M/S Unit Trust Of India & Ors vs M/S Jagan Nath Sayal & Co.& Anr.
2012 Latest Caselaw 6965 Del

24
*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                               Judgment Reserved on :30.11.2012
                               Judgment delivered on : 05.12.2012

+     CO.A(SB) 35/2010

      M/S UNIT TRUST OF INDIA & ORS.        ..... Appellants
                    Through   Mr. Mohinder J.S. Rupal. Adv.

                      versus

      M/S JAGAN NATH SAYAL &
      CO. & ANR.                           ..... Respondents
                   Through  Mr. Samrat K. Nigam,
                            Mr.Kartikey Mahajan and
                            Ms. Ankitya Mahajan, Adv. for
                            R-1.
                            Mr. G.L.N. Murthy, Adv. for R-2.

      CORAM:
      HON'BLE MS. JUSTICE INDERMEET KAUR

INDERMEET KAUR, J.

1. This appeal has been directed against the impugned order of

Company Law Board (CLB) dated 08.06.2010 wherein directions had

been given to M/s Hero Honda Motors Ltd. (hereinafter referred to as

the Company) to rectify the Register of Members and to enter the name

of M/s Jagan Nath Syal & Co. (hereinafter after referred to as

respondent No. 1) in the Register of Members qua 1250 equity shares of

Rs.2 each; the unpaid dividend was also admitted to be paid to him for

the interregnum period.

2. Appellant before this Court is the Unit Trust of India (hereinafter

referred to as the appellant).

3. The case of the respondent is that he had bought 200 equity shares

of the value of Rs. 10 each in a broker to broker transaction from M/s

Dev Saigal & Co. vide invoice dated 20.05.1992. This document finds

mention at page 67 of the paper book. These 200 shares were lost on

the same date itself; not only these shares but his bag full of shares of

other companies had also been lost; an FIR of the same date i.e.

20.05.1992 was registered in the concerned police station which forms a

part of the record. On 26.05.1992 the respondent wrote to the Delhi

Stock Exchange giving him the details of the various shares which had

been lost by him as also his submission that an FIR had been lodged

with the Roop Nagar Police Station; distinctive numbers of these shares

which include the 100 shares in dispute were also given.

4. Learned counsel for the appellant points out that the distinctive

numbers which find mention in this communication dated 26.05.1992 do

not match with the distinctive numbers which have been given in the

petition and attention has been drawn thereto. Attention has also been

drawn to the subsequent communications exchanged between the

respondent and other bodes i.e. the letter dated 09.06.1992 addressed by

the Delhi Stock Exchange (DSE) to its members; letter of the respondent

to the Company dated 05.06.1992; letter dated 13.05.1997 by the

respondent to the Registrar/Share Transfer Agent (STA) of the

Company as also another letter dated 16.05.1997 written by the STA to

the respondent wherein in all these communications also there has been

a cutting over the original distinctive numbers and they have been re-

written; submission of the appellant being that these overwritings have

not been explained; who has made these overwritings and why the

distinctive numbers have been cut out and re-written with new members.

5. To this specific query, learned counsel for the respondent has a

satisfactory explanation. Admittedly several shares of the respondent

had been lost on 20.05.1992; they were not 200 shares of the M//s. Hero

Honda Motors Ltd. alone; shares of other various companies amounting

to almost more than 2500 shares had been lost and this is evident from

the details given in these communications. It is also not case of the

appellant that the numbers in each of these communications are

different; record shows that earlier the distinctive numbers had been

given as 11916764-813, 112466-515 which were renumbered in all

subsequent communications as 4070816-865; 3465966-015; this was

apparently and evidently because of inadvertence and a mistaken

identification; there could be but no other explanation and this fact

finding returned by the CLB based on sound discretionary principles

calls for no interference.

6. The appellant has also assailed the order of the CLB on the

ground that there has been an inordinate delay on the part of the

respondent in approaching the CLB; submission being that the shares

had been lost in May 1992 yet respondent No. 1 has approached the

CLB only in the year 2009.

7. For this submission also the answer given by the respondent is

satisfactory. Record shows that the loss of the shares was noted on

20.05.1992; an FIR had been lodged in the local police station at Roop

Nagar Police Station on the very same date. Thereafter on 26.05.1992 a

letter was addressed by respondent No.1 to the DSE detailing these

submissions; this was followed by a communication from the DSE to

its members notifying them about this loss. On 05.06.1992 respondent

No. 1 wrote to the Company seeking issuance of duplicate shares; this

was followed by another communication dated 13.05.1997 addressed to

the STA of the Company which was duly replied to by him vide his

communication dated 16.05.1997. Record also shows that a suit for

declaration i.e. Civil Suit No. 861/1998 was filed by the respondent No.

1 against the Company seeking transfer of these shares in his record. It

is also an admitted fact that in the year 1998, the Company had marked

a „stop transfer‟ of these shares; the dividend qua these shares remained

unpaid as objections against these shares were pending before the

company. This suit was withdrawn on 22.11.2000. Vehement

submission made by the learned counsel for the appellant on this count

being that this suit was withdrawn unconditionally and as such the

present petition under Section 111 of the Companies Act was barred.

8 This is a misdirected submission. It is not the case of the appellant

that the principle of res judicata was applicable; Order 23 Rule 3 would

also not apply. A petition under Section 111 of the Companies Act is a

summary procedure vesting the CLB with the jurisdiction to rectify the

share register; it is not a suit.

9. Even after the withdrawal of the suit in 22.11.2000 respondent

no. 1 did not allow the matter to rest; he continued with his vigorous

efforts to get share register rectified. The petition under Section 111 of

the Companies Act was filed in 2009. In this interregnum period

respondent No. 1 wrote letters to the Mumbai Division of the Company

seeking a rectification in the share register (which is evident from his

letter dated 19.07.2002 followed by their reply dated 23.07.2002). On

27.11.2005 the Stock Holding Corporation answered the letter of

respondent No. 1 which was also of the same date; communication

dated 08.02.2006 was also addressed by the Company to the appellant

wherein the Company requested them to confirm the fact as to whether

they had sold 100 shares to respondent No. 1 or not to which admittedly

no reply had been sent by the appellant. Vehement submission of the

learned counsel for respondent No. 1 on this count being that the

appellant was all times ignoring the correspondences of respondent No.

1 and that of the company as well. Communication dated 16.03.2006

written by respondent No. 1 to the DSE is also on record. Thus these

correspondences establish the fact that the respondent No. 1 had been

continuously following up this matter.

10. It is also an admitted fact that 29.09.2002 the 100 shares which

were originally in the name of Kamal Doot were transferred by the

Company in favour of respondent No. 1 on his executing the necessary

documents i.e. indemnity bond etc. These shares were also the subject

matter of the same theft which had been taken place on 20.05.1992. A

specific query has been put to the learned counsel for the Company as to

why if 100 shares of Kamal Doot had been transferred in favour of

respondent No.1 on his executing an indemnity bond etc. why the

remaining 100 shares which were on the same footing had not been

transferred to which there appears to be no explanation by the Company.

11. The CLB in this context has rightly observed that an individual

has been pitted against a big financial institution and in this factual

scenario because of the arbitrary discretion exercised by the Company

respondent No. 1 had little choice but to come knocking on the doors of

the court.

12. It is also not the case of the appellant that they had taken any

action to get these shares re-registered in their names; they have

admittedly not taken a single step in this regard; no communication had

been sent by the appellant to the Company asking for this "stop transfer"

in 1998 to be removed.

13. It is in this background that the order of the CLB has to be tested.

14. An appeal under Section 10 F of the Companies Act can be filed

only on a question of law; a mis-interpretation or mis-reading of

document is question of law. There is no dispute that in this case a

question of law has arisen as the submission of the appellant is that the

correspondences exchanged between the parties were not appreciated by

the CLB in its correct perspective.

15. Submission being that the CLB should have returned a finding

that no active steps had been taken by respondent No. 1 up to 2009

(when the present petition was filed) and the petition was barred by

limitation. Record does not substantiate this submission of the

appellant; respondent no. 1 was pursing his case right from the inception

and correspondences (as noted supra) are prima facie evident of this

fact. It is also not the argument of the appellant that respondent No. 1

had not purchased the shares from him; his whole argument is bordered

on the issue of limitation; submission being that because of the

inordinate delay on the part of respondent No. 1 in taking active steps,

the present petition under Section 111 of the Companies Act is liable to

be dismissed.

16. As noted (supra) this submission is contrary to the record. Order

of the CLB on this count calls for no interference

17. The last submission of the appellant is that prayer made in the

petition under Section 111 of the Companies Act has sought a

declaration for the ownership of these shares and such a prayer cannot

be entertained by the CLB; it is a rectification of the share register

rectified alone which is permissible under Section 111 A of the

Companies Act.

18. A wholesome reading of the petition negatives this argument.

Case of the respondent all along has been that he had purchased these

shares on 20.05.1992 but they were lost on the same date; accordingly it

had been prayed that in the absence of the original documents i.e. share

certificates and the share transfer forms a direction be given to the

Company to rectify the Share Register entering his name in the list of

share holders qua these 100 shares.

19. As noted (supra) out of the 200 shares which had formed part of

the transaction dated 20.05.1992 Company has already transferred 100

shares in favour of respondent No. 1. Discriminatory attitude of the

Company qua respondent No. 1 has been correctly noted by the CLB.

20. In this background, impugned order directing rectification of the

Share Register in favour of the respondent No. 1 qua these 100 shares as

also for additional bonus shares with a direction to pay the unclaimed

dividend to respondent No. 1 calls for no interference.

21. Appeal is dismissed.

INDERMEET KAUR, J

DECEMBER 05, 2012 rb