BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION :HYDERABAD
F.A.No.244/2007 against C.D.No.640/2004, Dist.Forum-III,Hyderabad
Between:
1.Sterlite Industries Ltd.,
Rep. by its Chairman cum Managing Director,
Having Reg. Office at
7 , Kirol, Vidyavihar, Mumbai 86
or Regd. Office at B-10/4, Waluj
MIDC Industrial Area,
Aurangabad 431 133,
Maharashtra State.
2.The Company Secretary,
Sterlite Industries Ltd.,
Rep. by its Chairman cum Managing Director,
Having Reg. Office at
7, Kirol , Vidyavihar, Mumbai-86
or Regd. Office at B-10/4, Waluj,
MIDC Industrial Area,
Aurangabad 431 133,
Maharashtra State . …. Appellants/
Opp.parties
1 & 2
And
Randip Singh Chauhan,
S/o.Late Bansilal Chauhan,
R/o.6-3-595/50, Padmavati Nagar,
Khairatabad, Hyderabad. … Respondent/
Complainant
Counsel for the Appellants : M/s.Bimal B.Bhaskar
Counsel for the Respondent : M/s. Gopi Rajesh & Associates
CORAM: SMT. M.SHREESHA, HON’BLE MEMBER,
AND
SRI K.SATYANAND, HON’BLE MEMBER.
MONDAY, THE FIRST DAY OF FEBRUARY,
TWO THOUSAND TEN.
Oral Order (Per Smt M.Shreesha, Hon’ble Member)
****
Aggrieved by the order in C.D.No.640/2004 on the file of Dist. Forum-III, Hyderabad, the opposite parties preferred this appeal.
The brief facts as set out in the complaint are that the complainant purchased 125 shares under certificate numbers 00908507 & 01105297-5299 respectively. The complainant submits that he was informed that the shares have been bought back by the opposite party company and hence his shares were cancelled. The complainant did not encash any of the cheques/warrants issued by the buy back offer made by the opposite parties 1 & 2 company in respect of the 125 shares. The complainant did not receive interest and warrants on the 625 debentures issued to him against the shares held on certificate no. R26025. The complainant returned the debenture certificates and unencashed warrants and the cheques and requested the opposite party company to process dematerialization. This request was forwarded to M/s.Gayatri Capital Limited. The complainant sent shares through the opposite party no.3 for dematerialization of shares to opp.party no.1 company. On 19.1.2004 the complainant wrote a letter to Share Pro Services that he does not want to surrender the shares of the opposite party no.1 company in the buy back offer and did not encash the warrants/cheques issued in his favour against buy back proceeds. The complainant received a letter dt.7.2.2004 from M/s.Share Pro Services stating that they are not able to process his request since the shares have been encashed and opposite party no.3 wrote a letter dt.9.3.2004 to the complainant rejecting the request of the complainant for dematerialization of shares. The complainant wrote another letter on 19.2.2004 to the opposite parties calling upon them to restore the original holding shares and also requested that he should get bonus shares as declared on 9.2.2004 by opposite party no.1. This letter was refused by the opposite party. The complainant sent another letter dt.20.2.2004 requesting opposite party no.1 for dematerialisation of 125 shares and opposite party no.1 sent cheques for Rs.1,359.93 ps. and another cheque for Rs.5,439-73 ps. for redemption of debenture cum interest. The opposite parties 1 and 2 have purchased shares at Rs.100/- per share and Rs.50/- converted them into debentures. Each non conventional debentures redeemed in three instalments of Rs.3.50 , 3.50 and 3.00 at the end of 4th and 5th year respectively from the date of allotment of debentures i.e. 6.8.2000 and investor money tied from 4th year to 6th year. The opposite party intentionally held up the amount of the investor. After purchasing the shares of small investors at low rate of interest for Rs.100/- per each share the opposite party converted the shares into company shares by fraudulent buy back offers and have intentionally stopped trading of stock exchange from 13.5.2002 to 1.11.2002 i.e. nearly six months to consolidate their share holding capacity and also to grab the small investors’ shares at low prices . Some shares were sold at high prices of Rs.1000/- from 10.11.2003 to 5.2.2004 on BSE gaining huge profit at the cost of small investors. Hence the complaint seeking direction to the opposite parties to pay Rs.1,76,250/- towards 125 shares value as on 14.1.2004 and also to pay interest from the date of cancellation of shares till the date of payment and also to allot bonus shares on the 125 shares as allotted by the opp.party company on 9.2.2005 in the ratio of 1: 1 and also to pay Rs.50,000/- towards compensation and to pay costs of Rs.5000/- .
The opposite parties 1 and 2 filed counter stating that they filed a petition in High Court of Mumbai under Section 392 of Companies Act,1956 for a scheme of arrangements between opp.party no.1 and its equity shareholders for buy back shares and the said scheme was approved and sanctioned by the High Court of Bombay and as per the scheme the share holders were required to send back the duly signed option form to opp.party no.1 in case the share holder do not wish to offer their shares for buy back. The last date for sending back the options was fixed at 21.6.2002. Against the said orders SEBI has preferred an appeal in High Court of Mumbai and while dismissing the said appeal the last date was also extended to 20.10.2002. As per the scheme the share holder was entitled for 5 non convertible debentures against holding of one share and these five non convertible debentures were also redeemed in the month of February 2004 and the option form along with the share repurchase consideration warrant were duly dispatched to the complainant in month of May,2002 and on receipt of this the complainant is required to return the option form duly filled and singed by him on or before 21.6.2002 or within the extended period. The complainant did not bother to return the said option form. The complainant himself annexed a copy of the letter dt.24.5.2002 sent by the opposite party no.1 to the complainant in which the opposite party no.1 clearly conveyed about the said scheme. Hence 125 shares of the complainant were considered for repurchase under the buy back scheme and the said original shares were cancelled and extinguished as per the order of the Hon’ble High court at Mumbai. The complainant is entitled for 625 non convertible debentures and this was duly dispatched to the complainant which have been redeemed in the month of February 2004 and the redemption proceeds were also dispatched to the complainant while sanctioning the buy back scheme. The High Court clearly stated in its order that non receipt of the option form within the stipulated period the holding of the share holders shall automatically be considered for buy back and it is needless to state that on such buy back the shareholding of the share holders will automatically be cancelled. On receipt of the letter dt.19.1.2004 from the complainant, M/s.Sharepro Services replied on 7.2.2004 rejecting the demat request of the complainant on the ground that the shares were already bought back by the company . The limitation of this case started from the letter dt.24.5.2002 and the complainant ought to have filed this case before 24.5.2005 but it had filed beyond limitation and hence they seek dismissal of the complaint.
It is the version of the opposite party no.3 that they have immediately sent the physical share certificates to M/s.Share Pro Services who are the registrars of the opposite party no.1 company and Share Pro Services by letter dt.7.4.2004 rejected 125 equity shares for DEMAT on the ground that the opposite party no.1 company gave an option for buying the shares and the complainant failed to exercise their option to retain the shares and issued warrant of payment to the complainant. The rejected 125 equity shares were returned to the complainant on 9.3.2004 therefore there is no deficiency in service on their behalf.
The District Forum based on the evidence adduced i.e. Exs.A1 to A37 documents allowed the complaint in part directing the opposite parties to recredit the 125 shares in favour of the complainant and also allot the bonus shares on par with other share holders and also pay compensation of Rs.2000/- and costs of Rs.1000/-.
Aggrieved by the said order the opposite parties 1 and 2 preferred this appeal.
It is the case of the complainant that he had purchased 125 equity shares issued by the opposite parties and thereafter the complainant was informed that the shares have been bought back by the opposite party company. The complainant did not encash any of the cheques or warrants issued against the buy back offer made by opposite parties 1 and 2 in respect of his 125 shares. The complainant further submits that he did not receive the warrants and interest on 625 debentures issued to him against the share certificates no. R26025. The complainant wrote a letter on 19.1.2004 to Sharepro Services who are the Registrars of the opposite party company and he received a letter from them on 7.2.2004 stating that the shares have not been encashed and opposite party no.3 wrote a letter dt.9.3.2004 rejecting the request of the complainant for DEMAT and the complainant was informed that the 125 shares of opposite party company were rejected. The complainant wrote another letter dt.19.2.2004 to opposite parties 1 and 2 to restore the original holding shares and to get the bonus shares. It is the case of the appellants/opp.parties that the Hon’ble High Court of Bombay in its order dt.19.4.2002 directed the appellants/opp.parties to dispatch he option forms to all the registered share holders and no specific directions were given regarding the mode of dispatch. In this letter, the appellants/opp.parties mentioned that the said scheme of buy back was duly approved by the equity share holders, secured creditors at the Court meeting on 16.2.2002. The appellants/ opposite parties gave the salient features of the scheme and stated in the last para “in case you do not wish to offer your equity shares for purchase” the share holders should fill up the option form and send it back to opposite party within the stipulated period of time fixed by the High Court. Since the complainant herein did not exercise this option the original shares stood cancelled under the buy back scheme and the complainant was entitled for 625 non convertible debentures which was duly dispatched to the complainant and also been redeemed in the month of February,2004 and redemption proceeds were also sent to the complainant.
We observe from the record that the District Forum has allowed the complaint on the ground that the appellants/opp.parties did not file any documentary evidence in support of their contention that the notice has been dispatched and received by the complainant. We observe from the exhibits that Exs.A21 and A22 which are the letters addressed by the complainant dt.18.2.2004 to the opposite parties with respect to DEMAT of his shares in which it is stated as follows:
“ I also wish to inform you that I have not encashed any of the cheques/warrants issued against the buyback offer made by the Company for the shares held by me…………I was also out of station when the letter came and you don’t expect me to have so much foresight that the Company will be sending the letter on a particular date so that I should be present at my home when the letter comes…..”
This exhibit clearly states that the complainant was aware of the option letter sent by the company but did not take necessary steps about the option letter. The appellants have only acted within the orders of the Hon’ble High Court of Bombay which reads as follows:
“AND THIS COURT DOTH FURTHER ORDER THAT on or after the Record Date, the Petitioner Company shall send to every Shareholder an Option Form to enable him/her/it to select whether he/she/it desires to continue as Shareholder of the Petitioner Company and accordingly, does not desire to offer his/her/its Equity Shares to the Petitioner Company for purchase and that the Shareholders shall be entitled to exercise their option to continue to hold their Equity Shares by sending the Option Form to the Petitioner Company within the period stipulated in the Option Form”
“AND THIS COURT DOTH FURTHER ORDER THAT subject to Clause 4:7 of the Scheme, in consideration for every 1(one) Equity Share purchased by the Petitioner Company in pursuance of Clause 4.1 of the Scheme, the Petitioner Company shall, within 7(seven) days from the date of purchase of the Equity Shares, without any further application, act or deed by the Shareholders (i) pay to the shareholder a cash consideration of Rs.100 (Rupees one hundred); and (ii)issue and allot to the shareholder 5 (five) Debentures on the terms and conditions contained in the Scheme”.
We are of the considered view that the order passed in favour of the complainant is in contravention of the order passed by the Hon’ble High Court of Bombay and hence we hold that there is no deficiency in service on behalf of the appellants/opp.parties and we set aside the direction of the District Forum to recredit the 125 shares which were already cancelled and also the direction to allot the bonus shares on the cancelled shares in the ratio of 1:1 and we modify the order of the District Forum directing the appellants/opp.parties 1 & 2 to dispatch the redeemable debentures and the cheques with respect to the proceeds and interest which the complainant is entitled for.
In the result this appeal is allowed with the aforementioned directions.
MEMBER
MEMBER
Dt.1.2.2010
Pm*
