2017 (7) TMI 225 - Tri - Companies Law

Issue duplicate shares in respect of the 5000 equity shares - seeking release of all benefits like bonus shares, etc. and to pass appropriate orders under Sections 58 and 59 of the Companies Act, 2013 and Rule 70 of the National Company Law Tribunal Rules, 2016 - Held that - There is a dispute whether the shares of the petitioner were, in fact, transferred by the petitioner in the year 1998 or not. On the basis of a transfer form, the shares were already transferred to Mr. Rajgopal BV. Therefore, the issue involved in this case is a disputed question of facts. Moreover, in this case, investigation by SEBI is also pending relating to certain suspicious share transactions that were undertaken by the third respondent and the transfer of shares of the petitioner is one such case. Therefore, pending investigation by SEBI also, it is not proper for this Tribunal to decide the issue. The petitioner did not choose to disclose in the petition that he has already approached SEBI for issuance of duplicate shares and the matter is pending there. It amounts to suppression of material fact since the order, if any, passed may be or may not be in consonance with the order, if any, passed by this Tribunal in this proceeding. Therefore, it is a fit case where the petitioner can approach the civil court. Further, the petitioner did not choose to implead the transferee of shares by name, Mr. Rajgopal BV, as a party to this petition. Any order of rectification of the register passed in this proceeding would have a direct effect on the interest of Mr. Rajgopal BV. Therefore, Mr. Rajgopal BV is not only a proper party, but also a necessary party to this proceeding. But, such person has not been impleaded as a party in this petition. In view of the above the petitioner is not entitled to any relief in this petition. This petition is dismissed.

Summary

Issues Involved:
1. Issuance of duplicate share certificates.
2. Entitlement to bonus shares.
3. Alleged fraudulent transfer of shares.
4. Jurisdiction of the Tribunal to order issuance of duplicate shares.
5. Rectification of the register of members.
6. Non-joinder of necessary parties.
7. Pending SEBI investigation.

Detailed Analysis:

1. Issuance of Duplicate Share Certificates:
The petitioner sought an order directing the company and the Transfer Agent to issue duplicate shares for 5000 equity shares. The Tribunal noted that under Section 56 of the Companies Act, 2013, the power to issue duplicate shares lies with the Board of the Company. The Tribunal emphasized that there is no provision in the Companies Act that authorizes the Tribunal to direct the issuance of duplicate shares. The petitioner failed to lodge a police complaint about the misplaced shares, which is a necessary step to claim duplicate shares.

2. Entitlement to Bonus Shares:
The petitioner claimed entitlement to 5000 bonus shares issued during the Annual General Meeting on 31st August 2016. However, the Tribunal found that as of the date of bonus share issuance, the petitioner was not a registered shareholder due to the transfer of shares to Mr. Rajgopal BV. Thus, the petitioner was not entitled to the bonus shares.

3. Alleged Fraudulent Transfer of Shares:
The petitioner alleged that the shares were fraudulently transferred to Mr. Rajgopal BV without valid documents. The Tribunal noted that the first respondent company received a share transfer form from the third respondent (the previous Share Transfer Agent) dated back to 1998, which led the company to believe that the petitioner had entered into a share transaction. The Tribunal highlighted that the issue of whether the transfer form was genuine or fraudulent involves a title dispute, which is beyond the Tribunal's jurisdiction and should be addressed in a civil court.

4. Jurisdiction of the Tribunal to Order Issuance of Duplicate Shares:
The Tribunal clarified that under Section 56 of the Companies Act, 2013, the power to issue duplicate share certificates is vested solely with the Board of the Company. The Tribunal cannot direct the company to issue duplicate shares, especially when the petitioner did not follow the necessary steps, such as lodging a police complaint.

5. Rectification of the Register of Members:
The petitioner sought rectification under Sections 58 and 59 of the Companies Act, 2013, arguing that the transfer to Mr. Rajgopal BV was without sufficient cause. The Tribunal found that the transfer was based on a share transfer form from 1998, and the company acted on the belief that it was a legitimate transaction. The Tribunal concluded that the matter involves a title dispute that requires adjudication by a civil court.

6. Non-joinder of Necessary Parties:
The Tribunal noted that Mr. Rajgopal BV, the transferee of the shares, was not made a party to the petition. Any order of rectification would directly affect Mr. Rajgopal BV's interests, making him a necessary party. The failure to include him rendered the petition not maintainable.

7. Pending SEBI Investigation:
The Tribunal observed that SEBI was conducting an investigation into suspicious share transactions involving the third respondent. The Tribunal deemed it inappropriate to decide the issue while the SEBI investigation was pending. Additionally, the petitioner had already approached SEBI for relief, which was not disclosed in the petition, amounting to suppression of material facts.

Final Order:
The petition was dismissed, with the Tribunal advising the petitioner to approach a civil court for appropriate remedies. The interim order freezing all transactions in respect of the shares was vacated. No order as to costs was made.