Order in the matter of Complaint of Mr. Manoj Dharamdas Shah

WTM/RKA/MIRSD/170/2016 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI ORDER Under Sections 11(1) and 11B of the Securities and Exchange Board of India Act, 1992 In the matter of Complaint of Mr. Manoj Dharamdas Shah

1. Eicher Motors Ltd. is a company listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). MCS Ltd. had acted as the Registrar to an Issue & Share Transfer Agent (RTA) for Eicher Motors Ltd. during the period from 2005 to 2015. MCS Ltd. is a Category – I RTA holding permanent registration with registration no. as INR000000056. 2. Securities and Exchange Board of India (SEBI) received a complaint dated June 28, 2015, from Mr. Sandip Dharamdas Shah on behalf of his elder brother, Mr. Manoj Dharamdas Shah (the complainant), who claimed to be a bona fide existing shareholder of Eicher Motors Ltd. The complainant claimed that Eicher Motors Ltd. and MCS Ltd. (RTA) have cheated him by illegally transferring his 100 shares of Eicher Motors Ltd. in the name of illegal transferee, Mr. Vijay Ratnakar Humbre, without his knowledge and consent. The content of the complaint are inter alia as follows: i. The complainant has been holding 100 equity shares of Eicher Motors Ltd. since May 07, 1991 and has the original certificates with him, photocopy of which has been submitted. ii.

Pursuant to handing over of these shares for demat on January 6, 2015, the demat request was rejected by the RTA on January 19, 2015, on the pretext that Duplicate Share Certificates had already been issued. iii. The complainant had never applied for Duplicate Share Certificates. iv. Following a series of correspondences and transactions with the Eicher Motors Ltd./ RTA, the complainant has collected copies of various documents viz. FIR, Indemnity cum Surety Bond, Affidavit for loss of original share certificate, etc, which were obtained by Eicher Motors Ltd./ RTA while processing Duplicate Share Certificate request in 2007. v. There are several discrepancies in the documents obtained by the RTA for issuing Duplicate Share Certificate. For instance, name of the shareholder has been mentioned as Manoj Dayalal Shah in the documents shared by Eicher Motors Ltd./RTA, whereas the name of In the matter of Complaint of Mr. Manoj Dharamdas Shah the complainant and actual shareholder is Manoj Dharamdas Shah, which the complainant also claims to have verified as recorded in the Permanent record of Eicher Motors Ltd. vi.

Proper procedures for issuance of Duplicate Share Certificate was also not followed, a major point being that no notice was published in any newspaper informing general public about loss of original share certificates. Further, in just 29 working days, entire process of issuing Duplicate Share Certificate was completed including Board Meeting approval. vii. The complainant denied the RTA's claim that during March 2007, Mr. Manoj Dharamdas Shah had applied for change of signature and address. The complainant has further alleged that the RTA has stated in its letter dated 15th May, 2105 addressed to him that “Application for change of address and Signature during 2007 are not available, as per SEBI guideline these documents are maintainable for 3 years only” viii. The complainant is also aggrieved with the way officials of Eicher Motors Ltd. and the RTA have handled the complaint and because of which he has incurred huge unwarranted legal and travelling expenses. 3. SEBI conducted preliminary examination in the matter. On being queried about the subject matter of the complaint, the RTA, MCS Ltd. forwarded its reply to the complainant.

As per MCS Ltd., during March 2007, it had received request in the name of Manoj D Shah for change of address as well as signature and subsequently, request for duplicate share certificate along with various documents was received during September 2007 in which signatures of Mr. Manoj D Shah were tallying with the specimen signature in their records. After processing of these documents, same was sent to Eicher Motor Ltd. for approval. On receipt of approval, duplicate shares were issued and dispatched to Manoj D Shah’s address. The shares were subsequently transferred to one Mr. Vijay R Humbre, who later dematted the same. The RTA claimed that since December 2007 till January 2015 (eight years) Mr. Manoj D Shah never sent any communication for any matter i.e non receipt of dividend / annual report etc. Further, even after providing address and all details of transferee, no legal action has been initiated against Mr. Vijay R Humbre by Mr. Manoj D Shah. 4. SEBI further sought following details from the RTA, (i) as to whether advertisement was issued while processing the request for issue of Duplicate Share Certificates, (ii) what were the documents taken by them on record to check the veracity of request for the change of signature and address and (iii) what was the due diligence carried out by them to verify that this request was actually made by Mr. Manoj Dharamdas Shah.

5. The RTA admitted that no newspaper advertisement was issued as Eicher Motors Ltd. was not adopting the practice of publishing advertisements over the period. The RTA further claimed that they had asked Mr. Manoj D Shah for relevant documents while processing the change in signature and address. 6. SEBI further advised the RTA to provide documents supporting the submission made and to explain how the duplicate requests were processed when Mr. Manoj Dharamdas Shah’s father’s name was written as ‘Dayalal Shah’ in the Affidavit, Indemnity and FIR Copy submitted with the Duplicate Share Certificate Request, whereas the father's name of shareholder was captured as ‘Dharamdas Shah’ in the Permanent Record of Eicher Motors Ltd. The RTA later retracted from its earlier statements regarding the documents sought and stated that before 2013-14, the signature was updated based on the signed letter duly attested by the banker of the shareholder, which are presently not available/ traceable with them. Further, the RTA submitted that the complainant’s name was recorded as Mr. Manoj D Shah and they had presumed that D stood for Dayalal in the complainant’s name.

7. During preliminary examination by SEBI, Eicher Motors Ltd submitted that most of the addresses furnished by Mr. Vijay Humbre in the Share Transfer Deed and the KYC documents are “real” addresses that could be traced and which were occupied by Mr. Humbre or his relatives, but they have not been able to locate his present whereabouts. However, Eicher Motors Ltd. could not submit documents pertaining to the request for change of address & change of signature by Mr. Manoj D Shah and documents regarding any communication sent to verify the old as well as the new Address of Mr. Manoj D Shah. 8. Eicher Motors Ltd. further submitted that while issuing the duplicate certificate the name of the shareholder, address, FIR, notarisation etc. was relied upon in good faith and there seems to be an error in not comparing the father's name. Eicher Motors Ltd. further admitted that it did not issue the required public notice / advertisement in newspaper. 9. Eicher Motors Ltd. has also submitted that this case requires further investigation by investigating authorities and the company has also filed a police complaint against Mr. Manoj D Shah as well as against Mr. Vijay R Humbre, requesting the police to investigate the matter and file a FIR.

10. It has been observed that the folio of the complainant was dormant from 2003-06 and only once the dividend warrant was encashed. It has been further observed that signature and address records of the complainant were updated in March 2007 by RTA, which the complainant has denied having made such requests and for which the RTA has not provided any supporting documents to SEBI as to receipt of any such requests. However, in the same year, request of duplicate share certificate and subsequently request for dematerialisation thereof, were received by the RTA, for which the RTA has all the supporting documents. It has been observed that too much of a co-incidence that the RTA could not produce documents supporting its contention that it had received a request of change in signature and address from the shareholder and it had processed the aforesaid request for issue of duplicate certificates without even noticing that the name of the shareholder was mentioned as Mr. Manoj Dayalal Shah on the FIR copy submitted, and father’s name of Mr. Manoj D Shah was mentioned as Mr. Dayalal Shah in the Affidavit and Indemnity Bond, submitted for processing issue of duplicate share certificates, which was distinctly different from the Permanent Records of Eicher Motors Ltd., wherein father’s name of Mr. Manoj D Shah was mentioned as Mr. Dharamdas Shah.

11. It is admitted fact that Duplicate Share Certificate Request was approved by Eicher Motors Ltd. in the meeting of Shares Committee on October 27, 2007. Duplicate Certificates are issued by Eicher Motors Ltd. once all the documents submitted by the shareholder are forwarded by the RTA, and it is expected that the company would at least check the shareholder’s name in its Permanent Record before issuing the duplicate certificate. Clearly, the same has not been followed by Eicher Motors Ltd. in this case. In view of this Eicher Motors appears to have failed in due diligence obligation while issuing duplicate share certificate in the matter. 12. Further, as per Circular no. SMDRP/POLICY/CIR-46/2001 dated September 27, 2001 (incorporated in Master Circular CIR/MRD/DP/9/2015 dated May 26, 2015) issued to all the stock exchanges, where the investor has complained about issuing of duplicate share certificate(s) by the company on the basis of allegedly forged/stolen documents furnished by a third party, the company shall verify and satisfy itself of the claim of the investor, within 15 days of receipt of the claim and take steps including invoking of indemnity bond to issue shares and corresponding benefits to the rightful owner in terms of section 84 of the Companies Act read with Rule 3 of the Companies (Issue of Share Certificates) Rules, 1960. The circular is applicable in respect of all companies/ organisations (i.e. entities) whose shares are listed on any of the stock exchanges and are in physical form.

Eicher Motors Ltd. had to satisfy itself of the claim of the complainant herein, within 15 days of receipt of the claim. However, it is admitted fact that apart from filing a criminal complaint in the matter, Eicher Motors Ltd. has not done anything to satisfy itself of the claim of the complainant in the matter and has not invoked the indemnity bond to issue shares and corresponding benefits to the rightful owner. 13. Further, Clause 23 of General Norms for Processing of Documents as prescribed under RTI Circular no. 1 (2000-2001) dated May 09, 2001 requires "issue of advertisement in widely circulated newspaper to be issued when value of shares is greater than ₹ 10,000". It is admitted fact that Eicher

Motors Ltd. had not issued required public notice / advertisement in the newspaper on receipt of the request to issue Duplicate Shares even when the value of shares involved was around ₹ 35,000 (2007-08).

14. I therefore, am of the view that by processing investor requests without following proper procedures and without carrying out proper due diligence, Eicher Motors Ltd. and MCS Ltd. have let 100 shares of the company duplicated and transferred to a person who does not appear to be a genuine shareholder, which has caused a loss of the amount equivalent to these 100 shares of the company to the complainant, Mr. Manoj Dharamdas Shah. 15. I find that the interest of the investor needs to be protected and proper relief be provided to him to ensure the confidence of the investors at large in the securities market. In the light of the above, I find that there is no other alternative but to issue direction to Eicher Motors Ltd. 16. Accordingly, I, in exercise of the powers conferred under sections 11(1), and 11B of the Securities and Exchange Board of India Act, 1992 read with section 19 thereof, hereby direct Eicher Motors Ltd. to immediately reinstate the disputed shares to the complainant in lieu of proper indemnity of the complainant, Mr. Manoj Dharamdas Shah in the matter and submit an order compliance report within one month from the date of this order. 17. The above directions shall come into force with immediate effect. 18. This Order is without prejudice to the right of SEBI to take any other action that may be initiated in respect of Eicher Motors Ltd. and MCS Ltd., in accordance with law.

Sd/- Date: October 27th, 2016 RAJEEV KUMAR AGARWAL Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA