Bangalore District Court
Sri.Hiriadka Shankar Rao vs M/S Sterlite Industries on 6 March, 2017
IN THE COURT OF THE XX ADDL.CITY CIVIL &
SESSIONS JUDGE (CCH.32), BANGALORE CITY
Present
Sri. V.B.Suryavanshi, B.Com.,LL.B.(Spl.),
XX Addl. City Civil & Sessions Judge,
Bangalore
DATED THIS THE 6th DAY OF MARCH, 2017
O.S.No.1794/2010
Plaintiff: Sri.HIRIADKA SHANKAR RAO,
S/o Late H.Krishna Rao,
Aged about 62 years,
R/at 'SHRI GURKRUPA', No.4/1/18,
3rd Main Road, Venkatamma MSR
Colony, Mathikere, Bangalore-54,
represented by his SPA holder
Sri R.Manjunatha,
S/o G.V.Ramachandra Rao,
Aged about 57 years,
having office at No.256, K.S.Complex,
3rd Floor, Chickpet Circle,
Bangalore-560 053.
(by Sri Y.Hariprasad, Adv.)
/VS/
Defendants: 1. M/s STERLITE INDUSTRIES
INDIA LTD., (A company
registered under the Companies
Act of 1956) Registered office
SIPCOT Industrial Complex,
Maduria By-pass Road,
T.V.Puram Post, Tutokorian,
Tamilnadu-628 002.
2. KARVY COMPUTERSHARE (P)
LTD., Unit: STERLITE
INDUSTRIES INDIA LTD., Karvy
House, Plot No.17-24, Vittalrao
Nagar, Madhapur, Hyderbad - 81
3. KARVY COMPUTERSHARE (P)
LTD., Unit: STERLITE
INDUSTRIES INDIA LTD., No.59,
'Skanda' Puttanna Road,
Basavanagudi, Bangalore-04.
2 O.S.1794/2010
4. M/s SESA STERLITE LIMITED,
(Formerly Sesagoa Limited)
Regd.Office: SESA Ghor, No.20,
EDC Complex, Patto Panjim,
Goa-403 001.
5. M/s Vedanta Limited,
(Formerly Sesa Sterlite Limited)
Regd.Office: SESA Ghor, No.20,
EDC Complex, Patto Panjim,
Goa-403 001.
(D1 to D4-Sri S.R.Sundarram, Adv.
D5 - absent)
Date of Institution of the suit 17.03.2010
Nature of the suit Mandatory Injunction
Date of commencement of
26.03.2013
recording of evidence
Date on which Judgment 06.03.2017
pronounced
Total Duration Years Months Days
06 11 19
JUDGMENT
This is a suit filed by the plaintiff against the defendants for mandatory injunction.
2. It is the specific case of the plaintiff that, he is an investor in Shares and Stocks. The 1st defendant is Public Limited Company under Companies Act, 1956 offered Zero fully convertible Debentures to the public through the public issue during 1993 and listed the same in stock market for trading. The 2nd and 3rd defendants are mere Registrars and Transfer Agents of 3 O.S.1794/2010 the 1st defendant through whom the 1st defendant corresponds and handles shareholder's grievances, as of now.
2(a). The plaintiff had applied for 50 Nos. of secured zero interest fully convertible debenture issue of the face value of Rs.360/- each for cash at par of the 1st defendant during 1993. He had paid Rs.18,000/- towards the same and had been allotted 50 Nos. of said debentures from the 1st defendant and nil refund and received the Debenture Certificate during 1993. Moreover, said Debentures have been issued under the terms of automatic conversion of 50 Debentures into 100 fully paid up Equity shares of the face value of Rs.10/- each effecting from 22.09.1994.
2(b). The Debenture-cum-share certificate issued by the 1st defendant is having the Debenture Certificate No.00302607 with distinctive No.012515610 to 012515659 (50 Nos.) as well as Share Certificate No.00938722 with distinctive No.039915608 to 039915707 (100 Nos.) with common 4 O.S.1794/2010 registered folio No.D24575. The 1st defendant had kept the same for long term investment in view of bright future prospects of the industry.
2(c). The plaintiff came to know that the 1st defendant company had issued bonus shares and had split the shares, as well, of late. The plaintiff had checked the holdings of the 1st defendant company in his custody and could not find any extra shares except the 1st defendant and accordingly, the plaintiff requested the 1st and 2nd defendants to issue new share certificates considering bonus shares and share split up 2(d). The 1st defendant had not replied to letters, however, the 2nd defendant being a registrar and transfer agent of the 1st defendant had responded letter Dt.26.10.2009 and the 2nd defendant replied on behalf of the 1st defendant stating that, the scheme of arrangement of optional buyback of shares from the shareholders and their consent and payment is totally untrue.
5 O.S.1794/2010
2(e). The plaintiff had sent a third reminder and the 1st and 2nd defendants explaining the facts of the case in detail, requesting for a detailed check up and dispatch of the new certificate arising out of bonus and share splits. The plaintiff is left with no option, owing to negative and indifferent attitude shown by the 1st defendant, he got issued legal notice to the defendants. The 2nd defendant on behalf of the 1st defendant had sent Rs.10,000/- through DD 282921 Dt.04.02.2010 along with letter Dt.10.02.2010 mentioning the mount being issued in view of the share purchase consideration.
2(f). The plaintiff contended that, he has invested his hard earned money of Rs.18,000/- with long term investment prospective and future benefits and the 1st defendant has no right to extinguish the shares of the plaintiff without written consent and without surrender of share certificate and without making payment. The plaintiff is the legal, absolute and 6 O.S.1794/2010 rightful holder of the share certificate and he had not mortgaged any share certificates.
2(g). The 1st defendant company has been merged with the 4th defendant company recently, the 4th defendant company offered 3 Equity shares of Rs.1/- face value against the holding of 5 Equity shares of Rs.1/- face value in the 1st defendant company as exchange ratio for merger. In view of these developments, the share holders of the 1st defendant get allotted the shares of the 4th defendant in proportion to their holdings. Hence, the plaintiff is seeking mandatory injunction directing the 4th defendant to issue new equity share certificate arising under the Folio No.D24575 in Sterilite Industries Limited, due to the merger of the 1st defendant along with the accumulated dividends till today, hence, he constrained to file suit against the defendants for mandatory injunction.
3. On the contrary, the defendant No.1 has filed his written statement denying that, the suit filed by the 7 O.S.1794/2010 plaintiff is not maintainable and it does not disclose the cause of action.
3(a). Further, it is contended by the defendant No.1 that, in the year 2002, the 1st defendant had filed petition U/s 391 of the Companies Act, 1956 between Sterlite Industries (India) Ltd., and its Equity Shareholders before the Hon'ble High Court of Judicature at Bombay, this petition was allowed by the Hon'ble High Court of Bombay and the said Scheme of arrangement has been duly approved and sanctioned and moreover, their Lordships have observed that, the Scheme of arrangement to binding with effect from the effective date on all the Equity shareholders, preferential shareholders, secured creditors and unsecured creditors of the defendant company.
3(b). The Hon'ble High Court of Bombay has also ordered that, in terms of the Scheme the defendant company shall, on a date fixed by the Board of Directors of the Company, purchase not more than 2,79,96,278 equity shares from the shareholders. 8 O.S.1794/2010 excluding equity shares of those shareholders who intimate the defendant company and in case the equity shares required to be purchased by the defendant company as above exceeds, in that event, the defendant company shall purchase the equity shares on a pro rata basis and also Hon'ble High Court of Bombay ordered the defendant company that, in consideration for every one share purchased by the defendant company in pursuance of the Scheme, the defendant company shall within 7 days from the date of purchase of the equity shares without any further application, act or deed by the shareholder. Being aggrieved by the said order, the Securities and Exchange Board of India, and Union of India have challenged the said order by filing an Appeal before the Hon'ble High Court of Judicature of Bombay and the said Appeal was dismissed and even an Appeal was preferred before Hon'ble Supreme Court in Civil Appeal jurisdiction and that case was also disposed of and the cause of action as shown in the plaint is false and the contention of the plaintiff that, he has not pledged nor 9 O.S.1794/2010 mortgaged nor taken any loan from anybody at any point of time on this share certificate is denied, hence, prays for dismissal of the suit.
3(c). The defendants 2 and 3 have also filed their written statement contending that, the suit of the plaintiff is not maintainable and the grievance of the plaintiff against the 1st defendant and this 2nd defendant are not necessary parties and hence, prays for dismissal of the suit.
4. On the rival pleadings of the both the parties, the following issues have been framed by the court on 10.07.2012
1. Whether the plaintiff proves that, he is entitled for the new share certificate arising out of Bonus issue and share split issue related to share certificate No.00938722 of STERLITE INDUSTRIES (INDIA) LTD?
2. Whether the plaintiff proves that, the defendants are interfering with his holdings under the registered folio No.D24575?
3. Whether the defendant proves that his action of buy back and cancellation of the share certificate of the plaintiff is legal and fair?
10 O.S.1794/2010
4. Whether the plaintiff proves that, he is entitled for the unencumbered ownership of share certificate arising out of split and bonus shares?
5. What order or decree?
5. The Special power of attorney holder of the plaintiff has been examined as PW.1 and got marked documents at Ex.P1 to P15 and closed plaintiff's side evidence. On behalf of the defendants, one Satyapriya, Associate General Manager-Legal of the defendant No.1 company has been examined as DW.1 and no documents are marked.
6. Heard the arguments.
7. My findings on the above issues are as follows:
Issue No.1: In the Affirmative
Issue No.2: In the Affirmative
Issue No.3: In the Negative
Issue No.4: In the Affirmative
Issue No.5: As per final order for the below mentioned 11 O.S.1794/2010 Reasons
8. Issue Nos.1 to 3: Since, these issues being interconnected and interlinked to each other, to avoid repetition of facts and evidence, I have taken these issues together for common discussion.
9. This is the suit filed by the plaintiff against the defendants for mandatory injunction.
10. It is the specific case of the plaintiff that, since, he has purchased 50 Nos. of secured Zero interest fully convertible debentures issue of the face value of Rs.360/- and he has paid Rs.18,000/- towards the same and the plaintiff had checked the holdings of the 1st defendant company in his custody and could not find any extra shares except the 1st defendant and accordingly, the plaintiff requested the 1st and 2nd defendants to issue new share certificates considering bonus shares and share split up, but, the plaintiff could not receive any extra share except the 12 O.S.1794/2010 first allotment, hence, he is constrained to file suit against the defendants for mandatory injunction.
11. On the contrary, the case of the plaintiff was denied by the defendant that, by virtue of the orders of Hon'ble High Court of Judicature of Bombay, the suit of the plaintiff is not maintainable and he is not entitled as he claims.
12. The plaintiff examined his special power of attorney holder as PW.1 and he has reiterated the contents of the plaint averments in his oral testimony and also produced Ex.P1 to P15.
13. Though the defendant has taken contention that the suit is not maintainable and accordingly, his Associate General Manager-Legal has been examined as DW.1 and he has reiterated the contents of the written statement in his oral testimony and he has not produced any documents before the court in order to substantiate his defence.
13 O.S.1794/2010
14. It is very significant to note that, though the DW.1 was examined, unfortunately DW.1 was not tendered for cross examination and accordingly, his evidence was discarded.
15. On perusal of the plaint averments as well as the evidence of the PW.1 wherein, it is plaintiff who had applied for 50 Nos. of secured zero interest fully convertible debenture issue o the face value of rs.360/- and accordingly, he has paid Rs.18,000/- and 50 debenture share certificates have been allotted from the 1st defendant in the year 1883 and the said 50 share debentures issued by the 1st defendant on terms of automatic conversion of 50 debentures into 100 fully paid up equity shares of the face value of Rs.10/- each effecting from 22.09.1994. On perusal of the Ex.P2 i.e., Debenture-cum-share certificate wherein, equity share of Rs.10/- of 50 debentures have been issued in the name of the plaintiff on 11.06.1993 and moreover Ex.P3 is the cheque issued by the 1st defendant bank 14 O.S.1794/2010 to the plaintiff. On perusal of the Ex.P4 to P8, wherein these are the letters written by the plaintiff.
16. On perusal of the Ex.P2 Debenture-cum- share certificate wherein issued in favour of the plaintiff by the defendant No.1 with the distinctive No.012515610 to 012515659 (50 Nos.) as well as Share Certificate No.00938722 with distinctive No.039915608 to 039915707 (100 Nos.) with common registered folio No.D24575 admittedly, said certificate was issued on 11.06.1993.
17. It is very significant to note that, it is the specific assertion of the plaintiff that, since he came to know that the defendant company had issued bonus shares and had split the shares, as well, of late and could not find any extra shares except the 1st defendant and accordingly, the plaintiff requested the 1st and 2nd defendants to issue new share certificates considering bonus shares and share split up through letter Dt.18.07.2009.
15 O.S.1794/2010
18. It is very significant to note that, though the plaintiff has written letters i.e., 2nd remainder on 15.10.2009, the 2nd defendant being a registrar and transfer agent of the 1st defendant had responded through letter Dt.26.10.2009. But, the defendant though he had specifically contended that, the suit of the plaintiff is not maintainable by virtue of the observations made in the petition filed U/s 391 of the Companies Act, 1956 between Sterlite Industries (India)Ltd., and its Equity shareholders and even by virtue of the order passed Dt.19.04.2002 the scheme of arrangement to be binding with effect from the effective date on all the Equity shareholders, Preferential Shareholders, secured Creditors including debenture holders of the defendant. But, in order to substantiate the same, unfortunately, the defendants have not placed any iota of evidence before the court. Though the defendant has contended in his evidence, but unfortunately has not turned up for cross examination, accordingly, the evidence of DW.1 was discarded.
16 O.S.1794/2010
19. Taking into consideration the evidence of the PW.1 and the documents produced by the plaintiff, I am of the considered opinion that, the defendant is entitled to issue new share certificates arising out of Bonus issue and share split issue related to share certificate No.00938722 with distinctive No as per Ex.P2 and also the 5th defendant is entitled to issue New Equity Share Certificate to the plaintiff under Folio No. D24575. So, I answer issue Nos.1 and 2 in the Affirmative and issue No.3 in the Negative.
20. Issue No.4: In view of findings given on issue Nos.1 and 2, the plaintiff is entitled for the relief sought for, accordingly, I answer this issue in the Affirmative.
21. Issue No.5: In view of finding on issue No.4, I proceed to pass the following 17 O.S.1794/2010 ORDER The suit of the plaintiff is decreed.
It is ordered and decreed that, the 1st defendant is directed to issue new share certificates arising out of Bonus issue and share split issue related to share certificate No.00938722 with distinctive No.039915608 to 039915707 issued under the Folio No. D24575 of STERLITE INDUSTRIES (INDIA) LTD., to the plaintiff.
It is further ordered and decreed that, the 4th and 5th defendants are directed to issue New Equity Share Certificate to the plaintiff under Folio No.D24575 along with accumulated dividends due thereon.
It is further, ordered and decreed that, the defendants are restrained from interfering with the plaintiff's holding under the registered Folio No.D24757.
Looking to the facts and circumstances of the case, the parties are directed to bear their own costs.
Draw decree accordingly.
(Dictated to the judgment writer, transcribed by her, corrected and then pronounced by me in open court, this the 6th day of March, 2017) ( V.B.SURYAVANSHI ) XX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.
18 O.S.1794/2010ANNEXURE List of witnesses examined for the Plaintiff :
PW.1 : Sri R.Manjunath List of documents marked for the Plaintiff :
Ex.P1 Special power of attorney
Ex.P2 Share certificate
Ex.P3 DD issued by defendant No.1
Ex.P4 Letter Dt.18.07.09 with postal receipt
Ex.P5 Letter Dt.15.10.09 with postal receipt
Ex.P6 Reminder Dt.15.10.09 with postal
receipt
Ex.P7 Letter Dt.26.10.2009
Ex.P8 4th reminder Dt.20.11.09 with courier
receipt
Ex.P9 Courier receipt
Ex.P10 Letter Dt.01.12.09
Ex.P11 Copy of legal notice Dt.14.12.09 with
receipt
Ex.P12 Postal acknowledgement
Ex.P13 Letter Dt.10.02.10 with copy of DD
Ex.P14 Circular
Ex.P15 Notice
Witnesses examined for the defendants:
DW.1 : Sri Satyapriya List of documents marked for the defendants : nil ( V.B.Suryavanshi ) XX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY 19 O.S.1794/2010 20 O.S.1794/2010 Judgment pronounced in the open court ( vide separate order) Order The suit of the plaintiff is decreed.
It is ordered and decreed that, the 1st defendant is directed to issue new share certificates arising out of Bonus issue and share split issue related to share certificate No.00938722 with distinctive No.039915608 to 039915707 issued under the Folio No. D24575 of STERLITE INDUSTRIES (INDIA) LTD., to the plaintiff. It is further ordered and decreed that, the 4th and 5th defendants are directed to issue New Equity Share Certificate to the plaintiff under Folio No.D24575 along with accumulated dividends due thereon. It is further, ordered and decreed that, the defendants are restrained from interfering with the plaintiff's holding under the registered Folio No.D24757.
Looking to the facts and circumstances of the case, the parties are directed to bear their own costs.
Draw decree accordingly.
XX ACC & SJ,B'lore 21 O.S.1794/2010