MITTAL INVESTMENT Vs. MONNET ISPAT AND ENERGY LTD.

JUDGEMENT

(1.) THE present petition is filed by invoking the provisions of Section 111A of the Companies Act, 1956, seeking directions to the Respondent -company as prayed in the petition.

(2.) SHRI Kalpesh Shah, the authorised representative appearing for the Petitioner submitted the brief facts. He submitted that the Petitioner purchased 6,300 shares of the Respondent -company and paid full consideration in respect thereof. Thus, the Petitioner became the legal owner of the said 6,300 equity shares of the Respondent -company. However, out of the aforesaid 6,300 equity shares 6,200 equity shares have been lost from the custody of the Petitioner with the signed transfer deeds. The Petitioner purchased another 3,200 equity shares of the Respondent -company and paid full consideration in respect of the same. Thus, the Petitioner became the legal owner of these 3,200 shares also. But these 3,200 equity shares also were lost from the custody of the Petitioner with signed transfer deeds. Thus, out of the total 9,500 equity shares 9,400 equity shares have been lost from the custody of the Petitioner. Though sufficient search was made, these shares could not be found. The Petitioner confirms that the said equity shares have not been sold, transferred, pledged or otherwise disposed of by the Petitioner but have been lost from the custody of the Petitioner. Therefore, the Petitioner wrote letters to the Respondent -company on October 2, 1994 and December 6, 1994, intimating the loss of the share certificates along with the transfer deeds with a request not to transfer the said shares to anybody. But the company did not respond at all. Thereafter, the Petitioner filed Civil Suits Nos. 5329 of 1994 and 1101 of 1995 against the Respondent -company before the City Civil Court, Ahmedabad for grant of injunction against the Respondent -company. The hon'ble City Civil Court vide its order dated October 17, 1994 and April 10, 1997, granted injunction order against the Respondent and in favour of the Petitioner. On receipt of the injunction order, the Petitioner vide letter dated October 20, 1994, sent a certified copy of the said order to the Respondent -company intimating not to transfer 6,200 equity shares to anybody and to issue the duplicate shares to the Petitioner. Thereafter, the Petitioner sent reminders on October 14, 1996, January 13, 1997, February 14, 1997, May 27, 1997, August 12, 1997, May 22, 2001 and November 16, 2002, to the Respondent -company. But the Petitioner did not receive any reply from the Respondent -company. Later on the Petitioner got to know that the Company Law Board is the only appropriate forum to adjudicate the present matter. Thereafter, the Petitioner filed the petition before the Company Law Board, Western Region Bench in 2003 but the Company Law Board, Mumbai returned the petition stating that the New Delhi Bench has the jurisdiction over the matter. Therefore, the Petitioner filed the petition before the hon'ble Northern Region Bench in August, 2004 pertaining to loss of 94 share certificates covering 9,400 equity shares and for issue of duplicate share certificates in lieu thereof. It is further submitted that the Respondent -company vide its letter dated March 5, 2007, intimated the Petitioner that it is ready to issue 6,600 equity shares to the Petitioner. The total 9,400 equity shares being litigated upon were bifurcated as 6,600, 1,200 and 1,500 shares. The differential 100 shares were ignored by both the parties. It is further submitted that the Respondent -company was ready to issue duplicate shares and further transfer them in the name of the applicant provided the Petitioner withdraws all cases/complaints filed before other forums. The Company Law Board vide its order dated March 5, 2007, directed the Respondent -company to issue 6,600 equity shares with immediate effect and remaining 1,200 shares within the period of eight weeks. Thereafter, the applicant moved appropriate applications before Ahmedabad Civil Court for withdrawal of Suits Nos. 5329 of 1994 and 1101 of 1995 filed against the Respondent -company. The hon'ble City Civil Court passed orders dated March 16, 2007 and March 17, 2007, granting permission to withdraw the aforesaid civil suits. He further submitted that when the Petitioner did not hear anything from the Respondent -company after the order of the Company Law Board, Northern Region Bench dated March 5, 2007, the Petitioner sent reminders to the Respondent -company for issue of duplicate share certificates, requisite formalities regarding 1,200 equity shares and for exchange of information regarding 1,500 equity shares, etc., vide its letters dated March 22, 2007 and May 1, 2007, to which the Respondent had not replied in any manner whatsoever. Thereafter various e -mails/correspondences were exchanged pursuant to which the company has issued advertisements for 6,600 equity shares on May 12, 2007 and 1,200 equity shares on May 15, 2007 in two English newspapers, i.e., Raipur edition of Hitavada, and Mumbai edition of Financial Express. The applicant paid the cost of advertisement to the company on May 11, 2007, vide cheque No. 232355 for the amount of Rs. 39,479 and on May 16, 2007, vide cheque No. 232359 for the amount of Rs. 17,661. The publication was made in order to ensure that no interest of any person was being infringed upon pursuant to such issuance of shares to the applicant. The applicant had also furnished an indemnity bond along with affidavit to the Respondent -company on June 1, 2007, with respect to 6,600 equity shares whereby the applicant undertook to indemnify the Respondent from any future claims that may arise with respect to the 6,600 shares. Mr. Kalpesh Shah further submitted that the Northern Region Bench again passed an order on June 27, 2007, directing the Respondent -company to provide details of 1,500 shares. The Respondent -company wilfully chose not to comply with the order dated March 5, 2007 and June 27, 2007, of the Company Law Board with regard to the directions to issue 6,600 duplicate shares in favour of the applicant with immediate effect and 1,200 shares within a period of eight weeks upon the completion of necessary procedure and to provide details of 1,500 equity shares. However, on September 19, 2007, the Respondent -company provided a document claiming as containing all details regarding the status of 1,500 equity shares and about which Mr. Kharbanda, the company secretary of the Respondent -company had earlier submitted before the Company Law Board, Northern Region Bench that these equity shares have already been transferred and dematerialised by the Respondent -company in another name. It is pertinent to mention that the Respondent -company dematerialised the equity shares despite an order dated April 10, 1997, passed by the hon'ble court for the mandatory injunction against the company and thereby directing them to maintain status quo with respect to the subject 9,400 equity shares till the disposal of that matter. He further submitted that the Respondent -company vide its Applications Nos. 30 of 2007 and 31 of 2007 before the Northern Region Bench raised the objection as to the jurisdiction of the Northern Region Bench. Thereafter, the Northern Region Bench passed an order on February 8, 2008, that as the registered office of the Respondent -company is in the State of Chattisgarh, only the Company Law Board, Western Region Bench has the jurisdiction over the matter.

(3.) AS on the date and even as on the date of filing of the first petition under Section 111A of the Companies Act, 1956, the shares in question were already registered in the names of third parties. If the hon'ble Board grants any relief or declares that the Petitioner is the lawful owner of 9,300 equity shares, the rights of the third parties in whose name the shares in question are standing, will be adversely affected. The Petitioner has purposely chosen not to join these third parties as party Respondents to this petition. Therefore the present petition ought to be dismissed on the ground of non -joinder of proper and necessary parties. Also the Petitioner is guilty of gross delay and laches. It is the Petitioner's case that the Petitioner addressed a letter dated October 2, 1994, to the Respondent regarding the alleged loss of share certificates. Thereafter the Petitioner filed the first petition in 2003, i.e., after a delay of about nine years which is beyond the prescribed limit of two months as per Section 111A(3) of the Act. Reasons for the delay are not explained. Hence, the present petition is an abuse of the process of this Board and ought to be dismissed with exemplary costs only on the ground of delay alone.