K.K.Balu, - (1.) THIS company petition is filed under Section 111 & 111 A of the Companies Act, 1956 ("the Act") seeking directions against M/s. Dr. Reddy's Laboratories Limited ("the Company") - a) to register the transfer of shares covered under share certificate Nos. 60182, 34626, 96791, 38346, 89655, 78472, 60183, 6484, 45436, 302 & 1564in favour of the petitioner; b) to deliver the bonus shares issued in relation to the impugned shares; and c) to extend the accrued benefits viz., dividend, rights shares in favour of the petitioner.
(2.) According to Ms. Shalini Kaul, learned Counsel, the petitioner had purchased in March, 2002 the impugned shares through M/s. K.P. Financial Consultants, sub-broker and the transaction was concluded through M/s. Vajani Securities Private Limited (VSPL) main broker, on the panel of Mumbai Stock Exchange. These shares were sold and delivered by M/s. Swapneel Investment Consultancy (SIC) sub-broker, for and on behalf of his clients M/s. Shriji Investments, a partnership firm, constituted by Samir Savjani and Bhadrakumar Savjani ("the transferors"). SIC paid to the transferors the sale consideration of Rs. 5,07,225/- by way of a cheque No. 231146 drawn on Standard Chartered Bank, as borne by the letters of confirmation dated 18.12.2001; 09.03.2002 and 26.08.2004 of VSPL; SIC and Bombay Stock Exchange respectively. The petitioner lodged with the Company the share certificates together with the duly stamped and properly executed transfer forms for effecting the transfer in his name, but the Company returned the documents on the ground that signature of Bhadrakumar Savjani one of the transferors differed with the specimen signature on its records, in terms of the communication dated 25.08.1994. In the meanwhile, Bhadrakumar Savjani lodged a police complaint against the petitioner and upon a detailed investigation, the police concluded that the dispute raised is of civil nature and accordingly by the communication dated 11.03.2003 advised the Company "to do needful as per civil law and directives of Mumbai Stock Exchange ("the Exchange")". The Exchange, on a complaint preferred by the petitioner, made a detailed enquiry and advised the Company by its communications dated 18.01.2002, 29.01.2002 and 13.02.2002 to transfer the shares in favour of the petitioner, if the transferors fail to produce a restraint order from a competent court of law within a particular period of time, as may be specified by the Company. Accordingly, the Company advised Bhadrakumar Savjani that the impugned shares would be transferred in favour of the petitioner, if he fails to produce prohibitory orders against transferring the shares, as directed by the Exchange. Nevertheless, the Company failed to register the transfer in favour of the petitioner. In these circumstances, Ms.Shalini Kaul, learned Counsel sought directions against the Company (i) to transfer the impugned shares in favor of the petitioner and (ii) to deliver bonus shares issued and pay dividend declared in relation to the subject shares. Shri B. Ravi, learned Authorised Representative of the Company submitted: The petitioner had lodged the impugned shares and the transfer instruments with the Company to effect transfer in his favour. The Company could not accede to the request of the petitioner in view of the fact that signature of Bhadrakumar Sayjani, one of the transferors, was entirely different from the specimen signature available in the records of the Company. The transferor further contended that he did not sell any shares to anybody. Therefore, the Company was constrained to return the share certificates to the petitioner and the Company cannot be faulted for not effecting the transfer in favour of the petitioner. Shri B. Ravi, learned Practicing Company Secretary pointed that no bonus shares have been issued by the Company and further that as long as the transferors' names remain in the register of members, the Company is bound to send the dividend warrant in their favour. The obligations cast on the Company under Section 206A are not required to be observed, since invalid transfer forms have been lodged with the Company. Accordingly, the Company returned the share certificates and transfer documents, without effecting the transfer in favour of the petitioner. Therefore, the petitioner is not entitled to any dividend in respect of the impugned shares. Shri B. Ravi, learned Practicing Company Secretary, while concluding his arguments submitted that the Company will act in terms of the order which may be passed by the CLB in regard to the transfer of shares.
(3.) I have considered the oral submissions made on behalf of the parties. The short issue before me is whether the Company shall rectify its register of members substituting the name of the petitioner in the place of the transferors in respect of the impugned shares. It is not under dispute that the Company was constrained not to effect the transfer in favour of the petitioner in view of the difference in the signature of one of the transferors as appearing in the instruments of transfer in comparison with the specimen signature available in the records of the Company. The petitioner has not originally arrayed the transferors as parties to the CLB proceedings. However, on an application made by the petitioner in C.A.48/2005, this Bench by an order dated 08.08.2005 ordered inpleadment of the transferors viz., Samir Savjani and Bhadrakumar Savjani as the respondents 2 & 3. When it is brought to my notice that the third respondent died as early as 19.05.2003, the petitioner has been directed to implead the legal heirs of the deceased third respondent and accordingly, pursuant to an order dated 10.11.2005, a public notice has been caused in one of the English Newspapers having circulation in Mumbai thus: Notice is hereby given that vide an order dated 10th November, 2005 of the Company Law Board, Southern Regional Bench, Chennai, in the matter of Jacob F. Bothelo v. Dr. Reddy 's Laboratories Ltd (hereinafter referred to as Dr. Reddy's) in Company Petition No.5/111A/SRB/2005, it has been decided that the legal heirs of the deceased Respondent No. 3, Mr. Bhadrakumar Savjani who's last known address is 60/8, Mount Unique, 62-A, Peddar Road, Mumbai- 400 026 have to be impleaded in the matter of 500 equity shares of Dr. Reddy's, the details of which are as under. Any person claiming interest in the said shares of Dr. Reddy 's are directed to file their claim with documentary evidence in accordance with Article No. 45 & 46 of the Article of Association of Dr. Reddy's to support their claim on or before 5th December, 2005 to the Company Law Board, Southern Regional Bench, Chennai with a copy to the undersigned. JUDGEMENT_707_TLCL0_20060.htm Advocate for the Petitioner: C/o M/s. Juris Matrix, 2nd Floor, 15, Dr. V.B. Gandhi Marg, Fort, Mumbai-400023. Despite the public notice, neither the legal representatives of the deceased transferor nor the second respondent either appeared or opposed the company petition. Further, it is on record that the police complaint lodged by the deceased transferor has been closed, as the same is of civil nature. The Exchange in its communications dated 18.01.2002, 29.01.2002 and 13.02.2002 addressed to the Company, endorsing a copy to the deceased transferor made it absolutely clear that he should obtain a restraint order from a competent court of law, failing which, the Company is bound to transfer the shares to the petitioner. The Company in its communication dated 11.03.2002 gave similar instructions to Bhadrakumar Savjani, while he was alive. But no action appeared to have been taken in this behalf before his demise, inspite of the opportunities afforded to him. The legal heirs of the deceased transferor and the second respondent did not oppose the prayer of the petitioner made in relation to the impugned shares. In this background, the Company is directed to register the transfer of impugned shares in the name of the petitioner, under authority of this order, within thirty days on lodgement of the original share certificates by the petitioner. The claim for dividend does not lie against the Company in the light of the Justification as rightly made out on behalf of the Company. The name of the third respondent is removed from the array of parties, as he reportedly passed away even prior to filing of the company petition. With these directions, the company petition is disposed of. No order as to cost.;