V. B. RANGARAJ versus V. B. GOPALAKRISHNAN AND ORS.

V. B. RANGARAJ versus V. B. GOPALAKRISHNAN AND ORS.

An agreement among shareholders restricting transfer of shares is not binding on the company or shareholders unless such restriction is incorporated into the Articles of Association. Restrictions not specified in the Articles are unenforceable under Company law.

Parties
Appellant: V. B. Rangaraj; Respondents: V. B. Gopalakrishnan and Ors.
Jurisdiction
India
Judgment Date
28 November 1991
Procedural Posture
Civil Appeal / Supreme Court Judgment on Appeal From Madras High Court
Outcome
Appeals allowed. Decree of High Court set aside. Plaintiffs' suit dismissed with costs.
Legal Topics
Transfer of Shares, Articles of Association, Restriction on Transfer, Private Agreements Among Shareholders
Company Law Transfer of Shares Articles of Association Restriction on Transfer Private Agreements Among Shareholders

Case Brief

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Parties

V. B. Rangaraj

Appellant

V. B. Gopalakrishnan and Ors.

Respondents

Procedural Posture

Civil Appeal / Supreme Court Judgment on Appeal From Madras High Court

Legal Issues

  1. 1 Whether an agreement among shareholders restricting transfer of shares is binding when not incorporated in Articles of Association
  2. 2 Nature of shareholder's right to transfer shares
  3. 3 Extent and application of restrictions on transfer under Companies Act and Articles of Association

Ratio Decidendi

An agreement among shareholders restricting transfer of shares is not binding on the company or shareholders unless such restriction is incorporated into the Articles of Association. Restrictions not specified in the Articles are unenforceable under Company law.

Court Disposition

Appeals allowed. Decree of High Court set aside. Plaintiffs' suit dismissed with costs.

Orders

  • Plaintiffs' suit dismissed
  • High Court decree set aside