TMI Blog2010 (6) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... to the petitioner by virtue of right/bonus/split etc. from time to time from the date of allotment of said 100 shares till the time of transfer in favour of R-3, the Register of Members of the R-1 company be rectified by re-entering therein the name of petitioner as the member of the company by re-allotting the shares so transferred in favour of R-3. It has been prayed that in alternate the number of shares equal to the number of shares standing in the name of petitioner in register of members on the date prior to the date of transfer in the name of R-3 by purchasing the same from the open market be allotted and further to take appropriate disciplinary action against the R-1 2 and award cost of filing the instant petition in favour of the Petitioner and against the respondents. 2. The Petitioner's case is that the petitioner in this matter is the original allottee of 100 shares of R-1 which were issued to him in physical form bearing Share certificate No. 5998 with Distinctive No. from 599701 to 599800 with folio No. 0005998. The Petitioner thereafter had regularly received dividends from time to time. In the year 1992 the R-1 had given rights shares to its existing share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Demand Draft of ₹ 1000/- on 11.11.2006 favoring R-1 alongwith covering letter dated 13.11.2006, it was duly submitted by him to the R-2, duly acknowledged by the R-2 on 13.11.2006. 3. Further, it was pointed out that the R-2 vide another letter dated 18.11.2006, returned the documents submitted by the petitioner and again suggested some more requirements to be complied with by the Petitioner informing that the signature's differ from the specimen signature inspite of the Respondents itself having put the caution mark as pointed out in their letter dated 23/03/2006. It was contended that it is incorrect to state that at no point of time the Petitioner completed the formalities for issuance of duplicate certificates. It was contended that the submissions made by the Respondents are nothing but a bundle of lies being contrary to the records of the case. The petitioner fulfilled all the formalities including the signatures which were got attested from the Bank official. The duplicate shares certificates were not issued to the petitioner by the R-2. The company again returned the documents and issued fresh directions to be complied with by the petitioner. It was contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged transfer in the name of R-3. However, R-1 sent a reply dated 22.05.2008 to the legal notices dated 27.03.2008 and 09.04.2008 giving its justification for all the deeds, acts, action inactions of all the respondents. 4. It was contended that the Respondents had not only violated the statutory guidelines issued by SEBI but had also not approached the CLB with clean hands, they had suppressed/concealed the material facts from the CLB. It was specifically pointed out that vide SEBI guideline 5.2.2 the requirements mentioned by the Respondents, are not mandatory but optional and one such option has been exercised by the petitioner, which is deliberately concealed by the Respondents, that duly attested copy of Police Complaint was also submitted to the Respondent and in the present case the Petitioner cautioned the R-1 on 11/03/2008 but the Respondents violated the statutory guidelines especially SEBI guidelines No. 5.2.2 for RTI/SIA, thus under every circumstances it becomes clear that the Petitioner had complied with all the formalities for stopping such transfer but Respondent company did not pay any heed to it. The R-1 also violated SEBI guidelines No. 5.2.3 for RTI/STA and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was contended that R-3 is raising disputed questions of facts i.e. it was a cash transaction which cannot be looked into at this stage since the same is a matter of leading evidence and a matter of trial. No cheque or contract note had ever been executed in favour of petitioner, alleged transfer Deed dated 13.3.1987 is a forged document which prior to forging/fabricated by the R-3 was lost by the Petitioner, in respect where of NCR immediately upon coming to know about the loss of same was lodged on 11.5.2006. The R-1 2 have transferred the shares in favour of R-3 by violating various statutory/SEBI Guidelines for transferring the lost shares of the Petitioner. No actionable claim remains with R-3 after the elapse of 21 years as the same amounts to acquiescence/waiver and thus estoppel. 6. The counsel for the respondents contended that the petitioner has overlooked the legal provisions relating to issuance of duplicate share certificates and transfer of shares by a listed public company. The petition is an abuse of the process of law and is to be rejected summarily. It was pointed out that pursuant to the guidelines issued by SEBI for listed companies and their share transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provisions) Act, 1985 or any other law for the time being in force which is not the case in the instant petition. The provisions relating to transfer of shares by a listed public company are prescribed in section 108 of the Act and clause 3(b), 12(c) and 12A of the Listing Agreement. From the legal provisions, it is clear that the R-1, being a listed public company, is bound to transfer the shares in the name of the transferee when a proper instrument of transfer duly stamped and executed by on be half of the transfer or and the transferee has been delivered alongwith the share certificates and after transfer, to issue the share certificates with in one month of lodgment for transfer, except when the transferor objects to the transfer and serves on the company within a reasonable time a prohibitory order of a Court of competent jurisdiction. It is the R-1 company's case that since the R-3 had submitted a Share Transfer Form duly stamped and executed by the Petitioner as transferor and the R-3 as transferee, alongwith share Certificate in original, the transfer of shares in the name of the R-3 by the R-1 was in compliance with section 108 of the Act read with Clause 3(b), 12(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational Ltd. and Ors. v. Vijay Remedies Ltd. [1998] 93 Comp cas 547 (CLB). 11. R-3's case is that the petitioner had sold the shares to R-3 on 21st August 1987 and delivered the original share certificates along with share Transfer deed to the R-3. The petitioner had sold 100 shares bearing certificate No. 5999 of the R-1 Company to the R-3 on 21st August 1987 having Distinctive Nos. from 599701 to 599800. The said shares were delivered along with the share transfer deed duly signed by the Petitioner in presence of Sh. Ashok Kumar and Mr. Rakesh Kumar. Both Mr. Ashok Kumar and Mr. Rakesh Kumar had witnessed the signatures of the petitioner and of the R-3. It was submitted that the transaction was executed in the presence of the, witnesses who were close friends and living in the same area and the shares were handed over by the petitioner physically, hence there was no need of the Contract note. The consideration amount of ₹ 12/- per share was paid in cash on specific request of the petitioner as he needed the same urgently. Both the witnesses have sworn the affidavits that the transaction of sale of 100 equity shares of Unitech Ltd. took place in their presence at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven on specific asking by the petitioner for providing a copy of the documents submitted by R-3 for transfer, the same were not provided to the petitioner. Even the request for providing some more time to the petitioner to file the requisite documents was overlooked and transfer was done. The transfer has been executed without the contract note. Despite the petitioner's request for some more time to furnish the required documents for issuing of duplicate shares, the transfer was done in favour of R-3 on 31.03.2008 even after receipt of the requisite documents from the petitioner on 28.03.2008. The petitioner was informed later on 14.05.2008 that his shares had already been transferred to R-3 and that too not of its own but when the petitioner checked up the status of issuing of duplicate shares to him. There is no denying the fact that the signature which were allegedly not matching were also got attested from the Punjab National Bank, copy of the NCR as well as the requisite demand drafts and the requisite documents were provided repeatedly by the petitioner at the earliest possible. The petitioner's documents were returned and the transfer was done in favour of R-3 giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence not binding, is an incorrect interpretation of the provisions of Section 11B of the Act. Statutory provision has been made under Section 11B for SEBI to issue directions. These directions are binding on those for whom these have been issued. These guidelines have been admittedly issued for the sake of uniformity and consistency in the functioning of the RT1/STA and the companies. These are very much applicable to the R-1 company and are binding on it. It is noted that in the present case as rightly pointed out by the petitioner, the R-1 company has not followed the guidelines at Serial Nos. 5.2.2, 5.2.3 and 5.3 which read as under: Uniform guidelines to be followed by RTI/STA and companies for handling and processing of transfer documents. It is hereby directed that all registered Registrar to an Issue and Share Transfer Agents and Companies listed on Stock Exchanges shall mandatory follow these guidelines and formats with immediate effect. These directions are issued pursuant to powers conferred on SEBI under Section 11B of SEBI Act, 1992. 5.2.2 to give notice to the Registered holder to produce any of the following, which should necessarily mention the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of shares. But sub-Section (7) of Section 111A envisages that the provisions of Sub-sections (5), (7), (9), (10) and (12) of Section 111 shall, so far as may be, apply to the proceedings before the Company Law Board under Section 111A of the Act as they apply to the proceedings under section 111 of the Act. Section 111A has to be read in conjunction with Section 111 and cannot be read in isolation; by virtue to Section 111A (7), whilst exercising the powers under Section 111A, the Company Law Board is to decide the appeal by applying the provisions of Section 111(5), (7), (9), (10) and (12); the remedies of appeal and rectification are available to all kinds of shares in a public company under the provision to Section 111A (2) and 111A(3) read with Sub-section (7) of Section 111A, which would make applicable the provisions of Section 111(1), (2) and (4) by virtue of Section 111(5); Sub-section (14) of Section 111 cannot exclude the application of Sub-sections (1), (2) and (4) of Section 111 to shares held in a public company; as it would be in conflict with Section 28 of the Depositories Act; and Section 111A having been inserted in the Act, pursuant to the enactment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are substantial in nature and do not deal with the procedural aspects unlike as in the case of sub-section (10) prescribing the fee for every appear or application which may be made under sub-section (2) or sub-section (4) of section 111 and sub-sections (9) and (12) of section 111 being penal provisions. The statutory rights embodied in sub-sections (5) and (7) of section 111 shall apply to the extent possible to a petition under section 111A by virtue of sub-section (7) of section 111A. The CLB is go by the legislative intent, as reflected in sub-sections (5) and (7) of section 111A, which is already found to be substantial and not procedural in nature. Seeking rectification of the Registrar of Members and issuing of Duplicate shares in the present case is very well within the scope of Section 111A of the Act. The ingredients of Section 111A are very well attracted in the present case. 16. The respondents, contention that the Limitation Act, 1963 applies to the proceedings under section 111A(3) of the Act is tenable. The provisions of the Limitation Act, 1963, would apply. In a recent case ( Shobha Thampi V. Federal Bank Ltd. 2008 [142] Comp Cases 458 ) the applicability of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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