S BHUVANESWARI Vs. ACI AGRO CHEMICAL INDUSTRIES LTD

JUDGEMENT

(1.) THE petitioners before the Company Law Board having aggrieved by the latter portion of the order, have filed the above Appeal.

(2.) THE 1st appellant claims that she is the promoter of the 1st respondent -company and the 2nd petitioner is her daughter. Both of them had shares of 42,517 and 7,503 respectively. It is not in dispute that subsequently, the 1st and appellants have transferred 34,500 shares and 6,000 shares respectively to the 2nd respondent. The 1st respondent -company at the instance of the 2nd respondent -company rectified the register of shareholding as if the 2nd respondent transferred all the shares from the appellants to respondents 3 to 6. So the appellants filed Company Petition No. 23/1993, originally praying the Company Law Board to declare that the transfer of 40,500 equity shares bearing distinctive numbers 021 to 34520 and 44021 to 59920 in favour of respondents 3 to 6 by the 2nd respondent -company and the registration of such transfer in the Register of Members by the 1st respondent -company is illegal and contrary to the Articles of Association and without sufficient cause and direct the 1st respondent -company to rectify the Register of Members in relation to 40,500 equity shares by deleting the names of respondents 3 to 6 from the Register and restore the name of 2nd respondent as the holder of 40,500 equity shares therein with reference to the above said shares. Subsequently, a petition to amend the prayer was filed and there is no dispute that the same was ordered. The said amended prayer reads as follows: -

(3.) LEARNED counsel for the appellants submitted that according to Article 7 of the Articles of Association, if a member has an intention to sell the shares, he has to give a notice to the existing members, lathe present case, no such notice was issued. According to him though the Company Law Board has set aside the transfer made by the 2nd respondent -company in favour of respondents 3 to 6, in view of the fact that the 2nd respondent is having an intention to sell the shares, the Company Law Board should have directed to sell the shares in favour of the appellants, who are the existing members, on the price to be fixed by the Board of Directors. The substance of the arguments of the learned counsel was that once the 2nd respondent was having intention to sell the shares, the appellants got the right to purchase the said shares especially when they have offered to purchase the same in the Company Petition itself.