Efirst Technologies Private Ltd. And ... vs Hiperworld Cybertech Limited And Ors. on 30 November, 2004
The power of the Board of Directors to insist on compliance with the provisions of the Articles has been upheld by Karnataka High Court in SA Padmanaba Rao v. Union Theatres Private Ltd. (108 CC 108). In that case, the appellants purchased shares of the respondent company in a court auction held in execution of a decree. The Board of Directors refused to register the transfer on the ground that the Articles prohibited the transfer of shares to non shareholders. The High Court upheld the decision of the Board of the company and held that even in case of court auction, the same was subject to limitation and restrictions in the Articles of the company.