Miss Aarti Mukund Pardhanani vs Mac Charles (India) Ltd.

H.N. Nagamohan Das, J.—These two company petitions are filed u/s 155 of the Companies Act, 1956 seeking an order to rectify the register of members of first respondent-company by deleting the names of respondents 2 and 3 and to show the name of petitioners as the owner of equity shares of the company.

The first respondent is a public limited company incorporated under the Companies Act, 1956 on 28-9-1979. The object of the first respondent company is to carry on the business of hotel, restaurant etc., Petitioner in Co. P. No. 109/1987 and the second respondent are brothers. Second respondent, was the Chairman of the first respondent-company and petitioner was the Managing Director of the Company. According to respondents 2 and 3 the petitioner clandestinely played a fraud on them. Petitioner by making a false representation secured blank share transfer forms for effecting transfer of shares from the name of respondents 2 and 3 to the fourth respondent-M/s Kapi Investments Ink Ltd., after securing necessary permission from concerned authorities. In good faith and trust respondents 2 and 3 signed blank share transfer forms. Petitioner being the Managing Director used the said blank share transfer forms and illegally transferred shares in his name, in his daughter and the petitioner in Co. P. No. 109/1987 instead of transferring them to M/s. Kapi Investment Ink Limited. Respondents 2 and 3 on coming to know the illegal transfer of shares to the name of petitioners, complained to the first respondent-company. The first respondent-company in the meeting of Board of Directors on 17-10-1987 resolved to delete the name of petitioners and to enter the name of respondents 2 and 3 in the register of members of the first respondent-company. Aggrieved by this, petitioners got issued lawyer''s notice on 23-11-1987 calling upon the first respondent to rectify the mistake and to enter their names as shareholder of the shares in question. Since the respondents failed to react to the request of the petitioners they are before this Court in these petitions.

Heard arguments on both the side and perused the entire petition papers.

u/s 108 of the Indian Companies Act, 1956, a company shall not register the transfer of shares or debentures of the Company unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of transferee has been delivered to the company along with the certificate relating to the shares or debentures. Therefore, the requirement u/s 108 of the Companies Act, 1956 is that the instrument of transfer should be duly stamped and that the same should be delivered to the company. The provisions contend in section 108 of the Companies Act are mandatory in nature. On the face of it if the company is satisfied that an entry in the register is by mistake, it is always open for the company to rectify such a mistake without, there being an order from the court.

In the instant case, the Board of Directors in their meeting noticed that the transferor''s signature was not affixed in the presence of witnesses, stamps were not affixed or the transfer deeds, specimen, signature of the transferee was not obtained on the document and procedure laid down in Article 10 of the Articles of Association of the company was not followed and certain columns are unfilled. Therefore, the Board of Directors in their meeting held that the alleged transfer of shares to the name of petitioner as illegal and void. When the Board of Directors realised the mistake committed by them, then it is always within their inherent power to rectify such a mistake. Therefore, the impugned entry in the register of members of first respondent-company is in accordance with law and I find no justifiable ground to interfere with the same.

It is seen from the record that the first respondent passed the impugned resolution not on the basis of complaint given, by respondents 2 and 3 in the impugned resolution the first respondent has not gone into the controversy between the parties. The resolution discloses that the company noticed the mistake committed by them, and the same was rectified.

Petitioners contend that, the transfer of shares in their favour from respondents 2 and 3 is genuine and valid. On the other hand, respondents 2 and 3 contend that the petitioners by playing fraud, and on misrepresentation obtained the blank transfer forms and effected the transfer of shares in their name. I do not propose to go into this controversy between the parties in these petitions. However, petitioners are at liberty to workout their remedy in accordance with law before appropriate forum if they so desire.

For the reasons stated above the petitions are hereby dismissed.