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TMI Blog2017 (7) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - CO. APPEAL NO. 2/58-59/NCLT/AHM/2017 - - - Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate shares. The first respondent company issued bonus shares to the existing shareholders of the company in the proportion of 1:1. Therefore, the petitioner also sought for bonus shares in his letter dated 4.12.2016. Vide the said letter, the petitioner also provided his new residential address for future correspondence and claimed dividend from the first respondent company. However, the first respondent company did not take any steps to give dividend to the petitioner. 6. The first respondent by its letter dated 5.10.2016, confirmed the status of the petitioner as shareholder of the company. But, in the said letter, the first respondent stated that respondent No.3, who was the earlier Share Transfer Agent of the first respondent company, indulged in certain illegal activities by transferring and dealing in the shares of the first respondent company and, therefore, SEBI instituted suo motu proceedings against the third respondent under the provisions of the SEBI Act, 1992. In the said proceedings, SEBI passed and order on 22nd March, 2016, which clearly indicates that the third respondent deals in the shares of the first respondent company fraudulently and in bad faith. By that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the petitioner was informed by a letter dated 05.10.2016 about the proceedings initiated by SEBI under Section 11 of the SEBI Act against the third respondent. In that letter, the first respondent company informed the petitioner that a special audit was conducted and in that audit, the folio number indicated by the petitioner was also there among the few transactions, which were found to be, prima facie, suspicious. Therefore, the first respondent company called upon the petitioner to confirm whether he had entered into any such transaction with Mr. G.K. Dhariwal. The petitioner responded stating that he had not transacted the shares in question. According to the first respondent company, the petitioner without informing Mr. G. K. Dhariwal, to whom the shares were transferred, filed this petition. The first respondent company has stated that Mr. G.K. Dhariwal got the physical shares dematerialized and, thereafter, sold the shares to others. 9. It is stated by the first respondent that Section 58 of the Act would apply where a company refuses to register the transfer of any securities or other interest of any member in a company. Further, according to the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent company also filed a criminal complaint against the 3rd respondent and its officers on 30th March, 2016. Based on the said complaint, police registered FIR No.90 of 2016. In the reply, the first respondent company has stated that under SEBI Regulations, an obligation is cast upon the first respondent company to submit audited report to concerned Stock Exchanges giving the details of reconciliation of total issued capital, listed capital and capital held by depositories in the demat form. According to the first respondent, in view of Regulation 55A of SEBI Regulations, the company was required to submit audit report to the concerned stock exchanges for the quarter ending on 31.12.2015 by the end of the next quarter, i.e. quarter ending on 31.3.2016. However, while the same was under process, the irregularities committed by the third respondent came to light in the months of December 2015 and January 2016. Thereafter, in view of the interim order passed by SEBI, the first respondent company strictly complied with the directions of SEBI and conducted internal audit. According to the first respondent company, the fraudulent and illegal activities done by the third responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with the letter of allotment of securities. Provided that where the instrument of transfer has been lost or the instrument of transfer has not been delivered within the prescribed period, the company may register the transfer on such terms as to indemnity as the Board may think fit. (2) Nothing in sub-section (1) shall prejudice the power of the company to register, on receipt of an intimation of transmission of any right to securities by operation of law from any person to whom such right has been transmitted. (3) Where an application is made by the transferor alone and relates to partly paid shares, the transfer shall not be registered, unless the company gives the notice of the application, in such manner as may be prescribed, to the transferee and the transferee gives no objection to the transfer within two weeks from the receipt of notice. (4) Every company shall, unless prohibited by any provision of law or any order of Court, Tribunal or other authority, deliver the certificates of all securities allotted, transferred or transmitted- (a) within a two months from the date of incorporation, in the case of subscribers to the memorandum; (b) withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les for short] are framed in exercise of the powers conferred by clause (b) of sub-section (1) of Section 642 of the Companies Act, 1956. 13. In supersession of the said Rules from 1st April 2014, the Companies (Share Capital and Debenture) Rules, 2013 [ the New Rules for short] came into force. Rule 6 of the New Rules deals with issue of renewed or duplicate share certificate. The abovesaid provisions of the Companies Act, 1956; the provisions of the Companies Act, 2013; Rule 4 of the Old Rules and Rule 6 of the New Rules empower only the Board of the Company to issue duplicate share certificates in case where share certificates were lost. 14. In the case on hand, the petitioner alleged that his shares were misplaced and lost in transit. The petitioner did not choose to state either in the petition or in the rejoinder as to when he came to know that his shares were misplaced. From the pleadings of the first respondent company, it appears that the shares of the petitioner were purchased by Mr. G.K. Dhariwal and Mr. G.K. Dhariwal, in turn, sent the share certificate along with transfer form to the third respondent for effecting transfer of the shares in his name. The third r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) that the original share certificate was handed over to unidentified person; and (iii) that no share certificate can be given to unidentified person. When the company transferred the shares in the name of Mr. G.K. Dhariwal, the company had no knowledge about the said defects. Therefore, it cannot be said that without sufficient cause, the name of the petitioner has been omitted from the register of members and the name of the transferee has been mentioned. When the company transferred the shares in the name of some other person and when the petitioner is disputing that he has not effected the transfer of his shares, it is a title dispute between the petitioner and the transferee, Mr. G.K. Dhariwal. It has to be determined whether the share transfer form was duly signed by the petitioner or whether the share transfer was a fraudulent transfer or not. No doubt, the internal audit conducted and the SEBI investigation, prima facie, reveals that the transfer of shares in favour of Mr. G.K. Dhariwal was a suspicious transaction. But unless the said issue is conclusively decided, it is not possible to replace the name of Mr. G.K. Dhariwal and insert the name of the petitioner in the regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the petitioner, shares were transferred without a transfer instrument. In fact, in the decision in Peoples Insurance Co. Ltd. (supra), there was reference to other decisions of Punjab Haryana High Court and it was held that providing summary remedy was not suitable in those cases. In those facts and circumstances of the cases, the Hon'ble High Court of Punjab Haryana held that where serious disputes were involved, the proper forum for their adjudication is the civil court. But in that case, it was held that summary remedy can be exercised depending upon the facts of the case. 22. In this context, it is necessary to refer to the legal position on the aspect when there are complicated questions of law and facts are involved, whether this Tribunal can pass orders or this Tribunal has to relegate the parties to the Civil Court. In Ammonia Supplies Corpn. (P.) Ltd. v. Modern Plastic Containers (P.) Ltd. (1994) 79 CC Page 163, the Full Bench of the Delhi High Court held that the object of Section 155 (now Section 111) of the Companies Act, 1956 is to provide a remedy in non-controversial matters or in matters where a quick decision is necessary and can be rendered in ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he owner of the shares; whether there is fraud or forgery in holding the shares or the very title to the shares, then such issues will be beyond the jurisdiction of the Company Court and will have to be decided by the Civil Court. 24. It is pertinent to mention here that Section 155 of the Companies Act was omitted by the Companies (Amendment) Act, 1988 with effect from 31.5.1991 and it is in verbatim taken into Section 111 of sub-section (4) of the Companies Act, 1956. In fact, Section 111 is corresponding to Sections 58 and 59 of the Companies Act, 2013. 25. Now, 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. 26. In the case on hand, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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