S M HAJEE ABDUL HYE SAHIB Vs. K N S HAJEE SHAIK ABDUL KADER LABBAI SAHIB COMPANY PRIVATE LTD

JUDGEMENT

(1.) IN this petition filed under Section 111 of the Companies Act, 1956, the petitioner has sought for a declaration that the decision of the board of directors of K. N. S. Hajee Shaik Abdul Kader Labbai Sahib Company Private Limited (company) to refuse to register transmission of 117 shares, as null and void and also for a direction to register the transmission of the shares in his name, for the reasons stated in the petition.

(2.) According to the petitioner, his deceased father held 733 shares in the company and by virtue of his being a legal heir sought for registration of transmission of 117 shares (his share in 733 shares), vide his letter dated May 16, 1994, which has been refused by the board as per communication dated July 7, 1994. The grounds of refusal were that the application for transmission should have been accompanied by (a) the original death certificate of the shareholder, (b) original legal heir certificate issued by the competent authorities, (c) consent letter from other legal heirs, (d) order of the competent court granting succession certificate and, finally, the original share certificates in the name of the deceased shareholder. In response to this letter, the petitioner furnished all the documents asked for by the company except the succession certificate, original share certificates as well as the consent letter of the other legal heirs. However, the company once again insisted on production of the consent letters from other legal heirs. The petitioner's attempt to get the consent letters from other legal heirs did not succeed. However, he was able to furnish a succession certificate from the competent court to the company. Yet the company has not registered the transmission on the ground that the petitioner having engaged in a competing business was not entitled to become a member as per Article 25 of the articles of association of the company.

(3.) WHEN the matter was heard, counsel for the petitioner, Shri T. Dulip Singh, submitted that the action of the board of directors of the company was mala fide. The company has been a family company and the petitioner has been a shareholder right from 1947. No doubt he started his own business of which the company was fully aware and as a matter of fact, the company itself appointed the petitioner's firm as a commission agent in 1976. Since he has already filed an appeal against the judgment in O. S. No. 101 of 1993 this judgment should not stand in the way of the company registering the transmission in the name of the petitioner. Since some of the legal heirs are on the board of the company with a view to ensure that the shares are not registered in the name of the petitioner, these directors are not giving their consent for the transmission. Even the original share certificates are with some of the directors of the company and as such the petitioner is not in a position to submit the same. As long as the succession certificate has been submitted it is the duty of the company to register the transmission on the basis of this certificate.