The legal heirs of Mrs. Premada Barooah, a deceased shareholder of Bahadur Tea Company Pvt. Ltd., filed a petition seeking an order to rectify the company's register of members to replace Mrs. Barooah with the petitioners. The company refused to register the petitioners as members, claiming a son-in-law cannot be a member per its articles. The court analyzed the relevant sections of the Companies Act relating to transfer of shares by legal representatives and found that the company's refusal was against the law. It ordered the company to rectify its register of members and enter the petitioners as the rightful members as the legal representatives and executors of the deceased shareholder.

1. Hemendra Prasad Barooah
Vs.
Bahadur Tea Co. Pvt. Ltd.
1991 Company Case 792 (Gauhati)
Case Presenter &
Role Player
• Rahul Kumar Verma
• Navaneeta Banik
• Bapan Mukherjee
• Rana Dev
• Rahul Newar
Jurisdiction by :
• Prof. Monika Saxena
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2. Foundation of case
Legal heir’s right to an order for rectification of register of
members to get on the register in place of a deceased
shareholder
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3. Basic understanding of case
 Application under Section 156 of the Companies Act, 1956
 For rectification of the register of members of the respondent-company
 Refusal by the company to enter the names of the petitioners as members
or shareholders.
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4. facts
Mrs. Premada Barooah
She was a shareholder of respondent company :
The Bahudur Tea Company Pvt.Ltd during her
lifetime
She died on March 31, 1978
Will
Mr. Hemendra Prasad Barooah (son-in-law)
Mrs. Rosa Kamte(daughter)
In the will, her shares in the respondent-company
were also included
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5. Text
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The executors made an application to the respondent-company
Facts continue…
Company refused to register their membership
Company said that a son-in-law or executor cannot be a member of the company under
the memorandum of association and articles of association of the company
The case was filed by the executor in court
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6. Mr. D.N.Chaoudhary Mr. N.M. Lahiri
learned counsel for the petitioners learned counsel for the respondent-com.
Contended that the legal representative (the
executor) of the deceased member applying
for entering his name in the register of
members cannot be refused
Contended that the petition is not
maintainable under Section 111(1) of the
Companies Act tead with the articles of the
company
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7. TEXT TEXT TEXT TEXT
Legal aspect of case
• Companies Act relating to transfer of shares
Section 108 of Company Act
Inter vivos shares is to be made by a proper instrument of transfer duly stamped and
executed by or on behalf of the transferor and by or on behalf of the transferee
• An inter vivos transfer is a transfer by one living person to another
• It is a transfer of property during the lifetime of the owner and it is to be
distinguished from testamentary transfer of succession where the property passes
by death
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8. Contradistinction to word “ TRANSFER” with “TRANSMISSION”
Transfer : An act of the parties or of the law, by which title to property is conveyed from
one person to another
Transmission : Transfer of share that occurs by operation of law upon bankruptcy or
upon death
TRANSFER TRANSMISSION
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9. TEXT
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• Section 109 of Company Act
States that a transfer of the share or other interest in a company of a deceased member
thereof made by his legal representative shall, although the legal representative is not
himself a member, be as valid as if he had been a member at the time of the execution of
the instrument of transfer
Section 211 of the Indian Succession Act, 1925
• The executor of a deceased person is the legal representative for all purposes and all
the property of the deceased person vests him as such
• But the executor do not become members of the comp. unless their names are
registered in the register of members
Sale of shares in court auction is also a case of transmission of shares
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10. TEXT TEXTTEXT TEXT
On a reading of Sections 108, 109, 110 and 111 together
• The word "transmission" has been used in Section 111 in contradistinction to the
word "transfer"
• "Transmission" is referable to devolution of title by operation of law. It may be by
succession or by testamentary transfer
• “Transfer", it has been used to mean inter vivos transfer.
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11. On the death of Premada, her right to the shares or other interest as a member in the
company devolved on the petitioners as executors and they are the legal representatives
of the deceased
In the case
• Legal aspect from company point of view
Could the company refuse to register the transmission by
operation of law of the right to the shares ?
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12. Test with article 7(A) & 7(b)
A shareholder may, at any time, transfer a share to his or her father, mother, wife or
husband, son or daughter or to any one of the existing shareholders of the company,
provided however that the transferee is not an insolvent or otherwise incapable of
discharging his obligations"
"No transfer of any share except to a member or the persons referred to in Article 7(b),
(c) shall be made to any person without the previous sanction of the directors who may
without assigning any reason decline to give any such sanction"
Article 7(b)
Article 7(a)
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13. On a reading of Article 7 (a) and (b) together
• It appears that for the transfer of shares by a member of the company to his or her
father, mother, wife or husband, son or daughter, or to any one of the existing
shareholders of the company, no previous sanction of the directors is required
• However, for transfer to other persons including a son-in-law, previous sanction will
be required and the company, without assigning any reason, can decline to give any
such sanction
Articles 7(a) and 7(b) denotes inter vivos transfer
Therefore, Articles 7(a) and 7(b) are not applicable to the present case
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14. back to case
The petitioners who are executors (legal representatives) of the deceased member, Pre-
mada Barooah, are entitled to registration of their names as members of the company
Therefore, the refusal was against the law
• Section 155(1)(b)
If default is made or unnecessary delay takes place in entering in the register the fact of
any person having become, or ceased to be a member, the person aggrieved may apply
to the court for rectification of the register
• Shri N. M. Lahiri, learned counsel for the respondents, has contended that Section
155 is in respect of the power of the High Court to rectify the register of members,
but it does not include such a refusal to register
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15. verdict
The petition is allowed
It is ordered and directed that the respondent-company shall rectify the
register of members of the company in the light of the observations
made above
The executor is liable to get the benefits of shareholder
Company can’t refuse for above
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16. Thank
you
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