The Board of Directors must exercise its discretionary powers regarding share transfer registrations bona fide and consider all arguments when refusing registration.

J U D G M E N T

Raman, J.

This is an appeal arising out of the order passed by the Company Law Board in C.P.No.13 of 2005, filed by the appellant herein. The said petition was filed under Sections 111 (2), (5) and (6) of the Companies Act, 1956 (hereinafter referred to as 'the Act' for short), seeking the directions against the respondent, M/s.Kantimathy Plantations Private Limited (hereinafter referred to as 'the Company' for short), to register the transfer of 28,370 shares, which are impugned, in favour of the petitioner and to rectify the register of members in respect of the impugned shares by substituting the name of the petitioner in the place of the respective transferors for the reasons set out therein. The Company Law Board eventually, after hearing the parties and after consideration of the matter, dismissed the petition, against which the present appeal is preferred.

2. The Cross Objection was filed, with a petition for condonation of delay, by the respondent in the appeal, seeking to support the order, as also challenging the certain findings rendered against the cross appellant. The very maintainability of the cross objection is challenged by the appellant. We shall consider the maintainability of the cross objection later.

3. The facts in brief necessary for the disposal of this appeal and the cross objection are as follows. The appellant's grandfather, Late Divan Peshkar Dr.N.Subramonya Iyer, had owned a rubber plantation known as 'Kanthimathy Estates'. Later, the father of the appellant, Late Sivaramakrishna Iyer, incorporated Peninsular Plantations Limited, which has three subsidiaries, viz., Kanthimathy Plantations, Braemore Estates and Vardhini Plantations. Subsequently, all these companies were de-subsidiarised. Thus, the respondent Company which was originally a subsidiary of a Public Limited Company, was also de-

subsidiarised. On 19.9.2000, the appellant's father expired. Before that, on the eve of his retirement, as desired by him, the appellant was co-opted to the Board of Directors and appointed as the Managing Director of the Company. After the death of the father, litigations started between the brothers and some of them approached the Company Law Board. The appellant vacated the post of Managing Director of the Company and continued to be the Director, as per the proceedings issued by the Company Law Board.

4. The Company Petition was accordingly disposed of, against which the appellant preferred M.F.A.No.1200 of 2002 before this Court. This Court, by its judgment, dated 15.1.2004, disposed of the appeal setting aside the decision of the Company Law Board regarding the cancellation of the transfer of shares in the three companies to the second appellant in the said appeal, viz., Dr.S.Krishna Sharma, and remanded the matter to the Company Law Board to decide that question alone afresh. That appeal was preferred against the order of the Company Law Board in a petition filed under Sections 397 and 398 of the Act. The application which was filed before the Company Law Board was mainly questioning the transfer of shares in the three companies to the second appellant therein. A Special Leave Petition was also filed from the Judgment of this Court in the aforesaid M.F.A., which was also dismissed by the Apex Court.

5. Now the present dispute relates to the transfer of shares in the respondent Company by some of the share holders of the appellant. According to the appellant, he was holding 37,600 equity shares of Rs.10/-. His wife holds 100 shares and his son also holds 100 shares, thus, holding a total of 37,800/- shares in the Company. The appellant purchased 10,620 equity shares from S.Gangammal, 2750 shares from Smt.Vardhini and 15,000 shares from S.Ramakrishna Sarma. The vendors are respectively the sister, niece and brother of the appellant. The entire sale consideration was paid to the transferors and the appellant got the share transfer deeds duly executed by the respective vendors. The appellant also