Mother Son Sumi Systems Lt. & Ors

8/11/2019 Mother Son Sumi Systems Lt. & Ors

1/5

BEFORE

THE

COMPANY

LAW

BOARD,

NEW

DELHI

BENCH

NEW

DELHI

c'P'

No'

20/59/2014

Present:

Shri

B.s'v.

Prakash

Kumar,

Member

(Judicial)

In the

matter

of:

ComDanies

Act,

1956

Sections

1114

And

In the

matter

of:

Milind

S

Nagatkar

......

Petitioners

verSus

Mother

Son

Sumi

SYstems

Lt' & Ors

.....Respondents

Present:

The counsel

for

the Petitioners:

Ms

Vandana

Sharma

Bhandari'

Advocate

The counsel

for

the

Respondents:

Mr. Avlnash

Menon,

Advocate

Order

(heard

and

dictated

in open

court

on

18-7-201'4)

The

petitioner filed

this

CP u/s

111A

of the

Companies

Act

1956

(hereafter referred

as the

"Act")

against

R-1

company

and

R-2

to

4

for

a

direction

against

R-1to

rectify

the

share

register

bringing

the

petitioner

on

the

share

register

as agalnst

R-3 shown

as

holding

500

shares

because

R-3

already

transferred

those

shares

to

him

way

back

in

the

year

2001.

2.

R-1 company

ls a

public

limited

company

and

listed

its

shares before

Stock

Exchange,

whereas

R-2

is the

Registrar

and

Share

Transfer

Agent

of

R-1

company

R-3

is

the

registered

shareholder

of

500 shares.

R4

is

a stockbroker'

The

petitioner on 13-6-2001

ourchased

these

500

shares

(Follo No.

MSS000031,

Certificate

No'00054824 -

25 and

,1,

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OOO72}4O

-

42 carrying

100 shares

each

in each

certificate)

lying

in the

name of

R-3 in

the

open

market

through

R-4

(broker)

in the

year

2001.

3.

To

prove

that

the

petitioner

purchased

those

shares

from

R-3,

he filed

the

copies

of

share

certificates

and

purchase

bill without

anybody's

signatures The

petitioner further

says

that on the

share

certificates

and

Share

Transfer

Deeds

(STD)

given

by

the broker,

he

lodged

the

said

share

certificates

along

with

the

transfer

deeds

with

the

company

for

reciification

in

the

name of

him.

Nevertheless,

the

company

refused

rectificatlon

and

returned

the

same

with

an

objection

that

the

signatures

of

the

transferor

in sTD

not

tallying

with

the

specimen

signatures

lying

with the

company,

on

this

ground,

R-1

Company

returned

the

same

as bad

delivery.

Thereafter,

the

petitioner could

not

pursue

the

same until

2013,

as he

left to Jaipur

from

Mumbai on

transfer.

4.

in

2013,

when

the

petitioner

came back

to

Mumbai,

he found

the

share certiflcates

lying

in his

house

in

Mumbai.

He then approached

the

broker

for fresh transfer

deeds,

but

for

having the broker

not

responded

to

the request

of

the

petitioner,

the

petitioner

sent

a

letter

to

R-2 to

provide

the address

of the

transferor

so that

the

petitioner

could

no contact

him

for

fresh transfer

deeds

in favor

of

him. On

the address

given

by

R-2,

the

petitioner

wrote

a letter

to

R-3,

but

that

letter written

to

R-3

came

back

with

a

remark

that

no

such

addressee

is in

existence

ln

the

address

mentioned

on

the

letter'

When there

was

no

response

from

R-3

and R-4,

the

petitioner

aqain

wrote

a

letter

to R-2

for

release

of

new

split

shares

with all

corporate beneflts.

To which

R-2

wrote

a 7-5-2013

saying

that they

are

unable

to

transfer

the

shares

in

favor

of

the

petitioner

and

advised

him to approach

a

comDetent

court

of

law for decree

directing

the

company

for rectification

of

the Register.

5.

For having R1/R2

on

7-5-2013

refused

to

rectify

the

share register

in

his

name

despite

shares

were transferred

in the

year

2001,

the

petitioner,

in 2013,

seeks

the relief

for

rectification of

the share

register showing

500 shares

held

by

R-3 as

transferred

in the

name of

the Petitioner

along

with the benefits

accrued

thereto

6.

Since

service was

not affected against

R-3

to the

address

given

by

the

company'

this

Bench

ordered

the Petitioner

to effect

service against

R-3

by

way

of

substituted

.,

,:'

.

'2

li*


3/5

service.

Accordingly,

the

petitioner

published notice

in

two

newspapers

indicating

filing

of

this

petition against

R-3, one

in

English

newspaper,

another

in

vernacular

lanquage

having

wide

circulation

within

the

locality

of

the address

shown

When

the

petitioner

has come

up

for

hearing,

the petitioner

has

filed

photocopies of

the share

certiflcates

of the shares'

7.

The

petition

discloses

that

the

petitioner

purchased the

shares

in the

year

2001

(13.06.200i).

Immediately

thereafter,

he

sent

a

request

to STA/R1

Company

for

rectiflcation

of

the

register,

but

the

company

refused

to

register

the

transfer

on

the

ground

that

the

signatures

on

STD

were

not tallying

with

the specimen

signatures

of

R-3

lying

with

the

comDanv.

Ever

since,

this

petitioner did

not take

any

action

until

2013'

he only

woke

up

in

the

year

2013

and

sent

another

letter

for registering

these

shares

in

the

name

of

him.

Responding

to

it, the company

again

replied that

since

the

share

transfer

deeds

have

not

been

annexed

with

the

request

letter,

they

could

not

register

these

transfers

in the

name

of

the

petitioner

unless

a

decree

is obtained

from

a

competent

court

of

law having

jurisdiction

to decide

this issue.

8.

On

seeing

the

pleadings

and

facts thereof,

it is

evident

that

there

is

no document

showing

R-3 transferred

his

shares

to the

petitioner. Therefore,

the

company

rightly

rejected

the

rectification

when

it

had noticed

that

the

signatures appearing on

the

Share

Transfer

Deeds

(STD)

do

not belong

to R-3.

Today,

there

is

no document

before

this

Bench

to

say

that the

signatures

present

on

transfer

deeds

belonging

to

the

transferor'

Because

the

petitioner

has

not

even filed

those

share

transfer

deeds,

which

he

said before

that

the

company

returned

on

the

ground

signatures

are

not tallying'

9.

To apply

section

111 A of

the Act,

it

is mandatory

that the

pafty

seeking

rectiflcation

has

to

comply

with

section 108

of

the

Act

*

the

compliance

is

that the

party

seeking

registration

of

transfer

shall

file

proper

instrument

of transfer

duly

stamped

along

with

ceftificates.

If the

transfer

instrument

is lost,

then

if

the

party

proves

to the

satisfaction

of

the

Board of

Directors

that

the

instrument

is lost,

the

company

may

register

the

transfer

on

such

terms

as indemnity

etc.

Here,

it is not

the

case

that

the

petitioner lost the

transfer

deedissuedbytheregisteredshareho|der.ItiShiscasethathesenttransferdeedstothe

\\,2


4/5

company

and

the

company

said that

the

signatures

on sTD

do

not

belong

to the

registered

holder.

Therefore,

it

is clear

that the

petitioner has

not filed

documents

as mandated

under

section

108 of

the

Act.

This

Tribunal

could

invoke

Section

111A

of

the

Act only

In

compliance

with

section

108

of the

Companies

Act

Since

it

is

a

Tribunal

having

limited

jurisdiction

to

deal

with

issues

as

stated

in the

statute,

this

Tribunal

cannot

go

beyond

the

clauses

u/s.

108

of

the

Act,

therefore

the

subject

matter

jurisdiction

does

not

lie

with

CLB'

'10.

The

petitioner filed

this

Company

Petition

about

12

years

after

the

company

refused

to

register

transfer

of

shares

in the

name

of

the

petitioner'

It

is not

that

the

company

refused

to

register

transfers

on

some

technical

aspect.

The

company

in

fact

refused

to

rectify

on the

basic

issue

that

the transfer

deeds

placed

by

the

petitioner

did

not appear

to

be

signed

by

the transferor.

This

refusal

according

to

the

petitioner came

to

his notice

in

the

year

2001,

ever

slnce

no

action

from the

petitioner' So

much

iime

has

gone

by'

Nobody

knows

that

whether

R-3

has

remained

alive

or

not,

it

is

not that

R-3 shall

remain

in

the same

address

all

through.

Had

the

petitioner made

efforts

in

2001

itself,

if

his

story

is

correct,

then

this

Bench

could

understand

and

presume

that

the

transferor

had no

interest

or

claim

in these

shares.

Now there

is

no actual

service

because

the

petitioner

or

for

that

matter

the

company

has

not

been

aware

of

the

whereabouts

of

R-3

soon

before

filing

this

company

Petition.

11.

The

petitioner

has to

e*ablish

the case

as

required

under

law'

he should

not take

shelter

under

a

garb

since

R-3

is not

present in the

address

given

to the

company'

ano

say,

he is

entitled

to

the

relief as

claimed.

The

petitioner himself

remained

in slumber

for

more

than

12

yea6.

The

main

document

that

is

required

to

prove

transfer

is

not

present

and

no

proof

to

say

R-3

executed

transfer

deeds

and

no

proof

that

R3

left

his

certificates

with

R-4

for sale

of them.

If the

material

documents

that

are

required

for registration

are not there,

the

Detitioner

has

to

approach

civil

court

to

prove

the

same

by

adducing

evidence'

lZ.

The

petitioner

relied

upon

t20061

133

Comp

Cas

561(CLB)

Jacob

F

Bothello

v Dr'

Reddy's

Laboratories

and

Ors;

[2010]

158

Comp

Cas

159(CLB)

Ajit

R'

Kapadia

v'

Jaiprakash

Associates

Ltd'

and

Or;

[2010]

158 Comp

Cas

53

(CLB), Dhiral

Ramji

Galla

v'

\-c.


5/5

Kotak Mahindra

Bank

Ltd.

And

Ors;

[2010]

159 Comp

Cas 241

(CLB)

D.R.

Sharma

vs.

Reliance

Industries

Ltd. and

Ors.,

to say

that

the

petition

u/s1l1A

of

the

Act could

be

allowed

even after

there

is

mismatch

of

the

signature

of

transferor and

even

after

more

than

10 years delay

in filing

company

petition'

In

the

cases

referred above,

CLB

held in

favor

of

the transferee

stating

since there

is no claim

for dividends

from

the company,

the

transferee

entitled

for

registration of his

name in the

place

of

Registered

Holder.

13

With all humility,

I

disagree

with this

proposition

because

mere inaction

or

for want

of

communication

on the

part

of

registered holder

with the company

will not tantamount

t0

transfer

of one's

rights to

another. Is there any

material

to

say

that

the company

declared

and

sent dividend

to the

party

to the said

address

and

R3

did

not

claim

it?

No

such

material

is there

to

say

that the

petitioner

abandoned

his

rights. It is basic

principle

when

anybody

says

he/she has acquired

rights of

somebody

through

conveyance,

then the

party

claiming

rights shall

produce

proof

to that effect,

if it

is not there,

it shall not be

construed

behind

the

back

of

such

person

that his

rights

are

transferred

to somebody.

Therefore,

the

Detitioner

cannot ctaim

the rights

of the

registered

holder as

long

as

the

rights

are

not

transferred.

Mere

inaction of one

person

will

not

give

right

to

another

person

to usurp

into

the

rlghts of

another

person

just

on the

ground

registered

holder

is said to

have remained

inactive. Since all

these citations

are

decided by

company

Law Board,

they will

have only

peBuasive

value on the

co-ordinate

Bench, but

they are not binding

upon

this Bench

to

go

by

the

proposition

propounded

by other Bench of

CLB.

4.

Accordingly,

this

petition

is

dismissed

giving

liberty to

the

petitioner

to approach

appropriate

forum.

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(B.S.V.

PRAKASH

KUMAR)

Member

(Judicial)

Corrected

and

signed on

22-7-20L4)

Mother Son Sumi Systems Lt. & Ors

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Transcript of Mother Son Sumi Systems Lt. & Ors