2015 (6) TMI 533 - Board - Companies Law

Rectification in Register of Members - Sections 58 and 59 of the Companies Act, 2013 - Indemnity Insurance Policy to cover risk related to certain losses including loss of shares - Held that - The Respondent Nos. 1 to 3 have stated therein that the Respondent No.l being neutral party having no vested interest in the subject matter of the Appeal have no objection of whatsoever nature, if the CLB pass a favourable order as prayed by the Appellant, the list of shares as on date being annexed to the Company Appeal. I have heard the parties and perused the record. Having considered the submissions advanced on behalf of the Parties and in the facts and circumstances of the case, the Appeal is allowed in terms of prayer 6.1 to 6.3 made in the Company Appeal, subject to furnishing an Indemnity Bond by the Appellant to the satisfaction of Respondent No.1 Company. The Respondent Nos.1 and 2 upon receiving such Indemnity Bond shall rectify its Register of Members by inserting the name of the Appellant Company in place of the Transferors of the respective shares. It is, however, made clear that this order shall not be treated as a precedent in other cases, keeping in view of the fact that the Respondent Nos. l to 3 have not opposed the prayer made by the Appellant in the Instant Company Appeal. - Decided in favour of appellant.

Issues:
1. Interpretation of Sections 58 and 59 of the Companies Act, 2013 regarding entitlement to shares and rectification of Register of Members.
2. Claim for original shares and benefits by the Appellant.
3. Circumstances surrounding the loss of shares and subsequent actions taken by the Insured.
4. Request for rectification of Register of Members and issuance of new share certificates.
5. Response of Respondents and their lack of objection.
6. Decision on the Appeal and conditions imposed.

Analysis:
1. The judgment revolves around the interpretation of Sections 58 and 59 of the Companies Act, 2013, concerning the entitlement to shares and rectification of the Register of Members. The Appellant sought orders to declare entitlement to original shares of the Respondents and requested rectification of the Register of Members to reflect the Appellant's ownership.

2. The Appellant claimed entitlement to 1450 original shares of Respondent No. 1, along with additional shares from Respondent No. 1 and Respondent No. 2. The Appellant requested rectification of the Register of Members and issuance of new share certificates, emphasizing the benefits due to them from the Respondents.

3. The circumstances leading to the claim involved the purchase of an indemnity insurance policy by the Insured in 1996, covering the risk of losses, including shares. A robbery incident in 1997 resulted in the loss of 1450 shares of Respondent No. 1, prompting the Insured to take immediate actions, including lodging a police complaint and requesting stop transfer of the shares.

4. The Appellant's request for rectification of the Register of Members and issuance of new share certificates stemmed from the loss of shares and subsequent legal actions taken. The judgment directed Respondent No. 1 and Respondent No. 2 to rectify the Register of Members by inserting the name of the Appellant and issuing new share certificates upon satisfaction of an Indemnity Bond.

5. The Respondents, except Respondent No. 1 and Respondent No. 3, did not appear in the proceedings. Respondent No. 1 expressed neutrality and no objection to the relief sought by the Appellant, facilitating the favorable order granted by the Company Law Board.

6. The judgment allowed the Appeal in favor of the Appellant, subject to the condition of providing an Indemnity Bond to Respondent No. 1. The decision highlighted that it should not set a precedent for future cases due to the lack of opposition from Respondents. The Company Appeal was disposed of with no order as to costs, concluding the legal proceedings.

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