T S PREMKUMAR Vs. TAMILNAD MERCANTILE BANK LTD

JUDGEMENT

(1.) IN this petition filed under section 111A(2) of the Companies Act, 1956 ('the Act'), the petitioner has chal- lenged the decision to refuse registration of 660 shares lodged by him with Tamil Nadu Mercantile Bank Limited ('the Bank') and has sought for direction to the Bank to register the transfer of these shares in his name.

(2.) According to the petitioner, he is the registered holder of 171 shares in the Bank. He had purchased 660 shares of the Bank from three other shareholders and lodged the same with the Bank by a letter dated 23-2-1999. The Bank returned the transfer instruments by a letter dated 6-3-1999 stating that the share transfer stamps had not been properly cancelled and that proper transfer fee had not been remitted. The petitioner by a letter dated 15-3-1999 complied with the requirements of the Bank. By a letter dated 4-5-1999 the Bank sought certain information from the petitioner which the petitioner submitted by a letter dated 12-5-1999. In spite of this, the Bank had by a letter dated 14-6-1999 required the petitioner to furnish additional information, inter alia, including the details about bank accounts copies of Income-tax return and assessment orders for three years. By letter dated 9-9-1999, the Bank had informed the petitioner that the information sought for by the Bank was with a view to comply with the instructions of the Reserve Bank of India and returned the transfer instruments back to the petitioner. Even though the petitioner by a letter dated 28-9-1999 once again remitted the transfer documents stating that the RBI instructions were not applicable in this case, yet the Bank had returned the documents again by a letter dated 5-11-1999, reiterating its earlier stand. Accordingly the petitioner has filed this petition in terms of section 111A(2).

(3.) WHEN the petition was taken up for hearing Shri R. Venkataraman, Advocate appearing for the petitioner submitted that originally the Bank returned the instruments pointing out certain defects, which were rectified by the petitioner. Thereafter, by a letter dated 4-5-1999, the Bank had sought information as to whether the petitioner belongs to any particular group and if so the names of such persons and the number of shares held by them in the Bank and the purpose of the existing and proposed investment and details of consideration paid. All these particulars were furnished to the Bank by a letter dated 12-5-1999. Thereafter, by a letter dated 14-6-1999, the Bank sought for further information which were not called for earlier. By this letter, the Bank sought for income-tax returns and assessment orders for three years including that of the nominees of the petitioner and also the source of consideration paid for the acquisitions. He pointed out that the above information called for is not warranted under any circumstances including the RBI guidelines relied on by the Bank. He further pointed out that the number of shares acquired is so insignificant and would be no where near the one per cent of the total paid-up capital of the Bank. Consequently, the RBI guidelines had not applied in respect of the acquisitions made by the petitioner. He pointed out that the petitioner acquired the shares purely for investment purpose and not with any oblique motive. Therefore, he prayed that directions should be given to the Bank to register transfer of these shares in the name of the petitioner.