SMC SHARE BROKERS LTD. Vs. ITC LTD.

JUDGEMENT

(1.) THE petitioner herein moved this petition under section 111A of the Companies Act, 1956 ('the Act') seeking directions against the respondent -company and other respondents for rectification of share register for the disputed 200 shares of R -1 -company, The petitioner is a company floated for carrying sale and purchase of different kind of shares and securities on various stock exchanges in India. In pursuance of it, the petitioner -company purchased 200 shares of R -1 -company of face value of Rs. 10 each (now 2000 shares of face value of Re. 1 each, as the face value of shares of R -1 -company is reduced from Rs. 10 to Re. 1 each) of R -1 -company through R -2, J S Shany & Co., a share broker, vide share certificate Nos. 1216215 and 1216216 bearing distinctive Nos. 130558868 - 967 and 130558968 -9067, respectively for Rs. 59,200 at the rate of Rs. 296 per share vide bill No. 3488 dated 26th October, 1995 (Annexure 3) duly issued by R -2 in favour of the petitioner. The case of the petitioner is that the petitioner -company lost the above share certificates in transit on 12th November, 1995. Since the petitioner lost the share certificates, it wrote a letter dated 14th November, 1995 (Annexure 4) to R -1 -company along with a photocopy of first information report ('FIR') lodged by the petitioner in the nearby police station requesting R -1 -company not to transfer the said shares to any one in case anybody approaches for the transfer of the same. Responding to the same, R -1 -company informed the petitioner on 5th January, 1996 (Annexure 5) that R -1 -company has received the share transfer deed duly executed by R -3 in favour of R -4 of share certificate No. 1216215 of 100 shares bearing distinctive No. 130558868 - 967 and further stated that R -1 would transfer the same in favour of R -4 in case the petitioner fails to produce the stay order from court of law from transferring the same. The petitioner wrote another letter dated 3rd February, 1996 (Annexure 6) to R -1 requesting that the petitioner would send the indemnity bond to R -1 for issuing of duplicate share certificates in favour of the petitioner. Subsequent to this, the petitioner on 27th February, 1996 wrote another letter (Annexure 7) to provide details of both the buyer and seller of those shares in dispute. To which, R -1 on 8th March, 1996 wrote a letter (Annexure 8) informing the petitioner that R -1 -company registered 100 shares vide certificate No. 1216216 bearing distinctive Nos. 130558968 - 9067 in the name of R -5 and R -6. The petitioner further stated that R -2 already acknowledged giving 200 shares with the above said distinctive numbers for Rs. 59,200 by a letter written by R -2 (Annexure 9). The petitioner also filed account statement of the petitioner -company (Annexure 10) disclosing payment towards 200 shares on 28th October, 1995. For having the petitioner pleaded its entitlement over the disputed shares, it sought declaration and mandatory injunction for declaring the transferring of shares as invalid and for transfer of the same in favour of the petitioner. The petitioner also filed a rejoinder almost reiterating the averments of the petition.

(2.) R -1 filed reply to the petition stating that disputed 200 shares comprising share certificate Nos. 1216215 and 1216216 were standing in the name of R -3 Ms. Alka Goyel. R -1 for the first time came to know about the loss of share certificates in respect of above 200 shares on receipt of letter dated 14th November, 1995 from the petitioner, along with a photocopy of a bill dated nil of J S Sahny & Co. (R -2), but whereas the petitioner did not supply any FIR copy or court order to R -1 -company preventing transfer of the disputed shares. Since there is no stay over the transfer of shares, R -1 -company transferred the shares in favour of R -5 and R -6. Thereafter, on 9th April, 1996, R -1 -company received summons in Civil Suit No. 299 of 1996 filed by the petitioner in the Court of Senior Civil Judge, Delhi (Annexure B) again the self -same cause of action. Again, in May 1997, R -1 -company received share certificate No. 1216216 for 100 shares along with transfer deed from Deutsche Bank for transfer of the shares from the names of R -5 and R -6 in favour of their client Fleming Fund Management (Luxembourg) SA A/c Flagship Indian Investment Co. (Mauritius) Ltd. In view of the pending litigation, R -1 -company did not effect further transfer of shares as sought by Deutsche Bank. R -1 -company further stated that the suit filed by the petitioner for declaration of transfer of the disputed shares was dismissed as invalid on 7th September, 2005. R -1 -company submitted that it transferred the shares in the names of R -5 and R -6 as the signature of R -3 lying in the company was tallied with the signature of R -3 in the transfer deeds filed along with the share certificates. Since there is no stay from any competent forum, R -1 -company transferred the shares in accordance with the provisions of law, thereby sought for dismissal of the petition.

(3.) THE authorised representative appearing on behalf of the petitioner made his submissions reiterating the pleadings of the petition. Apart from that, he also argued that CLB alone is competent to rectify the share register as enunciated under section 111A of the Act, thereby whatever proceedings initiated before a civil court are void ab initio in the eye of law. To which he relied upon a judgment given by the hon'ble Supreme Court in Ammonia Supplies Corporation (P.) Ltd. v. Modern Plastic Containers (P.) Ltd. [1998] 30 CLA 355 (SC)/ : AIR 1998 SC 3153 to state that CLB has exclusive jurisdiction to deal with the rectification of register of shares, as such, he argued that the petitioner is entitled for the reliefs above asked despite civil court dismissed the suit moved by the petitioner on the self -same cause action