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14. Taking up the issue relating to the second ground on which the board of directors decided to refuse registration of the transfer, Shri Raghavan argued that the minutes enclosed with the reference were only draft minutes and not confirmed minutes. These draft minutes were prepared on May 26, 1992, and were enclosed with the reference on May 28, 1992. He pointed out that the minutes of a particular meeting are confirmed only in the next meeting and it is inconceivable that within two days the minutes could be confirmed and taken on record. He drew our attention to page 51 of the reply to the amended petition to show that the reference was made only on the basis of draft the minutes. According to him, the minutes were not at all confirmed till June 25, 1992, and he drew support in his argument to the minutes of June 25, 1992, in which there has been discussion on the minutes of May 26, 1992. He drew our attention to the fact that the minutes of June 25, 1992, were approved in the next meeting only on September 15, 1992. Therefore, according to Shri Raghavan, it is inconceivable and improbable that confirmed minutes were available when the reference was made. He also questioned the letter of Shri Arunachalam dated June 23, 1992, in which he has raised certain queries about the affidavits filed by the five directors seeking amendment to the reference. Shri Raghavan pleaded that no credence should be given to this letter nor can the same be relied upon in the absence of an affidavit from Shri Arunachalatn. He also refuted the allegations by the respondent that it was an afterthought or in consultation with some company law experts that five directors filed affidavits seeking amendment. According to him, it is not necessary that the registration of transfer should bring about a change in the management. It is enough, if in good faith, the board apprehended that there is likely to be a change in the composition of the board of directors and that such a change would be detrimental to the interests of the company. Looking into the great efforts taken by SWC, an MRC company in the revival of the company, one can easily visualise the fate of the company if a change in management takes place. Once SWC decides to call back its loans, etc., from the company, or once outsiders come to know of the non-involvement of SWC in the affairs of the company, the revival process would come to an end and it is definitely detrimental to the company and its 900 odd employees and the public interest. Regarding taking part of the five directors in passing the impugned resolution, who owe allegiance to MRC/SWC, Shri Raghavan argued that it is fallacious to apply the provisions of Section 299/300 of the Act, as according to him, the provisions of these sections are attracted only when one or more directors are interested in a contract or arrangement and it is only about registration of transfer of shares.

29. Before we proceed with the decision of the board of directors rejecting the registration of transfers, it is essential to look into whether the resolution which was passed itself was valid as per the provisions of the Companies Act. One of the contentions raised regarding the validity of the resolution is that the resolution was passed by a group of directors who owe allegiance to MRC and as such they are interested directors as envisaged under Section 299/300 of the Act. It is contended that if they are interested directors then the resolution cannot be given effect to. In this connection, it is worthwhile to note that Section 299 of the Act imposes an obligation on the part of a director to disclose the nature of his interest or concern if he is in any way whether directly or indirectly concerned or interested in any of the contract or arrangement or proposed contract or arrangement entered into or to be entered into by or on behalf of the company and in case he fails to disclose such interest he will be punishable with a fine which may extend to Rs. 5,000. As per Section 300 of the Act, the presence of such director shall not count for the purpose of forming a quorum at the time of any such discussion or vote and if he does vote, his vote shall be void. Therefore, it is apparent from Section 300, that, if the directors who had voted on the impugned resolution were interested then the resolution having been passed only with their voting in favour of the same, has to be treated as void. The question, therefore, arises for determination is whether the five directors who allegedly owed allegiance to MRC in view of their being employees/consultants of SWC were interested directors within the provisions of either Section 299 or 300.

30. This is a case of registration of transfer of shares of GWL in the name of Trident in which Tracstar holds beneficial interest. In other words, there are three parties involved, viz., the transferors who are the present members, the transferee-Trident and the beneficial owner-Tracstar. The five persons are directors of GWL. As per Section 299, even assuming that the registration is an "arrangement", disclosure by these persons as directors regarding their interest, has to be construed with reference to either Tracstar, Trident or the transferors. There is no allegation that those directors hold more than 2 per cent shares in either Trident or Tracstar. The only contention is that they are the employees/consultants of SWC which is under the control of MRC. Of the eight directors who were present on May 26, 1992, when the impugned decision was taken, three directors, namely, Shri A. Arunachalam, nominee of B1FR, Shri KRC and Shri Krishna-rao abstained from voting leaving the other five directors who consented to the passing of the resolution.

31. It is an admitted fact in this case that the five directors who voted for the resolution owe allegiance to MRC. The question is whether they can be construed as "interested directors", when they considered the registration of these transfers on the ground that the apprehended change in the composition of board of directors will affect the present board. In this connection, it is relevant to refer to Section 22A(3)(c) of the SCR Act according to which a board of directors may refuse registration of transfer if "the transfer of security is likely to result in such change in the composition of the board of directors . . ." The decision to refuse registration on the ground of likely change, in other words, would ensure continuation of the present board. This means that everyone in the present board would be deemed to be interested in the resolution. If the interpretation of "interested directors" would mean a situation like this, then irrespective of whether the five directors in question belong to the MRC group or not, does not make any difference. However, such interpretation of "interested directors" in a 22A(3)(c) decision, on the face of it, looks far-fetched and absurd. Therefore, according to us as long as the board of directors who participate in a voting do not have any interest either as transferor or transferee or a beneficial holder, as in the instant case, then the decision cannot be construed to fall within the ambit of either "contract" or "arrangement" as contemplated under Section 299/300 of the Act. Otherwise, in all cases of refusal to register under Section 22A(3)(c) the entire board should be deemed to be interested in the refusal which is obviously not the spirit behind the provisions of law. What is actually intended under these sections is dealings between two or more parties in which the company is a party and the director has a direct or indirect personal pecuniary interest. Stretching anything beyond the scope of these sections is not warranted. We, therefore, hold that the resolution is not vitiated by the participation of the five directors in voting. In this connection we would like to observe that even though this point had been mentioned in the annexure 'S' to the application and also in the reply to the petition, there were no arguments by either of these parties on this point. In these circumstances, we hold that the resolution was validly passed.