EXIDE INDUSTRIES LIMITED vs JAGDISH CHANDER BAWA

IT appears that the appellant has directed this appeal against the impugned order dated 28.9.1999 passed by the District Forum probably on the erroneous view taken by the District Forum with regard to the directions and guidelines approved by SEBI with regard to sale and purchase of shares.

ADMITTEDLY appellant issued the shares in question on 31.10.1985. It is alleged by the respondent that corrections and alterations with regard to the number of shares and the dates were made by the respondent without authentication and without countersigning the same. As per SEBI guidelines and directions shares which carry corrections without counter signatures and without proper authentication are bad shares and cannot be sold through exchanges. But according to the appellant no such corrections were made. It is stated by the Counsel that the appellant only re-wrote the number of the shares as the numbers already mentioned were dim and illegible and there was no need for proper authentication. According to the respondent when he asked his broker to sell the shares the shares were declared bad delivery by the National Exchange when these were sent by broker and as a consequence has suffered a loss of Rs. 4,120.20.

The main premise of the contention of the Counsel for the appellant is that the aforesaid directions and guidelines were approved by the SEBI way back on 10.1.1997 whereas SEBI itself was constituted in 1992 and since the shares were issued in the year 1985 these guidelines were not applicable and moreover shares in question were sold as many as on four occasions in the open market.

WE are afraid the aforesaid contention of the Counsel does not hold water as the respondent was concerned with the sale of the shares through his broker at the relevant time and if it was found that the relevant shares were bad delivery the appellant was liable for compensating the loss suffered by the respondent. However, this circumstance can be taken as a mitigating circumstance and not a circumstance that may exonerate the appellant from the liability to compensate the respondent. In view of the foregoing reasons we do not find any merit in the appeal and dismiss the same, but instead of the interest awarded by the District Forum we are awarding compensation of Rs. 2,500/- on account of deficiency in service and the loss suffered by the respondent.

BANK Guarantee/FDR, if any, furnished by the appellant be returned forthwith after completion of due formalities. A copy of this order as per the statutory requirements, be forwarded to the parties free of charge and also to the concerned District Forum and thereafter the file be consigned to Record Room. Appeal dismissed.