2010 (9) TMI 916 - Board - Companies Law

Issues:
1. Transfer of shares and issuance of relevant share certificates.
2. Release of dividend and other benefits accrued.
3. Entitlement to interest over accrued dividend.

Transfer of Shares and Issuance of Share Certificates:
The petitioner sought relief to direct the company to enter their name in the shareholder register and issue relevant share certificates. The petitioner purchased 700 equity shares in 1997, out of which 400 shares were initially returned due to bad delivery. After a legal battle, the petitioner received the shares and requested the company to transfer them in their name. The company required a certified copy of the court order for the transfer, as the shares were in demat form. Respondent No. 1 company explained the challenges in effecting the transfer due to the shares being in demat form and stated that unclaimed dividends would be handled as per the law. Ultimately, the company was directed to transfer 300 shares to the petitioner and update the shareholder register accordingly.

Release of Dividend and Other Benefits Accrued:
The petitioner claimed entitlement to dividend and benefits accrued on the shares. The company held the dividend entitlement on 300 shares in abeyance, citing reasons related to demat shares and legal obligations. The company argued against the payment of interest on the dividend, highlighting provisions of the Companies Act and the Depositories Act. The petitioner's counsel referenced a legal ruling to support their claim for interest on the accrued dividend. However, the company contended that they were not obligated to pay interest, given the circumstances of the transfer and the demat nature of the shares. The company was directed to release the dividend to the petitioner in accordance with the Companies Act, along with effecting the transfer of shares.

Entitlement to Interest Over Accrued Dividend:
The petitioner's counsel argued for interest on the dividend accrued, citing section 205A of the Companies Act and a legal precedent. The company, on the other hand, relied on company articles and statutory provisions to oppose the payment of interest. The company clarified that the delay in transferring shares was not due to their fault, as the shares were initially returned as defective. The judgment emphasized that the company was not at fault for the delay in transfer, as the shares were in demat form and the issue arose at the exchange level. Therefore, the petitioner was not entitled to claim interest over the accrued dividend. The judgment concluded that the petitioner was not eligible for interest on the dividend and directed the company to release the dividend as per the Companies Act.

In conclusion, the judgment addressed the issues of transfer of shares, issuance of share certificates, release of accrued dividend, and entitlement to interest over the dividend. It clarified the legal obligations of the company, the petitioner's claims, and the reasons behind the decision to allow the petition. The judgment provided a detailed analysis of the facts, legal arguments, and applicable laws to reach a fair and reasoned decision in favor of the petitioner regarding the transfer of shares and release of dividend benefits, while denying the claim for interest on the accrued dividend.

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