed with costs, and the order was certified for two counsel.