M.S. MADHUSOODHANAN AND ANR. versus KERALA KAUMUDI PVT. LTD. AND ORS.

Citation: [2003] SUPP. 2 S.C.R. 107 · Decided: 01-08-2003 · Supreme Court of India · Bench: RUMA PAL · Disposal: Disposed off

Judgment (excerpt)

M.S. MADHUSOODHANAN AND ANR. 
v. 
KERALA KAUMUDI PVT. LTD. AND ORS. 
AUGUST 1, 2003. 
[RUMA PAL AND B.N. SRIKRISHNA, JJ.] 
Sale of Goods Act, 1930-Section 9-Contract Act, 1872-Section 29-
Transfer of shares of a company-Determination of consideration amount at 
A 
B 
a later date-Validity of-Held: Such agreement is valid-It is not void for C 
uncertainty-Section 9 permits such transfer. 
Companies Act, 1956: 
Sections 108 and 195-Transfer of shares between two brothers-Validity 
of-Held: Documentary evidence showing valid transfer-Intention to transfer D 
evident from immediate and unconditional transfer and the transfer deeds 
placed before the Board and duly approved-Annual returns filed also 
mentioning transfer-Transfer of share admitted in the affidavit by transferor-
Transferor failing to discharge onus as to correctness of the minutes of the 
Board Meeting-Evidence indicating transfer in accordance with section 108-
Transferor receiving some consideration-Hence, transfer of shares valid- E 
Prayer of transferor for rectification of share register of the company deleting 
the name of transferee as shareholder rejected-Sale of Goods Act, 1930-
Section 9. 
Sections 189 and 53.,--Articles of Association-Alteration-Necessary F 
requirement-Held: Notice of 21 days, specifying intention to propose resolution 
and resolution to be passed by 7 5 per ·cent of the members present in the 
meeting-:-In the instant case, Article 74 of the company amended and major 
share holder appointed the Managing Director for life-Subsequently, mother 
assumed power-In the next meeting resolution to increase the share capital 
by issue of notice to share holders-Thereafter in the next meeting shares G 
allotted to two brothers and one of them sold one share to the brother who 
had earlier transferred all his shares to the major share holder pursuant to 
the family settlement and admitted as member in the company-Major share 
holder removed from the post in an extraordinary general meeting, prior to 
which Article 74 deleted-Major share holder opposing all this-On appeal, 
107 
108 
SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R. 
A Held: Requirements. of section 189 not complied with while deleting Article 
7 4-Resolution to delete Article 7 4 formed no part of the notice of Extraordinary 
General Meeting-Hence, notice defective, as such removal of the major share 
holder not correct and allotment of shares vitiated-Companies Act, 1913, 
section 81. 
· B 
Section 53-Documents-Service by post-Value oF--Held: General rule 
regarding certificate of posting is that service is presumed to be effeeted-
Raising of presumption does not by itself amounts to proof-Burden lies on 
the person against whom the presumption operates for disproving it-Further, 
the presumption may be rebuttable-Rebuttable presumption is raised if the 
C basic facts regarding due posting of the document is proved-Use of words 
'shall presume' does not make it irrebuttable or conclusive-Words and 
Phrases. 
Sections 155 and I 08-Share transfer in the company in implementation 
of the Board's decision-Application for rectification of share register-
D Sustainability of-Held: All necessary documents executed for transfer of 
shares-Deeds signed by the persons concerned not under any 
misrepresentation, fraud, undue influence or mistake-Minutes and other 
records of the Company prima facie raising presumption of the veracity, and 
; 
not disproved by applicants-Also ·non-compliance of section I 08 of no 
E consequence-Hence, the application for rectification liable to be rejected 
Specific Relief Act, 1963: 
Sections JO, 16(c) and 20(2)(a) Explanation I-Agreement (Karar) 
providing division of shares of parents in a private company among brothers 
p 
in the ratio of 50: 25: 25-Claim of major share holder for enforcement of 
Karar-Held: Other share holders had taken full benefit of Karar, thus were 
bound to comply with its terms and Karar being in the nature of family 
settlement not to be lightly interfered by the Court-Shares coming within 
expression 'not easily available in market-Non-determination of consideration 
in respect of inherited shares of no consequence-Major share holder always 
G ready and willing to perform his part of agreement thus no contravention of 
Section 16-Filing of suit ten months later not unreasonable delay-Mere 
inadequacy of consideration no ground to hold that contract gives undue 
advantage-Hence, major share holder entitled to specific perform

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