Madras High Court
Talayar Tea Company Limited vs Union Of India And Others on 15 November, 1989
Equivalent citations: [1991]71COMPCAS95(MAD)
Author: A.S. Anand
Bench: A.S. Anand
JUDGMENT Sathiadev, J.
1. These writ appeals are preferred against the common judgment in W.P. Nos. 3343 and 3538 to 3543 of 1983 dated March 31, 1989. The writ petitions were filed against the order of the Company Law Board dated February 10, 1983, passed under section 111 of the Companies Act, 1956, hereinafter referred to as "the Act," by the Talayar Tea Company Ltd., a public limited company, incorporated on January 10, 1945, and having its registered office at Coimbatore. The shares of the company are listed on the Madras Stock Exchange. The second respondent (ranking of parties as in writ petitions ) moved the Company Law Board under section 111 of the Act for directing the rectification of the register of members of the company by entering the names of the respective second respondents in relation to the shares purchased by them and which were produced along with the requisite applications at the registered office of the company for carrying out the transfer. They were tendered on December 17, 1980, through their advocates, but still the company having refused to register the documents by stating that the share certificates were returned "since the instruments do not conform to section 109(1A) of the Companies Act, 1956", the appeals had to be filed to the Company Law Board. An earlier attempt made to tender the share certificates to the petitioner- company to register the same on November 8, 1979, having been rejected unauthorisedly by the director and general manager of the company, the company petitions have been filed in this court for rectification of the company's register and on their dismissal, C.S.A.Nos. 28 to 35 of 1981 have been filed and they are pending disposal.
2. The Company Law Board, after hearing the parties passed the impugned order on February 10, 1983, directing the company under section 111(5) to transfer the share certificates in favour of the writ petitioners.The learned judge upheld the above order and it resulted in the filing of the writ appeals.
3. One of the crucial points raised before the learned judge and in these appeals,is whether the requirements under section 154 of the Companies Act are mandatory or only directory in nature. After referring to the meaning ascribable to the expression "newspaper" as found in various dictionaries and different enactments and on taking into account the inbuilt provisions found in the said section, the learned judge held that its requirements are mandatory in nature.
4. Mr. R. Krishnamurthy, learned counsel for the petitioners, submits that the decisions referred to by the learned judge have been overruled in All India Reporter Karamchari Sangh v. All India Reporter Ltd. . The closure of the register of transfer of shares of the company from May 7, 1980, to May 12, 1980, having been published in the Daily Official List of Stock Exchange Limited, there was proper publication as contemplated under section 154 and, therefore, the refusal to register the share certificates presented on December 17, 1980, cannot be held to be illegal.
5. If it be held that the requirements of section 154 are mandatory in nature and that the publication found in the Daily Official List of Stock Exchange Limited would not be an advertisement in a newspaper, then there is no need to consider any other point, because if the closure between those dates was not lawfully done, then the refusal to receive the share certificates as presented on December 17, 1980, could not have been done.
6. Section 154 reads as follows:
"Power to close register of members or debenture holders. - (1) A company may, after giving not less than seven days' previous notice by advertisement in some newspaper circulating in the district in which the registered office of the company is situate, close the register of members or the register of debenture holders for any period or periods not exceeding in the aggregate forty-five days in each year, but not exceeding thirty days at any one time.
(2) If the register of members or of debenture holders is closed without giving the notice provided in sub-section (1), or after giving shorter notice than that so provided, or for a continuous or an aggregate period in excess of the limits specified in that sub-section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the register is so closed."
7. The requirements are that the seven days' previous notice of the closure of the register of members or debenture-holders has to be made known by an advertisement. The said advertisement must find a place in a newspaper. The concerned newspaper should have circulation in the district in which the registered office of the company is situated. If such an advertisement is made, than the company could close its register of members or debenture-holders for a period not exceeding 45 days in the aggregate in each year but it shall not exceed 30 days at any one time. This enablement to close the register is to facilitate the company to bring its register up to date whenever it chooses to do so. It is left to the company to close its registers at its discretion, subject to the period mentioned in the section and if it chooses to do so, then it is obligatory on its part to carry out the any of these requirements, then the penal provision, as found in section 154(2), will be attracted.
8. It is the admitted case that except for the particulars about the closure of register as found in the Daily Official List of Stock Exchange Limited, Madras, in no other publication it had been published.
9. The expression "newspaper" is not defined in the Act. Of the decisions relied upon by the learned judge, one is the decision in P.S.V.Iyer v. CST , which dealt with the question as to whether a newspaper is entitled to exemption under the Orissa Sales Tax Act, 1947, and it was held that Cuttack Law Times being a non-official monthly law journal containing decisions of the Orissa High Court, Supreme Court etc., it is not a newspaper and the factum of its registration under the Press and Registration of Books Act, 1867, could not be relied upon to characterise it as a newspaper. Another decision relied upon is CST v. Express Printing Press [1983] 52 STC 290 of the Bombay High Court which held that in order to be called a newspaper, its main purpose must be to convey news, and if the publication is bereft of significant news content, the fact that it is brought out daily, will have no relevance in treating it as a newspaper. By registering such a publication under the Press and Registration of Books Act, 1867, voluntarily, the assessed cannot claim relief as if such a publication is a newspaper.
10. Learned counsel, Mr. R.Krishnamurthy, by referring to All India Reporter Karamchari Sangh v. All India Reporter Ltd., , rightly points out that the decision of the Orissa High Court had been overruled and the decision of the Bombay High Court had been distinguished. In dealing with the question whether All India Reporter, Criminal Law Journal and similar publications are newspapers as defined in the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955, it was held that as such law publications have a news element, they are newspapers, as defined in the said Act. A learned judge of this court in T.V.Ramanath v. Union of India [1975] Lab IC 488, in dealing with the same Act, had taken a similar view relating to the Madras Law Journal. Secion 2(b) of the abovesaid Act defines "newspaper"as follows:
"Newspaper' means any printed periodical work containing public news or comments on public news and includes such other class of printed periodical work as may, from time to time, be notified in this behalf by the Central Government in the Official Gazette."
11. In construing a beneficial enactment and in the context of the nature of definition as found in section 2(b) it was held that the law journals being out decisions of courts in which the public are interested and, therefore, it has a news content therein. Judgments printed therein are made known to every one who will have access to these reports, whereas in respect of the Daily Official List of Stock Exchange Ltd., issued to its members, or made available to whom soever may require it, though it may bring out information about the closure of the company, it cannot be treated as a newspaper, having a news content. The learned judge had rightly relied upon the decision in CIT v. Vasan Publications P.Ltd. [1986] 159 ITR 381 (Mad) in which it was held that the ordinary meaning is ascribable to a newspaper could be the guiding factor. In a popular sense, such a publication could never be treated as a newspaper. Even assuming that it is a newspaper then the other requirements of section 154 are not complied with. It stipulates that regarding closure of the register, an advertisement must appear in the newspaper. It is not at all the claim of the petitioner company that it had inserted any advertisement in the said publication. As for the other requirement about circulation in Coimbatore, no proof was forthcoming that it was available in the news stands in Coimbatore or that it was available in any of the shops selling periodicals, magazines, newspapers etc. Therefore, the two other essential requirements of advertisement and circulation in the district not having been proved, the learned judge had rightly concluded that the mandatory requirements of section 154 had not been complied with.
12. Refusal to register was based on the claim that during the relevant period, the registers were closed and, therefore, the tender of the share certificates was not accepted. Once it is found that the closure as claimed does not satisfy the requirements of the Act, the refusal to register must be held to be improper.
13. As for the other contention that in respect of the claims in Writ Petitions Nos. 3543 to 3545 of 1983, the requirements of section 108(1A)(ii)(a) had not been complied with, it would have no relevance, once it is found that the registers were not closed as lawfully required.
14. For all these reasons, the appeals are dismissed with costs. Counsel fee Rs. 1,000, for the entire batch of appeals to the second respondent.
A.S. Anand, C.J.
1. I have had the advantage of going through the judgment prepared by my learned brother Sathiadev J.I agree that the closure of the registers did not satisfy the requirements of the Act and, therefore, the refusal to register the shares was improper. I would, however, like to add a few words of my own.
2. A plain reading of section 154 of the Companies Act makes it quite obvious that the emphasis therein is laid on the publication of seven days' notice by advertisement in some newspaper circulating in the district in which the registered office of the company is situ regarding the closure of the register of members for any specified period not exceeding the prescribed period. The emphasis is on "circulation"of the newspaper carrying the advertisement notice. It is the case of the appellant that notice was published in the Daily Official List of Stock Exchange Limited and in no other newspaper. Whatever may be the status or nature of the Daily Official List of Stock Exchange Limited, since the narrow limits of its circulation, among its members and subscribers is not disputed, the conveyance of information through the said list about the closure of the register of the company cannot be equated with the publication by an advertisement in some newspaper circulating in the district in which the registered office of the company is situate. The object of publication of the notice through advertisement as envisaged by the Act is to bring to the notice of the general public information regarding the closure of the register. The admitted non-availability of the Daily Official List of Stock Exchange Limited to the general public thus defeats the very object for which the Legislature enacted section 154 of the Companies Act. It is, therefore, futile to contend that the issuance of the information about the closure of the registers in the Daily Official List should be treated as if the information had been published in a "newspaper" having circulation in the district in which the registered office of the company is located. On facts, therefore, we find that there was a total non- compliance with the mandatory requirements of section 154 of the Companies Act, and as such, the refusal to register the shares was grossly improper. The appeals, therefore, merit dismissal with costs as assessed by my learned brother.