S ANURATHA Vs. A K M N CYLINDERS PRIVATE LTD

JUDGEMENT

(1.) IN this order, we are dealing with three petitions--C. P. No. 28/111/ SRB/97 by S. Anuratha, C. P. No. 29/111/SRB/97 by Shri M. Sampath, and C. P. No. 30/111/SRB/97 by Shri S. Balavenkatesan, and Shri S. Man-ickaraj--filed under Section 111 of the Companies Act, 1956 (hereinafter referred to as "the Act") seeking rectification of the register of members of A. K. M. N. Cylinders Private Limited (hereinafter referred to as "the company") by restoring the names of the petitioners in respect of 419 shares-95 shares in C. P. No. 28/111/SRB/97, 304 shares in C. P. No. 29/ 111/SRB/97 and 20 shares in C. P. No. 30/111/SRB/97. The petitioners are wife, husband and children respectively belonging to the same family. The first respondent-company is common in all the petitions. As the facts and circumstances of these petitions are common, they are disposed of by this common order.

(2.) The facts, in brief, as stated in the petitions and reiterated by Shri A. Arul Rayan, counsel for the petitioners, are that the petitioners in C. P. No. 28/111/SRB/97, C. P. No. 29/111/SRB/97 and C. P. No. 30/111/SRB/97 being members of the company are holding 419 equity shares--95, 304 and 20 equity shares respectively--of Rs. 1,000 each. The petitioner in C. P. No. 29/111/SRB/97 is one of the promoters and directors of the first respondent-company. The petitioners, their relatives and associates together holding 561 equity shares which include 419 shares mentioned hereinabove either lost or misplaced the original share certificates and called upon the company by lawyer's notice dated October 27, 1995, to issue duplicate share certificates. The company did not obtain any indemnity bond from the petitioners for issue of duplicate share certificates. As per Rule 7(2) of the Certificate Rules, the relevant register of "renewed and duplicate share certificates" has not been filed by the company. The company in collusion with its managing director and the other respondents manipulated fraudulently as if duplicate share certificates were issued. By virtue of an unregistered agreement dated November 16, 1995, the petitioner in C. P. No. 29/111/SRB/97 and one Shri B. Mohandas, agreed to sell in favour of the second respondent in C. P. No. 29/111/SRB/97, 1,206 shares (506 + 700 shares respectively) for an aggregate sum of Rs. 19 lakhs. The petitioners by letter dated November 18, 1995, furnishing the certificate numbers of the original certificates requested the company to transfer their shares and settle the sale consideration as per agreement dated November 16, 1995, which will show that duplicate share certificates were not issued by the company. In the meantime, the petitioners delivered on November 18, 1995, blank transfer forms signed by them to an auditor at Trichinapally, as per the arrangement among the parties. The transfer forms were neither filled nor endorsed by the competent authority. The petitioners never executed the instruments of transfer in accordance with the provisions of Section 108 of the Act and did not surrender the share certificates. Blank transfers are not valid transfers. A signed transfer form which is blank otherwise in all respects cannot be said to be an executed document. The petitioners had not cancelled the adhesive stamps by putting their initials or names across the adhesive stamps in the instruments of transfer in compliance with Section 2(14) of the Indian Stamp Act, 1899. The company in collusion with the transferees had manipulated the date of execution as January 10, 1996, in the transfer deeds. The transfer deeds were executed prior to the endorsement of the competent authority and, therefore, contrary to law. The minutes of the board meeting held on November 18, 1995, approving the transfer of impugned shares are concocted. The articles of association of the company prescribe the manner and the procedure to be followed in the case of transfer of shares, which were not followed in the present case. In the circumstances the transfer of impugned shares is illegal and not valid in the eyes of law. According to the petitioners, the agreement dated November 16, 1995, became infruc-tuous due to breach of its terms and lapse of time and they are willing to pay back the consideration received by them along with interest.

(3.) IN the circumstances, the petitioners seek for rectification of the register of members of the company.