R.M. Datta, J. - (1.) This is an application for rectification of the share register of a private company named Presidency Nursing Home Pvt. Ltd. The company was incorporated in the month of October 1947 under the Indian Companies Act, 1913. It is a private company within the meaning of Sec. 3(1)(iii) of the Companies Act, 1956.
(2.) The facts shortly are that on or about June 2, 1972, Sm. Monica Rati Mallick, a member of the company, the Respondent No. 5 herein, agreed to sell her 250 shares of this company to the Petitioner Shyamdhan Chakraborty at the rate of Rs. 80 per share. The company was informed and was requested to have the shares transferred in the name of the said Shyamdhan Chakraborty. The Petitioner Shyamdhan Chakraborty, at all material times, was and still now is a member, a director and the secretary of the company. The company by its letter dated June 12, 1972, informed the member proposing the transfer that under Article 13 of the articles of association of the company it was incumbent upon the Respondent No. 5 to offer her shares to the members of the company in accordance with their holdings and if the company did not secure any purchaser of the said shares within 28 days of the service of the said notice of transfer, the Respondent No. 5 might then become entitled to transfer her shares to a person of her choice. The member proposing the transfer by her letter dated June 27, 1972, again requested the company to have the transfer recorded and the shares mutated in the name of the Petitioner as and when the transfer deed would be submitted. The company ultimately did not accede to the request or demand. Subsequently on or about March 7, 1973, the Petitioner paid Rs. 20,000 to the transferor and obtained the transfer deed duly signed by the transferor and submitted and/or caused the same to be submitted to the company and/or to its directors for mutation in favour of the Petitioner It is to be mentioned here that the company did not dispute and in fact, accepted the valuation at which the transferor intended to sell her shares but contended that the said shares should be sold, as would be directed by the directors, in terms of the provisions of the articles of association of the company.
(3.) The short and the important point involved is whether the articles would -permit such transfer. Hence, the articles have to be construed to find out the nature of the right involved in the transferor in transferring her shares in favour of another member. The following articles are relevant for the Court's consideration in this application: (2) The company shall be a private limited company within the meaning of Sec. 2(13) of the Indian Companies Act, 1913 -36 and accordingly: (i) No invitation shall be issued to the public to subscribe for any share, debenture or debenture stock of the company. (ii) Number of members of the company shall be limited to fifty, provided that for the purpose of this provision where two or more persons hold one or more shares jointly they shall be treated as a single member. (iii) The right to transfer the shares of the company is restricted in manner and to the extent hereinafter appearing. (4) No share shall save as provided in these presents be transferred to a person who is not a member so long as any member or any person selected by the Directors as one whom it is desirable in the interest of the company to admit to membership, is willing to purchase the same at a fair value to be determined in the manner hereinafter provided. (5) Any share may be transferred at any time by a member to his son, daughter, brothers, son, brother, father, mother or to his wife and in case of female to her husband and any share of a deceased member may be transferred by his Executors or Administrators to the said relations of the deceased member to whom the deceased may have specifically bequeathed the same or who by operation of law of succession may be entitled thereto and shares standing in the name of the Executors or Trustees of the will of any member may be transferred upon any change of Executors or Trustees to the Executors of Trustees for the time being of such will and any share standing in the name of any firm may be transferred to any member of such firm and Article 4 shall not apply to any transfer authorised by this clause. (7) Any person becoming entitled to transfer shares in consequence of the death, bankruptcy or lunacy or other legal incapacity or insolvency of any member or in consequence of marriage of any female member or otherwise than by transfer, upon producing the share certificate and upon such evidence of title as the Directors think sufficient, may subject to the regulation as to transfer in these presents contained be registered as a member himself or may transfer such shares. (8) In order to ascertain whether any member or person selected under Article 4 as aforesaid is willing to purchase a share, the person proposing to transfer the share (hereinafter called the 'proposing transferor') shall except where the transfer is made pursuant to Article 5 as aforesaid give notice in writing (hereinafter called the 'transfer notice') to the company that he desires to transfer the same. Such notice shall specify the sum he fixes as the fair value and shall constitute the company his agent for the sale of the share to any member of the company or person selected as aforesaid at the price so fixed or at the ( option of the purchaser at a fair value to be fixed in accordance with these articles. (9) If the company shall within the space of 28 days after being served with such notice find a member or person selected as aforesaid willing to purchase the share (hereinafter called the purchasing member) and shall give notice thereof to the proposing transferor, he shall be bound upon payment of the price fixed by him or the fair value, as the case may be, to transfer the shares to the purchasing member who shall be bound to complete the purchase within 7 days from the service of such last mentioned notice. (10) In case of difference between the proposing transferor and the purchasing member as to the fair value of a share, the Directors or, if the purchasing member be a Director, the Auditor of the company for the time being shall on application of either party certify in writing the sum which in his opinion is the fair value and such sum shall be deemed to be the fair value and in so certifying the Directors or the Auditors, as the case may be, shall be considered as experts and not as arbitrators. (11) If in any case the proposing transferor, after having become bound as aforesaid, make default in transferring the shares, the company may receive the purchase money and shall cause the name of the purchasing member to be entered in the register as the holder of the share and shall hold the purchase money in trust for the proposing transferor to be paid to him on delivery of his certificate for the said shares without interest. The receipt of the company for the purchase money shall be good discharge to the purchasing member and after his name has been entered in the register in purported exercise of the aforesaid power, the company may issue to him a certificate for the shares purchased and thereupon the purchasing member shall become indefeasibly entitled to such share and the validity of the proceedings shall not be questioned by any person. (12) If the company shall not within 28 days after being served with the transfer notice find a purchaser for all or any of the shares comprised therein and give notice in manner aforesaid or if through no default of the proposing transferor the purchase of any shares in respect of which such last mentioned notice shall be given, shall not be completed within 28 days from the service of such notice, the proposing transferor shall at any time within 3 calendar months afterwards be at liberty hereof to sell and transfer the shares comprised in his transfer notice or such of them as shall not have been sold to a purchasing member or to any person and at any price. (13) Any shares specified in the transfer notice shall be offered to the members as nearly as may be in proportion to the existing shares of the same class held by them respectively and the offer shall in each case limit the time within which the same if not accepted will be deemed to be declined and may notify to the members that any member who desires an allotment of shares in excess of his proportion should in his reply state how many excess shares he desires to have and if all the members do not claim their proportion the unclaimed shares shall be used for satisfying the claim in excess. If any shares shall not be capable without fraction of being offered to the members in proportion to their existing holdings, the same shall be offered to the members or some of them in such proportions and in such manner as may be determined by lots to be drawn under the direction of the Directors. (14) The Directors may without assigning any reason decline to register any transfer of share upon which the company has a lien or of shares which are not fully paid up or to any transferee whom the Directors do not consider desirable to be admitted as a member, provided such transferee is not already a member but such right of refusal shall not be exercisable in the case of any transfer made pursuant to Articles 5 and 7 except for the purpose of ensuring that the member of members does not exceed fifty.;