Milan Manna Vs the Custodian and Ors.

The applicant asserts that Jahar Lal Manna, the applicant's late father had purchased the afore-described 1000 shares of RPL (R2) in the name of the applicant through MLB. Securities Limited, formerly Manik Lal Bhaia (R5), a

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stockbroker. At the time of the acquisition of the shares, the applicant was 25 years of age and had not known about the said transaction.

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The applicant avers, on 19^th February, 1992 the subject shares were purchased as a part of an exchange transaction whereunder the applicant's father had sold 100 shares of Dalmia Cement Limited at the rate of Rs.238.20 per share through R5. After adjustment of the price of the shares, the credit balance of Rs.120/- was received by the applicant's father from R5.

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The applicant has placed on record the original share certiicate, the original transfer deed, the bill (Exhibit-A) dated 4^th March, 1992, the contract note and a certiicate issued by MLB Securities (R5) that the subject shares were sold to the applicant vide Bill No. 80 dated 4^th March, 1992 in lieu of the price of 100 shares of Dalmia Cement Limited and no amount was outstanding or due from the applicant in respect of the said transaction.

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The shares were initially allotted to Growmore Research and Assets Management Limited (R6), which came to be notiied under Section 3(2) of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (“the TORT

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Act”). Consequent to the notiication of R6, the subject shares stood attached under Section 3(3) of the TORT Act and, thereupon, the applicant's father allegedly delivered the subject shares to R5 for obtaining requisite clearance. The applicant has made an endeavour to account for the delay. It is, inter alia, asserted that the applicant had no knowledge about the existence of the subject shares prior to March 2025.

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The Custodian has iled a certiication report. The Custodian claims to have examined the claim of the applicant in the light of the parameters delineated by this Court by order dated 27^th and 31^st April, 1992 in Petition Nos. 1, 2 and 3 of 1993. The Custodian contends that the applicant has produced the original share certiicate, original transfer form, contract note dated 19^th February, 1992 and the bill dated 4^th March, 1992 to substantiate his claim. However, the applicant has not placed on record independent proof of payment and proof of delivery in the Stock Exchange.

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The Custodian has furnished the details as to the current position of the shares; accretions and accruals and the dividend paid thereon, as provided by KFin Technologies Limited (R4), the RTA of RPL (R2), in paragraph 9(G) of the certiication report.

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Since the applicant did not appear, this Court has perused the material on record, and heard Mr. Gandhar Raikar, the learned Counsel for the Custodian and Mr. Ashwin Mehta, the learned Counsel for the Notiied Party.

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At the outset, it is necessary to note that, the share certiicate reveals that the shares were allotted to Growmore (R6) on 22^nd January, 1992 during the statutory period. The transaction in question was effected on 19^th February, 1992 again during the statutory period. Growmore (R6) was notiied on 8^th June, 1992 under Section 3(2) of the TORT Act. The share certiicate further reveals that the shares had been issued in lieu of the corresponding debenture certiicate(s) on conversion of the relevant debentures, with effect from 27^th October, 1991.

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The share transfer deed reveals that from the date of allotment till the purchase of the shares by the applicant, the shares changed hands. The last delivery broker was Manik Lal Bhaia. The share transfer form further indicates that the transferor had duly executed the transfer deed. The requisite particulars including the number of shares, distinctive numbers, certiicate number and folio number do ind mention therein.

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The aforesaid evidence, which appears to be rather unimpeachable, is required to be appreciated in the light of the documents tendered by the applicant to substantiate his claim. The contract note reveals that, the transaction was in the nature of an exchange transaction. The 1000 shares of RPL were purchased at the rate of Rs. 23.70 against the sale of 100 shares of Dalmia Cement at the rate of Rs. 238.20. The bill dated 4^th March, 1992 provides further support to the claim of the applicant. A copy of the sale bill dated 24^th February, 1992, issued by the father of the applicant on behalf of the applicant, lends further assurance. MLB Securities (R5) has also issued a certiicate to substantiate the genuineness of the transaction and recorded that it has no objection if the subject shares are registered in the name of the applicant.

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Cumulatively, the documents on record in the nature of the bill, contract note and sale note fortify the claim of the applicant. All the requisite documents which are necessary for declaring the acquisition as a bona ide purchase are placed on record. The absence of proof of payment in the form of the bank statements, etc., does not detract materially from the applicant's

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claim as the transaction was essentially an exchange transaction.

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Mr. Raikar, the learned counsel for the Custodian, fairly submitted that the applicant has placed on record all the material documents which indicate that the applicant was a genuine and bona ide purchaser. Mr. Mehta, the learned Counsel for the Notiied Party, also fairly submitted that in the case at hand the applicant has placed on record all the relevant documents to seek certiication of the subject shares.

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Indeed, there is delay in approaching the Court to seek certiication of the subject shares. However, in the light of the reasons ascribed in the application and documents which unmistakably indicate that the application satisies the parameters for certiication, mere delay in seeking certiication, by itself, cannot be a justiiable ground for rejection of the prayer. A proitable reference in this context can be made to the decision of the Supreme Court in the case L. S. Synthetics Limited vs Fairgrowth Financial Services Limited and another¹ .

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In view of the aforesaid exposition of law, the aspect of delay, in the background of the attendant facts, pales in signiicance. The applicant appears to be a genuine and bona ide purchaser of the subject shares for value.

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Resultantly, the application deserves to be allowed.

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1 (2004) 11 SCC 456.

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Hence, the following order:

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: O R D E R :

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(i) The application stands partly allowed.

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(ii) The prayer for certiication of 1000 shares bearing Certiicate No.05183887-3896, Distinctive Nos. 239832100–3099 and Folio No. 59291165, standing in the name of Growmore (R6), stands allowed.

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(iii) The Custodian (R1) shall take necessary steps to transfer the 1000 shares standing in the name of Growmore (R6), alongwith all accruals and dividends as indicated in paragraph 9(G) of the certiication report.

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(iv) The needful be done within a period of eight weeks from the date of uploading of this order.

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Application disposed.

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[N. J. JAMADAR, J.]

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Milan Manna v. the Custodian and Ors.

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Milan Manna v. the Custodian and Ors.

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