2019] 185
( 1 D) Notwithstanding anything in sub-section ( 1 A) or sub-section ( 1 B) or sub-sec-
tion ( 1 C) where in the opinion of the Central Government it is necessary so to do
to avoid hardship in any case, that Government may on an application made to it
in that behalf, extend the periods mentioned in those sub-sections by such further
time as it may deem fit whether such application is made before or after the expiry
of the periods aforesaid; and the number of extensions granted hereunder and the
period of each such extension shall be shown in the annual report laid before the
Houses of Parliament under section 638.
( 2 ) In the case of a company having no share capital, sub-section ( 1 ) shall apply as
if the references therein to shares were references instead of the interest of the
member in the company.
( 3 ) Nothing contained in this section shall apply to transfer of security effected by
the transferor and the transferee both of whom are entered as beneficial owners
in
the
records
of
a
depository.”
It
was
also
submitted
that
there
is
violation
of
section
108
of
the
Companies
Act^
of
1956.
It
was
submitted
on
behalf
of
Hillcrest
that
the
Board
meeting
was^
held
on
10. 5. 2005
in
which
32 , 88 , 181
shares
of
HQRL
were
purportedly
transferred^
by
Moral
to
Mr.
R.P.
Mittal.
Out
of
32 , 88 , 181
shares,
8 , 98 , 166
shares
were^
lying
with
the
Overseas
Bank
and
were
available
before
the
Board
of
HQRL^
for
recording
of
transfer.
Shares
can
be
transferred
only
in
accordance
with^
section
108
of
the
Companies
Act
which
provides
for
filing
of
the
share
certificate^
which
was
a
mandatory
requirement
as
observed
in
Mannalal
Khetan
v. Kedar Nath Khetan
[ 1977 ]
2
SCC
424
thus:
“ 16.
The
provision
contained
in
Section
108
of
the
Act
states
that
a
company
shall
not^
register
a
transfer
of
shares
.
.
.
unless
a
proper
instrument
of
transfer
duly
stamped^
and
executed
by
or
on
behalf
of
the
transferor
and
by
or
on
behalf
of
the
transferee^
to^ ....^ has^ been^ delivered^ to^ the^ company^ along^ with^ the^ certificate^ relating^
th^ ethe^ shares^ or^ debentures^ ...^ or^ if^ no^ such^ certificate^ is^ in^ existence^ along^ with^
letter of allotment of the shares.
There are two provisos to section 108 of the Act. We are not concerned with the
first proviso in these appeals. The second proviso states that nothing in this section
shall prejudice any power of the company to register as shareholder or debenture
holder any person to whom the right to any shares in, or debentures of, the com-
pany has been transmitted by operation of law. The words “shall not register” are
mandatory in character. The mandatory character is strengthened by the negative
form of the language. The prohibition against transfer without complying with the
provisions of the Act is emphasised by the negative language. Negative language is
worded to emphasise the insistence of compliance with the provisions of the Act.
(See State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga [ 1952 ]
SCR
889 ;
K. Pentiahv.
Muddala Veeramallappa[ 1961 ]
2
SCR
295
and
unreported
decision^
dated
April
28 ,
1976
in
Criminal
Appeal
279
of
1975
and
Additional Dis-
trict Magistrate, Jabalpurv. Shivakant Shukla
[ 1976 ]
2
SCC
521.
Negative
words
are^
clearly
prohibitory
and
are
ordinarily
used
as
a
legislative
device
to
make
a
statutory^
provision
imperative.
17.
In
Raza Buland Sugar Co. Ltd.
v.
Municipal Board, Rampur[ 1965 ]
1
SCR
970
this^
Court
referred
to
various
tests
for
finding
out
when
a
provision
is
mandatory
or^
directory. The purpose for which the provision has been made, its nature, theRam Parshotam Mittal
v.
Hotel Queen Road (P.) Ltd. (SC)