SRINIVASAN J. - (1.) KOTHARI Industrial Corporation Limited is the appellant in all these appeals. It will be referred as "the appellant" in this judgment. The second respondent in all the appeals is KOTHARI Orient Finance Limited. The first respondent in these appeals are different companies, who are the only contesting respondents. There are 11 such companies. In this judgment, they will be referred to as "the respondent companies". The respondent companies lodged 4, 77, 560 shares of the appellant for registration of the transfer of these shares in their names, on June 29, 1991, June 11, 1992, and September 21, 1992. The transfers were approved for registration by the board of directors after the one-man committee appointed by it, viz., Sri B. P. Saxena, approved of the same. The transfers were accordingly registered in the names of the respondent companies. Pursuant thereto, the respondent companies have been receiving dividends. On October 15, 1992, the appellant offered a rights issue of partly convertible debentures (PCDs) to the shareholders in the ratio of one PCD of the face value of Rs. 400 each for every 17 shares held on the expiry of six months from the date of allotment of Rs. 250 to be adjusted towards adjustment of ten equity shares of Rs. 10 each at a premium of Rs. 15 per share. The respondent companies applied not only for the rights but also for additional PCDs before the closure of the issue on December 15, 1992. The appellant claims to have scrutinised the share transfers in favour of the respondent companies and found that the adhesive stamps on most of the transfer deeds had not been cancelled and on the remainder, the stamps had been partly or fully cancelled by the staff of the second respondent in these appeals, who is the registrar of the appellant-company. The details thereof are as follows :List A : 2, 721 share transfer instruments, where the stamps had not been cancelled, and remained uncancelled throughout, pertaining to 3, 00, 393 shares. List B : 2, 955 share transfer instruments, where the stamps had been fully cancelled by the staff of the second respondent pertaining to 1, 73, 604 shares. List C : 53 share transfer instruments where the stamps had been partly cancelled by the staff of the second respondent pertaining to 3, 563 shares. The appellant filed 11 petitions before the Company Law Board on January 25, 1993, under section 111 of the Companies Act, 1956, seeking the deletion of the names of respondent companies from the register of members for reasons set out in the petitions. The case of the appellant in short before the Board was that the share transfer instruments were not duly stamped as per the provisions of the Indian Stamp Act, which require the cancellation of stamps prior to or at the time of the execution of the documents with the result, the registration of transfers was void ab initio and illegal. The cancellation of some of the instruments partially or fully by the staff of the second respondent would not validate the deeds. As the respondent companies were not legally members of the appellant-company and as their names had been entered in the register without sufficient cause, the register shall be rectified and their names deleted. It was the further case of the appellant that the respondent companies were not entitled to the issue of any further rights. A prayer was also made for refund of the dividends paid to the respondent companies on their shares so that the dividends could be paid to the transferors of the shares. The appellant-company prayed for interim orders directing the company not to do any act or deed in pursuance of the letter of offer dated October 15, 1992, in regard to the respondent companies and to restrain the company from allotting any PCDs, shares--including bonus and rights--to the respondent companies in relation to their alleged entitlement of shares in respect of the shares covered by the petitions. The Company LawBoard passed an interim order on February 5, 1993, keeping allotment of rights and additional PCDs to the respondent companies in abeyance until the disposal of the main petitions. It gave liberty to the respondent companies to inspect the original instruments of transfer. After such inspection, the respondent companies filed a reply. Their case was that the petitions for rectification were not maintainable in law and barred by limitation. It was also their contention that the board of directors had a discretion to register a transfer under section 22A of the Securities Contracts (Regulation) Act, 1956, which was introduced in 1985 and having exercised such discretion and registered the transfers, it was not open to the appellant to seek rectification of the register by deletion of the names of the respondent companies. They had also challenged the bona fides of the appellant in filing the applications for rectification and contended that the conduct of the appellant disentitled it to get any relief in the petitions. The respondent companies also raised the plea of estoppel. They submitted that the equitable jurisdiction of the Board could not be exercised in favour of the appellant. They also contended that without impleading the transferors of the shares, the applications were not maintainable. The Company Law Board passed its final order on October 20, 1993, directing rectification of the register of members by deletion of the names of the respondent companies in respect of the shares covered by List A and List C. The prayer of the appellant for rectification was negatived with respect to the shares in List B. The Board gave the following directions in the said order: "(a) The register of members shall be rectified by removing the names of the respondents in respect of the shares covered in Lists A and C of annexure I within ten days of receipt of this order.(b) The rights PCDs in respect of shares covered in Lists A and C of annexure I which have been kept in abeyance shall be allotted to the respondents. However, in respect of the convertible portion, as the date of conversion is already over, the shares for the converted portion along with the non-convertible portion of the PCDs, will be allotted within ten days of receipt of this order. (c) The additional rights PCDs in respect of shares covered in Lists A and C which are kept in abeyance will be allotted to all the existing members who have applied for additional rights, in consultation with the Madras Stock Exchange. (d) The rights PCDs and the additional rights PCDs kept in abeyance in respect of shares covered in List B in view of our decision that there need be no rectification, shall be allotted to the respective respondents. Here also, as in (b) above, the shares for the converted portion along with the non-convertible portion of the PCDs, will be allotted to the respective respondents within ten days of the receipt of this order. (e) The respondents shall not be entitled to any interest on the application money for PCDs and additional PCDs whether allotted or not inasmuch as the entire amount was remitted through stock invests which have not been encashed by the company so far. (f) The respondents will retain the dividends they have received in the past in respect of all the shares covered in Lists A, B and C of annexure I and there is no need for them to refund the same. (g) In regard to registration of transfers in respect of shares in Lists A and C, the respondents may lodge the instruments afresh in accordance with section 108 of the Act for consideration by the company."* Both parties were aggrieved by the order of the Board with reference to the portions respectively against them. Appeals were filed under section 10F of the Companies Act against the order of the Board. The appeals filed by the appellant were numbered as C. M. A. Nos. 1245 to 1255 of 1993. The appeals filed by the respondent companies were taken on file as C. M. A. Nos. 1412 to 1422 of 1993. All the appeals excepting four which were omitted to be posted by oversight were heard by a learned single judge of this court and a common judgment was rendered on April 7, 1994. The learned judge has allowed the appeals filed by the respondent companies and dismissed the appeals filed by the appellant in the following terms : "(a) the orders of the Company Law Board, dated October 20, 1993, directing the rectification of the share register of the appellant-company in respect of the shares falling under Lists A and C (categories I and III) are hereby set aside and the appeal filed by the 11 respondent companies against the direction of the Company Law Board directing rectification of the share registers with regard to the shares falling under Lists A and C, namely, C. M. A. Nos. 1412 to 1422 of 1993 are allowed ; (b) the appeals preferred by the appellant-company, namely, C.M.A. Nos. 1245 to 1251 of 1993, challenging the decision of the Company Law Board refusing to rectify the register in respect of the shares falling under List B are dismissed ; (c) the appellant-company, KOTHARI Industrial Corporation Limited, shall proceed to finalise and allot rights PCDs and additional rights PCDs to the extent of the entitlement of the 11 respondent companies pursuant to their applications in terms of letter of offer dated October 15, 1993, within two weeks from today ; and (d) the other directions of the Company Law Board shall stand vacated. In the circumstances of the case, each party will bear their own costs."* Aggrieved thereby, the appellant has preferred these letters patent appeals under clause 15 of the Letters Patent. When we found that four of the C.M.As., viz., C. M. A. Nos. 1252 to 1255 of 1993, continue to be pending, we had them posted for orders on July 19, 1994. Counsel on both sides represented that no separate argument is necessary in those C.M.As. and we could render a judgment common to all the L.P.As. and the four C.M.As. Accordingly, we have included the said C.M.As. in this judgment. II. Rival contentions.--The contentions of the appellant are as follows:(1) The provisions of section 108 of the Companies Act are mandatory, according to which a company shall not register a transfer of shares unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor has been delivered to the company along with the certificates relating to the shares. In the present case, with reference to the shares mentioned in Lists A, B and C, the instruments were not duly stamped, as the stamps thereon were not cancelled as required by the provisions of the Indian Stamp Act which are also mandatory. According to section 12 of the Indian Stamp Act, if the stamp is not cancelled at or about the time of execution of the instrument, the instrument shall be deemed to be unstamped. (2) The provisions of section 108 of the Companies Act are not overridden or modified by section 22A of the Securities Contracts (Regulation) Act, 1956 (3) The said section 22A has no application in a case where a company has registered the shares and thereafter seeks rectification under section 111, sub-sections (4) and (5). The construction sought to be placed on the said section 22A by the respondent companies is erroneous. (4) There can be no estoppel against a statute and the fact that the registration was effected by the appellant-company earlier will not prevent it from pointing out that the same is void. (5) There were no mala fides whatever on the part of the appellant-company in seeking rectification of the register. There was no pleading in this regard by the respondent companies. (6) The doctrine of laches cannot be applied as no rights have accrued in favour of any third party.In reply thereto, the following contentions are urged on behalf of the respondent companies : 1.Section 22A has been deliberately introduced by the Legislature in the Securities Contracts (Regulation) Act with a view to govern transfer of shares and provide for free transferability and registration of transfers of securities of listed companies. After the introduction of the said section 22A, the provisions of section 108 cannot be invoked with respect to listed companies as the later legislation on the same subject-matter will prevail. It gives a discretion to the company to register or refuse to register any transfer on any one or more of the grounds mentioned therein. The change in the language of the section from that found in section 108 of the Companies Act is significant.
(2.) THE appellant-company being a wrongdoer, as it has contravened the provisions of law, cannot invoke the equitable jurisdiction of the Company Law Board. The purpose of the Stamp Act is only to collect revenue and to prevent the cheating of the Revenue and the provisions thereof cannot be used to defeat the substantive rights of parties.
(3.) THE petition for rectification is not maintainable as the transferors have not been impleaded as parties. THE transferors cannot be traced after such a long lapse of time and irreparable prejudice would be caused to the respondent companies if the prayer of the appellant company is granted.;