2010 (11) TMI 848 - Board - Companies Law

Issues Involved:
1. Legitimacy of the petitioner's claim to 650 shares of Respondent No. 1 Company.
2. Loss and subsequent non-traceability of transfer deeds.
3. Validity and procedure for transfer of shares without original transfer deeds.
4. Entitlement to new shares issued under the scheme of demerger.
5. Entitlement to bonus shares issued post-demerger.
6. Implementation of the court's order regarding physical and dematerialized shares.

Detailed Analysis:

1. Legitimacy of the Petitioner's Claim to 650 Shares:
The petitioner purchased 650 shares of Respondent No. 1 Company on 4-10-1999 through a broker, who issued Bill No. 1131 for Rs. 1,12,635. The petitioner received the share certificates and transfer deeds, becoming a bona fide buyer entitled to transfer and benefits from the shares. The petitioner completed the transferee portion and lodged the shares for transfer.

2. Loss and Subsequent Non-Traceability of Transfer Deeds:
During home renovation, the transfer deeds were lost. The petitioner filed a police complaint on 22-5-2000. New transfer deeds for 229 shares were obtained, but not for the remaining 421 shares. The petitioner informed Respondent No. 1 about the loss and requested a stop transfer mark and guidance under section 108 of the Companies Act, 1956.

3. Validity and Procedure for Transfer of Shares Without Original Transfer Deeds:
Respondent No. 3 informed the petitioner that old share certificates were invalid due to a scheme of arrangement approved by the Bombay High Court, which issued new certificates without surrendering old ones. The petitioner sought an injunction from the City Civil Court, Ahmedabad, and later filed a petition before the Company Law Board (CLB).

4. Entitlement to New Shares Issued Under the Scheme of Demerger:
The petitioner claimed entitlement to new shares under the demerger scheme approved by the Bombay High Court, as a bona fide buyer before the record date. The petitioner argued that transferors, who sold their original shares, held the new shares as trustees and had no right to them.

5. Entitlement to Bonus Shares Issued Post-Demerger:
The petitioner claimed entitlement to bonus shares issued in 2006 and 2008, arguing that transferors had no right to retain them. The petitioner sought recognition of his title over the original and bonus shares.

6. Implementation of the Court's Order Regarding Physical and Dematerialized Shares:
Respondent No. 1 admitted the issuance of new shares to registered holders as per the High Court's order. The company acknowledged the petitioner's claim to 30 shares in physical form and stated that dematerialized shares were beyond its control. The court directed Respondents to rectify the Register of Members, insert the petitioner's name, and issue share certificates within 60 days, subject to indemnity. For dematerialized shares, Respondent No. 10 was to notify relevant parties and decide on the petitioner's claim after due process.

Conclusion:
The court found the petitioner to be the rightful owner of the shares and directed Respondents to rectify the records and issue share certificates for physical shares, while dematerialized shares required further notification and decision by Respondent No. 10. The petition was disposed of with these directions.

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