NARENDERA KUMAR AGRAWAL Vs. SAROJ MALOO

JUDGEMENT

(1.) Leave granted.

(2.) These two appeals are filed against the judgment and order dated 28/4/1992 passed in Company Appeal No. 1 of 1991 and the order dated 4/8/1992 passed in Civil Review No. 55 of 1992 by the High court of Patna.

(3.) The Maghadh Stock Exchange Association (hereinafter referred to as 'msea') is registered as a Company under Section 25 of the Companies Act (hereinafter referred to as the 'act'). It is a Company limited by guarantee and not having a share capital. Appellant, Narendera Kumar Agarwal, lodged with MSEA on 9/2/1989 an instrument of transfer/nomination for transferring his interest as a member in the Company in favour of Respondent I, Smt Saroj Maloo. On 10/8/1989 she was informed by MSEA that transfer of membership by nomination in her favour was not possible in absence of any provision to that effect in its Articles of Association. Aggrieved by the refusal Smt Saroj Maloo filed an appeal under Section 111of the Act to the Company Law Board (hereinafter referred to as 'the Board'). The stand taken by MSEA before the Board was that in the Articles of Association there was no provision regarding nomination of membership leading to transfer of the same in favour of nominee, prior to June 1989 and that in case of a company limited by guarantee without share capital like MSEA membership cannot be transferred by nomination until a clause providing for nomination is incorporated in its Articles of Association. It was also contended that a request for nomination could not have been received and considered till a provision in that behalf was incorporated in the Articles of Association. Even after incorporation of Article 27-A, the request to transfer could not be granted as it did not fulfil the requirements prescribed by that provision. The action of MSEA was also sought to be supported on the ground that Shri Narendera Kumar Agarwal had subsequently cancelled his request contained in his letter dated 6/2/1989 to transfer his interest in favour of Smt Saroj Maloo. The Board was of the view that if there is no provision for transfer of other interest in the Articles of Association of a company limited by guarantee and having no share capital then the member cannot transfer his interest to a third person. The Board held that in the absence of such a provision and because Smt Saroj Maloo failed to establish her case of proper lodgement of the transfer of other interest of the member as required by the amended Article 27-A of the Articles of Association the action of MSEA was justified. It, therefore, dismissed her application.