KEDAMBADY JAGANNATHA SHETTY, J. ( 1 ) THIS is a Company Petition filed by the petitioner under Section 155 of the Companies Act for rectification of Register of Members of the respondent-Company, directing the respondent-Company to effect the transfer/substitute the name of the petitioner No. 1 in place of her deceased husband Channabasappa and to declare that petitioner no. 1 is entitled for the benefits and profits of the Company. ( 2 ) FACTS of the case speak eloquently. The respondent is a Company incorporated under the provisions of the Companies Act, 1956. It is a private limited Company with an object of purchase, sell or otherwise, deal in all kinds of oil, lubricants, petrol and petroleum products. The first petitioner's husband and the father of the petitioners 2 to 7 Mr. Channabasappa was one of the Director-Member and a share holder of the respondent-company. He died on 16. 8. 1988 leaving behind him the pe' tioners, the legal heirs. The petitioner No. 1 after the death of her husband, made an application on 30. 10,1988 with the respondent-company for the transmission of his shares and other interest in her name. The true copy of the application is produced and marked as Annexure- C. The petitioners were asked to comply certain requirements by the company, such as production of the succession certificate. It was accordingly complied with and has produced the succession certificate issued by the competent authority along with the application. The true copy of the same is produced and marked as Annexure-D. The petitioners 2 to 7 have given their no objection letter for transmission of shares in the name of petitioner no. 1. The copy of the said letter is produced and marked as annexure-E. ( 3 ) THE petitioners had sent several reminders to the respondent- Company and for transmission of shares of deceased Channa- basappa but no action was taken in this regard. Ultimately, the petitioners have issued a legal notice dated 28. 6. 1990 to the company for complying and considering the application. The said notice was produced and marked as Annexure-E. ( 4 ) THE petitioner No. 1 had received a letter, dated 21. 2. 1990 from the respondent Company stating that the application will be placed before the next Board of Directors Meeting. 6. 1990 to the company for complying and considering the application. The said notice was produced and marked as Annexure-E. ( 4 ) THE petitioner No. 1 had received a letter, dated 21. 2. 1990 from the respondent Company stating that the application will be placed before the next Board of Directors Meeting. The copy of the said communication is produced and marked as Annexure-G. Since then the application of the petitioner has not been considered by the respondent-Company nor any steps taken to transmit the shares in the name of the petitioner No. 1. ( 5 ) IT is stated that the respondent-Company has acted illegally and in contravention of the Articles of Association of the Company and also the provisions of the Companies Act. It is stated that as per the articles of Association, the Company is bound to transmit the shares of the husband in her name. The matter was delayed for no reason and the petitioners have been illegally deprived of their rights to act as a member share holder and their right to recover the amount of dividend and other profits of the company. Thus, the petitioners have filed this Petition seeking direction to the respondent-company to transmit the shares of the deceased Channabasappa in the name of petitioner No. 1 ( 6 ) THE respondent-Company represented by its Chairman appeared through the Counsel Mr. Gururajan and filed objection statement contending inter alia that the Petition is not maintainable in law and on facts. It is stated that the Articles of Association does not provide transmission of shares in the name of the first petitioner. It is further stated that the Articles of Association also provides for refusal to register the transmission of shares under Article 16 of the Articles of Association. Further it is stated that in the opinion of Directors. no transfer can take place, assuming that it could be done in the light of the facts stated above. It is further stated that the second petitioner has taken away the books without any authority of law and there is a police case and as such, he was in the habit of acting against the interest of the company and in fact, he has rushed to the press by making false defamatory statements against the respondent-Company. It is further stated that the second petitioner has taken away the books without any authority of law and there is a police case and as such, he was in the habit of acting against the interest of the company and in fact, he has rushed to the press by making false defamatory statements against the respondent-Company. Apart from that it is also stated that the first petitioner is not well versed in these matters and the second petitioner is taking advantage of the situation. The petition lacks bona fide and therefore there is absolutely no ground made for interference at the hands of this Court. It is denied that the respondent-Company illegally and in contravention of the Articles of Association have refused to act as sought to be made out by the petitioner. It is further stated that the company is not bound to transfer the shares in favour of the first petitioner in the absence of any Article available in the Articles of association. It is further stated that the respondent is not depriving illegally the rights of the petitioners, as stated in their petition. The allegation of deprivation of dividend and other profits is also denied. Finally it was stated that there was no proper application for transfer of shares in the name of petitioner No. 1 as required under Section 108 of the Companies Act. The application for transfer of shares was not in the proper form, no stamp affixed, as such the question of effecting a transfer of shares in the name of petitioner No. 1 or any one claiming to be the legal representatives of deceased member of channabasappa does not arise for Section 108 of the Companies Act enjoins the company to reject any application for transfer of shares unless the procedural requirements are fully complied with. ( 7 ) THE learned Counsel for the petitioner contended that on the death of the member, his legal representatives are in effect entitled to be the share holders for the right has devolved on them through the death of the member whose name is still on the Register. ( 7 ) THE learned Counsel for the petitioner contended that on the death of the member, his legal representatives are in effect entitled to be the share holders for the right has devolved on them through the death of the member whose name is still on the Register. Referring to the second Proviso to Section 108 of the Companies Act, he submitted that it enables the company to register as shareholder a person to whom the right to share devolves which right has passed by transmission and that provision relating to transfer of shares do not apply to cases of transmission by operation of law. i. e. , devolution of right on succession by the legal representatives of deceased Member. As such there need be neither an instrument of transfer nor any payment of stamp duty. The learned Counsel for the petitioner has further submitted that it is only transmission of shares from the deceased Member to his legal representatives, as such there is no sale of shares. ( 8 ) IN support of this submission, he has relied on the Decisions: (1) (1978) 48 Company Cases 458 (2) AIR 1962 Calcutta 380 (3) (1966) 36 Company Cases 592 SC3. ( 9 ) MR. Gururajan, learned Counsel for the respondent-Company has argued that the Petition under Section 155 of the Companies Act is not maintainable in as much as the power of the Court is very much limited. The Section 155 (1) is meant only in case of mistake or mis-statement, not otherwise. The legal representatives of the deceased member cannot be permitted to invoke the provision of section 155 as sought to be done in this case. Further, he argued that the Articles of Association provides for refusal to register the transfer of shares under Article 16 of the Articles of Association, that the petitioner No. 2 is not a responsible person to the satisfaction of the company, and the petitioner No. 1 being lady not well versed in the company matters and the second petitioner is taking advantage of the situation and is trying to get the share transferred in the name of the petitioner. Lastly, he argued that the petitioner-transferee has not complied with the formalities in connection with the transfer of shares as provided under Section 108 of the Companies Act. They are mandatory. Lastly, he argued that the petitioner-transferee has not complied with the formalities in connection with the transfer of shares as provided under Section 108 of the Companies Act. They are mandatory. The Articles of the company provide that every instrument of transfer must accompany a certificate for the shares to be transferred. In this case, there is no application for registration of transfer of share made by complying with these requirements. As such, no instrument of transfer along with the share application and registration fee are delivered or left at the office of the company. That being so, there is no question of considering by the Directors the transfer of shares that arise in the matter. ( 10 ) LET me consider the controversy involved in the Petition regarding the transfer/transmission of shares in the name of the petitioner No. 1, the legal representative of deceased Channabasappa, one of the Director-Member and share holder of the respondent-company. ( 11 ) THE undisputed facts are that the respondent-Company is a private limited Company incorporated under the Companies Act. The 1. Gulabrai Kalidas Naik vs Laxmidas Lallu Bhai Patel 2. Naza Munnisa Begum vs Vidya Sagar Cotton Mills Ltd. 3. Indian Chemical Products Ltd vs State cf Orissa and Another petitioner No. 1 s husband and father of petitioners 2 to 7, channabasappa, died on 16. 8. 1988. Petitioner No. 1 to 7 are the legal representatives of deceased Channabasappa. They have produced succession certificate and the petitioners 2 to 7 have given the consent for transfer of shares in the name of petitioner No. 1 as per annexure-B. The petitioners have produced the succession certificate to the effect that petitioner Nos. 1 to 7 are the legal heirs of deceased channabasappa, The petitioner No. 1 gave an application on 5. 7. 1989 to the respondent-company to transfer the shares of deceased channabasappa in her name along with the consent of petitioners 2 to 7 stating that they have no objection for transfer/transmission of shares in the name of their mother, petitioner No. 1. As the respondent-company did not take any step for rectification of register the petitioner issued legal notice to the respondent Company on 28. 6. 1990. However, the respondent-company referring to one of the letters of the petitioners dated 18. 1. 1990 replied on 21. 2. As the respondent-company did not take any step for rectification of register the petitioner issued legal notice to the respondent Company on 28. 6. 1990. However, the respondent-company referring to one of the letters of the petitioners dated 18. 1. 1990 replied on 21. 2. 1990 stating that application will be placed before the next Board of Directors meeting. Thereafter, in spite of issuing notice by the petitioners, dated 28. 6. 1990 neither any action taken nor replied to the notice by the respondent-Company. ( 12 ) IN view of the conflicting contentions and the facts that give rise to the questions involved in this application are:1) Whether in a case of transmission of shares, by virtue of operation of law by death or otherwise by the order of the court, is it necessary to submit transfer form in compliance with the requirements of transfer of shares contemplated under sub-section (1) of Section 108 of the Companies act?2) When a person becomes the owner of shares by virtue of succession due to the death of the member (whose name is in the Register of Members) and he is entitled to be recorded as a member of the company, and if the company refuses to record him as a member, can he maintain an application under Section 155 of the Companies Act? ( 13 ) TO answer the above questions, it is necessary to refer to the provisions of Section 108 of the Companies Act and the Articles of association of respondent-company. The relevant Section 108 reads as follows: "section 108. Transfer not to be registered excepton production of instrument of transfer.- (1} A company shall not register a transfer of shares in or debentures of the company, 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 and specifying the name address and occupation, if any. of the transferee, has been delivered to the company along with certificate relating to the shares or debentures, or if no such certificate is in existence, along with the letter of allotment of the shares or debentures: provided that where on an application in writing made to the company by the transferee and bearing the stamp required for an instrument of transfer, it is proved to the satisfaction of the Board of Directors that the instrument of transfer signed by or on behalf of the transferor and by or on behalf of the transferee has been lost, the company may register the transfer on such terms as to indemnity as the Board may think fit. Provided further that nothing in this Section shall prejudice any power of the company to register as shareholder any person to whom the right to any shares in, or debentures of, the company has been transmitted by operation of law. " article 16 of the Articles ot Association reads as follows:"16. The Directors may refuse to register any transfer of a share - (a) Where the share is not fully paid up, or where monies due to the Company are covered by the Company's lien on the share; (b) Without assigning any reason therefor where it is not provided to their satisfaction that the proposed transferee is a responsible person; (c) Where the Directors are of opinion that the proposed transferee is [sic : not] a responsible person; (d) Where the Directors are of opinion that the proposed transferee is not a desirable person to admit to membership: (e) Where the result of such registration would be to make the number of members exceed the limits set out above. " ( 14 ) THE contention of the respondent Counsel that Section 155 of the Act would come into operation in the present case, if the requirement of Section 108 of the Act had been complied with by the petitioners, and further argued that the request of the petitioner was rightly refused by the respondent because proviso of Section 108 was not followed since there was no proper instrument of transfer duly stamped and executed and delivered to the respondent-Company. The respondent's counsel in support of the submission has relied on the Decision of the Kerala High Court in P. V. CHANDRAN vs malabar AND PIONEER HOSIERY PRIVATE LTD. The respondent's counsel in support of the submission has relied on the Decision of the Kerala High Court in P. V. CHANDRAN vs malabar AND PIONEER HOSIERY PRIVATE LTD. , It is observed in the said Decision that "it is a condition precedent for getting the shares transferred that the instrument should be executed by the transferor and the transferee, and it should be left at the office of the company to be registered and the fee of Rs. 2/ -. The Directors are obliged to consider only a valid application filed in accordance with law under the Articles of Association. The petitioner has obviously not filed such valid application at all which is condition precedent to enable the Directors to consider application and register the transfer of shares. On the short ground, the jurisdiction of this Court under section 155 (2) of the Companies Act, itself is not properly or vaiidfy invoked by the petitioner nor attracted. " ( 15 ) I am not satisfied that in the instant case, it was necessary for the petitioners either to send along with their letter or application for entering their name on the Register of Members with respect to the shares in this Petition, which was owned by the deceased husband of petitioner No. 1 and father of petitioners Nos. 2 to 7 a Transfer Deed executed, attested and stamped or affixing the necessary stamp on the letter/application itself. As already indicated the shares of channabasappa the deceased Member devolved on his legal representatives (legal heirs) evidenced by succession certificate filed by the petitioners. In case like this, there could be no transferor to execute any instrument of transfer and get attested and stamped. By operation of law, the shares of the deceased Member get transmitted in favour of his legal heirs. ( 16 ) THUS, the only question, therefore, to be considered is Whether sub-section (1) of Section 108 of the Act or the second proviso applies to the instant case. ( 17 ) AS already noticed that this is not a case of transfer of shares by act of parties. It is well laid principles of law that "transmission by operation of law" is not transfer. ( 17 ) AS already noticed that this is not a case of transfer of shares by act of parties. It is well laid principles of law that "transmission by operation of law" is not transfer. The transmission by operation of law takes place where a person acquires an interest in property by operation of law such as by right of inheritance or succession, while a transfer is effected by act of parties. Sub-section (1) of Section 108 requires the instrument of transfer to be duly stamped, for it is an essential condition for registering a transfer of shares. The instant case is not covered by sub-section (1) of Section 108 of the Act, but it would fall under the second Proviso to sub-section (1) of Section 108 which reads as follows:"provided further that nothing in this section shall prejudice any power of the company to register as share holder or debenture-holder any person to whom the right to any shares in or debentures of, the company has been transmitted by operation of law. " ( 18 ) THE petitioners' Counsel has rightly contended that where title to the share has passed by operation of law, as in the present case, no further formalities have to be completed so that neither duly stamped instrument of transfer nor an application in writing itself bearing the requisite stamp is necessary. But, however, the learned counsel for the respondent-company, Mr. Gururaj, argued though this being a transmission by operation of law and it may be that there cannot be an instrument of transfer duly stamped and executed, but even so the application or letter sent by the petitioner to the respondent-company requesting entry of their names on the Register of Members should have borne the stamp required for instrument of transfer as contemplated under sub-section (1) of Section 108 of the act. There is no merit in this contention. As already pointed out sub-section (1) of Section 108 of the Act deals with the transfer by act of parties, requiring an instrument of transfer. The Transmission of shares' by operation of law by succession or inheritance, there could be no instrument of transfer. There is no merit in this contention. As already pointed out sub-section (1) of Section 108 of the Act deals with the transfer by act of parties, requiring an instrument of transfer. The Transmission of shares' by operation of law by succession or inheritance, there could be no instrument of transfer. In the present case, the title to the shares having vested with the petitioners by virtue of death of member and inheritance by his legal heirs evidenced by the death certificate and succession certificate, it would not be justified in importing the condition as to stamp laid down in the first Proviso to sub-section (1) of Section 108 into the second Proviso. The wordings of the second Proviso clearly establishes that nothing in Section 108 which would include sub-section (1) as well as first Proviso to it, shall prejudice any power of the company to register as share holder any person in whom the right to any shares in the company has been transmitted by operation of law. I do not think that the respondent- company could refuse to exercise its power under second Proviso by" insisting on the petitioners complying with the provision of either sub-section (1) of Section 108 or first Proviso to the same. ( 19 ) THE next submission of respondent-Company was that the petitioners application under. Section 155 is not maintainable for section 155 (1) is meant only in case of mistake or mis-statement. It was further argued that the Articles of Association provides for refusal to register the transfer of shares under Article 16 of Articles of association. The petitioners Counsel has controverted this contention of the respondents Counsel and submitted that the application of the petitioners under Section 155 is maintainable, as the power of the company court is very wide under Section 155, and the power of rectification is not confined only to correct the mistake or mis- statement as contended by the respondent's Counsel. The petitioners Counsel has controverted this contention of the respondents Counsel and submitted that the application of the petitioners under Section 155 is maintainable, as the power of the company court is very wide under Section 155, and the power of rectification is not confined only to correct the mistake or mis- statement as contended by the respondent's Counsel. Section 155 reads as follows:-"section 155 Power of Court to rectify register of members.- (1)if- (a) the name of any person- (i) is without sufficient cause, entered in the register of members of a company, or (ii) after having been entered in the register is, without sufficient cause, omitted therefrom; or (b) default is made, or unnecessary delay takes place, in entering on the register the fact of any person having become, or ceased to be, a member; the person aggrieved, or any member of the company, or the company may apply to the court for rectification of the register. (2) The Court may either reject the application or order rectification of the register; and in the latter case, may direct the company to pay the damages if any, sustained by any party aggrieved. In either case, the Court in its discretion may make such order as to costs as it thinks fit. (3) On an application under this Section, the Court (a) may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand; and (b) generally, may decide any question which it is necessary or expedient to decide in connection with the application for rectification (4) From any order passed by the Court on the application, or on any issue raised therein and tried separately, an appeal shall he on the grounds mentioned in Section 100 of the Code of Civil procedure, 1908 (V of 1908) (a) If the order be passed by a District Court, to the High court; (b) If the orders be passed by a single Judge of a High Court consisting ot three or more Judges to a Bench of that High court. (5) The provisions of a sub-sections (1) to (4) shall apply in relation to the rectification of the register of debenture-holders as they apply in relation to the rectification of the register of members. " ( 20 ) PETITIONERS' counsel in support of his submission has relied on the Decision of the Gujarat High Court reported in Gulabrai Kalidas naik vs Laxmidas Lallubhai Patel wherein it was observed as follows:"a bare perusal of Section 155 on its own language does not indicated that the jurisdiction conferred by the section is one hedged in with a condition that it can only be exercised when relief can be granted in a summary manner. There is nothing in the language of Section 155 which excludes decision of questions of title to shares that may arise in an application for rectification of the register. On the contrary, the language of sub-section (3) makes it abundantly clear that in such an application, the court has power to decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register and the Court would have further jurisdiction to decide the question of title even when it arises between members or alleged members, or between members or alleged members on the one hand and the company on the other. Sub-clause (b) of sub-section (3) further widens the jurisdiction of the Court under Section 155 when it permits or enables the Court generally to decide any question which it is necessary or expedient to decide in connection with the application for rectification. " ( 21 ) I am in full agreement with the opinion expressed by the High Court of Gujarat. The power of the Company Court under Section 155 is very wide. It makes it clear that not only any member of the company, but also the 'person aggrieved' may apply to the Court for rectification of Register of Members. " ( 21 ) I am in full agreement with the opinion expressed by the High Court of Gujarat. The power of the Company Court under Section 155 is very wide. It makes it clear that not only any member of the company, but also the 'person aggrieved' may apply to the Court for rectification of Register of Members. In clause (b) of Section 155 (1) the words "the fact of any person having become a member have been construed to mean "having become entitled to be a member" or having got the right of membership, as observed by the Calcutta High court in Nazamunnisa Begum vs Vidya Sagar Cotton Mills Ltd. In my view, having regard to the principles enunicated in the above decision the Company Application of the petitioners filed under section 155 is maintainable. ( 22 ) LASTLY, it was argued by the respondent's Counsel that Article 16 of the Articles of Association provides for refusal to register the transfer of shares, and the Directors of respondent- Company are, in fact, of the view that petitioner No. 2 is not a responsible person and petitioner No. 1 being a lady not well versed in the company matters. It is contended by the petitioners Counsel that these allegations have now been belatedly made to justify their arbitrary action refusing to effect the transmission of shares in the name of petitioners. On 30. 10. 1988 an application was sent by petitioner No. 1 after the death of her husband. The respondent-Company sent a reply as per annexure-C, asking the petitioner to produce succession certificate. The Succession Certificate was produced and along with it the consent letter of petitioner Nos. 2 to 7 giving no objection for transfer transmission of shares in the name of the petitioner. The respondent- company thereafter inspite of several reminders, including notice calling upon it to effect the rectification of Register of Members showing the name of the petitioners as share holder in place or her deceased husband Channabasappa, did not take any action. However, the respondent-Company by its reply letter, dated 21. 2. 1990 stated the matter will be placed before the next Board of directors. There was no communication thereafter by the respondent-Company either accepting or refusing transmission of shares in the name of petitioner. However, the respondent-Company by its reply letter, dated 21. 2. 1990 stated the matter will be placed before the next Board of directors. There was no communication thereafter by the respondent-Company either accepting or refusing transmission of shares in the name of petitioner. It is seen that the intimation for transmission of shares was given by the petitioners to the respondent-Company, on 30. 10. 1988, the respondent-Company has asked to produce Succession Certificate which was produced by the petitioners. Thereafter, the respondent-Company by its letter, dated 21. 2. 1990 intimated that it would place the matter before the Board. Thus, till to-day no action was taken by the respondent either to accept or refuse the grant of transmission of shares in the name of petitioners. Under Section 111, the Company has power to refuse registration of shares, in pursuance of power under Articles of association, but such refusal shall be made within two months of the date of delivery of intimation of transfer/transmission of shares, and send the intimation of refusal to the person giving intimation of such transfer/transmission. In the present case, the respondent has not refused to register the shares, nor sent any intimation of refusal to register the shares within two months from the date of delivery of intimation for transmission of shares. Mere silence by the Directors of company may not be acquiescence, but sub-section (2) of Section 111 of the Act requires the Company to notify the person delivering intimation of transmission of shares, within two months of a refusal to register. Therefore, if two months elapsed, it would be clear that the directors can no longer refuse to register/effect the transmission of shares. Since the respondent-Company has not refused to effect transmission of shares, in pursuance of its power under its articles within two months from the date of delivery of intimation of transmission of shares by the petitioners the Directors of respondent- company cannot now refuse the transmission of shares in favour of petitioner. ( 23 ) IT is pointed out by the petitioner's Counsel that Article 16 of the Articles of Association is inapplicable to the present case, as there was no transfer of shares falling under Section 108 (1) or first proviso of the Act. It is a case of transmission of shares falling within second proviso of Section 108 of the Act, by devolution. It is a case of transmission of shares falling within second proviso of Section 108 of the Act, by devolution. In any event, since the power to refuse the transfer/transmission of shares, within two months from the date of intimation given by the petitioners, has not been exercised by the Directors of the Company, it can no longer refuse to register. ( 24 ) IN the result, I allow this Petition and direct respondent- Company, M/s Vithal Prasad Company Pvt. Ltd. , Athani, do rectify its register of Members by entering the name of the petitioner No. 1 in respect of the shares held by her deceased husband Channabasappa by deleting his name in respect thereof. I further direct that the notice of this rectification be filed by respondent-Company with the Registrar of Companies, within thirty days from to-day as required under Section 156 of the Act. I further direct the respondent-Company to pay the petitioner the cost quantified at Rs. 1,500/ -. --- *** --- .