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TMI Blog2020 (2) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares at a fair market value of Rs. 80 per share to the appellant and his family members. 5. In the meeting, it was resolved that the 3rd respondent was authorised to do all that was necessary for the completion of the transfer of the shares. The 3rd respondent was also authorised to invite the appellant and members of his family to join the Board of the 2nd respondent company and to obtain necessary consent for the transfer of the shares. 6. Thus, 12,020 equity shares in the 2nd respondent Company were proposed to be transferred to the appellant and his family for a total consideration of Rs. 9,61,600/-. The appellant and his family also paid the entire sale consideration to the 3rd respondent pursuant to the aforesaid Board Meeting of the 2nd respondent company. 7. It appears that the original of 500 equity shares which were jointly held in the name of the 1st and the another person named Shri Girish Chimanlal Parikh bearing distinctive numbers 1021 to 1520 covered by Share Certificate No. 13 to 17 were never handed over to the 3rd respondent for transfer to the appellant and his family. The 3rd respondent therefore called upon the 1st respondent to hand over the same to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks, informed the 1st respondent that the shares had already been transferred pursuant to an agreement entered earlier and it was for the 1st respondent to contact the 3rd respondent and the 4th respondent Chartered Accountant in this regard. Meanwhile, the 2nd respondent company also became a public limited company effect from 13.10.1997. 17. Under these circumstances, the 1strespondent issued a legal notice dated 3.10.1997 and 16.12.1997 and called upon the 2nd respondent company to transfer the shares denying any previous arrangement/agreement to transfer be 500 shares in favour of the appellant or his family through the 3rd respondent. 18. Since the 2nd respondent declined to transfer the 500 shares as demanded by the 1st respondent, the 1st respondent filed C.P.No. 7/111S.R.B/1999 under Section 111 of the Companies Act, 1956. 19. The 1st respondent therefore prayed for a direction against the 2nd respondent company to transfer 500 equity shares covered by Certificate No 13 to 17 in favour of the 1st respondent and to rectify the register of members of the 2nd respondent company in respect of the shares and to award costs in the said petition. 20. The Company Law Board has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the consequential transfer effected by the 3rd respondent in favour of the appellant and his family to the extent of 500 shares was not valid though by letter dated 11/08/1995 the 3rd respondent had requested for the original share certificate along with the share transfer form in respect of the subject shares to be handed over to the appellant by the 1st respondent herein. 26. I have heard learned counsel for the appellant Mr. TK Bhaskar and Mr.V.Venkadasalam, learned counsel for the the 2nd respondent company. Though the contesting respondent namely the 1st respondent had engaged M/s.Shah & Shah there was no representation on behalf when the case was taken up for hearing on 15.11.2019 and thereafter on 29.11.2019. The case was reserved for passing orders on 29.11.2019. 27. The other respondents namely 3rd and the 4th respondent also have not been represented. Under these circumstances, I am constrained to dispose the appeal without the assistance of the 1st respondent, 3rd & 4th respondent based on available records. 28. At the time of admission of the appeal this court had framed the following questions of law for the purpose of disposal of the appeal under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent company. 34. Under these circumstances, the appellant and his family paid a sum of Rs. 9,61,600/-to the 3rd respondent towards the purchase of 12,020 equity shares of the 2nd respondent company. 35. The 3rd respondent who was responsible for effecting the transfer of all the share, including the share of the 1st respondent transferred all the shares in the 2nd respondent company in favour of the appellant and his family. 36. However, from a reading of the records of the case it is evident that though the erstwhile Board of Directors of the 2nd respondent company had decided to offload the entire share in the 2nd respondent company in favour of the appellant and his family and that the 3rd respondent was authorised to do all that was necessary to implement the decision taken by the Board of Directors on 20.4.1992, the 1st respondent had failed to cooperate in this regard. 37. The 1st respondent appears to have failed to hand over 500 shares and the share transfer form to the 3rd respondent, though it is the case of the appellant that the 500 shares had been misplaced in the registered office of the 2nd respondent company which incidentally was at that time at the 1st res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3rd respondent earlier with the help of duplicate shares which she had already procured by misrepresenting the facts on 15.09.1995. 44. Unaware of the transfer and issue of the duplicate shares, the 1st respondent responded by a letter dated 16.8.1995 and alluded to a telephonic conversation with the 3rd respondent and stated that when the 3rd respondent had taken controlling interest in the 2nd respondent company, he had retained 500 shares as the 2nd respondent company was to operate from the 1st respondent's premises till the 3rd respondent found an alternate office premises for doing the business and also for the purpose of IATA to show that he was still connected with the 2nd respondent so that there was no need for a fresh appraisal. 45. Thus, it is evident when the 3rd respondent approached with the proposal to offload the shares in favour of the appellant and his family to the 1st respondent when the company was still occupying the 1st respondent's premises and therefore the 1st respondent did not wish to part with the 500 shares at that time. Thus, he has exercised the rights over the shares. He has also indicated that he was willing to transfer the shares to the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the 1st and the 3rd respondent regarding the amount to be paid inter se has remained unsettled. Since the 3rd respondent failed to pay the amount, the 1strespondent has refused to part with 500 shares. Therefore, the transfer of shares to the appellant with the help of duplicate shares cannot be sustained. The 3rd respondent could not transfer 500 shares of the 1st respondent to Shri Girish Chimanlal Parikh. Therefore, the 1st respondent was justified in filing the said company petition before the Company Law Board by the 1st Respondent. 53. I therefore find no reasons to interfere with the impugned order of the Company Law Board. Further, the issue of duplicate shares also accompanied a letter of indemnity from the 3rd respondent to indemnify the 2nd respondent company on account of any adverse orders/consequences arising out of issue of duplicate shares. Therefore, it is for the appellant and the 2nd respondent to work out their remedy against the 3rd respondent. 54. Therefore, while dismissing the present appeal, liberty is given to the appellant to approach the civil court to recover the amount from the 3rd respondent on account of the fraud played by her in obtaining d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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