The main legal point established in the judgment is the company's obligation to act in the interest of the company and shareholders, and the power of the Board to rectify the register of members.

S.C. GUPTE, J.

1. Company Appeal Nos. 55 of 2014 and 56 of 2014 impugn an order passed by the Company Law Board, Mumbai Bench (“CLB”) on applications under Section 111 of the Companies Act, 1956 (“Act”) by which the first Respondent company was inter alia directed to transmit shares held by a shareholder of the company and rectify the register of members. Companion Company Appeal Nos. 31 of 2015 and 54 of 2015 are cross appeals which impugn another order passed by the CLB on the same day on a petition filed by the same Petitioners under Sections 397 and 398 of the Act, complaining of the same facts as are the subject matter of the rectification petitions in addition to some other facts.

2. The short facts of the case may be stated as follows:-

2(i) In or about 1947, the first Respondent company-Mehboob Productions Pvt. Ltd. (Company) was incorporated by the reputed filmmaker, late Mehboob Khan. The company owns a large immovable property admeasuring about 4.2 acres at Hill Road, Bandra (West), Mumbai, known as Mehboob Studio, which is hired out for films and advertisements as of this date. The dispute between the parties relates to transfer/transmission of shares held by descendants/successors-in-title of late Mehboob Khan. The family tree of late Mehboob Khan is shown below for the purposes of convenience of understanding the controversy.

(ii) Prior to 1992, Ayub Khan (“Ayub”) son of late Mehboob Khan, was a shareholder of 1132 equity shares of the company. At his request, by a resolution duly passed on 9 May 1992, the then Directors of the company resolved to add the names of Mehboob Ayub Khan (“Mehboob”) and Yasmin Ayub Khan (“Yasmin”) who were his children from second marriage, i.e. with one Farida Moriswala (“Farida”) (original Petitioners) as joint holders in respect of 726 and 128 shares, respectively, held by Ayub in his sole name. The entries were made in the share certificates and the names of the original Petitioners, Mehboob and Yasmin, were entered in the register of members as joint holders with Ayub in respect of the shares. Thus, 1992 onwards, 726 shares of the company have been held by Mehboob whilst 128 shares have been held by Yasmin, both jointly with Ayub.

(iii) In or about November 2003, Najma Sayed (original Respondent No. 2) (“Najma”) filed a company petition before the CLB, being Company Petition No. 14 of 2003, inter alia challenging the entry of joint shareholding of Mehboob and Yasmin for 726 shares and 128 shares, respectively, as being violative of the pre-emption clause in the Articles of Association. (In an affidavit filed in the company petition, Ayub took up a position that the joint shareholding of Mehboob and Yasmin was not a transfer but that the names were added in view of a proposed testamentary disposition during his life time in favour of the two, which was to take effect upon his death and that since that was not a transfer, the pre-emption clause in the Articles did not apply thereto.) Around the same time, i.e. in or about November 2003, Najma also filed another company petition, being Company Petition No. 108 of 2003, under Sections 397 and 398 of the Act, complaining of oppression and mismanagement. (Once again, in reply to that petition, Ayub filed an affidavit stating that the addition of the names of Mehboob and Yasmin did not amount to a transfer.)

(iv) On 3 January 2004, Ayub and Farida purported to register under the Special Marriage Act their nikah marriage held in 1966. (The validity of registration of this marriage under the Special Marriage Act is a contentious issue between the parties. The significance of registration of marriage under the Special Marriage Act is that the restrictions under Shariat Law regarding testamentary succession to the property of a Mohammedan do not apply in the event of registration of the testator's marriage under the Special marriage Act, ma