DR. S. KRISHNA SARMA Vs. THE KANTHIMATHY PLANTATIONS PRIVATE LIMITED

JUDGEMENT

(1.) THIS Company petition has been filed under Section 111(2), (5) and (6) of the Companies Act, 1956 ("the Act") seeking directions against The Kanthimathi Plantations Private Limited ("the Company") (i) to register the transfer of 28,370 shares ("the impugned shares") in favour of the petitioner; and (ii) to rectify the register of members in respect of the impugned shares by substituting the name of the petitioner in the place of the respective transferors for the reasons set out therein, in support of which Shri R.N. Shankaranarayanan, learned Counsel submitted:

(2.) THE petitioner along with his family members held 37,600 equity shares constituting 26% of the share capital of the Company. The petitioner purchased 10,620 equity shares from S. Gangammal, 2,750 shares from Vardhani and 15,000 shares from S. Ramakrishna Sarma, who are the sister, sister's daughter and brother of the petitioner respectively and paid the entire consideration to the transferors. The petitioner lodged the share certificates together with duly executed share transfer forms in respect of the impugned shares, with the Company in April 2005 for registering the transfers in his name. The Company, however, by a communication dated 22.06.2005 refused to register the transfer of impugned shares for the following reasons:

(3.) THE articles of association enables the transfer of shares by one member to another and this right cannot be taken away by resorting to any general provision in the articles of association. The reasons offered by the Company for refusing registration of the transfers, are covered by the contentious issues raised in C.P. No. 4 of 2001, on the file of this Board, which is presently the subject matter of an appeal before the Kerala High Court. The notice of refusal dated 22.06.2005 apart from being frivolous, mitigates against the fundamental principle that the shares are fully transferable. The interest of the Company would in no way be affected by registering the transfer of impugned shares in the name of the petitioner.