Companies Act Case Law Bajaj Auto Ltd Vs Company Law Board & Ors

PETITIONER:
BAJAJ AUTO LTD.

Vs.

RESPONDENT:
COMPANY LAW BOARD & ORS.

DATE OF JUDGMENT: 22/07/1998

BENCH:
B.N. KIRPAL, SYED SHAH MOHAMMED QUADRI

 
ACT:

 

HEADNOTE:

 

JUDGMENT:
With
CIVIL APPEAL NOs. 3420-79/1980
J U D G M E N T
KIRPAL, J.
These appeals by special leave arise from the common
order of the Company Law Board (respondent No. 1 ) which had
partly upheld the decision of Bajaj Tempo Limited
(respondent No. 2) in declining to register the transfer of
it’s shares in favour of M/s. Bajaj Auto Limited which had
been purchased by the appellants. These are essentially two
groups of shareholders which control these companies. While
‘Bajaj Group’ has the control of the appellant it is
“Firodia Group” which controls Bajaj Tempo Ltd.
Bajaj Auto Limited (appellant in Civil Appeal No.
3480/86) is the holding company of Bajaj Auto Holdings
Limited (appellant in C.A. Nos. 3480/86 & 3420-79/86) and
they, along with other individuals who were members of their
group (all of whom are appellants in these appeals are
existing share-holders of Bajaj Tempo Limited which is a
public Limited company. Bajaj Auto Limited purchased 50
shares of Bajaj Tempo Limited and Bajaj Auto Holdings
Limited purchased 13150 shares of the said company. These
purchases were made in the year 1983 through different
brokers and they were sent to M/s. Bajaj Tempo Limited for
transfer of shares in the appellants’ names. By three
different resolutions dated 29.8.1983, 27.9.1983 and
19.11.1983, the transfer of shares was rejected by Bajaj
Tempo Limited. The minutes of the meeting dated 29.8.1983
contained the reasons for refusal to transfer and the
resolution passed thereto. The relevant portion of the said
minutes is as under:
” The Directors, therefore, after
due deliberation and considering
all aspects unanimously resolved
not to approve the said transfers
and declined to register the said
transfers considering the facts
briefly stated above and grounds
briefly summarised as under:
(1) Further acquisition of shares
of this Company by Bajaj Group if
permitted will lead to
interconnection between this
Company and the Companies of the
Bajaj Group which is not desirable
in the interest of this Company.
(2) The Bajaj Group is not
acquiring the shares of this
Company with a view to or for the
purpose of genuine investments but
with ulterior and oblige motives
and purposes including with a view
to destablise the management of
this company.
(3) Bajaj Auto Limited and this
Company are competitors in business
in as much as both the
manufacturing light Commercial
Vehicles. The attempt of Bajaj
Group to make inroads in this
Company by acquiring large block of
shares is to cause detriment and
prejudice to the company.
(4) In view of the facts stated
above although absolute discretion
is conferred under Articles of
Association of the Company, the
Board has carefully considered the
matter and has decided to refuse to
register the transfers. The
Transferees in the circumstances
are also not desirable persons from
the larger point of view of the
interest of Bajaj Tempo Limited, as
a whole.
Therefore, the proposed transfers
are not in the interest of the
Company.
“RESOLVED that in pursuance of
Article No. 52 of the Articles of
Association of the Company, the
transfer of shares submitted of
this meeting and herein below
mentioned be and are hereby not
approved and the Board of Directors
do decline to register the said
transfers and the Secretary to give
to the parties notice of this
decision refusing the said
transfers in the following terms:
“I have to advise that in the
meeting of the Board of Directors
held on 29th August, 1983 the Board
has decided that it will not give
its approval to the transfer of the
following shares. The transfer
forms and share certificates are
being returned under a separate
cover.”
It is for the same reason as above that the other
transfers were declined by the Resolutions dated 27.9.1983
and 19.11.1983.
Appeals were the filed by the appellants under Section
111 of the companies Act, 1956 before the Company Law Board.
On the basis of the pleading before it and the submissions
of the counsels for the parties, the Company Law Board
formulated the following five issues for its consideration:
” 1. whether the appellants and the respondents are rivals
in business ?
2. whether the purchases of impugned shares were bona fide
investments ?
3. Whether the appellants can be termed as undesirable
persons ?
4. Whether Apprehension of inter-connection of respondent
company with Bajaj Group is well founded and whether it
can be a good ground for refusal to transfer shares ?
5. Whether transfer of 7,600 shares, sought to be
transferred by Smt. Suman Jain was intra-group transfer
and if so, whether respondent company was justified in
refusing transfer of these shares ? ”
By a reasoned order, issue Nos. 1,3 & 5 were decided in
favour of the appellants. It came to the conclusion that the
appellants were not rival in business nor were they
undesirable persons and by registering the transfer of 7600
shares, which transfers were intra-group, there would be no
change in the overall holding and, therefore, Bajaj Tempo
was not justified in refusing the said transfer. Issue Nos.
2 & 4 were, however, decided against the appellants and the
effect of this was that refusal to transfer 50 shares in
favour of Bajaj Auto Limited and 5550 shares in favour of
Bajaj Auto Holdings Limited was upheld.
In deciding Issue No. 2, the Company Law Board came to
the conclusion that as Bajaj Auto Holdings Limited was an
investment Company, it was not convincing that it would
invest in the shares of Bajaj Tempo by way of investment. It
further came to the conclusion that the proposed investment
in the shares of the respondent company by the appellants
was to increase its share holding and was motivated. It also
noted that the return on the shares of the company did not
appear to be adequate enough warranting successive purchases
of the shares by the appellants.
Dealing with Issue No. 4, the Company Law Board noticed
that on 29.8.1983, the total holding of the appellants group
was about 23.2% in Bajaj Tempo Ltd. At that time the inter-
connection limit under the Monopolies and Restrictive Trade
Practices Act 1969 (hereinafter referred to as ‘M.R.T.P.
Act) was 33 1/3% and the said limit has been reduced to 25%
w.e.f. 1.8.1984 as a result of amendment in the M.R.T.P.
Act. The Company Law Board was of the opinion that even
though at the time of lodgment of shares the said amendment
had not been made, there was a feeling prevalent in trade
and industry that the inter-connection limit would be
reduced to 25%. It then held that the limit up to which
shares may be allowed to be acquired by any group, in the
share holding of the respondent company in such
circumstances, has to be the subjective opinion of its Board
of Directors and when the acquisition of the appellants “had
already reached critical limit of over 23% which is not
widely of the mark of 25%, the apprehension existing in the
mind of the Board of Directors of the respondent Company
cannot be assailed.” It, therefore, concluded that the
apprehension of Bajaj Tempo Ltd. that it was likely to get
inter-connected with the appellants, in the event of
impugned transfer of shares being allowed, was not baseless
or ill-found.
Assailing the aforesaid decision of the Company Law
Board Shri Shanti Bhushan and Shri Harish Salve, learned
Counsels for the appellants submitted that the power of the
Directors to refuse transfer is by way of an exception to
the rule that the share transfer should generally be
accepted by a listed company. Impugning the findings in
connection with Issue Nos. 2 & 4 of the Company Law Board,
it was contended that the conclusion of the Broad that the
return by way of dividend on the shares was very low is not
the only relevant factor in order to determine whether the
purchases of shares was by way of investment. An important
factor which has been ignored by the Board was that the
capital appreciation was more than ample to off-set the low
dividend return. It was submitted that refusal to transfer
was not in the interest of the company and the non-transfer
by the Firodia Group, which controls Bajaj Tempo, was with a
view to protect that group’s personal interest. It was also
submitted that even if the transfers were allowed the share-
holding of the appellants would be below 25% limit. In this
connection, it was submitted that it was in the hand of the
Bajaj Tempo Ltd. to avoid inter-connection if any more
transfers of shares was sought for, it with the said
transfer the transferability would reach the limit of 25%.
Our attention was also drawn to the fact that at the
relevant point of time, Bajaj Tempo was already a company to
whom the provisions of Chapter 3 of M.R.T.P. Act applied by
virtue of the provisions of Section 20(a) of the said Act
inasmuch as its assets exceeded 20 crores and, therefore,
inter-connection would not have made any difference. For the
view, we are taking, it is not necessary to refer to or deal
with the other contentions raised by the learned counsels
for the appellants.
The crucial question is as to what is the power and
scope of Directors to refuse to register the transfer of
shares in the case of a public limited company whose shares
are listed on the Stock Exchange. In declining to register
the transfer of shares, power is sought to be derived from
Article 52 of the Articles of Association of the Company
which reads as follows:
” 52. The Board may at its own
absolute and uncontrolled
discretion decline to register or
acknowledge any transfer of shares,
and in particular may so decline in
any cases in which the Company has
lien upon the shares or any of
them, or whilst any moneys in
respect of the shares desired to be
transferred or any of them remain
un-paid, or unless he transferee is
approved by the Board, and such
refusal shall not be affected by
the fact that the refused
transferee is already a member. The
registration of a transfer shall be
conclusive evidence of the approval
of the transferee by the Board.
Provided that the registration of
any transfer shall not be refused
on the ground of the transferor
either alone or jointly with any
other person or persons indebted to
the Company on any account
whatsoever except as stated above.”
The power of the Board of Directors to refuse
registering the transfer of shares is now settled when these
two adversaries had on earlier round of litigation
culminated in the decision reported as Bajaj Tempo Limited
Vs. N. K. Firodia and another etc. 1970 (2) SCC 550. That
was the case where Firodia Group (who controls Bajaj Tempo
Limited ) had applied to Bajaj Auto Limited, on of the
appellants in this appeal, for transfer of shares of Bajaj
Auto Limited which had been purchased by the Firodia Group.
The Board of Directors of Bajaj Auto Limited refused to
register the transfers, inter alia, stating that N.K.
Firodia and his representatives had acted against the
interest of the company and that it was in the interest of
Bajaj Auto to refuse the transfer. The Company Law Board
directed Bajaj Auto to register the transfer which led to
the filing of the appeal in this Court. Bajaj Auto had
placed reliance on its Article 52 of the Articles of
Association, which was identical to Article 52 of Bajaj
Tempo, and it contended that it gave the Directors absolutes
and uncontrolled discretion to decline to register any
transfer of shares. Dealing with the question relating to
the discretion of the Directors, it was observed at page 554
as follows:
” Article 52 of the appellant
company provided that the Director
might at their absolute and
uncontrolled discretion decline to
register any transfer of shares.
Discretion does not mean a bare
affirmation or negation of a
proposal. Discretion implies just
and proper consideration of the
proposal in the facts and
circumstances of the case. In the
exercise of that discretion the
Directors will act for the
paramount interest of the company
and for the general interest of the
share-holders because the directors
are in a fiduciary position both
towards the company and towards
every share-holder. The Directors
are therefore required to act bona
fide and not arbitrarily and not
for any collateral motive.”
This Court then observed that where the Directors give
reasons, the Court would consider whether they were
legitimate and whether the Directors proceeded on a right or
wrong principle. In such a case, the reasons of the
Directors have to be decided from three points of view.
Firstly, whether the Directors acted in the interest of the
Company, secondly, whether they acted on a wrong principle;
and thirdly, whether they acted with an oblique motive or
for a collateral purpose. In this connection reference was
made to the observations of this Court in M/s. Harinagar
Sugar Mills Ltd. Vs. Shyam Sunder Jhunjhunwala & Ors. (1962)
2 SCR 339 where it was observed that “the discretion of the
Directors would be nullified if it were established that the
Directors acted oppressively, capriciously or corruptly or
in some other way mala fide.” After referring to some
English decisions, this Court in Bajaj Tempo’s case at page
557 observed thus:
” It follows that where the
Directors have uncontrolled and
absolute discretion in regard to
declining registration of transfer
of shares, the Court will consider
if the reasons are legitimate or
the Directors have acted on a wrong
principle or from corrupt motive.
If the Court found that the
Directors gave reasons which were
legitimate, the Court would not
overrule that decision merely on
the ground that the court would
not have come to the same
conclusion.”
The Court then examined the facts of that case dealing
with three reasons given by the Bajaj Auto for refusing to
transfer the shares it observed that the Directors had a
hostile feeling against Firodia and they had the dominant
desire to keep Firodia out of the company. They did not act
in the interest of the company and their discretion was
tainted by unfair conduct and unjustifiable attitude against
Firodia. The Court rejected the ostensible reasons which
were given for refusing the transfer of shares and it
observed that the “the reason given by the Directors was a
camouflage to cover their collateral and corrupt motive of
preserving the hegemony of the Bajaj Group. The motive is
corrupt because the Bajaj Group acted for their personal
interest and not in the bona fide general interest of the
company”. Dealing with the third reason, it was observed as
follows:
” The third reason given by the
appellant company was that the
shares were being acquired by the
Firodia group not with a view of
bona fide investment but with a
mala fide purpose and evil design
of obstructing the business of the
appellant company Acquisition or
transfer of shares under the
Articles of the present case does
not suffer from any restrictive
impediment like promotion or
personal objections to the
transferees. There is no evidence
that the transferees belonged to a
rival concern. Equally, there is no
evidence that the Firodia Group
ever obstructed in the Management
of the Company. On the Contrary,
the Firodia group advanced large
sums of money. Firodia was largely
responsible for the gradual growth
of the appellant company and for
the prosperity of the company. It
was therefore an abuse of the
fiduciary power of the Directors to
refuse to register transfer of
shares.”
In the end, this Court noted that the refusal to
register the shares was a sequel to the termination of the
appointment of Firodia as Chief Executive and it is manifest
that the Directors acted for collateral reasons and in their
own interest.
The shoe now is on the other foot. Whereas in the
aforesaid case, it is Bajaj Auto which had refused to
register the transfer the shares in favour in N.K. Firodia &
Group, in the present case, it is the N.K. Firodia
controlled company namely Bajaj Tempo which has refused to
register the transfer of shares in favour of Bajaj Auto and
its subsidiary company. The stained relationship between the
groups, and the animosity among them, has been clearly
brought out in the aforesaid judgment of this Court.
Mr. R.F. Nariman, learned Counsel for respondent No. 2
however contended that there were no personal reasons for
declining to register the transfer of shares in favour of
the appellants. In this connection, he submitted that during
the period September, 1982 to July 1983, the Directors of
Bajaj Tempo Limited had approved the registration of as many
as 42350 shares in favour of the appellants. It was
contended that the Board of Directors of Bajaj Tempo Ltd.
had acted in bona fide and reasonable manner even though the
share acquisitions by the appellants were part of a plan of
action on its part to acquire a large block of shares of
Bajaj Tempo Limited. He submitted that it is only when the
said share acquisitions had crossed the limit of 24% and a
razor thin margin remained before the danger limit of 25%
was reached that the Board decided to draw a line and to put
an end to any further share acquisition by the Bajaj Group,
leaving an extremely slender margin of safety of only about
0.7%. He further submitted that the Board of Directors had
acted bona fide in rejecting the share transfer and the
Court should not interfere even though it may not agree with
the decision of the Board. There was a genuine apprehension,
it was submitted, that if the appellants were directed to
continue to acquire further shares in Bajaj Tempo Limited,
it might result in the company becoming inter-connected with
the Bajaj Group which would result in highly adverse
consequences for the company.
We have to consider whether the said apprehension in
the mind of the Board of Directors of that company was
genuine and was it the real reason for rejecting to register
the transfer of shares. In other words, what has to be
determined, keeping in mind the principles enunciated by
this Court in Bajaj Tempo Ltd. case (supra) is whether the
Board Directors had acted in the interest of the respondent
company.
As we see it the power of the Board of Directors to
refuse registration of transfer of shares must be in the
interest of the company and the general body of share
holders. No doubt in the year, 1983, Section 82 of the
Companies Act provided that the shares or other interest of
any member in the company shall be movable property,
transferable in the manner provided by the Articles of the
Company. Article 52 sought to give absolute and uncontrolled
discretion to the Board of Directors to decline to register
or acknowledge any transfer of shares. Even then as already
held in Bajaj Tempo Limited case (supra), the Board has to
act bona fide, and not arbitrarily and for the benefit of
the company as a whole. In the case of a public limited
company which is listed with Stock Exchange, an important
right of share holder is to be able to sell his shares at a
favourable price. It is seldom in the interest of the
general-body of share-holders that transfer of shares be
refused because that will have an adverse impact on the
market price of the shares. Free transferability of shares
will not artificially deprive its market price. This does
not mean that if there is a good reason then the Board has
no power to refuse to register the transfer of shares. This
Court while examining the action of the Board of Directors
is not expected to exercise original appellate jurisdiction
and sit in appeal on question of fact. The judicial review
while hearing in appeal from the decision of the Company Law
Board would be limited to see whether there was a bona fide
exercise of power by the Board of Directors while refusing
to register the transfer of shares.
The Company Law Board in the present case came to the
conclusion that at least two of the reasons stated by the
Company while refusing to register the transfer of share
were not correct. It held that the appellants and Bajaj
Tempo were not rivals in business and even though there was
hostility between the managements of the companies but that
by itself could not mean that the appellants were
undesirable persons in the matter of transfer of shares. The
only two reasons of the Directors which found favour with
the Company Law Board were that the appellants were not bona
fide investors and, secondly there was a genuine
apprehension about inter-connection of respondent company
with the appellants.
Reverting to issue No. 2. we find that in the
Resolution of 29.8.1983 what had been stated was that the
appellants were not acquiring the shares with a view to or
for the purpose of genuine investment “but with ulterior
motives and purposes including with a view to destablise the
management of the company”. The alleged reason, therefore,
was that the shares were being purchased with ulterior
motives and purposes and with a view to destablise the
management of the company. The Company Law Board appears to
have mis-understood this reason and framed the issue as
“whether the purchases of impugned shares were bona fide
investments”. It opined that being an investment company, it
was not convincing, that the appellants would prefer to
invest in the shares of the company other than the
respondent company and the purchases were made so as to
increase its share-holding in the respondent company and
are, thus, motivated. It also observed that the return on
the shares of respondent company did not appear to be
adequate enough warranting successive purchases of its
shares and appeared to be lacking in bona fide. In our
opinion, this was not a correct approach. Merely because the
appellants wanted to increase the share-holding cannot by
itself be a ground in law for refusing to transfer the
shares. Realising this in the resolution of the Board of
Directors it was alleged that the purchase was not by way of
genuine investment but was made with ulterior/oblique
motives and with a view to destablise the management of the
company. There is nothing placed on the record which can
possibly persuade anyone to come to the conclusion that the
intention of the purchase of shares by the appellants was
with a view to destablise the management of the company or
with an ulterior/oblique motive. Prima facie it appears to
us that even if it is assuming that the appellants were
trying to purchase shares with a view to get a controlling
interest in the company that itself cannot be a ground for
refusing to transfer the shares unless and until it can be
shown that the purchasers were undesirable persons and after
gaining control of the company they will act against the
company and the shareholders interest. In the instant case
the appellants would not even have 25% shares of the company
even if the transfer of share was registered and, therefore,
the threat to the management, assuming that could be a valid
reason, could not be regarded as genuine.
It was submitted on behalf of the appellants that the
Company Law Board over-looked the fact that the return on
the investment of such shares is not only by reason of
divided which is obtained but the main income which was
expected to arise was from the appreciation in value of the
shares. It was submitted by the learned counsel for the
appellants that at the time when the purchases were made,
the share price was around Rs. 145 per share and presently
it is around Rs. 210/- per share. In our opinion there is
merit in this contention. Price appreciation, which may in
future lead to issuance of bonus shares or right shares, in
the event of increase in capital, is a very valid and good
reason for purchasing shares of reputable companies by an
investor. Therefore, the reason, which is given for refusing
to transfer the share namely inadequate return on shares,
cannot be regarded as being bona fide.
As regards the fear of being regarded a dominant
undertaking, in the event to the being inter-connection
between the appellants and the respondent company are
concerned, it has been contended on behalf of appellant that
the sections pertaining to concentration of economic power
in Chapter III of M.R.T.P. Act i.e. Sections 25 & 26 have
been omitted w.e.f. 27.9.1991 and, therefore, as on today it
would make no difference and the said reason cannot be
regarded as valid. While it is true that the fear of
respondent company being regarded as a dominant undertaking
as on today may not arise but what has to be seen is as to
whether this could be a genuine apprehension in the mind of
Board of Directors when in 1983 they had declined to
register the transfer of shares. The admitted fact is that
as on that date, inter-connection could have been
established only if the appellants had acquired 33 1/3%
shares of the respondent company. But, it is contended that
in view of Sachar Committee’s Report, the company
apprehended that the Act would be amended so that instead of
33 1/3% shares, it should be 25%. We would, therefore,
proceed on the assumption that the figure of 25% had to be
avoided by the respondent company.
It is an admitted fact that even if the purchase of the
shares was registered, the total percentage of the holdings
of the appellants group would be short of 25%. the existing
share holding, at that time, was 23.232% had the transfer of
shares been registered then, according to the figures
supplied by Mr. Nariman at the time of hearing, the
percentage of the holding of the appellants group would have
risen to only 23.408%. The learned counsels for the
appellants are right in contending that if fear of the
inter-connection was the real reason in refusing to register
the transfer then such a reason could not exist at that
moment because even with the registration of the transfer
the total mark of 25% would not be reached. We are in
agreement with the appellant’s submission and are of the
opinion that if the number of shares which were purchased
had been such that the total mark of 25% could be reached
then the action of the Board of Directors could not have
been faulted. But with the registration of the transfer of
shares in question that danger mark would not have been
reached. We are unable to accept as correct the appellants
contention that because the total holding of the appellants
group would then become “dangerously close” to 25% it was a
good enough reason to refuse transfer. There may not have
been anything to prevent the company if, after the shares in
question had been registered, any further purchase of shares
was made which would have the effect to push the holding of
the appellants to 25% mark, to reject those subsequent
transfers. As the transfers in question would not have
resulted in reaching the 25% mark that cannot be regarded as
a valid reason or consideration for refusing the
registration of transfer of shares.
Faced with this, Mr. Nariman, learned counsel, however
contended that because of the provisions of M.R.T.P. Act in
determining the inter-connection, the shares held by a
financial institution are required to be excluded. He
submitted that even if the appellants did not purchase any
further shares but further purchase by financial
institutions of more shares could possibly lead to the same
result namely of the percentage of holding of the appellants
group going beyond 25%. While it is true that the
shareholding of the financial institutions is not to be
taken into account in determining whether or not two or more
bodies corporate are under the same management because of
Explanation IV to Section 2(g) of M.R.T.P. Act, we find that
if the shares in question had been registered, and existing
share-holding of the financial institutions excluded, then
the total percentage of shares of the appellants group would
come to only 24.405%. for this percentage to push up to 25%,
the financial institutions would have to acquire
approximately 27740 additional shares of Bajaj Tempo
Limited, which may not be very likely. In any case, if such
a situation did arise namely financial Institutions
purchasing more shares which would result in danger mark of
25% to reach, there is nothing in law which would then
prevent the Board of Directors of Bajaj Tempo Limited to
refuse the registration of transfer in favour of Financial
institutions. In other words just as the Directions can
refuse to register transfer of shares in the appellants name
in order to avoid inter-connection similarly, and for the
same reason, they could refuse to register transfer of such
further purchases by financial institutions if such purchase
would have had the effect of making the appellants inter-
connected with Bajaj Tempo Limited. The Company Law Board
was, therefore, wrong in rejecting a contention of the
appellants that the apprehension of the respondent company
that it was likely to get inter-connected with the
appellants in the event of the impugned transfer of shares
being allowed was baseless and/or ill-founded.
In order to see whether the Board of Directors had
acted in furtherance of a personal interest or in the
interest of company, the resolution dated 29.8.1983 should
be read as a whole. It is apparent that being aware of the
state of law, every possible reason was stated in this
resolution which could justify the Directors in refusing to
register a transfer. Of the four reasons given by the Board,
two of them were rejected by the Company Law Board, namely
that the appellants were competitors of Bajaj Tempo Limited
and that the transferees were not desirable persons from the
large point of view of interest of Bajaj Tempo Limited.
There is also nothing on record to show that the purchase of
shares by the appellants was with ulterior/oblique motives
and purposes and with a view to destablise the management of
the company. Lastly, we find that the acquisition in
question would not have led to the interconnection between
the companies and it was not a bona fide exercise of power
by the Directors to take into account “further acquisition
of shares” of Bajaj Tempo Limited which may take place in
future which may then lead to inter-connection. It is the
extent of share-holding at that point of time which had to
be taken into consideration and not future acquisition which
may or may not take place. It was submitted by the
appellants counsel that because of the provisions of Section
108A of the Companies Act as it stood at that time, further
acquisitions could not take place so as to bring up the
share-holding to 25% without first getting central
Government approval. We, however, need not examine this
aspect because, in our opinion, on the facts which existed
on the record, we are satisfied that the exercise of
discretion by the Board of Directors in refusing to register
the shares in the name of the appellants was not bona fide
or in the interest of the company or general-body of share-
holders. Accordingly, its decision not a to register the
transfer of shares was not correct.
For the aforesaid reasons, the appeals are allowed. The
impugned order dated 28.7.1986 of the Company Law Board is
set aside and the Resolutions dated 29.8.1983, 27.9.1983 and
19.11.1983 of M/s Bajaj Tempo Limited are set-aside and as a
consequence thereof, direction is given to respondent No. 2
to register the shares in question within four weeks from
the date of this judgment. The appellants will be entitled
to cost.

 

 

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