HARISH KUMAR AGARWAL Vs. PUNJAB COMMUNICATIONS LTD

JUDGEMENT

(1.) A petition has been filed on April "9, 1996, by Shri Harish Kumar Aggarwal, advocate, Agra, under Section 113(3) of the Companies Act, 1956 (hereinafter called "the Act"), against Punjab Communications Limited, SAS Nagar, Punjab. The cause of action relates to the delay in the delivery of 200 shares in the company which was stated to be applied for on October 27,1994, by the petitioner as the first applicant and Smt. Lata H. Aggarwal as the second applicant and duly allotted by the company. From the facts narrated in the petition which is also confirmed from a letter received from the company secretary of the company, the share certificate after allotment was issued by the registrars to the issue in the name of Shri Harish Kumar Aggarwal without the name of second applicant. The petitioner, therefore, returned the share certificate for addition of the name of the second applicant on January 23,, 1995. According to the company, the corrected share certificate was despatched on February 10, 1995, but the same was received back undelivered on February 24, 1995. Thereafter, the share certificate was re-despatched on May 2, 1995. According to the petitioner this was received on May 27, 1995. The grouse of the petitioner is that he wanted to sell these shares during the month of January, 1995, which could not be sold due to the negligence of the company in despatching the certificate and hence the company should be directed to pay the difference between the market rate of the share on January 18, 1995, i.e., Rs. 406 per share and that on May 27, 1995, i.e., Rs. 225 per share along with interest at the rate of 18 per cent, for four months, the total claim thus amounting to Rs. 19,184.

(2.) Section 113(3) provides for an order by the Company Law Board on the application of any person entitled to have the certificate delivered to him to make an order directing the company and any officer of the company to make good the default within such time as may be specified in the order. In the present case when the petition was filed, i.e., on April 9, 1996, the petitioner had already received the share certificate. Further according to the reply filed by the company regarding the delay in redespatching the certificate, since it was received back as undelivered, time was taken for verification and checking of related documents by the registrars to confirm the correct name and address of the petitioner, This was done to make sure that the share certificate is posted at the correct address and it reaches the bona fide shareholder. Without going into the causes for delay one striking feature of the petition is noted that on the A date of filing of the petition the cause of action did not exist. A petition under Section 113(3) could be filed if there is a subsisting default on the part of the company in delivering the certificate. As such the petition itself cannot be maintained due to the lack of cause of action on the date of- filing of the petition.

(3.) FROM the above, it is clear that an order directing to make good the default may provide for a consequential order for costs. Since there is no need for an order to make good the default due to lack of cause of action, D a consequential order for costs does not arise. Further, the Section contemplates only costs incurred by an applicant but not for any hypothetical loss of profits suffered by the applicant. As such even if the petition was maintainable which in this case is otherwise, no order for payment of damages for loss of profits could be considered.