DINESH GANDHI AND BAKULA GANDHI Vs. BAYER DIAGNOSTICS INDIA LTD

JUDGEMENT

(1.) THIS is a petition filed under Section 111A of the Companies Act, 1956 ('the Act') by the petitioners Mr. Dinesh Gandhi and Mrs. Bakula Gandhi, seeking relief inter alia, that the Respondent No. 1 company may be directed to register transfer of 300 shares bearing old name of the respondent-company under share certificate dated 21-8-1991 and issue fresh share certificate in the new name of the Respondent No.1 along with all benefits accrued on aforesaid share certificates since September 1991 and to direct the Respondent No. 1 company to collect from the Respondent No. 2 the share certificates already and wrongfully issued to the Respondents No.2 and record therein the transfer of shares in favour of the petitioners. The facts of the case are as follows:-

(2.) The petitioners had purchased 300 equity shares of Rs. 10 of the company Miles India Ltd. (MIL) in September 1991 through broker Rajshekhar Agarwal, a registered share and stock broker/member of the Bombay Stock Exchange. The name of the company Miles India Ltd. in the year 1995, was changed to Bayer Diagnostics India Ltd., i.e. the present name of the Respondent-company. The petitioners stated that upon purchase of the above 300 shares for delivery, the broker Rajshekhar Agarwal, having received the consideration, delivered the share transfer deeds with relevant share certificates sold by Ashok C. Samani, i.e., the respondent No. 2, in September 1991. The petitioner also stated, they could not lodge the same for getting the shares transferred on their name due to some problem about the change of residence and as a matter of fact the share transfer deeds and the relevant share certificates got misplaced along with the share transfer deeds and share certificates of other companies. When sorting and arranging papers/documents, the share transfer deeds and the relevant share certificates of Miles India Ltd. were traced along with similar documents of other companies. It is also stated that as the share transfer deeds dated 21-8-1991 of Miles India Ltd. had lost its validity period for the purpose of transfer, the petitioners as required under Section 108(1D) secured the revalidation of said share transfer deed from the office of the Registrar of Companies, Maharashtra on 27-10-1995. The petitioner further stated that when duly revalidated share transfer deeds along with the relevant share certificates were lodged by the petitioners with the concerned company, i.e., Bayer Diagnostics India Ltd., the company sent a communication dated 30-11-1995 to the petitioner stating that the share certificates attached with the above share transfer Form are of Miles India Ltd., which is not acceptable as a good delivery from 14-8-1995 as the new share certificates in the name of Bayer Diagnostics India Ltd. have already been issued to the shareholders. The old share certificates along with transfer deeds were returned to the petitioner with a request to resubmit it along with Bayer Diagnostics India Limited share certificates for taking further action by the respondent-company. Aggrieved the petitioner has filed the present petition seeking the reliefs mentioned above.

(3.) THE Respondent No.2 has submitted his reply stating that as regards the issue of limitation is concerned any dispute relating to the sale/purchase transaction of shares is governed by the law of contracts and not by the provisions of the Companies Act. Under the common law of contracts the Respondent No. 2 is liable only for delivery of the share certificates and is not responsible for getting the same transferred in the name of the petitioners. This liability has been fully discharged by the Respondent No.2 and the same is an admitted fact. He has also stated that there is no dispute between the petitioners and the Respondent No. 2 and if any dispute is there, it will be governed by the law of Contracts and Law of Limitation and on this score the present petition is barred by time against Respondent No. 2. It was further stated that the petitioners are liable for laches and delay on their part. THE shares in question were sold by the Respondent No. 2 through stock market operations sometime in August 1991 and the petitioners lodged the same with Respondent No. 1 sometime in November 1995. Further the shares sold by the Respondent No. 2 in the stock market have changed many hands before ultimately reaching the petitioners. It was also stated that there is no direct nexus between the Respondent No. 2 and the petitioners. THE transaction of sale/purchase of shares in the stock market is governed by the Regulations of Stock Exchange and the SEBI including Regulations relating to good/bad delivery. THE Respondent No. 2 further stated in his affidavit that he is a registered share broker and member of Bombay Stock Exchange and in that capacity deals with voluminous transactions pertaining to his own and that of its clients business. That on 23-9-1994 a fire had taken place at the premises of the Respondent No. 2 and as a result the books of account, souda books, registers and computer floppies were destroyed in the fire. As a result he was not left with any records to check about the shares held by him. THE fact of the fire was also brought out on the Notice Board of the Stock Exchange on 24-9-1994 which stated that the operations of the Member-brokers including the Respondent No. 2 were considerable effected. Further he is not having any shares of the Respondent No. 1 and therefore prayer restraining him from disposing off the shares in infructuous.