2018 (5) TMI 1995 - Tri - Companies Law

Time Limitation - Transfer of Shares - rectification in Register of members by deleting the name of the second respondent or any person in respect of the shares mentioned in schedule 1 - payment of dividend to the petitioner in respect of the shares mentioned in schedule 1 since 1998 to till date - awarding cost and damages. HELD THAT - Since the Petitioner has not filed any authentic proof to show that the share transfer deeds and original share certificates were lodged with RI, the accrual of right to the petitioner to approach this Tribunal under Section 11 IA of the Companies Act, 1956 does not arise at all. Time Limitation - HELD THAT - Even if it is assumed that the Petitioner has a right to file this petition, according to her the lodgement of shares along with the transfer deeds was made on 10.05.1998, legal notice was issued by her on 12.03.1999 calling upon RI company to transfer the shares in her favour, Civil Suit in O.S. No. 73 of 99 on the file of Junior Civil Judge, Kamareddy was filed on 16.09.1999 without impleading R2 herein in whose name all 700 shares were already transferred, subsequently many of those 550 shares were dematerialised and sold to third parties by R2, the said Civil suit was dismissed, thereafter this Petitioner has filed this petition only on 10.08.2011 i.e. after a period of 13 years of lodgement of shares, Whereas under Section 11 IA, the petition has to be filed within a period of 60 days of lodgement of transfer documents, at this point of time much water has flown under the bridge, hence this Tribunal could not come to the rescue of the Petitioner. The petition is not only barred by limitation but also suffers from delay and laches. On the date of filing this petition the shares were transferred to many third parties, however only R2 is shown as respondent as if all the shares are held by him only. In view of this, the petition has to fail on the count of misjoinder of parties. As far as the third parties are concerned, it is not possible to identify the present owner of the shares due to dematerialization. The RI company says that the remaining 150 shares in physical form which now swelled into 1837 which are noted as Stop Transfer on the file of the company, presently registered in the name of R2 which is questioned by the Petitioner and claimed as belonging to the Petitioner, could not be declared as belonging to the Petitioner, under the summary proceedings since it is a dispute relating to ownership of shares between two parties, and the proper forum for deciding the title to shares is only a Civil Court and not a Tribunal. Petition dismissed.

Summary

Issues:
1. Transfer of shares declared illegal and void
2. Directing respondent to rectify register of members
3. Claim for dividend payment
4. Allegations of fraud in transfer of shares
5. Application of Section 11 IA of the Companies Act, 1956
6. Lack of proof of delivery of transfer deeds
7. Allegations of forged documents by petitioner
8. Barred by limitation and delay in filing petition
9. Misjoinder of parties
10. Dispute over ownership of shares due to dematerialization

Analysis:
1. The petitioner sought various reliefs, including a declaration of the transfer of shares as illegal and void, rectification of the register of members, payment of dividends, and costs. The petitioner alleged that despite sending transfer deeds and original share certificates to the company, the shares were not transferred in her name. Legal proceedings ensued, including a civil suit, which eventually led to the petitioner approaching the Tribunal under Section 11 IA of the Companies Act, 1956.

2. The respondent company denied receiving the shares for transfer, questioned the authenticity of the documents submitted by the petitioner, and claimed that the shares were transferred to another party in a legitimate manner. The respondent highlighted discrepancies in the petitioner's documents and emphasized that the petitioner failed to provide proof of lodging the shares for transfer.

3. The Tribunal analyzed the application of Section 11 IA, emphasizing the requirement for the petitioner to prove that the company unjustly refused to register the share transfer within the stipulated period. Due to the lack of concrete evidence of delivery of transfer deeds, the Tribunal found the petitioner's claim unsubstantiated and concluded that the right to approach the Tribunal did not arise.

4. The Tribunal delved into the allegations of fraud in the transfer of shares, discrepancies in documents, and the subsequent transfer of shares to third parties. It noted the complexity of the case involving multiple legal proceedings, dematerialization of shares, and the challenge in identifying the current owners of the disputed shares.

5. Ultimately, the Tribunal dismissed the petition, citing issues of limitation, delay, misjoinder of parties, and the nature of the dispute as requiring adjudication in a civil court rather than a summary proceeding before the Tribunal. The decision highlighted the intricate legal issues surrounding the ownership and transfer of shares, underscoring the limitations of the Tribunal's jurisdiction in resolving complex disputes of this nature.