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TMI Blog2018 (12) TMI 1767X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent No. 1 company clearly brings out that transfer of share is involved and thereby Section 58(4) of the Act would become applicable. In view of this position, the applicability of Section 59 of the Act is not being examined. The respondent No.1 company without sufficient cause refused to register the transfer of shares consequent to the arrangement between the respondent no.1 company and the erstwhile respondent No.2 company whereby the father of the petitioner/his legal heirs were entitled to receive equivalent shares of respondent company No.1 from respondent company No.2 - the petition is maintainable in law and the contentions raised by the respondent No.1 and 2 companies in respect of the maintainability of the petition cannot be accepted. Under the provisions of Section 58 (5) of the Act, we direct that the transfer shall be registered by the respondent No. 1 company and the respondent No.1 company shall comply with such order within a period of ten days on receipt of the order - Application disposed off. - CA NO.06 OF 2014 WITH CP NO. 17/58/2013 RT CP NO.158/CHD/HRY/2017 - - - Dated:- 11-12-2018 - R.P. Nagrath, Judicial Member And Pradeep R. Sethi, Technica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the company from respondent No.2 at a price of ₹ 2/- per share after submitting the relevant documents and completing the required formalities. 4. It is also submitted that respondent No.2 was group company with the respondent No.1 company with two common Directors on the Board of the companies and the arrangement was made in favour of all minority shareholders holding equity shares as on record date i.e. 08.11.2005, so that respondent No.1 company could obtain approval from SEBI for its forthcoming IPO in 2007 and therefore, an undertaking was given by respondent No.1 company in the Red Herring Prospectus dated 25.05.2007 and Prospectus dated 18.06.2007 to this effect. 5. It is then averred that vide letter dated 25.05.2007, the petitioner intimated respondent No.1 about the death of his father and requested for transmission of 150 equity shares in his favour and that vide letter dated 01.06.2007, the petitioner requested the company for his entitlement of 66,000 equity shares of ₹ 2/- each. It is stated that vide letter dated 06.08.2007, respondent No.1 company required submission of proof of transmission of shares after procuring necessary Succ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his submission of all necessary documents and completing the formalities as required except succession/probate/letters of administration. The petitioner prayed for directions to the respondent No.1 company to arrange 60,000 equity shares of respondent No.2 in favour of the petitioner as per his eligibility as being legal heir of late Shri Devki Nandan Kaura holder of 150 equity shares. 8. The petition was accompanied by an application for condonation of delay stating that the petitioner was required to move the Board within 60 days from the date of refusal of the respondent No.1 company to transfer shares in favour of the petitioner and that the limitation for filing the petition expired on 07.01.2013 and the delay of 328 days be condoned since the delay occurred solely on account of the wrong advice given by the counsel that the petitioner was entitled to challenge the order of refusal of the respondent No.1 company to transfer shares within three years of refusal to do so in terms of Article 58 of the Limitation Act and that the petitioner is only class 10th pass and is an ordinary businessman having no knowledge whatsoever of the technicalities of law. 9. CLB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner be directed to transfer 50% equity shares to respondent No.3, failing which the respondent No.3 reserves his right to initiate appropriate legal remedies against the petitioner. 14. Rejoinder on behalf of the petitioner to the reply on behalf of respondent No.1 company has been filed by diary No.2603 dated 14.11.2017. It is stated that vide letter dated 06.08.2007 (Annexure P-5 of the petition), the respondent No.1 company had admittedly mentioned that in their case, shares were allotted on 26.07.2007 (appears to be a typing mistake and in the letter, the date is of 28.06.2007) and therefore, shares were already allotted and only transfer of shares was required from respondent No.2 to the petitioner as per the undertaking given in the Red Herring Prospectus filed with the Registrar of Companies. It is stated that the District Judge would obviously grant letter of administration on the 150 equity shares of the respondent No.1 company left by late Shri Devki Nandan Kaura but the fact that presently 6000 equity shares held by the testator have further accredited to 66,000 was duly taken note of by the District Judge in his judgement dated 31.01.2012. It is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be accepted. It is argued that the petitioner did not apply for further shares within the time of 26.09.2007 and as per the offer and that no heritable right could be claimed in respect of offer made under the rights issue or the offer made under the subsequent special arrangement between respondents No.1 and 2 which was contractual in nature and governed by the terms of the offer and the relevant provisions of the Contract Act. 17. In reply, the learned counsel for the petitioner has argued that vide letter dated 06.08.2007 (Annexure P-5 of the petition), the respondent No.1 company had given instructions for submitting proof for transmission of shares after procuring necessary succession certificate/probate of the Will/letter of administration etc. and that the petitioner applied for grant of letters of administration before District Judge(North), Delhi bearing petition No. P.C. No.142 of 2007 and that the letter of administration was granted in favour of the petitioner and as administrator, all assets were to be taken in his name and thereafter distributed between heirs as per Will. It is argued that vide letter dated 30.11.2007 (Annexure P-8 of the petition) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the decision of Hon'ble Supreme Court in Improvement Trust, Ludhiana v. Ujagar Singh Ors. [2010] 6 SCC 786 in which it was observed as under:- While considering the application for condonation of delay no straight jacket formula is prescribed to come to the conclusion if sufficient and good grounds have been made out or not. Each case has to be weighed from its facts, and the circumstances in which the party acts and behaves. From the conduct behaviour and attitude of appellant it cannot be said that it had been absolutely callous and negligent in prosecuting the matter. 23. Further, reliance was also placed on Concord of India Insurance Co. Ltd. v. Nirmala Devi and Ors. 1980 ACJ 55. in which it was held as under:- I am of the view that legal advice given by the members of the legal profession may sometimes be wrong even as pronouncement on questions of law by Courts are sometimes wrong. An amount of the latitude is expected in such cases for, to err is human and laymen, as litigants may legitimately lean on expert Counsel in legal as in other departments, without probing the professional competence of the advice. The Court must of course, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son of late Shri Kedar Nath admittedly held 150 shares bearing certificate No.6340, 6341 and 6342 with distinctive No.811219 to 811368 of face value of ₹ 10/- each in the books of respondent No.1 (earlier known as DLF Universal Ltd.) on 08.11.2005 and he made a Will dated 20.08.1980 in respect of the above equity shares besides other properties. The Will was registered on 20.08.1980 with the Sub Registrar, Assurances, Dist-1, Delhi vide details above discussed. Shri Devki Nandan Kaura is stated to have expired on 27.08.1987. The District Judge(North), Delhi granted letters of administration on 31.01.2012 as per Will dated 20.08.1980 and pursuant thereto, the petitioner undertook to administer the letter of administration and the District Judge(North) vide order dated 25.04.2012 accepted the undertaking given by the petitioner. Vide letter dated 17.09.2012 (Annexure P-12 of the petition), the respondent No.1 company informed the petitioner that since Shri Devki Nandan Kaura held 150 shares in his name, his legal heirs upon issuance of bonus split, are now entitled to 6000 shares. The transmission of these shares is not in dispute before us. 27. The dispute relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the present is the case of allotment of shares by the company and not that of transfer of shares as is sought to be projected. Reliance has been placed on the judgement of the Hon'ble Supreme Court in the matter of Sangramsinh P. Gaekwad v. Shantdevi P. Gaekwad [2005] 11 SCC 314 (para 148) and also Khoday Distilleries Ltd versus C.I.T. (2008) 15 Scale 177 (Para 7 8). Reference has also been made to the judgement of Hon'ble High Court of Bombay in the matter of Morgan Ventures Ltd. v. Blue Coast Hotels and Resorts Ltd. [2010] 3 CLJ 55 (Bom.) (Para 12 14, and Gopal Krishna Baliga v. Poona Industrial Hotels reported in AIR 1999 Bombay 302 (Para 5). It has been argued that in the SLP in the case of Morgan Ventures Ltd. v. Blue Coast Hotels and Resorts Ltd., the Hon'ble Supreme Court held that there is a vast difference in allotment and transfer and that was further held that they agree with the judgement of the Hon'ble High Court in the matter of Gopal Krishna Baliga versus Poona Industrial Hotels. It is submitted that Section 58 (4) of the Companies Act, 2013 is similar to Section 111 A of the Companies Act 1956. 30. We have carefully considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o apply on or before 26.09.2007 with the Court Order relating to succession certificate/probate of Will/letters of administration, affidavit-cum-indemnity bond, pay order in the sum of ₹ 1,20,000/- and that the petitioner and/or respondent No.3 did not on or before the cut off date of 26.09.2007 accept the extension of the offer of allotment of shares by filing affidavit-cum-indemnity bond, nor submitted pay order in the sum of ₹ 1,20,000/- nor even applied for Court Order relating to succession certificate/probate of Will/letters of administration. 33. We find that vide letter dated 19.11.2007 (Annexure P-7 of the petition) the petitioner wrote to the respondent No.1 company stating that petition for grant of letters of administration has been filed and since proceedings for grant of letters of administration are time consuming and hence it was not possible to comply with the dead line date of 26.09.2007. It was also pointed out by the petitioner that the formality for applying to the court for grant of letters of administration was really uncalled for, particularly in view of the fact that the legal department of the respondent No.1 company had accepted and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour after procuring necessary succession Certificate/Probate/ of the Will/Letter of Administration etc. from the Court of Competent Jurisdiction in their favour as may be relevant in each individual case, within 90 days of the date of allotment of equity shares to various shareholders after the IPO. 36. Therefore, the right was available to the legal heirs of the deceased shareholder on the record date. This conclusion is also supported by the term of the arrangement between the respondent no.1 company and respondent No.2 company whereby any eligible shareholder of the company who has not participated in the rights issue of debentures for any reasons (not attributable to the company) became entitled to receive equivalent share of the company from the respondent No.2 company at a price of ₹ 2/- per share on submitting the relevant documents and payment and completing the required formalities. We have already discussed above that the date of 26.09.2007 stood extended by the respondent No.1 company by letter dated 30.11.2007 (Annexure P-8 of the petition) and that by letter dated 19.11.2007 (Annexure P-7 of the petition), the papers for the transfer of shares consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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