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have been framed by the Central Government. By cl. (3) of the rules, the form of the petition of appeal is prescribed. Clause (4) provides that the memorandum of appeal shall be accompanied by an affidavit and documentary evidence if any in support of the statements made therein including a copy of the letter written by the appellant to the company for the purpose of registration of the shares. Clause (5) pres- cribes the mode of service of notice of appeal to the company and el. (6) authorises the Central Government before considering the appeal to require the appellant or the company to produce within a specified period such further documentary or other evidence as it considers necessary. Clause (7) enables the parties to make representations if any in writing accompanied by affidavits and documentary evidence. Clause (8) authorises the Central Government after considering the representations made and after making such further enquiries as it considers necessary to pass such orders as it thinks fit under sub-s. (5) of s. 111 of the Act. By the appendix to the rules, the form in which notice is to be given to the company is prescribed. Paragraph 2 of the form states that the company shall be called upon to make its representations in writing against, the appeal and be informed that if no representation is received, the appeal will be determined according to law. There was no provision similar to s. Ill of the Indian Companies Act, 1956, in the Act of 1913, nor is our attention invited to any provision in the English Companies Act on which our Act is largely based, to a similar provision. Prior to 1956, if transfer of shares was not registered by the directors of a company, action under the Companies Act of 1913 could only be taken under s. 38 of the Indian Companies Act, 1913 by petition for rectification of the share register. As we will presently point out, the power to refuse to register a transfer granted by the Articles of Association, if challenged in a petition for rectification of register was to be presumed to have been exercised reasonably, bona fide and for the benefit of the company, and unless otherwise provided by the Articles, the directors were not obliged to disclose reasons on which they acted. The power had to be exercised for the benefit of the company and bona fide, but a heavy onus lay upon those challenging the resolution of the directors to displace the presumption of bona fide exercise of the power. The discretion to refuse to register transfers was not liable to be controlled unless the directors "acted oppressively, capriciously or corruptly, or in some way mala fide" (Re Bell Brothers Ltd. ex parte Hodgson) (1).

register transfer of shares has, since the enactment of the Companies Act, 1956, therefore two remedies for seeking relief under the Companies Act, (1) to apply to the court for rectification of the register under s. 155, and (2) to appeal against the resolution refusing to register the transfers under s. 111. It is common ground that in the exercise of the power under s. 155, the court has to act judicially: to adjudicate upon the right exercised by the directors in the light of the powers conferred upon them by the Articles of Association. The respondents however submit-and they are supported by the Union of India-that the authority of the Central Government under s. Ill is nevertheless purely administrative. But in an appeal under s. 111 el. (3) there is a lis or dispute between the contesting parties relating to their civil rights, and the Central Government is invested with the power to determine that dispute according to law, i.e., it has to consider and decide the proposal and the objections in the light of the evidence, and not on grounds of policy or expediency. The extent of the power which may be exercised by the Central Government is not delimited by express enactment, but the power is not on that account unrestricted. The power in appeal to order registration of transfers has to be exercised subject to the limitations similar to those imposed upon the exercise of the power of the court in a petition for that relief under s. 155: the restrictions which inhere the exercise of the power of the court also apply to the exercise of the appellate power by the Central Government, i.e., the Central Government has to decide whether in exercising their power, the directors are acting oppressively, capriciously or corruptly, or in some way mala fide. The decision has manifestly to stand those objective tests, and has not merely to be founded on the subjective satisfaction of the authority deciding the question. The authority cannot proceed to decide the question posed for its determination on grounds of expediency: the statute empowers the Central Government to decide the disputes arising out of the claims made by the transferor or transferee which claim is opposed by the company, and by rendering a decision upon the respective con tentions, the rights of the contesting parties are directly affected. Prima facie, the exercise of such authority would be judicial. 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 s. 155. The proviso to sub-s. (8) of s. Ill clearly indicates that in circumstances specified therein reasonable compensation may be awarded in lieu of the shares. This compensation which is to be reasonable has to be ascertained by the Central Government; and reasonable compensation cannot be ascertained except by the application of some objective standards of what is just having regard to all the circumstances of the case.

A similar view was also expressed in In re, Smith and Fawcett Ltd. (1) where the Court of Appeal held that where the directors of the company had uncontrolled and absolute discretion to refuse to register any transfer of shares, while such powers are of a fiduciary nature and must be, exercised in the interest of the company, the petition for registration of transfer should be dismissed unless there is something to show that they had been otherwise exercised. Rectification of the register under s. 155 can therefore be granted only if the transferor establishes that the directors had, in refusing to register the shares in the names of a transferee, acted oppressively, capriciously or corruptly, or in some way mala fide and not in the interest of the company. Such a plea has, in a petition for rectification, to be expressly raised and affirmatively proved by evidence. Normally, the court would presume that where the directors have refused to register the transfer of shares when they have been invested with absolute discretion to refuse registration, that the exercise of the power was bona fide. When (1) L.R. [1942] 1 Ch. D. 304.

The facts have been stated in detail by my learned brother, and I shall not repeat them in full. Very shortly stated, the facts are that the second respondent, Banarsi Prasad Jhunjhunwala, transferred 2500 shares to his son, and 2100 shares to his daughter-in-law, in the appellant Company in 1953. The appellant Company declined to register these transfers. Proceedings for rectification of the Register under s. 38 of the Indian Companies Act, 1913, followed in the High Court of Bombay, but the High Court referred the disputants to the Civil Court. In the petition before the High Court, the respondents had charged the Directors of the appellant Company with bad faith and arbitrary dealing. The respondents renewed their requests for registration, but they were again declined, and appeals were filed before the Central, Government under s. 111(3) of the Companies Act, 1956, which had come into force from April 1, 1956. These appeals were heard by Mr. K. R. P. Aiyengar, Joint Secretary, Ministry of Finance, who dismissed them, holding that only a suit was the appropriate remedy. Banarsidas Prasad then made a fresh transfer of 100 shares each to his son and daughter-in-law, and requests for registration of these shares were made. The appellant Company again declined to register the shares, but gave no reaons. Under cl. 47-B of the Articles of Association of the appellant Company, it is provided: