Company Law Board
Citi Bank Na vs Power Grid Corporation Of India Ltd. And ... on 7 February, 1995
Equivalent citations: [1995]83COMPCAS454(CLB)
ORDER
1. City Bank NA, the petitioner herein, has filed a petition on September 30, 1993, under Section 111 of the Companies Act, 1956 (hereinafter referred to as "the Act"), seeking rectification of the register of debenture holders in Power Grid Corporation of India Ltd. (hereinafter referred to as "Power Grid") by deleting the name of Can Bank Financial Services Ltd. (hereinafter referred to as "Can Fina") and inserting the name of the petitioners (hereinafter referred to as "the City Bank") for the reasons stated in the petition.
2. According to the petitioner in March, 1992, Power Grid sold bonds of the face value of Rs. 80 crores by way of private placement in favour of Can Fina and issued allotment letters. On or about May 5, 1992, Can Fina sold to the petitioner, bonds of the face value of Rs. 30 crores and delivered three allotment letters of the face value of Rs. 10 crores each. On or about July 6, 1992, the petitioner lodged the allotment letters along with the transfer forms with Power Grid for registering the transfer of bonds in favour of the petitioners. But till the date of filing the petition, Power Grid had not registered the transfer. Power Grid had also not paid the interest due on the bonds that fell due to the petitioners. Power Grid was duty bound to register the transfer and send either the allotment letters or the bond certificates as required by Section 113 of the Act. Since City Bank had not received any communication from Power Grid in this regard, many meetings were held with the Power Grid authorities but no response was forthcoming from Power Grid. Even though as per the terms of issue of bonds, interest was to be paid on January 1, and July 1, every year, no interest had been paid by Power Grid. Even to the letters dated June 23, 1993, written to the chairman of Power Grid or to the letter of the petitioner's attorney dated August 24, 1993, Power Grid did not send any positive reply. In view of the inaction on the part of Power Grid, either to transfer the bonds or to refuse the same, the petitioner has a cause of action under Section 111(4) and 111(5) of the Act. Accordingly, the petitioner has sought for rectification of the register of bondholders as prayed for in the petition.
3. The second respondent, namely, Can Fina, filed a reply to the petition stating therein that Can Fina sold to the petitioner the impugned bonds on May 5, 1992, and also received the sale consideration. They have also delivered to the petitioner allotment letters in respect of these bonds. It is further stated in the reply by Can Fina that they have also written to Power Grid stating that Can Fina has no objection to Power Grid paying the interest due on September 10, 1992, March 10, 1993, and September 10, 1993, to the petitioner. It has further been stated in the reply that Can Fina has no objection to the transfer of the bonds and to payment of interest as prayed for by the petitioner.
4. Power Grid, in its reply, has raised certain preliminary objections, inter alia, the following :
(i) Section 111 is applicable only in the case of refusal of transfer of shares and debentures of a company. The impugned letters of allotment are neither shares nor debentures and as such the same does not fall within the purview of Section 111.
(ii) The petition is time-barred in terms of Section 111(3) as appeal against refusal has to be made within a period of four months from the date of lodgment. The instant application has been filed after a period of one year from the date of lodgment and as such it is belated and cannot also be condoned.
(iii) The petition has become infructuous inasmuch as the letters of allotment in question have been forfeited in accordance with the articles of association of the respondent-company.
(iv) The petitioner has not given/furnished many details like contract note, the name of the broker through whom the contract was completed, no consideration has been shown in the transfer deed, etc.
5. On the merits, it is stated in the reply, that the allotment of Rs. 80 crores worth of bonds was made on the condition by Can Fina that "Power Grid shall invest Rs. 60 crores with us on the date of allotment for one year as portfolio management scheme". Therefore, there was a composite arrangement with Can Fina by which Can Fina was to be alloted bonds to the extent of Rs. 80 crores and in turn Power Grid would place with Can Fina Rs. 60 crores for a period 12 months as portfolio management scheme at 12 per cent, interest. However, after one year Can Fina did not pay the consideration amount towards the allotment despite repeated letters and registered notices. They also did not comply with the stipulation of the allotment, that 20 per cent, of the alloted bonds would be offered to the public over the sales counter. Therefore, Power Grid remained an "unpaid seller" and as such after giving notice to Can Fina, Power Grid forfeited the letters of allotment on February 11, 1994, and there is no valid allotment letter in existence to give rise to any cause of action.
6. Shri Soli Sorabjee, the senior advocate appearing on behalf of the petitioner, dealing with the preliminary objections raised by the respondents, submitted that the petition is maintainable under Section 111. According to him, as per Section 111{2), a petition under this section can be filed either within two months of refusal of registration of transfer or within four months of lodging of the documents. In the present case, according to him, even though the transfer instruments were lodged with the company as early as on July 6, 1992, the petitioner was in constant touch with the company on this matter and only when it received a letter dated September 23, 1993, from the company which indicated the intention of the company to refuse registration, this petition was filed. Therefore, there is no delay on the part of the petitioner in filing this petition and the question of limitation does not apply. He also relied on the decision as per the Company Law Board's order dated March 10, 1980, in Bradi and Morris Engineering Co. Ltd. v. Ganesh Flour Mills Co. Ltd. [1995] 2 Comp LJ 275 and also the Company Law Board's order dated June 19, 1979, in Ashok Champaklal Shah v. Kohinoor Mills Co. Ltd. [1995] 2 Comp LJ 269 to substantiate his submissions in this regard. He further submitted that even assuming that there was some delay on the part of the petitioner, the Company Law Board can, under powers vested in it by Section 637B of the Act condone the delay and admit this petition. He further submitted that the petition has been filed under Section 111(4) of the Act in which no time has been prescribed for seeking rectification of register of members. He further stated that the relief sought for in the petition relates to rectification of the register of bondholders by deleting the name of Can Fina and inserting the name of the City Bank. Therefore, according to Shri Sorabjee the contention that this petition is not maintainable on the basis of the law of limitation is not tenable and the petition is definitely maintainable. In regard to the applicability of Section 111, in the case of letters of allotment, Shri Sorabjee submitted that letters of allotment are as good as bonds and the same are tradable till such time the bonds are issued in place of the allotment letters. Therefore, whatever provisions are applicable to transfer of shares or debentures are also applicable in respect of letters of allotment and thus this objection of the respondents has no substance whatsoever. As far as the other objection relating to forfeiture of the letters of allotment and non-furnishing of certain details are concerned, these are matters of merit and they cannot be treated as matters of preliminary objection, he submitted.
7. Shri Shanti Bhushan, senior advocate appearing on behalf of Power Grid, questioned the contention of Shri Sorabjee regarding the power of the Company Law Board to condone the delay under Section 637B of the Act. According to him, Section 637B confers powers of condonation only on the Central Government and not on the Company Law Board. He further submitted that when the Company Law Board was a delegate of the Central Government, before May 31, 1991, the Company Law Board was conferred with the powers of condonation of delays under Section 637B. But now the Company Law Board has become a quasi-judicial body, the powers conferred on the Central Government cannot be construed as available to the Company Law Board and as such the delay in filing the petition cannot be condoned by the Company Law Board under the provisions of Section 637B of the Act.
8. He reiterated the submissions made in the reply that the remedy under Section 111 is not available in respect of letters of allotment and no petition under Section 155 could have been entertained in this case or under similar circumstances.
9. Dealing with the submissions of Shri Sorabjee that this petition has been preferred under Section 111(4), Shri Shanti Bhushan contended that in the case of transfer of shares/debentures, the only applicable provisions are Section 111(2) and Section 111(3). The remedy under Section 111(4) is not an alternate remedy to the remedies under the provisions of Section 111(2) and 111(3). In case of refusal to transfer or delay in transfer, the time stipulated in Section 111(2) and 111(3) has to be strictly followed and as a matter of fact, according to Shri Shanti Bhushan, the provisions of Section 111(4) can be invoked only when the right to entry in the register is crystallised by first pursuing the remedy under Section 111(2) and (3). Such crystallisation could be either by an order of the Company Law Board or by an order of a court and if the company still fails to enter the name of a person in a register of members, then only the provisions of Section 111(4) can be invoked. Thus, for delay or refusal to transfer one has to resort to the remedy under Section 111(2) and (3). Since, a particular time limit has been prescribed in Section 111(3), such limitation will have to be taken into consideration by the Company Law Board as these time limits have to be mandatorily followed. In the present case, the company has not refused registration of the transfer of bonds and, therefore, the petitioner should have come before the Company Law Board within four months from the lodgment of the instruments which they have failed to do so.
10. According to him prior to the 1988 amendment, the High Courts were seized of the matter of rectification of the register of members and even though there is no specific limitation period, prescribed in this regard in Section 155 of the Act (before 1988), the High Courts followed the period of limitation of three years. Now, the provisions of Section 155 relating to rectification have been assimilated in Section 111, with this amendment, there should be a harmonious interpretation of the whole Section 111. As such no one can resort to Section 111(4) in case of refusal of transfer without resorting to the remedy prescribed under Section 111(2) and (3).
11. Otherwise, the entire stipulation of procedures and time limits provided by the Legislature will he set at nought. Whatever the time limit is specified in Section 111(3), therefore, has to be strictly complied with and the intent of Parliament should be given full effect to as this time limit is binding on every one. After obtaining relief under Section 111(2) and (3), a petitioner may resort to Section 111(4) in case the transfer is still not registered by the company. If the petitioner has got any grievance, in view of the expiry of the limitation period, he may seek suitable remedy in a civil court and not under Section 111 or the petitioner should have filed another set of transfer forms. But even that it cannot do now as the bonds have been forfeited. Even if it is assumed that the petitioner has come under Section 111(2) on the plea of refusal by letter dated September 23, 1993, it is to be noted, Shri Shanti Bhushan stated that this petition is prior in period of time, to the letter dated September 23, 1993. As a matter of fact, he further stated, there is nothing in this letter to indicate that the transfers have been refused. It is nothing but a reply to the notice of the solicitor of the petitioner. Therefore, the upper limit of four months from the date of lodgment has to be strictly applied and since the petition is beyond a year from the date of lodgment, the same is not maintainable. Even, Section 5 of the Civil Procedure Code, the Company Law Board not being a court, is not applicable for the Company Law Board to consider any condonation of delay.
12. Dealing further, Shri Shanti Bhushan stated that a transferee cannot challenge the act of the board of directors in forfeiting the bonds. Both the City Bank as well as Can Fina have not come with clean hands inasmuch as there are no details regarding the name of the broker through whom these transfers were entered into, consideration paid, etc. He further stated that the City Bank is involved in a number of scam cases and this aspect should also be kept in mind.
Shri Bhushan cited the following cases to substantiate his arguments :
(1) Carbon Corporation Ltd. v. Abhudaya Properties (P) Ltd. [1991] 2 Comp LJ 417 ; [1992] 73 Comp Cas 572 (CLB).
"The Company Law Board not being a court under the Code of Civil Procedure has no powers to extend the period of limitation fixed by a particular provision of the enactment."
(2) Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala, AIR 1961 SC 1669, 1G75 ; [1961] 31 Comp Cas 387, 395.
"It is immaterial that the statute which confers the power upon the Central Government does not expressly set out the extent of the power ; but the very nature of the jurisdiction requires that it is to be exercised subject to the limitations which apply to the court under Section 155."
to show the point that limitation though not expressly stated shall apply to the Company Law Board as applicable to courts.
13. To substantiate his argument that unless the provisions of sub-sections (2) and (3) are differentiated from Section 111(4), there would be absurdity inasmuch as Sub-section (3) provides a time-limit while Sub-section (4) does not mention any time-limit and that these two provisions will have to be harmoniously interpreted particularly after the 1988 amendment when the provisions of Section 155 have been incorporated in Section 111 of the Act he referred to C W. S. (India) Ltd. v. CIT [1994] 208 ITR 649, 656 ; JT 1994(3) SC 116.
" We may refer to the well-recognised rule of interpretation of statutes that where a literal interpretation leads to absurd or unintended result, the language of the statute can be modified to accord with the intention of Parliament and to avoid absurdity. "
He also relied on Girdhari Lal and Sons v. Balbir Nath Mathur, AIR 1986 SC 1499, 1503, 1504.
" So, we see that the primary and foremost task of a court in interpreting a statute is to ascertain the intention of the Legislature, actual or imputed. Having ascertained the intention, the court must then strive to so interpret the statute as to promote/advance the object and purpose of the enactment. For this purpose, where necessary, the court may even depart from the rule that plain words should be interpreted according to their plain meaning. There need be no meek and mute submission to the plainness of the language. To avoid injustice, anomaly or absurdity or to avoid invalidation of a law, the court would as well be justified in departing from the so called golden rule of construction so as to give effect to the object and purpose of the enactment by supplementing the written word, if necessary. . . . A judge cannot simply fold his hands and blame the draftsman."
He also relied on the observation of the Supreme Court in J. K. Cotton Spinning and Weaving Mills Co. Ltd. v. State of U. P., AIR 1961 SC 1170, 1174; [1960-61] 19 FJR 436.
" The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them, his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier directions should prevail."
To advance his argument that a transferee cannot question the forfeiture, he relied on Travancore Electro Chemical Industries Ltd. v. Alagappa Textiles (Cochin) Ltd. [1972] 42 Comp Cas 569 ; [1972] Tax LR 2192 (headnote of Tax LR) :
"A transferee, therefore, on the basis of the blank transfer and share certificates issued to the transferor has no right to impeach the forfeiture of the shares without being registered as the owner of the shares in the books of the company."
To substantiate his argument that letters of allotment are not bonds to be covered under Section 111, he relied on the decision of the Company Law Board in Hindusthan Development Corporation Ltd., In re [1993] 2 CLJ 257 ; [1994] 79 Comp Cas 207 wherein the Company Law Board observed. "A letter of allotment is not the same as the certificate".
Shri Ganesh appearing on behalf of the City Bank, replying to the arguments of Shri Shanti Bhushan refuted the contention that the petition is not maintainable. According to him, the petition has been filed under Section 111(4) and not under Section 111(2). He submitted that an aggrieved person had two options with him before the 1988 amendment either to appeal to the Central Government under Section 111 or approach the High Court under the then Section 155. By assimilation of the provisions of Section 155 in the present Section 111, the option has not been taken away. Even now an aggrieved person has the choice of either coming under Section 111(2) or Section 111(4) which option he had before the 1988 amendment except that earlier, the forums were different but now the forum is the same. Quoting from the Statement of Objects and Reasons relating to the Companies (Amendment) Act, 1988, in respect of assimilation of the provisions of Section 155 in Section 111, he stated that the entire Section 155 has been reproduced in Section 111(4) and, therefore, whatever the High Courts have observed in respect of the applicability of Section 155, the same should apply to a petition under Section 111(4). He cited the following cases in support of the proposition that sections 111(2) and 155 are alternate remedies.
(1) South Indian Bank Ltd. v. Joseph Michael [1978] 48 Comp Cas 368, wherein the Kerala High Court observed (at page 371) :
" It is open to the aggrieved transferee to seek relief either under Section 111 by an appeal to the Centra! Government or under Section 155 by petitioning the court."
(2) Hemendra Prasad Barooah v. Bahadur Tea Co. Pvt. Ltd. [1991] 70 Comp Cas 792, 796 (Gauhati) :
"Section 155(l)(b) covers all cases of improper or illegal refusal to register the transfer of shares."
(5) M. M. Mukherjee v. Jalpaiguri Cinema Co. Ltd [1975] Tax LR 1741 (Cal) :
"Petition under Section 155 for rectification of share register is not necessarily barred because of prior Section 111 proceedings as remedies under these two sections are different in nature."
Shri Ganesh further submitted that since the provisions of Section 155 have been assimilated in Section 111(4), and in the absence of any contrary intention on the part of the Legislature, the interpretation given by the High Courts that the remedies are alternative remedies holds good. On this proposition, he relied on the observation of the Supreme Court in Vajravelu v. Special Deputy Collector, AIR 1965 SC 1017, 1024.
" It is a well known principle of construction that where the Legislature used in an Act a legal term which has received judicial interpretation, it must be assumed that the term is used in the sense in which it has been judicially interpreted unless a contrary intention appears". (Craies on Statute Law)".
He also referred to the reliance placed by the Supreme Court on the observations of Lord Buckmaster in Barras v. Aberdeen Steam Trawling and Fishing Co. Ltd. [1933] AC 402, 411 in Diwan Bros. v. Central Bank of India, AIR 1976 SC 1503, 1515 ; [1976] 3 SCC 800.
"It has long been a well-established principle to be applied in the consideration of Acts of Parliament that where a word of doubtful meaning has received a clear judicial interpretation, the subsequent statute which incorporates the same word or the same phrase in a similar context must be construed so that the word or phrase is interpreted according to the meaning that has previously been ascribed to it."
14. Therefore, Shri Ganesh contended that the petitioner who had the option of coming either under Section 111(2) or Section 111(4) chose the latter option as there is no time limit fixed for filing this petition. Even assuming that there is a time limit, then it should be only three years and the petitioner has come within three years from the date of lodgment. He further submitted that there is no substance in the arguments of Shri Shanti Bhushan that Section 111(4) does not cover transfer cases in view of the specific wording at the end of the section, viz., "including refusal under Sub-section (1)" which was not there in the original Section 155. Accordingly, he contended that the Legislature not only provided two alternative remedies but has scrupulously included, to avoid any controversy, the words "including refusal under Sub-section (1)", to make it amply clear that even a refusal of transfer of shares can be agitated in addition to Section 111(2) under Section 111(4). Even though this petition was under Section 111(4) and maintainable, he pointed out, assuming that it is not maintainable, this petition could very well be considered under Section 111(3) inasmuch as the petition was filed within two months from the date of the letter of refusal, as in the case of refusal, the time will start running from the date of refusal and it has no relevance to the date of lodgment as the cause of action would accrue to the aggrieved only from the date of refusal of registration of transfer. On this proposition, he relied on Shailesh Prabhudas Mehta v. Calico Dyeing and Printing Mills Ltd. [1994] 80 Comp Gas 64 (SC).
15. As for the argument of Shri Bhushan that the letter dated September 23, was not a letter of refusal and that the petition was filed prior to that date, Shri Ganesh pointed out that a reading of the contents of the letter would show that the intention of the company to refuse, was clear and as a matter of fact it was a conditional refusal. This letter was filed along with the reply of the respondents and the petitioner has questioned this in his rejoinder. In such eventualities, as observed by the Supreme Court in Union of India v. Alok Exports, AIR 1965 SC 578 (sic) "a document contained in the reply if contested in the rejoinder tantamounts to mention in the petition and should be considered as amendment to the petition". He also submitted that this objection is purely technical and the Company Law Board not being a court, the proceedings before it are informal, and this technical objection should not be given any consideration.
16. As regards forfeiture of the bonds, he submitted that the articles were amended in 1993 giving retrospective effect to forfeit bonds in February, 1993. Refuting the reliance placed by Shri Bhushan on the decision of the Kerala High Court in Travancore Electro Chemical Industries Ltd. v. Alagappa Textiles (Cochin) Ltd. [1972] 42 Comp Cas 569, Shri Ganesh pointed out that, in that case, forfeiture was done prior in time to the transfer while in the present case the forfeiture was done after the transfer was effected. He submitted that any amendment to the articles cannot take away the right of a third party and in the present case the petitioner being the third party, has the right to the bonds, which cannot be taken away by retrospective amendment and forfeiture. He contended that the submission of Shri Bhushan that after forfeiture the transferee has no right to file an application under Section 111(4) is not based on any judicial interpretation inasmuch as any aggrieved person can file a petition under Section 111(4) and since the petitioner in this case is an aggrieved person, it can file this petition.
17. As regards the contention that the petitioner has not come with clean hands, Shri Ganesh pointed out that the consideration was paid by means of a cheque and Can Fina has also acknowledged the same and there is no mention either in the JPC report or any other report impugning this particular transaction.
18. Closing his arguments Shri Ganesh prayed that if the Company Law Board considers this petition maintainable, it may fix a few days for hearing the case on merits instead of issuing any order on maintainability.
19. Shri Shanti Bhushan concluding his argument submitted that since the respondents are questioning the jurisdiction of this Board to entertain this petition, orders on the maintainability should be issued and, therefore, we must give our findings on the maintainability of the petition through a speaking order before fixing any date for hearing this petition.
20. We have considered the arguments of counsel. Having regard to the submissions of Shri Shanti Bhushan that we should issue a speaking order on the maintainability of the petition and as we also feel so, we are considering in this order only the maintainability of the petition. Even though various preliminary objections have been raised, according to us, there are only two issues which touch upon the maintainability of the petition and, therefore, we propose to consider only these two issues, namely, whether a petition against refusal to register the transfer of a letter of allotment is maintainable and whether the petition is maintainable under Section 111(4). Other objections relating to forfeiture especially when the correctness of the same has been questioned and non-furnishing of full details, etc., would require us to go into the merits of the case and as such they are not being discussed in this order.
21. The first objection of the respondents is that a petition regarding refusal to register the transfer of a letter of allotment is not maintainable under Section 111 of the Act. In this connection, it is necessary to note the exact wording of Section 111(1) which reads as follows :
" If a company refuses, whether in pursuance of any power of the company under its articles or otherwise to register the transfer of or the transmission by operation of law of the right to, any shares or interest of a member in or debentures of the company it shall . . . ."
22. The above wording of the section indicates that the subject-matter of refusal is the "right to any shares or interest of a member in or debentures of the company." A share has been defined by Section 2(46) as "share means share in the share capital of a company and includes stock except where a distinction between stock and share is expressed or implied". A share is also described as the interest of a shareholder measured by a sum of money for the purpose of liability in the first place and of interest in the second but also consisting of a series of mutual covenants entered into by all the shareholders inter se. Further, a reading of Section 84 of the Act which deals with certificate of shares in this context indicates that a certificate is an evidence of the title of members to such shares. The same applies to debentures as well. On reviewing the arguments of the respondents in the above context, it is evident that there is a clear misconception with regard to shares/debentures on the one hand and share certificate/ debenture certificate and letters of allotment on the other. Whereas the shares or debentures indicate the interest of a person in the company as a member or debenture-holder, a share certificate or letter of allotment is an evidence of the entitlement to such shares or debentures. The above distinction could be further evident from the provisions of Section 108(1) of the Act where it is clearly laid down that a company shall not register a transfer of shares in or debentures of the company unless, inter alia, either the share or debenture certificate or if no such certificate is in existence a letter of allotment is delivered to the company. In other words the scheme of the Act is that in order to register the transfer of shares or debentures the evidence in the form of either a share/debenture certificate or letter of allotment is essential. A share or debenture certificate is not the same as a letter of allotment as differences do exist between the two documents. This of course has been dealt with in the decision of the Company Law Board under Section 113 of the Act as cited by the respondents. The Act does recognise a letter of allotment as an alternative evidence to a share/debenture certificate by the specific provisions contained in Section 108 in the context of transfers of shares and debentures. However, the certificate letter of allotment is not the same as the share or debenture itself. As such the objection of the respondents regarding maintainability on the ground that the evidence of the debenture is in the form of a letter of allotment is not well founded. The respondents have misconstrued a share or debenture as the same as a share certificate or debenture certificate whereas the former denotes the interest of a member or debenture holder, the latter refers to the evidence of such interest. The evidence of shares/debentures is tangible and as such could be destroyed but a share/debenture being intangible cannot be destroyed. What is dealt with in Section 111 relates to the transfer of the share/ debenture which may be evidenced either by a certificate or letter of allotment. In the circumstances, this ground adduced by the respondents is not maintainable.
23. As regards the second objection, this petition has been filed under Section 111(4) which according to Shri Shanti Bhushan is not the applicable provision in the instant case and, therefore, cannot be entertained under that sub-section. The sum total of the argument of Shri Shanti Bhushan is that in the case of transfers, Sub-section (4) of Section 111 is not applicable at all and the only applicable provisions are Section 111(2) and 111(3) especially after the assimilation of the provisions of the erstwhile Section 155 in the present Section 111.
24. Before the 1988 amendment to the Companies Act, remedy for an aggrieved transferee was provided in Section 111 and the forum to deal with his grievances was the Company Law Board, as a delegate of the Central Government. At the same time Section 155 provided for application to the High Court for rectification of the register of members/debenture holders. While the then Section 111 dealt with the rights of appeal only relating to transfer, Section 155 provided the right to any member, company or any aggrieved person for rectification of the register. Unlike the provisions of Section 111 there was no time limit fixed in Section 155, but in view of the decisions of the various High Courts the period of limitation has been recognised as three years from the date of cause of action. Even though Shri Shanti Bhushan contended that there was no specific provision in Section 155 to cover grievances arising out of either refusal of transfer of shares or delay in effecting registration of transfer of shares, actually there have been innumerable cases in which courts have dealt with transfer matters and while doing so many courts have also held that the remedies available under Section 111 and Section 155 were alternate remedies and the choice of electing either of these sections was at the discretion of an aggrieved person. No doubt, Shri Shanti Bhushan argued that, in a literal sense, the High Courts could not have and should not have dealt with matters relating to transfers under Section 155, he felt that the courts did deal with these matters only perhaps because they were superior courts and also constituted the appeal courts from orders of the Company Law Board. But now with the assimilation of provisions of Section 155 in Section 111 the forum has become one and the same and since there is a separate provision relating to transfer matters in Section 111(1), (2) and (3) the question of exercising jurisdiction on transfer matters under Section 111(4) should not arise without first exhausting the remedy available under Section 111(2) and (3) he contended.
25. His argument is that if at all transfer matters could be considered under Section 111(4) it could be only after either the Company Law Board or the High Court or a civil court has given a verdict or direction to the company to effect the registration of transfers and the right to become a member has crystallised and the company still delays effecting the transfer. The main theme of the argument is that when certain time limits have been fixed within which an aggrieved transferor or transferee can agitate under Section 111(3) it would be inappropriate to switch the same under Section 111(4) wherein no time limit has been fixed. According to Shri Shanti Bhitshan this switching cannot be done if a harmonious construction of the entire section is taken. Since in the present case what had been sought in the petition is to direct the company to register the transfer, the petitioner should have come within the time limit prescribed under Section 111(3). In other words, admitting a petition under Section 111(4) in case of refusal of transfer renders the entire time limit in Section 111(2) and (3) nugatory.
26. While we appreciate the soundness of this argument, we will have to also consider the arguments of Sari Ganesh wherein he has stressed on the harmonious interpretation of statutes before and after an amendment and also the decision of various High Courts in this regard. It is now an established position that the remedies available under the erstwhile sections 111 and 155 were alternate remedies. The only issue is whether by mere assimilation of the provisions of Section 155 in the present Section 111 consequent to the 1988 amendment there is any change in this established position.
27. It is an admitted position that Section 111(4) is practically a reproduction of the erstwhile Section 155(1) of the Act except to the addition of the words "including a refusal under Sub-section (1)" and substitution of the word "Company Law Board" for "court". As per Sub-clause (b) of Section 111(4) any person aggrieved can make an application to the Company Law Board for rectification of the register, if unnecessary delay takes place in entering in the register. The term "having become a member" has been judicially interpreted to mean "any person having become entitled to be a member" or "any person having got the right of membership". Therefore, a , transferee who has valid instruments of transfer along with the certificates, according to us, is one who is entitled to become a member and not necessarily only one who has obtained an order of the court or the Company Law Board as contended by Shri Shanti Bhushan. This position of a transferee coming to the court under the erstwhile Section 155 has been very well recognised by the various High Courts. Whether this position has now changed consequent to the amendment if examined with various case laws and legal treatise, would show that there has been no change in the position. Shri Ganesh cited various case laws which we have indicated in the earlier part of this order, on this aspect. We have also had the benefit of going through certain decisions of courts and treatises on the subject of interpretation of words used by the Legislature and of words which have already received judicial interpretation : In Murugiah v. Jainudeen [1956] 3 WLR 682 (PC) the Judicial Committee cited with approval the following passage from Maxwell's Interpretation of Statutes, 10th edition, at page 81 :
"Presumption against implicit alteration of law--One of these presumptions is that the Legislature does not intend to make any substantial alteration in the law beyond what it explicitly declares, either in express terms or by clear implication, or, in other words, beyond the immediate scope and object of the statute. In all general matters outside those limits the law remains undisturbed. It is in the last degree improbable that the Legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law without expressing its intention with irresistible clearness."
Their Lordships agreed that the law was correctly stated in the above passage.
28. In Cricket Club of India v. Madhav L. Apte [1975] 45 Comp Cas 574 (Bom), the four principles of interpretation were set out as follows (at page 591) :
"(1) There is presumption against the alteration of well-settled law by implication and such a change should be either by explicit or express words or only if such inference of alteration is irresistible.
(2) If the matter is evenly balanced or fairly arguable on either side, then that interpretation should be preferred which would involve the least alteration of the existing law.
(3) If one of the two possible constructions would lead to startling or bizarre results, or to any absurd or harsh consequences, then that construction is one which ought not to be preferred and is one which aught to be avoided.
(4) The intention of the Legislature is primarily to be gathered from the actual words used and not from any words not to be found in the statute, but which are required to be added to make the statute clear and to bring out the policy intention".
29. In Dr. Mrs. Sushma Sharma v. State of Rajasthan, AIR 1985 SC 1367, where the court held that the principle that when a legislative enactment has received authoritative interpretation whether by judicial decision or by a long course of practice is again adopted in the framing of a later statute, it is sound rule of construction to hold that the words so adopted were intended by the Legislature to bear the meaning which has been so put upon them, is only a presumption and it is not an absolute rule. The court said (at page 1374) :
" It,was observed by Lord Scarman in the case of R v. Chard [1984] AC 279 at page 295, that the theory which has noted hereinbefore was not a cannon of construction of absolute obligation but only a presumption in the circumstances to be taken in judicial interpretation. This proposition, according to Lord Scarman is well settled."
30. In Keshavji Ravji and Co. v. CIT [1990] 183 ITR 1 (SC) the contention was that where the meaning of a word used in a statute had been judicially ascertained by a court and where the Legislature while re-enacting the law on the subject, uses the same word, it must be taken to have been aware of the meaning so judicially ascertained earlier and not to have used the word with a different content. While acknowledging the fact that the principle was a well-recognised guide to construction, the court held that there were limitations to its application. In that case, it was held that the said principle of construction was out of place. The court said (at page 11) :
" The rules of interpretation are not rules of law ; they are mere aids to construction and constitute some broad pointers. Two interpretative criteria apposite in a given situation may, by themselves, be mutually irreconciliable. It is the task of the court to decide which one, in the light of all relevant circumstances, ought to prevail. The rules of interpretation are useful servants but quite often tend to become difficult masters."
31. Bearing the above principles in mind, our task is to find out whether the Legislature has intended to, by incorporating the provisions of Section 155(1) into Section 111(4), restrict the remedies which were earlier available to an aggrieved person. The intention of the Legislature regarding whether the remedies under Section 111(2) and (4) are alternate remedies would have been difficult to ascertain if the erstwhile Section 155(1) had been incorporated in Section 111(4) as such. The addition of the words "including a refusal under Sub-section (1)" in Section 111(4) makes it abundantly clear that the Legislature had intended that transfer cases also could be considered under this sub-section and it is an additional remedy to that provided in Section 111(2). Since refusal to transfer and delay in transfer are treated at par a view cannot also be taken that cases of delay are not contemplated by addition of these words. The contention of Shri Shanti Bhushan that the addition of these words would cover only those cases in which there is a judicial direction to effect registration of transfers, does not appeal to us. If that be the case the proper remedy for the aggrieved person would be to execute such direction through some other remedies and he does not have to necessarily invoke the provisions of Section 111(4).
32. An analysis of the various decisions cited above strengthens the arguments of Shri Ganesh that the legal position that the remedies under sections 111(2) and (4) are alternate remedies, as has been held by various courts and, in the absence of any other contradiction by courts, should continue to prevail even after the 1988 amendment.
33. Shri Shanti Bhushan has cited three Supreme Court cases. Of this C.W.S. (India) Ltd. v. CJT[1994] 208 ITR 649 ; JT 1994 3 SC 116 and Girdhari Lal and Sons v. Balbir Nath Mathur, AIR 1986 SC 1499, are relevant in this context. These decisions seem to suggest that the language of a statute may be modified if otherwise absurd or the intended result would not follow and the statute should be interpreted by ascertaining the intention of the Legislature is not clear from the statute. In the present case, however, by assimilating Section 155 in Section 111 no new situation has arisen. Moreover, the intention of the Legislature is abundantly clear from the specific inclusion of the words "including a refusal under Sub-section (1)" as part of Section 111(4). No other contrary intention also appears "from a reading of the relevant Notes on Clauses. As such, we do not consider it appropriate to impute any other meaning than what is intended by the Legislature. As regards application of J. K. Cotton Spg, and Wvg. Mills Co. Ltd. v. State of U. P., AIR 1961 SC 1170, cited by Shri Shanti Bhushan, namely, that if a statute gives two directions one covering a larger number of matters and another only some of them, the intention is that these later directions should prevail. As regards all the rest, the earlier directions should prevail. In the present case, however, since there is an overlap of one situation forming part of a larger situation the remedies available under both the provisions could be availed of as it was done prior to the amendment.
34. Even though we have come to the conclusion that an aggrieved transferor or transferee can invoke the provisions of Section 111(4), we do appreciate the point raised by Shri Shanti Bhushan that if in one section there are two provisions, one fixing a time limit and the other without any time limit, and if both are applicable in a given situation, then it would make the provision fixing a time limit redundant. However, the legal provisions remaining as they are, and the intention of the Legislature being patently clear in view of our analysis as above, we hold that the petition is maintainable under Section 111(4) and we order accordingly. In view of this decision, we are not discussing the point raised on whether the time limit prescribed under Section 111(3) is mandatory and whether we have powers to condone, etc. The main petition will come up for hearing on April 10, 1995, at 10.30 a.m. and shall continue on April 11, 1995, at 10.30 a.m.