Appellate Tribunal Confirms NCLT Jurisdiction on SBI Share Disputes, Upholds Companies Act 2013 Compliance, SEBI Regulations

The Appellate Tribunal affirmed the National Company Law Tribunal's jurisdiction over disputes involving State Bank of India (SBI) shares, upheld the applicability of the Companies Act, 2013 to SBI for share transfers, and directed compliance with SEBI regulations for transferring shares with mismatched signatures. The appeal was disposed of with specific directions to ensure proper share transfer, maintaining the impugned order and emphasizing adherence to regulatory guidelines.

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Issues Involved:
1. Jurisdiction of NCLT over disputes involving State Bank of India (SBI) shares.
2. Applicability of Companies Act, 2013 to SBI.
3. Validity of transfer of shares with mismatched signatures.
4. Compliance with SEBI regulations regarding transfer of shares.

Issue-Wise Detailed Analysis:

1. Jurisdiction of NCLT over disputes involving State Bank of India (SBI) shares:

The appellants contended that the National Company Law Tribunal (NCLT) lacked jurisdiction to entertain disputes pertaining to the transfer of equity shares issued by SBI, as SBI is not a company registered under the Companies Act but a body corporate constituted under the State Bank of India Act, 1955. This argument was supported by a previous Company Law Board (CLB) decision in the case of Tirupati Trade Communication Vs SBI. However, the NCLT held that it had jurisdiction, citing Section 1(4) of the Companies Act, 2013, which states that the provisions of the Act apply to banking companies except where inconsistent with the Banking Regulation Act, 1949. The NCLT also referenced the fact that SBI, being listed on stock exchanges, follows procedures prescribed under the Companies Act for share transfers. The Appellate Tribunal upheld this view, affirming that NCLT has jurisdiction over such disputes.

2. Applicability of Companies Act, 2013 to SBI:

The appellants argued that the Companies Act, 2013 does not apply to SBI due to its incorporation under the State Bank of India Act, 1955. The respondent countered that the Companies Act provisions apply to SBI to the extent they are not inconsistent with the SBI Act. The NCLT found that SBI, being a listed entity, follows the Companies Act for share transfers and is thus subject to its provisions. The Tribunal noted that SBI uses share transfer forms prescribed under the Companies Act and has a higher responsibility to its stakeholders. The Appellate Tribunal agreed, stating that SBI is a company within the meaning of the Companies Act for the purpose of transferring securities.

3. Validity of transfer of shares with mismatched signatures:

The appellants argued that shares could only be transferred with valid execution and proper signatures of the registered holder, and the NCLT cannot decide on issues of signature mismatch. The respondent maintained that they were the bona fide purchaser of the shares, which were lodged for transfer but rejected due to signature mismatch. The NCLT noted that the transferor did not contest the transfer, and the respondent had followed due process. The Tribunal referenced SEBI guidelines and circulars addressing the issue of signature mismatches, which allow for the transfer of shares if the transferor cannot be traced or does not cooperate. The Appellate Tribunal directed that the shares be transferred following SEBI Circular No. SEBI/HO/MIRSD/DOS3/CIR/P/2018/139 dated 6th November 2018, which outlines procedures for dealing with signature mismatches.

4. Compliance with SEBI regulations regarding transfer of shares:

The Tribunal emphasized the importance of complying with SEBI regulations, particularly the circular addressing the transfer of securities in cases of signature mismatch. The circular mandates procedures such as obtaining indemnity bonds, verifying documents, and publishing advertisements to notify potential objections. The Appellate Tribunal directed the parties to follow these procedures, with any expenses incurred to be borne by the respondent.

Conclusion:

The Appellate Tribunal upheld the NCLT's jurisdiction over the dispute, affirmed the applicability of the Companies Act to SBI for share transfers, and directed compliance with SEBI regulations for transferring shares with mismatched signatures. The appeal was disposed of with specific directions to ensure the proper transfer of shares, maintaining the impugned order and emphasizing adherence to regulatory guidelines.

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