TaxTMI 
TaxTMI 
2005 (7) TMI 354
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....e said review application of the appellant herein was dismissed. 2. It may be noted at this stage that against the order dated January 12, 2001, passed in C. P. No. 16 of 2000, the appellant herein had earlier also filed an appeal in this court being Co. A. (B) No. 4 of 2001. However, on April 25, 2001 when that appeal came up for hearing the appellant sought leave of the court to withdraw the said appeal as she was willing to seek review of the Company Law Board's order dated January 12, 2001. That appeal was accordingly dismissed as withdrawn without prejudice to the right, if any, of the appellant to file an application for review of the impugned order before the Company Law Board. Since the earlier appeal against the order dated January 12, 2001 was withdrawn by the appellant, a preliminary objection is raised to the maintainability of this appeal against the same order on the ground that no second appeal is permitted after earlier appeal was dismissed as withdrawn. It is also submitted that in any case this appeal filed against the order dated January 12, 2001 would be hopelessly time-barred. 3. However, few facts necessary for determination of the issues involved in the app....
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....er percentage shareholding had come down below 14.7 per cent, which percentage would be restored if she accepts further shares to be offered to her which offer should be made within one month from the receipt of the impugned order and the appellant would be at liberty to accept this offer within three months from the date of this offer by remitting necessary consideration; (vi)in case she does not accept the offer within the aforesaid period, direction in this regard would not survive after that offer ; (vii)as and when further shares are issued, she should be offered proportionate shares; and (viii)so long as the appellant is a director, notices for the board meetings should be sent to her along with the agenda by registered post with seven days clear notice. 5. As already pointed out above, the core issue is the sale of shares held by respondents Nos. 2 to 4 to respondents Nos. 6 to 9. According to the appellant, a memorandum of family agreement dated May 4, 1999 was arrived at between the parties as per which, it was agreed by all the four sisters that in case any sister wants to dispose of her share, she would first offer the same to the other sisters. It was submitted that....
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....eceived an offer from an outside party, but as they were bound by the family settlement and as per the minutes of meeting dated March 16, 1994, they would like to sell their shares within the family. Since the company was suffering losses at that time, the appellant and respondent No. 4 replied vide letter dated October 17, 1997 and objected to the sale of shares to outsiders and requested for time to attain some smooth transition. Thereafter, in the board meeting held on November 6, 1998, it was resolved that two promoter directors of the company were selling their shares to the other two promoter directors and request was also made for giving them some time for completing the transaction. At that time respondent No. 4 even expressed her happiness vide letter dated October 20, 1997, that the appellant had decided to purchase her shares. According to the appellant, thereafter there was some delay on the part of the appellant in arranging the funds, as she got involved in the illness of her daughter-in-law, which was of very serious nature and respondents Nos. 2 and 3, realising this crisis, never asked the appellant and her sister (respondent No. 4) to accept the payment of shares.....
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....ring the same to the petitioner cannot be considered to be an act of oppression. An act to be construed as oppressive, has to be either burdensome or wrongful or it should involve an element of lack of probity and fair dealing to a member in matters of his/her propriety right as a shareholder. Such right could be either by virtue of the provisions of the Act or the articles and in some cases could be imputed on equitable grounds. Since the company is a public limited company, as per section 111A of the Act which is applicable to the company, there could be no fetters on the right of a shareholder to transfer his/her shares. Thus, no statutory right has been conferred on the petitioner to claim the shares for herself. In the same way, in the absence of any provisions in the articles giving a preemptive right to a shareholder, no right has been vested in the petitioner to seek transfer of the shares held by the respondent sisters. (This is notwithstanding the legal position that a public company cannot have any provision giving pre-emptive rights to its members). If we consider the right on equitable grounds, it is on record that, in terms of the articles, when the second and third r....
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....s of section 111A of the Act, there could not be any fetters on the right of a shareholder to transfer his/her shares. It may be noted that the Legislature has made different provisions for transfer of shares in case of private limited company and public limited company. Section 111, which deal with power to refuse registration and appeal against refusal relate to the private limited companies. On the other hand, the provisions of section 111A dealing with "rectification of register on transfer" are attracted in the case of public limited companies. While restrictions can be stipulated in the articles of association so far as transfer of shares of a private limited company is concerned, sub-section (2) of section 111A of the Act specifically provides that the shares or debentures and any interest therein of a company shall be freely transferable. Proviso to this sub-section further stipulates that if a company without sufficient cause refuses to transfer the shares within two months, the transferee may file an appeal to the Company Law Board and "it shall direct the company to register the transfer of shares". Since respondent No. 1 company is a public limited company, the Company ....
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....y had also issued share equity to financial institutions from whom it had borrowed funds for construction of hotel. Therefore, it was not a case where the outsiders were going to be inducted for the first time. In any case, due to financial crisis the company was unable to repay the borrowings of the financial institutions with the result even notice under section 29 of the State Financial Corporations Act were issued. Sisters were also not having cordial relations among them. The two sisters (respondents Nos. 2 and 3), in these circumstances, decided to part with their shareholdings and in view of the family arrangement, they offered to sell their shares to the appellant and respondent No. 4 way back in the year 1997, although under the provisions of the Companies Act they were under no such obligation. The fact remains that till February 2000, the appellant could not respond to this offer by taking any positive steps. The appellant has herself admitted the same, although she has tried to explain away by giving her own reasons and stating that she got involved in the illness of her daughter-in-law, which was of serious nature and, therefore, she could not arrange the funds. Be tha....
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.... related to sale of shares held by her sisters to an outsider group in contravention of the memorandum of understanding, that new directors have been appointed without notice to her, that further shares had been issued to new shareholders and that she had been sidelined from the management of the affairs of the company. In respect of the first allegation relating to sale of shares in contravention of the memorandum of understanding we had held that in doing so the sisters of the petitioner had not acted in an oppressive manner. In regard to the allotment of further shares, this Bench found some substance in the allegation and had directed that she should be offered proportionate shares. In regard to the allegations of being sidelined in the management, this Board had directed that she should continue as a director as long as her shareholding continued to be 14.7 per cent, shares and in respect of appointment of additional directors we had held that in terms of article 89, the incoming shareholders had the power to appoint additional directors. The only reference to the receipt is in para. 10 of that order that in view of the said receipt the petitioner cannot complain of non receip....