1964 Supreme(Cal) 13

HIGH COURT OF CALCUTTA
H. K. BOSE,G. K. MITTER, JJ.
Vidyasagar Cotton Mills
Versus
Nazmunnessa Begum
Appeal No. 195 of 1961, (Company Petn. No. 25 of 1961)
Decided On : 22-01-1964

Section 155 of the Companies Act, 1956, as amended, applies to cases of transmission or transfer of shares and provides an alternative remedy to an aggrieved person who has been refused registration of a transfer of shares, along with the remedy of appealing to the Central Government under Section 111.

Headnote:

COMPANIES ACT - RECTIFICATION OF SHARE REGISTER - INTERPRETATION OF SECTION 155 - SCOPE AND EFFECT - APPLICABILITY TO CASES OF TRANSMISSION OR TRANSFER OF SHARES - ALTERNATIVE REMEDIES UNDER SECTION 155 AND SECTION 111 - CONSIDERATION OF SUBSEQUENT EVENTS - JUDGMENT OF AFFIRMANCE - SUBSTANTIAL QUESTION OF LAW.

Fact of the Case:

The petitioner company, Vidyasagar Cotton Mills Ltd., sought a certificate under Article 133(1) of the Constitution to appeal a Division Bench decision dismissing its appeal against an order directing rectification of its Share Register. The respondent, Nazmunnessa, was the widow and administratrix of Mohammad Bashir, a deceased shareholder. She applied for rectification of the Share Register to reflect her ownership of the shares following Bashir's death. The petitioner company contended that Section 155 of the Companies Act, 1956, as amended, did not apply to cases of transmission or transfer of shares and that the respondent's remedy was to appeal to the Central Government under Section 111(3) or file an independent suit. The Division Bench held that Section 155 was applicable and that the respondent was entitled to an order for rectification.

Finding of the Court:

The Court held that the Division Bench's interpretation of Section 155 was correct and that the respondent was entitled to an order for rectification. It found that Section 155 provided an alternative remedy to an aggrieved person who had been refused registration of a transfer of shares, along with the remedy of appealing to the Central Government under Section 111. The Court also held that the Division Bench was justified in considering subsequent events that took place after the presentation of the petition for rectification, as these events were relevant to the question of whether the respondent was entitled to an order for rectification.

Issues: 1. Whether Section 155 of the Companies Act, 1956, as amended, applies to cases of transmission or transfer of shares. 2. Whether the respondent had alternative remedies under Section 155 and Section 111 of the Companies Act, 1956. 3. Whether the Division Bench was justified in considering subsequent events that took place after the presentation of the petition for rectification.

Ratio Decidendi: 1. Section 155 of the Companies Act, 1956, as amended, applies to cases of transmission or transfer of shares. The Court interpreted Section 155 broadly, in line with the interpretation given to Section 38 of the Indian Companies Act, 1913, which it replaced. The Court held that Section 155 was intended to provide a summary remedy for persons claiming title to shares by transfer or transmission, and that it was not limited to cases of subscribers to the Memorandum of Association. 2. The respondent had alternative remedies under Section 155 and Section 111 of the Companies Act, 1956. The Court held that the Supreme Court's decision in Harinagar Sugar Mills Ltd. v. Shyam Sundar, AIR 1961 SC 1669, established that a person aggrieved by the refusal to register a transfer of shares had two remedies: to apply to the Court for rectification of the Register under Section 155 or to appeal against the resolution refusing to register under Section 111. 3. The Division Bench was justified in considering subsequent events that took place after the presentation of the petition for rectification. The Court held that the Division Bench could consider subsequent events that were relevant to the question of whether the respondent was entitled to an order for rectification. The Court distinguished the case of Rajahmundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao, AIR 1956 SC 213, which held that the validity of a petition under Section 153-C of the Companies Act must be judged on the facts at the time of the presentation of the petition, on the grounds that the subsequent events in that case did not relate to the merits of the petition.

Final Decision: The Court dismissed the petitioner company's application for a certificate under Article 133(1) of the Constitution, holding that there was no substantial question of law involved in the case.