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TMI Blog2019 (3) TMI 1748X X X X Extracts X X X X X X X X Extracts X X X X ..... share holder can transact with respondents Nos. 1 and 3. In the instant case, unfortunately, the original shareholder prematurely died on September 12, 2003. Therefore, they could not approach the authorities for transmission of shares immediately on the death. It is also admitted position that there are several shares purchased by the deceased, and in order to settle the issue with legal documents, the petitioner has rightly approached the hon'ble High Court of Bombay by seeking to grant succession certificate in respect of schedule property, which includes the impugned shares in the instant company petition. Therefore, the certificate issued by the hon'ble High Court of Bombay is binding on all the parties. The contention that there is a discrepancy between the names of the father of the petitioner with that of the other claimant is not at all tenable in way of the evidence - Admittedly, respondent No. 3 has not filed any substantial evidence to show that he is original shareholder of the impugned shares. Respondents Nos. 1 and 2 utterly failed to examine the bona fides of claim of respondent No. 3 and, on the contrary, contributed to the fraud and misrepresentati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , since there is an abnormal delay in approaching this Tribunal, after death of his father on September 12, 2003 - Petition disposed off. - C. P. No. 7 of 2017. - - - Dated:- 18-3-2019 - Rajeswara Rao Vittanala (Judicial Member) And Dr. Ashok Kumar Mishra (Technical Member) For the Petitioner : Dhananjay Joshi, Vachan (H. V.) and Ms. Varsha For the Respondents Nos. 1 and 2. : R. Subramanian, D. Nagesh Babu and J. Gopinath ORDER RAJESWARA RAO VITTANALA (JUDICIAL MEMBER). - 1. C. P. No. 7 of 2017 is filed by Shri Neel Rajesh Shah under section 58 of the Companies Act, 2013, seeking a direction to the respondents, jointly and severally, to register the petitioner as the true and lawful owner of the schedule shares and to re-issue the schedule shares to the petitioner in dematerialized format ; direction to the respondents, jointly and severally, to pay/hand over to the petitioners all benefits that arose from and/or on account of the schedule shares on or after September 12, 2003 including all dividends and bonus shares, if any, etc. 2. The brief facts of the case, as mentioned in the petition, which are relevant to the issue in question, are as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner of the schedule shares. To the petitioner's surprise, by a letter dated February 11, 2015 respondent No. 2 informed the petitioner that respondent No. 2 had issued duplicate shares of petitioners father's schedule shares to some other person basing on some letter that the schedule shares were lost, and thereafter those shares have been dematerialized in 2013. Since the father of petitioner died in 2003 and question of transacting shares does not arise, mother of the petitioner addressed a letter dated March 9, 2015 to respondent No. 2 by calling upon him to furnish complete details of the manner in which respondent No. 2 issued the duplicate shares in lieu of the schedule shares to the petitioners father. (7) By its letter dated March 28, 2015 respondent No. 2 forwarded copies of some of the documents and claimed that it had, purportedly, acted appropriately in issuing the duplicate shares to the petitioner's father. Respondent No. 2 completely ignored and did not even deal with the fact that the duplicate shares and dematerialization of the schedule shares was done by respondent No. 1 in favour of and in the name of the petitioner's father in 2012-13, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssbook reflecting the payment of the dividends by respondent No. 1-company to the petitioner's father. It is apparent that the respondents have either colluded with one or more persons or have been victims of fraud by one or more persons in impersonation of the petitioner's father and getting issued duplicate shares in lieu of the schedule shares and for getting the duplicate shares dematerialized. (11) In any case, the petitioner cannot be made to suffer on account of the failure on the part of the respondents to identify true owner/legal heirs of share in question. As the petitioner's father died in 2003, the issuing of duplicating shares in lieu of the schedule shares to and/or in the name of the petitioner's father in 2013 and all subsequent actions thereafter, are patently, fraudulent and have no basis in law. Pursuant to such fraud, no lawful rights and/or entitlements can arise in respect of the schedule shares. The petitioner is and continues to be the sole and absolute owner of the schedule shares ever since the date of his father's demise on September 12, 2003. The petitioner is, therefore, not entitled to not only have the schedule shares registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that of the petitioner's claim. The original allottee's father's name as per the application form Himmat Bhai Shah, whereas, the plain tiff's father name as per death certificate filed by them is Himmatlal D. Shah. Hence, on this ground itself the petition had to be dismissed in limine. (2) It is stated that Shri Rajesh H. Shah who happens to be the owner and holder of 3,100 shares of this respondent No. 1-company. The second respondent had received a letter from one Rajesh H. Shah dated June 30, 2012 informing that his residential address has been changed and requested to register/update his new address and also sought information about corporate benefits if any pending with the company and release the same to his new address. The second respondent had verified the KYC document and since the same was in order, had acknowledged the said letter and intimated regarding updation of change of address to both his new and old address by its letter dated July 9, 2012 and the respondents did not receive any objection from any persons of whatsoever. On August 14, 2012 a person name Rajesh H. Shah sent another letter to the second respondent stating that he had not recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary steps. Shri Rajesh H. Shah sent a letter dated Nil to the second respondent received on January 3, 2013 along with self-attested residential proof-ration card issued by the Government of Maharashtra along with electricity bill dated June 13, 2012 issued by Reliance Energy for his address proof. (6) On receipt of the above documents from the said Rajesh H. Shah, by way of abundant caution gave a public notice regarding loss of share certificates by effecting paper publications on January 19, 2013 in Business Standard (All India) and Sanjvani Kannada in Bangalore. As no response of serious objections received from any persons for the public notice on January 21, 2013 the second respondent sent a letter to the Bombay Stock Exchange Ltd., intimating its proposal to issue duplicate share certificate to Shri Rajesh H. Shah since the original certificate was lost and requesting stock exchange to intimate to its members accordingly by marking a copy to the BSE, NSE and the first respondent. (7) Since they had not received any objection from anybody, on February 8, 2013 the first respondent had passed a board resolution for issuance of new equity share certificates to Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013, which clearly delineates the mala fide intention of the petitioner. There is not even a letter of intimation of death of the petitioner's father for the past 12 years claiming the alleged shares. While so, the first respondent received a letter dated January 16, 2015 from the petitioner informing that the schedule share was held by his father, he died intestate on September 12, 2003 and requested to transfer of shares in his name along with copy of share certificate, Aadhaar Card and death certificate. In this regard, the second respondent, sent a detailed reply dated February 11, 2015 informing him about the past activities in the folio, loss of share certificates, issuance of duplicate certificate to the original allottee and dematerialization after following due procedures and therefore refused to transfer the shares requested by the petitioner. (11) It is submitted that upon refusal by the respondents on February 11, 2015 the petitioner ought to have filed an application before this hon'ble Tribunal under section 58 of the Companies Act, 2013 within 60 days from the date of refusal. Being an illegal claim, the petitioner had knowingly approached the civil court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons owing such debts or liable on such securities, and shall notwithstanding any contravention of section 370, or other defect, afford full indemnity to all such persons as regards all payments made, or dealings had, in good faith in respect of such debts or securities to or with the person to whom the certificate was granted. (3) Even this Tribunal do not have any jurisdiction or authority to sit in appeal or adjudicate upon the validity of the succession certificate issued by the hon'ble Bombay High Court in favour of the petitioner. Therefore, the only question arises for consideration whether the refusal to effect transmission of shares is correct or not in accordance with the provisions of the Companies Act. (4) He relied upon the judgment of the hon'ble Allahabad High Court in Ganga Prasad v. Mst. Saeedan [1952] All. LJ 406, wherein, the hon'ble Allahabad High Court had occasion to consider the legal effect of section 381 of the Indian Succession Act, 1925, and held that the section raises a conclusive presumption against the debtors that the person in whose favour a succession certificate is granted is entitled to receive the debts specified therein. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dress in Belgium at Ferdinand, Verbiestlaan, 19, 2650, Edegem, Belgium, a fresh Identity Card No. 296122 was issued by the Belgian authorities. The originals of both the identity cards are surrendered to the authorities in Belgium after his death. (iii) Copy of the birth certificate of the petitioner's father, Rajesh Shah. The date of birth, January 3, 1961 is the same as mentioned in all relevant documents. (iv) Copy of the identity cards of the petitioner issued by the authorities in Belgium. (1) Identity Card No. 590081258744 dated May 27, 2005 of the petitioner issued by the Belgium authorities, which bears the alternate address of the petitioner's father i. e., Ferdinand, Verbiestlaan, 19, 2650, Edegem, Belgium, which is also noted in Identity Card No. 296122 of the petitioner's father. The original of the same is surrendered to the authorities in Belgium for issuance of a fresh identity card. Hence, the same is not available with him. (2) Identity Card No. 590772407588 dated April 22, 2008 of the petitioner issued by the Belgium authorities, which bears the same address of Belgium, i. e., 81, Belgielei, 2018, Antwerpen, Belgium, as is recorded in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by a share transfer agent to the petitioner, along with the copy of the share certificate, confirming the transmission of shares of another company, Aptech Ltd., that earlier stood in the name of the petitioner's father. (xi) Copy of the letter dated March 26, 2015 issued by a share transfer agent to the petitioner, along with the copy of the share certificate, confirming the transmission of shares of another company, Ambuja Cements Ltd., that earlier stood in the name of the petitioner's father. (7) It is evident that the respondents have been cheated/misled and are the victims of a fraud perpetrated by an imposter. However, the petitioner is not, in any manner whatsoever, responsible for such fraud and cannot be made to suffer a loss on account of the respondents' actions, howsoever genuine : (a) The petitioner has not committed any breach of any duty owed to the respondents. The respondents, being the custodian of the schedule shares, owe a statutory duty to the petitioner to transmit the schedule shares to the petitioner as directed by the hon'ble Bombay High Court. (b) Compliance with prescribed procedure cannot absolve the respondents of their ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one and the same and the petitioner is attempting to get the value of the shares for the second time. The petitioner vehemently resisted the impleading of the beneficiary of the duplicate shares and pursuant thereto this hon'ble Tribunal suo motu directed the petitioner to implead the beneficiary of the duplicate shares. Under any circumstances the respondents cannot be made to com ply with any of the reliefs as claimed by the petitioner. (4) The respondents relied on the following judgments : (i) Joginder Pal v. Indian Red Cross Society [2000] CDJ 469 (SC). (ii) Madhvi Amma Bhawani Amma v. Kunjikutty Pillai Meenakshi Pillai [2000] 5 JT 336 ; [2000] 3 RRR 187 (SC). (iii) Palaniammal v. Chinnapillai [2010] CDJ 3806 (Mad). (iv) Kamalamma v. Remani [1987] CDJ 292 (Ker). (v) Munia Khatun alias Munia Bibi v. Smt. Sabana Bibi [2016] CDJ 556 (Cal). (vi) Master A. Sridhar v. A. Adivaralaxmi [1996] CDJ 382 (AP). (5) On November 5, 1992 Shri Rajesh H. Shah son of Himmat Bhai Shah applies for shares with respondent No. 1-company residing at No. B-2, 7th Floor, No. 454, Napean Sea Road, Bombay-400 006. 3,100 shares of respondent No. 1-company were allotted to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting witness in the indemnity bond (page Nos. 19 and 20 of the respondent typed set) (6) Self-attested copy of PAN card copy original allottee (page No. 21 of the respondent typed set) (7) Self-attested copy Ration Card of the original allottee (page No. 24 of the respondent typed set). (9) On December 11, 2012 the second respondent writes letter calling for self-attested copy of address proof of the original allottee namely Shri Rajesh H. Shah son of Himmat Bhai Shah and DD for ₹ 250 towards advertisement charges. (10) Undated letter received by respondent No. 2 on January 3, 2013 from original allottee enclosing self-attested copy of Ration Card issued by Maharashtra Government. On January 11, 2013 public notice issued by respondent No. 1-company stating loss of share certificate published both in English newspaper and Vernacular language newspaper. On February 19, 2013 minutes of the first respondent followed by letter by the second respondent informing issuance of duplicate to and in favour of the original allottee after following due procedures and guidelines provided by the SEBI. On March 9, 2013 original allottee through Swastika Investments Ltd., requests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate is granted in respect of the securities listed in the petition filed by the petitioner. Hence, the grant of certificate does not give the right to get transmission of shares by the petitioner who is not entitled to the shares under any circumstances. The grant of the succession certificate does not confer title to the list of securities listed in the petition. (15) The respondents submit that the mischievous acts and deeds of the petitioner is untenable either in law or on facts. Thus, after dismissal of the suit, the petitioner had approached this Tribunal with inordinate delay and without any basis on the claim. Therefore, learned counsel for the respondent urged the Tribunal to dis miss the company petition. 7. By perusal of the pleadings of both the parties, the following issues/ points arise for consideration : (1) Whether the impugned shares are issued in favour of the father of the petitioner (Rajesh Himmatlal Shah) by respondent No. 1-company ? (2) Whether the petitioner furnished requisite documents for trans mission of the schedule shares of the deceased father ? (3) What is the effect of succession certificate ? (4) Whether the respondent follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y transaction by deceased person and the petitioner, his mother and paternal grand mothers are legal heirs of deceased Shri Rajesh H. Shah. However, the respondent put up a case that some other person stated to be with the same name has approached them for issuance of duplicate certificate and issued the certificates accordingly. 12. There is prescribed procedure for transfer/transmission of shares in every articles of association of a company and company law. Transfer/ transmission of shares can be effected by the board of directors of a company only if they are satisfied that there is bona fide claim made by parties with supporting documents. In the instant case, shareholder is NRI and respondents Nos. 1 and 2 should be more careful while dealing with those shares unlike shares held by resident Indians. Merely following technical procedure like issuing public notification, taking certificate issued by Police, etc., is not enough. When original shareholder dies, only legal heir of original share holder can transact with respondents Nos. 1 and 3. The third respondent, so called Rajesh H. Shah (imposter) started making correspondence with respondent No. 2 vide his letter dated Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentations along with some documents. 14. The way the third respondent stated making correspondence and fast responses to those representation by respondents Nos. 1 and 2 prima facie show mala fide intention in the impugned proceedings. The third respondent admittedly was not in possession of any documents of schedule shares in question and he started the fraud with initial request to change the address and thereafter got every information with active support of respondents Nos. 1 and 2. In order to escape the responsibility, the third respondent immediately dematerialized the shares in question with the support of the respondents. Admittedly, the third respondent did not produce any legal documents in support of his case except notarised Indemnity Bond, Police Certificate, etc., which would not prove that he was original share allottee. However, there is saving clause 4 for respondents Nos. 1 and 2, in the Indemnity Bond dated December 3, 2012 (pages 70 to 73) executed by respondent No. 3. And clause 4 reads as under : 4. In consideration of my request provided, I hereby agree to indemnify and keep indemnified the company at all times hereafter against all claims and deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy issued shares to the third respondent would not absolve them their duty to the original share-holders/legal heirs. The only protection for respondents Nos. 1 and 2 is they can invoke clause 4 of Indemnity Bond as stated supra. 16. The contention that there is a discrepancy between the names of the father of the petitioner with that of the other claimant is not at all tenable in way of the evidence already discussed above. Admittedly, respondent No. 3 has not filed any substantial evidence to show that he is original shareholder of the impugned shares. Respondents Nos. 1 and 2 utterly failed to examine the bona fides of claim of respondent No. 3 and, on the contrary, contributed to the fraud and misrepresentation perpetuated by respondent No. 3. 17. The other question raised that the petition is barred by laches and limitation is not at all tenable. Admittedly, the father of the petitioner prematurely died intestate, at an young age in the year 2003, without settling the properties including the shares. Therefore, ultimately, the petitioner has taken appropriate legal action by filing succession certificate before the hon'ble High Court of Bombay and thereafter he filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1 and 2 too failed to ensure for service of notice to respondent No. 3 in order to protect their interest. Only respondents Nos. 1 and 2 have strongly opposed the claim of the petitioner on untenable grounds. Therefore, the action of respondents Nos. 1 and 2 in refusing to allow transmission of shares in favour of the petitioners is ex facie illegal, and it is liable to be rejected and thus we are hereby rejected. 20. In view of the above facts and circumstances of the case, we are of the considered opinion that the petitioner is entitled to the schedule shares to be transferred in his name. However, the petitioner is not entitled to full consequential benefits out of transmissions of shares, since there is an abnormal delay in approaching this Tribunal, after death of his father on September 12, 2003. The respondents are protected by Indemnity Bond dated December 3, 2012 as per clause 4, and they are at liberty to invoke those Indemnity Bond in accordance with law and they can claim against the person who has given that Indemnity Bond. It is also necessary to clarify that since respondents Nos. 1 and 2 are liable for illegal issue of duplicate shares in question to responden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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