2017 (7) TMI 147 - Tri - Companies Law

Issue of duplicate shares on lost share certificates - Transfer and transmission of securities - Held that - In the case on hand, the dispute is relating to the title of 20000 equity shares of ₹ 2/- each of 1st Respondent Company between the Petitioner and 5th Respondent. Such title disputes cannot be decided by the Company Law Tribunal and it can only be decided by a Civil Court. Section 430 of the Act only says that the Civil Court s jurisdiction is ousted only in respect of matters which the Tribunal is empowered to determine. In the case on hand, in view of the complicated question of title to the disputed shares to the disputed shares between the Petitioner and the 5th Respondent is involved, this Tribunal cannot agitate upon the said issue. More so, there is no specific provision in the Companies Act which envisage the Tribunal to give a direction to the 1st Respondent Company to issue duplicate shares. It is already said that the relief sought by the Petitioner does not come under the provisions of Sections 58 and 59 of the Act. In the Petition there are no allegation made against the 2nd Respondent. But in the Rejoinder filed by the Petitioner, allegations were made against the 2nd Respondent that he colluded with the 5th Respondent and brought into existence some forged and fabricated documents. No material is placed on record by the Petitioner to substantiate such wild allegations involving 2nd Respondent. More so, the Petitioner did not seek any relief against the 2nd Respondent. Moreover, there is no basis to grant any relief in this application against 2nd Respondent. More so, the Main Petition itself is misconceived, considering the prayer made by the Petitioner.

Summary

Issues Involved:
1. Entitlement of the petitioner to a direction for issuing duplicate shares.
2. Jurisdiction of the Tribunal to pass orders for issuing duplicate shares.
3. Role and involvement of the second respondent in the dispute.
4. Resolution of title disputes over shares between the petitioner and the fifth respondent.

Detailed Analysis:

Issue 1: Entitlement of the Petitioner to a Direction for Issuing Duplicate Shares
The petitioner, a shareholder of Symphony Limited, sought a direction for issuing duplicate shares for 21,500 equity shares and the release of unclaimed dividends. The petitioner claimed that the share certificates were misplaced and had requested the issuance of duplicates from the company and its share transfer agent. The first respondent (Symphony Limited) and the third respondent (share transfer agent) required the petitioner to provide certain documents and attend their office in person. The petitioner complied but was informed that the shares were previously sold in 1997, and the transfer was refused due to insufficient stamp duty. The fifth respondent claimed ownership of the shares, having purchased them from the petitioner in 1997, and had filed a civil suit for declaration and injunction. The Tribunal noted that the petitioner's name continued to appear in the Register of Members, annual returns, and the list of unpaid dividends, but the issuance of duplicate shares was denied due to the ongoing dispute.

Issue 2: Jurisdiction of the Tribunal to Pass Orders for Issuing Duplicate Shares
The Tribunal examined the relevant sections of the Companies Act, 2013—Sections 56, 58, and 59. Section 58 pertains to the refusal of registration of transfer and does not apply as the company did not refuse to register the petitioner's name. Section 59 deals with the rectification of the Register of Members, which was not applicable as the petitioner's case did not fall under its categories. Section 56, which governs the transfer and transmission of securities, indicates that the power to issue duplicate shares lies with the Board of the company. The Tribunal concluded that it did not have the authority to direct the company to issue duplicate shares, as this power is vested in the company's Board. The Tribunal also noted that the petitioner did not provide sufficient evidence of the loss of share certificates or report the loss to the police, which further complicated the matter.

Issue 3: Role and Involvement of the Second Respondent in the Dispute
The second respondent, the Company Secretary of Symphony Limited, sought to be struck off from the array of parties, claiming no involvement in the dispute between the petitioner and the fifth respondent. The Tribunal noted that no specific allegations were made against the second respondent in the petition, and the allegations made in the rejoinder were unsubstantiated. Consequently, the Tribunal found no basis to grant any relief against the second respondent and closed the application seeking his removal from the proceedings.

Issue 4: Resolution of Title Disputes Over Shares Between the Petitioner and the Fifth Respondent
The Tribunal recognized that the dispute involved complicated questions of title to the shares, which are beyond its jurisdiction and should be adjudicated by a Civil Court. The Tribunal referred to the legal precedent set by the Delhi High Court and the Supreme Court, which established that matters involving rectification of the Register of Members fall under the exclusive jurisdiction of the Company Court, but issues of title, fraud, or forgery must be resolved by a Civil Court. Given the ongoing civil suit filed by the fifth respondent, the Tribunal directed the parties to pursue their claims in the Civil Court.

Conclusion:
The petition was dismissed, with the Tribunal directing the parties to bear their own costs and pursue their rights in the pending civil suit or any other civil suit if advised. The application to strike off the second respondent's name was closed, and the petitioner's application for adjournment was dismissed as infructuous.