2016 (8) TMI 240

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he Company Law Board (in short "CLB") refused registration of the transfer of shares on the ground that the conduct of one of the shareholders is detrimental to the benefit and interest of the company and has relied upon Article 5 of the Memorandum and Articles of Association which empowers the Board in the name of the petitioner. The company further contended that the transfer forms were not duly stamped and they were not submitted to the company within two months from the date of presentation as envisaged under Section 108(1A)(b)(ii). A dispute was raised with regard to the character of the company, that is to say, the public limited company or the private company and depending on an answer to such questions the determination of the applicable Section. The Company Law Board held that the Company being a public limited company, as to rectification of register of shareholders, Section 111-A of the Act is applicable but not Section 111 of the Act. The Company Law Board also held that companies converted into public companies under Section 43A of the Act covered under Section 111 of the Act, such power of refusal being conspicuously absent under Section 111-A of the Act, such power o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... On the basis of the aforesaid, the respondent company as successor-in-interest of the said GNB filed an application for enforcement of the order dated 10th August, 2010 before the Company Law Board (hereinafter referred to as "CLB"). The GNB purchased 90 ordinary shares of and in the appellant Company and sent the original share certificates along with duly stamped transfer deeds for transfer of the shares in its name, but the appellant company, without sufficient cause, had refused to effect the transfer of shares. The respondent company herein instituted proceedings under Section 111A of the Act for rectification of Register of Members in respect of the said shares and this CLB, vide order dated 10th August, 2010, directed the appellant company to effect the registration of the transfer in the name of the petition after lodgment of the share transfer forms upon due compliance of the provisions of Section 108 of the Act. In terms of the directions of the CLB vide order dated 10th August, 2010, the said GNB, vide letter dated 10th September, 2010, made over the original share certificates along with duly stamped transfer deeds for transfer of 90 shares to the appellant company,....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....B by suppression of the fact that it stood amalgamated with the respondent company on and from 1st April, 2010 and also, the 90 ordinary shares stood transferred to and vested in the appellant company on and from the transfer date or the appointed date, i.e., 1st April, 2010. Further, the said GNB had no locus to contest the appeal being A.C.O. NO.157 of 2010 preferred by the appellant company against the order dated 10th August, 2010 passed by this CLB in C.P. No.304 (111A)/ERB/2006. The order dated 19th April, 2012 has been obtained by the said GNB by perpetrating fraud on the Hon'ble High Court at Calcutta and the appellant company. The appellant company refused to effect the transfer of 90 ordinary shares lodged by the said GNB as the mandatory provisions of Section 108 of the Act were not complied with and the promoters and persons in control of GNB were hostile to the management of the appellant Company and were acting agaist the interest of the appellant company. The appellant Advocate has contended that the respondent company is not entitled to the transfer of shares of GNB as it has not complied with the mandatory provisions of Section 108 of the said Act and the appellant....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... was the duty of GNB and the respondent Company to inform the Hon'ble High Court in seisin of APO No.391 of 2010 about the order dated 19th April, 2012 and the scheme of Amalgamation for the merger of GNB with the respondent Company. The appellant Company was informed by the respondent company for the first time about the merger of GNB with the respondent Company in June, 2012. GNB did not have the locus to contest APO No.391 of 2010 on and from 19th April, 2012. The order dated 19th April, 2012 is inexecutable and the CLB has acted illegally in directing the appellant to register the shares in favour of the respondent Company. The CLB in the impugned judgment allowed rectification on the ground that by operation of law the company is entitled to claim rectification. The company losses corporate personality or is deemed to be destroyed on amalgamation from a date declared by the Competent Authority under the Companies Act. When two companies merge into one, the transferor company ceases to exist. In that event, the transferor company is to apply to the company for their registration on the Company's Register of Members. The amalgamation of the two companies was effected pursu....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....trument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation, if any, of the transferee, has been delivered to the company along with the certificate relating tot he shares ..., or if no such certificate is in existence, along with the letter of allotment of the shares ..." The first proviso to such sub-section deals with the loss of an instrument of transfer and permits the company to register the transfer by seeking an indemnity, if thought fit. The second proviso to the sub-section excludes the operation of the substantive provision for registering, inter alia, shares "transmitted by operation of law." Section 108(1) is, in essence, a statutory protective shield for the company whose shares are involved in the transfer. That such provision is couched in a negative instruction to the company cannot detract from its purpose. The transfer of any shares in a company amounts to property in such shares passing from one to another. Ideally, the shares should be freely transferable, as the company cannot have any interest as to who would its shareholders or who sells the shares in....