Venture Global Engineering v. Satyam Computer Services Ltd.
- 2022-02-17
Citation: (2018) 5 SCC 575
Facts: The Mackintosh Case involved an unlisted public company, which had refused to register a transfer of shares to its competitor.
Issue: Whether the registration of a share transfer may be refused any other sufficient cause?
Judgement: The court held that “The Company Law Board, it appears, was of the view that the refusal to register the transfer of shares can be permitted only if the transfer is otherwise illegal or impermissible under any law. Going by the expression “without sufficient cause” used in section 58(4), it is difficult to appreciate that view. Refusal can be on the ground of violation of law or any other sufficient case…”
The Supreme Court ultimately left it to the National Company Law Tribunal, Kolkata to decide whether there was “sufficient cause” to refuse registration on the basis of the facts of the given case. The court also implied that acquisitions by competitors could be considered ‘sufficient cause’ as they may give rise to a conflict of interest.
The court also cited its earlier landmark judgement Auto Ltd. v. NK Firodia. In that case the Supreme Court of India held that “the discretion of directors is to be tested as the opinion of fair and sensible men in the interest of the company…” It can therefore be said that ‘sufficient cause’ would include matters that are not in the best interests of the company.
The decision of the Supreme Court in the Mackintosh Case significantly enlarged the scope of the expression ‘sufficient cause’ used in Section 58(4) of Companies Act, 2013.
