TaxTMI 
TaxTMI 
2015 (6) TMI 686
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....hares and also cost of the litigation. 2. The facts relevant for the purpose of the case may be summarized here as under :- 2.1 It is stated that the Petitioner Nos.1 and 2 jointly hold 100 shares in the Company. The Petitioner Nos-3 and 4 also jointly hold 50 shares in the Company. The said shares were registered in the name of the Petitioners since 30/04/1998 and since then they are the registered shareholders of the Company. 2.2 It is further stated that for convenience of dematerialization of the shares, the Petitioners decided to get the shares in a single name and, for the said purpose, on 18/02/1999 they sent to the Company the subject shares for transfer as under :- a. 100 shares jointly held by the Petitioner Nos.1 and 2 to a single name of the Petitioner No.1, and b. 50 shares jointly held by the Petitioner Nos.3 and 4 to a single name of the Petitioner No.3. 2.3 It is further averred that the above shares were not sent for sale but just for transfer from joint holding to single holding for the convenience of dematerialization only. It is stated that since the Petitioners did not receive back duly transferred shares in due course, on inquiry being made with the Comp....
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....is petition. 3. The Respondent No.1 Company appeared and filed its reply. In their reply, the Respondent No.1 Company (hereinafter referred to as "the Answering Respondent) has raised two preliminary issues/objections and sought dismissal of the Petition on those preliminary issues at the threshold stage. The first preliminary issue/objection raised by the Company is that the petition is bad for non-joinder of necessary party and second preliminary objection is that the C.P. is barred by law of limitation. On merits also, the Respondent No.1 denied all the allegations made by the Petitioners and prayed to dismiss this petition being frivolous and baseless. 4. In the reply filed on behalf of the Respondent No.1, it has been denied that the shares were intercepted in postal transit. According to the Answering Respondent, the Transfer Deeds were not destroyed in connivance with the Respondent No.2 as sought to be contended by the Petitioners, and, prima facie, the signatures on the TDs were not forged, and therefore, the answering respondent has rightfully transferred the subject shares in favour of the Respondent No.2 and, hence, no case is made out for grant of reliefs as prayed b....
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....tter, and the impleadment of NSDL as a party in this petition is not required for just and effective adjudication of the petition. It was, therefore, argued that the aforesaid first preliminary objection raised by the Answering Respondent deserves to be rejected being devoid of any substance. 9. I have considered the rival submissions. For the reasons stated by the Petitioners' Authorised Representative, in my opinion, the NSDL is neither a necessary party nor a proper party in this case. The said preliminary objection raised by the Answering Respondent is, therefore, rejected. 10. Next preliminary issue/objection taken by the Answering Respondent is that the subject shares were admittedly transferred In the name of the Respondent No.2 in the year 1999 and, thereafter, the Petitioner No.1 filed a civil suit in the year 1999 before Civil Court at Surat for restraining the Company from transferring the subject shares and not to issue duplicate share certificates. However, the said suit was dismissed in the year 2000 for want of jurisdiction. Being aggrieved by the said order of the Civil Court, an appeal was preferred by the Petitioner No.1 before the Appellate Court and that a....
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.... neglect of the company or the depository to transfer the shares. For this reason Sec.111(3) has not been incorporated in Sec.111A(7) which provides the manner in which the applications are to be decided by the CLB under Sec. IIIA. Sub-section (14) of Sec. 111 cannot exclude the application of sub-sections (1), (2) and (4) of Sec. 111 to shares held in a Public Company as it would then be in conflict with Sec.28 of the Depositories Act. Under this section, the law made under the Depositories Act is in addition to and not in derogation of any law which is/was in force at the time when the Depositories Act was enacted. Therefore, restriction contained In sub-sec. (14) of Sec.111 would not apply to transfer an ownership of the shares of the Public Company held in the form of share certificates. Construed in this manner, the provisions of sub-sec. (1) of Sec.111A would clearly mean that the remedy of rectification of register on transfer provided in Sec. I l l A would not be applicable to Private Companies. For the Private Limited Companies, the remedies of appeal and rectification would remain under Sections 111 (2), (3) and (4) of the Act. When an application is made under Sec.111 wi....
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....do not apply with respect to the petition filed under Section 111 of the Act, it is undisputed proposition of law that the doctrine of "delay" and "laches" applies to the proceedings filed under Section 111 of the Act. Despite having knowledge of dismissal of the Appeal and further not offering any explanation for delay of 7 years in filing the present Appeal, in my considered opinion, they are not entitled from any equitable and discretionary reliefs from this forum. 14. Now, looking to the issue as to limitation from the legal angle. From perusal of Section 111(4) of the Act, it is noted that the said provision although does not specifically provide the period of limitation, however, in my view, the provisions of the Limitation Act would apply in a petition filed under Section 111/ 111A of the Companies Act, 1956 as laid down in the case reported in (2004) CLC 1094. It is settled law that, if no limitation period is prescribed, in that case Article 137 of the Limitation Act shall be applicable. Therefore, in terms of Article 137 of the Limitation Act, 3 years period with effect from the date of cause of action would be available for an aggrieved party toy CLB for relief under Se....
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....ith the original share certificates. 18. In addition to the above, it Is submitted on behalf of the Petitioners that, on perusal of the share transfer deeds, it can be seen that the Company has committed negligence in giving effect for transfer of the shares on the basis of set of share transfer deeds produced by the Respondent No.2. According to the Ld. Authorised Representative appearing for the Petitioners, the signatures on the forged transfer deeds did not match with the signatures of the Petitioners. Referring the Guidelines of "Good" and "Bad Delivery" of NSE and Department of Company Affairs, the Ld. Authorised Representative appearing for the Petitioners has further cited the following instances to substantiate the Petitioners' allegation that the Respondent Company failed to exercise due diligence before effecting the transfer of shares. i) The Company failed to notice that the stock exchange always its stamp of settlement no. in which the particular shares were traded and delivered. The share transfer deeds-in-question, however, do not speak on which stock exchange the shares were traded. Moreover, inspite share broker stamp, the Company failed to notice the said b....
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....ting a letter to the transferor about the genuineness of signatures. It is, therefore, contended that the Company has not complied with the said guidelines and hurriedly transferred the Impugned shares in less than 15 days time in favour of the Respondent No.2. 21. It is further submitted that the names of the Petitioners in the covering letter for dispatch of the share transfer deeds executed by the Petitioners for transfer of the impugned shares from joint names to a single name were written through rubber stamp. According to the Ld. PCS, the Petitioners had practice to use rubber stamp only, as can be seen from the transfer deeds dated 4/09/1997 as well as covering letter sent to the Company, whereas on the forged transfer deeds names of the Petitioners are handwritten. 22. Lastly, it has been contended by the Petitioners that none appeared for the Respondent Nos.2 and 3 throughout in these proceedings and, therefore, the allegations made against them should be accepted, being unrebutted. 23. Based on the above, it was submitted on behalf of the Petitioners that the Company, without sufficient cause has removed the name of the Petitioners from its Register of Members an....