The provisions of Sections 13 and 16 of the Securities Contracts (Regulation) Act, 1956, which prohibit certain types of contracts for the sale or purchase of securities, are mandatory and apply to shares of a public limited company, even if they are not quoted in the stock exchange.

( 1 ) THIS is an application under Section 155 of the Companies Act, 1956, for rectification of the share register of respondent No. 1. The application arises under the following circumstances.

( 2 ) THE petitioner, B. K. (Holdings) Pvt. Ltd. some time in the month of August, 1979, purchased 1,855 ordinary fully paid-up shares of Rs. 100 each in the respondent-company from respondents Nos. 2 to 7 for valuable consideration. According to the petitioner, it became the lawful owner of the said shares and was entitled to have the shares registered in the name of the petitioner. According to the petition itself the said shares are not quoted or dealt with on any recognised stock exchange in India.

( 3 ) ONE of the specimen agreements for sale is annexed to the affidavit of Amar Nath Roy filed on behalf of the company and affirmed on the 8th January, 1980. The material portion for our purpose is Clause 3, which provides as follows :" The purchaser shall pay to the seller the agreed price for the said shares at the rate of Rs. 100 (one hundred) per share as follows : (a) A/c. payee bank draft in favour of the seller for 50% amount of the agreed price will be handed over by the purchaser to Shri Arun Krishna Roy against delivery of blank transfer deeds duly signed by the seller. (b) The balance 50% amount of the agreed price will be paid within nine months from the date hereof. . . . . . "

( 4 ) AFTER the purchase of the said shares the petitioner duly lodged them with the respondent-company for registration of its name as the owner thereof. The respondent-company, however, sent a communication stating that it was unable to register the said shares in the name of the petitioner-company and returned the share certificates and the transfer deeds. The communication was also stated to be a notice under Article 43 of the articles of association of the respondent-company. Hence, the present application praying that the share register of the respondent-company be rectified by inserting therein the name of the petitioner in place and stead of the respondents Nos. 2 to 7 in respect of the said 1,855 fully paid-up ordinary shares, particulars whereof have been stated in Sch. ' A ' to the petition.

( 5 ) IN order to appreciate the respective contentions of Mr. Dipankar Gupta who appeared for the petitioner-company and Mr. R. C. Nag who appeared for the respondent-company it will be useful to set out certain provisions of the Securities Contracts (Regulation) Act, 1956, (hereinafter referred to as " the Act " ).

( 6 ) THE preamble of the Act is as follows :" An Act to prevent undesirable transactions in securities by regulating the business of dealing therein, by prohibiting options and by providing for certain other matters connected therewith. "

( 7 ) SECTION 2 (h) of the Act defines " Securities" as follows :" (h) 'securities' include- (i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate ;,. . . . . . . . "

( 8 ) SECTION 2 (i) defines " Spot delivery contract" as follows :'"spot delivery contract' means a contract which provides for the actual delivery of securities and the payment of a price therefor either on the same day as the date of the contract or on the next day, the actual period taken for the despatch of the securities or the remittance of money therefor through the post being excluded from the computation of the period aforesaid if the parties to the contract do not reside in the same town or locality. "

( 9 ) SECTION 13 of the Act, which is very material for our purpose, provides as follows:"13. Contracts in notified areas illegal in certain circumstances.--If the Central Government is satisfied, having regard to the nature of the volume of transactions in securities in any State or area that it is necessary so to do, it may, by notification in the Official Gazette declare this section to apply to