FENOPLAST LTD Vs. A MALLIKARJUNA RAO

JUDGEMENT

(1.) This company appeal is filed by the appellant-company, aggrieved by the order dated Aug. 14, 2003, passed by the Company Law Board, Southern Region Bench, Chennai in C.P. No. 14/ 111A/SRB/2002, under which the objection raised by the appellant-company, was overruled.

(2.) The respondent herein is a shareholder, having 9,000 shares in the appellant-company. According to him, he transferred the shares to certain individuals who have lodged their transfer deeds for entering their names in the place of the respondent. On some grounds, the appellant-company refused to effect the transfer of the shares held by the respondent and intimations were given to the transferees. Aggrieved by that, they have approached the Company Law Board by making a petition under section 111A(2) of the Companies Act, 1956 (for short "the Act"). Thereafter, the Company Law Board, tried to get the matter settled between the parties, but as there was no agreement, the Company Law Board proceeded to hear the petition on the merits. At that stage, on behalf of the company it was contended that the company petition filed by the respondent-transferor is not maintainable in terms of the proviso to section 111A(2). However, the said objection was overruled, observing that the Company Law Board being a court of equity is bound to hear the transferees, therefore, ordered notice to the transferees. Aggrieved by that, the company has come up with the present appeal.

(3.) Learned counsel for the appellant-company contended that the Company Law Board has committed grave error in entertaining the company petition though the respondent who is a transferor of the shares is not entitled to file an appeal in terms of the proviso to section 111A(2). Learned counsel referred to the provisions of section 111 as well as section 111A and brought to the notice of this court the distinction between a private company and a public company and contended that though provision was made under section 111 for filing an appeal by both the transferor and the transferee, the Legislature has specifically omitted the right to file an appeal in so far as the transferor is concerned when it comes to the public company as provided under section 111A. It is only the transferee who is entitled to file an appeal if the company failed to affect the transfer of the shares lodged with it within a period of two months, therefore, sought to set aside the impugned order pass by the Company Law Board.