M M ANANDARAM Vs. MYSORE LACHIA SETTY

JUDGEMENT

(1.) This is a petition under S. 155 of the Companies Act, 1956, (hereinafter referred to as the Act). The petitioners are the transferees of certain shares of M/s. Mysore Lachia Setty and Sons (Pvt.) Ltd., which is the respondent- Company in this proceeding represented by its Director in-charge. The prayer in the petition is for an order of this Court directing the respondent- Company to recognise the transfer of 40 Shares (8 to each of them) and make the alteration in the register of members in accordance with the transfer.

(2.) The petition was filed on 3-1-1981 and notice was ordered to the respondent on 7-2.1981. The respondent after service of notice has entered appearance and contested the petition. The facts which themselves are not in dispute as can be made out from the pleadings of the petitioners as well as the respondent may be briefly stated and they are as follows: Eight brothers joined together and in. corporated Mysore Lachia Setty and Sons (Pvt.) Ltd., under the Act on 26th November 1946 with a paid up capital of Rs. 1,00,000 divided into 400 shares of Rs. 250 each. The father of the petitioners, late M. L. Manjunatha Setty together with his seven brothers contributed Rs. 12,500 each and were allotted 50 shares each. However, in the year 1964 differences between the share-holders surfaced and the petitioners' father together with one other brother M. L. Janardhana Setty formed a group while the remaining brothers formed the opposite proup. In that circumstance, a partition suit came to be filed to which all the shareholders were parties and it is stated that that suit is in the final decree stage on the date of petition. It is alleged that the group of brothers opposed to late Manjunatha Setty and'Janardhana Setty despite the pendency of the partition suit in the Supreme Court of India, effected a partition in the family on 6-1-1978 ignoring Manjunatha Setty and Janardhana Setty. On account of the differences among the brothers, late Manjunatha Setty was not elected as a Director of the Company. It is stated that Manjunatha Setty has besides the petitioners a son by first wife by name M. Madhava Murthy, who is the applicant in C.A. No. 7 of 1984 and who has sought to implead himself in this proceeding. He filed a suit for partition in the Court of the Civil Judge, Chickmagalur, in O.S. No. 218(1965 which has stood transfered since to one of the City Civil Courts in Bangalore in O.S. No. 405/1980. It will be useful to state here itself that the issues in the said suit are related to the properties of Manjunatha Setty which are liable for partition as properties of a Hindu undivided family,

(3.) By share transfer forms dt. 7-9-1968 Manjunatha Setty transferred 40 shares out of the 50 shares which he held in the respondent-Company to the petitioner;. Soon thereafter Manjunntha Setty as transferor sent the . share transfer forms to the respondent-Company with a request, for giving effect to the transfers. Rut the Company returned all the transfer applications and wrote to Manjunatha Setty that the Board of Directors had unanimously rejected all the transfer applications under the Articles of Association. Photostat copies of the share transfer forms are enclosed to the petition as Annexures A to E of Annexure-III while the covering letter dt. 22-11-1968 (true copy) is at Annex- ure-II. Soon thereafter, each of the petitioners separately wrote an uniform letter dt. 24.12-1968 addressed to the Managing Director of the respondent-Company protesting against the rejection of the transfer by the Board of Management as they were not in any way disqualified to become shareholders of the Company in accordance with the Articles of- Association. In their letters aforementioned each of the petitioners called upon the respondent-Company to register the transfer without further delay failing which they would take necessary legal steps to enforce their rights in the matter at the cost of the Company. They also indicated that on hearing from the Board they would tender the documents once again. True copies of those letters are produced as Annexures to C.A. No. 636/1983 which is an application made by one of the petitioners to amend the pleadings in the main petition.