AI Drafter 
TaxTMI 
TaxTMI 
1994 (7) TMI 238
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....tion by the board of directors after the One Man Committee appointed by it, viz., Shri B.P. Saxena approved of the same. The transfers were accordingly registered in the names of the respondent companies. Pursuant thereto, the respondent companies have been receiving dividends. On 15-10-1992 the appellant offered a rights issue of partly convertible debentures (PCDs) to the shareholders in the ratio of one PCD of the face value of Rs. 400 each for every 17 shares held on the expiry of six months from the date of allotment of Rs. 250 to be adjusted towards adjustment of ten equity shares of Rs. 10 each at a premium of Rs. 15 per share. The respondent companies applied not only for the rights but also for addi- tional PCDs before the closure of the issue on 15-12-1992. The appellant claims to have scrutinised the share transfers in favour of the respondent companies and found that the adhesive stamps on most of the transfer deeds had not been cancelled and on the remainder, stamps had been partly or fully cancelled by the staff of the second respondent in these appeals, who is the Registrar of the appellant company. The details thereof are as follows: List 'A' : 2,721 share tra....
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....respondent companies filed a reply. Their case was that the petitions for rectification were not maintainable in law and barred by limitation. It was also their contention that the board of directors had a discretion to register a transfer under section 22A of the Securities Contracts (Regulation) Act, 1956 (SCRA), which was introduced in 1985 and having exercised such discretion and registered the transfers, it was not open to the appellant to seek rectification of the register by deletion of the names of the respon- dent companies. They had also challenged the bona fides of the appellant in filing the applications for rectifications and contended that the conduct of the appellant disentitled it to get any relief in the petitions. The respondent companies also raised a plea of estoppel. They submitted that the equitable jurisdiction of the Board could not be exercised in favour of the appellant. They also contended that without impleading the transferors of the shares, the applications were not maintainable. 4. The CLB passed its final order on 20-10-1993 directing rectification of the register of members by deletion of the names of the respondent companies in respect of the sh....
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....s filed by the respondent companies were taken on file as CM.A. Nos. 1412 to 1422 of 1993. All the appeals excepting four which were omitted to be posted by oversight were heard by a learned Single Judge of this Court and a common judgment was rendered on 7-4-1994. The learned Judge has allowed the appeals filed by the respondent companies and dismissed the appeals filed by the appellant in the following terms: "(a)the orders of the CLB dated 20-10-1993, directing the rectification of the share register of the appellant company in respect of the shares falling under Lists A and C (Categories I and III) are hereby set aside and the appeal filed by the 11 respondent companies against the directions of the CLB directing rectification of the share registers with regard to the shares falling under Lists A and C, namely, C.M.A. Nos. 1412 to 1422 of 1993 are allowed; (b)the appeals preferred by the appellant company namely, C.M.A. Nos. 1245 to 1251 of 1993 challenging the decision of the CLB refusing to rectify the register in respect of the shares falling under List B are dismissed; (c)the appellant company Kothari Industrial Corpn. Ltd. shall proceed to finalise and allot right....
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....ide whatever on the part of the appellant company in seeking rectification of the register. There was no pleading in this regard by the respondent companies. (6)The doctrine of laches cannot be applied as no rights have accrued in favour of any third party. 7. In reply thereto, the following contentions are urged on behalf of the respondent companies: (1)Section 22A has been deliberately introduced by the Legislature in the SCRA with a view to govern transfer of shares and provide for free transferability and registration of transfers of securities of listed compa-nies. After the introduction of the said section 22A, the provisions of section 108 cannot be invoked with respect to listed companies as the later legislation on the same subject matter will prevail. It gives a discretion to the company to register or refuse to register any transfer on any one or more of the grounds mentioned therein. The change in the language of the section from that found in section 108 of the Companies Act is significant. (2) The appellant company being a wrong-doer, as it has contravened the provisions of law, cannot invoke the equitable jurisdiction of the CLB. (3) The purpose of the....
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....hey were cancelled by the employees of the second respondent and as there was no cancellation at the time of execution of the instruments, they are void. The CLB has rejected the contention of the appellant after giving a finding of fact that the appellant has not proved its case that the stamps were cancelled by the employees of the second respondent. The CLB has taken into account the circumstance that about 2,500 transfer instruments were lodged on 29-6-1991 and only 15 of them remained uncancelled. The Board pointed out that the transfers were approved on 1-7-1991 itself and within two days it was not possible to cancel stamps on all the instruments. Again, about 3,000 transfer instruments were lodged on 11-6-1992 and approved on 15-6-1992. It is pointed out that the stamps on about 500 instruments were only cancelled though there was a gap of four days. The CLB observed that the documents have to be considered on their face value and when the One Man Committee approved the instruments, the stamps on the instruments had been cancelled. In the circumstances, the Board gave the benefit of doubt in favour of respondent companies and held that the instruments covered by List B were....
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....eholder or debenture holder any person to whom the right to any shares in, or debentures of, the company has been transmitted by operation of law. (1A) Every instrument of transfer of shares shall be in such form as may be prescribed, and- (a)every such form shall, before it is signed by or on behalf of the transferor and before any entry is made therein, be presented to the prescribed authority being a person already in the service of the Government, who shall stamp or otherwise endorse thereon the date on which it is so presented, and (b)every instrument of transfer in the prescribed form with the date of such presentation/stamped or otherwise endorsed thereon shall, after it is executed by or on behalf of the transferor and the transferee and completed in all other respects, be delivered to the company,- (i)in the case of shares dealt in or quoted on a recognised stock exchange, at any time before the date on which the register of members is closed, in accordance with law, for the first time after the date of the presentation of the prescribed form to the prescribed authority under clause (a) or within twelve months from the date of such presentation, whichever in la....
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....ons of this section, securities of companies shall be freely transferable. (3) Notwithstanding anything contained in its articles or in section 82 or section 111 of the Companies Act, 1956 (1 of 1956), but subject to the other provisions of this section, a company may refuse to register the transfer of any of its securities in the name of the transferee on any one or more of the following grounds and on no other ground, namely:- (a)that the instrument of transfer is not proper or has not been duly stamped and executed or that the certificate relating to the security has not been delivered to the company or that any other require-ment under the law relating to registration of such transfer has not been complied with; (b)that the transfer of the securities is in contravention of any law or rules made there under or any administrative instructions or condi-tions of listing agreement laid down in pursuance of such laws or rules; (c)that the transfer of a security is likely to result in such change in the composition of the board of directors as would be prejudicial to the interests of the company or to the public interest; and (d)that the transfer of the security is proh....
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....mandatory in view of the negative, prohibitory and exclusive words used therein. The Court rejected the argument that the provisions in the section were directory because non-compliance thereof was not declared as an offence. The Court referred to section 629A of the Companies Act prescribing penalty, whereas no specific penalty is provided elsewhere in the Act. Referring to the provisions in section 108, the Court said: "...There are two provisos to section 108 of the Act. We are not concerned with the first proviso in these appeals. The second proviso states that nothing in this section shall prejudice any power of the company to register as shareholder or debenture holder any person to whom the right to any shares in, or debentures of, the company has been transmitted by operation of law. The words 'shall not register', are mandatory in character. The mandatory character is strengthened by the negative form of the language. The prohibition against transfer without complying with the provisions of the Act is emphasised by the negative language. Negative language is worded to emphasise the insistence of compliance with the provisions of the Act. (See State of Bihar v. Maharajad....
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....mpany could not be directed to act in contravention of the statute and rectify the register. The Court rejected the argument that the instrument may be impounded and the penalty provided in the Indian Stamp Act could be collected. The Court said that the only question was whether the company was bound in law to accept any instrument not duly stamped within the meaning of section 108 of the Companies Act or section 12 of the Indian Stamp Act and rectify the register. 16. In Mathrubhumi Printing & Publishing Co. Ltd. v. Vardhaman Publish-ers Ltd. [1992] 73 Comp. Cas. 80, the Kerala High Court rendered a similar judgment. That was a case in which the adhesive stamps on the instru- ments of transfer of shares had not been cancelled at the time of execution but only at the time of lodgement with the company, the Court held that the board of directors of the company was justified in rejecting the request of the transferees to have their names entered in the register. Reliance was placed on Mannalal Khetan's case (supra) . 17. A Division Bench of the Karnataka High Court took a similar view in Muniyamma v. Arathi Cine Enterprises (P.) Ltd. [1991] 72 Comp. Cas. 555. In that case, the....
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.... the Legislature is primarily to be gathered from the actual words used and not from any words not to be found in the statute, but which are required to be added to make the statute clear and to bring out the policy intention." (p. 591) 20. It is further argued that the law declared by the Supreme Court in Mannalal Khetan 's case (supra) was clear and categorical and it was not doubted or diluted at any time. The Legislature did not intend to nullify the judgment of the Supreme Court after it held sway for about a decade. There was no reference to or mention of the judgment in the statement of objects and reasons of the Securities Contracts (Regulation) Amendment Act, 1985. Nor was there any reference to it in the speech of the Finance Minister. The learned counsel drew our attention to the statements of objects and reasons of some of the Amendment Acts and in particular the Land Acquisition Amendment Acts XXXI of 1962 and XIII of 1967, which expressly refer to the judgments of the Supreme Court which were sought to be overcome by the amendments. Significantly, section 22A(3) of the SCRA which contains a non obstante clause refers only to sections 82 and 111 of the Companies ....
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....urther strengthened on the principle expressive unique est exclusio alterious. Further, the presumption will be comparatively strong in case of virtually contemporaneous Acts. In the absence of an express provision of repeal, being presumed , the burden to show that there has been a repeal by implication lies on the party asserting the same. The presumption is, however, rebutted and a repeal is inferred by necessary implication when the provisions of the later Act are so inconsistent with or repugnant to the provisions of the earlier Act 'that the two cannot stand together'. But, if the two may be read together and some application may be made of the words in the earlier Act, a repeal will not be inferred." 23. In Life Insurance Corpn. of India v. D.J. Bahadur AIR 1980 SC 2181, the Court observed that an implied repeal is the last judicial refuge and unless driven to that conclusion, is rarely resorted to. It was also pointed out that the general rule that prior statutes should be held to be repealed by implication by subsequent statutes if the two are repugnant will not apply if the prior enactment is special and the subsequent enactment being general. The Court said that in de....
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....he doctrine of implied repeal is based on the postulate that the Legislature which is presumed to know the existing state of the law did not intend to create any confusion by retaining conflicting provisions. Courts in applying this doctrine are supposed merely to give effect to the legislative intent by examining the object and scope of the two enactments. But in a conceivable case, the very existence of two provisions may by itself, and without more, lead to an inference of mutual irreconcilability if the later set of provisions is by itself a complete code with respect to the same matter. In such a case the actual detailed comparison of the two sets of provisions may not be necessary. It is a matter of legislative intent that the two sets of provisions were not expected to be applied simultaneously. Section 80 is a special provision. It deals with certain class of suits distinguishable on the basis of their particular subject-matters. The High Court has come to the conclusion that new section 80 made a conscious departure on the law as to the place of suing in respect of suits of a particular subject-matter envisaged by that section. The High Court has held that the new secti....
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....a small investor. The present position is also not conducive to the free marketability of listed securities and healthy growth of the capital market. Unrestricted transferability is particularly necessary for securities of public limited companies which are listed on the Stock Exchanges. 2. It was in the above context that it was announced in the Budget Speech dated 16th March, 1985, that the Securities Contracts (Regulation) Act, 1956, would be amended to ensure free transferability of securities of public limited companies whose securities are listed on the Stock Exchanges. For this purpose, it is proposed to incorporate a new section, namely, section 22A, in the Securities Contracts (Regulation) Act, 1956, and also make necessary consequential amendments in the Act, to provide for free transferability of listed securities with adequate safeguards against undesirable take over bids or destabilisation of management. Under the proposed provision, companies would be entitled to refuse registration of transfer in certain circumstances only, such as that the instrument of transfer is not proper or has not been duly stamped and executed or that the transfer is in contravention of an....
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....mpanies Act for the other words and expressions. Section 22A of the SCRA is confined in its application to a company whose securities are listed on a recognised Stock Exchange and to securities which are fully paid up and on which the company does not have a lien. Sub-section (2) contains the key to the new scheme. It declares that securities of companies shall be freely transferable subject to the provi-sions of the section. In other words, the said securities are governed only by the provisions of section 22A and no other provision of law in respect of their transferability. Though sub-section (3) does not expressly refer to section 108 it excludes the operation of section 108 by necessary implica-tion on account of the language used with reference to the securities governed by the section. Both the expressions 'notwithstanding' and 'subject to' are used in the said sub-section. In fact, the provisions of section 108(1) of the Companies Act are virtually rewritten in sub-section (3)(a) of section 22A of the SCRA. The non obstante clause begins with the word 'notwithstanding' and refers to sections 82 and 111 of the Companies Act. The next part of the sub-section adds immediately ....
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....ction prescribes a time limit within which the company shall form, in good faith, its opinion as to whether registration of transfer as applied for ought not or ought to be refused. The sub-section emphasises that refusal can be only on one of the grounds set out in sub-section (3). In fact, sub-section (3) itself permits the company to refuse to register on any one or more of the four grounds set out therein and prohibit the company from refusing registration on any other ground. Under section 111 of the Companies Act, the company had a wide discretion to refuse registration on any ground. Prior to 31-5-1991 there was no necessity for the company to give reason for such refusal. But, by the Companies (Amendment) Act, 1988, which came into force on 31-5- 1991, the company is bound to give reason for such refusal under the amended section 111(1). Under section 22A(4) of the SCRA, if the company decides in favour of registration, it may do so. However, if it forms the opinion that registration ought to be refused on the ground mentioned in sub-section (3), clause (a), it should intimate the transferor and the transferee by notice in the prescribed form about the requirements under th....
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.... the Amendment Act brought about change of far reaching implications with regard to transfer of shares of the listed companies. Annexure 3 in the book has reproduced recommendations of Sachar Committee on transfer of shares contained in para 7.21 of the report. We do not think it necessary to refer to either the passages in the text book or the contents of the Report of Sachar Committee. We have already set out in detail the contents of section 22A of the SCRA which by themselves show that the Legislature intended to change the law relating to transfer and registra- tion of listed securities. 36. Having regard to the purpose, object sought to be achieved by the introduction of section 22A and the mischief sought to be remedied thereby as well as the deliberate change in the language, adopted in the new section, we hold that the doctrine of implied repeal will come into play and the provisions in section 22A of the SCRA will prevail over the provisions of section 108 of the Companies Act in relation to listed securities to the extent to which they are inconsistent. VI. Issue 'B' 37. We have already seen that the company's power of refusal to register transfer is restricted ....
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....which it has to be exercised, the conditions on which it has to be exercised and the types of persons for whose benefit it has to be exercised, the power has to be exercised when the facts establish the circumstances and legal conditions to be fulfilled calling for the exercise of such power. In such situations, 'may' will again mean 'shall'. In section 22A, the word 'may' confer a discretion on the company and it cannot be construed as mandatory. He referred to several rulings in support of his contentions. 39. In Chief Controlling Revenue Authority v. Maharashtra Sugar Mills Ltd. AIR 1950 SC 218, the Court referred to the judgment of the Privy Council in Spooner v. Juddow 4 MIA 353 and quoted a passage therefrom. In the passage extracted, the Privy Council had quoted Lord Cairns in the case of Julius v. Bishop of Oxford [1880] 5 AC 214 at page 222, which read as follows: "...There may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power....
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....ll though they may in a general way be said to have been adversely affected by section 3. If the power was to be discretionary in every case there was no need to enact further than sub-section (2). The reason why two sub-sections were enacted is not far to seek. That Government may have to select some for consideration under sub- section (3) and some under section 7 and may have to dismiss the claims of some others requires the conferment of a discretion and sub-section (2) does no more than to give that discretion to Government and the word 'may' in that sub-section bears its ordinary meaning. The word 'may' in sub-section (3) has, however, a different purport. Under that sub-section Government must, if it is satisfied that an institution or service must be continued or that there is a descendant of a former ruling Chief, grant money or pension to the institution or service or to the descendant of the former ruling Chief, as the case may be. Of course it need not make a grant if the person claiming is not a descendant of a former Ruling Chief or there is other reasonable ground not to grant money or pension. But, except in those cases where there are good grounds for not granting ....
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....not quite accurate to say that the word 'may' by itself acquires the meaning of 'must' or 'shall' sometimes. This word, however, always signifies a conferment of power. That power may, having regard to the context in which it occurs, and the requirements contemplated for its exercise, have annexed to it an obligation which compels its exercise in a certain way on facts and circumstances from which the obligation to exercise it in that way arises. In other words, it is the context which can attach the obligation to the power compelling its exercise in a certain way. The context, both legal and factual, may impart to the power that obligatoriness. 8. Thus, the question to be determined in such cases always is whether the power conferred by the use of the word 'may' has, annexed to it, an obligation that, on the fulfilment of certain legally prescribed conditions, to be shown by evidence, a particular kind of order must be made. If the statute leaves no room for discretion the power has to be exercised in the manner indicated by the other legal provisions which provide the legal context. Even then the facts must establish that the legal conditions are fulfilled. A power is exercise....
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....the requirements of law for securing registration and in the other three cases it has to make a reference to the CLB and forward copies of such reference to the transferor and transferee. Thus, in no case, the company can straightway refuse to register. If the ground for refusal falls under clause (a) of sub-section (3), intimation is to be given to the parties informing them about the requirements which should be fulfilled, for the purpose of registration. That gives an opportunity to the party to rectify the defects in a manner known to law. If the matter falls under clauses (b) , (c) and (d) of sub-section (3), the only course open to the company is to make a reference to the CLB. The Board after giving reasonable opportunity to the transferor and the transferee, passes an order either way. A time limit is prescribed by sub-section (4) within which the company must form an opinion, in good faith, whether the transfer ought or ought not to be refused. Thus, the only act which can be performed by the company immediately after scrutiny of the instruments of transfer etc., is the registration of the transfer. The company cannot refuse to register without adopting the course prescrib....
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....bing stamp duty for any instrument. The only enactment which prescribes stamp duty for instruments referred to in the two Acts is the Indian Stamp Act. In order to find out the stamp duty, one has to refer to the provisions of the Indian Stamp Act. It goes without saying that the expression 'duly stamped' used in the sections can only mean "stamped in accordance with the law prescribing stamp duty for the instruments referred to". It follows that an instrument can be considered to be duly stamped only if it is stamped in accordance with the relevant provisions of the Indian Stamp Act. Necessarily the definition contained in section 2(11) has to be adhered to for deciding whether an instrument is duly stamped. Consequently, section 12 which brings in a legal fiction that the instrument bearing adhesive stamp which has not been cancelled in accordance with that section will be deemed to be unstamped. There is no escape from the application of the legal fiction and if an adhesive stamp on an instrument remains uncancelled, the instrument is, in the eye of law, unstamped with the result, that it is not duly stamped as contemplated by the sections in the Companies Act and the SCRA. 5....
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....o presents the instruments of transfer to the company for the purpose of registering the same. Reliance is placed in the judgment of Chagla, CJ. in Jagdish Mills Ltd., In re AIR 1955 Bom. 79, where it was held that the company is not liable to pay stamp duty on the instrument of transfer and the revenue authorities should only proceed against the person who was liable to pay the duty. Reliance is also placed on the judgments in Babulal Choukhani v. Western India Theatres Ltd. [1958] 28 Comp. Cas. 565 (Cal.) and Nuddea Tea Co. Ltd. 's case (supra) in support of the contention. The registration of the transfers by the company was void inasmuch as the manner and mode of transfer prescribed by the statute was not followed. The names of the respondents were entered in the register without sufficient cause, warranting rectification. The provi-sions of section 22A of SCRA have no relevance in a proceeding for rectification as it is governed by section 111(4) and (5) of the Companies Act from 31-5-1991 and section 155 previously. The two sections operate in different spheres on different stages. While section 22A comes into play at the stage of consideration of application for transfer, se....
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....PC 52 and Bihar Eastern Gangetic Fishermen Co-operative Society Ltd. v. Sipahi Singh AIR 1977 SC 2149 in support of the contention that there could be no estoppel against the statute. Reference is made to Killick Nixon Ltd v. Dhanraj Mills (P. ) Ltd. [1983] 54 Comp. Cas. 432 (Bom.), wherein a prelimi-nary objection was raised that the application for rectification was barred by principles if analogous to those of res judicata and the principle of issue estoppel. The Bench, however, did not decide the question as the matter was being considered at interlocutory stage. Our attention is also drawn to Mahabir Singh v. Jai Singh [1978] 48 Comp. Cas. 558 in which the Delhi High Court said that the Companies Act does not provide anywhere that the company to which share transfer documents are presented within the time limit fixed by section 108(1A) must make the entry in its register of members within any given time. In that case it was also held that the transfer deed was not duly stamped within the meaning of section 108 and entries made in the register on the basis of such a deed of transfer had to be rectified by restoring the original entries to the register. 58. Finally, reliance ....
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...., the document could still be validated with effect from the date of its execution. Our attention is drawn to the judgment of the Supreme Court of the United States in Guy T. Helvering v. Charles N. Nitchell 303 U.S. 391 and Spies v. United States 317 US 492 wherein different types of sanctions in taxation laws were discussed. It was pointed out that some sanctions are punitive and some sanctions are remedial. The maximum fine prescribed in section 63 of the Indian Stamp Act for failure to cancel the adhesive stamp on an instru- ment is only Rs. 100. That indicates that it is not a serious offence. The time of cancellation prescribed in section 12 is not mandatory and it would be sufficient compliance with law if the stamp is cancelled before the document is used. Reliance is placed on the judgment of the Privy Council in Ma Pwa May v. S.R.MMA. Chettiar Firm AIR 1929 PC 279 in which it was ruled that where a document not duly stamped was admitted for registration, the mistake was only an error in procedure and durable under section 87 of the Indian Registration Act, 1908. Our attention is also drawn to Subramanian Chettiar v. Revenue Divisional Officer AIR 1956 Mad. 454, V.E.A. Ann....
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....t or section 22A(3) of the SCRA to be mandatory. Reliance is also placed on Jagatjit Industries Ltd. v. Mohan Meakin Ltd. [1991] 2 Comp. LJ. 288, wherein the CLB held that in the case of blank transfer, the adhesive stamps have to be affixed only at the stage when the instrument is lodged with the company for transfer as the document is deemed to be executed only when the ultimate transferee signs the same. 63. The second limb of the argument of the respondent companies is on the following lines. Rectification is an exercise of quasi-judicial power. It is a discretionary power. Equitable considerations will arise before exer cise of the power, which depends upon the facts and law. The equity and justice of the case have to be decided before granting rectification. It is not a matter of right. Circumstances like delay, laches, conduct and prejudice which may be caused to the parties shall all be taken into account. The principle of estoppel can also apply, if the facts of the case warrant the same. In the present case, there is a long unexplained delay on the part of the company in seeking rectification. The claim that the company did not notice the defect in the instruments of t....
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....nd Birds' Company Law, similar passages are found at page 425. In Halsbury 's Laws of England, 4th Edition, Vol. 7(1), Reissue, at page 253, in paragraph 372, it is stated thus: "The jurisdiction to rectify the register is discretionary. It is not limited by the provisions of the Companies Act, 1985 to the cases mentioned above; thus the Court will rectify the register, apart from the Act, to enable the members of a company to have a fair and reasonable exercise of their rights. When the Court entertains the application, it is bound to go into all the circumstances of the case, and to consider what equity the applicant has to call for its interposition^3." Foot-note 3 therein reads thus: "Trever v. Whitworth [1887] 12 App. Cas. 409 at 440. HL: Re Joint Stock Discount Co., Sichall's case [1867] 3 Ch. App. 119; Bellurby v. Rowland and Marwood's SS Co. Ltd. [1902] 2 Ch. 14. CA; Re Onward Building Society [1891] 2 QB 463. CA; Re Hannan's King (Browning) Gold Mmzng [1898] 14 TLR 314, CA. In the corresponding provision in the Companies Act, 1862 section 35, the Court might make an order for rectification 'if satisfied of the justice of the case'. The words last quoted have be....
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.... the registration was effected within the period prescribed by the sub-section. It is not the case of the appellant company that it did not act in good faith while forming an opinion that registration ought not to be refused for the respondent's companies. 'Good faith' in the sub-section has to be under-stood in the light of the definition found in the General Clauses Act, 1897. Section 3(22) of the General Clauses Act reads that "a thing shall be deemed to be done in 'good faith' where it is in fact done honestly, whether it is done negligently or not". Mere negligence does not negative good faith. In fact the CLB has found in this case that the company acted bona fide in registering the transfers. We have already noted the fact that the board of directors had nominated Mr. D.B. Saxena, one of the directors, as the One Man Committee to scrutinise the instruments of transfer and approve or disapprove the same. Admittedly, some of the instruments were sent back for rectification of certain defects and they were again lodged for transfer after rectification. This shows that the company had acted in good faith, before it formed its opinion as required by sub-section (4) of section 22A....
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.... purpose intended'. It embraces no more than, that which provides a plentitude which, when done, suffices to accomplish the purpose intended in the light of existing circumstances and when viewed from reasonable standard of practical and cautious men." (p. 235) 73. In T.V. Somasundaram Pillai v. Official Liquidator [1967] 37 Comp. Cas. 440, a learned single Judge of the Madras High Court held that a claim to rectify the register cannot be asked for ex debito justitio, and that it must be based on certain accepted principle, particular care being taken to find whether the applicant who is seeking such a discretionary and equitable relief is guilty or not guilty of laches. The learned Judge said that the doctrine of laches has a very great significance. The learned Judge quoted the following observation made by Lord Romilly, M.R. in Walker's case: Anglo-Danubian Steam Navigation & Colliery Co., In re [1868] L.R. 6 Eq. 30, 35: " '...Where there has been no fault on either side, the register remains as it was-where the fault is on both sides, the register also remains as it was'." (p. 445) The above principles do apply in this case. 74. The learned senior counsel for the re....
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.... Vol. 34, 1971, p. 28). Nor is Shri Sen right when he contends that his client admittedly not being guilty of any blessable conduct, therefore, should not be deprived of any part of his decree. Equity is not penalty but justice and even where neither party, as here, is at fault, equitable considerations may shape the remedy. Lord Denning spoke of the new equity that was needed (5 Current Legal Problems 1952 (p. 1) and Marshall said that the time to write finis to the role of the judiciary in the field of equity had not come (See Law Justice & Equity - essays in tribute to Keeton (p. 66). Of course, not novel sentiments but well-settled rules, (not novel sentiments), not the Chancellor's foot but standard-sized shoes, serve the judge in these pathless woods. True, as Keeton said (Keeton Sheridan on 'Equity' p. 37, 1969 edn. Sir Isaac Pitman & Sons Ltd. London). 'An equitable doctrine may prove malleable in the hands of Lord Denning but intactable in the hands of Lord Justice Harman.' 35. In short, our equitable jurisdiction is not hide-bound by tradition and blinkered by precedent, though trammelled by judicially approved rules of conscience...." (p. 836) 77. It is submitte....
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....uest for registration. It is submitted by the respondent companies that the appellant has deliberately omitted to mention the real reason for seeking the equitable relief of rectification. The learned counsel for the appellant submitted that there was no pleading at all before the Board and in the absence of a specific plea with full particulars the case of mala fides should have been thrown out. He took exception to the finding of the learned Single Judge in the C.M.As. 81. We find that the relevant pleading is found in the counter statements of the 1st respondent company. In the counter filed on 3-3-1993 in C.P. No. 11/11/SRB of 1993, the following passages are found: "3. At the outset it is respectfully submitted that the petition filed seeking for deletion and rectification of the Register of Members of the petitioner-company is not maintainable in law, lacks bona fides and is based on disputed facts and as such is liable to be dismissed. ****** The obvious defects discovered now as pleaded by the petitioner were not noticed than which is beyond a reasonable man's comprehension. This conduct itself would go to show that the petitioner has not come before this Hon'bl....
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....ide action on the part of the petitioners, the inevitable result will be that those in management of the petitioner-company, including the said Mr. Saxena and others, who have applied for additional quota of partly convertible debentures beyond their rights entitlement, will benefit, inasmuch as the rights entitlement of the first respondents would lapse and would be available for distribution to the very directors, who had earlier approved the said transfer, and thereafter by precluding the transferors from applying therefore, and now seeking to deprive the transferees also of the said rights, thereby gaining an unfair advantage, which, it is respectfully submitted, is grossly inequitable, unjust, unfair and which conduct, it is respectfully submitted, this Hon'ble Court should not sanction or confer its imprimatur upon, which would tantamount to putting a premium on dishonesty." Again it is averred: "It is further respectfully submitted, and it is pertinent to note, that the mala fides of the company in filing the said rectification application is borne out by the subsequent conduct of the petitioner-company as more particularly set out hereinafter. In this connection, it i....
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....o refrain from giving a factual finding on the question, the learned Single Judge ought not to have ventured a finding against the appellant particularly when an appeal under section 10F of the Companies Act is confined to questions of law. The proper course would have been to call for a finding on the facts from the CLB. But, in view of our conclusions on the other issues, we do not think it necessary to adopt such a course. X. Issue 'F' 86. The Supreme Court has elucidated the law on this aspect of the matter in the following words in Udit Narain Singh v. Addl. Member, Board of Revenue AIR 1963 SC 786: "...The law on the subject is well settled, it is enough if we state the principle. A necessary party is one without whom no order can be made effectively; a proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding." (p. 788) 87. In Luxmi Tea Co. Ltd. v. Pradip Kumar Sarkar [1990] 67 Comp. Cas. 518, the Supreme Court held that in an application filed by a transferee of shares for rectification of the register of the company by insertion of his name the....