AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 1748
X X X X Extracts X X X X
X X X X Extracts X X X X
....hares, if any, etc. 2. The brief facts of the case, as mentioned in the petition, which are relevant to the issue in question, are as follows : (1) Respondent No. 1 is a public company listed on the Bombay Stock Exchange and National Stock Exchange. Respondent No. 2 is the Registrar and share transfer agent of respondent No. 1. (2) The petitioner is represented by his mother and general power of attorney holder, Smt. Priti Rajesh Shah. The petitioner's father, late Shri Rajesh Himmatlal Shah died on September 12, 2003. (3) As on the date of his death, the petitioner's father was the owner of and held, inter alia, several stocks and securities solely in his own name as well as jointly with his wife, i. e., the petitioner's mother, Smt. Priti Rajesh Shah. These stocks and securities included 3,100 equity shares of respondent No. 1-company. (4) The petitioner's father left behind him surviving the petitioner, his wife, i. e., the petitioner's mother, Smt. Priti Shah, and his mother, i. e., the petitioner's paternal grandmother, Smt. Kantaben Shah. For a few years after the demise of Shri Rajesh Shah, there were serious dif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e fact that the duplicate shares and dematerialization of the schedule shares was done by respondent No. 1 in favour of and in the name of the petitioner's father in 2012-13, whereas, the petitioner's father had died on September 12, 2003. On the petitioner's mother's request for copies of certain relevant documents that had not yet been forwarded by respondent No. 2, by its letter dated April 17, 2015 respondent No. 2 forwarded some additional documents to the petitioner's mother. (8) After spending a few months in attempting to file police com plaints in Mumbai, the petitioner received legal advice to file a civil suit in Bangalore for a mandatory injunction to respondent No. 1-company to register the petitioner as the true and lawful owner of the schedule shares and to re-issue the schedule shares to the petitioner in dematerialized format and also to pay/hand over to the petitioner all benefits that arose from and/or on account of the schedule shares on or after September 12, 2003. Therefore, the petitioner's mother eventually filed a civil suit, O. S. No. 1201 of 2016, on February 10, 2016 against the respondents in the hon'ble City Civil C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e sole and absolute owner of the schedule shares ever since the date of his father's demise on September 12, 2003. The petitioner is, therefore, not entitled to not only have the schedule shares registered in his name as the sole owner thereof but is also entitled to all benefits that arose on account of the schedule shares including all dividends and bonus shares, if any, issued on or after September 12, 2003. The respondents have declined to register the petitioner as the owner of the schedule shares. The petitioner has submitted complaints to the police authorities and intends to seek the respondents' criminal prosecution for fraud, forgery, etc. (12) In the meantime, as respondent No. 1's shares are listed on the stock exchanges, the duplicate shares issued in lieu of the schedule shares have apparently been sold and innocent investors may have purchased the said duplicate shares. The petitioner reiterates that when the very issuing of the duplicate shares in lieu of the schedule shares is fraudulent, no law ful rights and/or entitlements can arise in respect of the schedule shares. Any loss that may be suffered by innocent investors who may have purchased ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by its letter dated July 9, 2012 and the respondents did not receive any objection from any persons of whatsoever. On August 14, 2012 a person name Rajesh H. Shah sent another letter to the second respondent stating that he had not received the new share certificates and other corporate benefits issued in time to time by the company due to the non-information of his new address and requested to send the entire new certificates to his newly registered address. (3) It is stated that the second respondent being the Registrar and transfer agents of the first respondent wrote a letter to Rajesh H. Shah inti mating that the old share certificate Nos. 335056 to 335086 for 3100 equity shares stood cancelled upon the issuance of new equity shares bearing Share Certificate No. 512246 upon amalgamation of the company. The new equity share certificates were sent by registered post on July 12, 2001 to Shri Rajesh H. Shah to his registered address and the same was not returned to the company. In addition, Share Certificate No. 2203 for 620 equity shares of McDowell Holdings Ltd., which was issued additionally against his 3,100 equity shares of United Spirits Ltd., consequent to demerge....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing stock exchange to intimate to its members accordingly by marking a copy to the BSE, NSE and the first respondent. (7) Since they had not received any objection from anybody, on February 8, 2013 the first respondent had passed a board resolution for issuance of new equity share certificates to Shri Rajesh H. Shah and other persons who have lost the original certificates. Accordingly, the following duplicate share certificates were issued to Rajesh Himmat bhai Shah (Rajesh H. Shah) : Folio No. MS144742, Certificate No. 571721, Distinctive Nos. 43536689 to 43539788, Nos. of shares : 3,100 of United Spirits Ltd. And thereafter, the second respondent received a letter dated March 9, 2013 along with dematerialization request form of Rajesh H. Shah and accordingly it was dematerialized. (8) By going through the documents produced by the petitioner, this respondent recollects that the petitioner had approached during January, 2013 and collected all the information about the issuance of duplicate shares from the second respondent. The petitioner had waited till the shares were sold by the original allottee Rajesh H. Shah and thereafter they had applie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....petitioner. (11) It is submitted that upon refusal by the respondents on February 11, 2015 the petitioner ought to have filed an application before this hon'ble Tribunal under section 58 of the Companies Act, 2013 within 60 days from the date of refusal. Being an illegal claim, the petitioner had knowingly approached the civil court vide O. S. No. 1201 of 2016 on the file hon'ble LIX Additional City Civil, Sessions Judge at Bangalore. The hon'ble Civil Judge vide his order dated November 2, 2016 upon perusing the petition and counter, had gone through the facts of the case on merits in detail and rejected the suit for want of jurisdiction. It is further submitted that the petitioner frustrated with their illegal claim in order to pressurize the respondents, the petitioner had also filed a private criminal complaint against the respondents clearly shows that the petitioners are not the true and lawful owner of the shares and the petitioner was only attempting to usurp money and all the averments and allegations made in the petition were invented for the purpose of this case and self-serving nature. 4. Heard Shri Dhananjay Joshi, learned counsel for the petiti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sad v. Mst. Saeedan [1952] All. LJ 406, wherein, the hon'ble Allahabad High Court had occasion to consider the legal effect of section 381 of the Indian Succession Act, 1925, and held that "the section raises a conclusive presumption against the debtors that the person in whose favour a succession certificate is granted is entitled to receive the debts specified therein. The debtors cannot challenge this fact. The presumption raised by the succession certificate being conclusive and absolute, it cannot be displaced even upon the ground of a previous decision to a contrary effect". The hon'ble Allahabad High Court also rejected the contention that the succession certificate was not binding on those who were not parties to the proceedings in which the said certificate was granted holding that : "It was urged that the debtors were not parties to the proceedings which resulted in the grant of the succession certificate. That is true. But succession certificate proceedings are, as against the debtors, in the nature of judgment in rem. They are binding to them whether they are represented in the proceedings or not". (5) The law laid down in Ganga Prasad v. Mst. Saeedan [....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m, which is also noted in Identity Card No. 296122 of the petitioner's father. The original of the same is surrendered to the authorities in Belgium for issuance of a fresh identity card. Hence, the same is not available with him. (2) Identity Card No. 590772407588 dated April 22, 2008 of the petitioner issued by the Belgium authorities, which bears the same address of Belgium, i. e., 81, Belgielei, 2018, Antwerpen, Belgium, as is recorded in the allotment application submitted to the respondent. The original of the same is surrendered to the authorities in Belgium for issuance of a fresh identity card. (3) Identity Card No. 591955219225 dated September 3, 2012 of the petitioner issued by the Belgium authorities. (4) Model 8 Form, dated September 3, 2009 of the petitioner issued by the Belgium authorities, which records the current address of Mumbai, i. e., 18, Prem Milan, 2nd Floor, 87B, Napean Sea Road, Mumbai-400 006 and other details of the petitioner including the petitioner's father's name, date of birth, etc. The original of the same is submitted to the Belgium Consulate Office at Mumbai. (5) Certificate issued by the Belgium C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oner is not, in any manner whatsoever, responsible for such fraud and cannot be made to suffer a loss on account of the respondents' actions, howsoever genuine : (a) The petitioner has not committed any breach of any duty owed to the respondents. The respondents, being the custodian of the schedule shares, owe a statutory duty to the petitioner to transmit the schedule shares to the petitioner as directed by the hon'ble Bombay High Court. (b) Compliance with prescribed procedure cannot absolve the respondents of their obligation to issue the schedule shares to the petitioner when the very issuance of duplicate shares by the respondents is, evidently, void in law. (c) Recently, in a judgment passed on July 3, 2018 in Civil Appeals Nos. 19426 and 19427 of 2017, Adesh Kaur v. Eicher Motors Ltd. [2018] 210 Comp Cas 719 (SC), in a case with strikingly similar facts, the hon'ble Supreme Court held that even if someone else's name is entered in the share register of the respondents in respect of the duplicate shares, such name must be cancelled as the very issuance of the duplicate shares is void in law. In this case, the hon'ble Supreme Cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ani Amma v. Kunjikutty Pillai Meenakshi Pillai [2000] 5 JT 336 ; [2000] 3 RRR 187 (SC). (iii) Palaniammal v. Chinnapillai [2010] CDJ 3806 (Mad). (iv) Kamalamma v. Remani [1987] CDJ 292 (Ker). (v) Munia Khatun alias Munia Bibi v. Smt. Sabana Bibi [2016] CDJ 556 (Cal). (vi) Master A. Sridhar v. A. Adivaralaxmi [1996] CDJ 382 (AP). (5) On November 5, 1992 Shri Rajesh H. Shah son of Himmat Bhai Shah applies for shares with respondent No. 1-company residing at No. B-2, 7th Floor, No. 454, Napean Sea Road, Bombay-400 006. 3,100 shares of respondent No. 1-company were allotted to the said Shri Rajesh H. Shah son of Himmat Bhai Shah with share certificates bearing Nos. 43536689 to 43539788. In the year 2001, upon amalgamation the old share certificates were cancelled and new share certificate were issued bearing No. 571721 to the original share allottee, namely, Shri Rajesh H. Shah son of Himmat Bhai Shah. (6) On June 30, 2012 Shri Rajesh H. Shah, son of Himmat Bhai Shah writes letter to respondent No. 2 being the Registrar and transfer agent with proof of address (Reliance Electricity Bill). On July 10, 2012 the second respondent being....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wards advertisement charges. (10) Undated letter received by respondent No. 2 on January 3, 2013 from original allottee enclosing self-attested copy of Ration Card issued by Maharashtra Government. On January 11, 2013 public notice issued by respondent No. 1-company stating loss of share certificate published both in English newspaper and Vernacular language newspaper. On February 19, 2013 minutes of the first respondent followed by letter by the second respondent informing issuance of duplicate to and in favour of the original allottee after following due procedures and guidelines provided by the SEBI. On March 9, 2013 original allottee through Swastika Investments Ltd., requests respondent No. 2-company for dematerialization of the physical share certificates. (11) The respondents had issued the duplicate shares after strictly following rules and procedures prescribed under the Act and Rules as well as the guidelines issued by the SEBI, hence, the same cannot be disputed by the petitioner and all the subsequent transfer also cannot be disputed or questioned by the petitioner in any manner. The respondents submit that after the allotment of duplicate shares and p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in law or on facts. Thus, after dismissal of the suit, the petitioner had approached this Tribunal with inordinate delay and without any basis on the claim. Therefore, learned counsel for the respondent urged the Tribunal to dis miss the company petition. 7. By perusal of the pleadings of both the parties, the following issues/ points arise for consideration : (1) Whether the impugned shares are issued in favour of the father of the petitioner (Rajesh Himmatlal Shah) by respondent No. 1-company ? (2) Whether the petitioner furnished requisite documents for trans mission of the schedule shares of the deceased father ? (3) What is the effect of succession certificate ? (4) Whether the respondent followed the prescribed procedure in issuing duplicate shares to respondent No. 3 ? (5) Whether the respondents are justified in refusing the transfer of the shares of the father of the petitioner ? (6) If so what is relief the petitioner is entitled to. 8. As narrated supra, it is not in dispute that respondent No. 1-company has issued the impugned shares and the only dispute is whether rejection of respondents Nos. 1 and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... procedure for transfer/transmission of shares in every articles of association of a company and company law. Transfer/ transmission of shares can be effected by the board of directors of a company only if they are satisfied that there is bona fide claim made by parties with supporting documents. In the instant case, shareholder is NRI and respondents Nos. 1 and 2 should be more careful while dealing with those shares unlike shares held by resident Indians. Merely following technical procedure like issuing public notification, taking certificate issued by Police, etc., is not enough. When original shareholder dies, only legal heir of original share holder can transact with respondents Nos. 1 and 3. The third respondent, so called Rajesh H. Shah (imposter) started making correspondence with respondent No. 2 vide his letter dated June 30, 2012 by intimating that his address has been changed and thus requested to effect change and extend pending corporate benefits on Registered Folio No. MS 144742. He did not say anything about the shares issued and no documents stated to have enclosed to the letter. Immediately, respondent No. 2 has effected change of address as requested vide letter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the fraud with initial request to change the address and thereafter got every information with active support of respondents Nos. 1 and 2. In order to escape the responsibility, the third respondent immediately dematerialized the shares in question with the support of the respondents. Admittedly, the third respondent did not produce any legal documents in support of his case except notarised Indemnity Bond, Police Certificate, etc., which would not prove that he was original share allottee. However, there is saving clause 4 for respondents Nos. 1 and 2, in the Indemnity Bond dated December 3, 2012 (pages 70 to 73) executed by respondent No. 3. And clause 4 reads as under : "4. In consideration of my request provided, I hereby agree to indemnify and keep indemnified the company at all times hereafter against all claims and demands that may be made on or against the company in respect of or in relation to the said original share certificate(s) by any party whatsoever as also against all claims, demands, damages, costs, and losses, expenses that the company may have to suffer or incur either in prosecution or in defence of any suit, claims or demands." Another affida....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to show that he is original shareholder of the impugned shares. Respondents Nos. 1 and 2 utterly failed to examine the bona fides of claim of respondent No. 3 and, on the contrary, contributed to the fraud and misrepresentation perpetuated by respondent No. 3. 17. The other question raised that the petition is barred by laches and limitation is not at all tenable. Admittedly, the father of the petitioner prematurely died intestate, at an young age in the year 2003, without settling the properties including the shares. Therefore, ultimately, the petitioner has taken appropriate legal action by filing succession certificate before the hon'ble High Court of Bombay and thereafter he filed a suit on rejection of plaint for lack of jurisdiction, the present petition is filed. Therefore, laches and limitation will not come in the way of claiming the estate of the deceased father of the petitioner basing on the succession certificate issued by a competent court as detailed supra. Once the petitioner established that shares were initially issued to the father of the petitioner, and he is the legal heir of Rajesh H. Shah to claim the shares in question, he is entitled to transmissio....