KURIAN,J. - (1.) Delay condoned. Leave granted.
(2.) The appellant is a public company with majority of shares held by the Government of West Bengal. The respondent, which is holder of 28.54 per cent of the shares purchased 100 shares, which together would make its holding 39.77 per cent, sought registration of the shares. Since, no orders were passed on the registration, the respondent approached the Company Law Board, Kolkata Bench, Kolkata. It was mainly contended by the appellant that the respondent Company is controlled by a competitor in business, and hence, it would not be in the interest of the Government Company to permit such transfer. The Company Law Board, however, rejected the contentions and directed registration as per order dated 16.09.2015. The order, to the extent relevant, reads as follows: "6. Having considered (sic) the Company Petition, reply, rejoinder and the arguments (oral and written), it is observed that the Respondent Company is a Government of West Bengal Undertaking wherein 51.01% of the total issued, subscribed and paid up share capital is held by the Government of West Bengal which correspondence to 454 equity shares of Rs. 3,500/- each. Besides, the Petitioner Company is a member of the Respondent Company being the registered shareholder of 254 equity shares of Rs. 3,500/- each. As stated in the Company Petition, on or about 02.07.2014, the Petitioner Company purchased additional 100 shares of and in the Respondent Company from one Shri Sankar Naik in physical mode and the Petitioner Company vide letter dated 02.04.2014, forwarded the original share certificates along with the transfer deeds duly signed, stamped and executed to the Respondent Company for registering the transfer of the said 100 shares in the name of the Petitioner Company. But, the said communication returned with the postal endorsement "refused" and hence, the Petitioner Company through its Advocate issued a notice dated 09.06.2014 calling upon the Respondent Company in the share register, which was responded to by the Respondent Company vide communication dated 16.06.2014. Thereafter, once again the Petitioner Company vide letter dated 02.07.2014, forwarded all the original share certificates together with the duly executed and stamped transfer deeds to the Respondent Company for effecting registration of the transfer in the name of Petitioner Company. Apart from this, the Petitioner Company followed up the matter by issue of reminder dated 25.08.2014 to the Respondent Company, but in vain. Consequently, legal notice dated 11.09.2014 was issued calling upon the Respondent Company to take immediate steps to register and record the name of the Petitioner Company as the registered owner in relation to the aforesaid 100 shares. In this regard, the Respondent Company has replied that the action of the Petitioner Company has been contrary to the SEBI Act as well Substantial Acquisition of Shares and Takeover Regulations. In addition, the Petitioner Company is controlled by M/s MKJ Group which is involved in similar business as the Respondent Company is carrying on and hence, the intention of the Petitioner Company to purchase 100 equity shares is to take over the control of the Respondent Company. It has also been mentioned that on 13.03.2014, the Petitioner Company had already made an application for the sale of its said 254 Shares to the Principal Secretary of Government of West Bengal, Public Enterprises Division as well as the Managing Director of the Respondent Company. In this context, the Petitioner Company Advocate has averred that the question of acquisition being violation of SEBI Act or Takeover Regulation is not applicable in the case of the Respondent Company as the shares of the Respondent Company are not listed. Not only this, the acquisition of 100 shares cannot and will not change the control of the Respondent Company even after registration of such transfer as the Company will continue to remain as a Government Company. It is also irrelevant in the present context as the Petitioner Company is controlled by MKJ Group or that the business of the Respondent Company and the MKJ Group are similar. 6.1 Under the aforesaid facts and circumstances, it is undoubtedly clear that the Respondent Company received the share transfer deeds along with the original share certificates for registration of the transfer in favour of the Petitioner Company who is already the second largest shareholder in the Respondent Company. On one side, the Respondent Advocate has made the submission that on 13.03.2014, the Petitioner Company had made an application for sale of its 254 shares to the Principal Secretary of Government of West Bengal, Public Enterprises Division as well as the Managing Director of the Respondent Company, on the other side, doubt has been raised over the intention of the Petitioner Company that the purported purchase of 100 equity shares is to take over the control of the Respondent Company. Over and above, the plea has been taken by the Respondent Company Advocate that the Petitioner Company is controlled by M/s MKJ Group and the business of the Respondent Company and MKJ Group are similar, whereas the Government of West Bengal is singly owing 51.01% of the paid up capital of the Company and thereby, the MKJ Group cannot acquire the control of the Respondent Company. As a matter of fact, even if the purchase of additional 100 shares by the Petitioner Company is taken into consideration, the total shareholding of the Petitioner Company will be 39.77% only. Besides, Article 44 of the Article of Association of the Respondent Company gives the authority to the Board to decline the transfer of shares and when such shares are not fully paid up. In the present case, there is no lien on any share of the Petitioner Company and also, the shares are fully paid up. Thus, there seems to be no impediment in transfer of shares and hence, the Petitioner Company has the right to get the shares transferred in its name. 6.2 IN view of the legal position stated supra, I am of the considered opinion that the conditions specified in the concerned Article 44 regarding transfer of shares have been duly filled by the Petitioner Company and the registration of transfer cannot be refused arbitrarily and the reason for non-registration of transfer in favour of the Petitioner Company on the suspicion of acquisition of control by the Petitioner Company over the Respondent Company is baseless and unfounded. Therefore, in the interest of justice, I hereby direct the Respondent Company to register the transfer of impugned 100 shares in the name of the Petitioner Company within 10 days of the receipt of this Order and also, to make suitable entries in the register of members thereafter."
(3.) The order passed by the Company Law Board in C.P. No. 151 of 2014 was challenged by the appellant before the High Court of Calcutta under Section 10F of the Companies Act, 1956. In the Memorandum of Appeal, the following questions of law were raised: "XXV. FOR THAT following substantial questions of law arise for consideration and determination by this Hon'ble Court: a. Whether the Learned Company Law Board was to first consider whether the Appeal has been filed within the time prescribed by Section 58 (4) of the Companies Act, 2013 which is condition precedent to assuming jurisdiction to entertain the Appeal and should have refused to entertain the Appeal? b. Whether it was the inherent duty and incumbent upon the Learned Company Law Board to consider the question of as to whether the Appeal had been filed within the time prescribed under Section 58 (4) of the Companies Act, 2013 and to reject the Appeal? c. Whether the Learned Company Law Board should have held that in any event the application for recording of transfer of shares made on 2nd April, 2014 was refused/rejected by the letter dated 16.06.2014 served on the respondent same day and the appeal not having been filed within 60 days from 16th June, 2014 was barred under Section 58 (4) of Companies Act, 2013. d. Whether the Learned Company Law Board should have held in view of the respondents case in their Advocates letter dated 9th June, 2014 that registration was refused on 2nd April, 2014 the appeal filed on 29th September, 2014 was beyond the time fixed under Section 58 (4) of the Companies Act, 1956 and was not entertainable? e. Whether the learned Company Law Board can direct rectification of the share register in favour of an applicant when the applicant is controlled by Company which is a competitor in similar business of the Company? f. Whether the learned Company Law Board ought to have considered that MKJ Group would have access to the appellant and its trade secrets and tenders submitted and policy decision of the petitioner and act contrary to the interest of the appellant and the public at large? g. Whether the learned Company Law Board can direct rectification of share registration within 10 days from the receipt of the impugned order without there being a valid good reason? h. Whether on the notification of the Companies Act, 2013 the Company Law Board is entitled to give effect to the repealed provision of the Companies Act 1956? i. Whether the learned Company Law Board can pass an order without considering the submissions and arguments of a party in its entirety? j. Whether the learned Company Law Board can pass an order without taking into consideration the contention of the appellant by passing an urreasoned order? k. Whether the provision of the Companies Act, 2013 with relation of the time period fixed in Section 58 and 59 are mandatory? l. Whether in view of the notification of Section 58 and 59 of the Companies Act 2013, the Learned Company Law Board had jurisdiction to adjudicate an application there under in view of the said provision only providing jurisdiction to the Tribunal?" ;