w w w . L a w y e r S e r v i c e s . i n



Pravina Kirti Shah v/s Jindal Steel & Power Ltd.


Company & Directors' Information:- JINDAL POWER LIMITED [Active] CIN = U04010CT1995PLC008985

Company & Directors' Information:- JINDAL STEEL AND POWER LIMITED [Active] CIN = L27105HR1979PLC009913

Company & Directors' Information:- S. G. POWER AND STEEL PRIVATE LIMITED [Active] CIN = U14290DL2012PTC240718

Company & Directors' Information:- R. S. STEEL AND POWER PRIVATE LIMITED [Active] CIN = U70100CT2009PTC021362

    C.P. Nos. 2, 3, 5 & 7 to 9 & 113 of 2011

    Decided On, 21 March 2014

    At, Company Law Board Principal Bench New Delhi

    By, THE HONOURABLE MR. DHAN RAJ
    By, MEMBER

    For the Petitioner: Kamal Agrawal, Advocate. For the Respondent: R1, U.K. Choudhary, Sr. Advocate, Sharig Reyag, R2, Akshat Gupta, Advocates.



Judgment Text

In this case, I an considering Petitions bearing Nos. as CP No. 2/113/2011, CP No. 3/113/2011, CP No. 5/113/2011, CP No. 7/113/2011, CP No. 8/113/2011 and CP No. 9/113/2011 in this common Order on account of the facts and legal submissions being the same in these COs. In all these cases, the Petitioners filed the Company Petitions under Section 113 read with 111A of the Companies Act, 1956 with the prayer to pass an Order directing the Respondent No. 1 Company to deliver to the Petitioners, the certificates for bonus shares. As a matter of fact, as stated in the aforesaid C.Ps. pursuant to Scheme of Arrangement as sanctioned by the High Court of Punjab & Haryana vide its Order dated 25.12.1999 under Sections 391 to 394 of the Companies Act, 1956, M/s Jindal Strips Ltd. (hereinafter referred to as the "Jindal Strips") demerged into two companies namely, M/s. Jindal Strips Limited (Now, M/s. Nalwa Sons Investments Limited and hereinafter referred to as the 'JSL/NSIL' and M/s. Jindal Steel & Power Limited (hereinafter referred to as the 'JSPL'). Consequently, for every 5 shares of M/s. Jindal Strips Ltd., every shareholder of M/s Jindal Strips Ltd. became entitled to the allotment of three shares of Rs. 10/- each of M/s Nalwa Sons Investments Ltd. and thwo shares of Rs. 10/- each of M/s. Jindal Steel & Power Ltd. During the month of October, 2003, the Respondent Company i.e. M/s Jindal Steel & Power Ltd. decided to split the denomination of shares of Rs. 10/- each of M/s. Jindal Steel & Power Ltd. decided to split the denomination of certificates of Rs. 5/- each to Re. 1/- each paid up. Further to this, the Board of Directors of the Respondent Company in their meeting proposed allotment of bonus shares in the ration of 5:1 subject to the approval of the shareholders in the AGM/EGM and the shareholders gave their approval for allotment of bonus shares and the Respondent Company fixed 19th September, 2009 as the record date to find the entitlement of the shareholders for the purpose of allotment of bonus shares in the ratio of 5:1.

CP NO.2/113/2011

The petitioner was the registered shareholder of 185 shares of M/s. Jindal Strips Limited having certificate No. 198631 (DNR 16963079-163) and 5585 (DNR 767601-700) under Folio No. 53869. As per the scheme of de-merger, M/s Jindal Strips Limited allotted 74 shares of Rs. 10/- each of M/s. Jindal Steel & Power Ltd. (Respondent Company) in the name of the Petitioner but withheld delivery of certificates without assigning any valid reason. Consequent upon the split of the denomination of share certificates of Rs. 10/- each to Rs. 5/- each and them to Re. 1/- each, the Petitioner was allotted 148 shares of Rs. 5/- each and then, 740 shares of Re. 1/- each in the name of the Petitioner and withheld their deliveries. Further, since the Petitioner was holding 740 shares of Rs. 1/- each on the record date, the Respondent Company allotted 3700 shares of Rs. 1/- each as bonus shares but the Petitioner has not received delivery of the bonus share certificates.

CP NO.3/113/2011

The petitioner was the registered shareholder of 10 shares of M/s. Jindal Strips Limited having certificate NO. 285580 and DNR 17570631 to 40 under Folio No. 80665. As per scheme of demerger. M/s Jindal Strips Limited allotted fours shares of Rs. 10/- each of M/s. Jindal Steel and Power Limited (Respondent Company) in the name of the Petitioner but withheld delivery of certificates without assigning any valid reasons. As per scheme of de-merger, M/s Jindal Strips Limited allotted 4 shares of Rs. 10/- each of M/s. Jindal Steel & Power Limited (Respondent Company) in the name of the Petitioner but withheld delivery of certificates. Consequent upon the split of the denomination of the share certificates of Rs. 10/- each to Rs. 5/- each and then, to Re. 1/- each, the Petitioner was allotted 8 shares of Rs. 5/- and then, 40 shares of Re. 1/- each in the name of the Petitioner and withheld their deliveries. Further, since the Petitioner was holding 40 shares of Re. 1/- each on the record date, the Respondent Company allotted 200 shares of Re. 1/- each as bonus shares but the Petitioner has not received the delivery of the bonus shares certificates.

CP NO.5/113/2011

The Petitioner was the registered shareholder of 42 shares of M/s. Jindal Strips Limited having certificate No. 174645 (DNR 14573783-824) under Folio No. 36947. As per scheme of de-merger, M/s Jindal Strips Limited allotted 17 shares of Rs. 10/- each of M/s. Jindal Steel & Power Limited (Respondent Company) in the name of the Petitioner but withheld delivery of certificates without assigning any valid reasons. Consequent upon the split of the denomination of share certificates of Rs. 10/- each to Rs. 5/- each and then, to Re. 1/- each, the Petitioner was allotted 34 shares of Rs. 5/- each and then, 170 shares of Re. 1/- each in the name of the Petitioner and withheld their deliveries. Further, since the Petitioner was holding 170 shares on the record date, the Respondent Company allotted 850 shares of Re. 1/- each as bonus shares and the Petitioner has not received delivery of the bonus share certificates.

CP NO.7/113/2011

The Petitioner was registered shareholder of 200 shares of M/s. Jindal Strips Limited having certificate No. 82911 (DNR No. 910276 to 860) and 91109 (DNR 10270189 to 288) under Folio No. 53713. As per scheme of de-merger, M/s. Jindal Strips Ltd. allotted 80 shares of Rs. 10/- each of M/s. Jindal Steel & Power Limited (Respondent Company) in the name of the Petitioner but withheld delivery of certificates without assigning any valid reason. Consequent upon the split of the denomination of the share certificate of Rs. 10/- each to Rs. 5/- each and them, to Rs. 1/- each, the Petitioner was allotted 160 shares of Rs. 5/- each and then, 800 shares of Rs. 1/- each in the name of the Petitioner and withheld their deliveries. Further, since the Petitioner was holding 800 shares of Re. 1/- each on the record date, the Respondent Company allotted 4000 shares of Re. 1/- each as bonus shares but the Petitioner has not received delivery of the bonus share certificates.

CP NO.8/113/2011

The Petitioner was registered shareholder of 100 shares of M/s. Jindal Strips Ltd. having certificate No. 285983 and DNR 10234189-288. As per scheme of de-merger, M/s Jindal Strips Limited allotted 40 shares of Rs. 10/- each of M/s Jindal Steel & Power Limited (Respondent Company) in the name of the Petitioner but withheld delivery of certificates without assigning any valid reason, Consequent upon the split of the denomination of share certificates of Rs. 10/- each to Rs. 5/- each and then, to Re. 1/- each, the Petitioner was allotted 80 shares of Rs. 5/- each and then, 400 shares of Re. 1/- each in the name of the Petitioner and withheld their deliveries. Further, since the Petitioner was holding 400 shares of Re. 1/- each on the records date, the Respondent Company allotted 2000 shares of Re. 1/- each as bonus shares but Petitioner has not received delivery of the bonus share certificates.

CP NO.9/113/2011

The Petitioner was the registered shareholder of 200 shares of M/s. Jindal Strips Ltd. under folio No. 472237. As per scheme of de-merger, M/s. Jindal Strips Limited allotted 80 shares of Rs. 10/- each of M/s. Jindal Steel and Power Ltd. (Respondent Company) in the name of the Petitioner but withheld delivery of certificates without assigning any valid reason. Consequent upon the split of the denomination of share certificates of Rs. 10/- each to Rs. 5/- each and then, to Re. 1/- each, the Petitioner was allotted 160 shares of Rs. 5/- each and then, 800 shares of Re. 1/- each in the name of the Petitioner and withheld their deliveries. Further, since the Petitioner was holding 800 shares of Re. 1/- on the record date the Respondent Company allotted 4000 shares of Re. 1/- each as bonus shares but the Petitioner has not received delivery of the bonus share certificates.

2. In all the Company Petition, Advocate for Respondent No. 1 Company has filled reply mentioning therein that the Petition is not maintainable and the same has been filled by the Petitioner under Section 113 of the Companies Act, 1956 with respect to the shares of the Respondent Company which is a public limited and listed company on Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. However, it has been stated that pursuant to Scheme of Arrangement as sanctioned by the High Court of Punjab and Haryana vide its Order dated 25.2.1999 under Sections 391 to 394 of the Companies Act, 1956. M/s. Jindal Strips Ltd. (hereinafter referred to as the 'Jindal Strips') demerged into two companies namely, M/s. Jindal Strips Limited (now M/s. Nalwa Sons Investment Limited & hereinafter referred to as the JSL/NSIL) and M/s. Jindal Steel & Power Limited (hereinafter referred to as the JSPL). Consequently, for every 5 shares of M/s. Jindal Strips Ltd. every shareholder of M/s. Jindal Strips Ltd. became entitled to the allotment of three shares of Rs. 10/- each of M/s. Nalwa Sons Investment Ltd. and two shares of Rs. 10/- each of M/s. Jindal Steel & Power Ltd. Consequently, an intimation was sent to all the registered shareholders by JSL/NSIL vide its Circular No. JSL/conversion of shares/99 dated 1st July, 1999 thereby calling upon all the registered shareholders of M/s. Jindal Strips Ltd. for surrendering their existing original share certificate to M/s. Nalwa Sons Investment Ltd. so that in lieu thereof, new share certificates of M/s. Nalwa Sons Investment Ltd. and M/s. Jindal Steel & Power Ltd. in the aforesaid ratio could be issued. However, in response to the aforesaid Circular dated 1.07.1999, the Petitioners had not surrendered the original share certificates of M/s. Jindal Steel & Power Ltd. were unable to issue to the Petitioners the shares as per their entitlement.

2.1 On the contrary, in the meantime different persons claiming themselves to be the bonafide purchasers/holders of the aforesaid initial shares of M/s. Jindal Strips Limited lodged the aforesaid shares for transfer in their favour on the basis of transfer deeds, purportedly executed by the Petitioners as per details given below:-

CP No. 2/113/2011

(i) Total 85 equity shares of Jindal Strips bearing distinctive No. 16963079-16963136 vide Certificate No. 198631 were purportedly sent for transfer by Ms. Priti P Shah jointly with Mr. Nagindas Kakaldas Shah, both residents of C-205/206, Shri Hari Megha Co-operative Society Limited, 9th Carter Road, Borvali (E) Mumbai-400006 and then lost in transit and as such both persons lodged their claim for issuance of duplicate shares and for transfer in their name as per their name, as per their letters dated 15.06.1998 and 5.08.1998. In reply to the said letters, JSL/NSIL vide their letters dated 20.7.1998, 23.07.1998 and 10.8.1998 informed them that they have not received shares for transfer and had put "Stop Transfer Mark" on the said shares and also sent procedure for issuance of duplicate shares to them.

(ii) Total 100 equity shares of Jindal Strips bearing distinctive No. from 767601-767000 vide Share Certificates No. 5585 were lodged for transfer by one Mr. Ram Mirpuri, Jolly Maker-1, 72A, Cuffe Parade, Mumbai-400005 during the period of September to December, 1999, but were returned back with the objection memo without effecting the transfer and the Petitioner was duly informed about the said fact by Abhipra Capital Limited vide its letter dated 20.12.2007.

CP NO.3/113/2011

Total 10 equity shares of Jindal Strips bearing distinctive numbers from 17570631-17570640 vide Certificate No. 285580 were purportedly sent for transfer by Ms. Leena Bhavani, 508, 5th Floor, Sindhu Apartments Narayan Nagar, Sion, Chunabhatti Mumbai-400022 which however was reportedly lost in transit.

CP NO.5/113/2011

Total 42 equity shares of Jindal Strips bearing distactive numbers from 14573783-14573824 vide Certificate No. 174645 were purportedly sent for transfer by Ms. Leena Bhavani 508, 5th Floor, Sindhu Apartments, Narayan Nagar, Sion, Chunabhatti, Mumbai-400022 which however was reportedly lost in transit.

CP NO.7/113/2011

(i) Total 100 equity shares of Jindal Strips bearing distinctive number from 9102761-860 vide Certificate No. 82911 were lodged for transfer by Shri Jagishraj Gianchand Vohra jointly with Pradeep Jagdishraj Vohra 563, Dieal, Central Avenue, Corner of 11th Road, Chembur, Mumbai-400071 in July, 1999 but were returned back with the objection memo without effecting the transfer. These shares were again lodged for transfer in 2006 by Shri Pradeep Bhardwaj, House No. 578, Bharam Puri Fafrana Road, Modinagar-201204 but were returned again without effecting the transfer.

(ii) Total 100 shares of Jindal Strips bearing distinctive number from 10270189-288 vide certificate No. 91109 were lodged for transfer by Shri Laxman Bansal 17, Amandeep Apartment, Section-9 Rohini, Delhi-110085 in 1999 but were returned back with objection memo without effecting the transfer.

CP NO.8/113/2011

(i) Total 100 equity shares of Jindal Strips bearing distinctive number from 10234189-288 vide Certificate No. 285983 were purportedly lodged for transfer by Shri Mohmedhusin Chopda jointly with Shri Mehmood M. Chopda, Sahera Apartment, Near Shahin Tenements, Juhapura, Sarkhej Road, Adhmedabad-380055 in their favour in September 1997. However, these shares were returned back with the objection memo without effecting the transfer.

(ii) Subsequently the same shares were again lodged for transfer by Shri Prafuichandra Chandula Shah, 3, Kunal Apartment, Narayan Society, Maninagar, Ahmedabad-380008 in his favour in October, 1998. However, these shares were again returned back with the objection memo without effecting the transfer.

Thereafter, the same shares were lodged for transfer by Shri Vijay Shree Daga C/o D.K. Daga, F-302, Adarsh Palace, 47th Cross, 5th Block, Jayanagar, Bangalore-56004, in his without effecting the transfer. Once again, the said shares were lodged for transfer by Shri Vijay Shree Daga C/o D.K. Daga F-302 Adarsh Palace, 47th Cross, 5th Block, Jayanagar, Bangalore-560004, in his favour in June 1999. However, these shares were returned back with the objection memo without effecting the transfer. Once again, the said shares were lodged for transfer by Shri Rajesh Malhotra, 124, A-158, Block No. 11, Govind Nagar, Kanpur-208006 in his favour in December 1999. However, these shares were once again returned with the objection memo without effecting the transfer.

CP NO.9/113/2011

(i) Total 100 equity shares of M/s. Jindal Strips bearing distinctive number from 31977055-154 vide Certificate No. 343143 were purportedly lodged for transfer by Shri Suresh Bhai Patel, 3 Vimal Park Society, B/h Arms Depot Jawahar Chowk, Sabarmati, Ahmidabad-380005 in 1999 but were rejected as bad delivery due to reason that "transfer deed was not lodged within prescribed period". However, these shares were converted into 60 equity shares of Rs. 10/- each of JSL/NSIL and 40 equity shares of Rs. 10/- each of JSPL and were returned to him along with transfer deed and objections memo by JSL/NSIL. Subsequently, in 2005 he again lodged 60 equity shares of Rs. 10/- each of JSPL and were returned to him along with transfer deed and objections memo by JSL/NSIL. Subsequently, in 2005 he again lodged 60 equity shares of Rs. 10/- each of JSL/NSIL which were, after further conversion into shares of JSL/NSIL transferred in his favour on 16.3.2005. Furthermore, 40 equity shares of Rs. 10/- each of JSPL are reported in his possession only as these were sent to him by JSL/NSIL after conversion at the time he had lodged 100 equity shares of M/s. Jindal Strips.

(ii) Total 100 equity shares of M/s. Jindal Strips bearing distinctive Nos. 31976955 to 7054 vide Certificate No. 343142 were purportedly lodged by Sanjay Amolakchand Munot, 10, Shubha Building Alkapuri Soc. Poud Road, near Vanaz Pune-411029 in 2004. JSL/NSIL converted these shares into 60 equity shares of Rs. 10/- each of JSL/NSIL and 40 equity shares of Rs. 10/- each of JSPL. However, 60 equity shares of JSL/NSIL were transferred in his favour by JSL/NSIL in respect equity shares of the Respondent, Sanjay amolakchand Munot has sent the following documents:-

1. Letter notarized by Notary Public on 22.01.2009.

2. Notarized affidavit and idemnity bond executive by Sanjay Amolakchand Munot.

3. Copy of Share Certificate No. 24890 for 80 equity shares of Rs. 5/- each of the Respondent Company.

4. Dummy transfer deed.

5. Photocopy of the transfer deed duly signed by transferor namely Mega Securities Limited and Chiranjilal Saraf and the transferee namely Sanjay Amolakchand Munnot regarding transfer of 100 equity shares of Rs. 10/- each bearing Distinctive No. 31976955-7054 of JSL/NSIL.

6. Letter dated 13.2.2009 of M/s Mega Securities Private Limited regarding obtaining duplicate share certificate.

7. Letter No. NSIL/SD-10F-472237/Misc-2 dated 01.02.2011 of Nalwa Sons Investiment Limited addressed to the Respondent Company.

With regard to all the Company Petitions, the Respondent Advocate has further stated that in view of the lodging of aforesaid equity shares of Rs. 10/- each of Jindal Strips for transfer of above-named persons coupled with the claim of the Petitioners for issuance of duplicate share, on the ground of purportedly loss of shares, the Registrar and Transfer Agent of JSL/NSIL i.e. M/s. Abhipra Capital Ltd. informed the Petitioners about the particulars of such person who had lodged the equity shares of M/s. Jindal Strips Ltd. for transfer and further advised the Petitioner to approach the Court for transfer or alternatively to arrange no objections from all the allotted shares holders stating specifically that they have no objection in issuing duplicate share certificates in favour of the Petitioners.

2.2 Lastly, it has been stated that in the guise of the present petition by claiming the relief of direction from the Hon'ble Bench for delivery of the certificates of Bonus shares to him, the petitioner is seeking declaration of his title based on disputed question of facts, which require detailed evidences and elaborate trial and as such this Hon'ble Bench, in exercise of its summary jurisdiction, cannot adjudicate the same. In addition, it had been pleaded that the present petition is not maintainable for the non-joinder of the proper and necessary parties and in their absence the matter cannot be adjudicated properly in as much as there are various other persons other than the Respondent(s), impleaded herein, who are claiming themselves to be the bonafide purchasers/owners of shares in question. As such, in their absence, the present petition cannot be adjudicated properly, effectively and legality. It will not be out of context to mention that he Petitioner has not impleaded them as the party to the present petition deliberately, intentionally and malafidely despite having knowledge about the said facts.

3. On the Company Application of the Petitioners under Order 1, Rule 10 read with Section 10E of the Companies Act, 1956 and Regulation 44 of the Company Law Bord Regulations, 1991 for impleadment as Respondent(s), some persons were also allowed to be impleaded. However, expect the reply of Respondents No. 2 in CP No.9/113/2011, no other reply has been received from other other such Respondents and none has appeared before this Bench either in person or through some representative or advocate except advocate for respondent no. 2 in CP NO. 9/113/2011. In the reply, Advocate for Respondent No. 2 submitted that the Petition filed by the Petitioner is frivolous, misconceived and not maintainable and is liable to be dismissed on the ground that the Petitioner is claiming the delivery of bonus shares which do not belong to him but in fact, belong to Respondent No. 2. Further, it has been pleaded that the Respondent No. 2 is the original owner of 40 shares (now 400 shares after subsequent division of face value of each share) and cannot be deprived of 2000 bonus shares as the right to the bonus shares cannot be differentiated from the right to the original shares as bonus shares arise only from the original shares. As a matter of fact, on 2.8.1997, the Respondent No. 2 had purchased 100 equity shares of Rs. 10/- each under Certificate No. 343132 bearing distinctive numbers from 31976955 to 7054 of M/s. Jindal Strips Ltd. (now known as M/s. Nalwa Sons Investment Limited) held in the name of M/s. Mega Securities and Mr. Chiranjilal Saraf. Subsequently, in September, 2004, the Respondent No. 2 had applied to the company i.e. M/s Jindal Strips Ltd. (now M/s. Nalwa Sons Investment Limited) for transfer of said shares in his favour. As a result of demerger in the company, the aforesaid 100 equity shares of Rs. 10/- each were converted into 60 equity shares of Rs. 10/- each of M/s. Nalwa Sons Investments Ltd./M/s. Jindal Strips Ltd. and 40 equity shares of M/s. Jindal Steel & Power Ltd. (now 400 equity shares of Re. 1/- each). Further, M/s. Nalwa Sons Investments Ltd./M/s. Jundal Strips Ltd. which was demerged into M/s. Nalwa Sons Investment Limited and M/s Jindal Steel & Power Ltd. have transferred the 60 equity shares held by the Respondent No. 2 on 11.10.2004 which were dematerialized by the Respondent No. 2 on 24.2.2005 and have been consumed by the Respondent No. 2 in October, 2004, the Respondent No. 2 received a letter from the Respondent No. 1 Company seeking a fresh transfer deed from the Respondent No. 2 in connection with transfer of 40 equity shares of Rs. 10/- each of the Respondent Company. Thereafter, the Respondent No. 2 contacted the Petitioner many a times for issuing a fresh transfer deed in his favour for the transfer of 40 equity shares of Rs. 10/- each of the Respondent No. 1 Company but they refused to sign the same. Not only this, it has also come to the knowledge of the Respondent No. 2 that the second holder of the said shares, Shri Chiranjilal Saraf had died by that time.

The Respondent No. 2 Advocate has submitted that the Petitioner initially held 200 shares. However, out of these shares, 100 shares were brought by the Respondent No. 2 in the year 1997 and the Respondent No. 2 has been the legitimate owner of the said shares since 2.8.1997. In fact, the Respondent No. 2 had paid the purchase consideration of Rs. 3,20,000/- in respect of these shares i.e. Rs. 800/- per share to the transfer i.e. the Petitioner and Shri Chiranjilal Saraf. Thus, the ownership of the demerged share i.e. 40 shares of M/s. Jindal Steel & Power Ltd. lies with the Respondent No. 2 had sent Share Transfer Deed to the Respondent Company for transfer in his name but the Respondent Company sought the original of the same. Since the Original Transfer Deed had been lost by the Respondent No. 2 an idemnity Bond and Affidavit were provided by the Respondent No. 2 to the Respondent No. 1 Company. Lastly, the Respondent No. 2 has been constantly trying to contact the Petitioner for signing a fresh Transfer Deed but to no avail. Therefore, it has been observed by the Respondent No. 2 till the ownership of the title of the shares was decided and the only reason of the Petitioner receiving the dividend, notice of AGM/EGM and postal ballot notice etc. is because the Respondent No. 1 Company failed to change the name of the owner of these shares in its Shareholders' Register as the shares were kept under "stop transfer mark". Over and above it has been contended that this inadvertent error on the part of the Respondent No. 1 Company in no manner whatsoever, establishes the ownership of the shares which can only be established by elaborate trial. Consequently, Respondent Company is only trustee and it is the duty of the Respondent No. 1 Company to deliver the bonus shares to the rightful owner and the Respondent No. 1 Company shall withhold the shares till the title of shares is adjudicated upon by the Competent Court of Law.

4. In the rejoinder to the reply of Respondent No. 1 Advocate, the Petitioner Advocate submitted that the Petitioner has filed the present Petition in accordance with the provisions of Section 113 of the Companies Act, 1956 for direction to the Respondent for delivery of bonus shares allotted in the name of the Petitioner for record date 19th September, 2009. As per Section 113(1) of the Act, a company is bound to deliver shares to the shareholder within 3 of law or any order of any court, tribunal or other authority. However, on the date of allotment of bonus shares, the Respondent was neither prohibited by any provision of law or any order of any court, tribunal or other authority restraining the Respondent from delivering certificates of bonus shares to the Petitioners and therefore, the Respondent No. 1 Company should have delivered the certificates of bonus shares to the Petitioners in accordance with the procedure laid down in Section 53 of the Companies Act, 1956.

4.1 It has also been highlighted that there is no provision under the Companies Act, 1956 of Listing Agreement which provides for 'stop transfer' only on the grounds that original shares were lodged for transfer and the same were returned under objection of any reasons as provided under the law. Therefore, the Respondent's decision to put stop transfer mark against the Petitioner's folio is illegal, arbitrary and mala fide. The Petitioners Advocate has denied having received any circular dated 1.7.1999 from the Respondents or form any other company and the allotment of bonus shares and its delivery to the Petitioners have nothing to do with the said circular as both are separate and independent of each other. Apart from this, it has been stated that the Petitioners have not sold shares of M/s. Jindal Strips Ltd. to anyone and therefore the lodgment of stolen shares by Respondent Nos. 2 and 3 cannot affect the claim of the Petitioners and the SEBI, NSE and BSE Regulations have provided a fool proof mechanism for resolving bad delivery claim of the lodger. However, it is relevant to notice that the purported Claimant had not lodged any claim with the Respondent either in respect of originals shares or bonus shares. Lastly, the Petitioner Advocate has denied that the Petitioners are also seeking any declaration of their title based on disputed facts and same requires detailed evidence and elaborate trial and this Hon'ble Board in exercise of its summary jurisdiction, cannot adjudicate the same. It has also been emphasised that the Petitioner had not sold the original shares of M/s. Jindal Strips Ltd. On the contrary, at the most, if they are the buyers of the Petitioner's stolen shares for consideration, they can lodge bad delivery claim with their broker through whom they had bought the Petitioner's stolen shares for rectification and replacement as per the procedure prescribed by stock Exchange and SEBI. However, no lodger has lodged any claim with the Respondent either in respect of the original shares of the Respondent which were allotted in the name of the Petitioners or any claim in respect of bonus shares. The Petitioner Advocate has further denied that the grievance of the Petitioner is non-issuance of duplicate certificates against lost shares. The Petitioner Advocate has also submitted that the original equity shares of Rs. 10/- each are in the possession of the Respondent No. 1 Company and even the lodgers of original shares of M/s. Jindal Strips Ltd. have not lodged any claim against the Petitioner's entitlement and/or filed any court case and obtained any order thereby restraining the Respondent Company from delivering certificate of bonus shares to the Petitioner.

4.2 The Petitioner Advocate has also submitted that the Respondents Company had sent a postal ballot notice dated 16.6.2008 to the Petitioners showing their shareholding and this notice to the Petitioners further proves the shareholding of shares of Respondent. Further there was no prohibitory order passed by any court or tribunal and therefore, the Petitioner is entitled to receive delivery of bonus shares.

5. In the rejoinder on the Respondent No. 2s aforesaid reply dated 30.4.2012, it has been submitted that the Petitioner has filed the present Petition as an allottee of 4000 bonus shares is admitted by Respondent No. 1 company. Petitioner Advocate has denied that there is any dispute in respect of ownership of bonus shares has an irrevocable right under the provision of Section 113(1) of the Act to get delivery of said 4000 bonus shares within 3 months from the date of allotment. Apart from this, Petitioner Advocate has pleaded that it is a well settled position that Respondent No. 1 has no power under the Act to withhold delivery of bonus shares certificates on the ground that 100 original shares of M/s. JSL were lodged for transfer by Respondent No. 2. The Petitioner Advocate has also highlighted that Respondent No. 2 has miserably failed to bring on record any documentary evidence to establish any of his alleged rights either against the Petitioner or against the original shares and/or against the bonus shares. Since, Respondent No. 2's alleged right is not valid, he has chosen to not to initiate any proceedings enforcing his alleged rights against the Petitioner since last 15 years. The Petitioner Advocate has also contended that the delivery of shares of M/s. Nalwa Sons Investment Ltd. and M/s. Jindal Steel & Power Ltd. by the respective companies to Respondent No. 2 has no co-relation at all with the claims of the Petitioner in the present Petition. The Petitioner Advocate has clearly denied that the Petition is not maintainable and is liable to be dismissed on the ground that Respondent No. 2 is the originally owner of 40 shares (now 400 shares). As the Register of Members of Respondent No. 1 is showing the name of the Petitioner as holder of 800 shares of Re. 1/- each on the record date for allotment of bonus shares, the claim of Respondent No. 2 in respect of 400 shares is false and malafide and based on no evidence. The Petitioner Advocate had categorically denied that the Petitioner had sold 100 shares of M/s. JSL bearing Certificate No. 343132 to Respondent No. 2 or to any other person and calls upon Respondent No. 2 is not bonafide purchaser of 100 original shares of M/s. JSL but is a person who had got possession of certificate of said 100 shares of M/s. JSL by unlawful means.

5.1 The Petitioner Advocate pointed out that Respondent No. 1 has rightly demanded fresh transfer deed duly signed by the Petitioner as transferor for getting the certificates of 40 shares of Respondent No. 1 transferred in the name of Respondent No. 2 because the section 108 of the Act provides transfer of shares only on production of transfer deed. Since Respondents No. 2 is not the bonafide buyer of the Petitioner's 100 original shares of M/s. JSL he could not lodge claim on the Petitioner through the stock exchange mechanism. The Petitioner Advocate has denied that the Respondent No. 2 had ever contacted the Petitioner for execution of fresh transfer deed in respect of 40 shares of Respondent No. 1. Further, it is highlighted that a review of the transfer deed clearly shows that there is no signature of the Petitioner in the transferor column but the Respondent No. 2 has written affidavit enclosed instead of signature in place of transferor's signatures. It has also been stated that the legislature had no intention to give any power of trusteeship on the company and therefore, the provisions of Section 113(1) are drafted in a simple language wherein the company is having right to withhold the delivery of shares allotted to a shareholder if it is prohibited by any provisions of law and/or by any order of the court or tribunal. However, no other circumstances/situation is provided by Section 113(1) of the Act wherein a company is authorised to withheld delivery of bonus shares and hence, decision of the Respondent No. 1 to withhold delivery of bonus shares is a clear case of their willful violation of Section 113(1) of the Companies Act, 1956.

6. The Petitioner Advocate has argued that in view of the provisions of Section 113(1) of the Companies Act, 1956, a company can withhold delivery of bonus shares allotted in the name of shareholders only on following two grounds:-

(i) That the company is prohibited by any provision of law;

(ii) That the company is prohibited by any order of any court, tribunal or other authority.

Further, it has been stated that the Respondent No. 1 was neither restrained by any provision of law nor any order of any court or tribunal from delivering certificates of bonus shares to the Petitioner and hence, decision of Respondent No. 1 to not to deliver certificates of shares is contrary to the provisions of Section 113(1) of the Companies Act, 1956, Respondent No. 1 has no power/authority to withhold delivery of shares on the ground that original shares of M/s. JSL were lodged for transfer and transfer was rejected on valid ground. In this regard, the Petitioner Advocate has relied on the judgment of the Hon'ble CLB in the case of Dipika M. Shah v. Jaiprakash Associates Ltd., CP No. 10/113/2011 and the relevant extract is reproduced below.

"R-1's stand that since Petitioner's originally shares of JIL were lodged for transfer by R-2 and they have withheld delivery of shares allotted in the name of petitioners and dividend as trustee of R-2, the stand of the R-1 needs careful consideration. I find that the shares were allotted in the name of Petitioners and R-1 was not restrained by any provisions of law or any order of court or tribunal to withhold delivery of shares and therefore, in view of the provisions of Section 113(1) of the Act, the Petitioner was entitled to receive delivery of shares. A company cannot dispute the title of the allottee on the ground that originally shares were lodged for transfer and transfer was rejected for any valid reasons because the lodger has separate remedy provided under the law.

The Petitioner has rightly contended that R-1 is not given any power under the Act to withhold benefits due on the shares allotted in the name of allotees only on the ground that original shares were lodged for transfer by third party and transfer was rejected. I hold that R-1's decision to withhold delivery of share certificates allotted in the name of the Petitioner on the ground of R-2's lodgements is contrary to the provision of section 113(1) of the Companies Act, 1956."

In view of the aforesaid legal and factual position the Petitioners Advocate has contended that Respondent No. 1 has failed to deliver the certificates of bonus shares allotted in the name of the Petitioner within 2 months from the date of allotment and willfully violated provisions of Section 113(1) of the Companies Act, 1956 and this Hon'ble Board has jurisdiction and power to direct Respondent No. 1 to deliver to the Petitioner certificates of bonus shares. In support of these submissions, the Petitioner Advocate has cited the case of Mrs. Trishla Jain v. Oswal Agro Mills Ltd., (1996) 86 CC 48(CLB) and the ratio of the judgments is given hereunder:-

"The right to get delivered the share certificate within 2 months of allotment is an irrevocable right vested in every share/debenture holder and is enforceable through the Company Law Board by virtue of Section 113(3). This right cannot be taken away by unilateral action of the company. As such, the plea of outstanding dues to the company is not valid and sustainable.

In view of the above and as decided by the Delhi High Court in respect of some parties in 1989, it is hereby ordered that the company shall delvier within 10 days from the date of receipt of a copy of this order all the bonus share certificates in respect of the Petitioner either to the Petitioner directly or to her duly constituted attorney."

In addition to above, the Petitioner Advocate has submitted that on the record date 19.9.2009, the Petitioners were the registered shareholders and bonus shares were allotted in their names but not delivered. In this regard, it has been clarified that the Petitioners are not seeking any declaration of title but seeking directions to Respondent No. 1 to deliver certificates of bonus shares allotted for record date 19.9.2009. Further to this, in regard to the argument that the Petitioners have not sold original shares of M/s. JSL to Respondent No. 2 or to any other person, it has been pleaded that Respondent No. 2 has neither produced any contract note under which he has allegedly purchased aforesaid shares of JSL nor produced any details of cheque/draft issued by him towards consideration. Besides, the Petitioner had not received delivery of share certificate of Re. 1/- each of Respondent No. 1 Company and the same were lying with Respondent No. 1 Company and hence, there is not question of any sale. Not only this, transfer deeds which were filed by Respondent No. 2 along with affidavit are not signed by the Petitioner which further establishments that Respondent No. 2 & 3's claim is false and liable to be rejected.

No only this, Respondent Nos. 2 & 3 have neither lodged any claim in respect of bonus shares allotted in the name of the Petitioner nor lodged any claim against 400 original shares allotted in the name of the Petitioner, the decision of Respondent No. 1 to not to deliver the certificates of 2000 bonus shares to the Petitioner is illegal and contrary to the provisions of Section 113(1) of the Act.

7. The Respondent Advocate extended the argument that since the allotment of bonus shares on 19.9.2009 against the aforesaid original 80 shares (now 800 shares) of the Respondent No. 1 Company is marred with dispute of title inter-se between the Petitioner and other persons, the Petitioner cannot be said to be an allottee of said bonus shares. Actually, M/s. Jindal Strips Ltd. (Jindal Strips) pursuant to scheme of Arrangement, as sanctioned by Hon'ble High Court of Punjab & Haryana vide its Order dated 25.2.1999 under Section 391 to 394 of the Companies Act, 1956 demerged into two companies namely M/s Jindal Strips Limited (Now Nalwa Sons Investments Limited hereinafter referred to as the "JSL/NSIL") and M/s Jindal Steel & Power Limited (hereinafter referred to as the "JSPL"). Consequently, for every 5 shares of M/s. Jindal Strips every shareholder of M/s Jindal Strips became entitled tot he allotment of 3 shares of Rs. 10/- each of JSL/NSIL and 2 shares of Rs. 10/- each of JSPL. Subsequently, an intimation was sent to all registered shareholders by JSL/NSIL vide its Circular No. JSL/Conversion of share/99 dated 1.7.1999 thereby, calling upon all the registered shareholders of M/s. Jindal Strips to JSL/NSIL so that in lieu thereof new share certificates of JSL/NSIL and JSPL in the foresaid ratio could be issued. However, the Petitioner never surrendered the original share certificate of M/s. Jindal Strips Limited and as a consequence of which he was never issued any share certificates of JSL/NSIL and the Respondent Company. The Respondent Advocate has also pleaded that it is trite in law that Section 113 of the Companies Act, 1956 deals with issuance of share certificates after allotment thereof is made by the company and the same is not applicable in the facts and circumstances of the present case as the Petition is not the case where the shares have either been allotted in favour of the Petitioner and the same has not been delivered to the Petitioner after the allotment thereof or the Petitioner has made any application for registration of transfer of shares and the company has not registered the said transfer. On the contrary, it is mentioned that the grievance of the Petitioner really and in substance relates to the non-issuance of duplicate shares against lost shares regarding which other persons have also lodged the claim. As a matter of fact, in the present case, since the aforesaid 80 equity shares of Rs. 10/- each (now 800 equity shares of Re. 1/- each) of the Respondent No. 1 Company under Folio No. 472237 are in circulation and hence, total 4000 equity bonus shares of Re. 1/- each allotted by the Respondent Company under said Folio No. 472237 have not been despatched and as such cannot be despatched until title with respect to said original 80 equity shares (now 800 equity shares) is not adjudicated and determined thereby, declaring either the Petitioner or aforesaid other persons as entitled to the said bonus shares. The Respondent Advocate has place reliance on the case of Tamil Nadu Finance Limited v. Raasi Limited wherein it is inter alia held that:-

"The petitioner undisputedly has not lodged with company the original certificates together with the instrument of transfer, in compliance with the mandatory requirements of Section 108 of the Act. The company, on the other hand, claims that it has received the original share certificates and the transfer forms from the purported transferees for effecting transfer in their favour. It is thus far from doubt that the petitioner neither delivered the requisite documents nor the company refused the registration of the transfer in favour of the petitioner. By virtue of Section 111A, the CLB has jurisdiction to adjudicate only when there is restful for transfer of shares on sufficient cause and/or pass an order for rectification of register or records when transfer is in contravention of law as specified therein. But, in the present case, before me none of these two criteria exists. In this background, the Petitioner cannot invoke either sub section(2) or (3) of section 111A to press into the prayer of ratification of the register of members of the company. Section 113 provides that the company shall deliver the share certificate to the allottee within 3 months after the allotment of any of its share and in favour of the transferee within two months after making of the application for registration of the transfer of shares. Under section 113, the CLB has no power to give directions for issue of duplicate share certificates. The provision for issue of duplicate share certificates has been prescribed under Rule 4(3) of the Companies (Issue of Share Certificate) Rules, 1960. Therefore, the relief of issue of duplicate share certificate fails outside the ambit of section 113. In these circumstances, I am of the considered view that the CLB has no power to pass any order under section 111A and section 113 as prayed for by the petitioner."

The Respondent Advocate has pointed out that the present Company Petition raises complicated questions of facts qua the title of shares of the petitioner in the Respondent No. 1 Company. As a matter of fact, the title of the shares of the Respondent No. 1 Company is in dispute as much as there are various other persons other than the Petitioner, herein, who are claiming to be the bonafide purchaser/owners of shares in question. Therefore, the adjudication of the shares requires an elaborate trial including examination of witnesses which the Hon'ble Bench in its summary jurisdiction cannot adjudicate upon. It is submitted that the right recourse available to the Petitioner is to approach the appropriate civil court where the title of the shares can be properly adjudicated because the Hon'ble Company Law Board in its summary jurisdiction cannot adjudicate upon the complicated questions of fact arising due to the present dispute pertaining to the title of the shares of the Respondent No. 1 Company. Reliance for the same is place on Kalpesh Kantilal Dedhia and Others v. Altius Developers (P) Ltd. and Others, [2013] 114 CLA 4419 (CLB) wherein it is held that "...the disputes involving substantial rights of parties and where the allegations relating to fraud are involved, which could be only resolved by oral testimony tested by cross examination of witnesses, the contentious issues raised cannot be decided in a summary jurisdiction but such controversies can be tested and adjudicated upon only by a civil court."

Further, the Hon'ble Supreme Court in the matter of Ammonia Supplies Corporation Private Limited v. Modern Plastic Containers Private Limited, (1998) 7 SCC 105 has also upheld the summary nature of the proceedings before the Company Law Board. Accordingly, in the present case where complicated question of facts or law are involved, the CLB in its summary jurisdiction cannot decide the issue and must relegate the parties to appropriate civil court for proper adjudication of the matter."

Lastly, the Respondent Advocate has submitted that grievance of the Petitioner in substance relates to non-issuance of duplicate shares against the lost shares regarding which the present Petition has been filled u/s 113 of the Act. However, it has been argued that the Petitioner is admittedly not in possession of the original share certificates and has also requested the company vide letter dated 13.2.203 for issuance of Duplicate Share Certificates in the Respondent No. 1 Company and it is trite in law that bonus shares are accretions on the original share certificates and in the light of the fact that the original share certificates are not in possession of the Petitioner and that the title of the same is in serious dispute, no duplicate share certificates can be allotted to the Petitioner until a Court of Competent Jurisdiction (Civil Court) decides upon the title of the original share certificates.

8. Having considered the averments made in the Company Petition, replies, rejoinders and arguments (oral and written), it is clear that the Petitioner were the registered shareholders of M/s. Jindal Strips Ltd. and in the year 1998, the said company, M/s. Jindal Strips Ltd. (Now, M/s. Nalwa Sons Investments Limited & hereinafter referred to as the 'JSL/NSIL') and M/s. Jindal Steel & Power Limited (hereinafter referred to as the 'JSPL'). Consequently, for every 5 shares of M/s. Jindal Strips Ltd. became entitled to the allotment of three shares of Rs. 10/- each of M/s. Nalwa Sons Investments Ltd. and two shares of Rs. 10/- each of M/s. Jindal Steel & Power Ltd. Accordingly, as stated by the Respondent Advocate, an intimation was sent to all registered shareholders by JSL/NSIL vide its Circular No. JSL/Conversion of shares/99 dated 1.7.1999 thereby calling upon all the registered shareholders of M/s. Jindal Strips Ltd. for surrendering their the then existing original share certificates of M/s. Jindal Strips to JSL/NSIL so that in lieu thereof, new share certificates of JSL/NSIL and JSPL in the aforesaid ratio could be issued. But, the Petitioner Advocate has pleaded that the Petitioners have not received any such circular. However, as per the scheme of demerger, M/s. Jindal Strips Ltd. allotted shares of Rs. 10/- each of M/s. Jindal Steel & Power Ltd. (Respondent Company) in the name of the Petitioners but withheld delivery of certificates. However, the Respondent Company has regularly paid dividend to the Petitioners and sent annual reports, notice of AGM/EGM and notices of postal ballot and thereby recognised the Petitioners as holders of shares mentioned in the respective dividend warrants and other correspondence.

8.1 It is also admitted position that the Board of Directors of the Respondent Company in their meeting proposed allotment of bonus shares in the ratio of 5:1 subject to the approval of the shareholders and the shareholders gave their approval for allotment of bonus shares and the Respondent Company fixed 19.9.2009 as the record date to find the entitlement of the shareholders for the purpose of allotment of bonus shares i the ration of 5:1. However, the Petitioners have not received delivery of the bonus shares certificates and in the meantime, different persons claiming themselves to be the bona fide purchasers/holders of the initial equity shares of M/s. Jindal Strips Ltd. lodged the same for transfer in their favour on the basis of transfer deeds purportedly executed by the Petitioner. In this regard, it is relevant to highlight that in the Company Application of the Petitioners under Order 1, Rule 10 of CPC read with Section 10E of the Companies Act, 1956 and Regulation 44 of the Company Law Board Regulations, 1991 for impleadment as Respondent(s), some persons were also allowed to be impleaded. However, except the reply of Respondent No. 2 in CP No. 3/113/2011, no other reply has been received from other such Respondents and none has appeared before this Bench either in person or through some representative or advocate except advocate for respondent no. 2 in CP No. 9/113/2011. Thus, all such respondents who have not appeared before this Bench, have lost the opportunity to defend their case by producing submissions and documents in their support and hence, inferences can be drawn against them. Even, in the case of respondent no. 2 in CP No. 9/113/2011, advocate for Respondent No. 2 has stated that Certificate No. 343132 bearing distinctive numbers from 31976955 to 7054 of M/s. Jindal Strips Ltd. (now known as M/s. Nalwa Sons Investments Limited) was held in the name of M/s. Mega Securities and Mr. Chiranjilal Saraf. Subsequently, in September, 2004, the Respondent No. 2 had applied tot he company i.e. M/s. Jindal Strips Ltd. (now M/s. Nalwa Sons Investments Limited) for transfer of said shares in his favour. However, in October, 2004, the Respondent No. 2 received a letter from the Respondent No. 1 Company seeking a fresh transfer deed from the Respondent Company. Thereafter, the Respondent No. 2 that the second holder of the said shares, Shri Chiranjilal Saraf had died by that time. Further, it has been pleaded that Respondent No. 2 Advocate has submitted that the Petitioner initially held 200 shares. However, out of these share, 100 shares were brought by the Respondent No. 2 in the year 1997 and the Respondent No. 2 has been the legitimate owner of the said sh ares since 2.8.1997 and the Respondent No. 2 Advocate has submitted that the Petitioner initially held 200 shares. However, out of these shares, 100 shares were brought by the Respondent No. 2 in the year 1997 and the REspondent No. 2 has been the legitimate owner of the said shares since 2.8.1997 and the Respondent No. 2 had paid the purchase consideration of Rs. 3,20,000/- in respect of these shares i.e. Rs. 800/- per share to the transferors i.e. the Petitioner and Shri Chiranjilal Saraf. In addition, it has also been brought on record by the Respondent No. 2 Advocate that the Respondent No. 2 had sent Share Transfer Deed to the Respondent Company for transfer in his name but the Respondent Company sought the original of the same. Since the Originally Transfer Deed had been lost by the Respondent No. 1 Company. Lastly, the Respondent No. 2 has been constantly trying to contact the Petitioner for signing a fresh Transfer Deed but to no avail. Therefore, it has been observed by the Respondent No. 2 Advocate that the Respondent Company has rightly kept the shares under "stop transfer marks" till the ownership of the title of the shares was decided and the only reason of the Petitioner receiving the dividend, notice of AGM/EGM and postal ballot notice etc. is because the Respondent No. 1 Company failed to change the name of the owner of these shares in its Shareholders' Register as the shares were kept under "stop transfer mark".

8.2 The Petitioner Advocate categorically denied that the Petitioner has sold shares to Respondent No. 2 in CP No. 9/113/2011 or to any other persons. On the contrary, it has been alleged that the aforesaid Respondent No. 2 has chosen to not to initiate any proceeding enforcing his alleged claim against the Petitioner since last 15 years. Moreover, the Petitioner Advocate has denied that the Respondent No. 2 had ever contacted the Petitioner for execution of fresh transfer deed in respect of 40 shares of Respondent No. 1. Further, it is highlighted that a review of the transfer deed clearly shows that there is no signature of the Petitioner in the transferor column but the Respondent No. 2 has written 'affidavit enclosed instead of signatures' in place of transferor's signatures. Moreover, it has been pleaded that Respondent No. 2 has neither produced any contact note under which he has allegedly purchased aforesaid shares of JSL nor produced any details of cheque/draft issued by him towards consideration besides. Since REspondent No. 2 is not the bonafide buyer of the Petitioner's 100 original shares of M/s. JSL he could no lodge claim on the Petitioner through the stock exchange mechanism.

8.3 The Petitioners Advocate has further pleaded that in view of the provisions of Section 113(1) of the Companies Act, 1956, a company can withhold delivery of bonus shares allotted in the name of shareholders only on the following two grounds:-

(i) That the company is prohibited by any provision of law;

(ii) That the company is prohibited by any order of any court, tribunal or other authority.

In the present case, the Petitioner Advocate has argued that the Respondent No. 1 was neither restrained by any provision of law nor any order of any court or tribunal from delivering certificates of bonus shares is contrary to the provisions of Section 113 of the Companies Act, 1956. In addition, it has been argued that there is no provision under the grounds that original shares were lodged for transfer and the same were returned under objection of any reason as provided under the law. Therefore, the Respondent's decision to put stop transfer mark against the Petitioner;s folio is illegal, arbitrary and malafide. Besides, the lodgment of stolen shares by Respondent Nos. 2 and 3 cannot affect the claim of the Petitioners and the SEBI, NSE and BSE Regulations have provided a fool proof mechanism for resolving bad delivery claim of the lodger. However, it is relevant to note that the purported Claimants had not lodged any claim with the Respondent either in respect of original shares or bonus shares. At the most, if they are the buyers of the petitioner's stolen shares for consideration, they can lodged bad delivery claim with their broker through whom they had brought the Petitioner's stolen shares for rectification and replacement as per the procedure prescribed by Stock Exchange and SEBI. However, no lodger has lodged any claim with the Respondent Company either in respect of the original shares of the Respondent which were allotted in the name of the Petitioners or any claim in respect of bonus shares. On the contrary the Petitioner's Advocate has pleaded that the Respondent Company had sent a postal ballot notice dated 16.6.2008 to the Petitioners showing their shareholding and this notice to the Petitioners further proves the shareholding of shares of Respondent Company. In this context, the Petitioner Advocate has cited the judment in the case of Dipika M. Shah v. Jaiprakash Associates Ltd. wherein the observation has been made that the Petitioner has contended that R-1 has not given any power to withhold benefits due on the shares allotted in the name of allottees only on the ground that original shares were not for transfer by third party and transfer was rejected. Based on this, it has been held that R-1's decision to withhold delivery of share certificates allotted in the name of the Petitioner on the ground of R-2's lodgment is contrary to the provisions of Section 113(1) of the Companies Act, 1956.

8.4 The Respondent No. 1 Company Advocate has argued that despite intimation sent to all registered share holders by M/s. JSL/NSIL vide its circular dated 01.07.1999, the petitioners never surrender the original share certificates of M/s Jindal Strips Ltd. and a consequence of this, petitioners have never been issued any share certificates of M/s JSL/NSIL and the respondent company i.e. JSPL. Further, it has been pleaded that since allotment of bonus shares on record date 19.9.2009 is marred with dispute of title inter-se between the Petitioners and other person, the Petitioners cannot be said to be allottees of said bonus shares. Lastly, the Respondent Advocate has controverted that it is trite in law that Section 113 of the Companies Act, 1956 deals with issuance of share certificates after the allotment thereof made by the company and the same is not applicable in facts and circumstances of the present case as the Petition is not the case where the shares have either been allotted in favour of the Petitioner and the same has not been delivered to the Petitioner after the allotment thereof or the Petitioner have made any application for registration of transfer of shares and the company has not registered the said transfer.

8.5 In the context, it is relevant to mention that the provisions of Section 205, sub-section (3) provides that no dividend shall be payable except in cash, provided that nothing in this sub-section shall be deemed to prohibit the capitalisation of profits or re

Please Login To View The Full Judgment!

serves of a company for the purpose of issuing fully paid-up bonus shares or paying up any amount for the time being unpaid on any shares held by the members of the company. Further, Section 206A(b) of the Act states that where any instruments of transfer of shares has been delivered to any company for registration and the transfer of such shares has not been registered by the company, its shall notwithstanding anything contained in any other provisions of this Act; keep in abeyance in relation to such shares any offer of rights shares under clause (a) of sub-section (1) of section 81 and any issue of full paid-up bonus shares in pursuance of sub-section (3) of section 205. But, in the present cases, there was no pending instrument of transfer of shares and hence, there was no justification to keep issue of fully paid up bonus shares as per the entitlement of the shares, in abeyance. Consequent upon this position, the provision of section 113 of the Companies Act, 1956 are attracted. 8.6 After careful perusal of the facts, narrated in the preceding paras, it is undoubtedly clear that the petitioners are the registered share holders of M/s Jindal Strips Limited and there was failure on the part of the Petitioner to surrender their shares certificates to get the respective shares as per the scheme of demerger sanctioned by the Hon'ble High Court of Punjab & Haryana vide Order dated 25.02.1999 resulting in two entities viz M/s Nalwa Sons Investments Limited and M/s. Jindal Steel & Power Limited (Respondent Company) despite the circular dated 01.07.1999 issued by Jindal Strips for this purpose. Legally speaking, the original shares of the M/s. Jindal Strips Limited cannot be traded now unless new shares certificates as per the scheme of arrangement are obtained on surrender of such original shares certificates. However, the petitioners have lost such original shares certificates and hence, duplicates shares certificates are required to be obtained with due compliance of the Companies (Issue of Share Certificates) Rules, 1960 and for this purpose, the petitioners have taken up the matter with the Respondent Company belatedly. Of Course, the names of the petitioners are reflected in the Register of the Members and hence, they are getting notices of AGM/EGM, divdend etc. On the other hand, none of the transferees impleaded as Respondents except Respondent No. 2 in CP. No. 9/113/2011 has either filed reply or represented in person or through advocate. Even in case of the aforesaid Respondent No. 2, it has been pleaded by the Respondent No. 2 advocate that the original transfer deed had been lost by the Respondent No. 2 and therefore the Respondent Company sought the original of the same. On one side, the Respondent No. 2 advocate submitted that the Respondent No. 2 has been consistently trying to contact the Petitioner to sign a fresh transfer deed but to no avail. On the other side, the petitioners advocate has made a counter claim that the Respondent No. 2 had never contacted the petitioner for execution of fresh transfer deed. Further, there is not signature of the Petitioner in the transferor column but the Respondent No. 2 has written 'affidavit enclosed instead of been pleaded that Respondent No. 2 has neither produced any contract note under which he has allegedly purchased aforesaid shares of JSL nor produced any details of cheque/draft issued by him towards consideration. Moreover, the SEBI, NSE and BSE Regulations have provided a full proof mechanism resolving bad delivery claim with their broker. However, the transferees had neither taken action for resolving the delivery claims nor are producing documentary evidence of having paid considerations for the purchase of shares. Despite this position, the Respondent No. 1 Company has kept the shares under "Stop Transfer Mark" even though the shares transfer deeds were not legally complete. As a matter of fact, the title to the originals shares of M/s. Jindal Steels Limited is admittedly in favour of the petitioners and the onus lies on the buyers (Respondents) to claim their ownership by proving payment of consideration for purchase of shares and execution of valid transfer deeds. As is evident form pleadings, there is nothing on record to show that such buyers (Respondent) have approached some court or tribunal to obtain appropriate Orders. Actually, as of now, there is no Order of any Court, tribunal or other allotted in the name of the Petitioners. Under these circumstances, the ratio of the judgment in the case of Dipika M. Shah v. Jaiprakash Associates Ltd. is very relevant whereby it was held that R-1's decision to withhold delivery of share certificates allotted in the name of the Petitioner on the ground of R-2's lodgment is contrary to the provision of Section 113(1) of the Companies Act, 1956. Under the aforesaid facts & circumstances, I am of the considered view that the petitioners are the real and genuine owners of the original shares of restwhile M/s. Jindal Strips Limited and till the time, new shares certificates of M/s. Nalwa Sons Investment Limited and M/s. Jindal Steel & Power Limited are obtained by way of surrender of original shares certificates as per scheme of Arrangement the transfer of shares of erstwhile M/s. Jindal Strips Ltd. cannot be registered by the Respondent Company unless some directions or orders are given by some Court or Tribunal to this effect. However, as of now, neither some legal proceedings is pending in some Court or Tribunal nor some Order to this effect is placed on record before this Bench. Therefore, in the interest of justice, the balance of convenience goes in favour of the Petitioner and hence, the Petitioners are entitlement to get the accrued benefits in the form of bonus shares and there is no prohibition by any Court or Tribunal under the provisions of Section 113 of the Companies Act, 1956. As such, it is held that the petitioners be given bonus shares certificates by the Respondent Company within 45 days and necessary entries in this record be made in the statutory records/returns of the Respondent Company within 60 days. 8.7 CP No. 2/113/2011, CP No. 3/113/2011, CP No. 5/113/2011, CP No. 6/113/2011, CP No. 7/113/2011, CP No. 8/113/2011, CP No. 9/113/2011 are disposed of accordingly. Stay Order, if any, is hereby vacated. 8.8 No orders as to cost.
O R