MATHEW MICHAEL Vs. TEEKOY RUBBER (INDIA LTD.)

JUDGEMENT

(1.) These are petitions under S.155 of the Companies Act for rectifying the register of members of the Teekoy Rubbers (India) Ltd., Palai. The petitioners belong to a well known family engaged mainly in the abkari business. They purchased 15,100 equity shares and 31,750 preference shares and applied for registration of the transfers, but the company refused to register them. And the prayer is to direct the company to enter the names of the transferees in its register of members in the place of the transferors.

(2.) The facts are identical in all the petitions and they have all been tried together, so that it is enough to refer to the pleadings in one of them. The Teekoy Rubbers (India) Ltd. is a public company limited by shares, with its registered office at Palai. The authorised capital is Rs. 16 lakhs, made up of 60,000 cumulative preference shares and 1,00,000 equity shares of Rs 10 each. The company is listed in the Madras Stock Exchange and its shares are quoted. Regulation.24 of the Articles, of Association of the company reads:

(3.) These allegations are denied in the counter affidavit sworn to by the Managing Director of the company. It is claimed that in declining to register the transfers in question, the Directors had only exercised their discretion under Regulation.24, and that too, in the interests of the company and the shareholders. They did not act on wrong principles or for collateral purposes or with oblique motives. They had no intention to corner the shares. Regulation.24 is valid and similar provisions are found in the Articles of Association of every company. They are also binding on the company and each of its share holders. The petitioners are persons well known to the Directors, and the latter bona fide thought the former were prisons who could not be approved of. There were reasons to hold that it would be undesirable, in the interests of the company, to admit them to membership. Some of the transfer deeds were also incomplete and defective. They were not duly stamped within the meaning of S.108 of the Companies Act, read with S.12 and 17 of the Indian Stamp Act.