Company Law Board
Pushpaben Kalyanbhai Vasa And Anr. vs Grasim Industries Limited on 18 July, 2002
ORDER
1. The petitioners have filed this above appeal under Section 111 and Section 111A of the Companies Act, 1956, inter alia, praying to pass order directing the Respondent No.1 to issue duplicate share certificates to the petitioners in respect of 150 shares. The brief fact of the case are that the petitioners are jointly holding 150 shares of the Respondent Company and they surrendered the said 150 share certificates to the Respondent No.3 - UTI Bank Limited who is depository of Respondent No.1 for dematerialisation on 3rd March, 2000. Subsequently, the Respondent No.3 the depository vide its letter dated 1st April, 2000 informed the petitioners that the shares have been misplaced by their Courier ELBEE while sending it to the Respondent No.1 company for dematerialisation and also informed that the ELBEE have lodged police complaint on 25th March, 2000 and advised the petitioners to request the Respondent No.1 Company for issue of duplicate shares.
2. The petitioners thereafter on receipt of the letter from the Respondent No.3 faxed on 3.4.2000 as the Respondent No.1 and intimated about the loss of the share certificates by Respondent No.3 and requested to issue duplicate share certificates in lieu thereof, Thereafter petitioners received a letter dated 7.11.2000 from the Respondent No.1 intimating that the aforesaid shares which were reported as lost by the petitioners have been lodged by the Respondent No.2 - Mr. Dimesh Laxmanbhai Vaghaisa for transfer in his name. The petitioners by his letter dated 14.11.2000 replied to the Respondent No.1 company and requested for not to transfer the said shares as the Elbee Couriers have lodged police complaint to police station of Dadra vide FIR No. 76/2000 dated 25.3.2000 about loss of the said shares. It is also stated in the petition that the Respondent No.1 company has accepted their contention that the petitioners are the original shareholders of 150 shares and advised the petitioners to approach the Respondent No.1 company for issuance of duplicate shares. Accordingly, the petitioners executed Indemnity & Guarantee and Affidavit on the stamp papers in the formats prescribed by Respondent No.1 company and forwarded to the Respondent No.1 company on 7.3.2001. The Respondent No.1 company requested the petitioners to move on an appropriate Court of Law and obtain injunction order restraining Respondent No.1 from transfer of the said shares. The petitioners further stated that they had filed Civil Suit No. 1970 of 2001 before the City Civil Court at Ahmedabad seeking necessary orders to restrain Respondent No.1 from transferring the shares in question. However, the application for temporary injunction filed by the petitioners has been rejected by the said Court on the ground of bar of jurisdiction.
3. The Respondent Company has filed its reply duly affirmed by an affidavit dated 7th May, 2002. In the said reply the Respondent No.1 Company stated that it has received a declaration dated 19th April, 2000 executed by the petitioners stating that the petitioners have by their own free will given their consent to transfer the said shares and accordingly were delivering the relevant transfer forms duly filled in and signed by them. proper forum to decide the matter in question, the Respondent No.1 will be pleased to abide by the decision of the Hon'ble Board.
4. The petitioners have not filed any rejoinder to the reply of the Respondent No.1. Respondents No. 2 & 3 neither filed any reply nor present at the time of hearing of the case.
5. The Counsel for the Respondent No.1 company, in this connection has referred the order dated 6th June, 1997, passed by the Company Law Board, Southern Region Bench, in the case of Andhra Pradesh Paper Mills Limited v. Pompasar Distillery Limited. In the said case it is stated that "Any right to move the Company Law Board in respect of a public company could only be under the provisions of Section 111A. As far as transfer matters are concerned, now provision exists under the proviso to Sub-section 111A(2) as well as 111A(3). However, rectification in respect of non transfer matters cannot be sought before the Company Law Board as no jurisdiction in these matters has been conferred on the Company Law Board under that section. Therefore, under the existing provisions, the only remedy available is that, one has to move the Civil Court". It is also stated in the said order that "one has to move a forum, which has the jurisdiction to entertain the matter on the day of filing a petition, and not a forum which had the jurisdiction when the cause of action arise but does not have the jurisdiction when a petition is filed".
6. We have examined the submissions made by the representative and the Counsel of the contesting parties. We are of the view that under Section 111A of the Companies Act, 1956 the Company Law Board has jurisdiction to adjudicate only when there is a refusal for transfer of shares on sufficient cause and/or pass an order for rectification of register of members on transfer. But in the instant case none of the above two criterias exists. The petitioners have prayed in the present petition for giving directions for issue of duplicate shares in respect of 150 shares. Under Section 111A of the Companies Act, 1956 CLB has no power to give directions for issue of duplicate share certificates. The provisions for issue The petitioners have further stated, inter alia, that they have no objection from their side and that any claim regarding the said shares in future may be treated as null and void. It is also stated in the said reply that the Respondent No.1 company has also brought to the notice of the petitioners the fact that when the shares are normally sent by a depository participant to the company for dematerialisation, they are normally cancelled and a rubber stamp seal "SURRENDERED FOR DEMATERIALISATION" is put by the concerned participant, whereas the share certificates in respect of the said shares delivered to the Respondent No.1 by the Respondent No.2 did not bear any such seal and called upon the petitioners to explain the reasons for the same. In the circumstances, the Respondent No.1 company wants the petitioners to obtain an order from competent Court within 15 days refraining them from transferring the said shares failing which they would be constrained to proceed with the transfer.
7. It is also stated in the reply of the Respondent No.1 company that the petitioners Advocate vide their letter 27th April, 2001 to the Respondent No.1 informed inter alia that they have filed a suit in the City Civil Court at Ahmedabad seeking ad-interim injunction restraining the Respondent No.1 etc. from transferring the said shares in favour of Respondent No.2 However, no order passed by the City Civil Court has been received by the Respondent No.1 till date. In reply to the petitioner's Advocate's aforesaid letter, Respondent No.1 stated, inter alia, that they will be unable to issue duplicate shares unless the until the petitioners furnish the Court Order or int eh alternative advised the petitioners to obtain a no objection letter from the Respondent No.2 consenting to and withdrawing his claim in respect of the said shares which he had lodged with the Respondent No.1 for transfer. However, Respondent No.1 company has not till date received any such letter. It is also stated that in fact out of total 728 shares reported lost, Respondent No.1 company has (except for the subject 150 shares which have been lodged with the Respondent No.1 for transfer by Respondent No.2) already issued duplicate shares for 578 shares to the petitions. The Respondent No.1 company also submitted in its reply that if the Hon'ble Board tasks the view that the CLB has jurisdiction and is the of duplicate share certificates has been prescribed under Rule 4(3) of the Companies (Issue of Share Certificates( Rules, 1960. In fact, the Respondent No.1 company has stated in his reply that out of 728 shares reported as lost, duplicate share certificates had already been issued by the Respondent No.1 for 578 shares except for impugned 150 shares which has been lodged with the Respondent No.1 for transfer by Respondent No.2.
8. In view of the facts and circumstances of the case, we are of the view that CLB has no power to pass any order under Section 111A of the Companies Act, 1956 for issue of duplicate share certificates as prayed for by the petitioners. Accordingly, the petition is dismissed for want of jurisdiction under Section 111A of the Companies Act, 1956 with no order as to costs.