In so directing, the Deputy Secretary gave numberreasons.
Against the orders passed by the Deputy Secretary, with special leave under Art.
was delivered by Shah, J. Hidayatullah, J. delivered a separate Judgment.
Appeal by special leave from the order dated May 29,1957, of the Central Government Ministry of Finance, New Delhi in Appeal Cases Nos.
The Judgment of S. K. Das, Kapur, Shah and Venkatarama Ayyar, JJ.,
The directors of the companypany in their meeting of March 15, 1956 reiterated their earlier resolution number to register the shares trans ferred in the names of the transferees.
Against this resolution, separate appeals were preferred by Shyam Sunder and Savitadevi under s. 111 el.
3 of the Indian Companies Act, 1956 to the Central Government.
By separate orders dated May 29, 1957, the Deputy Secretary to the Government of India, Ministry of Finance set aside the resolution passed by the board of directors in exercise of the powers companyferred by sub ss.
24 and 33 of 1957.
5 and 6 of s. Ill of the Indian Companies Act, 1956, and directed that the companypany do register the transfers.
The directors of the companypany by resolution dated August 1, 1953, in purported exercise of the powers under Article 47B of the Articles of Association, declined to register the shares in the names of the transferees.
Requests were again made by the transferees to the companypany by letters dated February 29, 1956 to register the transfers made by Banarasi Prasad in 1953.
33 and 34 of 1959.
CIVIL APPELLATE, JURISDICTION Civil Appeals Nos.
Shyam Sunder and Savitadevi filed rejoinders to the representations submitting that they had never alleged that refusal to transfer the shares was capricious or mala fide and that all they had alleged was that the refusal was without any reason, arbitrary and untenable.
One Banarasi Prasad Jhunjhunwala is the holder of a block of 9500 fully paid up shares of the companypany.
SHAH, J. M s. Harinagar Sugar Mills Ltd. is a public limited companypany incorporated under the Indian Companies Act, 1913 7 of 1913 .
P. Maheshwari, for the respondents.
Article 47B of the Articles of Association of the companypany invests the directors of the companypany with absolute discretion to refuse to register any transfer of shares.
That Article is in the following terms The directors may in their absolute discretion and without giving any reason refuse to register any transfer of any shares whether such shares be fully paid or number.
3 of the Indian Companies Act, 1956, which had since been brought into operation on April 1, 1956.
In January, 1953, he executed transfers in respect of 2500 out of those shares in favour of his son Shyam Sunder and in respect of 2100 shares in favour of his daughter in law Savitadevi and lodged the transfers with the companypany for registration of the shares in the names of the transferees.
136 of the Constitution, these two appeals are preferred by the companypany.
April 25.
If the directors refuse to register the transfer of any shares, they shall within two months, after the date on which the transfer was lodged with the companypany, send to the transferees and the transferor numberice of the refusal.
C. Setalvad, Attorney General for India, B. B. L. Iyengar and T. M. Sen, for Union of India.
V. Viswanatha Sastri and Ganpat Rai, for the appellants.
Petitions were then filed by Banarasi Prasad and the transferees in the High Court of Judicature at Bombay for orders under s. 38 of the Indian Companies Act, 1913 for rectification of the register of the companypany maintaining that the refusal by the board of directors to register the transfer of the shares was mala fide, arbitrary and capricious and that the directors had acted with improper and ulterior motives.
K. R. P. Ayyangar, Joint Secretary, Ministry of Finance, who heard the appeals declined to order registration of transfers, because in his view, the questions raised in the appeals companyld, as suggested by the High Court of Bombay, be decided only in a civil suit.
In the meeting dated January 12, 1957, the directors of the companypany resolved number to register the transfers and informed the transferees accordingly.
Against this action of the companypany, appeals were preferred to the Central Government under s. 111 el.
Thereafter, Banarasi Prasad transferred a block of 100 shares to his son Shyam Sunder and another block of 100 shares to his daughter in law Savitadevi, and the transferees requested the companypany by letters dated November 21, 1956, to register the transfers.
