TaxTMI 
TaxTMI 
2015 (2) TMI 1260
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....the first respondent. At that time, the first respondent company was making profits and it was about to declare dividend to its shareholders but unfortunately the declaration of dividend was postponed as the accounts of the company was not finalized. Hence the 13th respondent pledged all his 1310 shares with the respondents 2, 3 and the deceased K. Thangavel and borrowed a sum of Rs. 20,000/- as loan and agreed to repay the same as soon as the dividend was paid to the 13th respondent. At the time of borrowing, the respondents 2, 3 and the deceased K. Thangavel obtained two signatures in two reprinted blank forms from the 13th respondent saying that the above signatures were meant for the receipt of the above said amount. The petitioner submits that the 13th respondent issued a notice through his advocate vide letter dated 21.06.1986 to the respondents 2, 3 and the deceased K. Thangavel informing them about his willingness to redeem the share certificates by paying the money due to them. But the respondents 2, 3 and the deceased K. Thangavel replied on 07.07.1986 stating that the 13th respondent has transferred all his shares on 28.08.1985 in favour of the respondents 2, 3 and the d....
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....isdiction to decide the matter as per section 111(4) of the Companies Act, 1956. The respondents did not raise any other question of law and confined their argument to the question of jurisdiction of the civil court to entertain the suit. The Hon'ble High Court vide Judgment and decree dated 07.03.2007 made in S.A. No. 63 of 1998 allowed the second appeal and set aside the Judgment and decree of the courts below and dismissed the suit on the ground that the civil court has no jurisdiction to entertain the suit. The Hon'ble court further held that the respondent herein is at liberty to approach the appropriate forum. The Hon'ble High Court specifically held that the civil court has no jurisdiction to deal with the disputes arising between the parties. The Hon'ble High Court did not pass any order on merits of the case. This petitioner was aware of the dismissal of the second appeal in S.A. No. 63 of 1998 only during the month of June, 2008 from the 13th respondent herein and immediately contacted his counsel at Chennai for filing a petition before this Hon'ble Tribunal and the present petition came to be filed. Since this petitioner was not a party to the proceed....
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....es Act, 1956 at all. He cannot maintain this petition at all and therefore this petition deserves to be dismissed. In the light of the above settled position of law, the petitioner does not have any locus standi. 5. It is submitted that Section 36 of the Companies Act, 1956 emphatically states that Articles of Association of a company bind the shareholders of the company. Further as per section 82 of the Companies Act, 1956 the shares are moveable properties and are transferable in accordance with the Articles of Association. This is again a declaration of law. Shares in a company are different from ordinary properties and they come with certain rights vested in the shareholders by law and also by the Articles of Association. Therefore, they have to be strictly construed as per applicable provisions of the Companies Act and the Articles of Association of the company. As per section 108 of the Companies Act, 1956 the transfer of shares has to be in accordance with the articles of the company read with section 36, 82 and 108 of the Companies Act. Any other share transfer is invalid. The R1 Company is a private company and the share transfers are restricted. Further the name of the....
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....the Companies Act, 1956 that a person whose name is borne out in the Register of Members is a member of the company. R13 is not a member at all of the company ever since 28.08.1985. As per the case set up by the petitioner purportedly claiming through R3 is that R13 had actually pledged those shares with R2 & R3 (who is no more) and the late K. Thangavel when he borrowed from them a sum of Rs. 20,000/-. Admittedly the petitioner is not a party to the alleged pledge. The petition does not even show when and how the alleged pledge had taken place. The company is not aware of anything about this pledge and only through the suits the company came to know that there is such an allegation. The petition speaks about a pledge in a vague manner and would say that the shares were pledged with respondents 2, 3 (who is no more) and late K. Thangavel. According to the petitioner, the alleged pledge is jointly in favour of those three persons. It is not clear who paid the alleged sum of Rs. 20,000/- and when such sum was paid to R13 and to whom was the share certificates and reprinted blank instruments were allegedly handed over. There is no proof furnished about the existence of the pledge not ....
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....etitioner. The petitioner contended that the 13th respondent who was a shareholder of the R1 Company pledged the shares to respondents 2 & 3 and borrowed a sum of Rs. 20,000/- as a loan during March 1995. It is also stated that the respondents obtained two signatures in two reprinted blank forms from the 13th respondent. It is also contended that the 13th respondent issued a notice vide his letter dated 21.06.1986 on the respondents through his advocate informing about the willingness to redeem the share certificates by paying the money due to the respondents. Further the case of the petitioner is that the respondents vide their letter dated stated that the shares have been transferred on 28.08.1985 in favour of respondents 2, 3 and father of respondents 4 to 12. 10. The Bench is of the view that whether the petition is maintainable and whether the petitioner has any locus standi to file the petition before this Bench. It is contended by the petitioner in the petition that the 13th respondent executed a registered power of attorney in favour of the petitioner on 28.08.1998 to make, sign, execute, present and file all applications, petitions etc. to initiate any legal proceedings....
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....espondent before this Bench. Even on this score alone the petition is liable to be dismissed. Apart from this the petition is also not maintainable on law. Admittedly the company is a private limited company and as per the details given in the petition by the petitioner, section 111 of the Companies Act, 1956 will only apply. Sub section 1 to 4 of section 111 is reproduced hereunder: 1. If a company refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a member in, or debentures of the company, it shall, within two months from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal. 2. The transferor or transferee, or the person who gave intimation of the transmission by operation of law, as the case may be, may appeal to the Tribunal against any refusal of the company ....
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....here was or was not in fact an agreement for purchase of shares, and whether this agreement was proved to exist; proved to have been acted upon and given effect to; and whether, in pursuance of any purported and proved agreement, the shares had actually been issued for consideration paid for that purpose and no other. An assessment of complicated question of facts and a disputed right of a person to become a member of a company is beyond the purview of the Company Law Board acting under section 111 of the Act. The Company Law Board certainly cannot adjudicate or establish the right of a person to become a member of the company". At para 54 the Hon'ble High Court held that "From a reading of these decisions of the Supreme Court, it is possible to deduce a few principles. The first of these is that the Company Law Board is certainly entitled to decide any question relating to the title of a party before it in an application to have his name entered into company's register. However, where membership of the applicant in the company in relation to disputed shares has not yet been established, such a person cannot apply for rectification. That applicant would first have to fil....