K.K.Balu, - (1.) THIS company petition is filed under Section 111(3) and (4) of the Companies Act, 1956 ("the Act") seeking directions against M/s Incablenet Thirupathi Private Limited ("the Company") to (i) register the transfer of 99 shares with distinctive Nos. 1 to 99 in the name of the petitioner; (b) enter the name of the petitioner in its register of members and (c) deliver the share certificate in favour of the petitioner.
(2.) According to Shri P.H. Arvindh Pandian, learned Counsel, the petitioner had purchased the impugned shares on 19.11.2000 from the second respondent, upon which the latter executed a share transfer form, witnessed by her husband in favour of the petitioner. A sum of Rs. 990/- towards consideration for purchase of the shares paid by the petitioner is reflected as part of his investment in the income tax return filed by him for the assessment year 2001-2002. The petitioner had lodged with the Company the relevant share transfer form together with the share certificate at the board meeting held on 19.11.2000. However, the petitioner neither got back the share certificate from the Company after effecting registration of the transfer in his name nor received any notice of refusal to register the transfer of shares in his favour. The Company wrongfully withheld the transfer of shares, without sufficient cause entitling the petitioner for the reliefs claimed in the company petition. According to Shri P. Jagannathan, learned Counsel appearing for the respondents, the second respondent neither sold the shares impugned in the company petition nor executed any share transfer form as claimed by the petitioner. Moreover, any transfer of shares of the Company must be in due compliance with Article 26. Accordingly, the petitioner is neither the existing shareholder nor approved by the Board. At no point of time, the petitioner transferred the impugned shares in accordance with the procedure specified in the articles of association of the Company. The share transfer form relied upon by the petitioner is a fabricated document bearing the forged signatures of the second respondent and, therefore, it has no validity at all. The share transfer stamp affixed on the reverse of the share transfer form has not been cancelled in accordance with the relevant applicable provisions of Indian Stamp Act, 1899 and, therefore, the impugned transfer does not satisfy the mandatory requirements of Section 108 of the Act. Though the petitioner claims that the share transfer form and the original share certificate were lodged with the Company on 19.11.2000, yet he failed to approach the CLB within the time specified in Section 111(3) of the Act. Shri Jagannathan, learned Counsel, therefore, sought for dismissal of the company petition.
(3.) I have considered the pleadings and the arguments of the learned Counsel. While, according to the petitioner, the share transfer form and the original share certificate in respect of the impugned shares were lodged with the Company on 19.11.2000 to effect the transfer in his name, it is seriously disputed by the second respondent that she neither sold the shares nor executed any share transfer form in favour of the petitioner and further that the transfer documents were not lodged with the company. In these circumstances, duty is cast on the petitioner to establish the disputed transaction entered into with the second respondent. The petitioner has produced copy of his income tax return for the assessment year 2001-2002 filed on 19.09.2001 with the Income Tax Officer, Thirupathi showing an investment of Rs. 990/- on the impugned shares. The communication dated 12.10.2004 of the petitioner's auditor certifies that the petitioner purchased the impugned shares from the second respondent for a cash consideration of Rs. 990/- on 19.11.2000, as reflected in the books of account of the petitioner. The income tax return is a self-serving document and it is, in my view, rather weak evidence to establish the transaction, which is under dispute. Though the petitioner has placed reliance on the certificate of his auditor he has not chosen to produce the books of account or any other concrete evidence establishing the payment of consideration towards purchase of the impugned shares. Though it has been claimed that the share transfer form and the share certificate were lodged with the Company at the Board meeting held on 19.11.2000, there is no scrap of paper establishing such lodgement of the documents by the petitioners. There is no evidence on record to suggest that the petitioner at any point of time before approaching this Bench called upon the Company to return the share certificate after registering the transfer in his favour. There is no explanation for the petitioner's silence all these years. Even otherwise, the validity of the impugned transfer must be examined in the light of the claim and counter-claim of the parties. Article 26 provides that "the shares of the company may be transferred by holders of share only with the consent of the Board in writing. The shares shall be transferred to, either an existing member or a person approved by the Board. On a member intimating in writing his desire to sell, part with, or transfer a part or whole of his holding, the Board shall circulate copies of such letter among the shareholders." Any transfer of shares of the Company must satisfy the requirements of Article 26. The petitioner is not an existing shareholder. There is nothing on record to show that the board of directors of the Company either approved the transfer of impugned shares in favour of the petitioner or the requirements of Article 26 have been satisfied in the case before me, in which case, the alleged transfer in contravention of Article 26 cannot be valid under law. This Board on several occasions have set aside the transfer for non-compliance with the procedure contemplated under the articles of association in regard to the transfer of shares. It is observed from copy of the disputed share transfer form that the adhesive stamp appearing thereto remains uncancelled which according "to the learned Counsel for the petitioner is only technical. This defect in, my view, is fatal to the registration of the impugned transfer and cannot be cured. In this connection, beneficial reference is invited to Mathrubhumi Printing and Publishing Co. Ltd. v. Vardhaman Publishers Ltd. - 1992 (Vol. 73) CC 80, wherein it has been held that if the instrument is not properly executed or the stamp affixed to the instrument is not effectually cancelled before execution or at least at the time of execution, the said instrument must be deemed to be unstamped and, therefore, the lodgement of such an instrument with the company is not within the meaning of Section 108(1) of the Act. This being the settled legal position, I cannot direct the Company to register the transfer by rectifying the register when the share transfer instrument is carrying a patent defect on its face by virtue of the fact that the stamp has not been cancelled as required by Section 12 of the Indian Stamp Act, 1899. In view of the foregoing conclusions, the petitioner is not entitled for any relief claimed in the company petition. The other grievances of the petitioner regarding the directorship and allotment of shares are not germane to the main issue in dispute. Accordingly, the company petition is dismissed with no order as to costs.;