AJIT R. KAPADIA Vs. JAIPRAKASH ASSOCIATES LTD.

JUDGEMENT

(1.) IN this order I am considering Company 1 Petition No. 8/111/2008 filed by Shri Ajit R. Kapadia (the petitioner) against M/s. Jaiprakash Associates Ltd. and Ors. (the respondents) Under Section 111 of the Companies Act, 1956 (hereinafter referred to as "the Act") wherein the petitioner has sought reliefs that the 5,400 shares of respondent No. 1 company be transferred in the name of the petitioner; respondent No. 1 and respondent No. 2 be directed to rectify the register of members and name of the petitioner be recorded in the register of members of respondent No. 1 company in place of respondent No. 3 to respondent No. 16 ; if any benefit/ shares accrued in the past and or due against the concerned shares in dispute, that be given to the petitioner and respondents Nos. 1 and 2 be directed to bear all costs incurred by the petitioner in the litigation.

(2.) THE petitioner's case is that on June 25, 1996, the petitioner purchased 2 5,600 shares of respondent No. 1 from the open market. In the year 1994 the petitioner, an employee in the Western Railway, was transferred to Ahmedabad. During his stay at Ahmedabad the petitioner contacted a broker to sell the above 5,600 shares of J.P. Industries, but he was informed that the transfer deeds are outdated and are required to be revalidated for transfer in his name and only after that the petitioner can sell them. Accordingly, the petitioner kept the transfer deeds separate for their revalidation. But unfortunately due to the disastrous earthquake, the house of the petitioner collapsed and so many valuable article/documents were lost. The original share certificates which were in the bank locker were safe. In November, 2003 the petitioner left his job in the Railways. He approached the investor service department of the Bombay Stock Exchange where he was informed that he should lodge a police complaint report for loss of transfer deeds. The petitioner went to Ahmedabad and on November 25, 2003, lodged a complaint with P.S. Navrangpura, Ahmedabad. On December 1, 2003, the petitioner wrote a letter to the Jaiprakash Industries Ltd., for transferring the 5,600 shares in his name along with the copy of police complaint, bills of purchase and delivery note. The petitioner personally and his representative also visited the office of the company at Delhi. In the year 2004 the Jaiprakash Industries Ltd., was amalgamated with its wholly owned subsidiary, Jaypee Cement Ltd., and the name of Jaypee Cement Ltd., was changed to Jaiprakash Associates Ltd. (JAL) after amalgamation. On March 24, 2004, in response to the letter dated December 1, 2003, the company under the new name replied to the petitioner, requiring ownership proof of shares by way of broker note of a member of a recognised stock exchange and to get injunction order from the court of competent jurisdiction. It was also informed that the company's name has been changed to Jaiprakash Associates Ltd., and one equity share of Rs. 10 at par in JAL for each equity share held in Jaiprakash Industries Ltd. (JIL) on the record date, i.e., March 30, 2004. Since the petitioner was not registered as a shareholder in their record they shall not be able to hold the new share certificate without any injunction order before the record date. The petitioner wrote a letter to the company on March 31, 2004, mentioning his grievance and requesting to protect his interest and to withhold the new shares. This letter was not replied to by respondent No. 1 company. On June 27, 2004, the petitioner again wrote a letter to respondent No. 1 requesting to provide the necessary details and procedure to be followed to get the shares registered in his name. Because of the harassment, the petitioner wrote a complaint to the SEBI, Mumbai on July 19, 2004. The same was replied by respondent No. 1 vide letter dated September 6, 2004. Vide letter dated July 19, 2004, Shri T. D. Joshi, resident manager of respondent No. 1, replied to the above letter and gave the names and addresses of the registered holders as per their records of the disputed share certificates. On getting the information the petitioner tried to meet the registered holders. Some of them demanded a letter from the company in this regard. On September 2, 2005, the petitioner wrote a letter to respondent No. 2, who are the Registrar and share transfer agent of respondent No. 1, requesting to provide the proforma of the buyer's indemnity bond and affidavit, which was never replied to by respondent No. 2. On February 17, 2006, the petitioner once again wrote a letter to respondent No. 1 informing the factual position. Respondent No. 1 vide their letter dated March 6, 2006, informed that out of 5,600 shares, details of only 5,200 shares are correct which shares have been marked as stop transfer and they require an injunction order from a court of competent jurisdiction. The petitioner vide his letter dated March 12, 2006, informed the company that once again he will try to contact the registered members to do the needful. The petitioner made efforts to personally contact the registered members to get the fresh transfer deeds and succeeded in getting the transfer of 200 shares (Share Certificates Nos. 47127 and 18520) in his favour. Now 5,400 shares are yet to be transferred in his name for which the company had asked him to get the order from the Company Law Board. Hence this petition.

(3.) RESPONDENT No. 1 and respondent No. 2's case is that the petition merits dismissal merely on the ground that the same has been filed Under Section 111 of the Companies Act, 1956, instead of Under Section 111A of the Act. The petition merits dismissal primarily on the ground of non -lodging of the instrument of transfer by the petitioner with the answering respondent, as the petitioner has never delivered the relevant share certificates along with the duly executed transfer deeds with the respondent -company for transferring 5,400 shares of the erstwhile M/s. Jaiprakash Industries Ltd. (JIL) in his name, alleged to have been purchased by him in 1996. It is submitted that in the year 2004, JIL was amalgamated with M/s. Jaypee Cement Ltd., which was later renamed M/s. Jaiprakash Associates Ltd. (AL), in terms of the scheme of amalgamation sanctioned by the hon'ble High Court of Judicature at Allahabad. It is further submitted that according to the scheme of amalgamation, the share certificates of JAL, were to be dispatched to respondents Nos. 3 to 16 as their names appeared in the register of members of JIL as on March 30, 2004, being fixed as record date for the purpose. But respondents Nos. 3 to 16 could not be dispatched the shares of JAL as the respondent -company was informed by the petitioner vide his letter dated October 1, 2003, enclosing therewith a list of 5,600 shares of JIL alleged to have been purchased by him in 1996 and further alleged to have lost them during an earthquake in 2001. Though the plaintiff stated to have also enclosed a copy of the FIR, purchased the bill and delivery note nothing was enclosed with his said letter dated October 1, 2003. The present petition has been filed by the petitioner after a long delay of more than 7 (seven) years when the petitioner is alleged to have lost the related transfer deeds in the alleged earthquake (in 2001) as intimated by him to the answering respondent through his another letter dated December 1, 2003, thereby enclosing a copy of the shares lost complaint acknowledged by the Senior Police Inspector, Navrangpura P. S., Ahmedabad, hence it being barred by limitations merits dismissal on the ground of gross delay as prescribed Under Section 111A of the Companies Act, 1956. The petition merits dismissal on the ground as the answering respondent had never refused to register the transfer of 5,400 shares alleged to have been purchased by the petitioner, as no instrument of transfer as prescribed to the answering respondent in respect of the said shares. The petition merits dismissal on the ground as no "broker note" authenticating the alleged purchase of 5,600 shares by the petitioner was provided by him to the answering respondent though was required to do so through answering the respondent's letter dated March 24, 2004. The petition merits dismissal on the ground of limitation as no appropriate steps were taken by the petitioner for more than 3 1/2 years to obtain the necessary directions of the court of competent jurisdiction though having been so advised by respondent No. 1 through its letter dated July 19, 2004. The petition merits dismissal on the ground of limitation as it was for the first time that the petitioner vide his letter dated September 2, 2005, sent a photocopy of the delivery note dated June 25, 1996, issued by one Ibrahim Vahanvati (Share and Stock Broker), Rajkot in respect of the alleged purchase of 5,700 shares. It was contended that the petitioner is alleged to have purchased 5,600 shares in June 25, 1996 and the share transfer deeds in respect of these shares were allegedly lost in the earthquake in Ahmedabad. The petitioner neither filed the share certificates in original with the respondent -company nor he filed the transfer deeds lost in original. On being approach by the petitioner, respondent No. 1 company vide its letter dated July 19, 2004, advised the petitioner to approach the Company Law Board Under Section 111A of the Companies Act, 1956, whereas he has preferred this petition in February, 2008 Under Section 111.