The transfer of shares by the appellant did not result in the membership of the company exceeding 50. The appellant was the first shareholder in all five certificates and all notices were sent by the company to the first shareholder and not to the joint shareholders. The company had created a separate employee quota and had identified the employee share certificate separately as employee share. The transfer of shares by these employees during their employment and thereafter was restricted under Article 59(b) of the Articles of Association.

1. This appeal is placed on board in view of the Order dated 28th October,2014 passed by the Supreme Court of India in Civil Appeal No.2481 of 2014 allowing the said civil appeal and remanding the company Petition No.24 of 2010 to this court for deciding the factual enquiry ‘whether the transfer of five shares from the appellant (singly) to the appellant jointly with his children and wife resulted in the total members of the respondent no.1 i.e. Gharda Chemicals Limited exceeding 50. Both the parties have accordingly addressed this court at length.

2. Some of the relevant facts for the purpose of deciding the issue remanded to this court by the Supreme Court of India are as under:-

3. Mrs. Jer Kavasmaneck was the mother of the appellant and the respondent no.2 i.e. Dr. Keki Hormusji Gharda. The appellant is the son of Mrs. Jer Kavasmaneck and nephew of Dr. Keki Hormusji Gharda. The respondent no.3 is wife of respondent no.2.

4. On 28th April, 1962, Kavasmaneck and Gharda family constituted a firm called M/s. Gharda Chemicals Industries. On 6th March, 1967, M/s. Gharda Chemicals Industries is incorporated as a private company by taking over the erstwhile family firm of M/s.Gharda Chemicals Industries. It is the case of the appellant that the understanding was enshrined in the Articles of Association of the respondent no.1 thereby the promoters and the shareholders agreed not to transfer their shares to any outsider without first offering the same to the existing members. Article 57 recognized and grants this preemptive right.

5. On 17th August, 1988, M/s. Gharda Chemicals Limited became a deemed public company on account of turnover criteria under section 43A of the Companies Act, 1956. On 16th January, 1990, the respondent no.1 proposed to pass a resolution so as to amend Article 57 of the Articles of respondent no.1 By an order dated 14th February, 1990 passed in Company Petition No.77 of 1990, the implementation of the said resolution came to be stayed. In the year 1990, the appellant herein filed a Company Petition No. 77 of 1990 in this court under sections 397 and 398 of the Companies Act, 1956 against the respondent no.1 and others inter alia praying for winding up of respondent no.1, for appointment of a liquidator and for various declarations.

6. It is the case of the appellant that the appellant and other minority shareholders withdrew the said company petition on 8th September, 2005 in view of the assurance given by Dr. Keki Hormusji Gharda regarding increase in dividend, compliance with Article 57 and involving the appellant in the work of respondent no.1 company. The said Company Petition No.77 of 1990 however was continued by Percy R. Kavasmaneck and Aban Percy Kavasmaneck who were also the petitioners in the said company petition along with the petitioner.

7. On 13th December,2000, some of the provisions of the Companies Act, 1956 came to be amended. It is the case of the petitioner that the definition of the private company under section 3(1)(iii) was prospectively amended so as to amend sub-clause (d) of the fourth condition that a private company must include in its articles and that section 43A is stated to be inapplicable after 13th December,2000.

8. It is the case of the petitioner that on 5th May, 2001 a resolution was proposed to amend the articles of respondent no.1 by introducing sub clause (d) of section (3)(iii). The said amendment was however defeated. It is the case of the petitioner that sometime in the year 2009 as Dr. K.H. Gharda was attempting to violate the right of pre-emption by transferring his shareholding to an outsider, the petitioner filed a company petition bearing no. 132 of 2009 for enforcing the right of pre-emption and for preventing Dr. K.H. Gharda from transferring the shares, directly or indirectly held or controlled by him. The Company Law Board granted an ad-interim injunction on 11th December, 2009 and restrained Dr. K.H. Gharda from transferring the shares directly or indi