Supreme Court - Daily Orders
Adesh Kaur vs Eicher Motors Limited on 3 July, 2018
Author: R.F.Nariman
Bench: Rohinton Fali Nariman, Indu Malhotra
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1942619427 OF 2017
ADESH KAUR ... Appellant(s)
Versus
EICHER MOTORS LIMITED AND ORS. ... Respondent(s)
J U D G M E N T
R.F.NARIMAN, J.
The present case discloses a very sordid state of
facts.
The appellant before us is a resident of Punjab,
and had acquired in all 903 equity shares in the
respondent No. 1Company. This acquisition took place
way back in the year 199495.
It appears that sometime in 2012, another Ms. Adesh
Kaur, who is a resident of Mumbai impersonated the
appellant and requested respondent No. 2 to change the
Signature Not Verified
address from Punjab to Mumbai. It is not disputed
Digitally signed by
SHASHI SAREEN
Date: 2018.07.05
17:32:25 IST
Reason:
before us that the standard procedure to be followed was
not followed by respondent No. 2, and the aforesaid
change of address was despite the requirements of
2
Circular No. 1 dated 09.05.2001. The impersonator then
went on to execute an indemnity bond by forging the
appellant’s signature for issue of duplicate share
certificates of the 903 equity shares mentioned above.
This being done, on 28.09.2012, Respondent No. 2 issued
duplicate certificates in favour of the impersonator
who, in turn, on 10.12.2012, transferred the said shares
to one Vikas Tara Singh, respondent No. 8, resident of
Malad, Mumbai by using the forged signature of the
appellant. At this stage, it is important to note that
respondent No. 8, though served in the present
proceedings, has not appeared either before the Tribunal
or before the Appellate Tribunal and has not appeared
before us. The appellant, sometime in 2014, came to
know through the Company Secretary of Respondent No.1
that duplicate share certificates had been given to
somebody else who had subsequently transferred them to a
third party. As soon as she became aware of the fraud
that was perpetrated on her, the appellant requested the
Company to issue revalidated fresh share certificates
for the said 903 equity shares on 17.09.2014. Since
this was not done, despite repeated reminders for the
same, a Company Petition was filed on 31.07.2015 before
the Company Law Board, which was then taken up under the
Amended Act by the National Company Law Tribunal. In a
3
significant order that was passed by the NCLT on
09.11.2016, the NCLT recorded that it was acknowledged,
both by the Company as well as by the SEBI, that
procedural aspects and due care were not adhered to in
the process of issuance of duplicate shares, as
otherwise such fraud would easily have been unearthed.
In the order passed by the NCLT, the NCLT adverted to
the aforesaid facts and afforded relief to the appellant
in the following terms:
“The objection of Respondent No. 1 that the
case in hand cannot be adjudicated by the
Tribunal is a frivolous attempt to escape any
liability and or grant relief to the
petitioner. This Bench fails to understand why
the petitioner should resort to a civil court
in order to prove her title. Apart from her
oral testimony and her original share
certificates, there is little else to be
adduced in evidence even in a Civil Suit. She
has her original certificates in hand. The
respondents are aware of the fraudulent acts
perpetuated on her and have even initiated
criminal proceedings. There is no reason for
the petitioner to be deprived of her assets for
the outcome of the criminal investigation or
wait for the criminal to be brought to book.
Her documents and her entitlement are not
denied to by the respondents. Under such
circumstances, vague denial to escape any
4
liability and to suggest that the petitioner
initiates a Civil Suit is viewed as an attempt
not to redress the grievance which has
primarily arisen out of the fraud played by the
employees of the Respondent Company or their
Agents. Apart from guidelines of Respondent
No. 3 that unequivocally make the Respondent
Company liable for the acts of their Register
cum Share Transfer Agents, the law on the point
is clear that the Principals are liable for the
acts of their agents.”
The NCLT then went on to state that the original
share certificates, which were still in physical form
with the appellant, could get demated after due
confirmation from the register which would be carried
out pursuant to the aforesaid order. In appeal to the
Appellate Tribunal, the Appellate Tribunal referred to
the fact that a criminal complaint and SEBI
investigation were both pending, as a result of which it
would not be correct for the Tribunal to exercise its
powers to rectify the register under Section 59 of the
Companies Act. The aforesaid judgment of the NCLT was,
therefore, setaside and the appellant was relegated to
a suit.
Shri K.V.Vishwanathan, learned senior appearing for
the appellant, has commended for our acceptance the
order of NCLT, together with its reasoning. Learned
5
senior counsel has stated that there is really no
contest in the present proceedings inasmuch as
respondent No. 8, who would be affected by the NCLT
order, has chosen not to appear in the proceedings
throughout. He has also referred to and relied upon a
RTI Circular No. 1 dated 09.05.2001 and the fact that
SEBI has, in its application to delete itself from the
array of parties stated, on 20.05.2016, that respondent
No. 2 has issued duplicate shares without following the
proper procedure and without exercising due care and
diligence.
Shri Pratap Venugopal, learned counsel appearing on
behalf of SEBI reiterates this position and also agrees
with Shri Vishwanathan that the NCLT order should be
reinstated.
Shri Shyam Divan, learned senior counsel appearing
for the Company, when faced with the fact that there is
no real contest in the present case, has further
submitted that this Court should be careful in
reinstating the Tribunal’s order inasmuch as it is not
at all clear as to whether respondent No. 8 has, in
fact, been entered on the register or not. It is his
further submission that since the shares are now
demated, it is not his client that should be directed to
put the appellant back on the share register but the
6
concerned depository.
We are of the view that the Tribunal was absolutely
correct in not relegating the appellant to any further
proceedings inasmuch this is an open and shut case of
fraud in which the appellant has been the victim, and
Respondent No. 2 the perpetrator.
Equally, it is clear that the due procedure that
has been outlined in paragraph 23 of the RTI Circular
dated 09.05.2001 has not been followed. When the
duplicate shares were issued, stock exchanges were not
informed and neither was an advertisement in a widely
circulated newspaper issued as the value of the shares
were far greater than Rs. 10,000/.
We are, therefore, of the view that the Appellate
Tribunal in relegating the appellant to a further
proceeding was not correct. We, therefore, setaside
the Appellate Tribunal’s order and reinstate that of the
Tribunal dated 20.03.2017. It goes without saying that
if respondent No. 8 does not happen to be on the
register at all, then there would be no difficulty
whatsoever in restoring the appellant back to its
original position. Even if respondent No. 8 has been
entered on the Register, his name will have to be
deleted in view of the fact that the transfer to him has
been declared to be void in law.
7
We, therefore, direct the Company to rectify its
register, insofar as the physical share certificates are
concerned, and the concerned depository to rectify the
demat records in accordance with this order.
The appeals are allowed in the aforesaid terms.
Pending applications, if any, shall stand disposed
of.
......................J.
(ROHINTON FALI NARIMAN)
......................J.
(INDU MALHOTRA)
New Delhi,
Dated: 3rd July, 2018.
8
ITEM NO.50 COURT NO.10 SECTION XVII
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 19426-19427/2017
ADESH KAUR Appellant(s)
VERSUS
EICHER MOTORS LIMITED & ORS. Respondent(s)
(FOR ADMISSION and IA No.126711/2017-PERMISSION TO FILE ADDITIONAL
DOCUMENTS and IA No.126712/2017-EXEMPTION FROM FILING O.T. )
Date : 03-07-2018 These appeals were called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN
HON'BLE MS. JUSTICE INDU MALHOTRA
For Appellant(s) Mr. K.V.Viswanathan, Sr. Adv.
Mr. K.V.Balakrishnan, Adv.
Mr. S.M.Sundram, Adv.
Mr. Ravi Raghunath, Adv.
Mr. K. V. Mohan, AOR
For Respondent(s) Mr. Shyam Divan, Sr. Adv.
Mr. Anoop Dawar, Adv.
Mr. Rajesh Ranjan, Adv.
Mr. Sumit Teterrwal, AOR
Mr. Pratap Venugopal, Adv.
Ms. Surekha Raman, Adv.
Ms. Niharika, Adv.
Ms. Kanika Kalaiyarasan, Adv.
M/S. K J John And Co, AOR
Mr. Tushar Mehta, ASG,
Mr. Bharat Singh, Adv.
Mr. Arvind Kumar Sharma, Adv.
Ms. Swati Ghildiyal, Adv.
Mr. Mukesh Kumar Maroria, AOR
9
UPON hearing the counsel the Court made the following
O R D E R
The appeals are allowed in terms of the signed reportable judgment.
Pending applications, if any, shall stand disposed of.
(SHASHI SAREEN) (SAROJ KUMARI GAUR) AR CUM PS BRANCH OFFICER
(Signed reportable judgment is placed on the file)