Beneficial ownership of dematerialised shares must be proved to lift attachment in execution proceedings.

Attached dematerialised shares were not released because the applicants failed to prove a bona fide and valid beneficial ownership. The High Court noted that no contract notes, proof of consideration or other independent material established completed transactions, and the shares remained reflected in the judgment debtor's demat accounts; the explanation of client holdings or transfers was found unsupported. It also confirmed that an objection to attachment was maintainable under Order 21 Rule 58 CPC, since the executing court may decide claims involving right, title and interest. The attachment was therefore upheld, subject only to the limited clarification recorded for one joint demat account.

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Issues: Whether the applicants established a bona fide and valid title to the dematerialised shares so as to justify release of the shares from attachment in execution proceedings, and whether the objection to attachment was maintainable under Order 21 Rule 58 of the Code of Civil Procedure, 1908.

Analysis: The applicants, who were closely related to the judgment debtor, asserted that the attached shares had been purchased by them, but the record contained no contract notes, no proof of consideration and no independent material showing completed transactions. The shares stood in the dematerialised accounts of the judgment debtor, and the explanation that they had been held or transferred for clients was found unsupported and implausible. Reference to the Depositories Act, 1996 showed that securities are held in fungible form and that beneficial ownership arises only through a valid depository mechanism; the applicants failed to prove any such beneficial ownership. The objection was nevertheless maintainable under Order 21 Rule 58 of the Code of Civil Procedure, 1908, because the executing court can decide claims and objections to attachment, including questions of right, title and interest.

Conclusion: The applicants failed to prove a bona fide or valid right to the attached shares, and the claim for lifting the attachment was rejected, subject only to the limited clarification regarding the joint demat account.

Final Conclusion: The attachment in execution was upheld, and the chamber summons was dismissed except for the limited protection recorded in relation to one joint demat account.

Ratio Decidendi: A claim for release of attached dematerialised securities can succeed only on proof of a valid transaction and resulting beneficial ownership; in the absence of proof of consideration, contract notes or other independent evidence of title, the attachment will not be lifted.

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