TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 555
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....gent directing them not to transfer shares held by the Petitioner in Respondent No. 4-Company-Dr. Reddy's Laboratories Limited. The Petitioner further seeks mandamus to issue him a duplicate share certificate. Brief facts :- 2. Since 1986 to 1997, Petitioner acquired shares, in tranches, of Respondent No. 4-Company. As on 10 May 1994, the total shares held by Petitioner of Respondent No. 4-Company in Folio No. A00450 was 900 shares. The Petitioner subsequently sold some of these shares. In April 2007, the shares of Rs. 10/- each of Respondent No. 4-Company were split into shares of Rs. 5/- each. After the bonus issue, these 900 shares became 1800. 3. On 19 January 2007, Respondent No. 5-Transfer Agent informed the Petitioner that he held 450 shares (before split-up) of Respondent No. 4-Company, whereas he had surrendered only 50 shares for subdivision. Therefore, a request was made to the Petitioner to surrender the shares certificate for the balance shares. There were proceedings initiated by the Petitioner by invoking the redressal mechanism of the Bombay Stock Exchange in this connection, but the same is not relevant for our purpose. Respondent No. 4-Company has issued divide....
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....details of the Shareholder, including his full postal address who arranged the duplicate certificates. In the event the shares are still held by the share holder as mentioned in the Annexure, you are hereby requested to put a stop transfer on these shares till this matter is resolved. We have appointed M/s. Giltedge InfoTech Services Pvt. Ltd. as an agency to co-ordinate with you for follow-up and completing the task of getting these securities transferred to our name. You are requested to address your correspondence to them at the address given below under intimation to the Exchange. M/s. Giltedge Infotech Services Pvt. Ltd. 2nd Floor, Bhajanlal Complex, Seth Bhajanlal Marg, Daulat Nagar, Borivali (E), Mumbai-400066. Tel No. 022-28900338 Fax No.: 022-28900793. We certainly hope that you will take our matter on priority and do the needful at the earliest." 7. It is important to note that the letter dated 4 October 2007 was never communicated to the Petitioner, and it was only on 8 May 2008 that Respondent No. 3-NSE informed the Petitioner that they are in possession of the original share certificate of the shares held by the Petitioner in Respondent No. 4-Company. Respon....
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....has not taken any steps as alleged in the impugned communication. The Petitioner submits that Respondent No. 4-Company has confirmed that even today the Petitioner is holding 1800 shares (450 original shares of Rs. 10/- each split into 900 shares of Rs. 5/- each and consequent to issue of bonus of 1:1, the shares held by the Petitioner was 1800 shares). The learned counsel further submitted that Respondent No. 3-NSE cannot take the plea of delay without asserting as to what right they have to issue the impugned communication when admittedly the documents relied upon by Respondent No. 3-NSE supports that the shares did not belong to the defaulting member. The learned counsel further submitted that the impugned communication is not an order or decision which would entail Respondent No. 3-NSE to contend on alternative remedy of approaching Securities Appellate Tribunal. The learned counsel further submitted that the shares are even today in his name as admitted by Respondent No. 4-Company and, therefore, he is entitled to file the present petition. The Petitioner, in his rejoinder, has denied having received any consideration on account of alleged transfer of these shares as contended....
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....which are brought to our notice during the course of the hearing. We make it clear that except for the documents which are brought to our notice and which are referred to in the present order, no other documents annexed to the proceedings or pleadings have been relied upon by the parties. Analysis & Conclusions:- 16. The first issue that must be addressed is whether a Writ would lie against Respondent No. 3-NSE. Respondent No. 3-NSE in their affidavit-in-reply in paragraph No. 5 have stated that they have been incorporated to facilitate, promote, assist, regulate and manage the public interest and dealings in securities of all kinds, and to provide specialized, advanced, and modern facilities for trading, clearing and settlement of securities with a high standard of integrity and honour and to ensure trading in transparent, fair and open manner. They have further stated that the object of Respondent No. 3-NSE is to develop, promote and maintain a healthy market in the best interest of the investors and the economy. They have regulatory and supervisory powers to regulate its members activities. The impugned communication dated 4 October 2007 states that "stop transfer" direction i....
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...., Respondent No. 3-NSE has not taken any steps to transfer these shares. Respondent No. 3-NSE has not brought to our notice any regulation which empower them to issue such impugned communication with respect to shares not constituting "assets" of the defaulting member. The issue before us is the legality of such impugned communication based on these admitted facts by which right to property of the Petitioner under Article 300A of the Constitution is infringed by an authority which is amenable to the writ jurisdiction. Therefore, contention raised by Respondent No. 3-NSE on this count also needs to be rejected. 19. Respondent No. 3-NSE has also raised a contention on the availability of alternate and efficacious remedy before the Securities Appellate Tribunal for redressal of the Petitioner's grievance and, therefore, on this count also it is submitted that the present petition is not maintainable. Respondent No. 3-NSE has relied upon Section 23L of the Securities Contracts (Regulation) Act, 1956 (SCRA) which provides for appeals to the Securities Appellate Tribunal against an order or decision of the recognised stock exchange. 20. In our view, Section 23L(1) provides for an appea....
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....No. 3-NSE is rejected. 22. The impugned communication dated 4 October 2007 directing Respondent No. 5 to stop the transfer of shares records that the securities held in the name of the Petitioner is withheld on account of default by trading member in making payment to the exchange and the Respondent No. 3-NSE is proposing to get these securities transferred in its name by invoking provisions of Section 108 of the Companies Act and for this purpose, an agent is being appointed to co-ordinate with the Respondent No. 5. 23. At the time of hearing, the counsel for the Respondent No. 3-NSE submitted that the share transfer forms were recovered from the defaulting members' office and pursuant thereto, the impugned communication is made to Respondent No. 5-Transfer Agent. The date of declaring the member as defaulter as per the notice published was August 1998 and one of the defaulting member named therein is Fiscal limited from whom, the share transfer forms were recovered. The learned counsel for the Respondent No. 3-NSE brought to our notice these Transfer Forms and submitted that the shares under consideration were transferred by the Petitioner for a consideration to Tata Trustees C....
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.... no locus, Respondent No. 3 has also not shown us any authority of law based on which assets not belonging to the defaulting member but allegedly belonging to some third party are sought to be restrained by the impugned communication. The Respondent No. 3 has also made a statement that they are not in a position to state whether they have compensated the transferees namely, Tata Trustees Co. Ltd. and Fidelity Investments Trust on account of these transactions. The Respondent No. 5-Transfer Agent and Respondent No. 4 being company of which the shares are under consideration have also not stated that any claim is made by any of the parties on these shares except the impugned communication. Even today, the shares stand in the name of the Petitioner in the company and the transfer agent's records. 27. We also fail to understand as to if these share transfer forms were recovered from the defaulting member in the year 1998, why Respondent No. 3-NSE did not transfer these shares in their name till today more so when according to them, they have recovered these transfer forms from the members who defaulted. This also indicates that the Respondent No. 3 very well knew that based on the....
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....e case of Respondent No. 3 that these assets belong to the defaulter based on the share transfer forms on which heavy reliance is placed. 30. Even otherwise, the Petitioner had made an application for issue of duplicate share certificate in April 2007 onwards to share Transfer Agent-Respondent No. 5. However, for the first time, the Petitioner came to know about the impugned communication dated 4 October 2007 was when the Respondent No. 5 rejected the application for issue of duplicate share certificate by referring to the impugned communication, a copy of which was enclosed with the said rejection letter dated 27 November 2007. Even in the impugned communication, nowhere has Respondent No. 3 stated that the share constitutes assets of the defaulting members and in subsequent letter only a statement is made without any basis. Post knowledge of the impugned communication, the Petitioner entered into the correspondence with the Respondent No. 3-NSE and denied that the Petitioner has received any duplicate share certificate. 31. There is not a single document that is produced by the Respondent No. 3-NSE to claim that the shares under consideration constitutes assets of the defaultin....