Balasubramanian - A short, but important question that has arisen in this petition for determination, is, whether the name of a minor who has obtained shares by transfer, could be entered in the register of members of a Company or not.

2. The facts leading to this question are: the father of the petitioner purchased two shares of the company and lodged the same along with the transfer instrument to the company for registration of transfer in the names of Master Gautam R. Padival (minor) represented by Father and Natural Guardian Shri M. Ratnavarma Padival, jointly with Mrs. Aruna Padival (mother). The Board of Directors of the company refused to register the shares as sought for on the ground that one Mr. Madava Rao, advocate had given a legal opinion against the registration. Along with the letter of refusal, the opinion given by Shri Madav Rao was also enclosed. According to this opinion, since section 41 of the Companies Act, 1956 (‘the Act’) stipulates that every person desiring to become a member has to agree in writing and since a minor is not capable of entering into such an agreement, the shares cannot be registered in the name of the minor. The opinion further indicated that in view of the provisions of section 153 of the Act the Company could not take notice of the guardian holding shares in trust for a minor. This stand of the company has given rise to this petition.

3. Shri Seshadri, the Advocate appearing for the petitioner contended that in regard to transfer of shares, the company is bound by its Articles. As per section 82 of the Act, shares are movable property transferable in a manner provided by the Articles. The company has adopted the provisions of Table ‘A’ and there is nothing in Table ‘A’ to prohibit a minor from becoming a member of the company. He submitted that, legally a minor can hold properties in his name and as a matter of fact the present case, the petitioner is an income-tax assessee. It is always not necessary, that to become the member, one has to agree in writing, as shares could be gifted or it could be transmitted or could be transferred. In case of transmission of shares, by operation of law, merely by just sending an intimation of transmission to the company, the legal heirs, including a minor could seek entry in the register of members. Further he submitted that the company is a public company and therefore is governed by the provisions of section 111A which makes it abundantly clear that shares in a public company are freely transferable. He placed reliance on the decisions R. Balaraman v. Buckingham & Carnatic Co. Ltd. [1969] (Comp. L.J. 82) and Nandita Jain v. Bennet and Colman Co. Ltd. [Appeal No. 27 of 1972, dated 17-2-1998] in selected decision of the CLB Third Edition that a minor, applying through his natural guardian could be registered as a member in respect of fully paid-up shares. Referring to section 8(1) of the Hindu Minority & Guardianship Act, he submitted that a natural guardian is empowered to do all acts for the benefits of a minor and as such, in the present case, the father of the petitioner is empowered to acquire shares in the name of the petitioner, who is his minor son. He also drew our attention to the Departmental Letter No. 8/18(1)/63-PR, dated 31-3-1961, wherein the department has advised the Registrars not to raise any objection to the allotment or registration of transfer/transmission of shares to a minor and the entry of the minor in the register of members or in the return of allotment or in any other return. He further submitted that at present, the company itself is having minors as members. Referring to Fazulbhoi Jaffer v. Credit Bank of India Ltd. AIR 1914 Bom. 128, he submitted that in this case, the High Court had held that minor may be a member of the company. He further submitted that notwithstanding the fact that under the provisions of section 111A, of the Act the company is bound to register transfer of shares being freely transferable, in