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2019 (12) TMI 1466 - HC - Indian LawsSeeking appropriate directions to the National Stock Exchange of India Limited (NSEIL) for release of 1,00,000 shares of Reliance Industries Limited including all corporate benefits thereon on account of Fixed Deposit standing with NSEIL - HELD THAT - Clearly, given the manner in which fraudulent acts are undertaken under deceit and camouflage, if done with the affairs of a company/trust etc., the standard of proof required to prove such fraudulent conduct would necessarily be less stringent - it is manifest that Rommel has failed to place on record material facts without any plausible explanation. Rommel has failed to show that pursuant to sale of shares of Reliance Industries Limited which belonged to CRB Trustee Limited A/c CRB Mutual Fund the consideration was paid to CRB Trustee Limited. - Rommel has also failed to give details, namely, folio no./share Nos. of the shares of Reliance Industries Limited allegedly belonging to CRB Capital Markets Limited that were allegedly pledged to Rommel as claimed by Rommel. Hence, the defence sought to be given by Rommel about alleged execution of agreements dated 22.11.1995 and 24.4.1996 with CRB Capital Markets Limited cannot be accepted and appears to be make belief. NSEIL is directed to transfer 1,02,000 shares of Reliance Industries Limited with accumulated benefits including dividend, bonus shares etc. in favour of the applicant Committee formed by the court - Application allowed.
Issues Involved:
1. Entitlement to 1,00,000 shares of Reliance Industries Limited and ?43.75 lacs in Fixed Deposit. 2. Legitimacy of Rommel Investment Private Limited's claim and actions. 3. Validity of agreements between Rommel and CRB Capital Markets Limited. 4. Authority of the Special Committee to claim the shares and Fixed Deposit. Issue-wise Detailed Analysis: 1. Entitlement to 1,00,000 shares of Reliance Industries Limited and ?43.75 lacs in Fixed Deposit: The Special Committee, constituted by the court, filed an application for directions to the National Stock Exchange of India Limited (NSEIL) to release 1,00,000 shares of Reliance Industries Limited (RIL) and ?43.75 lacs in Fixed Deposit. The Committee argued that CRB Mutual Fund, managed by CRB Trustee Limited, was entitled to these shares and funds. The shares were initially sold by Rommel Investment Private Limited without proper authorization and the proceeds were used to purchase additional shares and invest in a Fixed Deposit. 2. Legitimacy of Rommel Investment Private Limited's claim and actions: Rommel claimed that they had agreements with CRB Capital Markets Limited, pledging 1,02,000 shares of RIL as security for loans given to CRB for the Arihant Mangal Scheme. They argued that due to CRB's default, they sold the pledged shares and used the proceeds to buy 1,00,000 shares of RIL and invest in a Fixed Deposit. However, the court found Rommel's evidence sketchy and unconvincing, noting the lack of detailed records and the failure to show that payment was made to CRB Trustee Limited from the sale of shares. 3. Validity of agreements between Rommel and CRB Capital Markets Limited: The court scrutinized the agreements dated 22.11.1995 and 24.4.1996, which Rommel claimed were the basis for their actions. The agreements lacked details such as share numbers and folios, and there was no evidence of the loans or consideration being paid by Rommel. The court also questioned why CRB Capital Markets Limited would pledge shares for a scheme that was already successful and well-subscribed. The court concluded that Rommel's defense based on these agreements was not credible. 4. Authority of the Special Committee to claim the shares and Fixed Deposit: The Special Committee was constituted by a court order to manage and wind up the CRB Mutual Fund's scheme. The court found that Rommel had dealt with shares belonging to CRB Trustee Limited a/c CRB Mutual Fund without proper authorization and failed to show that the sale proceeds were paid to CRB Trustee Limited. The court directed NSEIL to transfer the 1,02,000 shares of RIL and the Fixed Deposit amount to the Special Committee, rejecting Rommel's claims. Conclusion: The court allowed the application of the Special Committee, directing NSEIL to transfer 1,02,000 shares of RIL along with accumulated benefits and the Fixed Deposit amount of ?43.75 lacs to the Committee. The court found Rommel's claims and defenses unconvincing and lacking in credible evidence, leading to an adverse inference against Rommel. The application was disposed of accordingly.
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