Adesh Kaur vs Eicher Motors Limited

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 19426­19427 OF 2017

ADESH KAUR ... Appellant(s) Versus

EICHER MOTORS LIMITED AND ORS. ... Respondent(s)

J U D G M E N T

R.F.NARIMAN, J.

The present case discloses a very sordid state of

facts.

The appellant before us is a resident of Punjab,

and had acquired in all 903 equity shares in the

respondent No. 1­Company. This acquisition took place

way back in the year 1994­95.

It appears that sometime in 2012, another Ms. Adesh

Kaur, who is a resident of Mumbai impersonated the

appellant and requested respondent No. 2 to change the

Signature Not Verified address from Punjab to Mumbai. It is not disputed Digitally signed by SHASHI SAREEN Date: 2018.07.05 17:32:25 IST Reason: before us that the standard procedure to be followed was

not followed by respondent No. 2, and the aforesaid

change of address was despite the requirements of 2

Circular No. 1 dated 09.05.2001. The impersonator then

went on to execute an indemnity bond by forging the

appellant’s signature for issue of duplicate share

certificates of the 903 equity shares mentioned above.

This being done, on 28.09.2012, Respondent No. 2 issued

duplicate certificates in favour of the impersonator

who, in turn, on 10.12.2012, transferred the said shares

to one Vikas Tara Singh, respondent No. 8, resident of

Malad, Mumbai by using the forged signature of the

appellant. At this stage, it is important to note that

respondent No. 8, though served in the present

proceedings, has not appeared either before the Tribunal

or before the Appellate Tribunal and has not appeared

before us. The appellant, sometime in 2014, came to

know through the Company Secretary of Respondent No.1

that duplicate share certificates had been given to

somebody else who had subsequently transferred them to a

third party. As soon as she became aware of the fraud

that was perpetrated on her, the appellant requested the

Company to issue revalidated fresh share certificates

for the said 903 equity shares on 17.09.2014. Since

this was not done, despite repeated reminders for the

same, a Company Petition was filed on 31.07.2015 before

the Company Law Board, which was then taken up under the

Amended Act by the National Company Law Tribunal. In a 3

significant order that was passed by the NCLT on

09.11.2016, the NCLT recorded that it was acknowledged,

both by the Company as well as by the SEBI, that

procedural aspects and due care were not adhered to in

the process of issuance of duplicate shares, as

otherwise such fraud would easily have been unearthed.

In the order passed by the NCLT, the NCLT adverted to

the aforesaid facts and afforded relief to the appellant

in the following terms:

“The objection of Respondent No. 1 that the case in hand cannot be adjudicated by the Tribunal is a frivolous attempt to escape any liability and or grant relief to the petitioner. This Bench fails to understand why the petitioner should resort to a civil court in order to prove her title. Apart from her oral testimony and her original share certificates, there is little else to be adduced in evidence even in a Civil Suit. She has her original certificates in hand. The respondents are aware of the fraudulent acts perpetuated on her and have even initiated criminal proceedings. There is no reason for the petitioner to be deprived of her assets for the outcome of the criminal investigation or wait for the criminal to be brought to book. Her documents and her entitlement are not denied to by the respondents. Under such circumstances, vague denial to escape any 4

liability and to suggest that the petitioner initiates a Civil Suit is viewed as an attempt not to redress the grievance which has primarily arisen out of the fraud played by the employees of the Respondent Company or their Agents. Apart from guidelines of Respondent No. 3 that unequivocally make the Respondent Company liable for the acts of their Register cum Share Transfer Agents, the law on the point is clear that the Principals are liable for the acts of their agents.”

The NCLT then went on to state that the original

share certificates, which were still in physical form

with the appellant, could get demated after due

confirmation from the register which would be carried

out pursuant to the aforesaid order. In appeal to the

Appellate Tribunal, the Appellate Tribunal referred to

the fact that a criminal complaint and SEBI

investigation were both pending, as a result of which it

would not be correct for the Tribunal to exercise its

powers to rectify the register under Section 59 of the

Companies Act. The aforesaid judgment of the NCLT was,

therefore, set­aside and the appellant was relegated to

a suit.

Shri K.V.Vishwanathan, learned senior appearing for

the appellant, has commended for our acceptance the

order of NCLT, together with its reasoning. Learned 5

senior counsel has stated that there is really no

contest in the present proceedings inasmuch as

respondent No. 8, who would be affected by the NCLT

order, has chosen not to appear in the proceedings

throughout. He has also referred to and relied upon a

RTI Circular No. 1 dated 09.05.2001 and the fact that

SEBI has, in its application to delete itself from the

array of parties stated, on 20.05.2016, that respondent

No. 2 has issued duplicate shares without following the

proper procedure and without exercising due care and

diligence.

Shri Pratap Venugopal, learned counsel appearing on

behalf of SEBI reiterates this position and also agrees

with Shri Vishwanathan that the NCLT order should be

reinstated.

Shri Shyam Divan, learned senior counsel appearing

for the Company, when faced with the fact that there is

no real contest in the present case, has further

submitted that this Court should be careful in

reinstating the Tribunal’s order inasmuch as it is not

at all clear as to whether respondent No. 8 has, in

fact, been entered on the register or not. It is his

further submission that since the shares are now

demated, it is not his client that should be directed to

put the appellant back on the share register but the 6

concerned depository.

We are of the view that the Tribunal was absolutely

correct in not relegating the appellant to any further

proceedings inasmuch this is an open and shut case of

fraud in which the appellant has been the victim, and

Respondent No. 2 the perpetrator.

Equally, it is clear that the due procedure that

has been outlined in paragraph 23 of the RTI Circular

dated 09.05.2001 has not been followed. When the

duplicate shares were issued, stock exchanges were not

informed and neither was an advertisement in a widely

circulated newspaper issued as the value of the shares

were far greater than Rs. 10,000/­.

We are, therefore, of the view that the Appellate

Tribunal in relegating the appellant to a further

proceeding was not correct. We, therefore, set­aside

the Appellate Tribunal’s order and reinstate that of the

Tribunal dated 20.03.2017. It goes without saying that

if respondent No. 8 does not happen to be on the

register at all, then there would be no difficulty

whatsoever in restoring the appellant back to its

original position. Even if respondent No. 8 has been

entered on the Register, his name will have to be

deleted in view of the fact that the transfer to him has

been declared to be void in law. 7

We, therefore, direct the Company to rectify its

register, insofar as the physical share certificates are

concerned, and the concerned depository to rectify the

demat records in accordance with this order.

The appeals are allowed in the aforesaid terms.

Pending applications, if any, shall stand disposed

of.

......................J. (ROHINTON FALI NARIMAN)

......................J. (INDU MALHOTRA)

New Delhi, Dated: 3rd July, 2018. 8

ITEM NO.50 COURT NO.10 SECTION XVII

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Civil Appeal No(s). 19426-19427/2017

ADESH KAUR Appellant(s)

VERSUS

EICHER MOTORS LIMITED & ORS. Respondent(s)

(FOR ADMISSION and IA No.126711/2017-PERMISSION TO FILE ADDITIONAL DOCUMENTS and IA No.126712/2017-EXEMPTION FROM FILING O.T. )

Date : 03-07-2018 These appeals were called on for hearing today.

CORAM : HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN HON'BLE MS. JUSTICE INDU MALHOTRA

For Appellant(s) Mr. K.V.Viswanathan, Sr. Adv. Mr. K.V.Balakrishnan, Adv. Mr. S.M.Sundram, Adv. Mr. Ravi Raghunath, Adv. Mr. K. V. Mohan, AOR

For Respondent(s) Mr. Shyam Divan, Sr. Adv. Mr. Anoop Dawar, Adv. Mr. Rajesh Ranjan, Adv. Mr. Sumit Teterrwal, AOR

Mr. Pratap Venugopal, Adv. Ms. Surekha Raman, Adv. Ms. Niharika, Adv. Ms. Kanika Kalaiyarasan, Adv. M/S. K J John And Co, AOR

Mr. Tushar Mehta, ASG, Mr. Bharat Singh, Adv. Mr. Arvind Kumar Sharma, Adv. Ms. Swati Ghildiyal, Adv. Mr. Mukesh Kumar Maroria, AOR 9

UPON hearing the counsel the Court made the following O R D E R

The appeals are allowed in terms of the signed reportable judgment.

Pending applications, if any, shall stand disposed of.

(SHASHI SAREEN) (SAROJ KUMARI GAUR) AR CUM PS BRANCH OFFICER

(Signed reportable judgment is placed on the file)