1998 (4) TMI 450 - Commission - Companies Law

Dismissed appeal over share registration refusal due to tax attachment & ownership dispute

The appeal was dismissed by the Calcutta District Forum as the company had valid reasons to refuse share registration due to attachment by the Income-tax ... Deficiency in service Issues:1. Dispute regarding registration of shares due to attachment by income-tax authority.2. Allegation of bad delivery and loss suffered by the appellant.3. Denial of consideration by opposite Party No. 1.4. Dispute between appellant and opposite Party No. 2 regarding purchase of shares.5. Failure to prove payment for purchase of disputed shares.6. Need for involvement of actual owners of shares in the proceedings.7. Determination of deficiency of service by opposite parties.Analysis:The appeal in this case was against the dismissal of a complaint by the Calcutta District Forum, where the appellant, a registered shareholder of a company, alleged bad delivery of shares leading to a loss of Rs. 25,000. The appellant claimed compensation of Rs. 31,000 from the opposite parties. The forum held that the company had valid grounds to refuse registration of shares due to attachment by the Income-tax Department, and it could not decide the title dispute between the appellant and opposite Party No. 2.The key issue revolved around the purchase of shares by the appellant through opposite Party No. 2, with the company refusing registration due to attachment. The forum correctly determined that there was no deficiency in service on the company's part. The dispute primarily concerned the transaction between the appellant and opposite Party No. 2, who denied receiving any consideration for the shares. Despite references to bank entries, conclusive proof of payment was lacking.It was noted that opposite Party No. 2 likely had no title to the disputed shares and might have been a broker. However, without the actual owners being involved in the proceedings, it was deemed a matter for a civil court to decide. The absence of evidence regarding the purchase conditions and ownership raised doubts about the alleged transaction. As such, the forum rightly dismissed the case, as there was no proof of deficiency of service by the opposite parties.In conclusion, the judgment upheld the forum's decision to dismiss the appeal, emphasizing the need for clarity on ownership and transaction details, which could only be resolved in a civil court. The dismissal was without any costs, with the appeal being rejected on October 20, 1998.