Posh Exports Private Ltd. v. The Registrar of Companies
Posh Exports Private Limited ("Petitioner Company")
was incorporated as a private limited company. The board of
directors in the meeting came to know that the documents
compulsorily required to be filed by an Indian company under
Companies Act, 1956 ("CA 1956") had not been filed with
the RoC by the Petitioner Company and therefore, decided to take
steps in the present petition and seek revival of the Petitioner
Company. The board of directors also undertook to make the
statutory compliances and file the requisite statutory records and
the balance sheets in accordance with CA 1956. When the documents
i.e., annual returns and balance sheets, etc., were sought to be
filed on website of MCA, the directors came to know that name of
the Petitioner Company has been struck of for the failure to file
requisite statutory documents. The Petitioner Company contended
that the balance sheets of the company were prepared from time to
time, however, it was only recently discovered that none of the
balance sheets and the statutory records have been filed with RoC.
It was contended that the accountant did not co-ordinate and
further the learned counsel for the petitioner company submitted
that the part time accountant of the company who was dealing with
the aforesaid work was no more an employee of the company.
The petition was allowed in view of the fact that this
non-compliance was due to the non-coordination of the part time
accountant and thus the petition was allowed subject to payment of
costs. Consequently, it was decided to restore the name of the
Petitioner Company on the register of the RoC subject to Petitioner
Company filling all the statutory documents and returns for the
outstanding period along with the prescribed fees in accordance
with CA 1956.
[Note: Restoration of a struck off company was allowed by the
courts under Section 560 of CA 1956]
Bajaj Auto Ltd v. Western Maharashtra Development Co. Ltd.
The present case dealt with Section 111A of CA 1956 and section
58 of CA 2013 (both relating to free transfer/transferability of
shares). The parties to the Protocol Agreement (Clause 7) referred
their dispute relating to transfer of shares to arbitration. The
real controversy that revolved around clause 7 was whether it
impinges on the free transferability of shares of a public company
as contemplated under section 111A of CA 1956. Clause 7 of the
Protocol Agreement inter alia provided that if either party desires
to part with or transfer its shareholding or any part thereof in
the equity share capital, such party shall give first option to the
other party for the purchase of such shares at the agreed price.
The party desiring to part with or transfer its shareholding or any
part thereof, is required to give written notice to the other party
specifying its intention to do so and the rates at which it is
willing to transfer / part with the same. The arbitral award
declared the said Clause 7 as inoperative in the present case.
Being dissatisfied with the arbitral award, the respondent company
challenged the same before the learned Single Judge on various
grounds as were also covered under the Arbitration petition.
After hearing the parties, the learned Single Judge, negated all
the contentions of the respondent, save and except one, on the
basis of which the award was set aside. In a nutshell, the ground
on which the award was set aside by the learned Judge was that
Clause 7 of the Protocol Agreement entered into between the parties
which gave the right of first refusal to the appellant to purchase
the shareholding of the respondent, was not contrary to section
111A of the CA 1956. The learned Judge held that the effect of
Clause 7 of the said agreement was to create a right of pre-emption
between the appellant and the respondent for the purchase of each
other's shares. The conclusion made by the single Judge was
that because shares of a company are movable property and the right
of the shareholder to deal with his shares and / or to enter into
contracts in relation thereto (either by way of sale, pledge,
pre-emption, etc.), is nothing but a shareholder exercising his
property rights. Such contracts voluntarily entered into by a
shareholder for his own shares giving rights of pre-emption to a
third party / another shareholder, cannot constitute a restriction
on free transferability as contemplated under CA 1956. The court
held that in fact, such contracts (either by way of sale, pledge or
pre-emption) are entered into by a shareholder in exercise of his
right to freely deal with and / or transfer his own shares and that
two Joint Venture partners among themselves having provision of
right of first refusal is tenable. Thus, appeal was allowed.
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The Ministry of Corporate Affairs notified on June 5, 2015 that certain provisions of the Companies Act, 2013 shall not apply to private limited companies or shall apply with such exceptions or modifications as directed in the notification.
Whilst trade and barter have existed since early times, the modern practice of forming business relationships through the means of contract has come into existence only since the industrial revolution in the West.
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