State Bank Of India & Anr vs Kamlesh Kalidas Shah & Ors

IN THE MATTER OF: Before NCLT Before NCLAT

1. State Bank of India, Corporate Centre, 14th Floor, State Bank Bhavan, Madam Cama Road, Nariman Point, Mumbai-400021 1st Respondent 1st Appellant

2. Datamatics Business Solutions Ltd., Plot No.B-5, Part B, Cross Lane, MIDC, Andheri (E), Mumbai-400093 2nd Respondent 2nd appellant

Versus

1. Shri Kamlesh Kalidas Shah R/o B.No., Parthna Vihar Society, Opp Ambawadi Post Office, Ambawadi, Ahmedabad 380015 Petitioner 1st respondent

2. Ms Rukhmani Babulal C-3, 64, Goyal Intercity, Opp. T.V.Tower, B/h Drive in Cinema, Ahmedabad 380054. 3rd Respondent 2nd Respondent

3. Ms Urvi B Shah Mr BS Shah, C/o Shantilal J Shah Tower road Surendra Nagar 363001 4th Respondent 3rd Respondent

4. Mr Jolly Champaklal Shah 29/339 Adarsh Nagar,

Company Appeal (AT) No.70/2018 2

Naganpura, Ahmedabad 380013. 5th Respondent 4th Respondent

5. Mr. Kamlesh Bhuderaji Thakker, Near Balao Devas, Gujjarvada Chouck, Near Bhavani Pan House, Radhanpur 385340 6th Respondent 5th Respondent

For Appellants: Shri Sanjay Kapur and Ms Megha Karnwal, Advocates for appellants. For Respondent: Ms Vandana S. Bhandari, Advocate for Respondent No.1

JUDGEMENT

BALVINDER SINGH, MEMBER (TECHNICAL)

The appellants have filed this appeal under Section 421 of the Companies

Act, 2013, being aggrieved by the impugned order dated 4.11.2017 passed by the

National Company Law Tribunal, Mumbai Bench, Mumbai in Company

Application No.13/584(4) and 59/CLB/MB/MAH/2015 passed under Section

58(4) and 59 of Companies Act,2013.

2. The brief facts of the case are that 1st respondent, being a share broker,

purchased the following 200 shares of the appellant through Ahmedabad Stock

Exchange of 50 denominations and submitted the same to 2nd appellant to transfer

the said shares in his name.

Name of Seller Folio No Certificate No. Distinctive

No

1 Rukhmaniben SB2541954 1634923 333094801 to Babulal 33094850 2 Urvi B Shah SB2549950 1643232 333510251 to 333510300 3 Jolly Champaklal SB1797766 871509 294924101 to Shah 294924150

Company Appeal (AT) No.70/2018 3

4 Kamlesh SB1329225 386109 270654101 to Bhuderji Thakker 270654150

3. The original transfer deeds pertaining to Sl.No.2 to 4 of the above shares are

with the 1st respondent and the documents in respect of Sl.No.(1) have been

lost/misplaced (Page 66). The above shares were sent to 2nd appellant for transfer

and the 2nd appellant intimated that the signature of transferor on transfer deed

is not matching and requested 1st respondent to remove the objections and return

the transfer deed to 2nd appellant. 1st respondent also written to 2nd appellant to

stop transfer of shares purchased by him. 1st respondent had written a letter

dated 10.11.2014 to 2nd appellant to know about the status of shares standing in

the name of 2nd to 5th respondent. 2nd appellant vide letter dated 24.11.2014

intimated that the shares are standing in the name of 3rd to 5th respondent and

also assured that the status of shares held by 2nd respondent will be intimated

shortly but no reply has been received by 1st respondent from 2nd appellant.

4. Being aggrieved by the action of the 2nd appellant, 1st respondent (original

petitioner) filed a company petition before the Company Law Board, Mumbai

Region Bench, Mumbai praying for the following relief:

i) That 200 shares of Respondent No.1 Bank be transferred in the name of

Petitioner.

ii) That respondent No.Bank be directed to rectify the register of members

and name of the petitioner be recorded in the Register of Members of

Respondent No. (should be 'bank') in place of Respondents No.3 to 6.

iii) That if any corporate benefit declared by the Respondent Bank in past

and or due against the impugned share in dispute, that shall be given to the

petitioner.

Company Appeal (AT) No.70/2018 4

iv) That such any other order and/or further order this Hon'ble Board may

deem fit and proper be also passed.

v) For cost of this Petition.

5. 2nd appellant filed its reply and prayed that the Tribunal has no jurisdiction

to entertain or try the disputes pertaining to the Equity shares as SBI is not a

company incorporated under the provisions of Companies Act; the petitioner being

brokers involved in the transaction of these shares has no locus standi to claim

title to the certificates and prayed that the company petition be dismissed.

6. After hearing the parties the Learned NCLT passed the impugned order

dated 4.11.2017. Relevant portion of the impugned order is as under:

"8.4 In the light of the above discussion and considering the sequence

of events we have found that only 100 shares were lodged before State

Bank of India to record the Transfer and not 200 shares. In the

absence of any evidence that rest of the 100 shares have also been

lodged for transfer in SBI record we are not inclined to pass any order.

Definitely it is not permissible under law to adjudicate on an issue

which has not been raised by proper lodgement. At the cost of

repetition, the correspondence placed before us has demonstrated

only in respect of 100 shares, the distinctive numbers etc already

made clear in this judgement. Even in the reply filed by Datamatics

Financial Services (R-2) vide para 6 it is acknowledged that only 100

shares share certificates were lodged and put a Stop Mark and not for

rest of the shares. Para 6 is reproduced below:

"6 With reference to para 8 of the petition, it is respectfully

submitted that the Petitioner had lodged only two certificates

Company Appeal (AT) No.70/2018 5

(i.e. 100 shares) -i) share Certificate No.1634923 bearing

distinctive Nos 33094801 to 33094850 in the year 2002 and ii)

share certificate No.386109 bearing distinctive Nos.270654101

to 270654150 in the year 2011 for transfer in his name, but

because the transferor's signature in the relevant transfer

applications being different, the said certificates were returned

under objections to the Petitioner. As such, the contentions of

the Petitioner that the shares wrongly exist in name of

Respondent Nos. 3 to 6 are denied. Further, it is respectfully

submitted that since the Petitioner has submitted the transfer

applications for only 100 shares out of 200 shares as stated in

plaint, the provisions of Section 58(4) and 59 of Companies Act,

2013 will not be applicable to balance 100 shares as it has not

been submitted by the Petitioner to the Respondent No.2 for

transfer in his name."

8.5 Few Respondents mainly Respondent No.5 has stated in the

Affidavit in Reply that the shares were lost by him and the claimant

Petitioner is not a bona fide person to lodge the claim in SBI records.

A question has been raised that if the shares were lost then why a

Police Complaint or FIR was not lodged? Otherwise also, there is no

corroborative evidence in support of the alleged claim of loss of

shares. In the absence of any substantial proof we are not persuaded

by this argument of the Respondent.

9. In the light of the above discussion we hereby conclude that this

Petition is maintainable against the State Bank of India as per the in-

Company Appeal (AT) No.70/2018 6

depth discussion made hereinabove and that the question of

Limitation in respect of the impugned transaction in question is

concerned do not apply because the transaction has happened at the

period when the Old Companies Act, 1956 was in operation. However,

the Petition filed against State Bank of India revolves around the

lodging of claim in respect of only 100 shares as per the specifications

supra and not in respect of total 200 shares. As a result, our Order

is confined to those 100 shares only, details as per supra, which were

lodged for transfer in the prescribed record by the State Bank of India.

The Petition is therefore, partly allowed. Disposed of accordingly, to

be consigned to Records."

7. Being aggrieved by the said impugned order dated 4.11.2017 1st appellant

has preferred this appeal. 1st appellant stated that the 1st respondent lodged 100

shares with 2nd appellant for transfer in his name. However due to mismatch of

signatures of the transferor on transfer deed, 1st respondent was requested to

submit the fresh transfer deed and also to arrange a certified copy of the purchase

proof in the form of Contract Note/Purchase Bill mentioning therein the details of

SEBI registration and name of broker to whom he has purchased the shares and

in the meanwhile put provisional "Stop Mark" in their records. However, 1st

respondent has not resubmitted the said documents after rectification of the

discrepancies.

8. 1st appellant further submitted that the 1st respondent filed a Civil Suit

No.1173/2007 in the City Civil Court, Ahmedabad and thereafter preferred a

Company Petition before the then Company Law Board in March, 2015 under

Section 58(4) and 59 of the Companies Act, 2013. 1st appellant stated that the 2nd

Company Appeal (AT) No.70/2018 7

appellant filed its reply in the said Company Petition and raised preliminary

objections with regard to maintainability/jurisdiction and limitation.

9. 1st appellant raised the issue that the 1st appellant is not a Company

registered under the provisions of Companies Act, 2013 and it is a body corporate

constituted and incorporated under State Bank of India Act, 1955 which was

enacted before the enactment of Companies Act, 1956 and, therefore, the NCLT

would have no jurisdiction to entertain or try the disputes pertaining to transfer

of equity shares issued by State Bank of India.

10. 1st appellant stated that the NCLT erred in not following its previous order

dated 3.5.2017 passed by the Company Law Board, Western Region, Mumbai in

the case of Tirupati Trade Communication Vs SBI (Company Petition

No.20/111A/CLB/WR/2006) wherein it has been categorically held that since SBI

is neither formed nor registered under Companies Act and has been constitute

even prior to the enactment of the Companies Act, 1956, hence the petition under

the Companies Act against SBI is not maintainable. 1st appellant further stated

that the NCLT should have followed its previous order dated 3.5.2017. 1st appellant

further stated that the reference to the case of Ms Natali Vs SBI was completely

misplaced particularly keeping in view that the said order was passed in the

peculiar facts and circumstances, and the same was in a way of consent order.

11. 1st appellant contended that the NCLT has erred in holding that the Civil

Court has no jurisdiction in view of Section 430 of the Companies Act, 2013. 1st

appellant further submitted that when the petition against 1st appellant is not

maintainable before the NCLT, the provision of Section 430 would not be

applicable.

Company Appeal (AT) No.70/2018 8

12. 1st appellant further submitted that the shares can only be transferred after

valid execution of the documents and supported with valid transfer deed having

proper signatures of the registered holder and there is no stop mark put on shares.

13. 1st appellant submitted that the NCLT cannot decide an issue of mismatch

of signatures as that requires proper appreciation of evidence.

14. 1st appellant prayed that the impugned order dated 4.11.2017 may be set

aside.

15. Reply has been filed on behalf of 1st Respondent. 1st respondent has stated

that Company Law Board/National Company Law Tribunal has jurisdiction to

decide the issue of rejection of transfer being the constituted authority to deal with

all kind of matters where power is given. 1st respondent further stated that Section

1(4) of Companies Act, 2013 states that the provisions of this Act shall apply to

Banking Companies, except in so far as the said provisions are inconsistent with

the provisions of Banking Regulation Act, 1949. 1st respondent further submitted

that the provisions of the Companies Act also apply to the appellant to the extent

these are not repugnant to the SBI Act. 1st respondent have also stated that the

SBI Act also refers and prescribes the provisions of Companies Act in respect of

Transfer of unpaid or unclaimed dividend. 1st Respondent stated that SBI Act itself

follows the provisions of Companies Act.

16. 1st respondent stated that he has withdrawn the Civil Suit filed by him for

share certificate No.1634923 under Folio No.2541954 for 50 shares and no suit is

pending (Page 3 of Reply of 1st respondent).

17. 1st respondent, in reply to order dated 3.5.2007 passed by the erstwhile

Company Law Board in the case of Tirupati Trade Communications Vs SBI, stated

that Companies Act, 1956 is repealed by the Companies Act, 2013 wherein Section

Company Appeal (AT) No.70/2018 9

1(4) of the Companies Act, 2013 makes it very clear that the provisions of this Act

shall apply to (c) banking companies, except in so far as the said provisions are

inconsistent with the provisions of the Banking Regulations Act, 1949. 1st

respondent further stated that the inferior courts are bound to apply the legal

principles set down by superior courts in earlier cases, while a persuasive

precedent is one which is not absolutely binding on a count by which may be

applied.

18. 1st respondent submitted that the Tribunal has jurisdiction to decide a

complaint regarding non-transfer of shares. 1st respondent further submitted that

Section 430 of the Companies Act, 2013 specifically bars the jurisdiction of the

Civil Court. 1st respondent submitted that the petition was filed before the

Tribunal was for transfer of 200 shares and the petition is allowed for 100 shares

of SBI, which were lodged by the 1st respondent and were rejected by the appellant.

It is further stated that Section 59 of the Companies Act, 2013 empowers the

Tribunal to decide all issues. 1st respondent submitted that the appellant did not

appear before the Civil Court thereby deciding not to contest the case. 1st

respondent submitted had there been any disputed question of fact then appellant

would have contested the same before the Civil Court. 1st respondent submitted

that the Tribunal has not decided the question of mismatch of signatures and the

1st respondent had also not raised the issue of mismatch of signatures but was of

non-transfer of shares.

19. 1st respondent further submitted that the order/judgement passed by the

higher authorities are only binding and one bench of NCLT is not bound by the

order/judgement passed by previous bench or another bench.

Company Appeal (AT) No.70/2018 10

20. 1st respondent further stated that the provisions of Companies Act are

applicable on the appellant. 1st respondent submitted that the Tribunal has dealt

in detail Section 1(4) of the Companies Act, 2013, therefore, the appellant comes

within the ambit of this Act. There is no inconsistency among SBI Act and the

Companies Act 1956/2013. 1st respondent further submitted that SBI Act itself

follows the procedure of the Companies Act and restrained applicability only of

those provisions which are not consistent.

21. 1st respondent further submitted that NCLT has been empowered by the

Companies Act, 2013 like a Civil Court as per Section 424 of the Companies Act.

22. 1st respondent submitted that the order passed by the NCLT has been

passed on sound reasoning and after considering all the arguments/submissions

made by the respect parties and prayed that the appeal may be dismissed.

23. We have heard the parties and perused the record. Before we proceed to

decide the issues raised by the 1st appellant and the arguments submitted by the

1st Respondent, we have observed that no reply was filed by the 1st appellant before

NCLT and the reply was filed by the 2nd appellant. But before this Appellate

Tribunal 1st appellant has come in appeal and the 2nd appellant has not filed reply.

Further we have faced great difficulty as proper pagination was not done by the

appellant while filing the appeal. For example, Two pages of page No.21 have been

filed in which Declaration by appellant and Verification by Sanjeev Kumar Gaur

has been filed. Further on the Index, Annexure -1 and Annxure-2, copy of

authorisation letters have been shown at Page no.42 and 43. However, in the

appeal at Page 2, it is shown at Page No.39-40. Similarly on the Index, Annexure

-3 is shown at Pages 44-52 and in the appeal at Page No.8, Annexure -3 is shown

Company Appeal (AT) No.70/2018 11

at Pages 41-49. Similar mistakes have been committed in the Annexures also.

Therefore, we find that the appeal has been filed in a casual manner.

24. Now we come to the main issue which is the core issue raised by the 1st

appellant that State Bank of India is not a Company registered under the

provisions of Companies Act and it is a body corporate constituted and

incorporated under SBI Act, 1955 which was enacted before the enactment of

Companies Act, 1956 and, therefore, NCLT would have no jurisdiction to entertain

or try the disputes pertaining to transfer of equity shares. 1st appellant also relied

upon the judgement pronounced by Company Law Board in the case of Tirupati

Trade Communication wherein the CLB had decided that SBI is neither formed

nor registered under Companies Act and has been constituted prior to the

enactment of the Companies Act, 1956, therefore, the petition under the

Companies Act, 1956 is not maintainable.

25. On the other hand 1st respondent argued that Company Law Board/National

Company Law Tribunal has jurisdiction to decide the issue of rejection of transfer

being the constituted authority to deal with all kind of matters where power is

given. 1st respondent further argued that Section 1(4) of Companies Act, 2013

states that the provisions of this Act shall apply to Banking Companies, except in

so far as the said provisions are inconsistent with the provisions of Banking

Regulation Act, 1949. 1st respondent further argued that the provisions of the

Companies Act also apply to the appellant to the extent these are not repugnant

to the SBI Act. 1st respondent have also argued that the SBI Act also refers and

prescribes the provisions of Companies Act in respect of Transfer of unpaid or

unclaimed dividend. 1st respondent further argued that 1st appellant is listed on

the Stock Exchanges i.e. National Stock Exchange and Bombay Stock Exchange

Company Appeal (AT) No.70/2018 12

where only the companies are listed. 1st Respondent argued that SBI Act itself

follows the provisions of Companies Act.

26. We have heard the arguments and we have also gone through SBI Act, copy

of which was filed by the appellant, and we find that the 'Imperial Bank' was taken

over and named as State Bank of India and the Central Government together with

other persons entitled to become shareholder of State Bank of India. It is not in

dispute that the 'Imperial Bank' was a company under the erstwhile Companies

Act and it continued to be company on take over as State Bank of India which is

the reason that the Central Government become one of the shareholders. Later

on the SBI also came out with an Initial Public Offer (IPO) and allotted its shares

to various shareholders including individuals. We have also perused the Share

Transfer Form submitted by the 1st respondent to 2nd appellant for transfer of

shares. We observe that the said Share Transfer Form is prescribed under Section

108(1A) of the Companies Act, 1956. The said transfer from is being accepted by

the 1st appellant. 1st appellant has not submitted any such form which have been

prescribed by it for the purpose of transfer. We observe that the 1st appellant is

using the said form which have been prescribed under the Companies Act. As

such the argument of the 1st appellant that the Companies Act is not applicable to

them is not convincing. On the contrary State Bank of India being a body created

by an Act of Parliament it has higher responsibility than the ordinary company to

take care of its all stake holders. We are, therefore, of the view that the State Bank

of India is a company within the meaning of Companies Act for the purpose of

transfer of securities. Therefore, NCLT has the jurisdiction to entertain or try the

disputes pertaining to transfer of equity shares.

Company Appeal (AT) No.70/2018 13

27. The other issue raised by the appellant that when the petition before the

NCLT is not maintainable then the provision of Section 430 would not be

applicable.

28. 1st respondent argued that the NCLT has jurisdiction to entertain petition

as per section 430 of the Act.

29. Section 430 of the Act is as under:

"430. Civil Court not to have jurisdiction- No civil Court shall have

jurisdiction to entertain any suit or proceeding in respect of any

matter which the Tribunal or the Appellate Tribunal is empowered to

determine by or under this Act or any other law for the time being in

force and no injunction shall be granted by any Court or other

authority in respect of any action taken or to be taken in pursuance

of any power conferred by or under this Ac or any other law for the

time being in force, by the Tribunal or the Appellate Tribunal."

Since we have held that the NCLT has the jurisdiction to entertain or try the

disputes pertaining to transfer of equity shares, therefore, Section 430 of

Companies Act, 2013 would be applicable. The civil suit filed by the 1st respondent

is already withdrawn. Further in the matter of Adesh Kaur Vs Eicher Motors

Limited and Ors, Civil Appeal Nos 19426-19427 of 2017 decided on

3.8.2018 the Hon'ble Supreme Court upheld the version of the Tribunal which is

as under:

"xxxx 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

Company Appeal (AT) No.70/2018 14

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. Xxxx"

30. The other issue raised by the appellant that the shares can only be

transferred after valid execution of the documents and supported with valid

transfer deed having proper signatures of the registered holder and there is no

stop mark put on shares.

31. 1st respondent argued that he is the bonafide purchaser and has paid the

full amount and purchased the shares through Ahmedabad Stock Exchange and

the original share certificates are in his lawful possession. 1st respondent argued

that he had lodged 200 shares for transfer with 2nd appellant but only the

following100 shares have been allowed to be transferred by the NCLT:

Name of Seller Folio No Certificate No. Distinctive

No

1 Rukhmaniben SB2541954 1634923 333094801 to Babulal 33094850 2 Kamlesh SB1329225 386109 270654101 to Bhuderji Thakker 270654150

32. We have heard the learned counsel for the parties on this issue. It is not

disputed that the 1st respondent purchased the shares from Stock Exchange and

the physical shares are in his possession. 1st respondent while filing petition

before the NCLT made the transferor of shares as party respondent but they did

not come forward to file their reply, except Respondent No.4, or to agitate that they

have not signed transfer deeds. Now when the 1st appellant filed the appeal before

this Appellate Tribunal, 1st appellant have also made them parties respondent to

Company Appeal (AT) No.70/2018 15

the appeal. They have not come forward to agitate the Appeal inspite of service of

Notice. It goes to prove that the transferor is not cooperating with the transferee

or showing his inability to provide the information to the transferee. Therefore, it

is established on the record that the 1st respondent was rightly contesting and

claim that he is the rightful owner of these shares by filing Civil Suit and Company

Petition before the appropriate Court/Tribunal. Now the question arises that the

shares have not been transferred in the name of 1st respondent due to mismatch

of signatures of transferor. On this issue, similar complaints were also received

by the concerned department that the companies are not effecting transfer of

shares in the names of transferees on frivolous grounds, inter alia, that the

specimen signatures of transferors do not tally with that on record, in spite of the

fact that the transfer forms bear attestation of the magistrates etc. Ministry of

Finance, Department of Economic Affairs issued instructions vide No.1/10/SE/83

dated 21.7.1983. The said instructions also contain guidelines on good and bad

delivery. It was also directed to the member companies to follow the instructions

scrupulously and to effect transfer of shares within the period prescribed under

Section 113 of the Companies Act, 1956 and the listing guidelines (Circular No.3

of 1993 dated 22.3.1993. In this regard as it is established the original transferor

has not appeared before the NCLT and also have not appeared before this Appellate

Tribunal to rebut the claim of the 1st respondent, we have come across a recently

issued Circular No.SEBI/HO/MIRSD/DOS3/CIR/P/2018/139 dated 6th

November, 2018 which has been addressed to All Registrars to an Issue and Share

Transfer Agents registered with SEBI, All Listed entities (Through Stock Exchange)

on the subject 'Standardised norms for transfer of securities in physical mode'.

As the Circular is itself addressed to Share Transfer Agents registered with SEBI

Company Appeal (AT) No.70/2018 16

and All Listed entities including others, 1st appellant who is a listed entity and 2nd

appellant who is a Share Transfer Agents must have received this Circular and are

duty bound to follow it in letter and spirit. The said Circular has been issued under

Regulation 40 and Schedule VII of the Securities and Exchange Board of India

(Listing Obligations and Disclosure Requirements) Regulations, 2015. Regulation

40 provides as under:

"40(1) Save as otherwise specified in provision of securities laws or

Companies Act, 2013 and rules made thereunder, the listed entity

shall also comply with the requirements as specified in this regulation

for effecting transfer of securities.

The said Regulation 40 binds the listed entity that the they will comply with

the requirements of Companies Act, 2013 as well as this Regulation. Further

linkage of the Companies Act and the Securities Exchange Board of India is

provided under Section 24 of the Companies Act, 2013.

Section 24 of the Companies Act,2013 which states as under:

"24(1) The provisions contained in this Chapter, Chaptr IV and in

Section 127 shall-

(a) in so far as they relate to---

(i) issue and transfer of securities; and

(ii) non-payment of dividend

by listed companies or those companies which intend to get their

securities listed on any recognised stock exchange in India, except

as provided under this Act, be administered by the Securities and

Exchange Board by making regulations in this behalf;

Company Appeal (AT) No.70/2018 17

Thus it is noted that the combined reading of Section 24 of Companies Act

and Regulation 40 of SEBI will show that the principles and compliances to be

made under the Companies Act or under the SEBI are complementary in nature

and both provisions have to be complied with for a better outcome.

33. Now, the relevant part of the said circular

No.SEBI/HO/MIRSD/DOS3/CIR/P/2018/139 dated 6th November, 2018 on

mismatch of signature is as under:

"c. Major mismatch/Non-availability of transferor's signature:

As per procedure laid down in LODR, in case of non-availability/major

mismatch in transferor's signature the transferor is required to update

his/her signature by submitting bank attested signature alongwith an

affidavit and cancelled cheque to the RTA/company. Multiple instances have

been brought to the notice in such cases, where the transferor did not take

efforts to update his signatures since he had already received the

consideration for the transfer. Further in many cases, the transferors could

not be traced now.

Accordingly, following procedure/documentation shall be followed for

registration of transfer of securities, in such cases:

i. RTA/company shall follow the procedure as laid down in Para

(B)(2) of Schedule VII of LODR for major difference or non-

availability of signature of the transferor(s).

ii. Issuers/RTAs shall make efforts to contact the transferor:

1. By checking the Dividend history and obtaining the current

contract details from the bank where dividend was encashed.

Company Appeal (AT) No.70/2018 18

2. From the address, email IDs and phone numbers, if any,

available with the Depositories/KRA.

iii. In case of non-delivery of the objection memo to the transferor

or non-cooperation by/inability of the transferor to provide the

required details to the transferee, company/RTA shall register

the transfer after following the procedure as under:

1. Following additional documents shall be collected from the

transferee:

i. An indemnity bond from the transferee in the format

placed at Annexure A:

ii. Copy of address proof-Passport/Aadhar Card/Driving

License of the transferee.

iii. An undertaking that the transferee will not

transfer/demat the physical securities until the lock-in

period specified under Clause (4) below is completed.

2. RTA may also verify the documents submitted by the

transferee with the KYC details, if any, available with the

Depositories/KRAs.

3. Companies/RTAs shall publish an advertisement in at least

one English language national daily newspaper having

nationwide circulation and in one regional language daily

newspaper published in the place of registered office of the

listed entity is situated, giving notice of the proposed transfer

and seeking objection, if any, to the same within a period of

30 days from the date of advertisement. A copy of the

Company Appeal (AT) No.70/2018 19

advertisement shall also be published on the company's

website.

4. Transfer shall be effected only after the expiry of 30 days from

the newspaper advertisement. The securities so transferred

shall bear a stamp affixed by the company/RTA stating that

these securities shall be under lock-in for a period of 6 months

from the date of registration of transfer and should not be

transferred/dematerialized during the said period.

5. Names of the transferor, transferee and no. of securities

transferred under this procedure shall be disclosed on the

company's website for a period of 6 months from the date of

transfer. This information shall also be displayed on stock

exchange website as a corporate announcement.

d. In case of non-availability of any document required for transfer and

the transferor is not cooperating or not traceable, companies/RTA shall

register the transfer by following the procedure as specified in case of

major mismatch/non-availability of transferor's signature, as specified

in Para 2(c) above."

34. We have noted that the matter under consideration has been hanging over

for the last several years. NCLT vide Impugned Order partly disallowed the claim

of Respondent No.1, original petitioner, and he has not filed appeal. Appeal needs

to be disposed giving directions regarding compliance on the lines of SEBI Circular.

34. In view of the aforegoing observations and discussions the following

directions are issued:

Company Appeal (AT) No.70/2018 20

i) Impugned Order is maintained. However, the shares may be transferred

subject to compliance with SEBI Circular No. No.SEBI/HO/

MIRSD/DOS3/CIR/P/2018/139 dated 6th November, 2018.

ii) Appellants and Respondent to take prompt action by following the

prescribed procedure under the circular noted above.

iii) The expenses, if any, incurred by the appellants in following the above

procedure will be borne by the 1st respondent.

iv) No order as to costs.

(Justice A.I.S. Cheema) (Mr. Balvinder Singh) Member Judicial Member (Technical)

New Delhi Dated: 17-1-2019

BM

Company Appeal (AT) No.70/2018