KOSHA CHANDRAVADAN PARIKH Vs. KRISHNA MINGRANITE LIMITED

JUDGEMENT

(1.) THE appellant/petitioner Mr. Kosha C. Parikh has filed an appeal under Section 111A of the Companies Act, 1956 praying inter alia to give directions to M/s. Krishna Mingranite Limited, (hereinafter referred to as 'the Respondent Company') for transfer of 3,50,000 equity shares duly transferred and enter the names of the applicants in the register of members and to direct the Respondent company to pay dividend if any. THEre are other two petitions bearing No. 34 & 38/111A/CLB/WR/2000. THE subject matter of these petitions being the same, we have dealt with the same together and disposed of by this single common order.

(2.) The brief facts of the case are that the transferee advanced a sum of Rs. 20 lacs by way of loan to Mrs. Harsha K. Doshi, the wife of the then Chairman of Krishna Mingranite Limited before the company in Public Issue. The transferor agreed and gave 3,50,000 equity shares of Rs. 10/- each of his family to the transferees as a security for the above loan together with transfer deeds duly signed by the transferor i.e. Mrs. Harsha K. Doshi. It was agreed by and between the parties to transfer the shares in favour of the transferees if the transferor fails to repay the amount of loan with interest. A Memorandum of Understanding (MOU) was entered into by and between the parties on 17th November, 1995. The petitioner stated that unfortunately Smt. Harsha K. Doshi, the transferor and wife of the Chairman of the company and Shri K.D. Doshi, Chairman of the company expired in an accident. It is also stated by the petitioner that the original transfer deeds were executed on 11.11.95 and were revalidated by the Registrar of Companies, Gujarat, Ahmedabad and thereafter the same were sent to the company for transfer of shares in favour of the transferee. The petitioner also stated that the company returned the share certificates and transfer deeds without transferring the same by their letter dated 19.11.98 on the ground that signature of the transferor differs from the signature recorded with the company (attestation required) and the transfer deed bears inadequate stamps. Thereafter by letter dated 2nd April, 1999, the transferee sent to the company again the transfer deeds and share certificates requesting the company to accept the signature on various grounds mentioned therein. The transferee also explained that the stamps are adequate and since the transferor expired, it was not possible to get her signature attested. The petitioner further stated that the Respondent Company informed the transferee i.e. the petitioner vide its letter dated 20th April, 1999 that they are unable to give effect of the transfer deed unless and until it is properly authenticated. It is also stated by the petitioner that the objection of the company that the signature of the transferor differs from the signature recorded with the company, is not correct. Smt. Harsh K. Doshi was the wife of Late Shri Kishor M. Doshi, the then Chairman of the company who expired in an accident. She had signed the transfer deeds and her signature is correct. The rejection of the company is wrong and malafide. The petitioner further stated that the above transfers are linked with Memorandum of Understanding executed by and between Late Smt. Harsh K. Doshi, and Messrs Rohit Estate Agency before the company made its public issue. The said MOU was signed by Smt. Harsh K. Doshi, wife of Late K.M. Doshi and was witnessed by the then Chairman of the company Late Shri K.M. Doshi. The transfer deed were also signed by both the above persons and their signatures in the transfer deeds are same as appeared in the MOU. It also stated by the petitioner that the intention of the company is malafide and with a view not to transfer the shares, the company ha asked to attest the signature of the transferor who is deceased and attestation of the signature of the deceased is not feasible and the MOU and the transfer deeds were signed by Late Smt. Harsha K. Doshi and were witnesses by Late Shri K.M. Doshi. There is no difference in their signatures.

(3.) THE petitioner by his affidavit dated 16.1.2001 has filed rejoinder to the reply of the Respondent Company. In the reply the petitioner has stated that as per Sub-section (2) of Section 111A of the Companies Act, 1956, the shares and securities of a listed company are freely transferable. After the deletion of Section 22A of Securities Contract (Regulations) Act, the restrictions on transfer of shares are no more in existence and now the company has no right to refuse the transfer of shares unless some prohibitory order of proper authority is produced and there is no provision now anywhere to refuse to register the transfer of shares on the ground of signature difference. It is also stated by the petitioner in its rejoinder that under the provisions of the Companies Act, 1956 and also as per Articles of Association of the company, the transfer deeds are placed before the Board of Director or a committee thereof and the transfer deeds are approved or rejected by passing necessary resolution. THE Respondent company has not stated in its letter of refusal dated 20.4.1999 as to on which date the Board Meeting was held and the share transfer deeds were rejected. It is further stated in the rejoinder that the rejection letter is signed by one Mr. J.N. Goradia in Gujarati language as authorised signatory. It is no where mentioned in the affidavit in reply by the Respondent Company as to who authorised Mr. Goradia to refuse the transfer. THE letter of rejection is in English language whereas the same is signed by Shri Goradia in Gujarati language. It is doubted as to whether he has understood the contents of the letter. It is also stated in the rejoinder that the rejection letter did not make any reference or stipulation of the Board Resolution anywhere. It is also stated in the rejoinder that in fact no Board Resolution has been passed for rejection of the transfer of shares. It is further stated that the contention of the Respondent that the petition is time barred, is not correct. THE Respondent Company refused to transfer the shares by its letter dated 20.4.1999 and the petition was filed on 12.6.1999 and hence the same is in time and not time barred. It is also stated in the rejoinder that the Respondent Company cannot take any action on a simple letter written by one Poonam K. Doshi. THE application for transfer of shares was rejected by the Respondent by its letter dated 20.4.1999 whereas the letter from Poonam K. Doshi is dated 20th May, 1999 i.e. after the date of rejection by the Respondent Company. It seems that the said letter is after thought and further the said Poonam K. Doshi has not submitted any legal document or any order of appropriate Court or Succession Certificate about the title or ownership of the equity shares in question. It is also stated in the rejoinder that the Respondent Company has not produced the specimen signature Card of the transferor in support of so called difference in the signature and the transfer deed was signed by the transferor Mrs. Harsh K. Doshi who was the wife of the then Chairman of the company Shri Kishor Doshi and the said transfer deeds were witnessed by the Chairman. As per the general practice, the transfer deeds were approved by the Board of Directors and or committee of Directors and signed or initialled by the Director or Chairman of the company. In this case the transfer deed itself is witnessed by the Chairman which need not require any further verification of signature of the transferor, who was the wife of the Chairman. THE petitioner also stated in its rejoinder that the transfer deeds were sent to the Respondent company on or about 24.01.1998 and the market price of the shares as published in Gujarat Samachar and Economic Times both dated 7.1.1998 was Rs. 1.10 per share. Proper stamps were affixed accordingly on the transfer deeds. It is also stated in the rejoinder that it is fact that the company is not a party to the MOU dated 17.11.1995 and the said MOU was sent to the company so as to enable it to ascertain the correctness of the signature of the transferor who was the wife of the Chairman of the company and this MOU would help the company to verify the signature of the transferor. It is also stated in the rejoinder that the petitioner has waived or given up her option of transfer of shares, is not correct and the transferor has not waived any such right and her claim to the title of share certificates on the basis of transfer deeds is still in existence and it is not correct to say that the transfer is hit by the provisions of Money Lending Act and Arbitration Act and both these Acts do not come in the way of transfer of share certificates. THE petitioner has also stated that it is not necessary to obtain no objection certificate from the basis of the transferor on the country once the transfer deed is executed, it is binding on the heirs of the transferor. THE petitioner also stated in its rejoinder that as per Listing Agreement the Respondent Company has failed to inform the transferee about the rejection of shares within the prescribed time limit. Moreover, as required under Clause 10 of the Listing Agreement the Respondent company has not informed to the Stock Exchange the name and designation of the person who has to verify the signatures and the signature of the transferor has not been verified by the proper and authorised person. THE petitioner has further stated in the rejoinder that the Respondent company has not complied with the requirements of Clause 12 of Listing Agreement with the Stock Exchange which reads as under:-