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
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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*
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
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.
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)