2018 (12) TMI 621 - AT - Companies Law

Valid pledge of shares of a company as created by mere deposit of shares certificates - possession of shares - Held that - The respondents are in possession of the shares certificates and it is not a case that they have on their own taken any action with regard to the transfer of shares. In the present matter, especially when civil proceedings in the High Court are pending we need not enter into these disputes whether or not the pledge is there. We find that appellant failed to make out case under Section 46 or 56 of the Act and has not approached with clean hands. He suppressed the earlier litigation and wanted us to believe that he had reason to say that the shares were lost and that later he had reason to claim theft. Facts show that these claims were not true. We find that Respondents No.1 and 2 have justifiable reasons to show how they are in possession of the shares and that, in the facts of the present matter they may not be directed to hand over the shares. We agree with the reasons recorded by NCLT in impugned orders. No case is made out for us to interfere in the impugned order in this appeal. In equity and in law we have no reason to interfere in the matter to aid appellant like the present one.

Summary

Issues Involved:
1. Validity of the pledge of shares.
2. Entitlement to duplicate share certificates.
3. Allegations of theft and concealment of facts by the appellant.
4. Scope of Sections 46 and 56 of the Companies Act, 2013.

Detailed Analysis:

1. Validity of the Pledge of Shares:
The appellant contended that there was no written document pledging the original share certificates as security to the respondents. The respondents argued that the appellant had deposited the share certificates as security for a corporate guarantee provided by Respondent No.1 for a loan availed by Apsom Turner Pvt Ltd, where the appellant’s wife held a significant equity stake. The NCLT noted that the respondents had paid ?1.2 crores on invocation of the guarantee and were justified in holding the share certificates as security. The NCLT ruled that the pledge of shares necessitates only possession and that the respondents have a right to hold on to them until the debt is paid.

2. Entitlement to Duplicate Share Certificates:
The appellant sought duplicate share certificates, claiming the originals were lost. However, the NCLT found that the appellant had made false claims regarding the loss and theft of the shares. The tribunal noted that duplicate certificates could only be issued if the originals were proven lost, destroyed, defaced, mutilated, or torn, which was not the case here. Thus, the NCLT held that the appellant’s request for duplicate share certificates was beyond the scope of Sections 46 and 56 of the Companies Act, 2013.

3. Allegations of Theft and Concealment of Facts by the Appellant:
The appellant alleged that Respondent No.2 had stolen the share certificates during a visit to his residence. The respondents countered that the appellant had concealed multiple litigations, including a civil suit for partition of properties and arbitration proceedings related to the loan. The NCLT observed that the appellant had suppressed these facts and made false averments regarding the loss and theft of shares. The tribunal concluded that the appellant had not approached with clean hands and had failed to make a credible case.

4. Scope of Sections 46 and 56 of the Companies Act, 2013:
The NCLT examined Sections 46 and 56 of the Companies Act, 2013, which deal with the issuance and transfer of share certificates. The tribunal found that the appellant’s request for the company to deliver the original share certificates did not fall within the purview of these sections. The NCLT noted that the shares had been initially delivered to the appellant and that the circumstances did not meet the criteria for issuing duplicate certificates under Section 46(2).

Conclusion:
The NCLT dismissed the appellant’s petition, finding that the respondents were justified in holding the share certificates as security for the loan and that the appellant had not made a credible case under Sections 46 or 56 of the Companies Act, 2013. The tribunal also noted that the appellant had suppressed material facts and made false claims. The appeal was dismissed with costs of ?1 lakh to be paid by the appellant to Respondent No.1.