Indian Kanoon - Search engine for Indian Law

(6) Whether the removal of the name of SSPL and consequent entry of the names of respondents Nos. 17, 18 and 19 in the register of members of GWL was "without sufficient cause" ?

(7) Whether the prayer for rectification of register of members is to be granted ?

First issue : Locus standi :

The objection taken by the respondents is that none of the petitioners has any stake in the impugned shares nor any of them seeks to put its/ their names in the register of members consequent to the prayer for rectification and as such none has any locus standi to present the petition.

38. It was contended by counsel for the respondents that when we decided this case, the Full Bench judgment of the Delhi High Court on the maintainability of a petition under the erstwhile Section 155 (which is now Section 111(4)) in Ammonia Supplies Corporation Pvt. Ltd. v. Modern Plastic Containers Pvt. Ltd. [1994] 79 Comp Cas 163 was not available before us in which the High Court has categorically stated that proceedings under Section 155 are of a summary nature. In view of this, it was urged to relegate the parties to a civil suit. We have gone through the judgment of the Delhi High Court. The main issue in that case was whether a civil court has jurisdiction in matters of rectification of register of members. After a careful examination of various case law, the Full Bench came to the conclusion that (at page 178) :

98. Now, we revert back to the issue relating to rectification. This petition has been filed under Section 111(4) of the Act seeking rectification of the register of members. According to this section,--

(4) If--

(a) the name of any person--

(i) is, without sufficient cause, entered in the register of members of a company, or

(ii) after having been entered in the register, is without sufficient cause, omitted therefrom ; or

(b) default is made, or unnecessary delay takes place, in entering in the register the fact of any person having become, or ceased to be, a member (including refusal under Sub-section (1)), the person aggrieved, or any member of the company, or the company may apply to the Company Law Board for rectification of the register."

100. On a consideration of the provisions of the Act it is within the competency of the Company Law Board to decide whether the impugned transfers are invalid in view of the provision of law or fraudulent and mala fide and whether on account of these facts the transfers are a nullity. If these allegations are to be proved then there is absolutely no doubt that the transfers are invalid and the purchaser will not get any title and we can direct the rectification of the register of members.

101. Rectification has been sought on the basis of the various allegations against SSPL, GWL and the transferees. As far as SSPL is concerned, we have already held in the earlier paragraphs that it has not violated the provisions of Section 293 and also the undertaking given before us in C.P. No. 29 of 1992. Therefore, the remaining grounds against SSPL that the board has been illegally constituted and that the decision to transfer the shares was mala fide alone remain to be considered. As far as the allegation against GWL is concerned, we have already held that not only have the provisions of Section 84(2) not been complied with but it has also not complied with the provisions of the Issue of Certificate Rules.