Section 111A of the Companies Act, 1956 - Transfer of shares

Court :
High Court of Madras

Brief :
Section 111A of the Companies Act, 1956 - Transfer of shares - Rectification of register on - Whether amendment made to section 111A(3) by Depositories Related Laws (Amendment) Act, 1997, with effect from 15-1-1997 is only prospective in nature - Held, yes - Whether by amendment to section 111A(3) with effect from 15-1-1997, bringing within fold of section 111A(3) ‘other laws’ violation also, apart from already enumerated Acts, one more ground for rectification before CLB was added, viz., violation of other laws; amendment does not do away with already existing common law right available to aggrieved person as regards violation of other laws in force; post amendment, both common law and statutory remedies are concurrent remedies available leaving open an element of election to parties concerned - Held, yes The respondents-petitioners had filed company petitions on 17-9-1997, seeking rectification of the register of members in respect of transactions of share transfer in violation of the Companies Act having taken place in years 1992, 1993 and 1994, i.e., prior to the amendment to section 111A(3) with effect from 15-1-1997. The CLB dismissed the petition for want of jurisdiction and held that the petitioners had to avail civil remedy alone. However, in view of the amendment made with effect from 15-1-1997 and having regard to the fact that as on the date of dismissal of the petition, the amendment had already come into effect, the petitioners again sought intervention before the CLB. The petitioners submitted that change effected in sub-section (3) of section 111A by addition of words ‘any other law for the time being in force’ is retrospective and, hence, the petition was maintainable. The appellant objected against maintainability of the said petition on ground of limitation. The CLB held that there was no undue delay in moving the petition and admitted same for consideration on merits. In appeal, the appellant-submitted that in terms of the amended section 111A(3), the CLB had no inherent powers to exercise the jurisdiction condoning the delay beyond the limitation prescribed; and the amendment being prospective, any transfer effected much prior to the introduction of amendment in contravention of ‘any other law for the time being in force’ under the amendment effected in 1997 and beyond two months limitation would not be covered under section 111A(3).

Citation :
NEPC Micon Ltd. v. Sashi Prakash Khemka