(1.) THESE four appeals have been filed under Section 111 of the Companies Act, 1956 (hereinafter referred to as "the Act"), by the appellants herein against the refusal of registration of shares by Hyderabad Industries Limited (hereinafter referred to as "the company"). 'As the facts and circumstances in all the appeals are similar, we are disposing of these four appeals by this common order.
(2.) The brief details of the appeals, are as follows. The appellants herein lodged with the company the shares as indicated in the annexure-"I" along with the relevant transfer deeds on October 29, 1990. The company informed the appellants through a letter dated December 28, 1990, that, the board of directors had, in their meeting held on December 26, 1990, decided to refuse the registration of the abovementioned shares on the ground that the instruments of transfer were not proper and complete documents and information relating to transfer have not been submitted as called for by the company earlier and hence the requirements under the law relating to registration had not been complied with. According to the appellants these grounds of refusal are not correct and, therefore, they have filed these appeals on February 27, 1991.
The company in its reply has taken the stand that the refusal of registration was proper and the board was correct in refusing to register the shares in the name of the appellants. According to the company, the shares were originally in the name of Deccan Enterprises Private Limited ' (hereinafter referred to as "Deccan") and there was no valid authorisation of the transferor company for the transfer of these shares and the appellants do not hold proper instrument of transfers duly executed by the transferor company. It has also been averred by the company that the transfer of shares by the transferor company was in violation of an undertaking given by the transferor company to the High Court of Andhra Pradesh in another proceeding, that it would not dispose of any of its assets.
(3.) DURING the hearing, Shri C. Harikrishnan, senior advocate, appearing on behalf of the appellants, submitted that originally the shares were in the name of Deccan in which Shri O.P. Jalan, one of the appellants in the present proceedings, was the managing director. He was authorised by a board resolution of the transferor company on March 15, 1986, to invest, purchase or acquire shares up to a total limit of Rs. 20 lakhs at any one time at his discretion and on the basis of this authorisation, Shri O.P. Jalan transferred these shares to the appellants herein on payment of valuable consideration on March 16, 1990. These shares were originally lodged for registration of transfer on March 16, 1990, along with a certified copy of the board resolution of the transferor company dated March 15, 1986, but the respondent company returned these shares certificates and transfer deeds with a letter dated April 26, 1990, on the ground that the board resolution of the transferor company dated March 15, 1986, did not pertain to sale/transfer of the shares under reference. Therefore, the respondent company sought for specific authorisation from the board of the transferor company authorising the sale of these impugned shares. The appellants, once again, on May 7, 1990, wrote to the company that the overall authority given by the transferor company by resolution dated March 15, 1986, covers the sale/transfer of the impugned shares also. Again the company returned the shares vide its letter dated June 14, 1990, reiterating its stand. It also raised another objection that there was noauthorisation/consent in terms of Section 297 of the Act for transfer in favour of the appellants. Further, the company also informed the appellants that one of the shareholders of the transferor company has intimated, in writing to the company, that the transferor company had given an undertaking before the High Court of Andhra Pradesh that none of the assets of the company would be disposed of and as such the disposal of these shares by the transferor company was against the undertaking given and as such should not be registered in the name of the appellants. The appellants again wrote to the company vide their letter dated July 17, 1990, enclosing therewith the resolution of the transferor company dated May 5, 1989, authorising Shri O.P. Jalan to execute, on behalf of the company, transfer deeds in respect of all the impugned shares which conclusively proves that the board resolution dated March 15, 1986, authorised the sale/transfer of the impugned shares. The company was also informed that the undertaking given in the High Court of Andhra Pradesh was in the year 1988 while the impugned shares were sold as early as in September, 1986, and as such there is no violation of the undertaking given to the High Court of Andhra Pradesh by the transferor company. However, the company again returned the instruments along with the share certificates, vide its letter dated September 8, 1990, not only disputing the explanation given by the appellants but also on the ground that the transfer deeds had become invalid in terms of Section 108(1A) of the Act as being beyond the one year period from the date of endorsement by the Registrar of Companies. Counsel for the appellants also stated that the administrator appointed by the Andhra Pradesh High Court went into the validity of the transfer of the impugned shares and vide his decision dated October 17, 1990, he held that these shares had in fact been sold by the transferor company to the appellants and valuable consideration had been received by the transferor company. This fact was informed, Shri Harikrishnan stated, to the company, vide letter dated October 20, 1990. He also further stated that the appellants once again sent back the shares along with the transfer deeds to the company and in spite of this the company has decided to refuse the transfer.;