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TMI Blog2024 (11) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... here can be no doubt that stock exchange is an economic barometer of any economy and renders vital public duties as admitted by Respondent No. 3 in their reply. The Supreme Court in the case of K. C. Sharma Vs. Delhi Stock Exchange and Ors. [ 2005 (4) TMI 292 - SUPREME COURT ] has held that the stock exchange is covered by the definition of State under Article 12 of the Constitution of India and amenable to writ jurisdiction of the High Court - It is surprising that inspite of issue being put to rest, such a plea is being taken contrary to binding decisions. In any event, if the stock exchange acts unfairly or arbitrarily in the discharge of its public functions, an aggrieved party can invoke a public remedy, and a writ could be issued to the stock exchange. Section 23L(1) provides for an appeal to the Tribunal if a person is aggrieved by an order or decision of the recognised stock exchange. The communication impugned, in the present proceeding, dated 4 October 2007 is neither an order nor a decision but a direction to Respondent No. 5-Transfer agent to stop transfer of the shares belonging to the Petitioner - the impugned communication does not fall within the term order or decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007, the shares of Rs. 10/- each of Respondent No. 4-Company were split into shares of Rs. 5/- each. After the bonus issue, these 900 shares became 1800. 3. On 19 January 2007, Respondent No. 5-Transfer Agent informed the Petitioner that he held 450 shares (before split-up) of Respondent No. 4-Company, whereas he had surrendered only 50 shares for subdivision. Therefore, a request was made to the Petitioner to surrender the shares certificate for the balance shares. There were proceedings initiated by the Petitioner by invoking the redressal mechanism of the Bombay Stock Exchange in this connection, but the same is not relevant for our purpose. Respondent No. 4-Company has issued dividend warrants from time to time in the name of Petitioner, wherein it is stated that the Petitioner is holding 1800 shares. However, these dividends were not credited to the Petitioner's account because of communication from Respondent No. 3-NSE which is impugned in the present proceedings. The said accumulated dividends on shares has been transferred to Respondent Nos. 1 and 2 being Investor Protection Fund set up by the Union of India. 4. The Petitioner made an application for the issue of duplica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s your correspondence to them at the address given below under intimation to the Exchange. M/s. Giltedge Infotech Services Pvt. Ltd. 2nd Floor, Bhajanlal Complex, Seth Bhajanlal Marg, Daulat Nagar, Borivali (E), Mumbai-400066. Tel No. 022-28900338 Fax No.: 022-28900793. We certainly hope that you will take our matter on priority and do the needful at the earliest." 7. It is important to note that the letter dated 4 October 2007 was never communicated to the Petitioner, and it was only on 8 May 2008 that Respondent No. 3-NSE informed the Petitioner that they are in possession of the original share certificate of the shares held by the Petitioner in Respondent No. 4-Company. Respondent No. 3-NSE in the said letter stated that they have been informed by the Transfer Agent-Respondent No. 5 that duplicate share certificate in respect of these shares has already been obtained by the Petitioner. The letter further states that shares belong to the defaulted member of the exchange and, therefore, these shares get vested with powers to realise the assets of the defaulted member of the exchange. Therefore, Respondent No. 3 called upon the Petitioner to return the duplicate share cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned communication when admittedly the documents relied upon by Respondent No. 3-NSE supports that the shares did not belong to the defaulting member. The learned counsel further submitted that the impugned communication is not an order or decision which would entail Respondent No. 3-NSE to contend on alternative remedy of approaching Securities Appellate Tribunal. The learned counsel further submitted that the shares are even today in his name as admitted by Respondent No. 4-Company and, therefore, he is entitled to file the present petition. The Petitioner, in his rejoinder, has denied having received any consideration on account of alleged transfer of these shares as contended by Respondent No. 3-NSE in their reply. The Petitioner has also relied upon paragraph No.98 of the decision of the Supreme Court in the case of Rusoday Securities Limited National Stock Exchange of India Limited & Others (2021) 2 SCC 401. The Petitioner, therefore, prayed that the petition be allowed by directing Respondent Nos.4 and 5 to issue duplicate share certificates and Respondent Nos. 1 and 2 to issue these shares / dividends to the Petitioner which are transferred to the Investor Protecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have been incorporated to facilitate, promote, assist, regulate and manage the public interest and dealings in securities of all kinds, and to provide specialized, advanced, and modern facilities for trading, clearing and settlement of securities with a high standard of integrity and honour and to ensure trading in transparent, fair and open manner. They have further stated that the object of Respondent No. 3-NSE is to develop, promote and maintain a healthy market in the best interest of the investors and the economy. They have regulatory and supervisory powers to regulate its members activities. The impugned communication dated 4 October 2007 states that "stop transfer" direction is given on account of default by trading member in not making payments to the exchange. There can be no doubt that stock exchange is an economic barometer of any economy and renders vital public duties as admitted by Respondent No. 3 in their reply. 17. The Supreme Court in the case of K. C. Sharma Vs. Delhi Stock Exchange and Ors. 2005 (4) SCC 4 has held that the stock exchange is covered by the definition of 'State' under Article 12 of the Constitution of India and amenable to writ jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e writ jurisdiction. Therefore, contention raised by Respondent No. 3-NSE on this count also needs to be rejected. 19. Respondent No. 3-NSE has also raised a contention on the availability of alternate and efficacious remedy before the Securities Appellate Tribunal for redressal of the Petitioner's grievance and, therefore, on this count also it is submitted that the present petition is not maintainable. Respondent No. 3-NSE has relied upon Section 23L of the Securities Contracts (Regulation) Act, 1956 (SCRA) which provides for appeals to the Securities Appellate Tribunal against an order or decision of the recognised stock exchange. 20. In our view, Section 23L(1) provides for an appeal to the Tribunal if a person is aggrieved by an order or decision of the recognised stock exchange. The communication impugned, in the present proceeding, dated 4 October 2007 is neither an order nor a decision but a direction to Respondent No. 5-Transfer agent to stop transfer of the shares belonging to the Petitioner. In our view, the impugned communication cannot be construed as an "order or decision" and, therefore, the reliance placed by Respondent No. 3-NSE on Section 23L for relegating Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent No. 5. 23. At the time of hearing, the counsel for the Respondent No. 3-NSE submitted that the share transfer forms were recovered from the defaulting members' office and pursuant thereto, the impugned communication is made to Respondent No. 5-Transfer Agent. The date of declaring the member as defaulter as per the notice published was August 1998 and one of the defaulting member named therein is Fiscal limited from whom, the share transfer forms were recovered. The learned counsel for the Respondent No. 3-NSE brought to our notice these Transfer Forms and submitted that the shares under consideration were transferred by the Petitioner for a consideration to Tata Trustees Co. Ltd. A/c, Tata Mutual Funds and Fidelity Investments Trust A/c, Fidelity Emergent Market Funds. He also brought to our notice that pay-in-date on the reverse side of transfer forms would show that the Petitioner has received the consideration for transfer of the shares. 24. We have perused the share Transfer Forms, and the Bench raised a query as to on what basis Respondent No. 3-NSE is claiming that the share specified in these transfer forms constitutes assets of the defaulting member so as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Respondent No. 4 being company of which the shares are under consideration have also not stated that any claim is made by any of the parties on these shares except the impugned communication. Even today, the shares stand in the name of the Petitioner in the company and the transfer agent's records. 27. We also fail to understand as to if these share transfer forms were recovered from the defaulting member in the year 1998, why Respondent No. 3-NSE did not transfer these shares in their name till today more so when according to them, they have recovered these transfer forms from the members who defaulted. This also indicates that the Respondent No. 3 very well knew that based on the share transfer forms, these shares did not belong to the defaulting member and, therefore, except writing a letter to Respondent No. 5-Transfer Agent on 4 October 2007, that too after almost 10 years from the date of the members being declared as defaulter, no steps have been taken by the Respondent No. 3. The Respondent No. 3-NSE cannot by holding these share transfer forms claim ownership by adverse possession. We have not been shown a single document which would prima facie indicate that the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate by referring to the impugned communication, a copy of which was enclosed with the said rejection letter dated 27 November 2007. Even in the impugned communication, nowhere has Respondent No. 3 stated that the share constitutes assets of the defaulting members and in subsequent letter only a statement is made without any basis. Post knowledge of the impugned communication, the Petitioner entered into the correspondence with the Respondent No. 3-NSE and denied that the Petitioner has received any duplicate share certificate. 31. There is not a single document that is produced by the Respondent No. 3-NSE to claim that the shares under consideration constitutes assets of the defaulting member. After series of the correspondence, between the Respondent No. 3-NSE and Respondent No. 5, the advocate for the Petitioner issued a legal notice in the year 2023 and only after failure of the Respondent No. 3-NSE to withdraw the communication, the present proceedings are filed. In our view, a person who has no authority to withhold shares cannot object to any alleged delay of the Petitioner in approaching this Court. The records do not show that the Petitioner has slept over his rights, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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