(1.) IN this order we are considering two appeals filed under Section 111 of the Companies Act, 1956, involving 100 shares in Petition No. 155/111/ 92 and 3,050 shares in Company Petition No. 154/111/92 in Auto Lamps Ltd. (hereinafter referred to as "the company"). Since the facts and circumstances of both the cases are similar, we are disposing of these two petitions by this common order.
(2.) The 3,050 impugned shares were purchased by the petitioners in Company Petition No. 154/111/92 from one Shri R. Raghuraman, on March 20, 1990, and 100 shares on April 16, 1990, from one Shri Raghunath P. Aggarwal jointly with Mrs. Annu Gupta, Miss Vibha Aggarwal and Miss Shruti Aggarwal. These shares were lodged along with the instruments of transfer with the company on the dates of purchase itself. It is the case of the appellants that Shri Vimal K. Gupta, one of the appellants, in his capacity as a director of the company, raised the matter of transfer of these shares at various board meetings of the company and the petitioners had also sent reminders in writing about the registration of transfer a number of times but no action was taken by the company for nearly two years. On March 21, 1992, the appellants sent a notice to the company under Section 113(3) for return of the certificates and in response by a letter dated March 31, 1992, which was received by the appellants on April 4, 1992, the company informed them that the board of directors of the company had refused registration of the impugned shares. Aggrieved by the decision of the company, the instant appeals have been filed on April 22, 1992.
In the reply filed by the company, it is stated that the appeals are not maintainable under Section 111 for the reason that the board of directors of the company had refused registration of transfer of the impugned shares, at its meeting held on June 30, 1990, when Shri Vimal K. Gupta, one of the appellants, was present in his capacity as joint managing director. Therefore, he had notice of refusal of the registration of shares and as such should have come before the Company Law Board within a period of two months thereafter, which the appellants had failed to do. Since the appeals were filed only on April 22, 1992, the same are time barred under Section 111(2). Refusal was on the ground that the instruments of transfers were not properly stamped and executed and the transfers were likely to result in disproportionate shareholding and, therefore, be prejudicial to the interest of the company and its shareholders. It is further stated that this matter was once again considered on November 25, 1990, by the board of directors and it was resolved that since the legal infirmities regarding the transfer of shares have not been removed by Shri Gupta, the transferee, the same cannot be registered. Discussions on transfer of the said shares, it is further stated in the reply, were deferred for reasons stated at the above meetings held on February 15, 1991, April 17, 1991, May 15, 1991, and June 28, 1991. According to the company, it is, therefore, evident that the matter was finally decided by the board of directors of the company on June 30, 1990.
(3.) ACCORDING to the company, the letter dated March 31, 1992, only conveyed the information which related to the decision as back as on June 30, 1990, when the board took the decision to refuse registration of transfer of shares and as such the letter dated March 31, 1992, itself is not a letter of rejection giving cause of action to the appellants to move these appeals. It is also stated that the instruments of transfers along with the share certificates were returned to Shri Vimal K. Gupta on June 30, 1990, during the board meeting itself and as such they are no longer with the company. Further, it is averred that the transfers were in violation of article 43 of the articles of association of the company, according to which the names of the transferees will have to be approved by the board of directors before transfer, which, in the present cases were not complied with. In addition, as the registration of transfers of the impugned shares in favour of the appellants would disturb the equilibrium of the present management of the company and as such the transfer will be against the interest of the company and its members, the same was refused and this decision of the board should not be disturbed.;