C.P. No. 332(111A)/ERB/2006. Case: Hindustan Mercantile Bank Ltd. Vs D.N. Choudhury Cotton Mills Ltd. and Ors.. Company Law Board
| Case Number | C.P. No. 332(111A)/ERB/2006 |
| Counsel | For Appellant: Himadri Chakraborty and For Respondents: D. Basak, S.R. Kakrania and Hasnohana Chakraborty |
| Judges | S. Balasubramanian, Chairman |
| Issue | Companies Act, 1956 - Section 111(A); Securities and Exchange Board of India Act, 1992 |
| Citation | (2008) 77 CC 266, 83 SCL 399, 83 CLA 401, 142 CompCas 134 |
| Judgement Date | July 27, 2007 |
| Court | Company Law Board |
Order:
S. Balasubramanian, Chairman, (At Calcutta)
In this petition filed under section 111A of the Companies Act, 1956 ("the Act"), M/s. Hindustan Mercantile Bank Ltd. ("the petitioner"), has sought for rectification of register of members of M/s. D. N. Choudhury Cotton Mills Ltd. ("the respondent-company") in respect of 100 shares comprised in share certificate No. 1845, presently standing in the name of Mr. T. R. Jalan, by substituting the petitioner's name in place of the name of Mr. T. R. Jalan ("the transferor") in the register of members of the respondent-company.
It is the case of the petitioner that it has lodged 100 shares bearing certificate No. 1845 along with relevant transfer deed, share certificate, board resolution and memorandum and articles of association of the petitioner, with the respondent-company for registration of transfer of shares in the name of the petitioner. The petitioner by its letter dated April 12, 2006, also requested the respondent-company to register the transfer of shares. The respondent-company, in turn, returned back the said documents to the petitioner, by its letter dated June 2, 2006, refusing to register the said block of shares. In support of such refusal, the respondent-company has also sent a legal opinion along with its said letter dated June 2, 2006. This prompted the petitioner to come before this Bench to redress its grievances by a suitable order for rectification of register of members of the respondent-company, The petitioner through its counsel, Shri Himadri Chakra-borty, has submitted that the directors of a public limited company cannot refuse registration of shares without any proper and valid reasons and that it is extremely arbitrary on the part of the management of the respondent-company (which is a public limited company) to indulge in such illegal act, when as a matter of fact the shares are freely transferable goods. In this backdrop, the legal opinion in support of the refusal decision of the respondent-company has no relevance at all in the instant case.
Resisting the claim of the petitioner, the respondent-company through its counsel, Shri D. Basak, has contended that the proposed transfer of 100 shares of the company in favour of the petitioner is in contravention of the provisions of the Securities and Exchange Board of India Act, 1992 ("the SEBI Act") and/or the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ("the SEBI Regulations") and the...
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