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Adesh Kaur v. Eicher Motors Limited & Ors.

Civil Appeal · 2018 INSC 571Decided 3 Jul 2018
Civil Appeal Nos. 19426-19427 of 2017
Justice Rohinton Fali Nariman · Justice Indu Malhotra

Background

The appellant, a Punjab resident, had held 903 shares in Eicher Motors Ltd. since 1994-95. In 2012, an impostor using the same name but based in Mumbai fraudulently got the company (acting through its share registrar) to change the appellant's registered address, forged her signature on an indemnity bond, obtained duplicate share certificates, and then transferred the shares to a third party. When the appellant discovered this in 2014, the company did not restore her shares despite her requests, forcing her to approach the National Company Law Tribunal (NCLT) for rectification of the register.

Decision Breakdown

The NCLT had ordered rectification in the appellant's favour, noting that the company itself and SEBI had acknowledged the issuance of duplicate shares without following required procedure. The National Company Law Appellate Tribunal reversed this, holding the matter should instead go to a civil suit because criminal and SEBI investigations were pending. The Supreme Court held this was "an open and shut case of fraud" with no genuine dispute of fact, found that the registrar had failed to follow the mandatory procedure (such as notifying stock exchanges and advertising) before issuing duplicate certificates for shares of significant value, and reinstated the NCLT's order, directing the company and the depository to rectify the physical and demat share records to restore the appellant's shareholding, and to remove the fraudulent transferee's name if entered.

Lesson Learnt

Where fraud and a company's own procedural lapses are clear and effectively undisputed, a victim should not be forced into prolonged separate civil litigation just to get her rightful property (here, shares) restored: the specialised company law tribunal can grant that relief directly.

Official source (sci.gov.in)View Judgment (PDF)

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