AARTI MUKUND PARDHANANI Vs. MAC CHARLES (INDIA) LTD.

JUDGEMENT

(1.) THESE two company petitions are filed under section 155 of the Companies Act, 1956 seeking an order to rectify the register of members of first respondent -company by deleting the names of respondents 2 and 3 and to show the name of petitioners as the owner of equity shares of the company.

(2.) THE first respondent is a public limited company incorporated under the Companies Act, 1956 on 28 -9 -1979. The object of the first respondent company is to carry on the business of hotel, restaurant etc., Petitioner in Co. P. No. 109/1987 and the second respondent are brothers. Second respondent, was the Chairman of the first respondent -company and petitioner was the Managing Director of the Company. According to respondents 2 and 3 the petitioner clandestinely played a fraud on them. Petitioner by making a false representation secured blank share transfer forms for effecting transfer of shares from the name of respondents 2 and 3 to the fourth respondent -M/s Kapi Investments Ink Ltd., after securing necessary permission from concerned authorities. In good faith and trust respondents 2 and 3 signed blank share transfer forms. Petitioner being the Managing Director used the said blank share transfer forms and illegally transferred shares in his name, in his daughter and the petitioner in Co. P. No. 109/1987 instead of transferring them to M/s. Kapi Investment Ink Limited. Respondents 2 and 3 on coming to know the illegal transfer of shares to the name of petitioners, complained to the first respondent -company. The first respondent -company in the meeting of Board of Directors on 17 -10 -1987 resolved to delete the name of petitioners and to enter the name of respondents 2 and 3 in the register of members of the first respondent -company. Aggrieved by this, petitioners got issued lawyer's notice on 23 -11 -1987 calling upon the first respondent to rectify the mistake and to enter their names as shareholder of the shares in question. Since the respondents failed to react to the request of the petitioners they are before this Court in these petitions.

(3.) UNDER section 108 of the Indian Companies Act, 1956, a company shall not register the transfer of shares or debentures of the Company unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of transferee has been delivered to the company along with the certificate relating to the shares or debentures. Therefore, the requirement under section 108 of the Companies Act, 1956 is that the instrument of transfer should be duly stamped and that the same should be delivered to the company. The provisions contend in section 108 of the Companies Act are mandatory in nature. On the face of it if the company is satisfied that an entry in the register is by mistake, it is always open for the company to rectify such a mistake without, there being an order from the court.