B F L SOFTWARE Vs. STATE

JUDGEMENT

(1.) THIS revision petition is directed against the order dated 10.9.98 passed by learned Special Magistrate (Economic Offences), Rajasthan, Jaipur whereby he had convicted the petitioners for the offence under Section 113(2) of the Companies Act, 1956 and sentenced them for a fine of Rs. 3,000/- each. Being aggrieved of the said order, the petitioners preferred an appeal which came to be decided by the learned Additional Sessions Judge, No.1, Jaipur City, Jaipur on 8.9.99 who had partly allowed the same and as against 5 accused persons namely, S.N.Bangad, Srikant Bangad, P.S. Duttarai, V.K.Roongata and B.V.Vankatesh order of acquittal was passed. But as against the petitioners, M/s B.F.L., Software Ltd., Calcutta and R.K.Lakhotiya, the appeal was dismissed.

(2.) IN short, the relevant facts of the case are that a complaint came to be lodged in the year 1996 against the Company (M/s B.F.L. Software Ltd.- petitioner No.1) and 7 of its personnels by Atul Singhal in the Court of Special Magistrate, Economic Offences, Rajasthan, Jaipur, for the offence under Section 113 of the Companies Act. It had been alleged in the complaint that the complainant had purchased 200 share certificates of the petitioner company on 4.9.94. On having purchased the said shares, the complainant had sent the same to the petitioner company for the purpose of having them transferred in his own name. A transfer deed, with all formalities having been done for that purpose, was sent to the petitioner company through registered post. The company had received the share certificates on 22.9.94. According to the complainant, the petitioner company after receipt of the share certificates had not returned them to him after due transfer within the statutory period of two months, as given under the provisions of Section 113 of the Companies Act. Thereafter, registered letter dated 6.3.95 and 2.6.95 were also sent but they had not been replied by the accused persons. Subsequently, a notice through an advocate was also sent to the Company Secretary on 9.9.95. IN response to the said letter, the company stated that the share certificates had been sent to the complainant on 20.12.94. Another notice was sent through counsel by the complainant on 10.11.95 but the same was not replied to by the Company Secretary.

(3.) A glimps of the aforesaid provisions of law shows the method, procedure and time-limit under which a transfer of shares are to be done by the company and any default committed in following the procedure for the purpose of transfer or if it is done in violation of period prescribed under the said provisions, makes the company liable for penalization. Transfer of shares is to be done when it is duly stamped and otherwise valid. However, the company is entitled to refuse the transfer for a valid reason given under the law. It is the case of the petitioner, from the very beginning, that the transfer of shares could not be made as there was discrepancy in the signatures of the transferor on the deed from the specimen signatures in the record of the company. The provisions under Section 113 of the Companies Act only provides the limitation of time for issuance of certificates. A company shall within two months after the receipt of the application for the registration of the transfer of any such shares, is to deliver in accordance with the procedure laid down in Section 53, in default of which the company and every officer of the company shall be punishable with fine which may extend to Rs. 5,000/- for every day during which the default continues. But in the instant case, it is the case of the accused petitioners, as revealed from Ex.P/9 on record, that they had sent the refusal for transfer for the reasons given in it i.e., the discrepancy in the signatures of the transferor. Section 111 of the Act provides that if the company refuses to register the transfer of any shares, it shall, within two months from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal.