TaxTMI 
TaxTMI 
1998 (7) TMI 503
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....said time. When the said application along with shares were submitted to the company, the first petitioner, being the Secretary, wrote back on 26-4-1993 to the respondent Nos. 2 to 5 informing that the board resolution of the Deccan Company dated 15-3-1986 which was the basis for claim of respondent No. 2, had not authorised respondent No. 2 to transfer the said shares. The original shares and the transfer deeds were returned along with the letter dated 26-4-1990. Thereafter on 7-5-1990, the respondent Nos. 2 to 5 again lodged the same shares along with transfer deeds and once again claimed that the resolution dated 15-3-1986 passed by the Board of the Deccan Company properly authorised second respon- dent to transfer the said shares. In the mean time on 11-5-1990 the company received letter from Mrs., Satyabhama, who is one of the shareholders of the Deccan Company, intimating about on undertaking dated 20-4-1988 given by Mr. O.P. Jalan, who is second respondent here, to the Court in which Company Petition No. 27 of 1987 was pending. The undertaking was to the effect that no assets of the Deccan Company would be disposed of pending decision of Company Petition No. 27 of 1987. In v....
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.... 2. It is not disputed that the respondent Nos. 2 to 5 thereafter filed a company appeal before the CLB. The CLB after hearing both the sides directed the company to effect the registration of the shares in favour of the respondent Nos. 2 to 5 and, gave certain other directions. Against this decision of the CLB, an appeal was preferred, under section 10F of the Act by the company, in this Court. This Court confirmed the order of the CLB by its judgment dated 4-2-1998. It was after decision given by this Court and after receiving the certified copy of the order of this Court, that the company complied with all the directions contained in the CLB read with order of this Court. The Share certificates, duly transferred in favour of the respondent Nos. 2 to 5, were sent on 24-2-1998. 3. It is not disputed that during all this time between March, 1990 to February, 1998, the dividend payable on the shares in question was not paid. The company contends that the said unpaid dividend amount was during all these years kept in abeyance, pending registration of Transfer of Shares, and was transferred to the Special Dividend Account as required by section 205A of the Act. The said amount of di....
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....the respondent No. 2 with co-operation of the petitioner No. 2 has devised a plan to harass the respondent Nos. 2 to 5 herein. Several allegations are levelled in that respect but we are not concerned with that. The sum and substance is that the respondent Nos. 2 to 5 are victims of a plan hatched by the brother of the respondent No. 2 with help of the petitioner No. 2. The reasons given are mere ruse for not transferring shares in the names of respondents inspite of lodgment of all the appropriate papers along with the shares of different dates. The company purposely avoided to effect the transfer. Every time the shares were returned back along with a letter. Dividends were not paid for all the intervening period. Different reasons were given on every occasion for not registering the transfer of shares. The legal opinion obtained from so called senior advocate and the firm of solicitors has also been commented with certain harsh allegations. It is alleged that the referred senior advocate was coerced to give a particular opinion. The solicitors' firm gave a tailor made opinion due to interest of the said Firm in the petitioners-company. It is alleged that the opinions given by the....
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....e the respondents Nos. 2 to 5 of their legitimate claim. I do not think that such a plea can be entertained in this petition. Whatever may be the personal disputes between the respondent No. 2 and his brother or, between the respondent Nos. 2 to 5 and the petitioner No. 2, they have to be sorted out elsewhere and not in this petition. The Court is concerned with bona fides as can be found from factual and undisputable material available in the whole episode. It is unfortunate that the respondent Nos. 2 to 5 thought it fair and fit to make certain allegations against a Senior Counsel of Calcutta High Court, who has given opinion to the petitioners and also against a Firm of Solicitors of Calcutta. They have no opportunity to meet such allegations. Making such allegations in collateral proceedings may not be appropriate. It cannot be disputed that the Senior Advocate, Sri. R.N. Bajoria of Calcutta High Court, was consulted by the petitioner- company in the matter and he had given his opinion advising the petition-ers to take certain steps before effecting the transfer. The material also shows that the Solicitors' Firm of Khaitan & Co. was consulted in the matter and legal opinion was....
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....ed holder of such shares in writing to pay such dividend to the transferee specified in such instrument of transfer; and (b)keep in abeyance in relation to such shares any offer of rights share under clause (a) of sub-section (1) of section 81 and any issue of fully paid-up bonus shares in pursuance of sub-section (3) of section 205." 10. The argument is, that in the instant case the company has rejected the application of the respondent Nos. 2 to 5 on each occasion and had returned the share certificates along with other documents on every occasion. The matter was not pending with the company. It is argued that the company was thus devising ways and means not to register the transfer. It is said that the course of events show that the whole exercise was mala fide. In any event, the question of transferring shares in favour of the respondent Nos. 2 to 5 and registering them in their name was not pending with the company and therefore, the payment of dividend could not have been kept in abeyance. The learned counsel for the respondent Nos. 2 to 5 brings to my notice the observations made by the learned Author Shri Ramaiya in his Book on the Companies Act, 1956, (13th Edition). The....
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....be the property of the transferor. There was thus no reason for not paying dividend to the transferor. If the transferor did not dispute the validity of transfer, he would have held the dividend amount in trust for the respondent Nos. 2 to 5 or, would have immediately passed it on, to the respondent Nos. 2 to 5. In fact there is material on record to show that prior to 1990 the dividend was paid to the transferor. Sale of shares to the respondent Nos. 2 to 5 was dated 15-9-1986. The dividend from 1986 to 1990, was then passed on by the Administrator to the respondent Nos. 2 to 5 who also informed that the Deccan Company was acknowledging the respondent Nos. 2 to 5 as the transferees. However, non-payment of dividend to the transferor-share- holders is not the subject matter of this petition, as the petitioners are seeking protection, or shield from prosecution of a likely complaint to be filed by the respondent Nos. 2 to 5 under section 207 for non-payment of dividend to them. The question therefore is whether petitioners should be relieved unconditionally of liability arising out such likely prosecution ? 12. I have found that non-payment of dividend to transferor-shareholders by....
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....o 5 from 1990 to 1998 cannot be stamped as mala fide. True it is, that non-payment of dividend to the transferor was not proper but that is another issue and not required to be discussed at this juncture. 13. From the affidavit and the counters including additional counter and additional rejoinders, it has come on record that the company has opened an account in the name 'unpaid dividend account' of that company. It also appears that the company as soon as it declares dividend within the permitted period, transfers the whole amount of dividend to this account and from that account payment of dividend to the shareholders is made. The unpaid-dividend remains in the same account, undisbursed. The learned counsel for the respondent Nos. 2 to 5 says that the Act nowhere envisages that the whole-declared dividend of the company should be transferred to such account. It is only the unpaid dividend which is required to be transferred to such account. The act of the company in transferring gross-dividend declared at once to such an account is violation of the provisions of Act and, for that violation, the petitioners can be prosecuted. It is argued that such factual position is admitted by....