2017 (7) TMI 625 - Tri - Companies Law

Issue of duplicate shares - transfer of shares - Held that - In the case on hand, there is no specific provision in the Companies Act under which this Tribunal can give a direction to the Board of the Company to issue duplicate shares. However, when there is refusal on the part of the Board of the Company to issue duplicate shares, if after it was satisfied that the share certificates were lost or when such power was not properly exercised by the Board, it can certainly be challenged. In the case on hand, the challenge involves title of the Petitioner to the extent of 6000 Equity Shares of ₹ 2/- each of the first respondent company. In the case on hand, there is a dispute whether the shares of the petitioner were, in fact, transferred by the petitioner in the year 2015 or not. On the basis of a transfer form, the shares were already transferred to Mr. G.K. Dhariwal. 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. Further, 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. G.K. Dhariwal, 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. G.K. Dhariwal. Therefore, Mr. G.K. Dhariwal 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. The petitioner is not entitled to any relief in this petition. This petition is dismissed.

Issues Involved:
1. Reinstatement of the petitioner's name as a shareholder in the Register of Members.
2. Issuance of duplicate shares.
3. Change of the registered residential address of the petitioner.
4. Release of unclaimed dividends.
5. Allegations of fraudulent transfer of shares.
6. Jurisdiction of the Tribunal under Sections 58 and 59 of the Companies Act, 2013.

Issue-wise Detailed Analysis:

1. Reinstatement of the Petitioner's Name as a Shareholder:
The petitioner sought reinstatement as a shareholder in the Register of Members of the first respondent company. The petitioner argued that his shares were fraudulently transferred to an unknown person, Mr. G.K. Dhariwal, without his consent. The first respondent company confirmed the transfer of shares to Mr. G.K. Dhariwal and stated that the shares were dematerialized and sold. The Tribunal noted that the transfer was based on a transfer form, which was questioned in a special audit report by M/s Ernst & Young LLP, indicating suspicious transactions. However, the Tribunal concluded that the issue involved a title dispute between the petitioner and the transferee, which required adjudication by a civil court, not the Tribunal.

2. Issuance of Duplicate Shares:
The petitioner requested duplicate shares, claiming his shares were misplaced during transit. The first respondent company argued that the petitioner did not provide sufficient details or evidence of the loss. The Tribunal referred to Section 56 and Section 46(2) of the Companies Act, 2013, which empower the Board of the Company to issue duplicate shares if satisfied that the shares were lost. The Tribunal found that the petitioner did not report the loss to the police or provide adequate evidence, thus not meeting the requirements for issuance of duplicate shares.

3. Change of Registered Residential Address:
The petitioner requested an update of his residential address in the company's records. The first respondent company acknowledged receiving the petitioner's new address but did not update it due to the ongoing issues with the share transfer. The Tribunal did not specifically address this issue in the final judgment, focusing instead on the broader issues of share transfer and duplicate shares.

4. Release of Unclaimed Dividends:
The petitioner sought the release of unclaimed dividends. The first respondent company did not take steps to release the dividends, citing the ongoing investigation and the disputed ownership of the shares. The Tribunal did not provide a specific ruling on the release of dividends, as the primary focus was on the legitimacy of the share transfer and the issuance of duplicate shares.

5. Allegations of Fraudulent Transfer of Shares:
The petitioner alleged that his shares were fraudulently transferred by the third respondent, who was the Share Transfer Agent at the time. The first respondent company confirmed that SEBI had initiated proceedings against the third respondent for fraudulent activities. The Tribunal acknowledged the suspicious nature of the transfer but emphasized that determining the legitimacy of the transfer required a detailed examination of facts, which was beyond the scope of the Tribunal's summary jurisdiction.

6. Jurisdiction of the Tribunal under Sections 58 and 59 of the Companies Act, 2013:
The Tribunal examined whether it had the jurisdiction to grant the reliefs sought under Sections 58 and 59 of the Companies Act, 2013. The Tribunal concluded that these sections pertain to the rectification of the register of members and do not empower the Tribunal to issue duplicate shares. The Tribunal also noted that the issues involved complicated questions of fact and law, including the title to the shares and allegations of fraud, which required adjudication by a civil court.

Conclusion:
The Tribunal dismissed the petition, stating that the petitioner should approach the civil court for appropriate remedies. The Tribunal highlighted that the petitioner failed to provide sufficient evidence for the issuance of duplicate shares and did not report the loss to the police. Additionally, the Tribunal noted the ongoing SEBI investigation and the necessity of involving the transferee, Mr. G.K. Dhariwal, as a party to the proceedings. The Tribunal concluded that it was not the proper forum to adjudicate the complex issues presented in the case.

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