ASHIM KUMAR BANERJEE. J. - (1.) Poddar Udyog limited (hereinafter referred to a 'Udyog') was holding the subject shares in Peerless General Finance & Investment Co. Ltd. (hereafter referred to as "Peerless"). Under a scheme of arrangement sanctioned by this court on August 19, 1997 a part of the business division of Udyog was transferred to fodder Projects Limited (hereinafter referred to as "Projects") which included the subject shares. On September 3, 1999 Project sold the shares to the respondent nof 2, Vijaya Finance Corporation Ltd. (hereinafter referred to as "Vijaya"). Advocate for Vijaya lodged the shares with Peerless for registration on November 12, 2001. On January 9, 2002 Peerless refused such rectification and intimated to the advocate. On May 16, 2002 the shares were again lodged for registration on behalf of Project, the same was refused by Peerless on August 27, 2002. In none of those refusals Peerless assigned any reason in detail. Project and Vijaya both approached Company Law Board {hereinafter referred to as "CLB") by filing an application under Section 111A of the Company Act, 1956 on October 28, 2002. In course of hearing pursuant to the diretion of CLB, Peerless disclosed the resolution by which the rectification was disallowed. The CLB upon hearing the parties allowed the application of Project by directing Peerless to register the original shares in favour of Project; however, granted no relief to Vijaya. Vijaya accepted the order and did not prefer any appeal. Peerless being dissatisfied with the decision of the CLB filed the instant appeal which was heard by me on the above mentioned dates.
(2.) Reason for refusal assigned by Peerless in Board Meeting (i) No application for registration of transfer was made either by transferor or by transferee. Lawyer's letter could not be said to be compliance of Section 108(1). (ii) Transfer deed was not delivered in terms of Section 108(1A). Hence, lodgment was not a good delivery. (iii) Transfer in favour of Vijaya was in violation of Security Contract (Regulation) Act, 1956 since it was not a spot delivery contract. (iv) The transferee was not a desirable person. (v) Proper cancellation of stamp was not made.
(3.) Findings of CLB (i) Under the proviso to Section 111A(2) the company was entitled to refuse rectification on cogent ground. (ii) Section 111A(3) provided for rectification and proviso to SubSection 2 provided for refusal on sufficient cause. Hence, the Board was entitled to refuse on sufficient cause. (iii) Even in case of unlisted shares Section 111A was applicable. (iv) Once Project was not registered as a shareholder, subsequent transfer in favour of Vijaya could not be acceded to. (vj Rights of the third parties in case of amalgamation/ arrangement was not affected and Peerless had the right to refuse registration on sufficient cause, notwithstanding the sanction of the scheme, (vi) The grounds on which Project was refused were not tenable, save and except in respect of the bonus shares. Project became entitle, to claim registration after the same having been assigned to them by virtue of such sanction of arrangement and Peerless was not right in refusing such on the plea of desirability while considering rectification in favour of Projects. (vii) Order of sanction should be construed as an instrument of transfer and as such there was no fresh instrument executed under Section 108 Therefore, there was no necessity of comphance of section 108 (viii) The plea of limitation was not tenable in view of the fact that Sections 5 of the Limitation Act would apply assuming there was a delay,;