NEERAJA vs CASTROL INDIA LIMITED

ON having rejected the request of the appellant for transfer of the share certificates because of difference in the signatures in the transfer form and signatures in the records of the respondent-company, the appellant filed the instant complaint before the District Forum seeking compensation at the price difference of shares per share with interest.

VIDE impugned order dated 7. 3. 2005 the complaint was dismissed by absolving the respondent-company from the charge of deficiency in service. Feeling aggrieved the appellant has preferred this appeal.

Case of the appellant, in brief, is that she was a holder of 8476 equity shares under folio number N 00535 of respondent No. 1 company. She received a letter of offer in September 2001 from respondent Nos. 2 and 3 in their respective capacities as Registrar and Manager to the offer for the purchase of shares. The appellant submitted on 23. 10. 2001 at legal office of the respondent No. 2 the form of acceptance duly filled and also the signed transfer form along with share certificates. She also indicated particulars of her bank account and got her signatures verified by the Bank Management as required by the letter of offer. Respondent No. 2 vide letter dated 20. 11. 2002 informed the appellant that her offer for sale had been rejected on the ground that respondent No. 1 company found difference in the signatures in the transfer form and the signatures in the records of the company. The share department of respondent No. 1 company reiterated this stand and further termed the banker''s attestation of signatures as conditional. According to the appellant the share department of respondent No. 1 company was supposed to give to the appellant a notice to prove the validity of her signatures before rejecting the transfer as per Section 111 (2) of the Companies Act, 1956. The appellant protested against this rejection and claimed the difference in the price of the shares because the buy-back offer of the respondents was much higher. She has claimed compensation at the price difference of shares i. e. , Rs. 150 per share on acceptable limit of 1745 shares totalling Rs. 2,61,750 with interest.

IN their defence the respondent Nos. 1 and 2 pleaded that signatures on the transfer form were totally different from the signatures of the appellant in the records of the company and also the attestation of signatures of the complainant on the transfer form by her bankers being conditional was contrary to the terms and conditions of the letter of offer and hence the offer of the appellant to sell the shares to the acquiring company was validly rejected. The letter of offer of buy-back enclosed by the respondent along with reply was relied upon by the District Forum while rejecting the complaint. Clause 7 of the said letter relates to procedure of acceptance of the letter and is as under: "valid Share Transfer Deed'' (s) duly signed as transferors by all share holders (in case of joint holdings) in the same order and as per specimen signatures lodged with Castrol and duly witnessed at the proper place. It would be in the interest of the transferor to get the signatures attested by a Notary Public or Bank Manager or a Member of recognized Stock Exchange. In each case, the name and address of the attesting authority, the authority''s seal and the registration number (if the authority is a Notary Public/member of Stock Exchange) or the name and address of the Bank (if the authority is Bank Manager) should appear. Further all attestations should be unconditional i. e. , the authority attesting should not deny the responsibility of identifying the person and the signatures by qualifyng the attestation. If the said guidelines are not followed, Castrol reserves the right to reject the Transfer deed along with the application. . . . . . "

ON the premise of aforesaid clause the District Forum was of the view that since in the instant case the attestation of signatures of the appellant by the Bank Manager was admittedly one of the conditions and in addition to this signatures of the appellant in the transfer form differed from the signatures in the records of the company, therfore, the company was within its right to reject the offer of sale of shares by the appellant under its Buy-Back Scheme as it was not a case of ordinary sale and purchase of shares between two individuals where there was no time limit for the transfer and the company can always revert back to the share holder for rectification, etc. and the buy-back offer of the respondent company was time bound and it was not bound to accept the defective offer of sale made by the appellant. Aforesaid view taken by the District Forum has been assailed by the appellant mainly on the following premises: (i) That the District Forum did not call for the original record of the company for the purpose of comparing her signatures. (ii) That comparison of signatures from the company record should not be the sole method for establishing the identity and should not be the sole ground for rejection of a prayer as it involves valuable rights of shareholders and a set of all facts retaining to authenticity of signatures by bona fide share holders are require to be examined, before accepting or rejecting the Transfer Form. (iii) In the instant case appellant had mentioned her bank account number 929 on the form for Acceptance-cum-Acknowledgement to facilitate remittance of proceeds of offer through bank and the same account number was again mentioned in Attestation column of Transfer Forum.

In our view, if the signatures had differed the respondent-company should have given an opportunity to the appellant to show authenticity and bona fide of the signatures on the Transfer Form and could not have rejected the application only on prima facie view. In such cases the District Forum should have called for the record and obtained opinion of Hand Writing Expert whether the signatures on the Transfer Form are not of the person who had asked for the transfer of shares as rejection of such application unilaterally without providing opportunity to the shareholder is against principles of natural justice as by a stroke of pen the rapid rejection of application by an official of the company results in heavy loss to the consumer.

FOREGOING reasons persuade us to allow the appeal, set aside the impugned order and send back the matter to the District Forum for deciding it afresh after giving reasonable opportunity to both the parties to prove that the signatures on the Transfer Form were not that of the appellant and vice versa and if need be shall refer the matter to Hand Writing Expert on its own. Since the matter is pending since long the District Forum shall make endeavour to decide the matter within six months.

PARTIES shall appear before the District Forum on 18. 2. 2008 for the aforesaid purpose. Appeal is disposed of in aforesaid terms.

A copy of the 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 allowed.