2011 (9) TMI 844 - Board - Companies Law

Share register rectification petition dismissed by CLB citing res judicata

SMC Share Brokers Ltd. Versus ITC Ltd.

The petition seeking rectification of share register for disputed 200 shares of R-1 company was dismissed by the Company Law Board (CLB) due to the ... Rectification of share register for the disputed 200 shares - the petitioner-company lost the above share certificates in transit on 12th November, 1995. Since the petitioner lost the share certificates, it wrote a letter dated 14th November, 1995 (Annexure 4) to R-1-company along with a photocopy of first information report ('FIR') lodged by the petitioner in the nearby police station requesting R-1-company not to transfer the said shares to any one in case anybody approaches for the transfer of the same. Responding to the same, R-1-company informed the petitioner on 5th January, 1996 (Annexure 5) that R-1-company has received the share transfer deed duly executed by R-3 in favour of R-4 of share certificate No.1216215 of 100 shares bearing distinctive No.130558868-967 and further stated that R-1 would transfer the same in favour of R-4 in case the petitioner fails to produce the stay order from court of law from transferring the same. The suit filed by the petitioner was dismissed on merits. It is the petitioner who moved civil suit before the civil court seeking reliefs on the self-same cause of action wherein it did not withdraw the suit stating that CLB has jurisdiction over the matter. It was not even taken as an issue in the judgment passed by the civil court. Since the issue has been already tried and adjudicated by a civil court in the suit supra between the same parties on the same cause of action the present petition is hit by res judicata as the petitioner is re-agitating over the self-same cause of action before this CLB on the ground that the CLB has the jurisdiction to try this case. - petition dismissed. Issues:1. Rectification of share register for disputed 200 shares of R-1 company under section 111A of the Companies Act, 1956.2. Whether the case is hit by res judicata.3. Whether the petitioner is a shareholder of the disputed 200 shares.Analysis:1. The petitioner sought directions for rectification of share register for disputed 200 shares of R-1 company. The petitioner, a company dealing in shares and securities, purchased 200 shares at Rs. 296 per share. After losing the share certificates in transit, the petitioner informed R-1 company and requested not to transfer the shares. R-1 company transferred the shares to other parties without a stay order from the court. The petitioner claimed entitlement over the shares and sought a declaration and mandatory injunction for invalidating the transfer and transferring the shares back. R-1 company defended its actions stating the shares were transferred legally as per the law.2. The issue of res judicata arose as the petitioner had previously filed a civil suit seeking similar reliefs on the same cause of action, which was dismissed by the civil court. The petitioner argued that the Company Law Board (CLB) had exclusive jurisdiction for rectifying the share register. However, the CLB held that the civil court's decision on the ownership of the disputed shares was final and the petitioner could not re-agitate the same cause of action before the CLB. The CLB found the petitioner's actions as forum shopping and dismissed the petition on the grounds of res judicata.3. Regarding the petitioner's status as a shareholder of the disputed 200 shares, the CLB did not adjudicate on this issue due to the application of res judicata. Since the first issue was decided against the petitioner and re-adjudicating the second issue would amount to reopening a case already decided by a competent forum, the CLB did not delve into the petitioner's shareholder status. Ultimately, the petition was dismissed without costs, and the application connected to it was closed based on the application of res judicata and the previous civil court judgment.