ALLIANCE TEXTILE MILLS LIMITED and 8 otherss vs Mrs. NAHEED KAYANI and 9

ORDER

' This appeal has been filed against order dated 28-6-2006 passed in C.O. No.58 of 2002.

2. The facts of the case are that respondent No.1 moved a petition under section 152 of the Companies Ordinance, 1984 ("Ordinance") for rectification of the register of members, before the learned Company Judge of this Court. The case of respondent No.1 was that the register of members had been tampered with and the name of respondent No.1 was fraudulently omitted from the register of members at the behest of the appellants. The impugned order found that respondent No.1 never transferred any shares in favour of the appellants, hence the rectification in the register of members was fraudulently made to reflect such a transfer. The appellants urged that the transfer on the basis of a valid contract was made in their favour by respondent No.1, for valuable consideration which was duly paid and hence the rectification in the register of members was made to reflect the valid sale. The learned Single Judge found that in fact no valid transfer had taken place in terms of section 76 of the Ordinance as the original shares were in the custody of Habib Bank Limited. Admittedly, the shares were pledged with the Bank and the transfer of shares in favour of the appellants was never made in terms of section 76 of the Ordinance.

3. Learned counsel for the appellants urged that the transfer was made on the basis of a valid agreement dated 27-6-1993. Due consideration was paid by pay order and two cheques and permission was duly taken from the Habib Bank Limited to effect the sale. Learned counsel further argued that in this regard a certificate was issued by Habilb Bank Limited stating therein that while the shares were in their custody, they were transferred in favour of appellants Nos.2 and 3. Learned counsel has relied upon the certificate to state that on the basis of agreement dated 21-4-1993 as well as the certificate, a valid transfer has been affected and the said sale was duly reflected in the register of members in accordance with law. Learned counsel for the appellants argued that the transfer of shares in the name of the appellants was reflected in Form A from 1995 and it was at the filing of the petition under section 152 of the Ordinance in 2002 that the issue was raised by respondent No.1. Learned counsel argued that from 1995 till 2002, the respondents never agitated against the transfer. Learned counsel argued that the impugned order requires the appellants to enforce their right before the appropriate forum whereas in fact the right of the appellants was duly endorsed in the register of members and it was for the respondents to prove their claim against the appellants with respect to the transfer of shares.

4. We have heard the learned counsel for the appellants at length and find that the alleged transfer of shares in favour of the appellants did not meet the requirements of section 76 of the Ordinance. Section 76 of the Ordinance clearly provides that the company shall not register a transfer of shares or debentures unless proper instrument of transfer duly stamped and executed by the transferor and the transferee has been delivered to the company along with the scrip.

Admittedly, in this case, the original instrument of transfer was in the custody of Habib Bank Limited where they had been pledged. Therefore the mandatory requirement of section 76 of the Ordinance was never complied with and any rectification in the register of members to show the transfer in favour of the appellants was not in accordance with the law.

5. Under the circumstances, we find that the learned Single Judge while relying upon section 76 of the Ordinance has rightly concluded that the register of members could not have been changed on the basis of a disputed agreement dated .21-4-1993 and that the appellants would have to prove their claim before the appropriate forum before they could seek rectification under section 152 of the Ordinance.

6. In view of the aforesaid, this appeal is dismissed.